Sharemasterindia.com: Nestle India shares jumped as much as 10 per cent on Wednesday after a Food Safety Standards Authority of India-approved laboratory found Maggi noodles to be in compliance with the country's food safety standards.
The development is a big positive for Nestle India and is likely to pave the way for the return of the noodles brand back in the markets, analysts said. Nestle had to withdraw all varieties of the popular noodles in June amid country-wide scrutiny on Maggi for high content of monosodium glutamate (a taste enhancer) and lead in some samples.
The FSSAI later banned the snack, ruling it "unsafe and hazardous". Nestle had challenged the decision in the Bombay High Court, which has concluded hearing. A judgement is expected at a later date.
The controversy over Maggi noodles has weighed on Nestle's financial performance; the company slipped to a second-quarter loss as sales fell 20 per cent because of the withdrawal of Maggi noodles from domestic markets. Nestle also reported one-time loss of Rs 452 crore in the quarter.
Maggi used to contribute around 22-25 per cent to the company's topline and 30 per cent to its company's profitability, according to Kotak Institutional Equities.
"Nestle India is making all efforts and will continue to engage with authorities to bring Maggi Noodles back on the shelves," managing director designate Suresh Narayanan had said last month.
