Sustainable Performance Analysis of Vadilal Industries for

Digitalization in Food Processing Industry

by
Aashish Kanesh, 2019IMG-001
Abhinav Pathak, 2019IMG-002 &
Anirudh Gautam, 2019IMG-006

submitted to

Prof. Rajendra Sahu

ABV-INDIAN INSTITUTE OF INFORMATION TECHNOLOGY

AND MANAGEMENT
GWALIOR-474015
2023

1
1 Abstract
Purpose – This study aims to analyze the sustainable performance of Vadilal in the food
processing industry with respect to digitalization. The food processing industry is a crit-
ical sector that faces various sustainability challenges, such as resource scarcity, waste
generation, and environmental impact. Digital transformation can help small and medium-
sized enterprises (SMEs) in the food processing industry address these challenges and
achieve sustainable performance.

Design/Methodology/Approach – The study report will examine the sustainability ratios

and indicators of the firm before and after the digitalization initiatives using a quanti-
tative research approach and statistical analysis. The ratios and indicators will be com-
pared before and after the digitalization to see whether there are any notable variations,
which will be determined using the t-test.

Findings – Below listed are some Pre-digitalization practices,

Manual processes: Food processing businesses managed their operations using time-
consuming, ineffective manual procedures. Lack of uniformity and poor quality control
were the results.
Minimal data analysis: There was little real-time data available for decision-making, and
data analysis was restricted to simple reporting.
Inadequate supply chain management: Inefficiencies and a lack of transparency were
caused by a lack of visibility and traceability throughout the supply chain.
Below listed are some Post-digitalization practices,
Automated processes: As a result of the introduction of digital technologies, processes
have become more efficient, standardised, and quality-controlled.
Advanced data analytics: Digitalization has made it possible for businesses to gather,
store, and analyse real-time data, resulting in insights for enhanced performance and
decision-making.
Better supply chain management has been made possible by digitalization, which has
increased product visibility and traceability all the way through the supply chain.

Practical Implications – This study report has important practical ramifications for in-
vestors, policymakers, and the Indian Food Processing Industry. The results will aid in
decision-making and offer information on how well digitalization may increase opera-
tional performance and profitability.

2
Keywords – Sustainable performance analysis, food processing, SMEs, digitalization,
environmental impact, social responsibility, economic viability, innovation, energy con-
sumption, waste generation, employee satisfaction, profitability, revenue growth, cost
efficiency, research and development.

2 Introduction
SMEs in Food Processing industry One promising approach to achieving sustainability
in the food processing industry is through digitalization, which involves the use of tech-
nology to improve efficiency and reduce waste. Digital technologies can also help com-
panies to improve social responsibility by providing transparency in supply chains and
facilitating communication with workers and suppliers.
This study aims to analyze the sustainable performance of selected small and medium-
sized enterprises (SMEs) in the food processing industry with respect to digitalization.
We evaluate the sustainability of these SMEs based on several key factors, including envi-
ronmental impact, social responsibility, economic viability, and innovation. By analyzing
the performance of SMEs that have adopted digital technologies, we aim to provide in-
sights into the benefits and challenges of digitalization for achieving sustainability in the
food processing industry. Ultimately, the findings of this study can help inform policy-
makers, industry stakeholders, and SMEs themselves about best practices for achieving
sustainable performance in the food processing industry through digitalization.
Before the advent of the digital age, food processing businesses managed their operations
using time-consuming, ineffective, and error-prone manual processes and procedures.
The performance and efficiency of the sector have, however, significantly improved since
the implementation of digital technologies.
Overall, the food processing sector has greatly benefited from digitalization, which has
enhanced supply chain management, efficiency, and quality control.

About Vadilal Indutries – Vadilal Industries Ltd. is a popular Indian ice cream and frozen
dessert brand based in Gujarat, India. The company was founded in 1907 and started
with making traditional Indian sweets before diversifying into ice cream and other frozen
desserts. Today, Vadilal has a wide range of ice creams and frozen desserts available in
the market and is known for its innovative flavors and high-quality products.
Vadilal has also embraced digitalization and has taken several initiatives in this direction.
The company has launched an e-commerce platform where customers can order Vadi-
lal products online, making it more convenient for them to purchase their favorite ice
creams. Vadilal has also introduced an app that provides information about their prod-
ucts, offers, and promotions. Moreover, the company has implemented digital tools to
streamline its operations and improve supply chain management.

3
Recent Growth Trends – In the financial year 2020, Vadilal Industries Ltd. reported a to-
tal revenue of INR 496.71 crore (approximately USD 66.7 million), which was an increase
of 6.1% over the previous year. The net profit for the year was INR 13.95 crore (approxi-
mately USD 1.9 million), which was a decrease of 18.5% compared to the previous year.
Vadilal also continued to invest in sustainability and digitalization initiatives in 2020. The
company launched an e-commerce platform and app to make its products more acces-
sible to customers and improve sales. In addition, Vadilal implemented energy-efficient
measures and other sustainability initiatives to reduce its environmental impact.

Impact of Digitization on Vadilal – Digitization has had a significant impact on Vadilal

Industries Ltd. in recent years. The company has made a number of investments in digi-
tal technologies and initiatives to improve its operations and customer experience. Some
of the key impacts of digitization on Vadilal are:

• Improved Efficiency: Digitization has enabled Vadilal to streamline its operations

and improve efficiency. The company has implemented a range of digital tools and
platforms, such as enterprise resource planning (ERP) systems, that have helped to
automate many of its processes and reduce manual work.

• Enhanced Customer Experience: Vadilal has leveraged digital technologies to im-

prove its customer experience. The company has launched an e-commerce platform
and app that enables customers to purchase its products online, and has also intro-
duced digital payment options and loyalty programs.

• Increased Sales: The adoption of digital technologies has helped Vadilal to increase
its sales and expand its customer base. The company’s e-commerce platform has
enabled it to reach new customers in different geographies, while its digital market-
ing efforts have helped to raise brand awareness and drive sales.

• Improved Sustainability: Vadilal has also used digitization to improve its sustain-
ability performance. The company has implemented energy-efficient measures and
other sustainability initiatives, such as reducing its water usage and waste genera-
tion, which have helped to reduce its environmental impact.

3 Objectives
Objectives of this research study are as follows:

• To evaluate the sustainable performance of Vadilal in the food processing industry

with respect to digitalization.

• To analyze the environmental impact of Vadilal in the food processing industry that
have adopted digital technologies, including energy consumption and waste gener-
ation.

4
 • To assess the social responsibility practices of theVadilal, including fair treatment of
employees and suppliers and adherence to labor laws and regulations.

• To examine the economic viability of the Vadilal, including profitability, revenue

growth, and cost efficiency.

• To identify and evaluate the role of innovation in achieving sustainability in the

food processing industry, particularly in relation to digitalization.

• To provide insights into best practices for achieving sustainable performance in the
food processing industry through digitalization.

• To inform policymakers, industry stakeholders, and SMEs themselves about the

benefits and challenges of digitalization in achieving sustainability in the food pro-
cessing industry.

4 Literature Review
The literature on sustainable performance analysis of food processing frims for digital-
ization is vast and growing. The following are some key themes and findings that have
emerged from the literature.
Environmental impact: Research has shown that digital technologies can have a signif-
icant positive impact on the environmental performance of food processing SMEs. For
example, technologies like data analytics and artificial intelligence can help companies
reduce energy consumption and optimize production processes, leading to lower green-
house gas emissions and waste generation.
Social responsibility: Food processing SMEs face significant challenges in ensuring so-
cial responsibility, including fair treatment of employees and suppliers and adherence
to labor laws and regulations. Digitalization can help companies achieve greater trans-
parency in their supply chains and enhance communication with workers and suppliers,
leading to better social responsibility practices.
Economic viability: Innovation is critical to achieving sustainability in the food process-
ing industry, and digitalization can play a key role in driving innovation. Companies that
invest in research and development to improve their digital capabilities are more likely to
develop new products and services that meet evolving consumer needs and sustainabil-
ity requirements.
Innovation: Innovation is critical to achieving sustainability in the food processing in-
dustry, and digitalization can play a key role in driving innovation. Companies that in-
vest in research and development to improve their digital capabilities are more likely to
develop new products and services that meet evolving consumer needs and sustainabil-
ity requirements.
Wider customer accessibility: Internet availability and commerce through electronic
medium facilitates businesses’ ability to increase their customer base, reach new clients

5
and markets at comparatively lower costs than before and thus pave way for business
continuity. Companies have realized the importance of interacting and connecting with
customers, and a digital enterprise is capable of taking complete advantage of their digi-
tal presence, to spread word about their business.
de Sousa Jabbour et al., 2018 argue that ”Industry 4.0, when combined with circular econ-
omy principles, can lead to more sustainable operations in the food processing industry
by optimizing resource consumption, reducing waste and emissions, and closing material
loops.”
Li et al., 2021 found that ”Digital technologies such as big data analytics, IoT, blockchain,
and AI are increasingly being applied in the food processing industry to improve sustain-
ability performance by optimizing production processes, reducing energy consumption
and waste generation, and enhancing supply chain transparency.”
Mishra et al., 2021 note that ”Digital technologies can help SMEs in the food processing
industry achieve sustainable performance by enabling them to better manage their sup-
ply chains, reduce waste and energy consumption, and enhance their social responsibility
practices.”
O’Regan and Ghobadian, 2018 argue that ”Innovation is critical for SMEs to remain com-
petitive and sustainable in the food processing industry. Digital technologies can help
SMEs develop new products and services that meet evolving consumer needs and sus-
tainability requirements.”
Salamzadeh et al., 2021 found that ”Digital transformation can help companies in the
food industry achieve sustainability goals by improving resource efficiency, enhancing
supply chain transparency, and reducing environmental impact.”
Zhang et al., 2021 note that ”The relationship between digital transformation and sus-
tainability performance in the food industry is complex and multifaceted. While digital-
ization can lead to improved sustainability performance, companies must also carefully
consider potential unintended consequences and trade-offs.”

6
 Table 1: Literature table.

5 METHODOLOGY
The sample selection for this study is a crucial step in conducting pre and post-digitalization
analysis. The digitalization initiatives taken by Vadilal in 2018 were one of the biggest
decisions taken in Indian Food Processing Industry. 2018 can be considered as year of
digitalization for Vadilal because firm decided to give Zero Gravity Communications an-
nual contract for digital marketing and analysis of customer base. Zero Gravity Com-
munications is a strategic branding creative advertising agency, providing marketing
consultancy, branding ideas design solutions, performance marketing etc. Therefore, it is
important to select an appropriate sample that will be representative of the firm’s perfor-
mance before and after the digitalization and will provide reliable results.
In this study, the pre-digitalization period refers to FY13 to FY18, while the post-digitalization
period refers from FY20 to FY23. The selection of these time periods is based on the avail-
ability of financial statements and annual reports from the firm. These periods allow for

7
a comparison of the sustainability performance of the firm before and after digitalization
period.
Another factor that influences sample selection is the reliability and accuracy of financial
data. The data has been obtained from the official websites of the firm and is based on the
annual reports for the respective time periods. These reports follow specific accounting
standards and principles, ensuring the accuracy and consistency of financial data.
Moreover, the selection of ratios/indicators is based on their relevance and reliability in
measuring the overall performance of firm. These ratios were selected based on their use
in previous research and their ability to provide valuable insights into the Economic, So-
cial, Environmental health of the firm. The research has been based on secondary data of
Vadilal which were collected from the annual reports and financial statements published
by the firm for the financial years FY14-FY23. These financial statements include the bal-
ance sheet, profit and loss statement, and notes to accounts. These ratios include:

Table 2: Ratios table.

In this pre and post-digitalization analysis of Vadilal, we have selected a range of finan-
cial ratios to evaluate the profitability, capital, liquidity, and asset management of the
firm. These ratios have been chosen based on their ability to provide a comprehensive
overview of the firm’s financial health and performance, and to allow for meaningful
comparisons between pre and post-digitalization periods.
For profitability, we have selected Net Interest Margin and Operating Profit Margin, which
will enable us to assess the firm’s ability to generate profits from its core business opera-
tions.
Capital Ratio has been chosen to evaluate the firm’s capital adequacy, which is a crucial

8
factor in determining the firm’s ability to absorb losses and maintain its operations.
For liquidity, we have chosen Interest income of firm as a percentage of working funds
and Operating profit of firm as a percentage of working funds, which will help us assess
the firm’s ability to meet its short-term obligations.
Finally, we have selected Total Income to Total Assets as an asset management ratio, which
will help us understand how efficiently the firm is managing its assets to generate in-
come.
We will be comparing the change in each of these ratios individually over the course of
FY14-FY18 (pre-digitalization years) and FY20 and FY23 (the post-digitalization years).
We will be using graphical analysis to visualize the trends and changes in each ratio and
to come up with an overall view of whether the situation of the new firm has improved
or not.
The paired/dependent sample t-test is a popular statistical tool that determines whether
there is an observably significant difference in the mean values between two closely re-
lated sets of data. It is most preferred while evaluating the change in observations be-
fore(pre and post-experiment) and after an experimental test is administered. For this
research, the paired t-test was conducted in Excel platform, with a significance level of
significance = 0.05. The results from the paired t-test are useful in determining whether
the impact of the digitalization is detrimental to the financial performance of the firms or
not.

