July 6,2020

The General Manager Listing Department BSE Limited Phiroze Jeejeebhoy Towers Dalal Street, Fort Mumbai - 400001

STOCK CODE: 509966

Dear Sir,

Sub: Annual Report 2020

VST Industries Limited

The Manager Listing Department National Stock Exchange of India Ltd. "Exchange Plaza" Bandra Kurla Complex, Bandra (E) Mumbai - 400051

STOCK SYMBOL: VSTIND

Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, we enclose a copy of the Annual Report for the fmancial year ended 31st March, 2020 including the Notice of the 89th Annual General Meeting of the Company to be held on 29th July, 2020.

Please take the same on record.

Yours faithfully, For VST INDUSTRIES LIMITED

PHAN~DI COMPANY SECRETARY

Encl : As above.

Registered Office: Azamabad, Hyderabad - 500020; Phone: 91·40·27688000; Fax:91·40·27615336; C1N: L29150TG1930PLC000576; EmaiI:corporate@vstind.com; website: www.vsthyd.com

3 Board of Directors & Corporate Information

5 Notice of Meeting

12 Report of the Board of Directors &Management Discussion and Analysis

25 Annexure to the Directors’ Report

70 Business Responsibility Report (BRR)

76 Independent Auditors’ Report

85 Balance Sheet

87 Statement of Profit and Loss

90 Cash Flow Statement

92 Notes to Financial Statement

118 Operating Results

BOARD OF DIRECTORS & CORPORATE INFORMATIONVST INDUSTRIES LIMITED

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BOARD OF DIRECTORS &CORPORATE INFORMATION

DirectorsDirectorsDirectorsDirectorsDirectors NARESH KUMAR SETHI Chairman(DIN 08296486)

DEVRAJ LAHIRI Managing Director(DIN 03588071)

S. THIRUMALAI(DIN 00011899)

RAMA BIJAPURKAR(DIN 00001835)

SUDIP BANDYOPADHYAY(DIN 00007382)

RAJIV GULATI(DIN 06820663)

MUBEEN RAFAT *

(DIN 02097314)

Chief FChief FChief FChief FChief Financial Officerinancial Officerinancial Officerinancial Officerinancial Officer ANISH GUPTA

Company SecretaryCompany SecretaryCompany SecretaryCompany SecretaryCompany Secretary PHANI K. MANGIPUDI

AuditorsAuditorsAuditorsAuditorsAuditors B S R & ASSOCIATES LLPChartered AccountantsHyderabad – 500 034.

Registered OfficeRegistered OfficeRegistered OfficeRegistered OfficeRegistered Office 1-7-1063/1065, Azamabad,Hyderabad – 500 020, Telangana.Telephone : +91 40 2768 8000Fax : +91 40 2761 5336E-mail : investors@vstind.comWebsite : www.vsthyd.comCIN : L29150TG1930PLC000576

Registrar & ShareRegistrar & ShareRegistrar & ShareRegistrar & ShareRegistrar & Share KFin Technologies Private Limited,TTTTTransfer Agentsransfer Agentsransfer Agentsransfer Agentsransfer Agents Karvy Selenium Tower B, Plot No.31 & 32,

Financial District, Nanakramguda, Gachibowli,Hyderabad – 500 032, Telangana.Phone : +91 40 6716 2222Fax : +91 40 2342 0814E-mail : einward.ris@kfintech.comWebsite : www.kfinech.com

* Ceased to be a Director with effect from 12th August, 2019.

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NOTICE OF MEETINGNOTICE is hereby given that the Eighty Ninth Annual GeneralMeeting of VST INDUSTRIES LIMITED will be held onWednesday, 29th July, 2020 at 1.30 p.m. (IST) through VideoConferencing (VC) / Other Audio Visual Means (OAVM) fortransacting the following business:

ORDINARY BUSINESS

1. To consider and adopt the Audited Financial Statementsof the Company for the year ended 31st March, 2020,and the Reports of the Board of Directors and Auditors.

2. To declare a Dividend on the Equity Shares for the yearended 31st March, 2020.

3. To appoint a Director in place of Mr. Naresh Kumar Sethi[DIN: 08296486] who retires by rotation and beingeligible, offers himself for re-appointment.

By Order of the Board

PHANI K. MANGIPUDICompany Secretary

Dated this 21st day of May, 2020Azamabad, Hyderabad-500 020.

NOTES :1. In view of the continuing Covid-19 pandemic, the Ministry

of Corporate Affairs (MCA) has vide its circular dated5th May, 2020 read with circulars dated 8th April, 2020and 13th April, 2020 (collectively referred to as ‘MCAcirculars’) permitted the holding of the Annual GeneralMeeting (AGM) through VC / OAVM, without the physicalpresence of the Members at a common venue. Incompliance with the provisions of the Companies Act,2013 (Act), SEBI (Listing Obligations and DisclosureRequirements), Regulations, 2015 (Listing Regulations)and the MCA circulars, the AGM of the Company isbeing held through VC/OAVM. The deemed venue forthe Eighty Ninth AGM shall be the Registered Office ofthe Company.

2. A Member entitled to attend and vote at the AGM isentitled to appoint a proxy to attend and vote instead ofhimself/herself and the proxy need not be a Member ofthe Company. Since this AGM is being held throughVC/OAVM, physical attendance of Members has beendispensed with. Accordingly, the facility for appointmentof proxies by the Members will not be available for theAGM and hence the Proxy Form and Attendance Slipare not annexed to this Notice.

3. Corporate Members are requested to send, a dulycertified copy of the Board Resolution pursuant to Section113 of the Companies Act, 2013 authorising their

representative to attend the AGM through VC/OAVMon their behalf and vote through remote e-voting. TheResolution shall be sent to the Scrutinizer by emailthrough its registered email address tosaravana1015@gmail.com with a copy marked toevoting@karvy.com.

4. M/s. KFin Technologies Private Limited (KFintech) will beproviding facility for voting through remote e-voting, forparticipation in the Eighty Ninth AGM through VC/OAVMand e-voting during the AGM.

5. Members may join the Eighty Ninth AGM through VC/OAVM by following the procedure which shall be keptopen for the Members from 1.15 p.m. i.e. 15 minutesbefore the time scheduled to start the AGM and theCompany may close the window for joining the VC/OAVM 15 minutes after the scheduled time to start theEighty Ninth AGM. The detailed instructions forparticipating in the Eighty Ninth AGM through VC/OAVMare given as a separate attachment to this Notice.

6. Members may note that the VC/OAVM provided byKFintech, allows participation of at least 1000 Memberson a first-come-first-served basis. The large shareholders(i.e. shareholders holding 2% or more shareholding),promoters, institutional investors, Directors, KeyManagerial Personnel, the Chairpersons of the AuditCommittee, Nomination & Remuneration Committeeand Stakeholders Relationship Committee, Auditors, etc.can attend the AGM without any restriction on accountof first-come-first-served principle.

7. Members attending the AGM through VC/OAVM shallbe counted for the purpose of reckoning the quorumunder Section 103 of the Act.

8. The Register of Members of the Company shall remainclosed from Wednesday, 22nd July, 2020 to Wednesday,29th July, 2020 (both days inclusive) for payment ofdividend, if declared.Valid transfer of shares received at the office of Registrarand Transfer Agents of the Company, KFintech, beforethe close of business hours on 21st July, 2020 will beregistered in time for the transferees to become eligiblefor dividend, if declared.Dividend, if declared, will be paid within 30 days fromthe date of the AGM to those Members whose namesappear in the Register of Members of the Company on29th July, 2020 or to their mandatees, subject howeverto the provisions of Section 126 of the Companies Act,2013 or any amendment thereto or re-enactmentthereof. In respect of dematerialised shares the dividendwill be payable on the basis of beneficial ownership ason 21st July, 2020, as per details to be furnished by

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National Securities Depository Limited (NSDL) andCentral Depository Services (India) Limited (CDSL) forthis purpose.

9. Brief profile of the Directors proposed to be appointed/re-appointed is given towards the end of this Noticepursuant to Regulations 26(4) & 36(3) of the ListingRegulations and Secretarial Standard issued by Instituteof Company Secretaries of India. None of the Directorsis related to one another.

10. Members holding shares in physical form should informthe Company's Registrar and Transfer Agents, KFintechof any change in their registered address, mandate/bank details/e-mail address. Similarly, Members holdingshares in electronic form should inform their DepositoryParticipants (DP) of any change in their registeredaddress, mandate/bank details/e-mail address.

11. The shares of the Company are under compulsory demattrading. Members holding shares in physical form arerequested to convert their shares into dematerialized formin their own interest and for their convenience.

12. SEBI has directed listed Companies to use electronicpayment modes such as NEFT, RTGS, ECS etc., forpayments to the investors. Members are requested toupdate their bank details such as MICR, IFSC code etc.,with the Registrar and Transfer Agents, KFintech bysubmitting a cancelled cheque, while Members holdingshares in electronic form are requested to update suchbank details with their respective Depository Participants.

13. Members who have multiple folios in identical names orjoint names in the same order are requested to intimatethe Registrar and Transfer Agents, KFintech about thesefolios to enable consolidation of all such shareholdingsinto one folio.

14. The Securities and Exchange Board of India (SEBI) videcircular ref no. MRD/DoP/CIR-05/2007 dated April 27,2007, made PAN the sole identification number for allparticipants transacting in the securities market,irrespective of the amount of transaction. In continuationof the aforesaid circular, it is hereby clarified that forsecurities market transactions and off market/privatetransactions involving transfer of shares of listedcompanies in physical form, it shall be mandatory forthe transferee(s) to furnish copy of PAN card to theCompany /Registrar and Share Transfer Agent forregistration of such transfer of shares.

