Business-education
Business Education
<h2>Nestle Shares Drop after Maggi Ban</h2>
Maggi Ban leads to ginormous loss for its parent company Nestle. Opening trade on the Bombay Stock exchange shows incredulous and farcical news on Nestle Shares where it reported its first quarterly loss in 15 years after ban of its revenue generator product Maggi noodles by FSSAI after finding lead beyond permissible limit and adding taste maker monosodium glutamate (MSG). Nestle India shares fell on Thursday after the company reported a net loss of Rs 64.40 crore. At 10.37 am, the shares were down 0.25 per cent on BSE at Rs 6131.95. On NSE, the shares were down 0.21 per cent at Rs 6140.
The company had posted a net profit of Rs 287.86 crore during the April-June quarter of financial year 2014-15, Nestle India said in a statement. “Net sales for the quarter have decreased by 20.1 per cent largely due to the impact of the Maggi noodles issue. Net domestic sales decreased by 20.6 per cent,” Nestle India said in a statement. The company's total income from operations during the period under review declined 19.52% to Rs 1,957.01 crore as against Rs 2,431.97 crore in the same period of previous year.
"Net sales for the quarter have decreased by 20.1% largely due to the impact of the Maggi noodles issue. Net domestic sales decreased by 20.6%," Nestle India said. According to a report by Bloomberg, the company hasn't seen a loss in any of the quarters dating back to 2000.
Nestle Managing Director (Designate) Suresh Narayanan said: "This quarter has been extremely challenging for the company. Nestle India would like to reassure consumers that our products are safe. Consumer trust is and will always remain the cornerstone of Nestle. Nestle India is making all efforts and will continue to engage with authorities to bring Maggi Noodles back on the shelves".
"The Maggi issue disrupted business. In addition to loss of sales from the business disruption, net sales worth Rs 288.4 crore has been reversed during the quarter in relation to Maggi noodle stocks already sold and withdrawn from the market, Nestle India reported an exceptional item of Rs 451.66 crore, which "relates to estimates of loss on account of stocks withdrawn including incidental costs thereto and other related costs incurred".