Maggi crisis to capex boom: Narayanan's decade at Nestlé India

Mint

2 days ago

New Delhi: Packaged foods maker Nestlé India Ltd.'s capital expenditure has surged nearly fivefold as a percentage of its sales in the past decade, driven by greater demand for its products and its ability to manufacture more in India, according to its outgoing chairman and managing director Suresh Narayanan.
Nestlé India's capex has risen from 1.8% of sales in 2015 to 10% of sales in the financial year ended March 2025, Narayanan said in the company's annual report released Tuesday. In fiscal 2025, the maker of Maggi noodles and KitKat chocolate reported a total income of ₹ 20,260.42 crore.
'As a consequence of robust growth, your company is investing in new capabilities and capacities, by increasing product lines in existing factories and setting up the Sanand factory in Gujarat, for confectionery and prepared dishes and cooking aids,' said Narayanan, who is set to retire on 31 July. 'On the anvil is the 10th citadel of manufacturing that is coming up in Odisha. This not only demonstrates the focus on Indian consumers but also our commitment to manufacture in India and 'Make in India' as a theme.'
Narayanan joined Nestlé India as managing director in August 2015 following the company's Maggi crisis, when the brand disappeared from supermarket shelves overnight after allegations of high levels of monosodium glutamate (MSG). The company, which denied adding MSG, had to recall the noodles.
'It was a decade that brought both opportunities and challenges. Times that were unpredictable, yet promising,' he said in his note to shareholders in the annual report. 'Together, we navigated the black swans and gray rhinos. And seized the rising India opportunity. In the unpredictable dance of light and shadow, true resilience was forged.'
Narayanan said his first 100 days as chairman and MD were among the most challenging of his career as he confronted the "daunting" Maggi crisis.
'Maggi noodles went from market leadership to near extinction and recovered 60% of its market share within months of its relaunch. At that time, a young brand manager suggested, 'why don't we relaunch Maggi online?' I asked about the risk of failure. After a quick assessment, we relaunched Maggi online and the rest is history—60,000 boxes were sold in less than 5 minutes on Snapdeal,' he said.
India is the largest Maggi market globally.
A decade ago, the company was also highly reliant on its Maggi portfolio.
"Since then, we recalibrated and rejuvenated the portfolio, launching over 150 new products that have contributed to 7% of sales," he added.
Nestle sells products such as chocolates, milk, ketchup, cooking aids, nutrition products for infants, cereals, curd, noodles, coffee and pet food in India. It has been tapping more premium consumption opportunities.
Last year, it partnered Dr. Reddy's Laboratories Ltd, investing ₹ 705.6 via a joint venture to sell wellness and nutrition products in India. More recently, it has expanded its coffee and confectionery business in India. The country is also the second-largest KitKat market globally. It also opened its maiden Nespresso coffee boutique in India this year.
'We were once seen as an urban company with a limited portfolio, but through a penetration-led volume growth strategy rolled out in 2015, we now have access to more households and more consumption occasions…Our pace of innovation is now four times faster than it was a decade ago,' he said.
In 2023, the packaged foods maker had said it would invest ₹ 4,200 crore by 2025 to expand the manufacturing capacity of its noodles, coffee and chocolates portfolio.
This includes roughly ₹ 900 crore of investment in an upcoming factory in Odisha to manufacture prepared dishes and cooking aids.
Nestlé India set up its first manufacturing facility at Moga (Punjab) in 1961. Its ninth facility came up in Sanand (Gujarat) in 2021. Nestle competes with ITC Ltd and Britannia Industries Ltd in India.
"We have added 1.3 million more retail outlets since 2016, with the highest gains amongst peers in 2024,' Narayanan said. 'The RUrban strategy began in 2019 and has increased RUrban distribution touch-points to 28,240. Today, we are present in approximately 209,050 villages.'
Manish Tiwary is set to take over as managing director, succeeding Narayanan, on 1 August.