Vadilal Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS (2025-2026)

(1) INDUSTRY STRUCTURE & DEVELOPMENT AND OUTLOOK.

a) Ice Cream Division Overview

India continues to be the worlds largest producer and consumer of milk, contributing over one-fifth of global milk production. This abundant milk availability provides a strong and sustainable foundation for the continued growth of the Indian ice cream industry.

Over the past few years, the industry has witnessed remarkable expansion, driven by rising disposable incomes, rapid urbanization, changing consumer lifestyles, and increasing demand across Tier 2, Tier 3, and rural markets. Today, ice cream is evolving from being a seasonal indulgence to an all-year-round consumption category, supported by wider accessibility and changing consumption habits.

The Indian ice cream market continues to demonstrate strong momentum and is expected to grow at a CAGR of approximately 13%-16% during FY 2025-26 and in the years ahead. The sector remains one of the fastest-categories within the packaged food and dessert industry, fuelled by premiumization, expanding cold-chain infrastructure, digital commerce, and evolving consumer preferences. This expansion reflects structural shifts, including the proliferation of quick-commerce platforms catalysed by government schemes, the transformation of ice cream from a seasonal treat to an everyday indulgence, and the significant GST revision from 18% to 5%, which proved to be a major boost for the industry and a blessing for consumers by making products more affordable

Impulse ice cream maintains its market leadership with 59.62% share in 2025, driven by ubiquitous point-of-sale availability and Indias predominantly warm climate. Chocolate flavor accounts for 31.05% of total flavor revenue, followed by vanilla at 28.42% and fruit at 24.63%. Maharashtra leads all states at 12.00%, benefiting from its metropolitan consumer base and well-established cold chain networks.

Outlook for the Industry

The Indian ice cream industry is currently at a transformative stage, characterized by strong consumer demand, rapid innovation, and expanding market accessibility.

Supported by:

High milk availability

• Low per capita consumption levels

• Expanding cold-chain infrastructure

• Growing premiumization trends

• Increasing digital and retail penetration

• Evolving consumer preferences

The industry remains exceptionally well-positioned for long-term and sustainable growth.

As health consciousness rises and international consumption trends continue to influence Indian consumers, the market is expected to witness further innovation across both mass and premium categories. With strong demographic advantages and significant untapped potential, the Indian ice cream sector is poised for substantial expansion in the years ahead.

Growth Drivers of the Industry

Several key factors continue to accelerate the growth of the Indian ice cream market:

• Rising Disposable Incomes & Aspirational Lifestyles: As personal wealth grows, consumers are shifting from viewing ice cream as an occasional treat to a regular, permissible indulgence.

• Rapid Urbanization & Evolving Consumer Habits: Changing lifestyles and exposure to global food trends are steadily driving per-capita consumption upward.

• Expansion of Cold-Chain & Refrigeration Infrastructure: Dramatic improvements in the logistics ecosystem are reducing transit melt-rates and allowing brands to maintain product quality across vast distances.

• Deepening Rural & Semi-Urban Penetration: Brands are successfully breaking into Tier-2, Tier-3, and rural markets by offering accessible, low-unit-cost packs.

• Surge in Demand for Premium & Experiential Flavors: There is a distinct consumer shift toward gourmet, organic, vegan, sugar free, protein rich and high-quality artisanal options.

• Booming Quick-Commerce & Modern Retail: The rise of instant-delivery platforms (like Blinkit, Zepto, and Instamart) has transformed ice cream from a planned purchase into a 10-minute impulse buy.

• Rapid Acceleration of Digitalization: From tech-driven inventory tracking to hyper-targeted social media marketing, digital tools are helping brands build direct relationships with tech-savvy consumers.

Consumer preferences have evolved significantly, with increasing demand for products that offer innovation, indulgence, and premium experiences. Todays consumers are actively seeking differentiated offerings through unique flavours, novel formats, global inspirations, and health-focused alternatives.

The market has also witnessed strong diversification, with national, regional, and local players introducing a wide variety of products ranging from traditional kulfis and cones to gourmet desserts, vegan alternatives, sugar-free variants, and protein-enriched ice creams.

Rising Per Capita Consumption

One of the strongest indicators of the industrys growth potential is the significant rise in Indias per capita ice cream consumption. Over the last five years, annual consumption has increased from approximately 200 ml- 1600ML. Per capita ice cream consumption in India is still relatively low compared to developed markets, but it is growing rapidly with the expansion of quick-commerce and modern retail.

