Key Points
SEBI flags insider trading breach by designated Nestle India employee
Company reports 5% net profit increase in Q3 FY25
Contra trade involves trading within six months of previous transaction
Regulatory warning highlights compliance challenges
The warning, issued by the SEBI's Deputy General Manager, was sent to the company's Compliance Officer (CCO).
Nestle India disclosed in a stock exchange filing that it received the SEBI's letter on March 6, 2025.
The violation was committed by a designated person within the company. However, the coffee and tea manufacturer clarified that this issue does not have any material impact on its financial, operational, or other business activities.
According to the 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SEBI regulations strictly prohibit such trades for insiders and their immediate relatives to prevent the misuse of unpublished price-sensitive information.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 giving up some gains.
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, a subsidiary of Swiss multinational Nestle S.A., 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.
