Vadilal Industries Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis examines Vadilal Industries Limited’s (VIL) annual report for the fiscal year 2023-24, focusing on financial performance, business segments, risks, and Environmental, Social, and Governance (ESG) initiatives.

I. Financial Performance:

VIL reported a marginal increase in revenue from operations (1.77%) to ₹912.57 crore in FY2024 compared to ₹896.71 crore in FY2023. Including other income (₹13.21 crore), total income reached ₹925.78 crore. Profit before tax (PBT) showed a more substantial increase, rising from ₹96.48 crore to ₹128.57 crore, primarily due to improved operational efficiency and marginal revenue growth. After tax profit was ₹95.84 crore, up from ₹71.93 crore in the previous year. This improvement, however, is partly offset by a higher tax expense in FY2024 (₹32.73 crore vs. ₹24.55 crore).

Key Financial Highlights (₹ in crore):

Financial Ratios (Note: Calculations based on provided data may differ slightly from the report’s due to rounding):

The report provides some ratios, but a more complete analysis requires additional data (e.g., average equity, working capital). The provided ratios show a mixed picture: improved profitability (ROE) but decreased turnover ratios (inventory, receivables, net capital). The significantly improved debt-equity ratio is positive, signifying reduced financial leverage.

II. Business Segments:

VIL operates in two main segments:

• Ice Cream Division: This is the larger segment, contributing approximately 90% of the turnover. VIL is the second-largest ice cream brand in India, focusing on both impulse purchases (cones, bars, cups) and premium offerings (gourmet tubs, cakes). They have a wide distribution network and actively engage in marketing and brand building campaigns (Dil Bole Waah Vadilal!).
• Processed Food Division: This division contributes about 10% of the revenue, focusing on exporting processed frozen fruits and vegetables. This segment uses the existing cold chain infrastructure of the ice cream division.

III. Risks:

The report highlights many risks:

• Competition: The Indian ice cream market is highly competitive, with both established international and local brands. VIL’s strategy focuses on innovation, premiumization, and strong brand building to maintain its market share.
• Unorganized Market: The significant unorganized sector in both ice cream and processed foods poses a challenge through price competition and potentially lower quality standards.
• Supply Chain Disruptions: Rising energy costs, raw material availability (impact of climate change), and potential supply chain disruptions a/ffect both divisions.
• Raw Material Prices: Fluctuations in the prices of milk and other raw materials are a significant concern.
• Regulatory Changes: Changes in food safety regulations and taxation could impact profitability.
• Economic Downturn: A general economic slowdown can reduce consumer spending and impact demand.
• Internal Disputes: The report mentions past internal disputes between promoter directors and the pending receipt of conclusive reports related to potential misstatements in financial reporting. This is a significant governance risk.

IV. ESG Initiatives:

VIL’s Business Responsibility and Sustainability Report (BRSR) provides detail on their ESG performance, focusing on the nine principles of the National Guidelines on Responsible Business Conduct (NGRBC). While the report acknowledges many initiatives, it is still largely qualitative, lacking in quantifiable targets and progress measurements for many key areas. Key takeaways:

• Environmental: The company focuses on energy conservation (solar power, VFDs), water e/fficiency improvements, and waste management (plastic reduction through mono-layer laminate). However, concrete emission reduction targets are absent, and Scope 3 emissions are only mentioned qualitatively.
• Social: Employee well-being is prioritized through health insurance and other benefits, but data on diversity and inclusion is limited. There is a stated commitment to responsible sourcing, but the percentage of sustainably sourced inputs is only provided for the processed food division. There is mention of a grievance redressal mechanism but no detailed data on complaints received or resolved.
• Governance: The report details the composition and activities of various board committees (audit, nomination & remuneration, stakeholder relations, CSR, risk management). However, the mention of past internal disputes is a cause for concern, and greater transparency in resolving these matters is needed.

