& MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31ST MARCH,
2025
Your Directors have pleasure in presenting the 94th Annual Report
together with the Audited Financial Statements for the financial year ended 31st March,
2025.
FINANCIAL SUMMARY
(' Lakhs)
|
2024-25 |
2023-24 |
| Revenue from Operations |
180943 |
183750 |
| Profit after Tax |
29039 |
30157 |
| Balance available for Appropriation in
Retained Earnings |
112782 |
109605 |
| Amount transferred to General Reserves |
3000 |
3000 |
| Dividend paid |
23077 |
23077 |
| Balance in retained earnings |
86705 |
83528 |
Key Ratios * |
|
|
| Earnings per Share (') |
17.10 |
17.75 |
| Dividend per Share (') |
13.64 |
13.64 |
Value creation during the decade has been Compounded Annual Growth Rate
(CAGR), 6.6% in Earnings Per Share (EPS) and 7.9% in Dividend Per Share (DPS).
* Adjusted for issue of bonus shares in the ratio of 10:1
DIVIDEND
The Directors are pleased to recommend a dividend of '10/- per equity
share of '10/- each on the paid up equity share capital of the Company for the year ended
31st March, 2025, for consideration and approval of Members at the ensuing Annual General
Meeting (AGM). Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ('SEBI Listing Regulations'), the Company has adopted a
Dividend Distribution Policy. This policy can be accessed on the Company's website at
https://www.vsthyd.com/ mainsite/documents/Dividend-Distribution-Policy.pdf The dividend
would be payable to all Shareholders whose names appear in the Register of Members as on
3rd July, 2025, subject to deduction of tax at source.
TRANSFER TO RESERVES
It is proposed to carry forward an amount of '3000 Lakhs to General
Reserve.
MATERIAL CHANGES AND COMMITMENTS
Except as disclosed elsewhere in the Report, there have been no
material changes and commitments which affect the financial position of the Company that
have occurred between the end of the financial year to which the financial statements
relate and the date of this Report. There has been no change in the nature of business of
the Company during the year.
BONUS ISSUE
During the year, your Company had issued Bonus Shares in the ratio of
10:1 i.e. ten new bonus equity shares of '10/- each for every one equity share of '10/-
each fully paid up, to the eligible Members of the Company whose names appeared in the
Register of Members/list of beneficial owners received from the NSDL/CDSL on the record
date i.e. 6th September, 2024. With the issue and allotment of bonus shares, the nominal
capital has increased from '15,44,19,200 to '1,69,86,11,200. The shares so allotted rank
pari passu with the existing share capital of the Company.
SHARE CAPITAL
The paid up Equity Share Capital as on 31st March, 2025 was '16,986.11
Lakhs. The Company has neither issued shares with differential rights as to dividend,
voting or sweat equity shares.
EMPLOYEE STOCK OPTION PLAN
During the year under review, there has been no change in the VST
Employee Stock Option Plan-2020 (VST-ESOP 2020) of the Company and further the said
VST-ESOP 2020 are in compliance with SEBI (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021. The necessary disclosures in compliance with Regulation 14 of the SEBI
(Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are available on the
website of the Company at https://www.vsthyd.com/mainsite/
documents/vst-employee-stock-option-plan-2020.pdf
MANAGEMENT DISCUSSION & ANALYSIS REPORT (MD&A)
Based on feedback from Members on the Annual Report and Accounts, this
report includes MD&A as appropriate so that duplication and overlap between the
Directors' Report and a separate MD&A is avoided and the entire material with
Company's state of affairs is provided in a composite and comprehensive document.
INDUSTRY PERFORMANCE
The industry continues to witness volume growth, driven by a stable
regulatory and taxation regime. Industry volumes grew at a high single-digit rate during
the financial year 2024-25, following incremental growth in the preceding year. Policy
stability over the past few years has led to structural changes in the industry, with the
mid-premium price segment emerging as the most vibrant across the market.
However, illegal non-duty-paid cigarettes continue to pose a
significant threat to legal players, benefiting from a substantial price differential
compared to legal cigarettes. Despite coordinated efforts by the Government, the menace of
illicit cigarettes remains an ongoing challenge for the legitimate cigarette industry.
In addition, the industry faced other challenges during the year,
notably high inflation in raw material costs- particularly tobacco leaf.
COMPANY PERFORMANCE
Your Company's performance in its traditionally strong value segment
outpaced the industry. However, with the mid-premium segment gaining momentum, it became
imperative to introduce new brands at higher price points. In response, your Company
developed and launched innovative offerings in the mid-price segment, which have received
encouraging initial feedback across markets.
Unprecedented raw material cost inflation, coupled with intense
competitive pressures, impacted margins in the short term. Nonetheless, these challenges
were partially mitigated through business process restructuring and the strategic use of
digitisation to enhance operational efficiency.
TOTAL, your Company's national trademark, continues to rank among the
top 10 brands in the industry. The Company remains focused on strengthening TOTAL's
consumer appeal through periodic upgrades and the introduction of relevant variants.
EDITIONS, launched in several regions last year, is emerging as your Company's second
national trademark.
Your Company is also enhancing its overall brand portfolio through a
mix of product upgrades and market-relevant variants. Most of the new variants are showing
strong early promise. Simultaneously, improved in-market execution has driven growth in
heritage trademarks such as CHARMS, SPECIAL, and MOMENTS.
The Company's distribution capabilities have significantly improved
over the past few years by effectively leveraging digital infrastructure for data-driven
decision-making and targeted market activities. This has helped expand portfolio width and
depth in both established and emerging markets.
LEAF TOBACCO
Leaf function has once again delivered exceptional results, achieving a
record turnover of '472 Crores during the financial year 2024-25 reflecting a 6.7%
year-on-year growth, with a PBIT of about '58 Crores. This strong
performance underscores our operational excellence and ability to
navigate an evolving global landscape.
