Vadilal Industries shares have plunged nearly 15% in early trade after the company informed bourses that the audit committee and board of directors have not been able to conclude on certain matters and hence limited review related agenda item has been delayed.
The company has reported a consolidated net profit after tax of Rs 9.99 crore for the quarter ended September 2018. It posted a net loss of Rs 0.50 crore in the corresponding quarter last year. Total income of Vadilal Industries increased to Rs 136.47 crore in Q2FY19 over Rs 112.62 crore in Q2FY18.
The company is engaged in the business of manufacturing ice cream and flavoured milk, and processing and exporting processed food products, like canned pulp.
Vadilal, India's oldest ice-cream brand, now after eight decades is facing a meltdown. The Gandhis who own the popular brand, which also has the second largest share of the national market, are caught in a battle for control in the Company Law Board, with each side accusing the other of mismanagement and financial impropriety, reported ET.
The beginning of the dispute between the children and nephew of the late Ramchandra Gandhi lies in the memorandum of understanding (MoU) signed in 1999 among family members. As per the agreement, Ramchandra's sons Virendra (elder) and Rajesh and his brother Lakshman's son Devanshu had an equal share or one-third each of the total promoter stake in all Vadilal Group companies, including the unlisted Vadilal Chemicals.
The current promoter shareholding in Vadilal Industries and Vadilal Enterprises, both listed, is 65.28 per cent and 51.49 per cent respectively. While Vadilal Enterprises manufactures ice-cream, Vadilal Industries sells the product and owns the brand rights.
Ramchandra's third son Shailesh Gandhi had separated from the family business in the early 1990s but owned territorial rights for the Vadilal brand in Maharashtra and south India. Ranchodlal Vadilal Gandhi started the ice-cream business in pre-Independence Ahmedabad in 1935. His sons Ramchandra Gandhi (father of Virendra, Rajesh and Shailesh) and Lakshman Gandhi (father of Devanshu) joined the business sometime in 1945.
The MoU, now part of the petition filed by Virendra Gandhi in the Company Law Board in Mumbai, said, "The joint business will be equally owned and none of the parties can directly or indirectly increase stake in any of the listed company or partnership firm without written concept."
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