ESG Report 2021 22

ES G
REPORT
2021-22
VST INDUSTRIES LIMITED
INNOVATIVE. RESPONSIBLE. FOCUSED.
In This
Report
03
About this Report
22
Responsible Governance
56
Sustainable Agriculture
72
GRI Index
08
Organization profile
32
Care for People
62
Inclusive Growth
79
Assurance Statement
14
Sustainability Strategy
42
Sustainable Operations
69
Alignment with UNSDG
VST Industries Limited About this Organization Sustainability Responsible Care for People Sustainable Sustainable Inclusive Alignment with GRI Assurance
ESG Report 2021-22 Report profile Strategy Governance Operations Agriculture Growth UNSDG Index Statement
About this Report

VST Industries Limited is pleased to present its first ever full-fledged ESG
(Environment, Social & Governance) report for all our stakeholders. We view
The key to
reporting on non-financial parameters as an important means of communicating
our performance and vision with our stakeholders. This report gives our
stakeholders an insight into the company’s governance, strategy, prospects and
ESG performance for the FY 2021-22.
understanding the
(GRI 102-45, GRI 102-46, GRI 102-48, GRI 102-49, 102-50, GRI 102-51,
GRI 102-52, GRI 102-54)
future is Reporting Period and Principle

This Report has been prepared in accordance with GRI standards: Core option.
We have applied the following aspects to determine relevant topics that define
one word: the report content and ensure quality of information:
a) GRI guiding principles for defining the content: Materiality, Stakeholder

Engagement, Sustainability Context and Completeness
b) GRI guiding principles for defining the quality: Balance, Clarity, Accuracy,
Timeliness, Comparability and Reliability.
This report includes our performance on select environmental, social and

governance parameters for FY 2021-22 and dives into our strategy, goals,
and targets for upcoming ESG initiatives by the Company. Inputs from our
stakeholders, both external and internal, have been taken and incorporated as
part of the development of this report.
We disclose our performance on business responsibility and sustainability

aspects on annual basis through our Annual Report. All our reports for the
previous years are available on our website at https://www.vsthyd.com/mainsite/.
Reporting Boundary
The report boundary includes both our manufacturing facilities located at
Toopran and Azamabad (including our corporate office) in Telangana, India and
leaf growing areas spread around Telangana, Andhra Pradesh, Karnataka and
Gujarat.
External Assurance
We have also sought external assurance on our first ever ESG report to provide
authenticity of the information presented in this report. Ernst & Young
Associates LLP has provided independent assurance of the report and its
contents using International Standard on Assurance Engagements (ISAE)
3000 (assurance for non-financial information), as set forth in the Assurance
Statement included in this report.
02 03
Message from Message from