Amidst external challenges, we have reinforced relationships with key
customers, expanded into new geographies, and enhanced operational efficiencies, further
solidifying the position in international markets. Our unwavering commitment to quality,
sustainability continues to drive our competitive edge.
You Company has made significant advancements in digital procurement
and traceability, ensuring greater transparency and accountability across supply chain.
Additionally, strategic investment in tobacco varieties aligns with shifting global market
dynamics, positioning us for sustainable long-term growth.
At the core of our operations is a deep commitment to our farmers,
fostering trust-based, long-term partnerships. Your Company continue to focus on
optimising efficiency in tobacco procurement and processing, leveraging digital
integration, streamlining operations, and good agricultural practices to enhance
sustainability and excellence.
Looking ahead, Leaf function remains dedicated to driving sustainable
expansion, strengthening partnerships, and capitalising on emerging opportunities,
ensuring longterm value creation for all the stakeholders.
PRODUCTION AND PLANT MODERNISATION
Your Company has successfully transitioned its production to the new
state-of-the-art facility in Toopran, near Hyderabad. This upgraded plant is designed to
enhance capital efficiency, improve product quality, and optimise costs. Built with a
focus on sustainability and Industry 4.0 principles, the facility emphasises resource
conservation, water sustainability, and effective use of renewable energy.
RESEARCH & DEVELOPMENT ACTIVITY
Your Company's Research & Development Centre has played a pivotal
role in developing and delivering innovative, competitive products that have been well
received by adult consumers and are gaining strong traction in the market.
The R&D Centre Laboratory has been awarded the 'Certificate of
Continuation' for ISO 17025:2017 by the
National Accreditation Board for Testing and Calibration Laboratories
(NABL), under the Quality Council of India, for the year 2024-25. The laboratory has since
been relocated to the new factory at Toopran, near Hyderabad, and is now fully
operational. The process of obtaining NABL certification for the laboratory at its new
location is currently underway, in accordance with NABL guidelines.
HUMAN RESOURCE DEVELOPMENT
The success of your Company is rooted in the enduring belief that
people make all the difference. With a clear ambition to become a dynamic and
well-balanced organisation, your Company continues to embrace diversity in thought, ideas,
and action—leveraging the collective strength of One VST. Your Company has built a
culture that emphasises agility, cost efficiency, and consistent delivery of high-quality
outcomes at every level, enabling purposeful growth.
Aligned with its strategic priorities and long-term vision, your
Company is committed to fostering a culture of continuous learning, supported by a digital
ecosystem that encourages a growth mindset. This empowers employees to upskill and realise
their full potential—enabling both personal and organisational growth. Talent
development remains a key priority, a key initiative in this area was the CXO Leadership
Journey, a year-long development programme for senior leaders aimed at strengthening
leadership capabilities across the organisation. In addition, Sales Capability Workshops
were conducted to enhance both functional expertise and behavioural competencies. A robust
in-house Assessment Centre was conducted to rigorously identify and develop
high-potential, results-driven talent. To drive performance excellence, your Company has
introduced regular performance reviews and feedback mechanisms. This approach balances a
focus on outcomes with strong systems and process discipline.
Your Company is also focused on minimising people- related risks by
building the right capabilities and nurturing talent across the organisation - especially
in critical roles in the sales function. Employee engagement was carried out through
initiatives designed to build stronger connections between employees and leadership.
Platforms such as quarterly Town Halls, Two-Way Talks, Leaf Hangouts, and Open House
sessions provided opportunities for open dialogue and
deeper engagement. The flagship Gold Star recognition programme
continued to celebrate and reinforce the behaviours that shape a high-performance culture.
To ensure a safe and inclusive workplace, particularly for female
employees, your Company has constituted an Internal Complaints Committee in accordance
with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)
Act, 2013. No cases were reported during the year.
As of 31st March 2025, your Company employed 696 people—comprising
343 management staff and 353 workmen.
ENVIRONMENT, HEALTH & SAFETY (EHS) AND
COMMUNITY SERVICES
300 employees and 120 contract workmen have undergone EHS training.
Mock drills were also conducted for workers and management during the period to comply
with the Company's EHS guidelines. Half-yearly and Annual EHS audits of the Company's
operations were carried out to ensure compliance of EHS requirements.
Your Toopran facility was awarded "Gold rating" in Water
Stewardship Certification from Water Stewardship and Assurance Services, AWS, Scotland. In
view of the sustainability efforts, your Company was able to reduce water consumption by
5% year on year by adopting best practices for sustainable development.
RENEWABLE / GREEN ENERGY
Your Company commissioned a 1.2 MW photovoltaic (PV) solar power plant
in September 2022, followed by the installation of a 10 KW solar lighting system in 2024.
These initiatives reflect VST's ongoing commitment to renewable energy and sustainable
development. Your Company remains focused on increasing the adoption of clean energy
sources in alignment with its broader sustainability goals.
Through enhanced maintenance and operational efficiency, the solar
plant's performance improved by 5% compared to FY 2023-24. Currently, the plant supplies
approximately 31% of the Company's electricity needs, resulting in a 37% reduction in
carbon footprint.
In support of clean mobility, your Company has also established
electric vehicle (EV) charging stations for two and four wheelers at both its Azamabad and
Toopran facilities.
CLEANER FUEL FOR BOILER/INCINERATOR
As part of its commitment to reducing emissions and carbon footprint,
your Company has transitioned the primary fuel for its incinerator from High-Speed Diesel
(HSD) to the more eco-friendly Piped Natural Gas (PNG). PNG is not only one of the
cleanest-burning fuels but also offers greater safety and cost efficiency.
This strategic shift is aimed at enhancing environmental
sustainability, resulting in an estimated 50% reduction in carbon emissions and annual
fuel cost savings of approximately '174 Lakhs. Additionally, fuel efficiency for both the
boiler and incinerator has improved by 6.5% compared to FY 2023-24.