V. Overall Assessment:

VIL demonstrates financial stability and profitability, but the growth is moderate. Their reliance on the larger ice cream division needs to be balanced with growth in the processed food sector. The company’s strategy of premiumization and innovation in the ice cream market appears viable. The reported internal disputes represent a significant governance risk that requires immediate and transparent attention to rebuild stakeholder trust. While the BRSR outlines some ESG commitments, the lack of quantifiable targets and specific measurable outcomes limits the overall assessment of their sustainability performance. A stronger focus on quantifiable ESG targets and detailed reporting on progress is essential for future sustainability and investor confidence.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

Based on the provided Vadilal Industries Limited annual report, here are the values of the requested financial metrics as of March 31, 2024, in Indian Rupees (₹ crore):

• Total Assets: ₹645.24 crore
• Total Current Assets: ₹281.44 crore
• Cash and Cash Equivalents: ₹0.61 crore
• Trade Receivables (Accounts Receivable): ₹57.70 crore
• Inventories: ₹189.93 crore

Important Note: These figures are from the standalone financial statements. The consolidated financial statements would include the assets and liabilities of subsidiaries, resulting in likely higher values for total assets and the other metrics.

Liability Analysis #

Here are the values for the requested liabilities of Vadilal Industries Limited as of March 31, 2024, in Indian Rupees (₹ crore), based on the provided standalone financial statements:

• Total Liabilities: ₹262.64 crore
• Total Current Liabilities: ₹186.53 crore
• Long-term Debt: This requires some calculation. Note 19 shows a total of ₹33.10 crore in non-current borrowings after deducting current maturities. Therefore, the total long-term debt before deducting current maturities is ₹33.10 crore + ₹14.86 crore (current maturities of long-term loans) + ₹0.23 crore (current maturities of vehicle loans) = ₹48.19 crore. Note that public fixed deposits are also long-term, however, the company shows the current portion separately, so the correct figure is ₹48.19 crore.
• Accounts Payable (Trade Payables): ₹78.79 crore

Important Note: These figures are from the standalone financial statements. The consolidated financial statements would include the liabilities of subsidiaries, resulting in likely different values for total liabilities and the other metrics. Also, the long-term debt figure is a calculated value and could slightly vary based on how “long-term” is interpreted from the data provided in different notes.

Equity Analysis #

Here are the values for the requested shareholder equity components of Vadilal Industries Limited as of March 31, 2024, in Indian Rupees (₹ crore), based on the provided standalone financial statements:

• Total Equity: ₹382.60 crore
• Retained Earnings: ₹249.66 crore
• Share Capital: ₹7.19 crore (This represents the equity share capital; other equity components make up the remaining equity)

Important Note: These figures are from the standalone financial statements. The consolidated financial statements would show different values, as they include the equity of subsidiary companies. The share capital figure only represents the par value of the issued shares; the total equity includes additional paid-in capital (securities premium) and other reserves.

Income Statement #

Operating Performance #

Here’s a summary of Vadilal Industries Limited’s income statement data for the fiscal year ended March 31, 2024, in Indian Rupees (₹ crore), based on the provided standalone financial statements:

• Revenue: ₹912.57 crore (This is revenue from operations)
• Cost of Revenue: ₹495.40 crore (Cost of Materials Consumed) + ₹11.95 crore (Purchase of Stock-in-trade) + ₹18.14 crore (Changes in Inventories of Finished Goods and Stock-in-trade) = ₹525.49 crore
• Gross Profit: Revenue - Cost of Revenue = ₹912.57 crore - ₹525.49 crore = ₹387.08 crore
• Operating Expenses: This requires summing many line items from the income statement: Employee Benefits Expense (₹63.62 crore), Finance Costs (₹13.97 crore), Depreciation and Amortization Expenses (₹23.15 crore), and Other Expenses (₹170.98 crore). Therefore, operating expenses total ₹271.72 crore.
• Operating Income: Gross Profit - Operating Expenses = ₹387.08 crore - ₹271.72 crore = ₹115.36 crore

Important Note: The “Cost of Revenue” calculation here is an approximation. The provided income statement presents inventory changes in a way that makes a precise calculation slightly ambiguous. Furthermore, these figures are from the standalone financial statements. The consolidated financial statements would show different values due to the inclusion of subsidiary company data.

