Nestle’s Latest Headache, Moody’s Latest Warning And Other News from India

Nestle problems are far from over. The Indian government has now sued the food maker for misleading advertising and labelling. It is seeking damages of $100 million in what it says is a class action suit. The main contention of the government was the claim by Nestle that the product contained no MSG, which was disproved by tests and of course its tag line – “Taste bhi, health bhi” which suggested that it was a healthy food alternative. The move is sure to send other food companies fleeing for cover now.

Rating agency Moody’s has sounded the alarm bell on India’s monsoon. Rains this year have been erratic and the country may well escape drought, but it still highlights India’s vulnerability to rains and could affect ratings, it said. The solution, according to Moody’s, is more government effort in improving food distribution, agricultural infrastructure and non-farm jobs. This year, after two-thirds of the season, India is facing a 9 percent rain deficit. That isn’t too bad, but the fact that it is the second year of weak rains is a cause for concern. You’ll find the full report here.

The limbo over the GST bill continued as the opposition Congress party disrupted proceedings for a 16th day, with just two more days to go in the current session. The Congress party is clearly risking political isolation as its other allies have signaled their agreement to pass the law in the diluted form. The bill stands a chance of being approved in this session only if the Rajya Sabha passes it today and the Lok Sabha tomorrow. Only then can the government’s machinery swing into action to begin implementation and to meet the April 2016 deadline.

“This vulnerability to drought is a sovereign credit constraint because when it occurs, the economic effect of drought is material, and the uncertainty around it recurs annually.” - Moody's Investor Service.

The Indian diplomacy machine has moved in Adani’s favour as the high commissioner in Australia has spoken to the Australian trade minister about the recent court decision to ban the project for environmental reasons.

Ola faced a setback in Delhi after a court rejected its appeal to revoke a ban on its operations in the capital. Ola needs to secure a license under the current rules to offers its services, the court said.

Following at least two terror incidents in the last few weeks, Defence minister Manohar Parrikar has imposed a gag order on all ministry officials.

State Bank of India reported tepid quarterly results, which show that the economic recovery still has a long way to go.

Sun Pharma also reported weak results as the problems with Ranbaxy caught up with it. Well, we can’t say we weren’t warned.

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