FINANCE
a. Profits
The Profit after Tax of your Company for the year is '290.4 Crores.
b. Treasury Operations
Your Company follows a SLR model (Safety, Liquidity and Return) in
deployment of earmarked funds.
c. The changes (change of 25% or more) as compared to the immediately
previous financial year ratios of the Company including those listed out and specified
under Schedule V (B)(1)(i) read with Regulation 34(3) of the SEBI Listing Regulations, as
amended are disclosed in Note No. 32 of Notes on Financial Statements to the Accounts in
the Annual Report.
d. The financial statements have been prepared in accordance with
Indian Accounting Standards specified under Section 133 of the Companies Act, 2013
["the Act"], read with Rule 3 of the Companies (Indian Accounting Standard)
Rules, 2015, as amended from time to time. The accounting policies which are consistently
applied have been set out in the Notes to the Financial Statements.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has not taken any loans or given guarantees or made
investments in any other Company covered and provided under Section 186 of the Act, during
the year.
FIXED DEPOSITS
The Company has not accepted any deposits from public as per the
provisions of the Act, and as such no amount on account of principal or interest on
deposits from public was outstanding as on the date of the balance sheet.
CORPORATE GOVERNANCE
In terms of Regulation 34 of the SEBI Listing Regulations, a Report on
Corporate Governance along with Compliance Certificate issued by the Statutory Auditors of
the Company is annexed as "Annexure A" and forms part of this Report.
Your Company has taken adequate steps for strict compliance with the Corporate Governance
guidelines, as amended from time to time.
MEETINGS
The Board met seven times during the financial year. The Board and
Committee Meetings are pre-scheduled and a tentative calendar of the Meetings is finalised
in consultation with the Directors and are circulated to them in advance to facilitate
them to plan their schedule. However, in case of special and urgent business needs, the
approval is obtained by way of circular resolution. The details of the meetings of the
Board and Committees held during the year are given in the Corporate Governance Report,
which is part of this report.
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
a. Your Company maintains an adequate and effective internal control
system commensurate with the size and complexity. Your Company also has well documented
Standard Operating Procedures (SOPs) for various processes which are periodically reviewed
for changes warranted due to business needs.
b. Your Company remains committed to improve effectiveness of internal
financial controls and processes which would help in efficient conduct of its business
operations, ensure security to its assets and timely preparation of reliable financial
information. The policies and procedures laid out by your Company capture the control
environment prevalent in the organisation. Over a period of three years, the business
processes of your Company are reviewed through an internal audit process which reviews the
systems on a continuous basis. The objective being to identify potential risk areas and
come up with a comprehensive risk mitigation plan.
The Audit Committee of your Board met five times during the year.
Review of audit observations covering the operations, consideration of accounts on a
quarterly basis and monitoring the implementation of audit recommendations were some of
the key areas which were dealt with by the Committee. The Statutory Auditors/ Internal
Auditors were invited to attend the Audit Committee Meetings and make presentations
covering their observations on adequacy of internal financial controls and the steps
required to bridge gaps, if any. Chief Financial Officer is a permanent invitee to the
Audit Committee and other executives of the Company are invited to address, respond or
provide clarifications to relevant issues as and when required.
RISK MANAGEMENT
Your Company has constituted the Risk Management Committee as mandated
by SEBI Listing Regulations to frame, implement and monitor the risk management plan for
the Company. The Committee comprises of Directors and Senior Management as its Members as
prescribed under Regulation 21 of the SEBI Listing Regulations as amended. The Company
Secretary is the Secretary of the Committee. The Committee is responsible for monitoring
and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee
has additional oversight in the area of financial risks and controls. The major risks
identified by the businesses and functions are systematically addressed through mitigating
actions on a continuing basis.
Your Company has always endeavoured to bring together elements of best
practices for risk management in relation to existing and emerging risks faced by it at
both strategic and operating level. The Company faces a variety of risks from external and
internal sources. However, the objective is to be aware of different kinds of risks
affecting the business. Rather than eliminating these risks, the decision making process
at your Company considers sensible risk taking, and thereby proactive steps are taken to
ensure that business is undertaken in an environment which encourages a reasonable amount
of risk taking and enables the Company to leverage market opportunities effectively.
The Board is responsible for determining the nature and extent of the
principal risks that your Company is willing to take to achieve its strategic objectives
and for maintaining sound risk management system. With the support of the Audit Committee,
it carries out a review of the effectiveness of your Company's risk management process
covering all material risks including strategic, financial, operational and also
compliance levels. Your Company has substantial operations all over the country and
competes on the basis of brand appeal, loyalty, price value connotations and strong trade
relationships. The Company's position is influenced by the economic, regulatory and
political situations both nationally and at a state level and of the competitors. The
principal risks impacting your Company's business and steps undertaken to mitigate them
are as under:
i. Regulatory restrictions could have an impact on long term
revenue growth of the Company.
The Company operates under increasingly stringent regulatory regime
(COTPA guidelines on packaging and labelling, advertising and promotion). This further
gets complicated with adoption of differing regulatory regimes in different states and/or
lack of consensus on interpretation/application. Such restrictive regulations which are
subjected to interpretation could result in not only penalties being imposed/loss of
reputation, but also impair the Company's ability to communicate with adult smokers and/or
to meet consumer expectations through new/innovative brand launches or geographic
expansion. The Company addresses this risk by engaging in continuous social dialogue with
stakeholders and regulatory community through industry bodies. At the
same time, it works on developing strategies and capabilities to effectively launch
competitive and consumer acceptable brands within the changing regulatory environment.
ii. Taxation changes could have an impact on shortterm revenue
growth of the Company.
