Q2-2015: Maggi ban hits Nestle for a loss of Rs 64.4 crores

BENGALURU: In what is probably a first, Nestle India Limited (Nestle) has reported a loss. A loss to the extent of Rs 64.4 crore in the quarter ended 30 June, 2015 (Q2-2015, Nestle’s financial year ends on 31 December). Hit by the Maggi Noodles controversy, exceptional items worth Rs 451.66 crore have wiped off the Rs 333.1 crore profit before exceptional items and tax that the company had earned. 

The resulting loss of Rs 118.56 crore was mitigated by a tax credit of Rs 54.16 crore and the result was the above mentioned net loss of Rs 64.4 crore. 

Last quarter, the company had reported a profit after tax (PAT) of Rs 320.28 crore and a PAT of Rs 287.86 crore in Q2-2014. For now the company has suspended manufacture of Maggi Noodles pending a decision of the Bombay High Court pertaining to a case it has filed regarding interpretation of the Foods Safety and Standards Act, 2011. The loss of the brand value, goodwill is difficult to calculate.

Note: 100,00,000 = 100 lakhs = 10 million = 1 crore

The company says that net sales worth Rs 288.38 crore has been reversed in the current quarter in relation to Maggi Noodles stock being withdrawn from trade partners and the market. The exceptional items amount of Rs 451.66 crore relates to estimates of loss on account of stocks withdrawn including incidental costs thereto and other costs incurred exclusively in the ordinary course of business, dealt with in with the Accounting Standard AS2 on valuation of inventories and Accounting Standard AS5 on net profit or loss for the period, prior period items and changes in accounting policies.

Let us look at the other numbers in Q2-2015 that have changed:

The company says that its net sales have been impacted by 20.1 per cent on account of Maggi Noodles. Nestle’s net domestic sales have decreased by 20.6 per cent , export sales decreased by 12.7 per cent impacted by lower coffee exports Russia, partly offset by export of milk and nutrition products to Bangla Desh. Nestle reported net Total Income from Operations (TIO) of Rs 1957.01 crore in the current quarter as compared to the Rs 2516.48 crore in the immediate trailing quarter and the Rs 2431.97 crore in the corresponding year ago quarter.

Total Expenditure (TE)  in Q2-2015 declined to Rs 1634.38 crore as compared to the Rs 2000.75 crore in Q1-2015 and the Rs 2008.91 crore in Q2-2014. Nestle’s cost of materials consumed declined to Rs 718.80 crore in Q2-2015 as compared to the Rs 1110.50 crore in Q1-2015 and Rs 1123.47 crore in Q2-2014.

For the six month period ended 30 June, 2015 (6M-2015, YTD), Nestle reported a 5.9 per cent drop in TIO to Rs 4473.49 crore as compared to the Rs 4753.48 crore in 6M-2014. PAT in 6M-2015 declined to less than half (fell by 53.2 per cent) at Rs 255.88 crore as compared to the Rs 547.02 crore in the corresponding period of the previous year.

During 6M-2015, TE was lower at Rs 3635.13 crore as compared to the Rs 3913.13 crore in 6M-2014. The company’s cost of raw materials declined to Rs 1829.30 crore as compared to the Rs 2275.39 crore in 6M-2014.

Nestle’s board of directors at its meeting held on 29 July, 2015 based on the recommendation of the Nomination and Remuneration Committee, appointed Suresh Narayanan as managing director of the company effective from 1 August, 2015, subject to approvals. The company will seek consent of members by means of postal ballot on the proposal of the appointment of Narayanan as managing director. The board of directors has also appointed Abhinav Khosla, a chartered accountant, to act as the scrutinizer for conducting the postal ballot process in a fair and transparent manner.

Latest Reads
Dineout launches FIFA contest for fans

India’s premier table reservation platform, Dineout, has just made the 2018 FIFA World Cup more exciting for football fans in India who couldn’t make it to Russia for the games by presenting the ‘Dineout Predict and Win’ contest.

MAM Marketing Brands
Vivel celebrates freedom of choice in new campaign

ITC’s personal care brand, Vivel, has launched its impactful TVC integrating the brand’s philosophy of ‘Ab Samjhauta Nahin’. Vivel believes that being empowered is about having the freedom to make a choice. A choice to be yourself, the way you think, behave or even dress.

MAM Marketing Brands
Saif and Kareena discover Windsor through Airbnb

As more and more people seek newer and unique experiences and getaways, Airbnb has transformed the way people travel.

MAM Media and Advertising Ad Campaigns
Amitabh Bachchan turns uber cool grandpa for Lloyd smart LED TV

After the tremendous success of the AC campaign this year, Lloyd, a part of Havells India Ltd has launched a new TV commercial for LED TVs featuring Amitabh Bachchan as the uber-cool grandpa.

MAM Media and Advertising Ad Campaigns
Baggit launches new campaign with Shraddha Kapoor

Focusing on gender equality and freedom of expression, bag and accessories brand, Baggit has launched its new brand campaign, #PutItOnTheTable.

MAM Media and Advertising Ad Campaigns
Supari Studios creates campaign for Clinique’s popular product, Moisture Surge

Award-winning agency Supari Studios produced the latest campaign for Clinique for their popular product, ‘Moisture Surge’.

MAM Marketing MAM
Yardley launches new range of floral perfumes

MUMBAI: Yardley, a heritage personal care brand from Wipro Consumer Care and Lighting has launched an array of daily wear perfumes. The Modern Indian Woman, who is a perfect amalgamation of beauty, confidence, and elegance, inspires this contemporary range of Eau De Cologne from The House of...

MAM Marketing Brands
Kotak Mahindra Bank launches campaign with Ranveer Singh for 811 account

MUMBAI: Kotak Mahindra Bank has launched its 811 campaign - #IndiaInvited. The campaign features Bollywood actor Ranveer Singh along with people from all walks of life, across age, gender, profession, religion, physical appearance, including an acid attack survivor, among others.

MAM Media and Advertising Ad Campaigns
Need for condom brands to target the rural audience

MUMBAI: Sex is perhaps the most rampant taboo in India. Despite the economic and technological advancements, sexual discourse in the country is yet to witness a significant evolution. From sex education in school to conversations at home, the country in a sense continues to avoid addressing the...

MAM Marketing Brands

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories