On a scorching afternoon in Ahmedabad, we caught up with Rajesh Gandhi, CMD, Vadilal Industries to know more about the trends in the ice cream industry. In an interview for Bloomberg TV India’s special series Bloomberg Hotspot Gujarat, Gandhi opened up on how leaders from Gujarat supported the industry, right from the beginning.

Gujarat has been a hotbed of industrialists. We have seen several enterprises coming up here. Why does the State get the tag of being one of the most investor friendly regions? Why do so many sectors boom here?

From the very beginning, the Leaders of Gujarat have been supportive of industries. They know the value of industrialisation and have always backed the cause. On top of it, the administration in the state is also pro-industry. Whenever there is any issue, they take personal interest in solving it, which I believe, never happens in other states.

Tell us about the industry that you operate in, right now. What trends are you seeing and how has the industry evolved in the last few years?

As far as the ice cream industry is concerned, we believe that India is at a very slow, low-volume consumption, compared to rest of the world. With regard to the per capita ice-cream consumption, we are at around 350ml per annum as compared to 22 litres in the European countries or the Americas and around 8 litres in China. We see a very good trend coming up and we believe that the industry has to grow even more.

Lets talk about the monsoon angle as you are an industry where the demand is greater in summer. What has been the impact of deficient monsoon on the demand?

The ice cream industry is a seasonal industry, which is very much like the soft drink and air-conditioner businesses. When the heat is extreme, the business booms. On the other hand, the business is low during winters. In the monsoon, the business oscillates between the mids and lows because half the days witness rains and we have dry spells during the other half of the days. So, on the days which have no rains, business can be good as there is a lot of heat in the absence of rains. As a result, we usually get around 6-7 months of a good season which helps the industry keep going.

In that sense, deficit monsoon is actually a benefit for you?

Yes, indirectly, if the monsoon gets delayed, the ice cream industry sees a better growth. This year we have had a very good growth in September which covered our deficit of growth of the previous period.

About your plans going forward, let’s talk about capex and ad spends. How do you see that panning out?

We had spent ₹150 crore one and half years ago for updating our plant (s) and increasing capacity. We increased the capacity of both our plants to 3.5 lakh litres per day. So as on today for a year or year and a half, we are reasonably comfortable. We have to spend money on the sales generating assets.

We spend around ₹15 crore annually on generating assets, which is inevitable to get the right kind of growth. Coming to ad spending, we spent around 7-8 per cent of our total revenue and which amounts to around to ₹40 crore on advertisement which is segregated into TV commercials, newspapers and Point of Purchase (POP). In this current year, our ad spending has gone up by 3.5 per cent, especially because of the favourable season and overall good performance.

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