Every Nestle Cerelac infant cereal sold in India contains around 2.7 grams of additional sugar per serving, and according to a few reports, Nestle was found adding supplementary sugar to infant food products marketed in less wealthy countries such as India.
Nestle’s Cerelac wheat-based cereals for six-month-old infants sold in Germany, France, and the UK, have no additional sugar. In contrast, the same product has over 5 grams per portion in Ethiopia and 6 grams in Thailand.
Recently, a controversy emerged after a Swiss NGO, the Public Eye and International Baby Food Action Network (IBFAN), sent samples of Nestle’s baby food products sold in India as well as in African and Latin American countries for examination to a Belgian laboratory.
As a result of the revelation, the stock fell up to 5.4 percent to the day’s low at Rs. 2,409.55 on the BSE on 18th April.
Further, the Union Consumer Affairs Ministry of India has asked the Food Safety and Standards Authority of India (FSSAI) to initiate an investigation into allegations of Nestle selling baby food products with higher sugar content in India.
The scientific committee of FSSAI is presently reviewing the matter, and the report is expected to come within a month. Based on the committee’s findings, FSSAI will take necessary actions against the company.
However, as soon as the controversy erupted, Nestle claimed that it had reduced the sugar by up to 30 percent during the previous 5 years depending on variants in infant cereals.
Following the claim, the share price of this large-cap stock operating in the food segment rebounded and moved up by 1.41 percent on BSE, hitting an intraday high at Rs. 2,535 in the trading session of Wednesday.
The multinational FMCG major has fallen by 0.4 percent in the last five trading days and has delivered negative returns of nearly 8.08 percent, so far in 2024.
In terms of financials, the company’s revenue from operations grew by nearly 8.05 percent from Rs. 4,257 crore in Q3 FY22-23 to Rs. 4,600 crore in Q3 FY23-24, accompanied by an increase in the net profit of 4.5 percent, from Rs. 628 crore in Q3 FY22-23 to Rs. 656 crore in Q3 FY23-24.
As of March 2024, FIIs hold 12.1 percent of the shares, whereas DIIs hold 9 percent of the shares in the company, aggregating to 21.1 percent of the institutional holdings.
With a market capitalisation of Rs. 2.42 lakh crore, the share price of Nestle India Limited moved up to close at Rs. 2,502.75 on BSE, compared to its previous closing price of Rs. 2,459.15.
The stock has delivered positive returns of about 21.6 percent in the last one year and around 3.7 percent in the last six months.
Nestle India Limited, a subsidiary of Nestle of Switzerland, has a diverse business that includes milk products and nutrition, beverages, prepared dishes and cooking aids, chocolate and confectionery, and vending food services.
Written by Shivani Singh
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