The Company's business is subjected to GST, excise and other cesses as
may be made applicable, which could require the Company to take up product prices and in
absence of such action, impact its business. The impact increases when due to changes in
economic situation, consumer's disposal income reduces, resulting in down-trading to
cheaper cigarettes including non-duty paid illicit cigarettes or alternative tobacco
products. Such risks are addressed by the company through: (a) engagement with tax
authorities at levels where appropriate; (b) regular management review to build a well
laddered brand portfolio across new segments including new brand creation; and (c)
capability buildup through investments in distribution infrastructure to increase
geographical spread.
iii. Geopolitical tension could have a short-term impact on
company's revenue growth and profitability.
The Company's supply chain and normal business processes are exposed to
the risk of disruption. Such disruption could be caused through geopolitical tension,
civil unrest, economic policy changes, health crisis, violent weather conditions or other
natural disasters. This could result in potential loss of assets and increased costs due
to more complex supply chain arrangements and/or maintaining inefficient facilities. Such
risks are mitigated through a robust business continuity planning process and having
multiple sourcing / delivery (supply chain) strategy.
iv. Illicit Trade could have a risk to Company's long term revenue
growth and profitability.
Non-Duty Paid (NDP) Cigarettes in the form of counterfeit product,
contraband (genuine smuggled product) and locally manufactured products on which
applicable taxes are evaded, represents a
significant and growing threat to the legitimate cigarette industry.
Factors such as increased product prices (either for retailer or consumer) and economic
downturn among others encourage consumers shift to cheaper cigarettes which results in
commoditisation of the Product and erosion of brand value resulting in undermining
company's investment in trade marketing and distribution. As part of its mitigation plan
the company both directly as well as through trade bodies engages with key external
stakeholders including periodical interaction with law enforcement agencies in pursuit of
priority targets.
v. Infringement of Intellectual property could have a short term
impact on revenue growth and profitability.
The Company relies on its registered, trademarks and copyrights under
which it sells its products to get competitive advantage. Risk of Infringement happens due
to delay in identification and action taken including limitation of judicial protection.
In addition, as third-party rights (registered trademarks) are not always identifiable,
there may be claims against the company for infringement of their intellectual property
rights. Such infringement of trademarks results in reputational impact due to inability to
protect its trade marks, disruption to normal business processes resulting in potential
loss of revenue, unnecessary protracted litigation. Such risks are mitigated through
constant training to all team members to recognise misuse of Company's trademarks and
report to take legal protection, Further, process is in place to ensure new trademarks do
not infringe with trademarks belonging to others.
vi. Cyber Security - the Company's operations place high reliance
on its digital data. Loss or misuse of any such sensitive information, or its disclosure
to outsiders, including competitors and trading partners could potentially have a
significant adverse impact on the Company's business operations and/or give rise to legal
and financial liability. For this purpose, the Company has put in place cyber
security policies and procedures which are reviewed regularly. In
addition, for continuity of the operations we perform periodic assessment of information
technology controls implemented like access controls, security and operations management,
data back-up & recovery management, authorisation verification, firewalls, etc.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Your Company has formulated a Corporate Social Responsibility Policy
with the objective to promote inclusive growth and equitable development of identified
areas by contributing back to the society. Over the years, your Company has been involved
in various social activities focusing on Rural Development, Health & Sanitation,
Education & Sports and Environment sustainability.
Your Company has with the help of Gramalaya, a nonprofit organisation,
was involved in creating awareness among women on menstrual hygiene, usage of cloth
sanitary pads & production of cloth sanitary pads by the rural women to support their
livelihoods under project Naari Shakti as part of Rural development initiative. Towards
this initiative, women were mobilised and selfhelp groups were formed for better execution
of the project and a cohort of women were formed who will produce the cloth sanitary pads
for sale to make this project a self-sustaining one. Your organisation also supported
rural students by enrolling for a vocational skill building programme aspiring for jobs
conducted by Sambhav Foundation. Through this programme, your Company has been able to
place close to 300 students in respectable jobs in retail, and other sectors.
Your Company has also in collaboration with Gramalaya constructed
toilets in individual homes (of farmers living) in and around Jogulamba-Gadwal district of
Telangana where your Company has its operations, under the 'Swachh Ghar' programme of your
Company. These villages and the communities in the area were also sensitised regarding the
importance of health & sanitation. Over 400 household toilets have already been
constructed during the financial year, and your Company
has plans to extend it further to other houses in the same area and
thereafter to other areas.
Your Company has touched lives of many families in Kurnool and Raichur
areas and created a sense of healthy living and awareness through its mobile dispensary
programme to address the health care needs. With this, almost 15,989 villagers have
undergone health checkups and have access to medical support regularly.
Your Company had sponsored 12 Dialysis machines in partnership with
Rotary Club, Secunderabad including setting up of an RO plant impacting about 10,800 lives
yearly. In addition to this, your Company had sponsored an Audiometry machine, addressing
the needs of differently abled children in their treatments.
In the field of Education, your Company sponsored school infrastructure
to support the blind children education at Devnar School for Blind, Hyderabad and also
supported construction of school infrastructure at Government Schools in Suraram, Medchal,
Hyderabad and Government School, Medak. A unique pedagogy for identified school children
enhancing their overall development in all fields like computer training, arts, sports
etc. are being imparted in Government schools in Brahmanpally, Medak.
Your Company had provided Mid-day meals for more than 5,000 Government
School children in Medak district, Hyderabad this financial year.
In order to protect environment, your Company had initiated supporting
environment sustainability sponsoring 2 Electric Vehicles. Your Company has also supported
conservation of Wildlife and protection of biodiversity by sponsoring the conservation
activities through M/s Whale sharks project in Kerala.
