vadilal industries ltd Directors report


To,

The Members

VADILAL INDUSTRIES LIMITED

Ahmedabad.

Your directors have pleasure in presenting herewith the 39th Annual Report together with the Audited Financial Statements for the year ended 31st March, 2023.

FINANCIAL HIGHLIGHTS:

Particulars Year ended 31-03-2023 Year ended 31-03-2022
(a) Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) 12960.16 5127.15
(b) Finance Cost 1287.81 1788.34
(c) Depreciation and amortization expenses 2023.38 1923.87
3311.19 3712.21
(d) Profit before Tax 9648.97 1414.94
(e) Tax Expenses
Current Tax 1949.51 5.07
Deferred Tax 505.13 375.44
Total Tax Expenses 2454.64 380.51
(f) Profit/ (Loss) for the year 7194.33 1034.43
(g) Other Comprehensive income:
Remeasurement of defined benefit plans (net of tax) (18.30) (69.31)
Fair value changes of Cash Flow Hedges (net of tax) (108.90)
(h) Total Comprehensive income for the year: 7067.13 965.12

STATE OF COMPANYS AFFAIRS:

The Company has earned Revenue from Operations of Rs. 89,671.40 lacs during the year ended on 31st March, 2023 as against Rs. 54,411.61 lacs during the previous year ended on 31st March, 2022 i.e increase of 64.80% compared to previous year.

After adding thereto, the other income of Rs. 1,224.08 lakhs, the Company has earned total income of Rs. 90,895.48 lacs during the year under review. The Company has incurred total expenses of Rs. 81,246.51 lacs including Finance cost of Rs. 1,287.81 lacs and Depreciation and Amortization expenses of Rs. 2,023.38 lacs, during the year under review.

The Company has earned profit before Tax of Rs. 9,648.97 lacs during the year under review as compared to profit of Rs. 1,414.94 lacs during the previous year ended on 31st March, 2022. The Company has earned profit of Rs. 7,194.33 lacs during the year ended on 31st March, 2023 after deducting total tax expenses of Rs. 2,454.64 lacs as compared to profit of Rs. 1,034.43 lacs during the previous year ended on 31st March, 2022 after deducting total tax expense of Rs.380.51 lacs.

During current financial year of 2022-23, the Company has achieved revenue growth and better operational efficiency as compared to previous financial year and pre-covid pandemic period resulting in higher profitability. Further, during the previous financial year of 2021-22, the business has been impacted during the financial year on account of second wave of COVID-19.

DIVIDEND:

The Directors have recommended dividend of Rs. 1.50 per share (@15%) on 71,87,830 Equity Shares of Rs. 10/- each of the Company for the Financial Year ended on 31st March, 2023. If approved, the dividend will be paid with deduction of tax at source to the shareholders as applicable.

TRANSFER TO RESERVES:

The Company has not transferred any amount to the General Reserves during the year under review.

ANNUAL RETURN:

Pursuant to Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for FY 2022-23 is available on Companys website at https://vadilalgroup.com/?page id=904

MANAGEMENT DISCUSSION AND ANALYSIS:

Management Discussion and Analysis Report has been enclosed herewith as per Annexure – A and forming part of the Directors Report.

QUALITY ASSURANCE AND AWARDS AWARDS AND CERTIFICATIONS:

Vadilal has won 27 awards over 4 consecutive years: 2008 to 2011 at ‘The Great Indian Ice Cream Contest organized by the Indian Dairy Association. The various categories for awards were: The Best in Class

(3): Chocolate Frozen Dessert, Standard Chocolate Ice Cream, Rose Coconut Shell (Innovation – Novelty), Gold Medal

(4): Standard Chocolate Ice Cream, Chocolate Frozen Dessert, Vanilla Frozen Dessert, and Rose Coconut Shell (Innovation

– Novelty), Bronze Medal

(1): Natural Orange (Premium without Inclusion). Best in Class in Kids category

– Joker Ice Trooper, Gold in Kids category

– Joker Face Ice Trooper, Silver in Vanilla Frozen Dessert, Bronze in Vanilla Ice Cream

– Happinezz Vanilla Ice cream, Bronze in Premium

– Pista Happinezz Ice Cream garnished with Green Pista.

