Nestle India faces SEBI warning for insider trading norms violation by senior official

FMCG major Nestle India has received a warning from SEBI over violations of insider trading norms by a senior official of the company on Friday, March 7.

“The Compliance Officer of the Company has received an administrative warning letter from the Deputy General Manager of SEBI for violation of SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’) by a designated person of the Company,” the company said in a stock filing on Friday, March 7.

Nestle has not yet revealed the identity of the senior official.

In a statement, a Nestle India spokesperson said the SEBI order would have no impact on the company.

“We would like to categorically assert that this information has no impact on the financial and operational capabilities of the company. The information has been provided in accordance with Regulation 30 of SEBI Listing Regulations.”

Insider trading norms

The SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) prohibits insider trading in India. They aim to prevent people directly associated with the company from trading in securities based on unpublished price-sensitive information.

Insider trading, an illegal practice in the stock market is the process of buying or selling stocks or other securities on the basis of non-public information about a company.

Section 11(2) E of the Companies Act, 1956 prohibits insider trading for the following reasons due to reasons such as providing equal opportunities to every participant in the market, ensuring fairness and transparency in all transactions, enable the free flow of information among all stakeholders.

Nestle India Q3 results

On January 31, Nestle India released its December quarter earnings and reported a 5% increase in net profit, reaching ₹688 crore. The total revenue from operations for the quarter was ₹4,779 crore, marking a 4% growth compared to ₹4,600 crore in the same quarter the previous year, as Mint reported on January 31.

The company reported volume growth of 3%. The revenue from domestic sales stood at ₹4,566 crore, which constitutes 95% of its total revenue. In terms of operations, EBITDA stood at ₹1,103 crore, compared to ₹1,095 crore in Q3FY24, whereas margins stood at 23%.