Nestle India Jumps as Tests Show Lead in Maggi Within Limits

  • 90 samples of Maggi noodles tested by labs mandated by court
  • Nestle to resume sales of Maggi after new products cleared

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Nestle SA’s India unit rose the most in more than two months after the company said it will resume sale of its Maggi noodles following laboratory tests that showed lead in its products were within approved limits.

Shares of Nestle India Ltd. rose 5.6 percent to 6,555 rupees in Mumbai, the biggest gain since Aug. 5. The shares had plunged after an order by the Indian food safety regulator in June to recall the popular snack resulted in the company’s first ever quarterly loss in more than 15 years.

“This is definitely a big positive for the company as Maggi made around 20-25 percent of their revenue,” Nirvi Ashar, an analyst at Mumbai-based KR Choksey Shares & Securities Pvt, said in a telephone interview today. “The noodles will probably be on the shelves in 2016.”

Tests by India’s top food regulator showing unsafe amounts of lead in the noodles led to the product being pulled off shelves and bans in multiple states. Following Nestle’s legal challenge, the Bombay High Court in August overturned the ban imposed by the regulator and allowed the resumption of sales if additional tests were found acceptable.

The noodles were found safe in 90 samples covering 6 variants by 3 laboratories that were mandated by the court, the company said in Friday’s statement. The sale of the noodles will resume after newly manufactured products are cleared by the three laboratories, the company said.

India’s recall of Maggi noodles wiped about 0.3 percentage points off Nestle SA’s nine-month sales growth, Chief Financial Officer Francois-Xavier Roger said at a press conference Friday. The company is working on reintroducing the products after being off the shelves for six months, he said.

(A previous version of this story corrected the name of the noodles brand in the headline.)

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