Bottom Line Metrics #

Based on the provided standalone financial statements for Vadilal Industries Limited for the fiscal year ended March 31, 2024:

• Net Income: ₹95.84 crore (Profit for the year)
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): This requires calculation. Start with Profit After Tax (₹95.84 crore), then add back tax expenses (₹32.73 crore), interest expense (₹13.97 crore), and depreciation and amortization (₹23.15 crore). Therefore, EBITDA is approximately ₹165.69 crore.
• Basic EPS: ₹133.34
• Diluted EPS: ₹133.34 (The report states there were no potential dilutive securities, so basic and diluted EPS are the same).

Important Note: These figures are from the standalone financial statements. Consolidated figures would differ due to the inclusion of subsidiary data. The EBITDA calculation is an approximation, as some items may be considered operating expenses under different accounting standards.

Cash Flow #

Cash Flow Components #

Based on the standalone statement of cash flows for Vadilal Industries Limited for the year ended March 31, 2024:

• Operating Cash Flow: ₹137.85 crore
• Investing Cash Flow: ₹(40.77) crore (negative, indicating net cash outflow)
• Financing Cash Flow: ₹(102.19) crore (negative, indicating net cash outflow)

Important Note: These are figures from the standalone statement of cash flows. The consolidated statement of cash flows would include the cash flows of subsidiary companies, resulting in different values. The parentheses around the numbers for Investing and Financing cash flows denote that these represent net cash outflows.

Cash Flow Metrics #

To calculate free cash flow (FCF), we need to use data from the standalone statement of cash flows. Free cash flow is typically calculated as operating cash flow less capital expenditures.

• Operating Cash Flow: ₹137.85 crore (from the standalone cash flow statement)

• Capital Expenditure: This isn’t explicitly stated as a single line item but can be inferred. The investing cash flow section shows capital expenditure on Property, Plant & Equipment and Intangible Assets of ₹(43.32) crore.

• Free Cash Flow (FCF): Operating Cash Flow - Capital Expenditure = ₹137.85 crore - ₹43.32 crore = ₹94.53 crore

• Dividends Paid: ₹1.08 crore (from Note 18a under the standalone statement of changes in equity)

Important Note: These figures are from the standalone financial statements. The consolidated figures will differ because they will encompass subsidiary company data. The Capital Expenditure figure is derived from the investing activities section and may not perfectly align with all definitions of CAPEX depending on the specific accounting practices of the company.

Profitability Ratios #

To calculate the profitability ratios for Vadilal Industries Limited for the fiscal year ended March 31, 2024, we’ll use the standalone financial statement data. Keep in mind that these calculations are based on the numbers we derived earlier; slight discrepancies might exist compared to the company’s official report due to rounding differences.

• Gross Margin: (Gross Profit / Revenue) * 100 = (₹387.08 crore / ₹912.57 crore) * 100 ≈ 42.4%
• Operating Margin: (Operating Income / Revenue) * 100 = (₹115.36 crore / ₹912.57 crore) * 100 ≈ 12.6%
• Net Profit Margin: (Net Income / Revenue) * 100 = (₹95.84 crore / ₹912.57 crore) * 100 ≈ 10.5%
• Return on Equity (ROE): (Net Income / Average Shareholder Equity) * 100. We need the average shareholder equity for a precise calculation (beginning and ending equity values are needed, which aren’t directly provided in this simplified summary). The annual report states ROE as 28.53%, but we do not have enough information to independently calculate and verify that figure.
• Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similar to ROE, we need the average total assets (beginning and ending values) for a precise calculation. The annual report states ROA as 14.56%, but we do not have enough information to independently calculate and verify that figure.

Important Note: These calculations rely on our earlier approximations of Gross Profit and Operating Income. The precise values in the official annual report might show small variations due to rounding and possible differences in accounting treatment. Also, to accurately calculate ROE and ROA, the average values of shareholder equity and total assets for the year are necessary, which aren’t directly provided in the simplified information. Always use the company’s official reported figures for the most accurate financial analysis.