The composition of the CSR Committee is given in the Corporate
Governance Report forming part of this Annual Report. The CSR policy and the projects
approved by the Board are available on the Company's website at: https://
www.vsthyd.com/mainsite/documents/corporate- social-responsibility-policy.pdf
The CSR Policy of the Company the Annual Report on CSR activities
during the year is annexed herewith as "Annexure B" and forms part of
this Report.
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, a
report on Business Responsibility and Sustainability Report (BRSR) in the prescribed
format forms part of the Board's Report.
RELATED PARTY TRANSACTIONS
The related party transactions entered into by the Company during the
year are in its ordinary course of business and on arm's length basis. There were no
materially significant related party transactions between your Company and the Directors,
Promoters or Promoter group, Key Managerial Personnel and other designated persons which
may have a potential conflict with the interest of your Company at large. During the year,
the Company has not entered into any transactions with any person or entity belonging to
the promoter or promoter group which holds 10% or more shareholding in the listed entity
other than the corporate actions applicable uniformly to all the shareholders. Prior
approval for all the related party transactions is obtained from the Audit Committee.
Form AOC-2 pursuant to Section 134(3)(h) of the Act, read with Rule
8(2) of the Companies (Accounts) Rules, 2014 for disclosure of particulars of
contracts/arrangements, entered into by your Company with related parties for the year
ended 31st March, 2025 is annexed herewith as "Annexure C" and forms part
of this Report.
BOARD EVALUATION
Pursuant to the provisions of the Act, as amended and SEBI Listing
Regulations, the performance evaluation of the Board, the committees of the Board and
individual Directors [including Independent Directors and Chairperson] has been carried
out. The manner in which the evaluation has been carried out has been explained in the
Corporate Governance Report. The performance evaluation of the Chairman and the
Non-independent Directors was carried out by the Independent Directors. The Board of
Directors expressed their satisfaction with the evaluation process.
REMUNERATION POLICY
Nomination and Remuneration Committee has formulated a policy relating
to remuneration of directors, key managerial personnel and other employees which has been
revised and approved by the Board. The Remuneration Policy and the criteria for
determining qualification, position, attributes and independence of a Director as required
under Section 178(3) of the Act, are disclosed in the Corporate Governance Report. The
policy is also placed on the website of the Company at https://
www.vsthyd.com/mainsite/documents/remuneration- policy.pdf
MEETING OF INDEPENDENT DIRECTORS
During the financial year under review, all the Independent Directors
of the Company met on 25th April, 2024, inter alia, to discuss:
• Evaluation of the performance of the Nonindependent Directors
and the Board as a whole.
• Evaluation of the performance of the Chairman of the Company,
Chairman of the Committee's considering the views of the Executive and Nonexecutive
Directors.
• Evaluation of the quality, content and timelines of flow of
information between the Management and the Board that is necessary for the Board to
perform its duties effectively and reasonably.
VIGIL MECHANISM
In terms of Section 177 of the Act, and Regulation 22 of SEBI Listing
Regulations, the Company has formulated a Whistle Blower Policy as a vigil mechanism to
encourage all employees and Directors to report any unethical behaviour, actual or
suspected fraud or violation of the Company's 'Code of Conduct and Ethics Policy' which
also provides for adequate safeguard against victimisation of person who use such
mechanism and there is a provision for direct access to the chairman of the Audit
Committee inappropriate/exceptional cases. The details of the Whistle Blower Policy is
given in the Corporate Governance Report and also available on the Company's website at:
https://www.vsthyd.com/ mainsite/documents/whistle-blower-policy-2022.pdf
DIRECTORS AND KEY MANAGERIAL PERSONNEL
As on 31st March, 2025, the Board comprises of six Directors out of
which three are Independent Directors.
Directors retiring by rotation/Re-appointment Mr. S. Thirumalai
Pursuant to Article 93 of the Articles of Association of your Company,
Mr. S. Thirumalai (DIN: 00011899) is liable to retire from the Board and being eligible,
offers himself for re-election. Your Board recommends his reappointment. Further, in terms
of Regulation 17(1A) of the SEBI Listing Regulations, the Board recommends continuation of
his directorship who has attained the age of 76 years. A suitable Resolution for
continuation of his directorship pursuant to Regulation 17(1A) of the SEBI Listing
Regulations, is being put up for your approval.
Mr. Thirumalai (76 years) is a Fellow Member of Institute of Chartered
Accountants of India, Institute of Company Secretaries of India, Certified Associate of
Indian Institute of Bankers and also a law graduate. He has also attended the Advanced
Management Program at Harvard Business School, Boston, USA. He has diversified experience
of over four decades including a major portion in the tobacco sector and specialises in
Finance, Taxation, Legal and General Management. The Board feels that the vast and
diversified experience of Mr. Thirumalai will prove to be an asset to the Company.
Mr. Thirumalai is not a Director in any other Company in India. He is a
Member of the Audit Committee, CSR Committee, Stakeholders Relationship Committee and Risk
Management Committee. He has attended all the Board and Committee meetings held during the
year. Mr. Thirumalai holds 275 shares in the Company and is not related to any other
Director of the Company.
Directors Appointment/Cessation Mr. Nellaiappan Thiruambalam
The Board at its meeting held on 25th April, 2025 based on the
recommendation of Nomination and Remuneration Committee of the Company approved the
appointment of Mr. Nellaiappan Thiruambalam - [DIN 02121182] as an Additional Director
designated as Independent Director
of the Company with effect from 25th April, 2025 for a period of five
years not liable to retire by rotation subject to the approval of the Members at the
ensuing Annual General Meeting.
Mr. Nellaiappan Thiruambalam (68 years) has requisite skills and
expertise in Business Strategy, Marketing, Employee Engagement, Sales, Operations and
P&L management in India and globally. He has over 40 years of experience in reputed
firms viz. Heinz, Glaxo SmithKline Consumer, GE and a PE funded Indian Company. He has a
Honours degree in Mechanical Engineering from NIT, Trichy and has a Masters Degree in
Business Administration (Marketing & Finance) from IIM, Calcutta.
