Could Vadilal’s big family truce be a gamechanger for shareholders?

The market responded enthusiastically. For a brand frozen by its own infighting, the thaw came with promises of stability, transparency and value creation for shareholders. With the leadership reshuffle, brand consolidation, and a professional governance framework in place, Vadilal Industries is no longer just about scoops and cones—it's about serious corporate reinvention.

A family feud that boiled over

Vadilal has long been a household name in India, but behind the iconic brand was a saga of discord that quietly simmered for years. The fourth-generation Gandhi family members—Rajesh R. Gandhi, Janmajay V. Gandhi, and Devanshu L. Gandhi—found themselves on opposing sides over everything from the company’s future strategy to control over governance and operations. These disputes escalated beyond internal squabbles, landing before the National Company Law Tribunal (NCLT) and later the National Company Law Appellate Tribunal (NCLAT).

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As disagreements spiraled into legal battles, Vadilal's management structure became muddled. Conflicting visions paralysed strategic decision-making, and shareholders were caught in the crossfire. But in March, the tides turned. The family reached a groundbreaking memorandum of family arrangement, pledging to restructure the leadership and reimagine the company’s future together.

Professionalising the core

Central to the settlement was a fundamental shift: the separation of ownership from day-to-day management. The Gandhi family, while retaining promoter status, agreed to step back from executive functions. Rajesh R. Gandhi and Devanshu L. Gandhi resigned from their managing director roles, while Kalpit R. Gandhi stepped down as chief financial officer. This marked a departure from the old model of familial micromanagement that had long hindered organisational agility.

In their place, Vadilal will induct a new, professional leadership team including a CEO and CFO to be mutually identified by the three family branches. The company’s board is being reconstituted to ensure that professionals, not just promoters, are at the helm. Each Gandhi branch will nominate one director, but a majority of seats will now belong to non-family professionals. Among them are heavyweight names such as Shalini Raghavan, former group chief marketing officer of Nykaa; Shivakumar Dega, a seasoned executive from PepsiCo, Nokia and Philips; and Nagarajan Sivaramakrishnan, former CEO of Mother Dairy. Financial strategist Gaurav Marathe will also join as a non-executive director.

This reshuffle is designed to guarantee that no single branch dominates, creating a governance framework based on consensus, merit and oversight.

The brand comes home

Perhaps the most strategic element of the restructuring is the company’s decision to bring the Vadilal brand under its direct ownership. Previously, the brand was held by Vadilal International Pvt. Ltd. (VIPL), a promoter entity that licensed the trademark to Vadilal Industries. This arrangement created both financial and operational dependencies, including royalty payments and potential legal vulnerabilities.

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To address this, three promoter-owned entities—VIPL, Vadilal Finance Co. Pvt. Ltd., and Veronica Constructions Pvt. Ltd.—will be merged into Vadilal Industries via a share swap. This consolidation will not only ensure the company owns its brand outright but also eliminate any royalty expenses moving forward. With full control over the brand, Vadilal can now invest confidently in marketing, innovation and expansion.

Vadilal's 16% share of India’s ₹20,000-crore organised ice-cream market, according to a company statement from September 2024, is now backed by a more secure and unified brand identity.

Checks, balances, and clarity

To prevent the return of chaos, the family pact includes an exhaustive governance overhaul. Unanimous consent from all three promoter branches is now required for key decisions such as top-level appointments, capital structure changes and brand-related strategies. A waterfall funding clause has been introduced, prioritising internal accruals and debt over external equity infusions. This ensures that dilution of family ownership will be a last resort, and only possible with unanimous agreement.

Moreover, the agreement includes right-of-first-refusal clauses and tag-along rights to protect family and minority interests. These safeguards aim to prevent hostile takeovers and maintain continuity in promoter alignment. All these provisions will be formally embedded into the company’s articles of association and implemented after obtaining approvals from shareholders, SEBI, NCLT, and the stock exchanges.

A fresh scoop of optimism

The market’s reaction to the restructuring has been overwhelmingly positive. The stock’s rally was no flash in the pan. Vadilal’s stock had already climbed 38% over the prior month, a sign that insiders and savvy investors had anticipated a resolution. When the official announcement dropped, trading volumes soared and the stock outperformed the broader indices.

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Analysts welcomed the clarity, viewing the settlement as a catalyst for long-term value creation. For years the company traded at a discount thanks to governance risks and operational opacity. With the professionalisation of leadership, improved governance standards, and streamlined operations, brokerages are expected to revisit their models to reflect improved margins, stronger balance sheet dynamics, and increased investor confidence.

Brand, business and beyond

Internally, Vadilal has shown signs of resilience. In Q3FY25 the company reported a 29% year-on-year jump in net profit to ₹11.93 crore, while revenues grew 17% to nearly ₹204 crore. For the first nine months of FY25 the company clocked a profit after tax (PAT) of ₹128 crore and revenues of ₹963 crore. With a daily production capacity of over 625,000 litres and 1.3 million cones, Vadilal remains a heavyweight in the ice-cream, cones, and candy segments.

The internal changes are expected to accelerate growth across both its frozen dessert and processed foods divisions. Professional management and new board expertise in branding and FMCG could open up new product lines and geographies. Meanwhile, by cutting out royalty payments and reducing internal strife, the company could see operational margins improve.

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After the merger, the Gandhi family’s collective stake will rise to more than 72% from the current 64.73%, signaling deeper commitment to Vadilal’s future. High promoter ownership, when aligned with professional governance, can be a potent formula for long-term shareholder trust.

Conclusion

The story of Vadilal is more than a tale of family conflict and corporate compromise. It’s a case study in modernising a legacy enterprise without destroying its soul. In aligning behind professional leadership, unifying brand ownership, and embracing governance reforms, Vadilal is setting an example for Indian family-owned businesses.

It remains to be seen how effectively the company executes this transformation. But if the early signals from the market and boardroom are anything to go by, Vadilal has finally found the recipe for sustainable, shareholder-friendly growth.

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About the author: Suchitra Mandal is a proficient financial writer with expertise in delivering well-researched insights and detailed analyses of companies' performance and market trends.

Disclosure: The author does not hold any shares of Vadilal Industries at the time of writing this article. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.