Liquidity Ratios #

To calculate the liquidity ratios for Vadilal Industries Limited as of March 31, 2024, we’ll use the standalone balance sheet data. Remember that these calculations are based on previously derived values, so minor discrepancies might arise due to rounding:

• Current Ratio: (Current Assets / Current Liabilities) = ₹281.44 crore / ₹186.53 crore ≈ 1.51
• Quick Ratio: [(Current Assets - Inventories) / Current Liabilities] = (₹281.44 crore - ₹189.93 crore) / ₹186.53 crore ≈ 0.49
• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = ₹0.61 crore / ₹186.53 crore ≈ 0.0033

Important Note: These calculations use the standalone balance sheet data and our previously calculated values for current assets and current liabilities. The consolidated balance sheet would produce different results. Always use the company’s official reported figures for the most accurate financial analysis. Also, note that the cash ratio is extremely low, which may indicate a potential liquidity risk for the company. This warrants further investigation.

Efficiency Ratios #

Calculating efficiency ratios requires data not fully provided in the simplified summary of Vadilal Industries’ financial statements. We need average values (average inventory, average receivables, average total assets) for accurate calculations. The provided annual report gives some of these ratios, but not enough information to independently calculate and verify them. We can only provide the formulas needed for calculation, along with the available data points to illustrate how these would be computed.

• Asset Turnover: (Revenue / Average Total Assets). We need the average total assets (beginning and ending values from the balance sheet) for this calculation. The report shows a value for this, but we need the complete balance sheet to independently verify it.

• Inventory Turnover: (Cost of Goods Sold / Average Inventory). We have an ending inventory value (₹189.93 crore) from the balance sheet, but to calculate the average, we’d need the beginning inventory value. We also need the cost of goods sold (COGS), which isn’t explicitly stated but is calculable from the income statement data (though it requires a clarification on the accounting of inventory changes as mentioned earlier). The report shows a value for this ratio, but we lack the data to verify this.

• Receivables Turnover: (Revenue / Average Accounts Receivable). Similar to the other two ratios, calculating this requires the beginning and ending balances for accounts receivable. The report provides a value but without full data, we cannot verify it.

In summary: The formulas are provided above, but without complete data from the full annual report, a precise and independently verified calculation of these efficiency ratios is not possible. Always rely on the company’s official calculations for the most accurate financial analysis.

Leverage Ratios #

Calculating use ratios for Vadilal Industries Limited as of March 31, 2024, requires data from both the balance sheet and income statement. We’ll use the standalone figures we calculated earlier, acknowledging potential minor discrepancies due to rounding:

• Debt-to-Equity Ratio: (Total Debt / Total Shareholders’ Equity). We’ll use the approximate total debt figure from our previous analysis (₹111.37 crore - net debt). Total shareholder’s equity is ₹382.60 crore. Therefore, the Debt-to-Equity ratio is approximately (₹111.37 crore / ₹382.60 crore) ≈ 0.29.

• Debt-to-Assets Ratio: (Total Debt / Total Assets) = ₹111.37 crore / ₹645.24 crore ≈ 0.17

• Interest Coverage Ratio: (Earnings Before Interest and Taxes (EBIT) / Interest Expense). We need to calculate EBIT first. We can use the provided PBT (₹128.57 crore) and add back the interest expense (₹13.97 crore), resulting in EBIT of approximately ₹142.54 crore. Interest Expense is given as ₹13.97 crore. Therefore, the Interest Coverage Ratio is approximately (₹142.54 crore / ₹13.97 crore) ≈ 10.2

Important Note: These calculations use our previous approximations for debt and other financial metrics. The consolidated financial statements would yield different results. It is essential to use the company’s officially reported figures for a precise analysis. Also, remember that the reported interest expense is from standalone data and might slightly change upon consolidation.

Market Analysis #

Market Metrics #

Several of these market-based ratios cannot be calculated from the information provided in the annual report alone. The annual report gives fundamental accounting data, but to compute market-based metrics, we need current market data (share price, number of outstanding shares).

