Maggi Controversy: Nestle in Damage Control, Shares Recover

Nestle shares staged a sharp recovery on Friday after falling by as much as 5 per cent in morning deals. The company's global CEO held a press conference to address concerns around Maggi noodles, which has been under country-wide scrutiny for high lead content and mono-sodium glutamate or MSG, a taste enhancer.

"Maggi noodles are safe for consumption... We follow the same quality standards, safety procedures everyone in the world," said Paul Bulcke, CEO of Nestle Worldwide.

On Thursday, Nestle had decided to take Maggi noodles off the shelves temporarily. It said in a statement, "Recent developments and unfounded concerns about the product have led to an environment of confusion for the consumer, to such an extent that we have decided to withdraw the product off the shelves, despite the product being safe."

Maggi noodles contribute over 20 per cent to Nestle's revenue and nearly 30 per cent to its bottom line. The controversy around Maggi noodles resulted in a sharp selloff in Nestle shares. In the previous five sessions, Nestle shares have fallen around 15 per cent, resulting in nearly Rs 10,000 crore fall in the company's market capitalistion.

On Friday, the stock ended on a flat note, down 0.2 per cent at Rs 5,997.10 on the BSE.

Market analyst Ambareesh Baliga told NDTV that long-term investors can take a look at Nestle. "The sock is in downtrend and can fall 10-12 per cent from here, but India is a huge market for Nestle... I think Nestle will come back with a solution," he said.

Lancelot D'Cunha, CEO of ITI Wealth Management said it is difficult to time the bottom of Nestle, but one can look at buying the stock at different levels. It's a stock that needs to be held for 2-4 years, he added.