Nestlé India Receives SEBI Warning
• Regulator Flags Insider Trading Violation
Unmesh Gujarathi
Sprouts News Exclusive
Nestlé India, the Indian subsidiary of the Swiss multinational food giant, has come under regulatory scrutiny after the Securities and Exchange Board of India (SEBI) issued an administrative warning over violations of insider trading norms. The market regulator found that a designated person within the company had engaged in a “contra trade,” an activity strictly prohibited under insider trading laws.
• What is a “Contra Trade”?
A “contra trade” refers to the buying and selling of shares within six months of a previous transaction in the same security. Under SEBI regulations, insiders and their immediate relatives are prohibited from executing such trades to prevent the misuse of unpublished price-sensitive information (UPSI). The restriction is intended to uphold transparency and fairness in the stock market. (Source: Sprouts Newspaper)
According to Nestlé India’s stock exchange filing, its Compliance Officer received SEBI’s administrative warning on March 6, 2025. While the company has not disclosed the name of the individual involved, it has assured that the issue has had no material impact on its business operations, financials, or future outlook.
• Market Reaction and Financial Performance
Despite SEBI’s warning, Nestlé India’s stock showed resilience in the market. On Friday, the stock rose over 2% to ₹2,245.80 on the Bombay Stock Exchange (BSE) before undergoing a minor correction. Analysts suggest that investor confidence remains strong due to the company’s steady financial growth and brand strength.
In its latest financial results, Nestlé India posted a 5% rise in consolidated net profit, reaching ₹688 crore in Q3 FY25, compared to ₹655 crore in the same quarter last year. The company credited this growth to higher sales of its powdered and liquid beverage segment, particularly Nescafé. Total revenue from operations for the quarter stood at ₹4,779 crore, reflecting a 4% increase from ₹4,600 crore in the corresponding quarter of the previous year. (Source: Sprouts Newspaper)
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• Nestlé India’s Past Controversies
This is not the first time Nestlé India has found itself in the spotlight for regulatory violations. The company has faced several high-profile controversies over the years, raising questions about its compliance and corporate governance practices.
1. Maggi Noodles Ban (2015)
One of the most infamous scandals in Nestlé India’s history was the 2015 Maggi noodles controversy when the Food Safety and Standards Authority of India (FSSAI) banned the product due to allegedly high levels of lead and misleading labeling related to MSG (monosodium glutamate). The ban led to huge financial losses, brand damage, and product recalls across the country. Nestlé India eventually cleared safety tests and relaunched Maggi, but the incident severely dented consumer trust.
2. Infant Formula Marketing Violations
Nestlé has also faced criticism for allegedly violating the International Code of Marketing of Breast-Milk Substitutes. Various reports have accused the company of aggressively promoting infant formula in ways that discourage breastfeeding, a practice that has drawn backlash from global health organizations.
3. Water Exploitation Concerns
Globally, Nestlé has been accused of excessive water extraction for its bottled water business, which has sparked environmental and ethical concerns. In India, activists have raised concerns about Nestlé’s water sourcing practices and their impact on local communities, particularly in drought-prone regions.
• Final Takeaway: A Wake-Up Call for Nestlé India?
While SEBI’s warning does not impose financial penalties, it serves as a red flag for Nestlé India’s governance policies. The company must ensure stricter compliance mechanisms to prevent any future regulatory lapses that could damage its reputation and investor confidence.
With increasing scrutiny from regulators and consumers, Nestlé India must uphold ethical business practices and prioritize transparency to maintain its market leadership in India’s FMCG sector.