We contribute to a greener future while maintaining operational
efficiency and set a positive example in our community".
Dear shareholders,
I am pleased to share the FY24 Annual Report of your Company. Despite
challenges, your Company worked with exemplary resilience and focus, towards the goal of
building a stronger tomorrow, leveraging our decades-long foundation.
Financial performance
In a challenging business environment characterised by premiumisation
of the industry and price escalation of key raw materials, your Company reported a 9.82%
growth in revenues, from I 1,670 Crores in FY23 to I 1,834 Crores in FY24. Total
comprehensive income for the year stood at I 303 Crores. Profit after tax stood at I 302
Crores, a decline of 7.77% over I 327 Crores reported in FY 2022-23. The tobacco leaf
business has achieved a remarkable 24% growth in profitability, reaching an impressive I
51 Crores this year.
This outstanding performance is a testament to your Company?s
expertise in cultivating niche tobaccos and commitment to building strong and sustainable
relationships with the farmers.
Industry dynamics
In the last 2 years, the industry has witnessed heightened competitive
intensity. Prolonged price stability of premium trademarks has accentuated structural
changes in the industry towards mainstream premium segments, putting pressure on some of
our popular trademarks. Further, a sharp escalation in input prices, particularly in
tobacco leaf, has impacted profitability.
Agile responses, consistent focus
Your Company has responded to the changing industry dynamics by
increasing its focus and investments on strengthening the brand portfolio and on new
innovative launches in the mainstream premium segment. Our credo continues to be to
provide delightful value for money to our consumers – and we are continuously
innovating, improving our products and adjusting pricing to ensure that we continue to
deliver that. Over the following years, we will be delivering an innovation pipeline to
create a strong future-fit portfolio.
Your Company has an impressive track record of innovative new launches
and successfully refreshing its portfolio. As a company with nearly a century behind us,
we are proud to observe that more than a third of our volume comes from new launches of
the last decade and nearly a tenth from launches of the last 5 years. Since new brands
have a multi-year gestation period in our industry, we will consistently back our
innovations and new launches with appropriate investments, to emerge with a stronger
portfolio.
Strengthening our fundamentals
Another area of focus has been in strengthening our core geographies
and investing in our distribution engine with digitisation and improved activation
capabilities. ‘Smarter feet on street? with databased decision making is
resulting into better portfolio deployment in our core markets. Our depth of rural
penetration is also being increased, to ensure we benefit from the green shoots in the
rural economy. We are in the process of shifting to our new manufacturing facilities in
Toopran. Investments in technology as well as in people and processes have ensured that we
will be able to bring out more innovative products and further improve our product
quality, along with ensuring operational efficiency.
Care at the core
At VST Industries, sustainability is ingrained in our core ethos. We
prioritise renewable energy adoption, energy conservation and transitioning to cleaner
alternatives to replace fossil fuels. Your Company?s robust waste and water
management practices ensure responsible resource utilisation. I am thrilled to share that
we have been awarded the "Alliance for Water Stewardship Certification Gold
Rating" for our Toopran unit which underscores our commitment to the sustainable
management of water resources. By integrating sustainability into our operations, we
contribute to a greener future while maintaining operational efficiency and set a positive
example in our community.
Rewarding our shareholders
Continuing the tradition of rewarding shareholders, your Company has
declared an equity dividend of I 150 per share. This underscores our commitment to
delivering value to our shareholders.
Focused on people capital
I take this opportunity to extend my gratitude to our team of 750+
proud employees, who have shown exemplary grit and demonstration that helped us navigate
challenging times and look positively to the future. Your Company is dedicated to
advancing people excellence. By investing in our people, we ensure they are equipped to
drive innovation, efficiency, and success across the organisation, reinforcing our
commitment to sustainable growth and organisational excellence.
Stronger Tomorrow
Your Company has made significant strides in the last year. With a
dedicated focus on execution, bolstered by a strong culture, aligned capabilities and a
clear vision, we are poised to realise our potential and strengthen our market position.
On behalf of the Board, I express gratitude to the management team and all employees for
their efforts in overcoming challenges and advancing the Company towards growth and shared
value creation. Regards,
Naresh Sethi
Non-executive Chairman