Vadilal Ice Creams has been voted as the "Most Trusted Ice Cream Brand in India" as per The Brand Trust Report - 2013. The Economic Times Survey ranked us among the "Top 20 Food and Beverages" brands in India.

Recently in 2019 Vadilal ice cream has been voted as "Super Brand a very proud moment. The Company has received ‘THE ECONOMIC TIMES BEST BRANDS – 2021 Award.

ISO 22000:2005 AND ISO 9001 : 2008

The Company has always made continuous efforts to improve the "OVERALL PRODUCT QUALITY" by following the stringent GMP norms and continuous process innovation. This is evident with the achievement of FSMS (Food Safety Management System) Certifications i.e., BRC: Issue-6 with Grade "A", ISO-22000:2005 and HALAL for our Processed Food Division (PFD), located at Dharampur, Dist. Valsad, Gujarat.

The PFD Manufacturing facility is also listed in "Two Star Export House" Status by Joint Director General of Foreign Trade, Ministry of Commerce, and Industry for export of Processed Foods Products -APEDA.

The Ice Cream plants of the Company located in two locations - Pundhra in Gujarat & Barelly in UP are also certified for ISO-22000:2005, ISO 9001:2015 and BRC: Issue 7 for Food Safety Management System is another feather in the cap for the Company.

FINANCE:

During the year under review, the company has been Sanctioned Term Loan of Rs. 45 Crore from Indusind Bank Ltd. and partially disbursed by Rs. 22.49 Crore on standalone basis. The company has also repaid the short-term loans availed during the last year from The Kalupur Commercial Co-op. Bank Ltd. for Rs. 15.00 Crore and Unsecured Loan from Samunnati Finance for Rs. 10.00 Crore. During the year company has made regular repayment of Loan & interest thereon and there is no any overdue payment to Banks and FIs.

During the year the Company has availed short term pledge finance facility from The Kalupur Commercial Co-op. Bank Ltd. for Rs. 35 Crore against pledge of Skimmed Milk Powder (SMP) & Butter.

Company is having Consortium arrangement with BOB, SBI, IDBI & Indusind Bank where lead bank is Bank of Baroda. During the year company has raised ICD (Inter Corporate Deposit) to bridge the short-term working capital gap.

Based on the financial performance of previous year i.e. 2021-22, India ratings & Research Pvt. Ltd. has rated the Long term borrowing & Fund Based Working Capital Facility as BBB+/ Stable and Non fund based facility is rated as A2 vide its letter dated 07.10.2022.

INVESTOR EDUCATION AND PROTECTION FUND:

During the financial year – 2022-2023, the Company has deposited unclaimed/ unpaid fixed deposit amount of Rs. 3,11,888/- to Investor Education and Protection Fund - IEPF.

During the year under review, the Company has transferred the unclaimed interest on Fixed Deposit of Rs. 66888/- and Mature deposit of Rs. 245000/- to Investors Education and Protection Fund.

During the Financial year – 2022-2023, the Company has also transferred Rs.250,156/- being amount of unpaid dividend for the year – 2014-2015 to Investor Education and Protection Fund.

During the financial year – 2022-2023, the Company has transferred 24,828 Shares to Investor Education and Protection Fund - IEPF as dividend on those shares remained unclaimed for continuous 7 years.

DETAILS OF DEPOSITS: a. During the year under review, the details of deposits accepted by the Company from its Members, after complying with the provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, are as under:

I. Details of Deposit from Shareholders:

(a) Amount of existing deposits as at 1st April, 2022 4574.75
(b) Amount of deposits accepted or renewed during the year
(i) Secured deposits 0
(ii) Unsecured deposits 215.00
Total (b) : 215.00
(c) Amount of deposits repaid during the year 2065.55
(d) Balance of deposits outstanding at the end of the year (a+b-c) 2724.20

II. Details of Deposit from Public [Accepted under Companies Act, 1956 and Companies (Acceptance of Deposit) Rules, 1975]:

(a) Amount of existing deposits as at 1st April, 2021 0.15
(b) Amount of deposits accepted or renewed during the year
(i) Secured deposits 0
(ii) Unsecured deposits 0
Total (b) : 0
(c) Amount of deposits repaid during the year 0
(d) Balance of deposits outstanding at the end of the year (a+b-c) 0.15

b. As on 31st March, 2023, deposit of Rs. 15000/- has remained unpaid or unclaimed by the Company. c. During the year under review, the Company has not made any default in repayment of deposits or payment of interest on deposits. d. The Company has not accepted or renewed any deposit which is not in compliance with the provisions of Chapter – V of the Companies Act, 2013.