Mr. Nellaiappan Thiruambalam does not hold shares in the Company and is
not related to any other Director of the Company.
Mr. Alok Agarwal
Mr. Alok Agarwal [DIN 08655585] representing the interests of M/s.
Bright Star Investments Pvt. Ltd. was appointed as an Additional Non-executive Director of
the Company with effect from 25th April, 2025 who shall be liable to retire by rotation in
accordance with the Article 93 of Articles of Association of the Company subject to the
approval of the Members at the ensuing Annual General Meeting.
Mr. Alok Agarwal (71 years) has the requisite skills and expertise in
Corporate & Business Management, Strategy, M&A in India and globally. He has over
47 years of experience in various industries and sectors. He is a Chartered Accountant
from ICAI and has a Masters degree in Business Administration (FMS) from University of New
Delhi and has attended executive education/programmes at Harvard Business School (Boston),
Wharton Business School (Philadelphia), London Business School (London) and INSEAD
(Paris).
Mr. Alok Agarwal do not hold shares in the Company and is not related
to any other Director of the Company.
Mr. Sanjay Wali
Mr. Sanjay Wali [DIN 10868596] was appointed as an Additional Director
and Whole-time Director of the Company with effect from 25th April, 2025 who shall also be
a Key Managerial Personnel under Section 203 of
the Act subject to the approval of the Members at the ensuing Annual
General Meeting.
Mr. Sanjay Wali (58 years) is an experienced professional with a career
spanning over three decades, with expertise in Business Strategy, Sales, Marketing,
Logistics, New Product Development, Business Development, and Project Management. His
professional journey includes tenure at esteemed organisations such as Procter &
Gamble, Godfrey Philips, and Dalmia Cement, where he has consistently taken on roles of
increasing responsibility and demonstrated remarkable leadership. He has a Post Graduate
Degree in Business Management (Marketing) from IMT, Ghaziabad and is an alumnus of Harvard
Business School (AMP 2015).
Mr. Sanjay Wali hold 2200 shares in the Company and is not related to
any other Director of the Company.
The resolution seeking Members approval at the ensuing AGM for the
above mentioned Directors appointment along with other required details forms part of the
Notice of the AGM.
Mr. Aditya Deb Gooptu
Mr. Aditya Deb Gooptu [DIN 07849104], resigned as the Managing Director
& CEO and Director of your Company on 4th November, 2024 and is serving his notice
period in accordance with the Articles of Association of the Company. The Board of
Directors place on record their appreciation of the contribution made to your Company by
Mr. Aditya Deb Gooptu during his tenure as Managing Director & CEO. He is being
relieved from the services of the Company on 25th April, 2025.
Independent Directors
In accordance with Section 149 of the Act, the Members at the Annual
General Meeting of the Company held on 29th August, 2024 have approved the appointment of
Mr. Rajeev Bakshi as Independent Director of the Company with effect from 1st July, 2024
and the Members through Postal Ballot by way of Special Resolution have approved the
re-appointment of Ms. Rama Bijapurkar and Mr. Sudip Bandyopadhyay to be effective from 1st
April 2024 and 1st June, 2024 respectively to hold the office for a further term of five
consecutive years from their respective dates.
All the Independent Directors have submitted the declarations stating
that they meet the criteria of independence as prescribed under Section 149(6) of the Act,
and Regulation 16(1)(b) of the SEBI Listing Regulations as amended for the financial year
ended 31st March, 2025. The Board reviewed and assessed the veracity of the aforesaid
declarations, as required under Regulation 25(9) of the SEBI Listing Regulations. In the
opinion of the Board, all the Independent Directors fulfil the said conditions as
mentioned in Section 149(6) of the Act and the SEBI Listing Regulations and are
independent of the Management. All the Independent Directors of the Company have complied
with the provisions of sub rule (1) and (2) of Rule 6 of the Companies (Appointment and
Qualification of Directors) Rules, 2014 with respect to registration with the Indian
Institute of Corporate Affairs for the Independent Directors' Database.
There has been no change in the circumstances affecting their status as
Independent Directors of the Company. In the opinion of the Board, the Independent
Directors possess the requisite integrity, experience, expertise and proficiency required
to fulfill their duties as Independent Directors.
KEY MANAGERIAL PERSONNEL
Mr. Sanjay Wali, Whole-time Director, Mr. Anish Gupta, Chief Financial
Officer and the Company Secretary Mr. Phani K. Mangipudi are the Key Managerial Personnel
as per the provisions of Section 203 of the Act, .
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act, your Directors confirm that:
1. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation relating to material
departures, if any;
2. appropriate accounting policies have been selected and applied
consistently. Judgement and estimates which are reasonable and prudent have been made so
as to give a true and fair view of the state of affairs of your Company as on 31st March,
2025 and of the profits of the Company for that period;
3. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Act, for safeguarding
the assets of your Company and for preventing and detecting fraud and other
irregularities;
4. the annual accounts have been prepared on a going concern basis.
5. proper internal financial controls have been laid down to be
followed by your Company and such internal financial controls are adequate and were
operating effectively; and
6. proper systems to ensure compliance with the provisions of all
applicable laws have been devised, and such systems were adequate and operating
effectively.
CRITERIA FOR SELECTION AND APPOINTMENT OF
DIRECTORS
The Nomination and Remuneration Committee is responsible for
identifying, screening, recommending to the Board a candidate for appointment as Director.
Based on the recommendation of the Committee, the Board identifies the candidate for the
position of Director. While identifying the candidate, inter alia the following are taken
into consideration:
• Qualification, experience and expertise;
• Skills, abilities and personal contribution;
• Commitment to spare time to attend Board/ Committee and other
Meetings as may be necessary;
• Diversity of perspectives brought to the existing Board;
• Existing composition of the Board.
