Shares of Vadilal Industries surged nearly 5% in early trade on April 1 after the company’s promoter family reached a settlement to resolve internal disputes and restructure the board. The settlement, finalized on March 30, aims to separate ownership from management, appoint independent professionals to run the business, and ensure equal participation among all family branches to maximize shareholder value.
The Gandhi family, which has led Vadilal Industries for four generations, had differing interests and visions for the company’s strategic direction, growth, and governance, according to a company statement. As part of the agreement, each of the three branches of the family will be entitled to appoint one director to the board. However, the majority of the board will consist of independent directors, none of whom will be family members or their nominees. Each family branch will also hold equal representation on the boards of the company’s subsidiaries.
Additionally, the Gandhi family retains the authority to propose and recommend the CEO, CFO, and other key managerial appointments. The appointment, re-appointment, or removal of independent directors and professional management personnel will require unanimous consent from all family branches.
To fund future requirements, Vadilal will adopt a “waterfall mechanism,” prioritizing internal accruals or debt borrowings first, and, if necessary, raising funds through a rights issue to existing shareholders, again subject to unanimous approval from the family branches.
The newly structured board will include four non-executive directors, with at least three being independent. The promoters also agreed that the brand name “Vadilal,” which is currently licensed from a promoter group entity, will be formally housed within the company for a limited period. This decision aims to secure continued use of the brand and ensure long-term market presence.
The internal disputes within the Gandhi family had previously escalated to legal battles, involving the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT). The settlement is expected to resolve these issues and restore investor confidence.
Vadilal Industries currently holds a 16% share in India’s organized ice cream market, which is valued at approximately Rs 20,000 crore as of September 2024.
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