15. Members holding shares in single name and physicalform are advised to make nomination in respect of theirshareholding in the Company. The Nomination FormSH 13 prescribed under the Companies Act, 2013 canbe obtained from the Registrar and Transfer Agent or

can be downloaded from the Company’s websitewww.vsthyd.com.

16. Members are requested to refer to the “ShareholderReferencer” of the Report on Corporate Governancewhich inter-alia contains details regarding unclaimeddividend. Members wishing to claim dividends thatremain unclaimed are requested to correspond with theRegistrar and Share Transfer Agents as mentioned above,or the Company Secretary, at the Company’s registeredoffice. Members are requested to note that dividendsthat are not claimed within seven years from the date oftransfer to the Company’s unclaimed dividend account,will, as per Section 124 of the Companies Act, 2013, betransferred to the Investor Education and Protection Fund(IEPF). Shares on which dividend remains unclaimed forseven consecutive years will also be transferred to theIEPF as per Section 124 of the aforesaid Act, andapplicable Rules thereunder.

17. The documents referred to in this Notice are open forinspection at the Registered Office of the Company onall working days, except Saturdays & Sundays, between11.00 a.m. and 1.00 p.m. up to the date of the AGM.

18. Pursuant to Section 108 of Companies Act, 2013 readwith Rule 20 of Companies (Management andAdministration) Rules, 2014 as substituted by theCompanies (Management and Administration)Amendment Rules, 2015 and Clause 44 of ListingRegulations, the Company is pleased to offer voting byelectronic means to the members to cast their voteselectronically on all items of business set forth in thisNotice. The detailed instructions for e-voting are givenas a separate attachment to this Notice. Members whohave cast their vote by remote e-voting prior to the EightyNinth AGM may also participate in the AGM throughVC/OAVM but shall not be entitled to cast their voteagain. Only those Members, who will be present in theEighty Ninth AGM through VC/OAVM and have not casttheir vote on the Resolutions through remote e-votingand are otherwise not barred from doing so, shall beeligible to vote through e-voting system in the AGM byfollowing the same procedure as in the remote e-voting.

19. The Company has appointed Mr. Tumuluru Krishna Murtyor failing him Mr. B.V. Saravana Kumar, CompanySecretaries in Practice, who, in the opinion of the Boardare duly qualified persons, as a Scrutinizer who willscrutinize the electronic voting process in a fair andtransparent manner. The Scrutinizer shall within a periodof three days from the date of conclusion of the Meeting,submit his report of the votes cast in favour or against, ifany, to the Chairman of the Company and the result ofthe same will be disclosed forthwith. The Company has

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appointed M/s. KFin Technologies Private Limited as theAgency for the purpose of facilitating the electronicvoting.

20. In compliance with the above referred MCA circularsand the SEBI circular dated 12th May, 2020, Notice ofthe AGM along with the Annual Report 2019-20 is beingsent only through electronic mode to those Memberswhose email addresses are registered with the Company/Depositories. Members may note that the Notice andthe Annual Report for 2019-20 will also be available onthe Company’s website www.vsthyd.com, and websitesof the Stock Exchanges i.e. BSE Limited and NationalStock Exchange of India Limited at www.bseindia.comand www.nseindia.com respectively.

21. Pursuant to Finance Act 2020, dividend income will betaxable in the hands of the Members w.e.f. 1st April,2020 and the Company is required to deduct tax atsource from dividend paid to Members at the prescribedrates. For the prescribed rates for various categories,the shareholders are requested to refer to the FinanceAct, 2020 and amendments thereof. The shareholdersare requested to update their PAN with the Company/KFintech (in case of shares held in physical mode) anddepositories (in case of shares held in demat mode).A Resident individual shareholder with PAN and who is

not liable to pay income tax can submit a yearlydeclaration in Form No.15G/15H, to avail the benefitof non-deduction of tax at source by email toeinward.ris@kfintech.com by 11.59 p.m. IST on 21stJuly, 2020. Members are requested to note that in casetheir PAN is not registered, the tax will be deducted at ahigher rate of 20%.Non-resident shareholders can avail beneficial rates undertax treaty between India and their country of residence,subject to providing necessary documents i.e. NoPermanent Establishment and Beneficial OwnershipDeclaration, Tax Residency Certificate Form 10F, anyother document which may be required to avail the taxtreaty benefits by sending an email toeinward.ris@kfintech.com. The aforesaid declarationsand documents need to be submitted by the shareholdersby 11.59 p.m. IST on 21st July, 2020. The formats ofthe same can be downloaded from the website of theCompany, www.vsthyd.com.

22. Since the AGM will be held through VC/OAVM, the RouteMap is not annexed to the Notice.

By Order of the Board

PHANI K. MANGIPUDICompany Secretary

Dated this 21st day of May, 2020Azamabad, Hyderabad-500 020.

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INSTRUCTIONS FOR REMOTE E-VOTING

1. Use the following URL for e-voting from KFintechwebsite:https://evoting.karvy.com.

2. Members of the Company holding shares either inphysical form or in dematerialized form, as on 21st July,2020, the cutoff date (Record Date), may cast their voteelectronically.

3. Enter the login credentials [i.e., user id and passwordmentioned in the Attendance Slip enclosed with thisnotice]. Your Folio No/DP ID Client ID will be your userID.

4. After entering the details appropriately, click on LOGIN.

5. You will reach the Password change menu wherein youare required to mandatorily change your password. Thenew password shall comprise of minimum 8 characterswith at least one upper case (A-Z), one lower case (a-z),one numeric value (0-9) and a special character. Thesystem will prompt you to change your password andupdate any contact details like mobile, email etc. onfirst login. You may also enter the secret question andanswer of your choice to retrieve your password in caseyou forget it. It is strongly recommended not to shareyour password with any other person and take utmostcare to keep your password confidential.

6. You need to login again with the new credentials.

7. On successful login, the system will prompt you to selectthe EVENT i.e., VST Industries Limited.

8. On the voting page, enter the number of shares as onthe cutoff date under FOR/AGAINST or alternately youmay enter partially any number in FOR and partially inAGAINST but the total number in FOR/AGAINST takentogether should not exceed the total shareholding. Youmay also choose the option ABSTAIN.

9. Members holding multiple folios / demat account shallchoose the voting process separately for each folio /demat account.

10. Cast your vote by selecting an appropriate option andclick on SUBMIT. A confirmation box will be displayed.Click OK to confirm else CANCEL to modify. Once youconfirm, you will not be allowed to modify your vote.During the voting period, Members can login anynumber of times till they have voted on the Resolution.

11. Once the vote on the Resolution is cast by the Member,he/she shall not be allowed to change it subsequently.

12. The Portal will be open for voting from 9.00 a.m. on 25thJuly, 2020 and closes at 5.00 p.m. on 28th July, 2020.

13. Members of the Company who have purchased theirshares after the dispatch of the notice but before the cutoffdate (21st July, 2020) may contact KFintech at Tel No.1800 345 4001 (toll free) to obtain login id and passwordor send a request to einward.ris@kfintech.com

14. In case of any queries, you may refer the Frequently AskedQuestions (FAQs) for shareholders and e-voting UserManual for shareholders available at the download sectionof https://evoting.karvy.com or contact KFintech at Tel No.1800 345 4001 (toll free).

INSTRUCTIONS FOR PARTICIPATING THROUGH VC/OAVM

1. Members will be able to attend the Eighty Ninth AGMthrough VC/OAVM through the video conferencingplatform provided by KFintech. This can be accessed athttps://evoting.kfintech.com under shareholders login byusing the remote e-voting credentials and selecting theEVENT for the Company’s Eighty Ninth AGM. Please notethat the Members who do not have the User ID andPassword for e-voting or have forgotten the User ID andPassword may retrieve the same by following the remotee-voting instructions mentioned in the Notice of AGM toavoid last minute rush. Further, Members can also usethe OTP based login for logging in to the e-voting system.

2. Members will be required to use internet with a good speedto avoid any disturbance during the Meeting. It isrecommended to join the Meeting through GoogleChrome for better experience.

3. Please note that Members connecting from mobile devicesor tablets or through laptops etc. connecting via mobilehotspot, may experience Audio/Video loss due tofluctuation in their respective network. It is thereforerecommended to use stable Wi-Fi or LAN connection tomitigate any kind of aforesaid glitches.

4. Members can submit questions in advance with regard tothe financial statements or any other matter to be placedat the AGM, from their registered email address,mentioning their name, DP ID and Client ID No./FolioNo. and Mobile No. to reach the Company’s email

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address investors@vstind.com at least 48 hours in advancebefore the start of the meeting i.e. 27th July, 2020 by1.30 p.m. IST. Such questions by the Members shall betaken up during the Meeting and replied by the Companysuitably.

5. Members, who would like to ask questions during the AGMwith regard to the financial statements or any other matterto be placed at the Eighty Ninth AGM, need to registerthemselves as a speaker by sending their request fromtheir registered email address mentioning their name, DPID and Client ID No./Folio No. and Mobile No. to reachthe Company’s email address investors@vstind.com at least48 hours in advance before the start of the meeting i.e.27th July, 2020 by 1.30 p.m. IST. Those Members whohave registered themselves as a speaker will only beallowed to ask questions during the AGM, depending uponthe availability of time. The Company reserves the right torestrict the number of speakers depending on theavailability of time for the AGM.

