Nestle India said on Friday that it received a warning from the country's markets regulator for a breach of insider trading regulations "by a designated person of the company".
The Indian arm of Swiss food giant Nestle said its compliance officer received an administrative warning letter from the Securities and Exchange Board of India (SEBI) on Thursday. But the firm stopped short of revealing the findings of the letter or the details of the person.
According to SEBI, the violation involved a "contra trade". This happens when an insider buys or sells shares within six months of a previous transaction in the same security, aiming for short-term profits. SEBI regulations strictly prohibit such trades for insiders and their immediate relatives to prevent the misuse of unpublished price-sensitive information. The six-month restriction period is counted from the date of the initial transaction.
Despite the warning, Nestle India’s stock performed well in the market. On Friday, the stock rose over 2 per cent to Rs 2,245.80 on the Bombay Stock Exchange (BSE) before closing at Rs 2237.30, 1.6 per cent higher from the previous close of Rs 2,201.65. The violation was committed by a designated person within the company. However, the 'Maggi' maker clarified that this issue does not have any material impact on its financial, operational, or other business activities.
Meanwhile, the FMCG company posted a 5 per cent increase in its consolidated net profit, at Rs 688 crore, in Q3 of the current financial year (FY25), as compared to Rs 655 crore in the same period of the last fiscal (Q3 FY24). According to its exchange filing on January 31, the key reason behind the profit was higher sales of its powdered and liquid beverages, including the popular Nescafe coffee brand.
Its total revenue from operations for the quarter reached Rs 4,779 crore, marking a 4 per cent increase from Rs 4,600 crore in the corresponding quarter of last year (Q3 FY24). Nestle India is known for its popular brands such as Nescafe, Maggi, and KitKat. The company manufactures and markets a wide range of food and beverage products.