Figure 1: Mathematical formula for calculating t value in a paired t-test

The use of t-tests will enable us to determine whether the changes observed in the se-
lected ratios for Vadilal Industries Ltd. are statistically significant and meaningful. By
comparing the ratios between pre-digitalization years (FY14-FY18) and post-digitalization
years (FY20-FY23), we can evaluate the impact of the digitalization on Vadilal’s financial
health and performance. The null hypothesis that there is no significant difference be-
tween the pre- and post-digitalization periods for any ratio will be tested against the al-
ternative hypothesis that there is a significant difference. By doing so, we can establish
whether the changes are statistically significant and meaningful for firm. Ultimately, this
will allow us to draw valuable conclusions about the effectiveness of the digitalization
and Vadilal’s overall performance during these periods.

9
6 Performance of firms after Digitalization
Vadilal Industries Ltd is an Indian ice cream and flavoured milk manufacturer. Vadilal
has adopted digitalization to improve its performance and provide a better experience to
its customers. The company has implemented various technologies such as Digital Mar-
keting and Data Analytics to enhance its operations and provide personalized services.
As a result of its digitalization efforts, Vadilal has seen significant improvements in its
performance.

• Improved efficiency: With the help of digital tools, Vadilal has been able to auto-
mate several processes, including order processing, inventory management, and
customer support. This has helped the company to improve its operational effi-
ciency and reduce costs.

• Increased customer engagement: Vadilal has been able to leverage digital channels
to reach a wider audience and engage with customers in real time. The company
uses social media platforms to promote its products and offer personalized recom-
mendations to customers based on their browsing and purchasing history.

• Better insights: Vadilal has implemented data analytics tools to gain insights into
customer behavior and preferences. This has enabled the company to identify trends,
optimize its marketing strategies, and improve the overall customer experience.

• Faster growth: Vadilal’s digitalization efforts have helped the company to scale its
operations and expand its reach. The company has reported a significant growth in
its customer base and revenue, with plans to expand to new markets in the future.

• Improved supply chain management: Vadilal has implemented digital tools to

manage its supply chain more effectively, including real-time tracking of inven-
tory levels, automatic replenishment of stock, and optimization of delivery routes.
This has helped the company to reduce inventory costs and improve delivery times,
leading to higher customer satisfaction.

• Enhanced customer experience: Vadilal has implemented digital tools to personal-

ize the customer experience, including chatbots that provide instant support, per-
sonalized recommendations based on browsing history and preferences, and the
ability to track orders in real time. This has helped the company to build stronger
relationships with its customers and improve retention rates.

• Greater agility: By adopting digitalization, Vadilal has become more agile and re-
sponsive to changes in the market. The company is able to quickly launch new
products, test new marketing strategies, and adapt to changing customer prefer-
ences.

• Increased efficiency of payments: Vadilal has implemented digital payment sys-

tems, making it easier for customers to make transactions and for the company to

10
 manage payments. This has helped to reduce the time and effort required for finan-
cial management and improve overall financial stability.

• Improved partnerships: Vadilal has leveraged digital platforms to establish partner-

ships with other companies and increase its reach. For example, the company has
partnered with ZFW to scale delivery business.

References
de Sousa Jabbour, A. B. L., Jabbour, C. J. C., & Godinho Filho, M. (2018). Industry 4.0 and the cir-
cular economy: A proposed research agenda and original roadmap for sustainable oper-
ations. International Journal of Production Research, 56(1-2), 496–508. https://doi.org/10.
1080/00207543.2017.1401882
Li, Y., Li, D., & Guo, X. (2021). Digital transformation for sustainability in the food processing in-
dustry: A systematic review. Journal of Cleaner Production, 300, 126949. https://doi.org/10.
1016/j.jclepro.2021.126949
Mishra, S., Das, S., & Dutta, S. (2021). The role of digital technology in the sustainable perfor-
mance of small and medium-sized enterprises (smes) in the food processing industry.
Journal of Cleaner Production, 313, 127967. https://doi.org/10.1016/j.jclepro.2021.127967
O’Regan, B., & Ghobadian, A. (2018). Innovation in smes: A systematic review of the literature.
International Journal of Management Reviews, 20(2), 285–314. https://doi.org/10.1111/ijmr.
12156
Salamzadeh, A., Sadeghi, M., & Boubaker, S. (2021). Digital transformation and corporate sustain-
ability: Evidence from the food industry. Journal of Cleaner Production, 293, 126138. https:
//doi.org/10.1016/j.jclepro.2021.126138
Zhang, J., Wang, J., & Yang, L. (2021). The relationship between digital transformation and sus-
tainability performance in the food industry. Journal of Cleaner Production, 318, 128326.
https://doi.org/10.1016/j.jclepro.2021.128326

11