Sundrop Brands Limited, formerly known as Agro Tech Foods Limited, has been ordered by the Industrial Tribunal in Vadodara to increase worker compensation and benefits at its Jhagadia plant in Gujarat. The decision addresses a dispute referred by the Labour Commissioner of Gujarat regarding pay raises and benefits demanded by worker unions.

Key Points of the Tribunal Order

The Industrial Tribunal has directed Sundrop Brands to:

• Increase basic pay
• Raise House Rent Allowance (HRA)
• Enhance conveyance allowance
• Boost education allowance
• Provide additional benefits to workers

This order comes in response to demands made by two worker unions: Shramik Kamdar Kalyan Sangh and Bharuch Jilla Mazdoor Sangh.

Company's Stance and Next Steps

Sundrop Brands maintains that it has been compliant with labor laws, stating that it has been paying minimum wages as required under the Minimum Wages Act. The company has expressed its intention to challenge the tribunal's decision, planning to file an appeal on both legal and merit grounds.

As of August 23, Sundrop Brands reported that it has not received an official copy of the order. The company became aware of the decision after downloading the order from the Industrial Tribunal's website.

Regulatory Compliance

In compliance with Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Sundrop Brands has informed the stock exchanges about this development. The company provided details as required under SEBI Circular no. SEBI/HO/CFD/CFDPoD-1/P/CIR/2023/123 dated July 13, 2023.

Potential Impact

While the exact financial impact of the order remains to be quantified, it is expected to affect the company's operational costs at its Jhagadia plant. Sundrop Brands has stated that it is currently examining the order to determine its full implications.

Investors and stakeholders will be watching closely as the company proceeds with its appeal against the tribunal's decision, which could have broader implications for labor relations and operational costs in the food processing industry.

Sundrop Brands Limited, formerly known as Agro Tech Foods Limited, has reported a strong start to FY26 with a 12% year-on-year revenue growth in the first quarter, reaching INR 372.00 crores. This marks the first full quarter as a combined entity following the acquisition of Del Monte Foods in February.

Key Highlights

• Revenue grew by 12% to INR 372.00 crores in Q1 FY26
• EBITDA increased by 9% despite maintaining flat material margins
• Marketing investments surged by 58%
• Retail coverage expanded by 11,000 outlets
• Core categories now represent 61% of business, up from 53% in FY23
• E-commerce sales surged by 42%

Performance Across Segments

Popcorn and Snacks

• ACT II brand saw 21% value growth and 12% volume growth
• Ready-to-eat segment grew by 39%
• E-commerce sales in ready-to-eat segment nearly tripled

Culinary Business

• Experienced strong volume growth, particularly in B2B segment
• Mayonnaise holds over 20% market share in B2B space

Premium Staples

• Edible oil business saw 20% value growth due to commodity price increases
• Volumes remained relatively stable

Peanut Butter

• Facing challenges in modern trade channels
• Growing faster than the category in e-commerce
• New product launches planned to regain market share

Strategic Focus

Nitish Bajaj, Group Managing Director, emphasized the company's focus on core categories and emerging channels. He stated, "We have invested significantly on e-commerce performance marketing across quick commerce and hybrid platforms. As an outcome, both businesses are reflecting very strong growth in the e-commerce channel."

The company is also exploring synergies between Sundrop and Del Monte brands, with plans to leverage each other's distribution networks in the coming year.

Outlook

Management indicated plans to maintain separate operations for Sundrop and Del Monte this year while exploring integration opportunities for the following year to unlock synergies. The company aims to grow faster than the market, targeting at least 4-5% above market growth rates.

Sundrop Brands operates across multiple food categories including snacking, culinary products, and premium staples, with a combined distribution network covering 500,000 outlets through 1,800 distributors. The company remains committed to driving accelerated growth and improving value for stakeholders through efficient operations and strategic investments.