Shares of ice cream maker Vadilal Industries closed over 13 percent higher on April 1 after the promoter family settled the restructuring in order to separate management from ownership.
The family had reached an arrangement on March 30 to appoint 'independent professional management personnel' for management of the business and operations, and had decided to maintain 'equality of interests and participation' of all the promoters, with an eye on maximizing shareholder value.
On Tuesday, the stock ended 13.34 percent higher at Rs 5,205 on NSE.
The fourth generation of the promoters of Vadilal, the Gandhi family have 'harboured diverse interests' and different ambitions, the company had said in a statement, which implied varying perception of the 'strategic direction, growth and governance' of the Vadilal group.
As per the agreement, each of the three family branches of the Gandhi family will have the right to appoint one director to the board, and the majority of the Board will be constituted by directors not being members of the family and/or their nominees. Each 'branch' also has the right to equal representation on the boards of all subsidiaries of the company, the statement by Vadilal Industries said.
The company said the Gandhi family has the right to identify and recommend the CEO, CFO and other key managerial personnel. "Any appointment, re-appointment and/or removal of independent directors and professional management personnel will require the unanimous consent of each of the Branches," the press statement said.
For future funding requirement, the statement said that the company will be required to follow a 'waterfall mechanism', implying funds will be raised first through internal accruals or debt borrowings, and second, through a rights issue to existing shareholders, subject to 'unanimous consent' of each of the branches of the promoter family.
The Board will have four non-executive directors aside of the nominees, including at least three independent directors.
The promoters also said that the brand 'Vadilal' would be housed within the company, which is currently used under a non-exclusive license, for a limited period, from a promoter group entity. This, the statement said, will enable the company to secure continued use of the brand, sustain market presence and maximise value for all stakeholders.
The disputes between the promoter family had escalated to legal battles in the past, leading to the case reaching the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT). The settlement is expected to clear uncertainty and restore investor confidence in the business.
The Vadilal brand has a 16% organized market share in the total organized ice cream market in India, which is estimated at around Rs 20,000 crore, according to the company statement as of September 2024.
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