Nestle India shares slip nearly 3% after FSSAI initiates legal action over infant nutrition products

Shares of Nestle India came under pressure on Friday, September 18, falling nearly 3% during intraday trading after the Food Safety and Standards Authority of India (FSSAI) initiated legal action against the fast-moving consumer goods (FMCG) company over alleged non-compliance involving its NAN Excella Pro Stage 1 and Lactogen Pro 1 infant nutrition products.

The packaged foods supplier’s shares declined 2.75% to hit an intraday low of Rs 1,332.80 apiece on the NSE. Nestle India shares have declined 14.17% from their 52-week high of Rs 1,553 apiece, touched on August 7.

At 1:32 PM on Friday, Nestle India shares were trading at Rs 1,338.20 apiece on the NSE, down 2.35% from the previous close of Rs 1,370.60. At the same time, the benchmark NSE Nifty 50 was quoted at 23,327.70, up 57 points, or 0.25%.


So far this year, the counter has posted marginal gains of 3%, in contrast to the NSE Nifty 500, which has declined by more than 10%, according to exchange data.

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FSSAI action against Nestle India

FSSAI said it examined the products and their promotional material available on e-commerce platforms. In the case of NAN Excella Pro Stage 1, the regulator flagged claims relating to “5 HMOs” and “Whey Protein”. For Lactogen Pro 1, it raised concerns over a claim that the product’s “Whey Protein” was easy to digest, as per the reports.

According to FSSAI, both products were found to be in contravention of Regulation 4(2) of the Food Safety and Standards (Foods for Infant Nutrition) Regulations, 2020. The provision restricts promotional claims and material intended to increase the saleability of infant foods.

The regulator also cited Section 3 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, which prohibits their advertisement and promotion.

FSSAI said it had sought clarifications from Nestle India regarding the claims.

Separately, a sample of a follow-up formula manufactured by Nestle India was found to be sub-standard for its biotin content during laboratory analysis.

The sample was sent for re-analysis, but the referral laboratory also found it non-conforming with the prescribed biotin requirement under the 2020 regulations.

In view of the alleged violations, FSSAI said three separate adjudication cases have been filed against Nestle India in relation to the products. The action covers both promotional claims and the laboratory finding concerning biotin content.

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About Nestle India

Nestle India is a subsidiary of NESTLÉ S.A. of Switzerland. With nine manufacturing facilities, a large number of co-packers, and a strong distribution network, Nestlé India provides consumers in India with products of global standards and is committed to long-term sustainable growth and shareholder satisfaction.

The FMCG player had a market capitalisation of Rs 2,57,796 crore on the NSE as of September 18.

This article has been written by Kumar Gaurav, who is not a SEBI-registered Research Analyst or an Investment Adviser. Gaurav and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.