6. During the AGM, the Chairman shall, after response tothe questions raised by the Members in advance formallypropose to the Members participating through VC/OAVMto vote on the Resolutions as set out in the Notice of theEighty Ninth AGM and announce the start of the castingof vote through e-voting system. After the Membersparticipating through VC/OAVM, who are eligible andinterested to cast votes, have cast the votes, the e-votingwill be closed with the formal announcement of closureof the Meeting.

7. Only those Members who will be present in the AGMthrough the VC facility and have not casted their votethrough remote e-voting are eligible to vote through e-voting in the AGM.

8. Members who need assistance or help during the AGM,can contact KFin Technologies Private Limited, KarvySelenium Tower B, Plot No. 31 & 32, Financial District,Nanakramguda, Gachibowli, Hyderabad – 500 032,Telangana. Phone : +91 40 6716 2222.

GENERAL INSTRUCTIONS

1. The Scrutinizer shall, immediately after the conclusionof voting at the AGM, first count the votes cast duringthe AGM, thereafter unblock the votes cast throughremote e-voting and make, not later than 48 hours ofconclusion of the AGM, a consolidated Scrutinizer’sReport of the total votes cast in favour or against, if any,to the Chairman or a person authorised by him in writing,who shall countersign the same.

2. The result declared along with the Scrutinizer’s Reportshall be placed on the Company’s websitewww.vsthyd.com and on the website of www.kfintech.comimmediately. The Company shall simultaneously forwardthe results to BSE Limited and National Stock Exchangeof India Limited, where the shares of the Company arelisted.

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DETAILS OF DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT AT THE FORTHCOMING ANNUAL GENERALMEETING[Pursuant to Regulation 3 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Clause 1.2.5 ofSecretarial Standard-2 on General Meetings]

Name of the Director Mr. Naresh Kumar Sethi

DIN

Age

Date of first appointment on the Board

Qualifications

Expertise in specific functional areas

Number of Meetings of the Board attended during the year

List of Directorships of other Indian companies

List of Memberships/Chairmanships of Committees of otherBoards

Relationship with other Directors and Key ManagerialPersonnel of the Company.

Shareholding in the Company

08296486

54 years

14.12.2018

- Chemical Engineer from IIT Varanasi- MBA from IIM Calcutta

Governance, Marketing, Business Strategy andTransformation Champion

5

Nil

Nil

Nil

Nil

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REPORT OF THE BOARD OF DIRECTORS &MANAGEMENT DISCUSSION AND ANALYSISFOR THE YEAR ENDED 31ST MARCH, 2020The Directors of your Company have pleasure in presenting before you theAnnual Report together with the Audited Statements of Accounts for the yearended 31st March, 2020.

Financial Summary (` Lakhs)

2019-20 2018-19Revenue from Operations 141778 122301

Profit after Tax 30409 22684Retained earnings brought forward from previous year 38365 32358Balance available for Appropriation 68774 55042Amount transferred to General Reserves 3000 2250Dividend paid 14670 11967Corporate Dividend Tax thereon 3015 2460

Balance in retained earnings 48089 38365

KEY RATIOSEarnings per Share (`) 196.93 146.90Dividend per Share (`) 95.00 77.50

Value creation during the decade has been Compounded AnnualGrowth Rate (CAGR), 12.3% in Earnings Per Share (EPS) and7.8% in Dividend Per Share (DPS).

DIVIDEND AND TRANSFER TOGENERAL RESERVE

The Directors are pleased torecommend a dividend of `103/- perequity share of ̀ 10/- each on the paidup equity share capital of the Company,for consideration and approval ofMembers at the ensuing AnnualGeneral Meeting (AGM). It is proposedto carry forward an amount of `3000lakhs to General Reserve.

Pursuant to Regulation 43A of the SEBI(Listing Obligations and DisclosureRequirements) Regulations, 2015(hereinafter referred to as ListingRegulations), the Company adopted aDividend Distribution Policy in terms ofthe requirement which is annexed tothis report as Annexure C. The Policy

is available on the Company’s websiteat http://www.vsthyd.com/i/Dividend-Distribution-Policy.pdf and forms a partof this Report.

MATERIAL CHANGES ANDCOMMITMENTS

Except as disclosed elsewhere in theReport, there have been no materialchanges and commitments madebetween the end of the financial yearof the Company and the date of thisReport. There has been no change inthe nature of business of the Companyduring the year.

SHARE CAPITAL

The paid up Equity Share Capital ason 31st March, 2020 was ` 1544.19lakhs. The Company has neither issued

shares with differential rights as todividend, voting or otherwise nor issuedshares (including sweat equity shares)to the employees or Directors of theCompany, under any Scheme.

No disclosure is required under Section67(3)(c) of Companies Act, 2013 inrespect of voting rights not exerciseddirectly by the employees of theCompany as the provisions of the saidSection are not applicable.

MANAGEMENT DISCUSSION &ANALYSIS REPORT (MD&A)

Based on feedback from Members onthe Annual Report and Accounts, thisreport includes MD&A as appropriate sothat duplication and overlap between theDirectors’ Report and a separate MD&Ais avoided and the entire material withCompany’s state of affairs is providedin a composite and comprehensivedocument.

INDUSTRY STRUCTURE &DEVELOPMENT

In 2019-20, legal cigarette industryvolumes were largely stable. However,the industry continues to face taxationchallenges. Industry witnessed anotherround of tax increase in the Union Budgetpresented in February 2020.

Non duty-paid cigarettes have benefitedfrom the large price distortion arisingfrom exponential tax hikes in the recentpast, adversely affecting legal playersand government revenues. Also, harsherregulations such as selling restrictionsand ban on sale of loose sticks in keylarge states continue to pose challenges.

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COMPANY PERFORMANCE

In 2019-20, your Company recordedanother year of impressive performancewith significant growth in both volumeand value terms. Performance of keytrademarks and increased geographicfootprint have helped your Company tofurther bolster its market position.

Your Company’s new age brands,especially ‘Total’, have contributedsignificantly in increasing the overallvolume base in existing and newmarkets. Heritage trademarks such asRed Charms and Red Special continueto deliver a strong performance in theirrespective geographies.

Your Company remains focused ondeveloping and nurturing a vibrantbrand portfolio basis strong consumerinsights, appealing to various socio-economic strata across geographies.Your Company continues to furtherstrengthen its position throughcontinued investments in distributioninfrastructure and robust traderelationships.

The manufacturing operations of theCompany had to be suspendedbetween the later part of March, 2020and the second week of May, 2020 dueto the lockdown directives issued by theState Government and were partiallyresumed with restricted capacity andmanpower in compliance with theapplicable guidelines.

Moving forward, COVID-19 pandemicposes significant demand and supplychallenges. Your Company is closelymonitoring developments acrossmarkets to effectively respond topotential disruptions and minimize

impact. In all its initiatives, safety ofemployees remains your Company’sforemost priority.

LEAF TOBACCO

Your Company’s leaf function hasregistered a strong performance byprocuring quality tobaccos for ownmanufacturing in line with the increasingvolumes. By leveraging its expertise inall varieties of tobaccos, it continues itsdomestic sales in addition to exports.

The focus is on own development of newvarieties and high nicotine tobaccos inview of the changing requirements oftobacco in domestic and in theinternational market with establishedcustomers.

In the backdrop of changing climaticconditions, wherein farming communityis unable to realize their investment inagriculture, your Company continues tofocus on farmers’ interest to sustain thetobacco cultivation. This also has helpedto develop backward regions in the leafgrowing areas.

It is satisfying to note that your Company'sfarmers continue to grow tobacco withthe lowest pesticide residue levels andlow TSNAs (Tobacco SpecificNitrosamines) that are well withininternational standards.

As part of commitment to social andeconomic upliftment of the Companies’tobacco growing areas, your Companyis continuing the sponsorship of theinitiatives like house hold toilets and solarstreet lighting with an aim to ensurehigher standard of living of the farmersand their families.

PRODUCTION AND PLANTMODERNISATION

Your Company continues to givecompetitive edge to its products in themarket place, by offering innovativeproducts to consumers, which havebeen well received. The focus at theplants has been to enhance capitalefficiencies and cost optimization.

RESEARCH & DEVELOPMENTACTIVITY

Your Company continued to focus onR&D activity, by way of developingquality blends with innovative filtervariants for new brands, which havebeen well accepted by consumers inthe market place.

The R&D lab of your Company receiveda “Certificate of continuation” of ISO17025:2005, from NABL, QualityCouncil of India, Government of India,for the year 2019-20.

HUMAN RESOURCEDEVELOPMENT

Your Company recognizes people asthe primary source of itscompetitiveness, and continues its focusto attract and retain the best talent, inan increasingly competitive marketplace. Our endeavor is to give utmostimportance for people developmentinitiatives thereby unleashing theirpotential and fulfill their aspirations.

The year 2019-20 has been quitesignificant for Human Resources whereseveral initiatives were taken forward.A series of innovative talentdevelopment initiatives like webenabled learning, managementdevelopment programs and capability

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building initiatives through developmentcenters were taken up. The belief that'great performance culture creates greatorganizations’ has been at the core ofthe Company's approach to its people.Focused efforts are put in this regard, toempower individuals realize theirpotential.

Your Company continuously works on itsengagement strategy initiatives atmultiple levels to motivate & engagethe employees. This is reflected in thepositive employee engagement score,which is at par with the best in classscore in the Industry.

As on 31st March, 2020, yourCompany ’s work force was 807employees, with 357 Management staffand 450 Workmen.

Your Company has constituted anInternal Complaints Committee as perthe Sexual Harassment of Women atWorkplace (Prevention, Prohibition andRedressal) Act, 2013 and the Rulesframed there under. No cases werefiled during the year under the aboveAct.

