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Wednesday, December 07 2022
Business

Cabinet nod for new consumer protection bill; Nestle suffers 64 crore loss

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New Delhi: The Maggi controversy is likely to spell the doom of Food processing companies and begin a new era for consumenrs. The cabinet today approved a new consumer protection bill – The Consumer Protection Bill, 2015, which seeks to replace the Consumer Protection Act, 1986, and covers all kinds of firms including e-tailers, is likely to be introduced in the ongoing session of Parliament, sources said.

NestleThe bill insteretingly proposes a life term for certain violations and an authority to recall products and initiate class-action suits.The bill also proposes a Central Consumer Protection Authority. “The authority will intervene to prevent unfair trade practices and initiate class-action (cases) including enforcing recall, refund and return of products,” a source said.

The case for new law emnates from growing concern over safety of consumer products and services, especially after the Maggi row, and misleading ads by tele-marketing, multi-level marketing, direct selling and e-tailing firms.
 
The bill also has liability provisions “if products/services cause personal injury, death or property damage, besides “mediation” clauses for speedy disposal of consumer court cases. The bill provides for stringent penalties, including life imprisonment in certain cases, sources added. The 1986 act was amended thrice, in 1991, 1993 and 2002.

The new bill seeks to simplify dispute resolution in consumer courts, including a proposal to set up a “circuit bench” to facilitate quicker disposal of complaints.

Under the planned law, consumers will be able to file complaints electronically and take grievances to consumer courts that have jurisdictions over their place of residence. Consumers now have to often approach courts where the firms are based or where the purchases were made.

In another move to cut delays, the bill says complaints will be deemed admitted if their admissibility is not decided within 21 days. “The new bill is expected to enhance quality and safety of products and services,” the source said.

Nestle India is in a Maggi Soup, reports Rs 64 crore loss

Meanwhile Nestle India on Wednesday reported a loss during the April-June quarter as sales took a hit after its popular Maggi noodles were withdrawn from the market over safety concerns.
 
The company reported a net loss of Rs 64.4 crore in its second quarter compared with a net profit of Rs 288 crore a year ago. Total income from operations fell close to 20% year-on-year to Rs 1,957 crore during the quarter. “Results for the quarter have been impacted by the Maggi noodle issue,” Nestle India said.In the quarter under review, net sales worth Rs 288 crore were reversed in relation to the Maggi noodles stock being withdrawn from trade partners and market, the company said.

Nestle India said it booked an exceptional charge of Rs 451.7 crore in the quarter “relating to estimates of loss on account of stocks withdrawn, including incidental costs thereto and other related costs incurred exclusively in the ordinary course of the business”.

Nestle has been at the centre of the country’s worst food scare in a decade after food regulators in various states reported that Maggi noddle packs contained high levels of lead and MSG (monosodium glutamate). While the company subsequently removed the entire stock from the markets, it maintains that the products are safe.

Overseas sales too fell close to 13% due to lower coffee exports to Russia, Nestle India said.

“Nestle India is making all efforts and will continue to engage with authorities to bring Maggi noodles back on the shelves,” Suresh Narayanan, due to take over as the company’s India MD in August, said.

Nestle India shares closed down 0.6% on the BSE on Wednesday.

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