Chairman MD & CEO
We are committed to conducting business responsibly Creating shared value is at the heart of our approach to
with the goal of leading by example in corporate social sustainable development. Our continuous endeavour has been
responsibility through community interventions and to support the development of systems that protect and restore
infrastructure improvements. the environment, improve livelihood of farmers and strengthen
resilience and wellbeing of the farming community.
Dear Stakeholders, The ESG 2030 roadmap supports our enduring Dear Stakeholders, under statutory acts and rules, but also go beyond it.
commitment to sustainability and value creation for all We identify and implement technologies that reduce
It gives me immense pleasure to present you with VST stakeholders. The roadmap also sets out clear targets to I am extremely delighted to present our inaugural our resource footprint and GHG emission, besides
Industries’ inaugural ESG report. This report demonstrates achieve our sustainable development ambitions. We have ESG report which delineates our contribution towards exploring measures to reuse, recycle and use of
how as a company, we have been working tirelessly and defined key metrics as well to track our progress towards sustainable development and an endeavour to be alternative eco-friendly materials within our operations
responsibly with all the stakeholders to ensure sustainable achieving our goals and are committed to disclose our recognized as one of the most responsible and wherever feasible. During the year under review, we
business operations. performance on an annual basis. innovative organizations. Building on our legacy of have transitioned from using single-use BOPP films
corporate responsibility and sustainable practices since (used as cigarette packaging) with environment friendly
The beginning of this decade has witnessed many We are committed to conducting business responsibly inception, we are moving towards creating an equitable biodegradable films.
unprecedented challenges with the impacts of the with the goal of leading by example in corporate social and regenerative future for all our stakeholders.
pandemic, climate change and the geopolitical tension in responsibility through community interventions and We are cognizant of the growing concerns on water
war affected countries felt across all economies and all infrastructure improvements. In light of this, your company stress in our community and have focussed on
sections of the society. Notwithstanding these limitations, has installed solar plants at its factories and corporate Responsible Governance harvesting rainwater and identifying opportunities to
I am optimistic that India will rise above these challenges. office as well as in the areas where it carries out its social enhance reuse and recycle of water. I feel delighted to
I, therefore, look forward to an era of even stronger growth, projects. We have also implemented multiple projects We have always believed in maintaining transparency announce that both of our own manufacturing units are
greater revenues and higher shareholder value. around our CSR focus areas such as health & sanitation, in business decision making, creating robust policies Zero Liquid Discharge. As a climate steward, we have
education, and environment sustainability as part of our and practices for key processes and systems with clear continuously improved upon our energy productivity
We have always believed on integrating ESG principles
continued commitment towards the community. The accountability, integrity, and the highest standard of through energy efficiency measures and will continue to
into business decision making which is also reflective
projects are identified taking into consideration community compliance. We have extended the scope of the CSR increase share of renewable energy in overall energy mix.
in the fact that since inception we have been promoting
needs and are implemented in collaboration with all the committee with the responsibility of overseeing our
agriculture in a semi-arid and dry region like Telangana.
relevant stakeholders to make sure the projects become progress towards an ESG compliant organization. We
However, now we have decided to embark on the journey
sustainable post implementation. I would like to conclude have institutionalised a robust and comprehensive risk Care for people
of formally integrating ESG principles into our business
by saying that this journey has brought much fulfilled management framework which considers ESG challenges We are focused on creating a high-performance culture
strategy across the value chain. Accordingly, we have
aspiration of becoming an ESG complaint organization. We across our operations and value chain. We inspire and equipping ourselves for business growth and
developed an ESG framework taking into consideration
are committed towards our endeavour to build a capable, to shape breakthrough ideas by creating a culture of excellence. As an equal opportunity employer, we have
of ESG aspects that are material not only for VST’s
sustainable, and scalable company. innovation, to pave the way for impactful outcomes. always strived towards promoting a diverse and inclusive
operations, but also material from the perspective of our
work environment, creating unique and career fulfilling
internal and external stakeholders. Our ESG framework I thank all of you for your support that has helped us
lays out the necessary foundation to identify various risks emerge strong particularly during these challenging times. Sustainable operations opportunities while adhering to the highest standards
on occupational health, safety and human rights.
& opportunities while setting an action plan for utilizing We look forward to your inputs on this report and our As a responsible corporate citizen, we also take Health and safety remain top priority for us as we are
the opportunities and mitigating the risks. The framework progress. cognizance of our environmental and social impacts. committed towards consistently being ‘zero accident’ at
also enables us to measure our progress with respect to
We not only conform to the limiting values prescribed workplace.
relevant key performance indicators and to disclose our
NARESH SETHI
progress on ESG objectives and targets for 2030.
Non-executive Chairman
04 05
Inclusive Growth
We are fully committed to fulfil our responsibility
Firstly, we have emphasized on improving farm
productivity through soil quality management, Key Highlights
ensuring provision of high-quality seeds and initiating
towards all our stakeholders to the best of our abilities. mechanization of field activities. We at VST, ensure the
We continue to adhere to COTPA guidelines and other pesticide residue levels and TSNAs (Tobacco Specific
regulations which promote consumer welfare. We engage Nitrosamines) are within international standards.
in continuous social dialogue with our stakeholders and Environment Social
regulatory community through various policy advocacy Secondly, through robust implementation of the ALP code,
measures beneficial to the industry and community. we have ensured prevention of human rights violations and
sustaining decent working conditions.
We believe that a strong community relation is the 0.65 tCO2eq/mnc. * Zero
backbone of a successful and responsible business. Lastly, we have aimed at mitigating climate change GHG Intensity (Scope 1+2) Incidents at Workplace
We have worked towards improving access to health impacts in curing of tobacco leaves as we continue to
and sanitation, promoting education and protecting the discourage deforestation activities and instead upgrade
environment through our community development efforts. the barn structures. We are also enabling our value 4.15 GJ/mnc. 9,000+
During the year, we installed 400 solar street lights and chain partners to adapt to climate change by exploring Energy Intensity Number of contract farmers
constructed 1,685 household/school restrooms as part of sustainable ways to water crops while protecting the
the ‘VST Swachh Ghar Mission’. We also extended Covid access of the local communities to water resources. For
help to communities as part of the ‘VST Cares’ mission this purpose, we have been adopting various initiatives
and provided infrastructural support for ten schools under such as drip irrigation, micro sprinklers for nurseries etc. 4 KL/mnc. INR 1,004 Lakhs
project ‘Gyandeep’. We are also proud to announce that Water Intensity CSR Expenditure
We are excited to be a part of this journey, and the
though our flagship ‘Swachh Ghar programme’ we have
journey can only be rewarding with your active support.
constructed over 7,675 household toilets till date across
30 villages resulting in four villages being declared ‘open
Your suggestions and viewpoints are invaluable to our 1,002 KW 400
progress in further improving our performance and
defecation free’. Renewable Energy Capacity Solar street lights installed
contributing to the sustainable development. I would like
to take this opportunity to thank all our shareholders for
Sustainable Agriculture their continued support and confidence in us and our *mnc.- million cigarettes
management. 7,675
Creating shared value is at the heart of our approach to
Smart toilets installed
sustainable development. Our continuous endeavour has
been to support the development of systems that protect
and restore the environment, improve livelihood of farmers
and strengthen resilience and wellbeing of the farming
ADITYA DEB GOOPTU Governance 4
Managing Director & CEO
community. Open defaecation free villages
17%
Gender diversity in Board
200
Schools supported with mid-day meals
50%
Proportion of the Board is
Independent
06 07
Statement Of Cash Flows 132
Notes To The Financial Statements 133
Organization
Profile
08 09
Who VST Industries Limited (formerly known as Vazir Sultan Tobacco