ENVIRONMENT, HEALTH & SAFETY(EHS) AND COMMUNITY SERVICES

448 employees and 105 contractworkmen have undergone EHS trainingand 492 employees and 108 Contractworkmen have undergone fire fightingtraining. Mock drills were alsoconducted for workers andmanagement during the period tocomply with the Company’s EHSguidelines.

Half-yearly and Annual EHS audits ofthe Company ’s operations werecarried out to ensure compliance ofEHS requirements. ISO 14001:2015 &OHSAS 18001:2007 surveillance audit

was held at Azamabad & Toopranpremises by M/s. Rina India Pvt. Ltd.,and received a continuation certificatefor ISO 14001:2015 & OHSAS18001:2007 for both Azamabad &Toopran locations.

Your Company received "Green FactoryBuilding Certification with Gold rating"for Toopran factory from CII-IndianGreen Building Council, Hyderabad.

Bio-Medical Waste Authorization wasreceived for the Toopran factory fromTelangana State Pollution Control Board(TSPCB) for a period of 5 years - 2019to 2024.

FINANCE

a. Profits

The Profit after Tax of your Companyfor the year is ` 304.09 crores.

During the year, the Company had astrong growth momentum in Profitbefore Tax by 19.8% in turn leading toa growth of Profit after Tax by 34.1%on account of reduction in corporatetax rate announced by the Governmentof India.

b. Treasury Operations

Your Company follows a SLR model(Safety, Liquidity and Return) indeployment of earmarked funds.

There are no significant changes(change of 25% or more as comparedto the immediately previous financialyear) in the key financial ratios of theCompany including those listed out andspecified under Schedule V (B)(1)(i)read with Regulation 34(3) and 53(f)of the Listing Regulations, as amended.

There has been a positive change tothe Return on Net worth by about 13percentage points as compared to the

previous year primarily due to improvedperformance of the Company andefficient utilization of the shareholderresources.

PARTICULARS OF LOANS,GUARANTEES OR INVESTMENTS

The Company has not taken any loansor given guarantees or madeinvestments in any other Companycovered and provided under Section186 of the Companies Act, 2013during the year.

RATING

The Credit Rating InformationServices India Limited (CRISIL) hasre-affirmed the rating of your Companyto “FAAA/Stable” for Fixed DepositSchemes, “AA+/Stable” for Long TermNon-Convertible Debentures and“A1+” for Non-fund based liabilities(Letter of Credit and Bank Guarantee).Your Company has stopped acceptingfresh deposits for the past several years.

UNCLAIMED DIVIDENDS

Pursuant to the provisions of Sections124 and 125 of the Companies Act,2013, the Company has transferred ondue dates, the unpaid or unclaimeddividends for the financial year ended31st March, 2012 to the InvestorEducation and Protection Fund (IEPF)established by the CentralGovernment.

Further, as per the provisions of theInvestor Education and Protection Fund(Uploading of Information regardingunpaid and unclaimed amounts lyingwith Companies) Rules, 2012, theCompany has uploaded the details ofunpaid and unclaimed amounts lyingwith the Company as on 31st March,2019 on the website of the Company

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(www.vsthyd.com), and also on thewebsite of the Ministry of CorporateAffairs, Government of India.

The details of the dividend due fortransfer to IEPF as on 31st March, 2020is given in the Report on CorporateGovernance. The Company hascompleted the process of complyingwith the provisions of Section 124(6)of the Companies Act, 2013 read withthe IEPF Authority (Accounting, Audit,Transfer and Refund) Rules, 2016 andas amended by the SecondAmendment Rules of 2017 bytransferring 23,392 shares (100shareholders) on 9th September, 2019.

UNCLAIMED SHARECERTIFICATES

Your Company has communicated to theMembers whose share certificates havebeen returned undelivered to theCompany that these would betransferred to the Unclaimed SuspenseAccount if not claimed by them, asrequired under Regulation 34(3) readwith Schedule V[F] of the ListingRegulations (hereinafter referred as‘Listing Regulations’) as amended.

The status of unclaimed shares as on 31stMarch, 2020 is given in the Report onCorporate Governance.

CORPORATE GOVERNANCE

In terms of Regulation 34 of the ListingRegulations, a Report on CorporateGovernance along with ComplianceCertificate issued by the Statutory Auditorsof the Company is annexed as“Annexure A” and forms part of thisReport.

Your Company has taken adequate stepsfor strict compliance with the CorporateGovernance guidelines, as amendedfrom time to time.

MEETINGS

The Board and Committee Meetings arepre-scheduled and a tentative calendarof the Meetings finalized in consultationof the Directors are circulated to themin advance to facilitate them to plan theirschedule. However, in case of specialand urgent business needs, the approvalis obtained by way of circular resolution.During the year five Board Meetings andfour Audit Committee Meetings wereconvened and held. The details of theMeetings including composition of AuditCommittee are given in the CorporateGovernance Report. During the year, allthe recommendations of the AuditCommittee were accepted by the Board.

INTERNAL CONTROL SYSTEMS

a. Your Company maintains anadequate and effective internalcontrol system commensurate withthe size and complexity. YourCompany also has welldocumented Standard OperatingProcedures (SOPs) for variousprocesses which are periodicallyreviewed for changes warranteddue to business needs.

b. Your Company remains committedto improve effectiveness of internalfinancial controls and processeswhich would help in efficientconduct of its business operations,ensure security to its assets andtimely preparation of reliablefinancial information.

The policies and procedures laid outby your Company capture the controlenvironment prevalent in theorganization. Over a period of threeyears, the business processes of yourCompany is reviewed through aninternal audit process which reviews thesystems on a continuous basis. The

objective being to identify potential riskareas and come up with acomprehensive risk mitigation plan.

The Audit Committee of your Board metfour times during the year. Review ofaudit observations covering theoperations, consideration of accounts ona quarterly basis and monitoring theimplementation of auditrecommendations were some of the keyareas which were dealt with by theCommittee. The Statutory Auditors/Internal Auditors were invited to attendthe Audit Committee Meetings and makepresentations covering their observationson adequacy of internal financial controlsand the steps required to bridge gaps, ifany. The Chief Financial Officer is apermanent invitee to the AuditCommittee and other executives of theCompany are invited to address,respond or provide clarifications torelevant issues as and when required.

RISK MANAGEMENT

Your Company has constituted the RiskManagement Committee as mandatedby SEBI for top 500 listed entities whichwas to be effective from 1st April, 2019.The Committee comprises of Directorsand Senior Management as its Membersas prescribed under Regulation 21 of theListing Regulations as amended. TheCompany Secretary is the Secretary ofthe Committee.

Your Company has always endeavoredto bring together elements of bestpractices for risk management in relationto existing and emerging risks faced byit at both strategic and operating level.The Company faces a variety of risksfrom external and internal sources.However, the objective is to be aware ofdifferent kinds of risks affecting thebusiness. Rather than eliminating these

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risks, the decision making process at yourCompany considers sensible risk taking,and thereby proactive steps are taken toensure that business is undertaken in anenvironment which encourages areasonable amount of risk taking andenables the Company to leveragemarket opportunities effectively.

The Board is responsible for determiningthe nature and extent of the principal risksthat your Company is willing to take toachieve its strategic objectives and formaintaining sound risk managementsystem. With the support of the AuditCommittee, it carries out a review of theeffectiveness of your Company’s riskmanagement process covering allmaterial risks including strategic,financial, operational and alsocompliance levels.

Your Company has substantial operationsall over the country and competes onthe basis of brand appeal, loyalty, pricevalue connotations and strong traderelationships. The Company’s position isinfluenced by the economic, regulatoryand political situations both nationally andat a state level and of the competitors.The principal risks impacting yourCompany ’s business and stepsundertaken to mitigate them are asunder:

i) Regulatory restrictions couldhave an impact on long termrevenue growth of the Company.

The Company operates underincreasingly stringent regulatoryregime (COTPA guidelines onpackaging and labeling,advertising and promotion). Thisfurther gets complicated withadoption of differing regulatoryregimes in different states and/orlack of consensus on

interpretation/application.

Such restrictive regulations which aresubjected to interpretation couldresult in not only penalties beingimposed/loss of reputation, but alsoimpair the Company’s ability tocommunicate with adult smokersand/or to meet consumerexpectations through new/innovative brand launches orgeographic expansion.

The Company addresses this riskby engaging in continuous socialdialogue with stakeholders andregulatory community throughindustry bodies. At the same time,it works on developing strategiesand capabilities to effectivelylaunch competitive and consumeracceptable brands within thechanging regulatory environment.

(ii) Taxation changes could have animpact on short-term revenuegrowth of the Company.

The Company ’s business issubjected to GST, excise and othercesses as may be made applicable,which could require the Companyto take up product prices and inabsence of such action, impact itsbusiness. The impact increaseswhen due to changes in economicsituation, consumer’s disposalincome reduces, resulting in down-trading to cheaper cigarettesincluding non-duty paid cigarettesor alternative tobacco products.

Such risks are addressed by thecompany through: (a) engagementwith tax authorities at levels whereappropriate; (b) regularmanagement review to build a wellladdered brand portfolio acrossnew segments including new brand

creation; and (c) capability build-up through investments indistribution infrastructure toincrease geographical spread.

(iii) Regional disruptions could havean impact on short-term revenuegrowth of the Company as well asreputation.