SUBSIDIARY COMPANY:

Company is having 2 wholly-owned subsidiary companies outside India namely Vadilal Industries (USA) Inc., USA, and Vadilal Industries Pty Ltd and 2 wholly owned subsidiary companies in India viz; Vadilal Delights Limited and Varood Industries Limited.

A report on the financial position of the subsidiaries as per first proviso to sub-section (3) of Section 129 of the Companies Act, 2013 and Rules made thereunder in the prescribed Form – AOC-1 is provided as Annexure – B to the Directors Report. The Policy for determining material subsidiaries may be accessed on the Companys website viz www.vadilalgroup.com.

Pursuant to the provisions of Section 136 of the Act, separate Audited Accounts in respect of subsidiary company for the year ended on 31st March, 2023 are available at the web-site of the Company viz. www.vadilalgroup.com.

CONSOLIDATED FINANCIAL STATEMENTS:

Pursuant to the requirements of Section 129(3) read with Schedule – III of the Companies Act, 2013 and Rules made thereunder, and Regulation 34 of the SEBI (Listing Obligation and Disclosure Requirement), 2015 and other applicable Accounting Standards, the Consolidated Financial Statements of the Company, its subsidiaries and associates, for the year ended on 31st March, 2023 have been attached with the financial statement of the Company. The Audited Consolidated Financial Statements form part of the Annual Report.

CORPORATE GOVERNANCE:

Being a Listed Company, the Company has taken necessary measures to comply with the provisions of Regulation 72 of SEBI (Listing Obligation and Disclosure Requirement), 2015 regarding Corporate Governance. A separate report on Corporate Governance for the year ended on 31st March, 2023 is attached herewith as a part of this Annual Report viz Annexure - C. A certificate from Secretarial Auditors of the Company regarding compliance of Corporate Governance as stipulated under Regulation 34(3) and 53(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is obtained by the Company and annexed to the Corporate Governance Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

The Business Responsibility and Sustainability Report ("BRSR") form part of the Directors Report. The BRSR indicates the Companys performance against the principles of the ‘National Guidelines on Responsible Business Conduct. This would enable the Members to have an insight into Environmental, Social and Governance initiatives of the Company As required under Regulation 34(2) of SEBI (Listing Obligation and Disclosure Requirement), 2015, the Business Responsibility and sustainability Report is annexed herewith as a part of this Annual Report viz Annexure- D.

DIRECTORS RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the confirmation and explanations obtained by them, your Directors make the following statement in terms of Section 134(3)(C) and 134(5) of the Companies Act, 2013 and confirm:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) The directors had prepared the annual accounts on a going concern basis;

(e) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED:

Particulars of loans given, investments made, guarantees given and securities provided by the Company under Section 186 of the Companies Act, 2013 forms part of the Notes to the financial statements provided in this Annual Report.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure – E in the prescribed Form – AOC-2 and the same forms part of this report. All related party transactions are placed before the Audit Committee and the Board of the Company for review and approval. Omnibus approval is obtained for transactions which are foreseen and repetitive in nature The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website viz. www.vadilalgroup.com.

Your Directors draw attention of the members to Note – 46 to the financial statement which sets out related party disclosures.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Devanshu L Gandhi, Director (DIN:00010146) of the Company, shall retire by rotation at this Annual General Meeting and being eligible, offers himself for re-appointment. The Members are requested to consider his re-appointment as Director of the Company, for which necessary resolution has been incorporated in the notice of the meeting.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and Rules made thereunder, Mr. Kalpit R. Gandhi, Director (DIN: 02843308) of the Company shall retire by rotation at this Annual General Meeting, and being eligible, offers himself for re-appointment. The Members are requested to consider his re-appointment as Director of the Company, for which necessary resolution has been incorporated in the notice of the meeting.

Mr. Vijay R. Shah independent Director and chairman of the Company retired at the 29th September, 2022. Board of Directors hereby expresses its gratitude to Mr. Vijay Shah for his service and contribution to the Company during his tenure.

