Maggi worth Rs 320 cr being destroyed

Maggi worth Rs 320 cr being destroyed

Nestle India is in the process of destroying Maggi noodles worth Rs 320 crore after it was banned by the central food safety regulator Food Safety and Standards Authority of India (FSSAI) due to presence of lead and taste enhancer monosodium glutamate (MSG) beyond permissible limits.

The company said it is in the process of withdrawing the stock of Maggi noodles from markets, factories and distribution and destroying it. The ban on Maggi noodles is likely to wipe off the entire profits Nestle India reported for the quarter ended March 31, 2015.

“The estimated sales value of the stock in the market, including those with our trade partners, is around Rs 210 crore. In addition, there were Maggi noodles and related materials in our factories and distribution centres when the withdrawal was announced. The estimated value of these is around Rs 110 crore,” said Nestle India.

These are broad-based estimates because it is impossible to calculate the final figure while the withdrawal is taking place. There will be additional costs to take into account, and so, the final figure would be confirmed at a later date, said the company.

Nestle India had, for its first quarter, which ended on March 31, reported a net profit of Rs 320.20 crore as against Rs 259.16 crore in the same quarter previous fiscal.

Total income from operations for the company during the quarter stood at Rs 2,516.48 crore as against Rs 2,321.51 crore a year ago.

According to Nestle India, the additional costs to take into account would include bringing the stock back from the market, transporting it to the destruction points and the destruction costs.

These and other unforeseen costs associated with the withdrawal would be dealt with in line with the applicable accounting standards at the time of announcing the financial results on the due dates, added Nestle India.

The FSSAI had on June 5 ordered Nestle India to withdraw and recall the nine approved variants of its Maggi Instant Noodles from the market, after they were found unsafe and hazardous for human consumption, and stop its further production, processing, import, distribution and sale with immediate effect.
 

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