Nestle India shares tank 3% as FSSAI initiates legal action over infant products

In a kneejerk reaction, shares of Nestle India Ltd fell nearly 3 per cent in Friday's trade after the Food Safety and Standards Authority of India initiated legal action against the company over alleged non-compliance involving three infant nutrition products.

Following the development, the stock fell 2.57 per cent to an intraday low of Rs 1,332.80 on the NSE. With this, its one-year gain narrowed to 7.37 per cent. The action, according to an adjudication sanction notice, relates to NAN Excella Pro Stage 1, Lactogen Pro 1 and a follow-up formula manufactured by Nestle India.

As part of its proceedings, FSSAI examined the infant nutrition products and promotional material available on e-commerce platforms. The notice said promotional claims relating to "5 HMOs" and "Whey Protein" were observed in connection with NAN Excella Pro Stage 1.

In the case of Lactogen Pro 1, the promotional material reportedly described whey protein as being easy to digest. FSSAI subsequently sought clarification from Nestle India on these claims.

The authority said 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 regulation restricts promotional claims or material intended to increase the saleability of infant foods.

The notice also referred to Section 3 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, which places restrictions on the advertisement and promotion of such products.

Separately, a sample of a follow-up formula manufactured by Nestle India was found to be sub-standard in relation to its biotin content during laboratory analysis. The sample was then referred for re-analysis, and the Referral Laboratory also found that it did not conform to the prescribed biotin requirement under the 2020 regulations.

In view of the alleged violations, the notice said three separate adjudication cases had been filed against Nestle India Limited in relation to the three products. The proceedings centre on the marketing of infant nutrition products and their nutritional composition, with the adjudication process set to determine the consequences arising from the alleged non-compliances.