Regional disturbances throughstate level restriction on trade orthrough terrorism and politicalviolence including bandhs, strikes,have the potential to disrupt theCompany’s business operations.Such disruptions result in potentialloss of assets and increased costsdue to more complex supply chainarrangements and/or maintaininginefficient facilities.

The Company addresses this riskthrough developing secure multiplesourcing/delivery (supply chain)strategy and through Insurancecover and business continuityplanning.

(iv) Counter party risk could have apotential impact on Company'scapital and profitability.

The Company generates positivecash flows which arepredominantly invested withfinancial institutions and mutualfunds. Delay and/or default insettlement on maturity of suchinvestments could result in liquidityand financial loss to Company.

Such risks are mitigated throughinvestment based on principle ofSafety; Liquidity & Returns (SLR) andwith institutions having strongshort-term and long-term ratingsassigned by CRISIL.

(v) Data risks

The loss or misuse of sensitive

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information, or its disclosure tooutsiders, including competitorsand trading partners, couldpotentially have a significantadverse impact on the Company’sbusiness operations and/or giverise to legal liability. For thispurpose, the Company has put inplace information technologypolicies and procedures which arereviewed regularly. Further,information technology controlslike data back-up mechanism,disaster recovery center,authorization verification, etc. havealso been established.

CORPORATE SOCIALRESPONSIBILITY INITIATIVES

Your Company has formulated aCorporate Social Responsibility Policywith the objective to promote inclusivegrowth and equitable development ofidentified areas by contributing backto the society. Over the years, yourCompany has been involved in varioussocial activities focusing on Health &Sanitation like construction of toiletsunder Swachh Ghar mission,Environment sustainability andEducation.

The Company has with the help ofGramalaya, a non-profit organizationconstructed toilets in individual homes(of farmers living) in and aroundJogulamba-Gadwal district ofTelangana where your Company hasits operations, under the ‘SwachhGhar’ program of your Company. Inaddition to construction of toilets, thevillages and the communities in thearea are also sensitized about theimportance of health & sanitation. Over970 household toilets have already beenconstructed during the financial year and

your Company has plans to extend itfurther to other houses in the same areaand thereafter extend it to other areas.

Your Company has taken up an initiativeof supporting environment sustainabilityby installing 300 solar street lights in 30villages/towns in Jogulamba-Gadwaland Wanaparthy districts of Telangana.

In the field of Education, your Companyhas under the project Gyandeepsupported for the supply of 2361 nos.of desk cum benches to 60 Governmentschools situated in Jogulamba-Gadwal,Adilabad, Medak and Jangaon districtsof Telangana.

Your Company has also partnered withM/s. Akshaya Patra foundation to servemid-day meals to over 5000 childrencovering over 129 schools present in andaround Hyderabad.

Pursuant to the provisions of Section 135and Schedule VII of the Companies Act,2013, the Corporate SocialResponsibility (CSR) Committee of theBoard of Directors was formed torecommend the policy on CorporateSocial Responsibility and monitor itsimplementation. The composition of theCSR Committee is given in the AnnualReport on the CSR activities. The CSRpolicy is available on the Company’swebsite at : www.vsthyd.com/i/CSRPolicy.pdf.

The CSR Policy and the Annual Reporton CSR activities is annexed herewith as“Annexure B” and forms part of thisReport.

BUSINESS RESPONSIBILITY REPORT

The Listing Regulations mandatesinclusion of Business Responsibility Report(BRR) as part of the Annual Report fortop 500 listed entities based on marketcapitalization. In compliance with the

Regulation, the BRR is provided as partof this Annual Report.

RELATED PARTY TRANSACTIONS

The related party transactions enteredinto by the Company during the yearare in its ordinary course of businessand on arm’s length basis. There wereno materially significant related partytransactions between your Companyand the Directors, Promoters, KeyManagerial Personnel and otherdesignated persons which may have apotential conflict with the interest ofyour Company at large. Prior approvalfor all the related party transactions isobtained from the Audit Committee.

Form AOC-2 for disclosure ofparticulars of contracts/arrangements,entered into by your Company withrelated parties is annexed herewith as“Annexure D” and forms part of thisReport.

BOARD EVALUATION

Pursuant to the provisions of theCompanies Act, 2013 as amendedand Listing Regulations, theperformance evaluation of the Board,the committees of the Board andindividual Directors has been carriedout. The manner in which theevaluation has been carried out hasbeen explained in the CorporateGovernance Report.

The performance evaluation of theChairman and the Non-independentDirectors was carried out by theIndependent Directors. The Board ofDirectors expressed their satisfaction withthe evaluation process.

REMUNERATION POLICY

Nomination and RemunerationCommittee has formulated a policyrelating to remuneration of directors, key

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managerial personnel and otheremployees which has been approvedby the Board. The Remuneration Policyand the criteria for determiningqualification, position, attributes andindependence of a Director are statedin the Corporate Governance Report.The policy is also placed on the websiteof the Company and can be viewed athttp://www.vsthyd.com/documents/remuneration-policy.pdf.

MEETING OF INDEPENDENTDIRECTORS

The performance of the Non-ExecutiveDirector, the Chairman and the Boardas a whole is done by the Board andthe Independent Directors in theirexclusive Meeting as per the policyformulated by the Board in this regard.In addition, the Independent Directorsin such Meeting also review their role,functions and duties under theCompanies Act, 2013 and the flow ofinformation from the Management.

VIGIL MECHANISM

In terms of Section 177 of theCompanies Act, 2013, the Companyhas formulated a Whistle Blower Policyas a vigil mechanism to encourage allemployees and Directors to report anyunethical behavior, actual or suspectedfraud or violation of the Company’s‘Code of Conduct and Ethics Policy’which also provides for adequatesafeguard against victimization ofperson who use such mechanism andthere is a provision for direct access tothe chairman of the Audit Committee inappropriate/exceptional cases. Thedetails of the Whistle Blower Policy isgiven in the Corporate GovernanceReport and also posted on theCompany’s website at: www.vsthyd.com/i/WhistleBlower Policy.pdf.

DIRECTORS AND KEYMANAGERIAL PERSONNEL

Directors retiring by rotation

Mr. Naresh Kumar Sethi

Mr. Naresh Kumar Sethi[DIN:08296486], a nominee of theRaleigh Investment Company Limited,a British American Tobacco groupCompany was appointed as a Directorof the Company with effect from 14thDecember, 2018 whose office is subjectto retirement by rotation. Hisappointment was approved by theMembers at the Annual GeneralMeeting held on 28th August, 2019.

Pursuant to Article 93 of the Articles ofAssociation of your Company, Mr.Naresh Kumar Sethi is liable to retirefrom the Board and being eligible,offers himself for re-election. YourBoard recommends his re-appointment.

Mr. Naresh Kumar Sethi is not aDirector in any other Company in India.He is a Member in CSR Committee,Stakeholders Relationship Committee,Risk Management Committee and theNomination & RemunerationCommittee. Mr. Naresh Kumar Sethidoes not hold any shares in theCompany and is not related to anyother Director of the Company.

Independent Directors

Ms. Rama Bijapurkar

At the Annual General Meeting of theCompany held on 28th August, 2019,the Members have approved theappointment of Ms. Rama Bijapurkaras an Independent Director of theCompany in accordance with Section149 of the Companies Act, 2013, witheffect from 1st April, 2019 to hold the

office for a term of five consecutiveyears.

Mr. Sudip Bandyopadhyay

At the Annual General Meeting of theCompany held on 28th August, 2019,the Members have approved theappointment of Mr. SudipBandyopadhyay as an IndependentDirector of the Company in accordancewith Section 149 of the Companies Act,2013, with effect from 1st June, 2019to hold office for a term of fiveconsecutive years.

Mr. Rajiv Gulati

At the Annual General Meeting of theCompany held on 28th August, 2019,the Members have approved theappointment of Mr. Rajiv Gulati as anIndependent Director of the Companyin accordance with Section 149 of theCompanies Act, 2013, with effect from26th July, 2019 to hold office for a termof five consecutive years.

Also, the term of Ms. Mubeen Rafat, anIndependent Director of the Company,who was appointed for a period of 5years from 12th August, 2014 has cometo an end during the year. The Board ofDirectors placed on record theirappreciation for the contributions madeby Ms. Mubeen Rafat to your Companyduring her tenure as an IndependentDirector.

All the Independent Directors have givena declaration in terms of Section 149(6)of the Companies Act, 2013 asamended and Regulation 25 of theListing Regulations as amended for thefinancial year ended 31st March, 2020,that they meet the criteria ofindependence. They also declared thatthey are not aware of any circumstanceor situation, which exist or may be

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reasonably anticipated, that could impairor impact their ability to discharge theirduties as an Independent Director withan objective independent judgment andwithout any external influence. TheBoard carried out an assessment of thedeclarations and took the same onrecord.

None of the Independent Directors arerelated to any other director of theCompany.

Key Managerial Personnel

The Managing Director Mr. DevrajLahiri, the Chief Financial Officer Mr.Anish Gupta and the CompanySecretary Mr. Phani K. Mangipudi arethe Key Managerial Personnel as perthe provisions of the Companies Act,2013.

