Vadilal Ind soars 10% on board nod to buy 'Vadilal' brand from promoter co

The company's board on Thursday approved the purchase of the "Vadilal" brand from its promoter group entity Vadilal International; the stock later pared half of its gains

Shares of Vadilal Industries (VIL) jumped 10 per cent to touch an intra-day high of Rs 2739.55 a share on BSE in Friday’s early trade before the stock erased half of its gains.

At the time of writing this report, the stock was up 5 per cent. 

The sharp move came after the company’s board on Thursday approved the purchase of the “Vadilal” brand from its promoter group entity Vadilal International.

The board also gave its nod for selling ‘certain non-core assets and business’ of the company to the promoters and a contract manufacturing agreement with the latter, as per an exchange filing.

The above transactions are subject to shareholders’ approval and the finalisation of terms, it said.

The considerations to be paid by VIL for the purchase of the brand name, and that to be received from the promoter for the sale of its non-core assets remain unknown. 

These will be made public to the shareholders after the execution of the said agreements, the company said. 

The “Vadilal” brand was reportedly licensed to Vadilal Industries and its distributor company Vadilal Enterprises by the promoter entity Vadilal International in 2012 via a 15-year agreement. 

The stock of Vadilal Enterprises also rose over 4 per cent to its intra-day high of Rs 2,689 apiece before paring gains.

The eight-decade-old Vadilal Industries is owned by the Ahmedabad-based Gandhi family. The promoters together hold about 65 per cent stake in the company, of which 39 per cent is held through Vadilal International. 

The promoters have been in the middle of a feud since 2015 when then-managing director Rajesh Gandhi’s (now Chairman) elder brother Virendra Gandhi had accused Rajesh and his cousin Devanshu Gandhi (now MD) of mismanagement. Read here

As per reports, back in 2017, one of the brothers was looking to exit the company. 

The transfer of the brand name to the company raises speculations that this move may be a precursor to a stake sale by the promoters. 

As of the September quarter (Q2FY23), among the promoters, Rajesh, Devanshu and Virendra Gandhi own 3.17 per cent, 4.81 per cent and 2.21 per cent stake, respectively, in the company.