Shares of Nestle India experienced a notable decline on Friday, dropping over 3% amidst reports that the Food Safety and Standards Authority of India (FSSAI) has issued a notice to the company. The regulatory action stems from alleged complaints circulating on social media regarding the detection of insects or larvae in a Maggi noodles packet.
The stock price for Nestle India fell to Rs 1370 during the current session on the BSE, a decrease from its previous close of Rs 18,084. This dip resulted in the firm's market capitalization shrinking to Rs 2.65 lakh crore. By the end of the trading day, the stock closed 3.23% lower at Rs 1375.85, with 1.08 lakh shares changing hands, amounting to a turnover of Rs 15.06 crore.
Nestle India Rejects Allegations
In response to the FSSAI notice and the social media claims, Nestle India has strongly denied the allegations. The company issued a statement asserting, "We categorically reject the allegations circulating on media basis an unverified account regarding the presence of infestation, allegedly on MAGGI noodles."
Nestle India further stated that it has yet to receive the complaint sample directly from the complainant, as the account remains unreachable. The company has already submitted a detailed representation to the competent authorities, supported by relevant facts, quality records from both batch and market samples, and test reports.
Significantly, Nestle India highlighted that a reference sample from the same batch in question was sent for testing to an independent FSSAI-notified and NABL-accredited laboratory. This laboratory found the reference sample to be "free of any infestation."
FSSAI Demands Action Report
According to reports, the FSSAI took swift cognisance of the complaints shared across social media platforms, prompting the issuance of notices to multiple companies, including Nestle India. The notice specifically demands a detailed Action Taken Report (ATR) from the company, which must include several key pieces of information:
- Supplier and Manufacturing Details: Comprehensive information regarding the suppliers and manufacturing sources associated with the affected batch, alongside findings from internal quality assurance reviews and inspection records.
- Containment and Corrective Actions: Immediate steps taken by the company for the containment and removal of any impacted products from the distribution and supply chain network.
- Preventive Measures: A thorough outline of preventive measures being implemented to strengthen quality control processes, enhance supplier oversight, and ensure that similar incidents are avoided in the future.
The incident underscores the heightened scrutiny on food safety standards and the rapid impact of social media complaints on corporate reputation and stock performance in India's dynamic market.