Mr. Preet Shah Independent Director of the Company was appointed as a the chairman of the board of Directors of the Company with effect from 30th September,2022.

The remuneration of Mr. Rajesh Gandhi and Mr. Devanshu Gandhi as Managing Directors of the Company for the remaining period of 2 years of their term w.e.f 25th March, 2023 to 24th March, 2025 is for the approval of members.

Necessary resolutions relating to Directors who are seeking appointment/reappointment are included in the Notice of Annual General Meeting. The relevant details of the said Directors are given in the Notes/Annexures to the Notice of the Annual General Meeting.

BOARD EVALUATION:

The Board of Directors carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board and committees was evaluated by the Board on the basis of the criteria determined by Nomination and Remuneration Committee such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The Board reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, considering the views of executive directors and non-executive directors.

COMMITTEES OF DIRECTORS:

The details of various committees of Directors constituted under provisions of Companies Act, 2013 and Rules made thereunder, their constitution, terms of reference and other details are provided in the Corporate Governance Report annexed with the Directors Report.

OTHER POLICIES AND MEASURES AS PER THE REQUIREMENT OF SEBI LISTING OBLIGATION AND DISCLOSURE REQUIREMENT , 2015

The policies formulated by the Company under various provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are available on the website of the Company viz : www.vadilalgroup.com.

NUMBER OF BOARD MEETINGS:

During the year under review, 7 Meetings of Board of Directors were held the details of which are mentioned in the Corporate Governance Report annexed with the Directors Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required under Section 134(1)(m) of the Companies Act, 2013 and Rules made thereunder, details relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are given in the Annexure – F attached herewith and forming part of the Directors Report.

RISK MANAGEMENT:

The Company is exposed to various business risks from time to time. Risk management involves handling appropriately risks that are likely to harm an organization. There are various types of risks associated with conducting business of the Company. The ultimate goal of risk management is the preservation of physical and human assets of the organization for successful continuation of its operations. In view of the same and in terms of requirements of the regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding Corporate Governance, the Board of Directors had, approved the risk assessment and minimization procedure adopted by the Company in relation to its business.

The Board of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses are systematically addressed through mitigation actions on a continual basis.

The Board periodically reviews the risk assessment and minimization procedure in relation to the business of the Company.

CORPORATE SOCIAL RESPONSIBILITY:

In terms of provisions of Section 135 of the Companies Act, 2013 and Rules made thereunder, a committee of the Directors of the Company has been constituted as Corporate Social Responsibility Committee. The Corporate Social Responsibility Committee has formulated a policy on the Corporate Social Responsibility measures to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013.

The Corporate Social Responsibility Policy is available on the Companys web-site viz. www.vadilalgroup.com. The Annual Report on CSR activities is annexed herewith marked as Annexure - G.

INTERNAL FINANCIAL CONTROLS

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The External and Internal Auditors carryout periodic 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 Statutory Auditors have given qualified opinion on the financial reporting in their Report with regards to assessment and closure of the various financial, operational and governance related matters emanating out of the allegations made by promoter directors against each other and their consequential impact, if any, on the standalone financial statements of the Company The Management does not expect any material impact on the financial statements of the Company considering the fact that the matters pertain to earlier financial years and amount as already been expensed in the relevant financial years. Voluntary inquiries by external agencies initiated by the management are in process to substantiate its conclusion.

AUDITORS:

The Board of Directors in its meeting held on 13th August, 2021 approved and recommended appointment of M/s. Arpit Patel & Associates as Statutory Auditors of the Company for a remaining period of 4 years i.e. till the conclusion of the 41st Annual General Meeting of the Company to be held in the year 2025 subject to approval of shareholders in the annual general meeting. However, at the 37th Annual General Meeting (AGM) of the members of the Company held on 18th September, 2021, the resolution for the reappointment of M/s. Arpit Patel & Associates as Statutory Auditors of the Company for a remaining period of 4 years i.e. till the conclusion of the 41st Annual General Meeting of the Company to be held in the year 2025 was not passed and therefore, pursuant to the provisions of Section 139(10) of the CA 2013, Board of Directors vide circular resolution passed on 05th October, 2021 took note of continuation of M/s. Arpit Patel & Associates as Statutory Auditors of the Company for the financial year 2021-22 i.e. till the conclusion of next Annual General Meeting of the members of the Company to be held in the year 2021-22 as Auditors of the Company.