Company Limited) is one of India's most seasoned cigarette companies
We Are
with over nine decades of operation. Incorporated on 10th November
1930, we are involved in manufacturing and marketing several
cigarette brands, as well as trading unmanufactured tobacco.
(GRI 102-1, 102-3, 102-4, 102-5,

102-6, 102-7, 102-8)
We are an associate undertaking of British American Tobacco Plc., the
,
global leader in combustibles. We are a publicly listed company,
headquartered in Hyderabad, India, catering to market requirements
covering 80% of the geographical footprint in India through the support
02 Manufacturing facilities
located at- Azamabad
and Toopran
People Strength
of a reliable and trusted network of distributors, wholesale dealers and

retailers and our manufacturing facilities located at Toopran and
773 employees
Azamabad, which is managed by 750+ of our colleagues including
contract workers.
and workers
06 Regional offices in Hyderabad,

Mumbai, Delhi, Kolkata, Chennai
and Guwahati
New Delhi Net Revenue

Guwahati
`1,55,911.71
Lakhs
Kolkata
850+ Products sold
Wholesalers
8,340 MNC*
Mumbai Hyderabad
Toopran
*MNC- million cigarettes
Products and Brands

Offices and
11 Lakh+
GRI 102-2
Manufacturing Facilities VST meets market demands through numerous
brands, customized to meet the tastes of adult
Chennai consumers in India. Our robust brand portfolio
Market Presence (States) Retail Outlets satisfies diverse adult smoker groups across the
Regional Offices socio-economic strata. This serves our decades long
promise for quality and enjoyment. Our portfolio
Corporate Offices consists of both Growth Heritage Brands (e.g.,
Total, Editions) and New Age Brands (e.g., Charms,
Manufacturing Facilities
Special, Moments).
10 11
Our Value Chain Memberships and Associations

