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Cost of destroying Maggi packets? Rs 20 crore only!

By Rediff Business Desk
Last updated on: July 07, 2015 13:38 IST
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Ambuja Cements will be burning the recalled packets of Maggi noodles at its cement plant in Chandrapur in Maharashtra.

MaggiThere seems to be no end to the woes of Nestle India.

After being forced to withdraw Maggi instant noodles from the market when food regulators raised alarm about the product being unsafe for consumption, Nestle India has coughed up a whopping Rs 20 crore (Rs 200 million) to Ambuja Cements for destroying it.

According to reports, at least 10,000 vehicles were used to bring the recalled products to 38 warehouses from 3.5 million outlets across the country.

Ambuja Cements will be burning the recalled packets of Maggi noodles at its cement plant in Chandrapur in Maharashtra.

Nestle India has tied up with five cement manufacturing units, where Maggi packets will be crushed and mixed, to be used as fuel to produce raw material for cement, media reports said.

"Gujarat Ambuja Cements is. . . helping us to destroy the Maggi noodles being withdrawn by us from the market", a Nestle India spokesperson told PTI.

While the spokesperson did not confirm the cost involved in burning Maggi at Ambuja Cements plant, he said: "In addition to the value of stocks being destroyed there will be additional costs to take into account, for example bringing back stock from the market, transporting the stock to the destruction points and destruction cost etc."

Nestle India said that these and other costs associated with the withdrawal will be dealt with in line with the applicable accounting standards at the time of announcing the financial results on the due dates.

Nestle India had to recall Maggi instant noodles worth Rs 320 crore (Rs 3.2 billion) after it was banned by Food Safety and Standards Authority of India because of presence of lead and taste enhancer monosodium glutamate beyond permissible limits.

According to industry estimates, instant noodles sales in India in the past one month have crashed by over 90 per cent to just about Rs 30 crore (Rs 300 million) from Rs 350 crore (Rs 3.5 billion) a month earlier.

Bombay High Court refused to grant relief to Nestle India by rejecting its plea for stay of the impugned orders of the food regulator.

The company, however, got some reprieve when the court allowed it to export Maggi noodles.

Interestingly, UK's food regulator Food Standards Agency recently gave a clean chit to Nestle for Maggi manufactured in India saying levels of lead in the product are well within the EU permissible levels.

Canada too found Maggi noodles, imported from India, to be safe for human consumption.

Canadian Food Inspection Agency issued a statement announcing its findings on the India-made instant noodles.

MG (Ambi) Parameswaran, executive director of FCB Ulka Advertising, felt India over-reacted to the issue and have destroyed a brand Maggi without conclusive evidence.

In a candid interview to rediff.com, Parameswaran explained why he thought the Maggi controversy was blown out of proportion.

"Is there a single evidence of anyone falling sick after consuming Maggi," he asked, adding, "It is unfair to ban any product without arriving at any conclusive evidence".

As Nestle struggles to tide over the huge financial crisis caused by the Maggi recall, the company's managing director Etienne Benet recently sang a note of optimism when he said, "We are determined to resolve the Maggi noodles issue in the best possible way."

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