Annual Ice Cream Consumption per Person (2025-26 estimates)

Country	Consumption per person
India	~1.6 litres (1,600 ml)
United States	~20.8 litres (20,800 ml)
New Zealand	~28.4 litres (28,400 ml)

This means:

• The average American consumes nearly 13 times more ice cream than the average Indian.

• The average New Zealander consumes almost 18 times more than the average Indian

It clearly highlights the immense untapped growth opportunity that exists within the Indian market.

This gap presents substantial potential for deeper market penetration, especially across rural India, Tier 3 and Tier 4 cities, and emerging consumer segments where demand is steadily increasing alongside rising incomes and changing lifestyle aspirations.

Developments

Strengthening Our Market Presence through Innovation and Expansion

Vadilal Industries continues to strengthen its leadership position in the Indian ice cream industry through strategic investments in mega brands, advanced manufacturing technologies, and expanded production capabilities. A key driver of the companys growth has been its focus on optimizing resources and improving raw material efficiency, enabling faster scalability and operational excellence.

Recognizing the increasing consumer preference for premium and clean-label products, Vadilal has significantly expanded its premium ice cream portfolio over the years. The brands diverse offerings - including Natural Tubs, Cups, Kulfis, Premium Bars, Cones, Ice Cream Sandwiches, Artisan Cakes, and other innovative formats - have resonated strongly with health-conscious and experience-driven consumers, reinforcing Vadilals reputation as a pioneer in the premium segment.

Product Innovation & New Launches

Continuing its legacy of innovation and indulgence, Vadilal introduced several exciting additions to its portfolio during FY 2025-26, further strengthening its retail presence and enhancing consumer engagement across markets.

The companys flagship premium categories - including Gourmet Natural Tubs, Kulfis, Gourmet Tubs & Cups, Badabite,

Flingo, and Novelties - continued to witness strong consumer demand and robust sales momentum.

Adding to this success, Vadilal launched a range of indulgent and contemporary flavours, including:

• Vadilal Badabite Pista Kunafa

• Vadilal Badabite Cafe Mocha

• Gourmet Natural Gulkand Ice Cream Kulfi

• Rabdi Malai Ice Cream Kulfi

• Royal Kulfi Cassata Slice Ice Cream

• Ice Cream Tubs -Qcomm

• Alphonso Mango

• Mahableshwar Strawberry

• No Sugar Added Cups as :

o Crunchy Butterscotch

o Alphonso Mango

These launches reflect Vadilals continued focus on delivering innovative flavours, premium experiences, and evolving formats that cater to modern consumer preferences.

Packaging & Consumer Appeal

Vadilal has also undertaken strategic packaging enhancements across several product categories to create stronger shelf impact and improve visual appeal. These refreshed packaging initiatives have helped the brand strengthen its premium positioning while creating a distinctive identity in both retail environments and consumers minds.

Manufacturing Excellence & Operational Expansion

Vadilal takes immense pride in operating one of the countrys most advanced and fastest cone-manufacturing machines, reinforcing its leadership in the cones, cups, and candy segments. The company continues to scale production capabilities to meet growing consumer demand while maintaining superior product consistency and quality.

Its key manufacturing facilities, located at Pundhra (Gandhinagar, Gujarat) and Bareilly (Uttar Pradesh), have undergone significant expansion and modernization initiatives. These upgrades have enhanced automation, operational efficiency, and production capacity, positioning Vadilal strongly for future growth.

Commitment to Quality Amidst Market Challenges

Despite the presence of a large unorganized sector within the Indian ice cream industry — where competition is often driven primarily by pricing — Vadilal has remained steadfast in its commitment to quality, safety, and consumer trust.

Rather than compromising on standards, the company has consistently focused on delivering superior products and experiences, helping it emerge as one of the most trusted and leading ice cream brands in India. This unwavering dedication to excellence continues to differentiate Vadilal in a highly competitive market landscape.

Creating Premium Experiences Through Parlours

The growing influence of international brands and evolving consumer lifestyles have further inspired Vadilal to elevate its experiential offerings. In response, the company has curated globally inspired dessert experiences through its expanding network of premium parlours.

Currently, Vadilal operates over 62 parlours across India, serving as immersive consumer touchpoints designed to deliver indulgence, innovation, and memorable experiences. These parlours showcase a wide range of innovative desserts and premium formats that blend global trends with Vadilals rich legacy and trusted flavours.

