Vadilal industries whips up expansion plans

Vadilal Industries, one of the leading ice-creams makers in the country, is working on increasing its all-India market share from 20 per cent now to 24 per cent by entering newer markets like Haryana, UP, Bihar, Jharkhand among others. The company is also targeting a sales growth of 40 per cent in 2011-12.

The company's presence has been mostly in Gujarat, where it enjoys a 40 per cent market share. Vadilal now plans to increase the number of distributors from 550 at present to 750 in the coming year, besides adding around 40 Happinezz parlours across the country, taking the number up to 170. Vadilal currently has around 100 Happinezz parlours in Gujarat alone

Devanshu Gandhi, managing director of Vadidlal industries said, "We plan to increase our network penetration, which, in turn, will help us expand our market share." The company is also planning to come up with more products in the high-end ice-cream category, and hopes that it will boost its turnover by 40 per cent in 2011-12. As on date, Vadilal is a Rs 280 crore company. "As against the average industry growth of around 15 per cent, we are looking at achieving sales growth of 40 per cent in 2011-12.", he added.

Meanwhile, to support its growth plans, Vadilal is enhancing its production capacity from 2,25,000 litres per day to 3,25,000 litres per day from April onwards.

It has recently set up the country's fastest cone-making machine. The new machine is capable of making 18,000 cones per hour, from the current one which makes 6000 cones per hour. It has two ice-cream production facilities, one in Pundhra near Gandhinagar in Gujarat, and another at Bareilly in Uttar Pradesh.

Gandhi, however, also added,"Milk prices have gone up by 30 to 35 per cent on a year-on-year basis. We have already increased the prices in February by 7.5 per cent. So far, the sales have not been impacted due to the rise in prices. Now, we are planning to make another price rise of around five per cent next month." The demand growth during summer months is likely to offset the rise in ice-cream prices. Usually, sales grow four-fold during the summer months compared to the sales all year round, Vadilal claimed.

With soaring input costs and additional excise burden, all major ice-cream players have gone in for price rises in the last two months. Amul, the market leader with a 40 per cent market share has already raised prices of its large packs by around 10-12 per cent in March.

Another Ahmedabad- based ice cream major Havmor Ice Cream also plans to raise prices by around 5-7 per cent after April. Higher raw material cost is largely responsible for hike in ice cream prices.

As per the dairy industry players, the milk production cost in Gujarat has increased by 10 per cent in 2010, following which Gujarat Co-operative Milk Marketing Federation (GCMMF) raised retail milk prices twice in 2010 and once in first quarter of the current year.

Moreover, this year's Union Budget has brought ice-creams under the excise duty net with a levy of one per cent duty.

DEEPAK KUMAR

PGDM 2 ND SEM