• Market Cap: (Current Market Price per Share * Number of Outstanding Shares). This requires the current market price per share, which is not available in the provided annual report.

• P/E Ratio (Price-to-Earnings Ratio): (Market Price per Share / Earnings Per Share). This calculation also needs the current market price per share, which is unavailable.

• P/B Ratio (Price-to-Book Ratio): (Market Price per Share / Book Value per Share). The book value per share can be approximated from the balance sheet data (shareholder’s equity / number of shares), but the market price per share is missing.

• Dividend Yield: (Annual Dividend per Share / Market Price per Share) * 100. The annual dividend per share (₹1.50) is available in the report, but the market price per share is required for calculation.

• Dividend Payout Ratio: (Dividends Paid / Net Income) * 100 = (₹1.08 crore / ₹95.84 crore) * 100 ≈ 1.13%.

In summary: Only the dividend payout ratio could be calculated from the provided data. The other ratios require the current market price per share, which is not included in this annual report. To calculate these market-based ratios, you must obtain the current market price per share from a financial data provider.

Business Analysis #

Segment Analysis #

The provided annual report only gives limited segment information. While it clearly identifies two business segments, detailed breakdowns of revenue, growth rates, operating margins, and market shares aren’t available for each segment. Also, geographic presence is only mentioned qualitatively.

Business Segments:

1. Ice Cream Division:

• Name: Ice Cream Division
• Revenues: Approximately 90% of total revenue (₹821.31 crore, calculated as 90% of ₹912.57 crore standalone revenue). The exact figure is not explicitly provided.
• Growth Rate: Not explicitly stated for this segment alone; overall revenue growth was 1.77%.
• Operating Margin: Not explicitly stated for this segment; the overall standalone operating margin is approximately 12.6%.
• Market Share: The report indicates VIL holds a 16% share of the organized Indian ice cream market. This is not a total market share, as it excludes the significant unorganized sector.
• Key Products: A wide range of ice creams, including impulse items (cones, bars, cups) and premium products (gourmet tubs, cakes, artisan ice cream cakes). Specific product revenue breakdowns aren’t available.
• Geographic Presence: Pan-India, with an extensive distribution network.

2. Processed Food Division:

• Name: Processed Food Division
• Revenues: Approximately 10% of total revenue (₹91.26 crore, calculated as 10% of ₹912.57 crore standalone revenue. The exact figure is not provided.
• Growth Rate: Not explicitly stated for this segment alone; overall revenue growth was 1.77%.
• Operating Margin: Not explicitly stated for this segment; the overall standalone operating margin is approximately 12.6%.
• Market Share: Not provided.
• Key Products: Frozen fruits, vegetables, and other processed food products, primarily for export.
• Geographic Presence: Primarily export-oriented; the report mentions exports to 24 countries.

Limitations: The financial statements lack a detailed segmental breakdown. The data above relies on the approximate percentages of total revenue mentioned in the annual report, which means calculations based on these figures may not be perfectly accurate. To obtain a precise and complete analysis of each segment’s performance, a more detailed segmental report would be required.

Risk Management #

Risk Assessment #

The provided annual report does not offer a structured risk assessment framework with detailed likelihood and impact severity ratings for each risk. However, we can categorize and describe the key risk factors mentioned, along with some inferred mitigation strategies and trends:

I. Key Risk Factors:

A. Financial Risks:

B. Operational Risks:

C. Competitive Risks:

D. Governance Risks:

II. Impact Severity and Likelihood:

The annual report lacks quantifiable data for assessing likelihood and severity. A detailed risk assessment would require such information, including probabilities of different scenarios and the potential financial implications. Qualitative assessments could be made by expert review of the company’s operations and competitive landscape.

III. Mitigation Strategies:

The report mentions many strategies, but a full risk mitigation plan would require a more detailed view of both the risks and the steps taken to mitigate them.

