Following a ban on its popular Maggi noodles, Nestle India has witnessed its first quarterly loss in 17 years.
Nestle India has posted a loss of ₹ 64.4 crore in the June quarter compared to a profit of ₹ 288 crore in the same period last year.
Hit by Maggi crisis, the company's sales fell by over 19% to ₹ 1,957 crore in the April-June quarter against ₹2,432 crore in the corresponding quarter a year ago. The company also saw a one-time loss of ₹452 crore in the quarter.
"The disappointment is likely to extend further in the quarters to come by," Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services, told NDTV Profit.
Sales of Maggi noodles account for 20% of the company's overall revenues and analysts see a 50% decline in volume growth of Nestle India's ready-to-eat food products in 2015 due to the ban.
Besides, share prices of Nestle India have fallen by nearly 11% since the controversy on Maggi noodle began in May.
"If the company can relaunch the Maggi then there is huge upside in the stock. Those who want to invest in the stock should wait for clarity and then invest, the stock can offer 25 per cent upside from current level," said Prakash Diwan director at Altamount Capital Management.
On 5 June, India's food safety regulator, Food Safety & Standards Authority of India (FSSAI), had ordered Nestle India to recall all available stock of Maggi noodles from the market after more-than-permissible levels of lead and monosodium glutamate (MSG) were found to be present in samples of the noodles that were tested across laboratories by various states.
The company had filed a case in the court challenging the ban imposed by FSSAI on its flagship brand Maggi.
Recently, the court has allowed the company to export Maggi noodles, currently banned in several states in the country.
Last week, Nestle has appointed Suresh Narayanan as its India MD in a major reshuffle, replacing Etienne Benet.
Experts believe that the issues related to Maggi noodles recall and ban are likely to be settled in the coming three to six months.
