Maggi ban stalks Nestle India Q3, net profit dives 60% to Rs 124 crore

New Delhi: Reeling under the ban on Maggi instant noodles, Nestle India Thursday reported a 60.1 percent decline in its stand-alone net profit at Rs 124.20 crore for the third quarter ended September 2015.

The company, which today appointed MD Suresh Narayanan its chairman to perform the dual role, had posted stand-alone net profit of Rs 311.29 crore in the same period last fiscal.

During the period under review, net sales declined 32.12 percent to Rs 1,736.20 crore as against Rs 2,557.80 crore a year ago, Nestle India said in a statement.

"Export sales decreased 6.4 percent, which are impacted by the Maggi noodles issue and lower sales to Nepal due to the blockade of the border in the last week of September 2015," the company said.

The company follows January-December financial year.

Due to the ban on Maggi, Nestle India had reported a stand-alone loss of Rs 64.40 crore in the second quarter for the first time in the last 15 years.

Nestle India said it's "faced with an unusual situation and continued to deal with it during the quarter as well".

On the results, Nestle India Chairman and MD Suresh Narayanan said during the quarter, the Bombay High Court set aside the ban and ordered that the earlier batches be tested at three accredited laboratories specified by them.

"The results received from these laboratories show that 100 percent samples tested are clear, with lead well below the permissible limits," said Narayanan, who assumed the charge as the chairman of the company after retirement of A H Waszyk on October 1, 2015.

Narayanan clarified that Nestle India has again started manufacturing Maggi and is keen to reintroduce it at the earliest after clearance of the samples.

In June, FSSAI had banned Maggi noodles, saying it was "unsafe and hazardous" for consumption after finding lead levels beyond permissible limits. The company had withdrawn the instant noodles from the market.

Nestle India, which took a hit of Rs 450 crore, including destroying over 30,000 tonnes of the instant noodles since June when it was banned, had stated that it would continue with the existing formula of the product and not change the ingredients. 

The Consumer Affairs Ministry had also filed a class action suit against Nestle India seeking about Rs 640 crore in damages for alleged unfair trade practices, false labeling and misleading advertisements.

It was for the first time that the ministry dragged a company to the National Consumer Disputes Redressal Commission (NCDRC) using a provision in the nearly three-decade-old Consumer Protection Act.

In the third quarter, Nestle India's cost of material consumed declined 39.07 percent to Rs 660.50 crore as against Rs 1,084.16 crore a year earlier.

The company's total expenses during the quarter also fell 26.69 percent to Rs 1,544.98 crore as against Rs 2,107.48 crore of the same period last fiscal.

The stock today settled at Rs 6,282.10 on BSE, down 0.69 percent.