(GRI 102-9, GRI 102-10) (GRI 102-12, GRI 102-13)
VST is an active member of key industry associations and industry platforms. As members of these associations, we
interact with various professional bodies and organizations to understand new perspectives and keep ourselves abreast of
Sourcing Operations Serving the latest industry trends. Our participation on these forums, helps us implement sectoral best practices and strengthens
our alignment with applicable standards. We are a part of the following industry associations.
Our primary ingredient for Primary Manufacturing Division’s Markets
manufacturing is the tobacco leaf. We (PMD) operations involve threshing
source cured tobacco leaves directly of the procured leaf into stems Our end products are distributed
from over 15,000 contract farmers and laminas. The stems and to more than 80% of the Indian
located at Andhra Pradesh, Telangana, laminas in their individual lines geography with the help of our The Federation of
The Confederation of
Karnataka, Gujarat and Maharashtra. undergo blending with the different trusted distributors. Telangana Chambers
Indian Industry (CII)
We also source tobacco through grades and a series of mechanical of Commerce and Industry
The distributors provide VST
suppliers who participate in auctions operations including sieving,
products and brands a marketplace
held across the year, of which a small cutting, and drying are carried out.
for consumers through wholesale
portion is imported. The blended lamina and stem are
dealers and retailers.
appropriately treated before storing
Most of the contracted farmers we are in humidified condition. A portion of the unmanufactured
engaging with in our supply chain are All india management
tobacco is exported to buyers in Tobacco Institute of India
smallholder farmers. Our long-term The cut tobacco is then utilized in association
the international market.
contracts with them ensure sustenance Secondary Manufacturing Division’s
in livelihood as well as ensuring (SMD) operations which involves
reliability in our supply chain. making, packing, wrapping and
parcelling.
To produce our end product we
require product materials like paper
and filters. These are sourced from
domestic and international markets.
Tobacco
Exporting
unmanufactured
Certifications and
Curing barn
tobacco Recognitions
Awards and recognitions not only validate our deep commitment to the stakeholders we cater to but also instil confidence
Catering to amongst us to win consistently. The major awards and recognitions received during the reporting period are given below.
9,000+ 9,000+
Contracted Metric Tons
domestic market
farmers Tobacco
procured
PMD facility
Non-Tobacco (Toopran)
11 Lakhs + 850
40+ INR 228 Cr Retail outlets Wholesalers
Suppliers spent on
non-tobacco SMD facility
suppliers (Azamabad)
12 13
Sustainability
Strategy
Across the globe, the people and environment are
facing several challenges ranging from climate impact,
resource scarcity, population growth and demographic
change that is impacting both the ecology and society.
As a responsible corporate citizen, we are cognizant of

our responsibility to contribute to an environmentally
sound, socially inclusive and well-governed society
as we continue to accelerate our own transformation
towards a more ESG compliant business environment.
We firmly believe that we must demonstrate our

willingness to develop and deliver on a sustainable
strategy that ensures long term sustainable
value creation. We understand and embrace our
stakeholders’ interests and social needs in driving
towards a sustainable, resilient economy and
encourage collaborative efforts in contributing to
the achievement of the United Nations Sustainable
Development Goals (SDGs).
14 15
Stakeholder Materiality
Our Mode of Frequency of
Engagement Stakeholder Engagement Engagement Assessment
(GRI 102-44, GRI 102-47)
(GRI 102-40, GRI 102-42, GRI 102-43) Employees • Town hall meetings Ongoing
Our material topics are those that could have a direct or indirect impact on our organization’s ability to create, preserve
• Employee trainings Annually or erode economic, environmental, and social value for our organization, our stakeholders and society at large. The focus
At VST, we believe that successful business • Seminars/webinars
Quarterly on ‘materiality’ is expected to make our ESG reports more relevant, more credible and more user friendly. Materiality
is about creating and fostering strong • Quarterly newsletter assessments assist in creating real value for business and society by identifying, prioritizing the most relevant topics and
relationships. This belief has always helped • Collective bargaining Monthly strategy development through devising action plans, and setting targets.
us to have an inclusive growth along process
with our stakeholders. Our stakeholder • Health & Safety committee
engagement approach is focused on meetings Materiality Determination Process
understanding the needs, interests, and
The assessment of material topics is an ongoing process which helps the organisations to determine their material topics
expectations of our stakeholders and in Investors • Annual general meeting Annually depending on their importance to stakeholders and impact on business to create value.
the process creating value for both us
• Interim financial statements Quarterly
and our stakeholders. Our engagement The identification of material topics included, understanding best practices to determine the common issues across
• Director’s report
encompasses all those who have a direct Need basis our business. A detailed analysis of each of the topics based on their impacts on value chain and risk assessment
• Board meetings
or indirect influence on our business was undertaken. The assessment of material topics was based on their significance to the organisation’s economic,
operations as well as those who are • Corporate disclosures
environmental, and social impacts and substantive influence and importance on the decisions of our stakeholders.
impacted by them. • Press releases
We believe in open and transparent

