You are here: Home » Companies » News
Business Standard

Not so sweet: The Vadilal family feud may hit its future prospects

Sources claim the company was not on the block even as one of the brothers looked for an exit

Vinay Umarji & Sohini Das  |  Ahmedabad 

Vadilal ice creams

The eight-decade-old Gujarat-based ice cream maker is perhaps going for a split two years after a long drawn family feud.

One of India's largest ice cream brands had started with modest beginnings in Ahmedabad in the early 1900s.

Sources claim the company was not on the block even as one of the brothers looked for an exit.

Vadilal's managing director Rajesh Gandhi could not be reached for a comment on the split.

Founder started selling ice creams in India much before ice creams were an industry here. From selling sodas in 1907, Vadilal has travelled through four generations of Gandhis to become a Rs 500 crore company now. 

While exact brand shares are not known, Vadilal roughly enjoys a 14-16 per cent share of India's Rs 4,000 crore ice cream market that is clocking a 15-17 per cent annual growth. The market is well poised to grow as India's current per capita ice cream consumption is low - at 400 ml (as against Pakistan's 700 ml, US' 24 litres, and Australia's 26 litres per capita consumption). 

Vadilal now has a production capacity of 375,000 litres per day (lpd) at two plants. Its Ahmedabad facility (210,000 lpd) is the largest such facility in India at a single location. Vadilal, in fact, was one of the first in India who imported ice cream making machines way back in 1926. 

Vadilal's managing director Rajesh Gandhi had told Business Standard earlier that the company is eyeing an 18-20 per cent growth for the next five years. 

The long-run family business started as a traditional Kothi method of making ice-cream using a hand-operated machine by founder in 1907. By 1926, the business was launched as a small retail outlet in 1926 by his son Ranchod Lal Gandhi. Having imported ice-cream making machines, Ranchod Lal Gandhi expanded Vadilal's business to four ice-cream shops by 1950s. 

Later, Ranchod Lal's sons, Ramchandra and Lakshman, took over Vadilal, leading to its evolution as a modern corporate entity by 1970s with 8-10 ice-cream outlets in Ahmedabad.

By mid-80s, Vadilal began expanding outside Gujarat, pitching itself against the likes of Kwality, Joy and other multinational brands, on the back of its USP of being a vegetarian ice-cream player. Vadilal also went on to pioneer in 1987 in installing the first fully automated candy line.

Early 90s, however, saw Vadilal face a feud between Ramchandra's second and third sons Rajesh and Shailesh Gandhi, leading to a split in territories. Shailesh Gandhi went on to own territorial rights for the in Maharashtra and South India.

While it continued to fight for market share in the now growing ice-cream market in India with the advent of more multinational and homegrown brands, Vadilal ended with another rift in the family in 2015. 

In fact, the ongoing speculations of stake sale by promoters stems from this rift, which began in 2015 when Rajesh Gandhi's elder brother Virendra Gandhi approached the Company Law Board (CLB). Virendra had accused Rajesh and his cousin Devanshu - Lakshman Gandhi's son - of removing him from the board of the unlisted private group company Vadilal Chemicals. Rajesh and Devanshu Gandhi too accused Virendra of not seeking board's consent while transferring Rs four crore to Success Vyapar Ltd (SVL), a company where the latter owned majority.

As of today, among the promoters, Rajesh, Devanshu and Virendra Gandhi own 3.17 per cent, 4.75 per cent and 2.21 per cent stake, respectively.

History 

— 1907 - started selling sodas 

— Gandhi used to make ice cream by traditional kothi method - using a hand operated machine to churn milk and other ingredients
— Home delivery of ice creams in thermocol boxes was offered back then

passed on the business to son Ranchod Lal Gandhi, who ran a one-man operation with a hand cranked machine
— R L Gandhi started a small retail outlet in 1926
— In 1926 Vadilal imported ice-cream making machines
— Vadilal had expanded to four ice-cream shops before independence
— It became popular for its flagship cassata ice cream in the 1950s
— Ranchod Lal's sons, Ramchandra and Lakshman, inherited the business
— By the 1970s, the Vadilal Company had already evolved into a modern corporate entity and had 8-10 outlets in Ahmedabad
— Ice cream industry started opening up to multinationals in 1970's 
— Vadilal advertised that their ice creams were vegetarian and it could be consumed by people observing a fast
— In 1984-85 Vadilal started expanding outside Gujarat
— A multinational company tried to buy the company out in 1985 but Vadilal went in for long haul and decided to go national 
— In 1987 Vadilal installed the first fully automated candy line
— In the early 1990s, there was a split in the family - with Shailesh Gandhi, brother of Rajesh and son of Ramchandra 
— Both families continue to use the same brand name but there were territorial restrictions 
— In 1995, Vadilal became first Indian brand to export frozen vegetables to the US market 
— MoU signed in 1999 among family members - late Ramchandra Gandhi’s sons Virendra and Rajesh, and Lakshman Gandhi's son Devanshu would have equal shares of the total promoter stake in all companies, including the unlisted Vadilal Chemicals  
— In 2015, Virendra Gandhi accused brother Rajesh and cousin Devanshu of management and financial misappropriation 

First Published: Mon, November 20 2017. 14:36 IST
RECOMMENDED FOR YOU