New Delhi: Swiss food maker Nestlé SA’s Indian unit has moved a step closer to relaunching Maggi noodles in the market after three laboratories mandated by the Bombay high court to test samples of the popular snack vouched for its safety.

Nestlé India Ltd’s shares surged on the news on Friday, gaining 6.06% to 6,580.10 at the close of trading on BSE on a day the benchmark Sensex gained 204.46 points, or 0.76%, to 27,214.60.

“We have received test results from all three laboratories mandated by the Bombay high court to test Maggi noodles samples. All the 90 samples, covering six variants, tested by these laboratories are clear with lead much below the permissible limits," the company said in a statement.

Nestlé did not specify a timeline for Maggi’s comeback, saying: “We are committed to reintroduce our beloved Maggi noodles at the earliest."

Fresh batches of Maggi noodles will have to undergo tests as well to comply with the order of the Bombay high court. Nestlé India, in a statement, said the company will start selling the instant noodles “only after the newly manufactured products are also cleared by the designated three laboratories".

The Bombay high court, on 13 August, set aside a ban imposed by food regulator Food Safety and Standards Authority of India (FSSAI) on Maggi noodles and asked Nestlé to retest samples at three laboratories certified by the National Accreditation Board for Testing and Calibration Laboratories.

Nestlé had moved the high court following an FSSAI order on 5 June asking it to immediately withdraw all nine variants of Maggi noodles from the market, calling them “unsafe and hazardous" for human consumption, citing excess lead content and traces of monosodium glutamate.

“Nestlé India has always maintained that Maggi noodles are safe. It has conducted over 3,500 tests representing over 200 million packs in both national as well as international accredited laboratories and all reports are clear. In addition to these, various countries including the US, the UK, Singapore and Australia have found Maggi noodles manufactured in India safe for consumption," the company said on Friday.

Nestlé India also said that it will continue to collaborate with FSSAI and other stakeholders.

FSSAI chairman Ashish Bahuguna could not be reached for comment on Friday.

Last month, Nestlé India’s new managing director Suresh Narayanan, appointed after the Maggi controversy broke, indicated that the company hopes to bring Maggi noodles back to the shop shelves by the end of this year.

Analysts said Maggi’s return may take more time. Nestlé will still have to get permissions from the authorities, which may include FSSAI, to relaunch Maggi noodles, said Daljeet Singh Kohli, head of research at IndiaNivesh. “This may take a little longer," he said.

Nestlé India, had, for the first time in 15 years, reported a 64.4 crore loss for the quarter ended 30 June in the aftermath of the ban on Maggi noodles. During the quarter, it took a one-time charge of 451.6 crore related to the recall and destruction of Maggi noodles from the Indian market.

In a research note on 6 October, Abneesh Roy, associate director (institutional equity research) at Edelweiss Securities Ltd, said Nestlé India’s domestic sales growth for the September quarter was expected to dip by 19% year-on-year.

The announcement that the samples of Maggi had been cleared by the three labs came on a day Nestlé India’s Swiss parent said it will fall short of its long-term growth target for a third consecutive year amid weakness in China, highlighting the volatile conditions in emerging markets that continue to weigh on European consumer-product companies and retailers alike.

Sales will probably rise about 4.5% on an organic basis in 2015, the Vevey, Switzerland-based maker of Nespresso coffee said on Friday, abandoning a previous forecast of about 5%. Nine-month revenue advanced 4.2%, missing analysts’ estimates, as the recall of Maggi noodles in India also eroded sales in Asia.

The stock made its steepest intraday decline in almost two months.

Nestlé chief executive officer Paul Bulcke said he would be “the last to lower our ambitions" after analysts questioned whether the company should reduce its long-term average goal of annual sales growth of 5-6%. The KitKat maker’s performance is in contrast to Unilever, the producer of Ben & Jerry’s ice cream, which said on Thursday that full-year sales growth will be near the top end of its forecast.

“This is a real disappointment and questions around the Nestlé model of 5% to 6% organic growth will only increase," wrote Warren Ackerman, an analyst at Societe Generale.

Bloomberg contributed to this story.

Close