DIRECTORS’ RESPONSIBILITYSTATEMENT

Pursuant to Section 134(5) of theCompanies Act, 2013 your Directorsconfirm that:

1. in the preparation of the annualaccounts, the applicableaccounting standards have beenfollowed along with properexplanation relating to materialdepartures, if any;

2. appropriate accounting policieshave been selected and appliedconsistently. Judgement andestimates which are reasonableand prudent have been made soas to give a true and fair view ofthe state of affairs of yourCompany as on 31st March, 2020and of the statement of profit andloss and cash flow of yourCompany for the period ended31st March, 2020;

3. proper and sufficient care has beentaken for the maintenance ofadequate accounting records inaccordance with the provisions ofthe Companies Act, 2013 forsafeguarding the assets of yourCompany and for preventing anddetecting fraud and otherirregularities;

4. the annual accounts have beenprepared on a going concernbasis;

5. proper internal financial controlshave been laid down to be followedby your Company and suchinternal financial controls areadequate and were operatingeffectively; and

6. proper systems to ensurecompliance with the provisions ofall applicable laws have beendevised, and such systems wereadequate and operating effectively.

Criteria for selection andappointment of Directors

The Nomination and RemunerationCommittee is responsible foridentifying, screening, recommendingto the Board a candidate forappointment as Director. Based on therecommendation of the Committee, theBoard identifies the candidate for theposition of Director. While identifyingthe candidate, inter alia the followingare taken into consideration :

● Qualification, experience andexpertise;

● Skills, abilities and personalcontribution;

● Commitment to spare time toattend Board/Committee and otherMeetings as may be necessary;

● Diversity of perspectives brought tothe existing Board;

● Existing composition of the Board.

The qualification of the candidate isscrutinized by the Committeeconsidering educational degree,college/institution, professionalqualification if any, etc. In addition,there is also a criteria regardingminimum work experience and thepositive attributes such as leadershipquality, level of maturity, managementcapabilities, strategic vision, problemsolving abilities, etc., on which thecandidate is judicially scrutinized.

In case of an internal candidate, thesenior management employee is alsoevaluated on the above criteria beforebeing recommended for promotion asa Director. While considering re-appointment of the Directors, theirperformance evaluation report isconsidered.

In case of Independent Director, theindependence, integrity, expertise,experience and interest pecuniary orotherwise as per the statutory provisionsare also assessed before appointment.

SIGNIFICANT & MATERIAL ORDERSPASSED BY THE REGULATORS ORCOURTS OR TRIBUNALS

There are no significant or materialorders passed by the Regulators, Courtsor Tribunals which impact the goingconcern status of the Company and itsfuture operations. However, Members’attention is drawn to the following:

TAXATION

i. Luxury Tax

The Government of AP introduced levyof luxury tax on cigarettes and its virus

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was challenged before the High Courtof AP and before Supreme Court whichwas struck down. The Commercial Taxdepartment claimed that duringpendency of the matter before the courtsbetween 1999-2005, your Companyhad collected luxury tax amounting to ̀34.86 crores but not paid to theGovernment. Your Company deniedcollecting luxury tax and the litigation onthe same is now pending before theappellate authority of the Departmentand the High Court of Telangana.

ii. Entry Tax

Entry Tax levy by the States of Bihar, WestBengal, Jharkhand and Assam has beenchallenged before the respective StateHigh Courts by your Company, basis thedirections of the Hon’ble Supreme Court.Demand of interest on entry tax waschallenged before the High Court ofAllahabad and is pending adjudication.

iii. Excise

a. Wrapping Materials

The Excise department has issued showcause notices demanding payment ofduty of ̀ 4.51 crores on the ground thatGay Wrappers (printed paper used forwrapping cigarette packets) weremanufactured and consumed by yourCompany without payment of duty duringthe period April 1996 to July 2015.Demand for the period till March 2002has been adjudicated and the CESTATdecided in favour of your Company.Department preferred an appeal beforethe Supreme Court which is pending.Demands for period after March,2002 till July, 2015 are yet to beadjudicated by the original authority.

b. Tobacco Refuse

Your Company has received show cause

notices demanding recovery of duty oncut tobacco used in the manufacture oftobacco refuse since January 2005 tillJune 2017 amounting to ̀ 14.52 crores.Demand for the period till October,2013 has been adjudicated and theCESTAT decided in favour of yourCompany. Department preferred anappeal before Supreme Court which ispending. Demands for period afterOctober, 2013 till June, 2017 are yetto be adjudicated by the originalauthority.

c. Service Tax

Your Company has received show causenotices from the Excise Departmentseeking to deny CENVAT credit availedon various input services on the groundthat the same are not in relation to themanufacture of final products. Uponadjudication, credit on most of theservices was allowed in favor of yourCompany. Some of them have beendisputed. Since 2005, the matters arepending before various adjudicatingauthorities and before the CESTAT andare being effectively contested.

PUBLIC INTEREST LITIGATION (PIL)

i) PIL filed in the Andhra Pradesh HighCourt (now Telangana High Court)against the Central Government andthe cigarette manufacturersincluding your Company, seekingstrict implementation of Cigarettesand Other Tobacco Products(Prohibition of Advertisement AndRegulation of Trade and Commerce,Production, Supply and Distribution)Act, 2003 (COTP Act) andapplicable Rules has been dismissedas infructuous. Similarly, another PILfiled before the High Court ofBombay seeking directions to prohibit

insurance companies from investingin cigarette companies has beendismissed.

ii) Your Company has been impleadedin the petition filed in the SupremeCourt by an NGO called ‘Centre forTransforming India’ against theUnion of India along with othercigarette manufacturers, TobaccoInstitute of India, Bidi Manufacturersand Bidi Manufacturers’ Association,seeking prohibition/ban of themanufacture, storage and sale of allforms of tobacco within the territoryof India. This is being contested.

iii) Petitions have also been filed in othercourts such as High Court of MadhyaPradesh - Jabalpur, National GreenTribunal, Delhi seeking ban on saleof cigarettes and before High Courtof Madhya Pradesh-Indore Bench,seeking directions to mention tar andnicotine content on cigarette packsby the manufacturers.

All of the above are being effectivelycontested by your Company.

FINANCIAL SERVICES BUSINESS

The Company Petition filed by the OfficialLiquidator before the High Court ofAndhra Pradesh (now Telangana HighCourt) seeking directions against someof the Ex-Directors of ITC Agro TechFinance and Investments Limited(ITCATF), the Company in liquidation,into which one of the subsidiaries of yourCompany, viz. VST Investments Limitedwas amalgamated, and its relatedmatters are still pending finaladjudication.

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THE CIGARETTES AND OTHERTOBACCO PRODUCTS(PROHIBITION OF ADVERTISEMENTAND REGULATION OF TRADE ANDCOMMERCE, PRODUCTION,SUPPLY AND DISTRIBUTION) ACT,2003 (COTPA)

i. In view of the provisions of COTPA,various restrictions such as ban onadvertising in print, visual mediaand outdoors, regulation of in-store advertising, prohibition ofsale of cigarettes to persons belowthe age of 18 years, etc. have beenin force. Printing of pictorialwarnings on cigarette packets,came into effect from 31st May,2009 were further revised and thepictorial warning covering 85% ofthe front and back side of thepackets was implemented w.e.f. 1stApril, 2016 and is being dulycomplied with by your Company.

ii. Your Company had also filed a writpetition in the Hon’ble High Courtof Andhra Pradesh challenging TheCigarettes and Other TobaccoProducts (Packaging & Labelling)Rules, 2006 and the AmendmentRules 2008, on the grounds interalia that they are ultra vires ofCOTPA and therefore thenotifications issued there under(including those seekingimplementation of graphic healthwarnings) should be quashed. Thesaid writ petition has been admittedbut no interim orders were passedby the Hon’ble Court.

iii. Before the High Court ofKarnataka, a Writ Petition was filedby Tobacco Institute of India (TII)on behalf of your Company and

other manufacturers against theproposed notification dated 15thOctober, 2014 by Health Ministryto print health warning on bothsides of the pack occupying 85%of space. The 85% health warningcame into effect from 1st April,2016. Your Company also filed aWrit Petition before the High Courtbench at Dharwad against theimplementation of 85% healthwarning. The Hon’ble SupremeCourt on hearing a PIL filed byHealth for Millions, constituted aBench before the Karnataka HighCourt to hear all the mattersrelating to graphical healthwarning. The Writ Petitions filed byTII and your Company were heardbefore the Bangalore Bench and itwas held on 15th December 2017that the amendment made to thePackaging Rules imposing 85%graphic health warning is ultra viresthe Constitution. Against the saidJudgment, an appeal was filed bythe Ministry of Health before theSupreme Court. A stay has beengranted on the said judgement andis pending before the SupremeCourt.

REAL ESTATE

The Government of Andhra Pradesh hadfiled a land grabbing case against yourCompany in 1991 in relation to a pieceand parcel of vacant land which has beenunder possession and occupation by yourCompany for over four decades. By itsjudgment dated 28th July, 2010, theSpecial Court had held that yourCompany is not a land grabber but hadgiven the State Government the right toinitiate proceedings to recoverpossession of the land at some future

date. Against this part of the judgement,your Company filed a writ petitionbefore the then Hon’ble High Court ofAndhra Pradesh to expunge that part ofthe Order giving such liberty to theDepartment despite the fact that yourCompany has already been declared notto be a land grabber. The writ petition isstill pending. The State Government hasalso filed a writ petition in the Hon’bleHigh Court of Andhra Pradesh seekingto set aside the said judgment of the LandGrabbing Court. An interim Order waspassed restraining your Company fromchanging the status of the land orcreating any third party interest therein.Your Company is taking all the necessarysteps for speedy disposal of the abovewrit petitions which are pending beforethe Court.