Vadilals parlour formats - Now For Ever, Happinezz, and Hangout - continue to be popular destinations for consumers of all age groups. By combining inviting ambience, innovative products, and quality service, these parlours offer a complete brand experience that celebrates both timeless favourites and trendsetting new creations.

Vaddy Mascot - A True Sensation

Introduced last year, Vaddy, the cheerful and lovable mascot of Vadilal, has quickly become a sensation among consumers of all ages. Representing joy, fun, and togetherness, Vaddy brings a playful charm to every ice cream moment and perfectly reflects the happiness that comes with every Vadilal treat.

This year, we further amplified Vaddys presence through an extensive campaign across OOH, radio, print, digital platforms, and on-ground events, strengthening our emotional connect with consumers and making Vaddy an even more recognizable and loved brand icon.

At Vadilal, we believe ice cream is more than just a dessert — it is an emotion that brings people together, creates memories, and brightens everyday moments. Whether its sharing a cone with loved ones, celebrating special occasions, or simply indulging in a personal treat, Vadilal Ice Cream adds sweetness and joy to every experience.

With every scoop, Vadilal continues to spread smiles, create memorable moments, and celebrate the simple joy of togetherness - making life a little happier, one scoop at a time.

b) Processed Food Division Overview:

The global frozen food and ice cream industries continued to witness steady growth, supported by evolving consumer lifestyles, rising demand for convenience, and the expansion of organised retail and digital commerce channels.

Convenience, premiumisation, health-conscious consumption, and sustainability continue to influence consumer preferences across international markets.

Frozen foods have become an essential part of modern households, offering convenience, longer shelf life, and year-round access to diverse cuisines and meal solutions. Demand for clean-label products, high-protein offerings, and premium ready-to-eat meals is driving innovation across the category. Investments in cold-chain infrastructure and the growth of e-commerce and online grocery platforms are further accelerating category penetration across developed and emerging markets.

The ice cream segment remains resilient and dynamic, driven by demand for premium indulgence, innovative flavour profiles, and better-for-you alternatives such as dairy-free, low-sugar, and protein-enriched products. Impulse formats including bars, cones, and cups continue to perform strongly across retail and foodservice channels.

Growing multicultural populations and increasing consumer exposure to global cuisines are accelerating demand for authentic ethnic foods across international markets. Indian cuisine continues to gain broader acceptance among both diaspora and mainstream consumers, creating opportunities for regional flavours and culturally rooted food brands to expand their presence across modern retail channels. Together, these trends continue to create opportunities for innovation, premiumisation, and international growth across frozen food and dessert categories.

Global market view:

The global frozen food market was valued at approximately USD 325 billion in 2025 and is projected to reach approximately USD 508 billion by 2034, growing at a CAGR of over 5%. The global ice cream market was estimated at approximately USD 121 billion in 2025 and is expected to reach nearly USD 170 billion by 2033, growing at a CAGR of over 4%. Growth across both categories continues to be driven by evolving consumer lifestyles, increasing demand for convenience, premiumization, health-conscious consumption, and the expansion of organized retail and digital commerce channels.

Europe remains one of the largest markets for both frozen food and ice cream globally. It dominated the frozen food market with a market share of 38.78% in 2025. Europe also remains a significant ice cream market, supported by strong demand for premium and artisanal offerings, flavour innovation, and increasing adoption of sustainable packaging solutions.

North America continues to represent a significant share of the global frozen food and ice cream markets. It generated USD 92.5 billion in 2025, and is expected to reach USD 96.57 billion in 2026. U.S. frozen food market is projected to exceed USD 110 billion by 2032, driven by strong demand for convenience-led meal solutions, frozen snacks, and ready-to-eat products. The United States also remains one of the worlds largest ice cream markets, with annual sales exceeding USD 18 billion, supported by continued innovation in premium products, indulgent formats, and better-for-you alternatives.

The Asia Pacific region accounted for the largest revenue share in ice creams at 37.47% in 2025. It accounted for USD 85.81 billion in 2025, and is projected to reach USD 90.76 billion in 2026. The region is projected to witness growth of approximately 6% across the frozen food category during the forecast period and accounts for approximately 37% of global ice cream revenues. Rising urbanisation, increasing disposable incomes, changing household structures, and expanding organised retail and e-commerce channels continue to drive growth across China, India, and Southeast Asia.

