Nestle India struggles with Rs 320cr Maggi recall as noodles go up in flames
Nestle India is withdrawing and destroying thousands of tonnes of Maggi noodles worth more than Rs 320 crore as ordered by the Indian food regulator, but there is still quite a distance to go.Updated: Jun 16, 2015 10:42 IST
Nestle India is withdrawing and destroying thousands of tonnes of Maggi noodles worth more than Rs 320 crore as ordered by the Indian food regulator, but there is still quite a distance to go.
The company has brought back 11,483 tonnes of Maggi from 1,400 distributors. This is less than half of the 27,420 tonnes that were available in the market when the recall was announced. In the last five days, since it began burning packets on June 9, a mere 169 tonnes have been destroyed.
"The actual recall of Maggi noodles from the market is an immensely complex and a mammoth activity - the largest in the history of Nestle," Luca Fichera, executive vice-president of the supply chain in India, said in the Haryana town of Hassangarh, some 90-odd km from the national capital.
Food giant Nestle has been battling its worst-ever branding crisis in India since the regulator in Uttar Pradesh found monosodium glutamate (MSG) and excess lead in a sample of its hugely popular noodles.
"The estimated sales value of the stock in the market, including those with our trade partners is around Rs 210 crore. In addition, there were Maggi noodles and related materials in our factories and distribution centres... the estimated value of these is Rs 110 crore," Nestle India told the Bombay Stock Exchange.
The task before Nestle India as ordered by the Food Safety and Standards Authority of India (FSSAI) is enormous. Nestle India said a good part of its Maggi stock was being incinerated at five cement factories across the country into fuel.
About 40% of the 27,420 tonnes are no longer in cartons but on the shelves of retailers or at homes. Sources who did not wish to be named said some of these packets would be impossible to retrieve.
Maggi continues to be available for sale in many small towns and villages. HT visited villages near one of Nestle India's 38 distribution centres, at Hasangarh in Rohtak district.
One shop in the village of Mandora was selling Maggi Masala, though the owner, who refused to be named, claimed he had given back his stock. Only a few packs remained, he said. However, the shop next to his was well stocked.
Nestle has hired the furnaces of some cement manufacturers for the destruction exercise. The packets are crushed with the ingredients inside, and then incinerated. But with the company facing labour shortage at the factories, the process is likely to get stretched.
"The trust of our consumers is extremely important for us and despite the enormity, we are focused on completing this efficiently and as fast as feasible," Fichera added.
"There are 38 distribution centres in India, 1,400 distributors and 3.5 million retailers. We have control over only 1.5 million retailers and outlets. We can track the recall only there," said Fichera.
By Saturday, 5,848 tonnes of Maggi noodles were collected from the market shelves by Nestle distributors and 5,635 tonnes of noodles reached distribution centres from where 169 tonnes of noodles were incinerated so far. The process of incineration has been operational since June 9.
Ashish Pande, the head of supply chain in India, said, "We need to source over 1.4 million cartons to transport all the Maggi packets to our facilities, as they are no longer in cartons but in packets on the shelves. This also involves thousands of trucks and manpower to collect the packets."
The current capacity of destruction is 700 tonnes of Maggi noodles across five incineration facilities. It will take at least 40 days to completely destroy 27,420 tonnes, Pande said.
"This was the most environment friendly solution to destroy the recalled Maggi noodles -- to convert them into fuel," said Fichera.
The regulator had ordered Nestle to withdraw Maggi noodles after food safety concerns.
Nestle since moved the Bombay high court, challenging the order. The court has issued notice to the FSSAI, the regulator, and other respondents and posted the matter for hearing on June 30.
Among other matters, the Swiss multinational firm has urged the court to quash the June 5 order asking the company to withdraw and recall all its nine Maggi variants and the oats noodles from the Indian market.
The company said it halted the production of Maggi noodles in its factories since June 5 and decided to withdraw it from the market. It has continued to maintain: "Maggi is safe for consumption."
(With IANS inputs)
First Published: Jun 16, 2015 05:47 IST