One more case of land grabbing wasfiled by the then Government of AndhraPradesh against your Company in theyear 1989 on a piece of land along withbuilding called ‘Lal-e-Zar’, before theSpecial Court. In the year 2010, theSpecial Court passed a judgment statingthat your Company is not a land grabber.After 7 years, the Government ofTelangana filed an appeal before theHon’ble High Court of Telangana andAndhra Pradesh seeking a direction fromthe court that the nature of the land notto be altered and no third party interestto be created. Your Company filed acounter and vacate stay applicationseeking permission to construct on thesaid land. Judgment was pronounced onthe vacate stay petition allowing yourCompany to construct but with certainconditions. The State Governmentpreferred an appeal before the SupremeCourt which was dismissed.

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PARTICULARS OF EMPLOYEES

The information required pursuant toSection 197 of the Companies Act,2013 read with Rule 5(1) of theCompanies (Appointment andRemuneration of ManagerialPersonnel) Rules, 2014 as amended inrespect of employees of theCompany, are annexed herewith as“Annexure E” and forms part of thisReport. The statement containingparticulars of employees as requiredunder Section 197 of the Act read withRule 5(2) of Companies (Appointmentand Remuneration of ManagerialPersonnel) Rules, 2014 is provided ina separate annexure forming part ofthis Report. However, in terms ofSection 136 of the Act, the Report andAccounts are being sent to theMembers and others entitled thereto,excluding the information onemployees’ particulars which isavailable for inspection by theMembers at the Registered Office ofthe Company during business hours onworking days of the Company up tothe date of the ensuing AGM. In caseany Member is interested in obtaining acopy thereof, such Member may writeto the Company Secretary of theCompany.

The Nomination and RemunerationCommittee of the Company hasaffirmed that the remuneration is as perthe Remuneration Policy of theCompany.

Your Directors take this opportunity torecord their deep appreciation of thecontinuous support and contributionfrom all employees of your Company.

ANNUAL RETURN

As required under Section 92(3) ofCompanies Act, 2013 and Rule 12(1)

of Companies (Management andAdministration) Rules, 2014, an extractof Annual Return in Form MGT-9 isannexed as “Annexure F” and formspart of this Report.

A duly certified and filed copy of theannual return for the financial year2019-20 will be made available on thewebsite of the Company atwww.vsthyd.com after the ensuingAnnual General Meeting.

AUDITORS

Statutory Auditors

In compliance with the provisions ofSections 139 and 141 of the CompaniesAct, 2013 as amended and Companies(Audit and Audit Rules), 2014, includingany statutory modification(s), re-enactments and amendments thereof,for the time being in force, M/s. B S R &Associates LLP, Chartered Accountants,were appointed as the Statutory Auditorsof the Company to hold office from theconclusion of the 85th AGM to theconclusion of the 90th AGM. This wassubject to the ratification at every AGMduring the aforementioned term of theirappointment. However, the requirementof annual ratification has been dispensedwith under the Companies (Amendment)Act, 2017 which has been notified on7th May, 2018. The Report given by theAuditors on the financial statements ofthe Company is part of the AnnualReport. There has been no qualification,reservation or adverse remark in theirReport. During the year under review,the Auditors have not reported anymatter under Section 143(12) of theCompanies Act, 2013 and hence, nodetail is required to be disclosed underSection 134(3)(ca) of the CompaniesAct, 2013.

Secretarial Auditor

Pursuant to the provisions of Section 204of the Companies Act, 2013 and Rule 9of the Companies (Appointment andRemuneration of Managerial Personnel)Rules, 2014, the Company appointedM/s. Tumuluru and Company Firm asSecretarial Auditor of the Company forthe financial year 2019-20. TheSecretarial Audit Report is annexedherewith as“Annexure G” and forms part of thisAnnual Report.

There are no qualifications, reservationsor adverse remarks in the SecretarialAudit Report.

COMPLIANCE WITH

SECRETARIAL STANDARDS

Your Company has complied withapplicable Secretarial standards, i.e. onMeetings of the Board of Directors [SS-1] and on General Meetings [SS-2]issued by The Institute of CompanySecretaries of India (ICSI) and approvedby the Central Government underSection 118(10) of the Companies Act,2013.

COST ACCOUNTS AND RECORDS

The maintenance of cost accounts andrecords as specified by the CentralGovernment under Section 148(1) of theCompanies Act, 2013 is not required bythe Company.

CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION,FOREIGN EXCHANGE EARNINGSAND OUTGO

Information in accordance with clause(m) of sub-section (3) of Section 134 ofthe Companies Act, 2013 read with Rule8 of Companies (Accounts) Rules, 2014is given in the “Annexure H” formingpart of this Report.

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SUBSIDIARY/ASSOCIATES/JOINTVENTURES

Addition or cessation of subsidiaries,associates or joint ventures is notapplicable to the Company as theCompany does not have any subsidiarycompany, associates and joint ventures.

DEPOSITS

Your Company has stopped acceptingfresh deposits for several years now. Ason 31st March, 2020, your Companydoes not have any deposits for thepurpose of its business, hence details ofdeposits is not applicable.

UTILISATION OF FUNDS

Your Company has not raised any funds

during the year through preferentialallotment or Qualified InstitutionalPlacement, as a result question ofproviding details of utilization of suchfunds does not arise.

DEBENTURE TRUSTEES

Your Company does not have anydebentures and as a result, creation ofdebenture trustees does not arise.

THE FUTURE

Despite adverse market conditions, yourCompany is well placed to exploitopportunities through innovative newbrand launches, coupled with expansionof operational areas.

ACKNOWLEDGEMENTS

The Directors are grateful to all valuablestakeholders of the Company viz.,customers, shareholders, dealers,vendors, banks and other businessassociates for their excellent supportrendered during the year. The Directorsalso acknowledge the unstintedcommitment and valued contribution ofall employees of the Company.

On behalf of the Board,NARESH KUMAR SETHI

ChairmanDIN : 08296486

Dated this 21st day of May, 2020Azamabad, Hyderabad - 500 020.

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ANNEXURE AREPORT ON CORPORATE GOVERNANCEThe Directors present the Company’s Report on Corporate Governance for the year ended 31st March, 2020.

1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

Your Company considers good Corporate Governance a pre-requisite for meeting the needs and aspirations of itsMembers and other stakeholders in the Company. The Board of Directors of your Company firmly believes that the samecould be achieved by maintaining transparency in its dealings, creating robust policies and practices for key processesand systems with clear accountability, integrity, transparent governance practices and the highest standard of compliance.

2. BOARD OF DIRECTORS

(a) Composition and category of Directors

Name of the Director

Mr. Naresh Kumar Sethi $ Non-Executive Director Nil Nil

Mr. Devraj Lahiri Managing Director 1 Nil

Ms. Rama Bijapurkar Independent Non-Executive Director 4 3

Mr. Sudip Bandyopadhyay Independent Non-Executive Director 7 7

Mr. Rajiv Gulati Independent Non-Executive Director Nil Nil

Mr. S. Thirumalai Non-Executive Director Nil Nil

Category No. of Memberships/Chair-manships of board committees

of other companies #

No. of outsidedirectorships

held *

Notes : There are no inter-se relationships between the Board Members.

Except Mr. S. Thirumalai who holds 25 equity shares, none of the other Directors hold any shares in the Company. There areno convertible instruments issued by the Company and hence none held by the Non-Executive Directors during the yearended 31st March, 2020. Also, Mr. S. Thirumalai was reclassified from being an Independent Director to a Non-ExecutiveDirector with effect from 26th July, 2019.

* Other directorships exclude foreign companies, private limited companies, debt listed and alternate directorships.# Only Membership in Audit Committee and Stakeholders’ Relationship Committee have been reckoned for other Committee

Memberships.$ Representing equity interest of promoter group – British American Tobacco, U.K.

Directorships and Committees held in other listed companies

Ms. Rama Bijapurkar is on the Board and Member/Chairperson of the Committees* in the following listed companies:-

Name ofthe Director

Mahindra & Mahindra Financial Services Ltd. Audit Committee Member– Independent Director Stakeholders Relationship Committee Chairperson

Nestle India Limited – Independent Director Stakeholders Relationship Committee Chairperson

Emami Limited – Independent Director - -

ICICI Bank Limited – Independent Director - -

Directorship held in the other companies Whether Chairmanor Member

Name of the Committee

Ms. RamaBijapurkar

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Mr. Sudip Bandyopadhyay is on the Board and Member/Chairman of the Committees* in the following listed companies:-

Name of theDirector

Mr.Sudip Wall Street Finance Limited - Director Audit Committee MemberBandyopadhyay Stakeholders Relationship Committee Member

Directorship held in the othercompanies

Whether Chairmanor Member

Name of the Committee

(b) Attendance of each Director at the Board Meetings and the last Annual General Meeting (AGM)

Name of the Director

Mr. Naresh Kumar Sethi 5 Yes Yes Yes Yes Yes Yes

Mr. Devraj Lahiri 5 Yes Yes Yes Yes Yes Yes

Ms. Rama Bijapurkar 5 Yes Yes Yes Yes Leave of YesAbsence

Mr. Sudip Bandyopadhyay1 5 NA Yes Yes Yes Yes Yes

Mr. Rajiv Gulati2 5 NA NA Yes Yes Yes Yes

Mr. S. Thirumalai 5 Yes Yes Yes Yes Yes Yes

Mr. Pradeep V. Bhide 3 5 Yes NA NA NA NA NA

Ms. Mubeen Rafat 4 5 Yes NA NA NA NA NA

No. of BoardMeetings

held

1 Appointed as Director w.e.f 1st June, 2019.2 Appointed as Director w.e.f 26th July, 2019.3 Resigned as Director w.e.f. 1st July, 2019.4 Ceased to be a Director w.e.f. 12th August, 2019.

