‘High cost CEO, not paying minimum wage to factory workers’: Vadilal independent director quits

Ice-cream maker Vadilal Industries on Saturday disclosed that independent director Shivakumar Dega has resigned from the Board, citing concerns over alleged statutory non-compliance – including payment of wages below the legal minimum.

In an exchange filing on Saturday, the company confirmed Dega’s resignation and said it had initiated a review of compliance with relevant statutory provisions. The Board said it remains committed to “the highest standards of governance and compliance” and has constituted a dedicated sub-committee to review the matter. 

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‘Serious offence under law’

In his resignation letter dated February 17, Dega alleged that the company had paid factory workers less than the statutory minimum wage. “Not paying minimum wage is a serious offence under Minimum Wages Act 1948 and Code of Wages 2019, carrying potential legal action for forced labour under Article 23 of the Indian Constitution,” he wrote.

He claimed that the company had paid the factory workers less than the minimum wage. “This is a statutory violation. The results and share price are inflated to the extent of this amount of underpayment.”

Dega said he could not sign the company’s compliance certificate due in May 2026. He said three people had to sign the company compliance certificate by May 2026, and he was one of them. “I cannot sign when I know that what the Company has done is wrong.”

Differences over leadership and costs

Dega, who joined the Board in May 2025, said he had pushed for professionalisation and monthly board meetings during a transition from promoter-led to professional management. 

“I have attended each of the 10 Board meetings personally, fully prepared and getting the Board to sink personal differences in the pursuit of the larger picture,” he wrote.

He also cited disagreements over hiring a “high-cost CEO” and the need for a professional COO, which he said was not aligned with the company’s cost structure.

“In the many decisions made over the last ten months, I have had differences on two decisions – the issue of hiring a high-cost CEO, which I felt was not in line with the cost structure and the need for a professional COO,” he wrote. 

‘I have consistently said NO’

The independent director said he had raised objections multiple times. “I have consistently said NO to this practice in June 2025 and put this down in writing to the Board in January 2026 and registered it in the February Audit Committee meeting, where the CEO and Company Secretary were present.”

He further wrote that he had warned the CEO in October 2025 and January 2026 through phone calls. “The Board has not acted in the interests of all shareholders and the factory workers,” he said.

According to Dega, the company was attempting to spread the financial impact over two to four years and had tried to club it with the new Labour Code of November 2025, which he described as incorrect since they are “two separate issues.”

“In view of the above, I am resigning from the board today because I cannot be a party to the Company not paying minimum wages.”

Company response

In its filing, Vadilal said it had already initiated an assessment of compliance prior to receiving Dega’s resignation. The Board and independent directors have now formed a sub-committee and are appointing independent advisors to review the issues raised. The company said it is in the process of reconstituting Board committees following Dega’s exit.