The Maggi noodles controversy is nearing conclusion, barring further legal challenges, and the financial impact, if any, from the government’s ongoing class action suit. Maggi, the popular instant noodle brand, is set to return to store shelves as Nestle said it cleared tests mandated by the Bombay High Court and that the company will restart production of the snack within two-three weeks.investors marked up Nestle India Ltd’s share by 6.1% on Friday, on news that lab tests mandated by the Bombay high court had cleared the noodles. The share has already gained significant ground from the fall since end-May, when this controversy erupted, and is now just 7% short of its 28 May price.
Nestle India announced a voluntary recall of the noodles on June 5, the same day national food regulator Food Safety and Standards Authority of India (FSSAI) banned its sale alleging excessive levels of lead in it and mislabeling on the pack. The recall, the country"s biggest and which grabbed international headlines, almost wiped out the entire instant noodles category and dented the sales of all packaged snacks, as wary consumers avoided them.
In August, the Bombay High Court lifted the ban, but asked the company to get the samples tested before it starts selling the product.
FSSAI officials could not be contacted for comment.
"This speaks volumes about the regulatory apparatus of the country, and even its antibusiness stance in this case," social commentator Santosh Desai said. "It"s about a global foods giant with well-established credentials being targeted."
The return of Maggi comes at a time when the Indian company"s Swiss parent, Nestle SA, announced a reduction in its full-year sales forecast, citing recall of Maggi, which rakes in Rs 2,000 crore annually for the Indian unit. The world"s largest food company cut its forecast for organic sales growth to 4.5% this year from the previous estimate of 5%.The company said it conducted more than 3,500 tests representing over 200 million packs in both national as well as international accredited laboratories and all reports were clear. In addition to these, various countries including the US, UK, Singapore and Australia have found Maggi noodles manufactured in India safe for consumption, it said.
In a news release, Nestle India said in compliaare also tested and cleared by the designated three laboratories.
The FSSAI had banned sale of Maggi noodles citing lead levels more than the permissible quantity of 2.5 parts per million, mislabelling on the packs and selling a variant of Maggi noodles without product approval.
The recall had cost Nestle Rs 320 crore, and another Rs 1,270 crore in brand loss, according to global valuation consultancy Brand Finance.