Nestle India Ltd. slid to the lowest in a month after a complaint was filed in a local court over lead levels in its Maggi instant noodles.
A court in Uttar Pradesh state sent a notice to Nestle and a trial is due from July 1 after tests found high lead levels in some noodle samples, said V.K. Pandey, an official at the state’s Food Safety and Drug Administration. The stock closed down 1.2 percent at 6,670.20 rupees in Mumbai, after earlier declining as much as 3.3 percent.
Nestle, one of India’s biggest processed food makers, said in a statement Monday that it’s fully cooperating with local authorities. Tests initiated by Nestle on batches representing about 125 million packets of noodles showed lead levels to be “well within” allowed limits, the company also said.
Pandey said two rounds of testing -- first in an Uttar Pradesh state laboratory and then at the Central Food Laboratory in Kolkata -- found high levels of lead in samples collected from Barabanki district.
Any erosion of consumer trust could be “significant” for Nestle India, which gets about 15 percent to 20 percent of Indian revenue from instant noodles, Nitin Mathur, a consumer research analyst at Societe Generale SA, wrote in an e-mail.
Maggi noodles are a mainstay in northern India, featuring routinely on menus in restaurants and food stalls.
The Food Safety and Standards Authority of India expects to receive later today the results from tests on some Maggi samples, Food and Consumer Affairs Minister Ram Vilas Paswan said in New Delhi. Class-action lawsuits in the event of safety violations are possible, he said. Nestle India said it’s sharing its own test results with the authorities.
The company’s shares have gained 4.5 percent this year, compared with the 1.3 percent advance in the S&P BSE Sensex Index. Nestle India trades at about 40 times projected 12-month earnings, higher than the S&P BSE Fast-Moving Consumer Goods Index’s multiple of 32.