Nestle India proved the biggest gainer in the Sensex early today on the strength of a huge block deal of 4.13 lakh shares.

The scrip of the MNC food processing major went racing up by 6.53% to Rs 581.70 on BSE as a result. It had even touched a 52-week high of Rs 588, early morning. A substantial volume of over 6.89 lakh Nestle India shares were recorded by 10:35 IST.

There's buzz that the block deal that was concluded on the counter took place in two tranches . The deals were for 2.50 lakh shares and 2.63 lakh shares, respectively, and took place at 10:00 IST at a price of Rs 585 per share. But the market is not yet clear as to who the parties to the deal were. Some feel that the company's management, itself, may have been the buying party.

Parent Nestle SA has obtained the Foreign Investment Promotion Board (FIPB)'s nod to hike its stake in Nestle India by 5% to 63% from 58%. In fact, Nestle SA, has substantially hiked its stake in Nestle India in recent years through the creeping acquisition route. The promoter's shareholding currently stands at 58.71% as against 53.98% a year ago.

Recently, the National Stock Exchange (NSE) had decided to withdraw trading in the securities of Nestle India under the 'Permitted to Trade' category with effect from 4 August 2003. NSE said it shall consider listing them as and when the company indicates its interest to list, and upon fulfilling the eligibility criteria for listing.

Nestle India is one of the faster growing FMCG companies in India. It occupies a leading position in the processed foods industry. Its products span coffee, chocolates, milk and baby foods and culinary products. It is a household name for its brands like Nescafe, Kit Kat, Polo, Munch, Milo, Lactogen, Cerelac and Maggi.

The company has also entered the packaged milk and bottled water markets in a big way.The company has even entered the ready-to-drink milk market with its Fruit n Milk in Delhi, Mumbai and Pune.

Around the end of March 2003, the company rolled out the Nestle Development Nutrition Plan for infant weaning and launched its infant food Cerelac 123 as a range of products graded to the needs of infants in each stage of the plan.

In a strategic move, Nestle is currently working with McDonald's India to launch a new range of desserts, beverages and other new products in the current fiscal ended 31 December 2003.

The parent company is yet to decide about the biscuits business in India. Nestle India recently said it has no plans to enter this business as of now. The future growth engines of the company would comprise milk and milk-based products as well as the water business.

The company is also bringing about changes in the strategy for its bottled water business. Nestle's water business suffered losses even when the bottled water category boomed, and hence the company has decided to restructure the business.

It is expected that the restructuring of its water business should arrest the fall in Nestle's beverage business. The company had entered the bottled-water category with the launch of Nestle Pure Life in the first quarter of 2001 in Delhi and adjoining areas. The business did not take off in the wake of stiff competition and distribution challenges. The company changed its positioning twice, switching from the purity plank to the active and health bait.

For the first quarter ended 31 March 2003, Nestle recorded a 22% rise in net profit to Rs 74.70 crore (Rs 61.44 crore) on a 13% increase in net sales to Rs 598.10 crore (Rs 530.01 crore).