Australia and New Zealand continue to demonstrate stable demand across frozen food and ice cream categories.The Australia ice cream market size reached USD 2.3 billion in 2025. Looking forward, the market is expected to reach USD 2.8 billion by 2034, exhibiting a growth rate (CAGR) of 2.15% during 2026-2034. Increasing interest in internationally inspired cuisines and continued investments in cold-chain infrastructure are expected to support category growth across the region.

(2) OPPORTUNITY AND THREATS

a) Ice-cream Division

The Indian ice cream industry continues to witness strong growth, driven by evolving consumer lifestyles, rising disposable incomes, and increasing demand for premium and innovative offerings. In recent years, the impulse category has emerged as a dominant force in the market, a trend that is expected to continue as consumers increasingly seek indulgent, on-the- go experiences paired with superior quality and exciting flavours.

Todays consumers value convenience, variety, and affordability, while also showing a growing appetite for premium products that deliver unique taste experiences. This shift presents significant opportunities for brands to expand through innovative flavours, healthier alternatives, premium product lines, and wider accessibility across urban and emerging markets. The increasing influence of digital platforms, quick-commerce channels, and modern retail formats further strengthens the industrys growth potential.

At the same time, the sector faces certain challenges and competitive pressures. Rising input costs, evolving consumer preferences, seasonal demand fluctuations, and intense market competition require brands to continuously innovate and maintain operational efficiency. Additionally, growing awareness around health and wellness is encouraging companies to diversify their portfolios with low-sugar, plant-based, and functional dessert options.

Despite these challenges, the long-term outlook for the Indian ice cream industry remains highly promising. Brands that successfully combine innovation, quality, accessibility, and strong consumer engagement will continue to strengthen their market presence and drive sustainable growth in the years ahead.

Retail Presence and Digital Expansion

We have a strong and growing presence across multiple retail and distribution channels. In Modern Trade, our products are available in leading outlets such as Reliance Stores, Jio - Online, D-Mart, Spencers, Lulu Mall, Max Bazar, The New Shop, Apna Mart, W H Smith, Vakhra Mart, IPer Mart & Shubham K Mart.

I n the QSR (Quick Service Restaurant) space, we are proudly associated with well-known chains including Barbeque Nation (BBQ), Honest, Octant Pizza, Xero Degree and Real Paprika. We also maintain strategic partnerships with several key accounts, such as Akshardham Temple - Premvati Uphar Gruh, Reliance JIO petrol pumps, Mukta Cinemas & Water Villa Water Park.

On the digital front, we are actively present across major Quick Commerce platforms, including Blinkit, Instamart, Big Basket, Swiggy Instamart, Zepto, Amazon Fresh & Flipkart Minutes, ensuring quick delivery and strong online visibility.

Additionally, in E-commerce, our offerings are available on Swiggy, Zomato &Toing further strengthening our reach and accessibility across food delivery platforms.

Distribution and Logistics - Building a Cold Chain Network

Effective logistics are key to the success of any cold chain-dependent business. To increase our footprint, were strengthening our distribution network across cash-and-carry and modern retail formats. Were steadily expanding our cold chain infrastructure through an extensive fleet of refrigerated vehicles and deep freezers.

Our outreach strategy includes increasing direct consumer touchpoints via a network of dealers, Freezers on Wheels (FOWs), and exclusive ice cream parlours. In addition to large-scale advertising, were heavily invested in on-ground brand activations (ATL & BTL marketing) and innovative digital strategies, including influencer marketing and cross-promotions, to ensure top-of-mind recall and customer engagement.

b) Processed Food Division

The continued growth of digital commerce, online grocery platforms, quick commerce, and artificial intelligence-enabled retail ecosystems is expanding consumer access to frozen and impulse products across international markets while enhancing product discovery and consumer engagement.

Growing multicultural populations and increasing exposure to global cuisines are driving demand for ethnic foods, snacks, desserts, and frozen treats. Indian cuisine continues to gain mainstream acceptance across key international markets, creating opportunities for authentic regional brands to expand beyond traditional diaspora consumers. At the same time, increasing demand for health-conscious, premium, and convenience-led products continues to drive innovation across frozen food and ice cream categories.

However, intensifying competition, the expansion of private-label offerings, and the growing presence of regional and specialty food brands continue to challenge established players across international markets. Maintaining product differentiation, consumer relevance, and strong retail partnerships remains critical in an increasingly competitive marketplace

3) HIGHLIGHTS OF FINANCIAL PERFORMANCE AND OPERATIONAL PERFORMANCE.

