Nestle India Ltd. shares experienced a significant decline of nearly 3% on Friday, following the Food Safety and Standards Authority of India (FSSAI)'s initiation of legal proceedings against the company. The action stems from alleged non-compliance concerning three of Nestle India's infant nutrition products.
FSSAI Targets Promotional Claims and Product Standards
The FSSAI's adjudication sanction notice specifically names NAN Excella Pro Stage 1, Lactogen Pro 1, and a follow-up formula as the products under scrutiny. The regulatory body examined promotional materials available on e-commerce platforms and found discrepancies.
- NAN Excella Pro Stage 1: Promotional claims related to "5 HMOs" and "Whey Protein" were observed.
- Lactogen Pro 1: Promotional material reportedly described whey protein as being "easy to digest."
The FSSAI sought clarification from Nestle India regarding these claims. Both NAN Excella Pro Stage 1 and Lactogen Pro 1 were found to be in contravention of Regulation 4(2) of the Food Safety and Standards (Foods for Infant Nutrition) Regulations, 2020. This regulation explicitly restricts promotional claims or materials designed to increase the saleability of infant foods. The notice also referenced Section 3 of the Infant Milk Substitutes, Feeding Bottles and Infant Foods (Regulation of Production, Supply and Distribution) Act, 1992, which imposes restrictions on advertising and promotion for such products.
Sub-standard Biotin Content in Follow-up Formula
In a separate finding, a sample of a follow-up formula manufactured by Nestle India was determined to be sub-standard regarding its biotin content. This was discovered during initial laboratory analysis and confirmed by a Referral Laboratory after re-analysis, indicating a failure to conform to the prescribed biotin requirements under the 2020 regulations.
Market Reaction and Future Proceedings
Following the announcement, Nestle India's stock fell 2.57% to an intraday low of Rs 1,332.80 on the NSE, narrowing its one-year gain to 7.37%. In light of these alleged violations, three separate adjudication cases have been filed against Nestle India Limited for the three products. These proceedings will focus on the marketing practices and nutritional composition of the infant nutrition products, with the adjudication process set to determine the consequences arising from the alleged non-compliances.