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How Nestle plans to destroy Rs 320-cr Maggi noodles

By Arnab Dutta
June 16, 2015 09:06 IST
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MaggiAt least 10,000 vehicles are being used to bring the recalled products to 38 warehouses from some 3.5 million outlets across the country.

Nestlé India said it would destroy Rs 320 crore (Rs 3.2 billion) worth of Maggi instant noodles, which the Food Safety and Standards Authority of India banned recently after it found the product contained lead and monosodium glutamate beyond permissible limits.

In a filing to stock exchanges on Monday, Nestlé India said Maggi noodles worth Rs 210 crore (Rs 2.1 billion) were being withdrawn from the market and destroyed even as another Rs 110 crore (Rs 1.1 billion) worth of finished and related material stock remained at its factories and distribution centres.

“These are broad estimates because it is impossible to calculate the final figure while the withdrawal is taking place,” said the company, adding: “There will be additional costs to take into account.

“For example, bringing back stock from the market, transporting the stock to destruction points, destruction costs, etc.

“The final figure will be confirmed at a later date.”

About 27,420 tonnes of Maggi noodles, under recall process, will end up in furnaces of cement plants across the country -- a mode that Nestlé India has chosen to destroy the stock.

The company has already 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.

At least 10,000 vehicles are being used to bring the recalled products to 38 warehouses from some 3.5 million outlets across the country.

Apart from the time it would take to recall all available Maggi packets -- some 400 million -- the incineration process will take at least 40 days to complete given the five furnaces are run at their maximum capacity.

Nestlé has arranged 12 additional facilities to store the recalled noodles.

Since 40 per cent of the noodles are already out from their packed curtain boxes, 1.4 million new boxes have been arranged.

Till last Friday, Nestlé India has managed to recall 11,500 tonnes of the product and destroy 169 tonnes by putting them in such furnaces.

“The actual recall process of Maggi noodles from the market is an immensely complex process and a mammoth activity, the largest in the history of Nestle,” said Luca Fichera, executive vice-president (supply chain) at Nestlé.

While Nestlé stopped supplying Maggi to its distributors and retailers immediately after it withdrew the product on June 5, according to Fichera, the ‘more complicated’ part of the process is to bring back the products from its 50,000 channel partners and customers.

Adding to its woes, India having a less organised distribution system, Nestlé, like others, has less than half of the outlets under its direct control.

While it supplies products to 1.5 million retailers, the rest are serviced by wholesalers, small distributors and, at times, big retailers -- most of whom do not source Maggi noodles directly from Nestlé or its distributors.

“This makes the process even more complicated,” Fichera noted.

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Arnab Dutta in Hassangarh (Haryana)
Source: source

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