The qualification of the candidate is scrutinised by the Committee
considering educational degree, college/ institution, professional qualification if any,
etc. In addition, there is also a criteria regarding minimum work experience and the
positive attributes such as leadership quality, level of maturity, management
capabilities, strategic vision, problem solving abilities, etc., on which the candidate is
judicially scrutinised. In
case of an internal candidate, the senior management employee is also
evaluated on the above criteria before being recommended for promotion as a Director.
While considering re-appointment of the Directors, their performance evaluation report is
considered. In case of Independent Director, the independence, integrity, expertise,
experience and interest pecuniary or otherwise as per the statutory provisions are also
assessed before appointment.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
There are no significant or material orders passed by the Regulators,
Courts or Tribunals which impact the going concern status of the Company and its future
operations. However, Members' attention is drawn to the following:
TAXATION
i. Entry Tax
Entry Tax levy by the States of Jharkhand and Assam has been challenged
before the respective State High Courts by your Company, basis the directions of the
Hon'ble Supreme Court. Demand of interest on entry tax was challenged before the High
Court of Allahabad and is pending adjudication.
ii. Excise
a. Tobacco Refuse
Your Company has received show cause notices demanding recovery of duty
on cut tobacco used in the manufacture of tobacco refuse since January 2005 till June 2017
amounting to 14.52 Crores. Demand for the period till October, 2013 has been adjudicated
and the CESTAT decided in favour of your Company. Department preferred an appeal before
Supreme Court which is pending. Demands for period after October, 2013 till June, 2017 are
yet to be adjudicated by the original authority.
b. Service Tax
Your Company has received show cause notices from the Excise Department
seeking to deny CENVAT credit availed on various input services on the ground that the
same are not in relation to the manufacture of final products. Upon adjudication, credit
on most of the services was allowed in favour of your Company. Some of them have been
disputed and in such matters, the Company is in appeal.
PUBLIC INTEREST LITIGATION (PIL)
i. Your Company has been impleaded in the petition filed in the Supreme
Court by an NGO called 'Centre for Transforming India' against the Union of India along
with other cigarette manufacturers, Tobacco Institute of India, Bidi Manufacturers and
Bidi Manufacturers' Association, seeking prohibition/ ban of the manufacture, storage and
sale of all forms of tobacco within the territory of India. This is being contested.
ii. Petitions have also been filed in other courts such as High Court
of Madhya Pradesh - Jabalpur, National Green Tribunal, Delhi seeking ban on sale of
cigarettes and before High Court of Madhya Pradesh - Indore Bench seeking directions to
mention tar and nicotine content on cigarette packs by the manufacturers. All of the above
are being effectively contested by your Company.
FINANCIAL SERVICES BUSINESS
The Company petition filed by the Official Liquidator before he High
Court of Andhra Pradesh (now Telangana High Court) seeking directions against some of the
ExDirectors of ITC Agro Tech Finance and Investments Limited (ITCATF), the Company in
liquidation, into which one of the subsidiaries of your Company, viz. VST Investments
Limited was amalgamated, and its related matters are still pending final adjudication.
THE CIGARETTES AND OTHER TOBACCO PRODUCTS (PROHIBITION OF ADVERTISEMENT
AND REGULATION OF TRADE AND COMMERCE, PRODUCTION, SUPPLY AND DISTRIBUTION) ACT, 2003
(COTPA)
i. In view of the provisions of COTPA, various restrictions such as ban
on advertising in print, visual media and outdoors, regulation of in-store advertising,
prohibition of sale of cigarettes to persons below the age of 18 years, etc. have been in
force. Printing of pictorial warnings on cigarette packets, came into effect from 31st May
2009 were further revised and the pictorial warning covering 85% of the front and back
side of the packets was implemented w.e.f.1st April 2016 and is being duly complied with
by your Company.
ii. Your Company also filed a writ petition in the Hon'ble High Court
of Andhra Pradesh (now Telangana High Court) challenging The Cigarettes and Other Tobacco
Products (Packaging & Labelling) Rules, 2006 and the Amendment Rules 2008, on the
grounds inter alia that they are ultra vires of COTPA and therefore the notifications
issued there under (including those seeking implementation of graphic health warnings)
should be quashed. The said writ petition has been admitted but no interim orders were
passed by the Hon'ble Court. The matter came up for hearing and the same was dismissed as
infructuous.
iii. Before the High Court of Karnataka, a Writ Petition was filed by
Tobacco Institute of India (TII) on behalf of your Company and other manufacturers against
the proposed notification dated 15th October 2014 by Health Ministry to print health
warning on both sides of the pack occupying 85% of space. The 85% health warning came into
effect from 1st April 2016. Your Company also filed a Writ Petition before the High Court
bench at Dharwad against the implementation of 85% health warning. The Hon'ble Supreme
Court on hearing a PIL filed by Health for Millions, constituted a Bench before the
Karnataka High Court to hear all the matters relating to graphical health warning. The
Writ Petitions filed by TII and your Company were heard before the Bangalore Bench and it
was held on 15th December
2017 that the amendment made to the Packaging Rules imposing 85%
graphic health warning is ultra vires the Constitution. Against the said Judgment, an
appeal was filed by the Ministry of Health before the Supreme Court. A stay has been
granted on the said judgement and the case is pending before the Supreme Court.