IV. Trends:

The described trends are mostly qualitative, indicating growing competition, increasing complexity in regulatory compliance, and the need for continuous investment in infrastructure and technology to support business growth and sustainability initiatives. The future impact of these trends depends largely on external factors, such as economic conditions and government policies. A more rigorous analysis of industry trends and competitor strategies would be needed to provide more precise trend forecasts.

Strategic Overview #

Management Assessment #

Vadilal Industries Limited’s management highlights many key strategies, competitive advantages, market conditions, challenges, and opportunities in their annual report. However, the information provided is largely qualitative, lacking specific numerical data to support their claims.

I. Key Strategies:

• Product Innovation and Premiumization: Launching new and innovative products, including premium variants with natural ingredients, to cater to evolving consumer preferences and compete with international brands. This is evident in the Gourmet Naturals line.
• Strengthening Brand Identity: Aggressive marketing campaigns (like “Dil Bole Waah Vadilal!”) aim to improve brand recognition and create a younger, more modern brand image.
• Distribution Network Expansion: Expanding the reach of their distribution network to increase market penetration in existing and new markets, including modern retail formats and online channels.
• Investment in Infrastructure: Investing in production facilities and cold chain infrastructure to improve production capacity, automation, and logistics efficiency. This includes a focus on high-capacity cone-making machinery.
• Focus on Quality: Emphasizing quality control and adherence to food safety standards to differentiate themselves from competitors in the unorganized market segment.

II. Competitive Advantages:

• Established Brand: Decades-long brand recognition and consumer trust provide a significant competitive edge.
• Extensive Distribution Network: A widespread and robust distribution network provides access to a broad customer base.
• Production Capacity: High production capacity and access to advanced machinery are key operational advantages.
• Product Diversification: The varied product portfolio caters to various segments of the ice cream and processed food markets.
• Cold Chain Infrastructure: Established cold chain logistics provide an advantage in the handling and distribution of perishable products.

III. Market Conditions:

• Growth in Premium Segment: Increasing consumer demand for premium ice cream products creates a significant growth opportunity.
• Expanding Organized Market: Growth in the organized food and beverage sectors overall presents potential for expansion.
• E-commerce Growth: The growing penetration of e-commerce platforms provides new avenues for sales and reach.
• Health and Wellness Focus: A rising emphasis on health and wellness influences consumer choices; offering natural and healthier products is key.

IV. Challenges:

• Intense Competition: The ice cream and processed foods markets are intensely competitive, both from established brands and new market entrants.
• Unorganized Sector Competition: Lower prices and potential lower quality from the unorganized sector represent a continuous challenge.
• Raw Material Price Fluctuations: Fluctuations in the price of milk and other raw materials impact profitability.
• Supply Chain Disruptions: Global events and economic conditions can disrupt the supply of raw materials and cause logistical issues.
• Regulatory Compliance: Adhering to complex and ever-changing food safety and other regulations is a major challenge.
• Internal Disputes: Past internal disputes and unresolved governance issues pose challenges to operational efficiency and investor confidence.

V. Opportunities:

• Premiumization: The growing demand for premium ice cream and frozen desserts presents a significant opportunity for growth.
• Innovation: Continuous product innovation and new product launches can capture market share and cater to changing consumer demands.
• Expanding Distribution Channels: Growing e-commerce and organized retail sectors provide substantial opportunities for expanding market reach.
• International Expansion: Opportunities for growth exist through increased focus on exports to both new and existing markets.
• Sustainable Products: Demand for environmentally friendly products and packaging presents an opportunity for VIL to further differentiate itself and align with consumer preferences.

Limitations: The report provides qualitative descriptions rather than a thorough quantitative analysis of these aspects. The specific revenue contribution of new products or the exact market share gains from marketing initiatives aren’t provided, for example. A more in-depth analysis of market data and competitor information is needed for a complete picture of their competitive standing and growth prospects.

ESG Ratings #

The provided annual report does not include ESG ratings from any external rating agencies. While the report contains a Business Responsibility and Sustainability Report (BRSR), it doesn’t reference any scores or ratings from organizations such as MSCI, Sustainalytics, Refinitiv, or others that provide independent ESG assessments. To find ESG ratings for Vadilal Industries Limited, you would need to consult these specialized ESG rating agencies directly or use financial data platforms that provide such ratings.