None of the Independent Non-Executive Directors has any pecuniary relationship or transactions with the Company, itspromoters or its senior management which in the judgement of Board may affect the independence of the Director exceptreceiving sitting fees for attending Board/Committee Meetings and commission from the Company.

In the opinion of the Board, the Independent Directors fulfill the conditions specified in these regulations and are independentof the Management.

(c) Other details

The Board of Directors of your Company is routinely presented with all requisite information inter alia as required under theCompanies Act, 2013 and the Listing Regulations. Detailed agenda notes containing details required for decision makingare circulated to the Directors in advance. The Meetings are held as per the calendar finalized in consultation with the BoardMembers and the notice and agenda of the Meetings are circulated well in advance.

The Board exercises its powers subject to the provisions of the Companies Act, 2013, Memorandum & Articles of Association,the Listing Regulations and other statutory provisions. The Board reviews the performance and takes on record the actionstaken by the Company/Management on its suggestions. The Board meets at least four times a year and the gap betweentwo meetings is not more than 120 days.

None of the Directors on the Board is a Member of more than ten committees or a Chairman of more than five suchcommittees, across all the companies in which he/she is a Director as required under Regulation 26 of the Listing Regulations.

May 3,2019

July 26,2019

August 28,2019

November4, 2019

January22, 2020

AGM held onAugust 28,

2019

* Only Audit & Stakeholders Relationship Committees considered

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The Board has identified the following core skills/expertise/competencies which are required and available with reference tothe business environment in which the Company operates:

Name of the DirectorName of the DirectorName of the DirectorName of the DirectorName of the Director Skills/expertise/competencies of the DirectorSkills/expertise/competencies of the DirectorSkills/expertise/competencies of the DirectorSkills/expertise/competencies of the DirectorSkills/expertise/competencies of the DirectorMr. Naresh Kumar Sethi Governance, Marketing and Business StrategyMr. S. Thirumalai Finance & RegulatoryMs. Rama Bijapurkar Business Strategy, Marketing & GovernanceMr. Sudip Bandyopadhyay Business Strategy & FinanceMr. Rajiv Gulati Business Strategy & MarketingMr. Devraj Lahiri Business Strategy & Marketing

Independent Directors’ Meeting

During the year, the Independent Directors met on 3rd May, 2019 without the presence of Non-Independent Directorsand Members of management inter alia to review their role, functions and duties. They further reviewed the guidelinesof professional conduct as enumerated in Schedule IV (Code for Independent Directors) to the Companies Act, 2013.During the said Meeting, the Independent Directors reviewed the performance of the Non-Executive Director, includingthe Chairman and the Board as a whole.

They also assessed the quality, quantity and timeliness of flow of information between the Company management andthe Board that is necessary for the Board to effectively and reasonably perform its duties and found them to be satisfactory.

(d) Familiarization Programme for Independent Directors

In order to familiarize the Independent Directors with the Company and to inform them about their roles, rights andresponsibilities, the Company conducts orientation programs by various departmental heads such as Legal & Secretarial,Marketing, Finance, Technical, etc. The Independent Director is also taken for a market visit, visit to tobacco growingareas, leaf division and tour of the plant. In addition to the above, any other detail which the Director wants or any otherdepartment or function which the Director wants to meet is also arranged. The Policy on Familiarization Programme forIndependent Directors and the details of such familiarisation programmes are disseminated on the website of theCompany (www.vsthyd.com/i/Familiarisation Program.pdf).

The Board also carried out an assessment of the Independent Directors and confirmed that in its opinion they fulfill theconditions of independence as specified under the Companies Act and the Listing Regulations as amended and areindependent of management.

3. AUDIT COMMITTEE

(a) Terms of Reference

The primary objective of the Committee is to monitor and provide an effective supervision of the financial reportingprocess, to ensure accurate and timely disclosures with highest level of transparency, integrity and quality of financialreporting. The terms of reference of the Audit Committee covers all the matters specified under Section 177 of theCompanies Act, 2013 and those enumerated in Regulation 18 of the Listing Regulations. The terms of reference of theAudit Committee are as under :

1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that thefinancial statement is correct, sufficient and credible;

2. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

4. Reviewing, with the management, the annual financial statements and auditor’s report thereon before submission to theBoard for approval, with particular reference to :

a. Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report interms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013;

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b. Changes, if any, in accounting policies and practices and reasons for the same;

c. Major accounting entries involving estimates based on the exercise of judgment by management;

d. Significant adjustments made in the financial statements arising out of audit findings;

e. Compliance with listing and other legal requirements relating to financial statements;

f. Disclosure of any related party transactions;

g. Modified Opinion(s) in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval;

6. Reviewing with the management, the statement of uses/application of funds raised through an issue (public issue, rightsissue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a publicor rights issue, and making appropriate recommendations to the Board to take up steps in the matter;

7. Review and monitor the auditor’s independence and performance, and effectiveness of audit process;

8. Approval or any subsequent modification of transactions of the Company with related parties;

9. Scrutiny of inter-corporate loans and investments;

10. Valuation of undertakings or assets of the Company, wherever it is necessary;

11. Evaluation of internal financial controls and risk management systems;

12. Reviewing with the management, performance of statutory and internal auditors, adequacy of the internal controlsystems;

13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffingand seniority of the official heading the department, reporting structure coverage and frequency of internal audit;

14. Discussion with internal auditors of any significant findings and follow up thereon;

15. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraudof irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;

16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-auditdiscussion to ascertain any area of concern;

17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (incase of non-payment of declared dividends) and creditors;

18. To review the functioning of the Whistle Blower mechanism;

19. Approval of appointment of CFO (i.e. the Whole-time Finance Director or any other person heading the finance functionor discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

The Audit Committee mandatorily reviews the following information:

1. Management discussion and analysis of financial condition and results of operations;

2. Statement of significant related party transactions (as defined by the Audit Committee) submitted by management;

3. Management letters/letters of internal control weaknesses issued by the statutory auditors;

4. Internal audit reports relating to internal control weaknesses;

5. The appointment, removal and terms of remuneration of the internal auditor shall be subject to review by the AuditCommittee; and

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Name of the Member

Mr. Sudip Independent Non- - Yes Yes YesBandyopadhyay 1 Executive Director [Chairman]Ms. Rama Bijapurkar Independent Non- Yes Yes Yes Leave of

Executive Director AbsenceMr. Rajiv Gulati 2 Independent Non- - - Yes Yes

Executive DirectorMr. S. Thirumalai Non-Executive Director Yes Yes Yes YesMr. Pradeep V. Bhide 3 Non-Executive Director Yes NA NA NAMs. Mubeen Rafat 4 Independent Non- Yes NA NA NA

Executive Director

CategoryAttendance at the Audit Committee Meetings held on

May 3, 2019

1 Appointed as Chairman of the Committee w.e.f. 28th August, 2019.2 Appointed a Member of the Committee w.e.f 26th July, 2019.3 Resigned as Director w.e.f. 1st July, 20194 Ceased to be a Director w.e.f. 12th August, 2019

The representatives of the statutory auditors and internal auditors and the CFO are the permanent invitees and they haveattended all the Meetings held during the year. The Company Secretary is the Secretary to the Committee. Minutes of theAudit Committee Meetings are circulated to the Members of the Board of Directors and taken note of.

4. Nomination and Remuneration Committee:

(a) Terms of Reference

Pursuant to Section 178 of Companies Act, 2013 read with Regulation 19 of the Listing Regulations as amended, theterms of reference are as under:

a) Identify persons who are qualified to become Directors in accordance with the criteria laid down;b) Lay down the criteria for appointment at senior management level;c) Recommend to the Board, appointment and removal of Directors;d) To vet and approve recommendations from the Executive Directors for the appointment and succession of senior

managers;e) Formulate a criteria for evaluation of every Director’s performance;f) Formulate criteria for determining qualifications, positive attributes and independence of a Director;g) Recommend to the Board, a policy relating to remuneration for Directors, Key Managerial Personnel & other

employees;h) Recommend to the Board, all remuneration payable to senior management;i) Assess, approve or recommend the training and development requirements of Directors and senior management

as recommended by the Executive Directors;j) Devising a policy on Board Diversity.

(b) Composition, Meetings and Attendance during the financial year

6. Statement of deviations:

a] Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s)in terms of Regulation 32(1);

b] Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in termsof Regulation 32(7).

July 26, 2019 November 4,2019

January 22,2020

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Name of the Member

Ms. Rama Bijapurkar 1 Independent Non-Executive Director - -Mr. Sudip Bandyopadhyay Independent Non-Executive Director - YesMr. Rajiv Gulati Independent Non-Executive Director - YesMr. Naresh Kumar Sethi Non-Executive Director Yes YesMr. S. Thirumalai Non-Executive Director Yes YesMr. Pradeep V. Bhide 2 Non-Executive Director Yes NAMs. Mubeen Rafat 3 Independent Non-Executive Director Yes NA

Category

Attendance at the Nomination & RemunerationCommittee Meetings held on

May 3, 2019 July 26, 2019

(b) Composition, Meetings and Attendance during the financial year

1 Appointed as Chairperson of the Committee w.e.f. 28th August, 2019.2 Resigned as Director w.e.f. 1st July, 20193 Ceased to be a Director w.e.f. 12th August, 2019

The Company Secretary acts as Secretary to the Committee.

(c) Remuneration Policy

Purpose

The remuneration policy defines the compensation or remuneration philosophy of the organisation. It specifies about thedrivers of the philosophy, where the Company positions itself in the overall industry/market related percentile, who are thecomparators for the purpose of remuneration.

Scope

It covers the Executive Directors and management level emplo