dialogue with our stakeholders, and this Farmers • Seminars/ webinars/Field Ongoing
has been the greatest source of input visits
for our growth. On our road ahead, we
further plan to integrate sustainability
aspects in our regular communications
with stakeholders at every level, thus
strengthening our mechanism to identify
Wholesalers • In-person/ virtual meeting Ongoing Identification Stakeholder Prioritisation
challenges and opportunities. • Emails
We developed an initial list Consultations Stakeholder responses were
We continually seek our stakeholders’ of material topics through We invited our key internal reviewed and validated by
feedback which helps us increase our peer analysis and by referring and external stakeholders to senior management and topics
understanding and broaden our horizon global & national standards participate in a structured were prioritized considering
Local Communities • Training and awareness Ongoing
in improving ESG (Environment, Social & for sector specific material consultation process and company’s business strategy
building programmes
Governance) performance. We understand topics recorded their response on and sustainability objectives.
• CSR activities Post senior management review,
that stakeholders’ interest is growing in how impact and influence of each
corporations are incorporating ESG aspects material topic. Board of Directors approval was
into their business, and we will continue to taken for finalization.
Suppliers • In-person/ virtual meeting Ongoing
develop and promote ways of capitalising
on the feedback of our stakeholders. • Vendor meetings
• Capacity buildings
The outcomes of communication with
stakeholders are shared with respective
divisions and actively utilised as valuable Regulatory • Official notifications As and when
Our Materiality Matrix
insights in our business. Feedback received Bodies • Press releases required The materiality matrix presented below plots the ratings of each ESG material topic with x-axis representing importance
from stakeholders is assessed to identify • Meeting with Govt. body as to business, and the y-axis representing the importance to stakeholders. The relative positioning of each material topic
critical concerns which are discussed at per requirement signifies priority assigned to the respective material topics. At VST, we consider all these topics under consideration as
relevant board committee meetings. material, however priority has been assigned for devising a more effective time-bound topic specific action plan and
address the material topics in a phase wise manner.
16 17
High
Identified Material Topic ESG Pillar Impact Boundary
11 Energy Sustainable Operations Manufacturing Facilities & Corporate Office

1
Emissions Sustainable Operations Manufacturing Facilities & Corporate Office

2
2 1
3 Climate Resilience Sustainable Agriculture Suppliers
Importance to Stakeholders
7 14 9 24 4
Water Sustainable Operations Manufacturing Facilities, Corporate Office, and
15 10 4
21
Sustainable Agriculture Supply Chain
23 8
20 13 18 Waste Management Sustainable Operations Manufacturing Facilities, Corporate Office, and

5
12 5 Sustainable Agriculture Supply Chain
Sustainable Material Sustainable Operations Manufacturing Facilities & Corporate Office
3 6 22 19 16 6
17 Biodiversity Sustainable Operations Manufacturing Facilities, Corporate Office and

7
Society
8
Farmer Livelihood Sustainable Agriculture Suppliers
Low Importance to business High

9
Circular Economy Sustainable Operations Manufacturing Facilities, Corporate Office, and
Supply Chain
Material Topics Human Rights People & Culture Manufacturing Facilities, Corporate Office and
10
The material issues have been segregated into five strategic pillars considering the nature of impact and boundary. Supply Chain
Further, as a progressive business, we have set short-term and long-term goals for the identified material topics as part of Health & Safety People & Culture Permanent and Temporary workforce and Nearby
11
our sustainability strategy. Communities
Employment People & Culture Permanent and Temporary workforce, Nearby
12
VST’s strategic ESG pillars and identified material topics communities and Society
13 Consumer Welfare Inclusive Growth Consumer
STRATEGIC ESG PILLARS 14 Littering Prevention Inclusive Growth Consumer and Society
Sustainable Sustainable Responsible Labour-Management Relations People & Culture Permanent and Temporary workforce
Care for People Inclusive Growth 15
Operations Agriculture Governance
16
Training and Education People & Culture Permanent and Temporary workforce
Diverse and Inclusive Work People & Culture Permanent and Temporary workforce
17
Environment
Energy Employment Community Farmer Livelihood Business Ethics
Initiatives Community Initiatives Inclusive Growth Permanent and Temporary workforce, Nearby
Emissions Labour Management 18
Climate Resilience Regulatory communities and Society
Relations Consumer Welfare Water Compliance
Water Regulatory Compliance Responsible Governance Management
19
Diverse and Inclusive Littering Prevention
Waste Management Waste Management Responsible Sourcing
Work Environment Business Ethics Responsible Governance Management and Employees
20
Sustainable Material Innovation
Training and Illicit Tobacco trade Prevention Responsible Governance Management, Employees and Suppliers
Circular Economy Education Policy Advocacy 21
Biodiversity Human Rights Illicit Tobacco Trade Policy Advocacy Responsible Governance Management and Employees
22
Prevention
Health & Safety
23 Innovation Responsible Governance Management and Employees
E S G
Transforming towards a sustainable future 24 Responsible Sourcing Responsible Governance Management, Employees and Suppliers
18 19
Our ESG Roadmap: Onward to 2030 Our continuous endeavours