ESG Initiatives #

Vadilal Industries Limited’s annual report provides details on their environmental and social initiatives, but information on their carbon footprint and sustainability goals is limited and largely qualitative. There are no specific, quantifiable targets mentioned.

I. Environmental Initiatives:

• Energy Conservation: The company has implemented many energy-saving measures, including the installation of rooftop solar power systems, Variable Frequency Drives (VFDs) in compressors, and efforts to improve power factors. They are also exploring the use of hybrid power.
• Water E/fficiency: Initiatives to improve water usage efficiency are mentioned, including the fabrication of an in-house crate washer to conserve water and improve hygiene.
• Waste Management: The company emphasizes waste reduction and is working to minimize the use of plastic in packaging, aiming for a “circular economy” approach. They utilize a mono-layer laminate and mention that all their packaging carries an anti-litter logo.
• Sustainable Sourcing: The report notes e/fforts to promote sustainable sourcing practices, especially in working with farmers to improve agricultural methods, however quantifiable data on the percentage of sustainably sourced materials is limited.

II. Carbon Footprint:

The annual report does not provide a detailed calculation or disclosure of the company’s carbon footprint (Scope 1, 2, and 3 emissions). The BRSR mentions e/fforts to reduce overall emissions, but this lacks any quantifiable data.

III. Social Initiatives:

• Employee Well-being: The company emphasizes employee well-being through health insurance, accident insurance, and other benefits. There is mention of wellness initiatives.
• Community Engagement: The report describes some community engagement activities, including providing medical aid and vocational training, primarily in areas near their operational facilities. However, specific details on the scale and impact of these programs are limited.
• Value Chain Partnerships: The company claims to provide training and support to farmers in their supply chain to improve sustainable farming practices.

IV. Governance Practices:

• Board Committees: The report details the activities of many key board committees: Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee, and Risk Management Committee.
• Code of Conduct: The company has adopted a code of conduct and ethics for its directors and senior management.
• Vigil Mechanism: A whistleblower mechanism is in place to enable employees to report ethical concerns.
• Compliance: The report emphasizes compliance with legal and regulatory requirements. However, past internal disputes between promoter directors cast some doubt on the consistent application of robust governance practices.

V. Sustainability Goals:

The annual report does not explicitly state quantifiable sustainability goals or targets. The report focuses on qualitative statements about their commitment to sustainability, but it lacks speci/fic, measurable, achievable, relevant, and time-bound (SMART) objectives. This is a considerable limitation for assessing their long-term sustainability strategy.

Overall: While the report showcases many environmental and social initiatives, its lack of quantifiable data on carbon footprint and sustainability goals hinders a detailed evaluation of their progress and long-term commitment to sustainability. More detailed reporting with specific targets and measurable indicators is essential for transparency and accountability.

Additional Information #

Operational Metrics #

Based on the provided annual report:

• R&D Expenditure: ₹0.66 crore for the fiscal year 2023-24.
• Employee Count: A total of 632 employees as of March 31, 2024 (this includes both permanent and other than permanent employees). The report further breaks down the count by gender and employment type (permanent/non-permanent) for both employees and workers (a separate category). The total number of workers is 3490.

It is important to note that these figures are from the standalone report. Consolidated figures would include employees and R&D spending from subsidiary companies.

Key Events #

The annual report mentions many significant events during the fiscal year 2023-24:

• Marginal Revenue Growth: The company experienced only a small increase in revenue from operations. This modest growth warrants further investigation into market dynamics and the company’s performance in specific product categories.

• Improved Operational E/fficiency: Despite marginal revenue growth, the company showed a significant improvement in profitability, suggesting increased efficiency in operations and cost management.

• New Product Launches: The introduction of new products, especially in the premium “Gourmet Naturals” line, demonstrates a strategy to cater to the growing demand for higher-quality ice creams.