M/s. Arpit Patel & Associates (FRN: 144032W), Chartered Accountants, Ahmedabad Statutory Auditors of the Company were appointed, as such at the Annual General Meeting of the Company held on 29.09.2022 for one year (out of his remaining tenure of three years out of the current term of five consecutive years) to hold office from the conclusion of 38th Annual General Meeting till the conclusion of 39th Annual General Meeting of the Company to be held in the year 2023.

On the recommendation of the audit committee at its meeting held on 09th August, 2023, the Board of Directors at its meeting held on 09th August, 2023, have approved and recommended to the Members for reappointment of M/s Arpit Patel & Associates as Statutory Auditors of the Company for One year (out of his remaining tenure of of two years out of the current term of five consecutive years) i.e till the conclusion of the 40th Annual General meeting of the Company to be held in the year 2024.

SECRETARIAL AUDITOR:

Section 204 of the Companies Act, 2013 inter alia requires every listed companies to annex with its Board Report a Secretarial Audit Report given by a Company Secretary in practice in the prescribed form. The Board has appointed M/s SPAN & Co., Company Secretaries LLP, to conduct Secretarial Audit for the financial year – 2022-2023. The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed herewith marked as Annexure – H to this Report.

The Secretarial Auditors Report of the Company for the year ended 31st March, 2023 contains certain Comments/ observations. The explanation on observations therein is as under: -

1. As required under Regulation 31(2) of LODR Regulations, hundred percent shareholding of one of the promoters is not maintained in dematerialized form: The promoter group are in the process of dematerialization of shares of the Company.

INSURANCE:

All insurable interests of the Company including buildings, plant and machinery, furniture & fixtures and other insurable interest are adequately insured.

LISTING WITH STOCK EXCHANGES:

The Equity Shares of the Company are listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE).

The Company confirms that it has paid Annual Listing Fees due to the BSE Limited and National Stock Exchange of India Limited upto the Financial Year –2023-2024.

PARTICULARS OF EMPLOYEES:

The Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed with this report as Annexure - I.

MATERIAL INFORMATION:

A Company Petition (being Company Petition No. 42 of 2017) has been filed against the Company, before the National Company Law Tribunal, Ahmedabad ("NCLT"), under Sections 241 and 242 of the Companies Act, 2013. In connection to the said Company Petition No. 42 of 2017, the case has been heard on 11thJuly, 2023 and the matter has been adjourned to 22nd August, 2023.

GENERAL:

O During the year under review, there was no change in the nature of business of the Company and there is no material change and/ or commitments, affecting the financial position of the Company, during the period from 31st March, 2023 till the date of this report. O During the year under review, there was no significant and/or material order passed by any regulators or courts or tribunals impacting the going concern status and companys operations in future.

O The Company does not provide any loan or other financial arrangement to its employees or Directors or Key Managerial Personnel for purchase of its own shares and hence, the disclosure under Section 67(3)(c) of the Companies Act, 2013 does not require. O During the year under review, no Director or Managing Director of the Company has received any remuneration or commission from subsidiary of the Company in terms of provisions of Section 197(14) of the Companies Act, 2013.

O The disclosure in terms of Rule – 4 of Companies (Share Capital and Debenture) Rules, 2014 is not provided, as the Company does not have any equity shares with differential voting rights.

O The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has also organized an awareness program for its employees on the said policy on prevention, prohibition and redressal of sexual harassment at workplace adopted by the Company.

O The trademark "Vadilal" and its associated trademarks are owned by Vadilal International Pvt. Ltd. The Company is a licensee of the said Trademarks.

ACKNOWLEDGEMENT:

The Directors place on record its appreciation and gratitude for the co-operation and assistance extended by various departments of the Union Government, State Government, Bankers and Financial Institutions.

The Directors also place on record their appreciation of dedicated and sincere services of the employees of the Company at all levels. The Company will make every effort to meet the aspirations of its Shareholders and wish to sincerely thank them for their wholehearted co-operation and support at all times.

By order of the Board of Directors

Mr. Rajesh R. Gandhi Mr. Devanshu L. Gandhi
Date : 09th August, 2023 Managing Director Managing Director
Place : Ahmedabad DIN: 00009879 DIN: 00010146