Published On : Tue, Jun 9th, 2015

Magi row becomes nightmare for Traders

Nagpur: The Maggi row has proved to be a nightmare for the wholesalers and retailers since large amount of capital of supply chain is blocked due to recalling back of stocks of Maggi in different States. Taking a serious cognizance of the matter, the Confederation of All India Traders (CAIT) has urged Union Health Minister J P Nadda to direct the Authority to issue instructions to Nestle for making immediate payments of the recalled stocks to Distributors and Sub-Stockists instead of any Credit Notes. Punishment to supply chain for the lapse of Nestle is against the principle of natural justice-added CAIT.

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Maggi owner Nestle has about 4000 Distributors and Sub Stockists in the Country and stocks of about Rs100 crores is said to be in the Indian market which needs to be recalled by Nestle under the directions of Food Safety & Standards Authority of India. All such stocks are paid up stocks as Distributors and Sub-Stockists have already paid value of the stocks to Nestle. Big Companies usually take payment of supplies made to their respective Distributors in advance. It is learnt that Nestle has asked its Distributors and Sub-Stockists to return back Maggi in 15 days time and then Nestle will perhaps issue Credit Note in 30 days for the stocks recalled.

In this procedure, the working capital of Distributors and Sub-Stockists is blocked for nearly two months. In all probabilities, Nestle will give other products in lieu of recalled stocks to settle the claims. Therefore, because of lapse of Nestle, the supply chain is feeling the heat. In all this, episode, the actual looser is traders and not any one.

CAIT National President B C Bhartia and Secretary General Praveen Khandelwal said that small retailers across the Country are in great soup. First ten days of every month are ‘peak sales period” for retailers since more than 50 percent goods are sold during these days and thus retailers generally procure stocks in last week of every preceding month.  The Maggi row came at a time when there were ample stocks in the market.

The trade leaders said that Nestle should reimburse the supply chain immediately and till such time as long as stocks come from retail market.