• Marketing Campaign: The “Dil Bole Waah Vadilal!” campaign aimed to revitalize the brand’s image and improve consumer engagement. The success of this campaign in boosting sales and brand perception would need to be measured and reported in future reporting.

• Consolidation of Banking Arrangements: The company dissolved its consortium banking arrangement and transitioned to a multiple banking arrangement, suggesting potential cost savings and optimized /financial management.

• Debt Reduction: The repayment of some long-term debt and the restructuring of borrowing arrangements signifies a strengthening of the company’s /financial position.

• Internal Disputes: The report mentions ongoing matters relating to allegations and counter-allegations between promoter directors concerning expenses. Although the board considers this to be not material, its disclosure shows a potential governance risk and needs further attention to ensure transparency and restore investor confidence. The resolution of these disputes is a significant factor to watch going forward.

• Legal Matters: The annual report notes ongoing legal proceedings, including litigations relating to potential oppression and mismanagement, which would need to be closely followed. The impact of the outcome of these cases on the company’s future financial performance cannot be determined at this time.

• Acquisition of Krishna Krupa Corporation: The acquisition of Krishna Krupa Corporation in the previous fiscal year (June 10, 2022) is mentioned as having impact in the current year. The implications of this acquisition on the company’s operations and /financial performance should be monitored closely.

It is essential to consider that these events have varying degrees of importance, and a full understanding would require additional details and quantitative data about their impact on the company’s overall performance.

Audit Information #

Auditor’s Opinion:

The auditor, Arpit Patel & Associates, issued a qualified opinion on both the standalone and consolidated financial statements. This means the auditor found the financial statements to be presented fairly, except for the potential effects of certain matters. Specifically, the qualification stems from the ongoing investigation into counter-allegations made by promoter directors concerning the classification of certain expenses. The auditor was unable to assess the potential material impact of these unresolved allegations on the financial statements as a whole. The auditor also included an emphasis of matter paragraph highlighting ongoing litigations against the company.

Key Accounting Policies:

The annual report outlines many key accounting policies, consistent with Indian Accounting Standards (Ind AS). These include, but are not limited to:

• Basis of Preparation: The financial statements are prepared using the historical cost convention except for certain financial instruments measured at fair value. The going concern basis is assumed.

• Operating Cycle: The company’s operating cycle is determined to be twelve months.

• Property, Plant, and Equipment: Cost less accumulated depreciation and impairment. Depreciation is calculated using the straight-line method over estimated useful lives.

• Intangible Assets: Cost less accumulated amortization and impairment, amortized over their estimated useful lives.

• Investments: Investments in subsidiaries are carried at cost less impairment. Other investments may be carried at cost, fair value through profit or loss (FVTPL), or fair value through other detailed income (FVOCI) depending on the company’s business model.

• Inventories: Valued at the lower of cost and net realizable value (NRV). Cost is determined using the weighted average method.

• Financial Instruments: Financial assets and liabilities are initially measured at fair value. Subsequent measurement varies depending on classification (amortized cost, FVTPL, or FVOCI).

• Revenue Recognition: Revenue from sales of goods is recognized when the goods are shipped or made available to the customer. Ind AS 115 principles are applied.

• Government Grants: Recognized when there is reasonable assurance of compliance with conditions and receipt. Recognized systematically over the periods in which related costs are recognized.

• Employee Benefits: Includes defined contribution plans (provident fund) and defined benefit plans (gratuity), accounted for under Ind AS 19.

• Borrowing Costs: Costs directly attributable to qualifying assets are capitalized; others are expensed.

• Foreign Currency: Transactions are recorded at exchange rates prevailing at transaction dates; monetary items are retranslated at the reporting date, with differences recognized in profit and loss.

• Taxation: Includes current tax and deferred tax, recognized in profit or loss (except for items in other detailed income).

• Earnings Per Share: Calculated in accordance with Ind AS 33.

This is not an exhaustive list, but it covers the key areas of accounting policy disclosed in the report. A full understanding would require reviewing the entire accounting policies section of the annual report.