The Center for Science and Environment (CSE) on Monday, in a report, suggested presence of potassium bromate, a carcinogen, in most Indian bakery products.
CSE also said that fast food outlets are selling products of breads laced with toxins like potassium bromate and potassium lodate. CSE’s study is limited to Delhi so far.
Following the report, Food Safety & Standard Authority of India (FSSAI) has decided to remove potassium bromate as a matter of abundant caution.
FSSAI told CNBC-TV18 that it has removed cancer-causing substance, potassium bromate from list of permitted additives. However, the regulatory body is yet to issue a formal notification for it. Use of another toxin called potassium iodate has also been restricted.
As per 2011 regulations, use of 11,500 additives is allowed by FSSAI that includes both potassium bromate and potassium iomate. The body has ordered an inquiry into the matter and has said that industries will be given time to comply.
However, reacting to the news, food stocks like Britannia and Jubilant Foodworks are down 2 percent and 9 percent respectively in trade today. Most of the fast food chains except Dominos have denied using these toxins.
Abneesh Roy of Edelweiss Securities told CNBC-TV18 that the news is more of a sentiment dampener and that CSE test findings need to be seen before taking a call on the matter.
The impact of the study will be industry-specific and any cost from it is likely to be passed onto customers by companies, Roy said.
While Roy has a hold call on Jubilant, he prefers Britannia over it. Recovery in same store growth for Jubilant will take another two to four quarters as the growing consumer options and food start-ups are weighing on the growth.
On Britannia, he says that while slowdown in rural economy will keep numbers mutes, 10 percent sales in biscuits are doable for the company. He has a price target of Rs 3,065 for the company.
Inputs from CNBC-TV18