The Company has earned Revenue from Operations of Rs.1,109.54 crore during the year ended on 31 st March, 2026 as against Rs.1,013.51 crore during the previous year ended on 31 st March, 2025 i.e. increase of 9.47% compared to previous year.

After adding thereto, the other income of Rs.24.62 crore, the Company has earned total income of Rs.1,134.16 crore during the year under review. The Company has incurred total expenses of 1,002.03 crore including Finance cost of Rs.8.67 crore and Depreciation and Amortization expenses of Rs.28.90 crores, during the year under review.

The Company has earned profit before Tax of Rs.132.13 crore during the year under review as compared to profit of Rs.152.99 crores during the previous year ended on 31 st March, 2025. The Company has earned profit of 98.01 crores during the year ended on 31 st March, 2026 after deducting total tax expenses of Rs.34.12 crore as compared to profit of Rs.113.44 crores during the previous year ended on 31 st March, 2026 after deducting total tax expense of 39.11 crore.

	Turnover History
Financial year	Rs in crore
2016-17	484.38
2017-18	520.13
2018-19	507.05
2019-20	516.62
	Turnover History
Financial year	Rs in crore
2020-21	356.54
2021-22	544.11
2022-23	896.71
2023-24	912.57
2024-25	1013.51
2025-26	1,109.54

4) SEGMENT WISE PERFORMANCE.

The company is primarily engaged in one business segment namely Food segment as determined by the chief operating decision maker in accordance with IND AS 108 - Operating segment and hence, Segment-wise Performance of the Company has not been provided.

5) RISKS AND CONCERNS

a) Ice Creams Division

Market Presence & Business Strength

Vadilal Industries holds an estimated 16% share of the organized ice cream market in India, supported by a strong and expansive pan-India distribution network comprising over 1,20,000 dealers and trade partners. This extensive reach enables the brand to maintain a strong presence across urban, semi-urban, and rural markets, ensuring widespread accessibility for consumers nationwide.

Vadilals continued success is driven by its proactive approach towards evolving market trends and changing consumer preferences. The company consistently focuses on innovation, product quality, and strategic market planning to remain competitive in a dynamic and rapidly evolving industry landscape. While the unorganized sector continues to present competitive challenges, Vadilal differentiates itself through its trusted legacy, product expertise, and commitment to delivering high-quality offerings.

b) Processed Food Division

The global frozen food and ice cream industry continues to operate in an environment influenced by geopolitical uncertainties, supply chain disruptions, and volatility in commodity, energy, and freight costs. These factors may impact sourcing efficiency, logistics costs, and product availability across international markets.

Evolving regulations relating to food safety, product labelling, sustainability standards, packaging compliance, and international trade requirements require continuous monitoring and adaptation across multiple jurisdictions.

Additionally, changing consumer preferences, increasing focus on health and wellness, and currency fluctuations in certain markets may influence purchasing behaviour, operating costs, and pricing strategies. Companies with diversified sourcing, strong distribution networks, and efficient cold-chain capabilities remain better positioned to navigate these challenges.

6) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

I n view of the management, the Company has adequate internal control systems for the business processes followed by the Company. The External and Internal Auditors carry out periodical reviews of the functioning and suggest changes if required. The Company has also a sound budgetary control system with frequent reviews of actual performance as against those budgeted.

The Audit Committee of the Board meets periodically to review various aspects of the performance of the Company and also reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them from time to time. The External Auditors also attend these meetings and convey their view on the business processes and also of the policies of financial disclosures. When found necessary, the Committee also gives suggestions on these matters.

7) HUMAN RESOURCE DEVELOPMENT:

Employee being prime force the Company gives equal emphasis on employee development and their engagement. The Company believes in enhancing the competencies of employee to create a high performing and innovative organization. Equal emphasis is given on the on technical & soft skills. There are cordial relations between the management and employee of the Company.

As on 31 st March, 2026, the Company has employed total 655 employees at all locations.

8) Significant changes in financial ratios:

Refer Note 51 to Standalone Financial Statement

9) CAUTIONARY STATEMENT:

The statements made and figures given in the various sections of Management Discussion and Analysis are keeping in mind the Companys objectives, estimates and expectations. The Actual results may differ from those expected depending upon the economic conditions, changes in Govt. Regulations, tax regimes and other external and internal factors.

For and on behalf of the Board of Directors

	Mr. Nagarajan Sivaramakrishnan
Date :. 12 th August, 2026	Chairman
Place : Ahmedabad	DIN :03060429