Ahmedabad: Once upon a time, before cooperative dairy major Amul (Gujarat Cooperative Milk Marketing Federation) entered the ice cream market, Vadilal was synonymous with ice creams in India. Now, the city-based Vadilal Industries Ltd is rediscovering itself. It has entered the frozen foods business with a brand, Quick Treat and its ice cream business is seeing a revival. There has also been talk of Vadilal’s promoters planning to exit the business if they get the right price.
In an exclusive interview with Mint, Rajesh Gandhi, managing director of Vadilal Industries, spoke about his company’s plans for the ice cream and frozen foods businesses. Gandhi said there are no real sugar-free or probiotic (with beneficial bacteria) ice creams available in India, a reference to launches by some of Vadilal’s competitors. Edited excerpts:
News of the Vadilal brand being on the block is doing rounds. Now we hear ITC Ltd is in the fray…
We have no plan whatsoever to sell our brand to anyone in the foreseeable future. We have been hearing this for over 15 years. The only time we had any talks of sale of any kind was over a decade-and-a-half back when Hindustan Unilever Ltd had approached us. We refused and since then we have neither been approached by any body nor have we even remotely approached anyone to sell our brand.
What’s new on the Vadilal shelf?
This is the time for growth of the industry. It has been growing at a rate of 15% and Vadilal, today, has an ice cream business worth Rs150 crore and frozen foods
business of Rs30 crore.
Optimistic: Vadilal Industries MD Rajesh Gandhi.
The frozen food business, too, is seeing revival due to boom in retail sector. Earlier, it was difficult to get shelf space as retailers would keep things on shelves that they thought customers wanted. Now, their perception has changed and they have started keeping stuff which they think customers will pick up, if offered. The customer psyche, too, has changed. Today, the customer walks around the store, takes a hard look at the products available and is not averse to picking up new things.
So, frozen foods are the focus area for Vadilal?
We now plan to expand our Quick Treat brand of frozen foods from green peas to many other products and are expanding our capacity at Dharampur near Valsad, Gujarat, by this December. We will be making frozen curries of different kinds and vegetable mixes at this facility. Most of the curries available today are at ambient temperature. We also plan to launch tandoori rotis and naans from our stable. We hope to expand our frozen food business and achieve a turnover of at least Rs100 crore in next three-five years.
Do you eat your own frozen foods?
(Smiles) Well, I do taste (them) during the launch process, but frozen foods are for people who are single or for working couples who at times don’t feel like cooking or going out for their food. It also is good for students and non-resident Indians who love to have a taste of India. Therefore, most of the frozen packaged foods are exported to countries such as the US, the UK, Canada, Australia and New Zealand where we have a sizeable Indian population.
What about the domestic market?
Things are looking up in India, too. Apart from rising demand, what is further giving boost to the frozen foods business is that the government, too, has come forward and reduced excise duty from 16% to 8%. The only issue is that of 12.5% value-added tax (VAT). We believe that the food-processing ministry is now trying to impress upon finance ministry to cut down VAT on perishable foods to zero and 4% for non-perishable foods. This would bring it in-line with the developed nations and give a big boost to foods business in our country.
Vadilal seems to have made a comeback of sorts in ice cream, too, after being sidelined by Amul.
Well. You can’t go on full steam if you sell your product at (the) least margins. They are finally revising their margins. We always maintained right price and so have been able to survive and now grow.
How is the ice cream business growing in India? And where does Vadilal stand?
The organized ice cream business in India is not very large. It is anywhere between Rs800 crore and Rs1,000 crore. At present, we have a turnover of Rs150 crore. So we have 15-20% market share. We feel that we could move to number one position if a level-playing field is provided and competition is on merit. At present, we continue to be second to market leader (Amul).
What do you mean by competition on merit?
I mean if there is right pricing and no cross-subsidy is provided.
Don’t you plan to enter the sugar-free ice cream business like your competitors have?
Well, let me tell you that there is no sugar-free ice cream available in the Indian market as of now.
Not even from Amul or the others?
No. If you go strictly by the Indian statutory requirements. There are a lot of restrictions on the ingredients you can use to make sugar-free ice cream.
So, when you launch yours, it will be a true sugar-free ice cream...
It’s too premature to say what we are going to add to make our ice cream sugar free, but one thing is for sure that it will strictly follow all the norms set under the Indian law for sugar-free products. So in that sense you can say that ours would be a real sugar-free ice cream.
Would it also be a probiotic ice cream?
Well as per Indian laws, ice creams cannot be probiotic.
How do we have probiotic ice creams in the market?
I can’t comment on this.