REAL ESTATE
The then Government of Andhra Pradesh had filed a land grabbing case
against your Company in 1991 in relation to a piece and parcel of vacant land which has
been under possession and occupation by your Company for over four decades. By its
judgement dated 28th July 2010, the Special Court had held that your Company is not a land
grabber but had given the State Government the right to initiate proceedings to recover
possession of the land at some future date. Against this part of the judgement, your
Company filed a writ petition before the then Hon'ble High Court of Andhra Pradesh to
expunge that part of the Order giving such liberty to the Department despite the fact that
your Company has already been declared not to be a land grabber. The writ petition is
still pending. The State Government has also filed a writ petition in the Hon'ble High
Court of Andhra Pradesh seeking to set aside the said judgement of the Land Grabbing
Court. An interim Order was passed restraining your Company from changing the status of
the land or creating any third party interest therein. Your Company is taking all the
necessary steps for speedy disposal of the above writ petitions which are pending before
the Court.
One more case of land grabbing was filed by the then Government of
Andhra Pradesh against your Company in the year 1989 on a piece of land along with
building called 'Lal-e-Zar', before the Special Court. In the year 2010, the Special Court
passed a judgement stating that your Company is not a land grabber. After 7 years, the
Government of Telangana filed an appeal before the Hon'ble High Court of Telangana and
Andhra Pradesh seeking a direction from the court that the nature of the land is not to be
altered and no third party interest to be created. Your Company filed a counter and vacate
stay application seeking permission to construct on the said land. Judgment was pronounced
on the vacate stay petition allowing your Company to construct but with certain
conditions. The State Government preferred an appeal before the Supreme Court which was
dismissed.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
The information required pursuant to Section 197(12) of the Act, read
with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 as amended in respect of employees of the Company, are annexed herewith as "Annexure
D" and forms part of this Report. The statement containing particulars of
employees as required under Section 197 of the Act read with Rule 5(2) of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a
separate annexure forming part of this Report. However, in terms of Section 136 of the
Act, the Report and Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees' particulars which is available for inspection by
the Members at the Registered Office of the Company during business hours on working days
of the Company up to the date of the ensuing AGM. In case any Member is interested in
obtaining a copy thereof, such Member may write to the Company Secretary of the Company.
The Nomination and Remuneration Committee of the Company has affirmed
that the remuneration is as per the Remuneration Policy of the Company. Your Directors
take this opportunity to record their deep appreciation of the continuous support and
contribution from all employees of your Company.
ANNUAL RETURN
As required under Section 92(3) of Act, and Rule 12(1) of Companies
(Management and Administration) Amendment Rules, 2020, Annual Return is available on the
Company's website at https://www.vsthyd.com/ mainsite/Annual-Returns.html
AUDITORS
Statutory Auditors
M/s. BSR & Associates, LLP, Chartered Accountants, were
re-appointed as the Statutory Auditors of the Company to hold office for a second term of
five years from the conclusion of the 90th AGM to the conclusion of the 95th AGM. The
Report given by the Auditors on the financial statements of the Company is part of the
Annual Report.
There has been no qualification, reservation or adverse remark in their
Report. During the year under review, the Auditors have not reported any matter under
Section 143(12) of the Act, and hence, no details is required to be disclosed under
Section 134(3)(ca) of the Act, .
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Act, read with
Regulation 24A (1), (1A), (1B) and Rule 9 of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 and other applicable provisions, the Company
appointed M/s. Tumuluru and Company [Firm Registration No. P1988AP052200], Company
Secretaries to undertake Secretarial Audit of the Company for the financial year ended
31st March, 2025 and as Secretarial Auditor of the Company for a term of five years
effective from 1st April, 2025 to 31st March, 2030. The Secretarial Audit Report is
annexed herewith as "Annexure E" and forms part of this Annual Report.
There are no qualifications, reservations or adverse remarks in the Secretarial Audit
Report.
Further, as per Section 204 of the Act, read with Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, and read with SEBI
(LODR) (Third Amendment) Regulations, 2024 the Board on the recommendation of the Audit
Committee has recommended to appoint M/s. Tumuluru and Company [Firm Registration No.
P1988AP052200], Company Secretaries as Secretarial Auditor of the Company for a term of
five years effective from 1st April, 2025 to 31st March, 2030.
COMPLIANCE WITH SECRETARIAL STANDARDS
Your Company has complied with applicable Secretarial standards, i.e.
on Meetings of the Board of Directors [SS- 1] and on General Meetings [SS-2] issued by The
Institute of Company Secretaries of India (ICSI).
COST ACCOUNTS AND RECORDS
The maintenance of cost accounts and records and requirement of cost
audit as specified under Section 148(1) of the Act, are not applicable for the business
activities carried out by the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
Information in accordance with clause (m) of subsection (3) of Section
134 of the Act, read with Rule 8 of Companies (Accounts) Rules, 2014 is given in the "Annexure
F" forming part of this Report.
SUBSIDIARY/ASSOCIATES/JOINT VENTURES
Your Company does not have any subsidiary company, associates or joint
ventures.
INSOLVENCY AND BANKRUPTCY CODE 2016
There was no application made or any proceedings pending under the
Insolvency and Bankruptcy Code 2016 (31 of 2016) during the financial year.
UTILISATION OF FUNDS
Your Company has not raised any funds during the year through
preferential allotment or Qualified Institutional Placement, as a result question of
providing details of utilisation of such funds does not arise. Further, during the year,
there were no transaction relating to difference between amount of valuation done at the
time of one
time settlement and the valuation done while taking loan from the Banks
or Financial Institutions.
WAY FORWARD
While a consumer centric portfolio continues to be a top priority for
your Company, a lot of efforts are being made to enhance your Company's portfolio in mid
price segment. This will ensure that your Company is able to actively participate in
overall industry growth.
ACKNOWLEDGEMENTS
The Directors are grateful to all valuable stakeholders of the Company
viz. customers, shareholders, dealers, vendors, banks and other business associates for
their excellent support rendered during the year. The Directors also acknowledge the
unstinted commitment and valued contribution of all employees of the Company.
| On behalf of the Board, |
Naresh Kumar Sethi |
| Chairman |
| DIN: 08296486 |
| Dated this 25th day of April, 2025 |
| Hyderabad |
|