Since inception, it has been our continuous endeavour to make our company a better place, provide safe working
Our Environmental, Social and Governance (ESG) targets supports our enduring commitment to sustainability and value
environment, promote an inclusive work environment, and upgrade our employee’s knowledge. Adhering to our
creation for all. We strive to sustain a high level of performance in all our ESG pillars, to achieve our ESG goals. The ESG
roadmap sets out clear targets to achieve our sustainable development ambitions. The roadmap uses metrics to track our commitment we continue to act and build our organization.
progress toward achieving our goals.
We firmly understand sustainability is inbuilt to business resiliency and growth, and that our size, scale, and reach
can drive meaningful change and make the world better place. Building on our legacy of corporate responsibility and ESG Pillar Material topic Our commitment
sustainable practices, we are moving towards a new era in sustainability for our company, as we aim to co-create an
equitable and regenerative future with all our stakeholders. Care for Diverse and Promote an inclusive work environment by:
people inclusive work Being an equal opportunity employer and provide equal
The performance against our targets will be verified by independent assurance providers and our progress will be
reported annually through the annual ESG reports and SEBI’s BRSR to ensure transparency of communication with our environment opportunity to all employees based on merit and ability
stakeholders. Our transparency reflects our continuous endeavour to build a capable, sustainable, and scalable company.
Provide inclusiveness training to management staff to promote a
In line with our commitment to contribute towards the United Nations Sustainable development goals (UNSDGs), our work environment free from discrimination, sexual harassment and
sustainability targets are projected to be achieved by the year 2030. undue biases in compensation, training and employee benefits
based on caste, religion, disability, gender, sexual orientation,
race, colour, ancestry, marital status, or affiliation with a political,
ESG Pillar Material topic Target for FY 2030 religious, or union organisation or majority/minority group
Sustainable Energy
50% renewable energy in overall energy mix (subject to regulatory
environment)
operations
Employment Continue to invest in employee engagement and conduct the
(Technical)
100% of fleet (owned and third-party passenger vehicles) will
operate on electric vehicles by 2030
employee engagement survey at regular intervals to track for any
course correction, track relevant KPIs for the workforce
Emissions
100% carbon offset for VST’s own operations
(scope 1+2 emissions) by 2030
Health & Safety Zero accident in own operations
Water Rainwater Harvesting Potential equivalent to over 3 times the Net Water
Consumption in own operations
Waste 100% of packaging to be reusable, recyclable, or biodegradable

by 2030
Regulatory Continue to comply with applicable regulatory
100% offsetting of plastic packaging (plastic neutrality) through
post-consumer plastic waste collection and processing under
Compliance requirements
Extended Producer Responsibility (EPR)
Sustainable Climate
30% of contracted farmers (for Talmari & Oriental crops) to use
drip irrigation by 2030
agriculture resilience
(Leaf)
30% of crop protection agents used by contracted farmers to be
biofertilizer/biochemicals based by 2030
20% improvement in soil organic matter by 2030 through green

manuring crops for better water holding capacity
Farmer “We have zero tolerance towards child labour or forced labour. We shall
livelihood continue to have adequate measures in place to identify and mitigate
such risks within the leaf supply chain”
“We shall continue to ensure minimum legal wage is provided to farm

workers”
100% area under tobacco cultivation to be mechanized for field

preparation and removal of stubbles
Also, explore and implement mechanization of other farm operations
(harvesting & plantation) for at least 20% of tobacco area by 2030.
20 21
Responsible Board Oversight
Governance
GRI 102-18
Our commitment to responsible The Board comprises of six members, The Board enforces policies and
Responsible governance is a pre-requisite for meeting the needs governance starts with the Board chaired by Mr. Naresh Kumar Sethi procedures and expresses confidence
and aspirations of all stakeholders. We firmly believe that the same of Directors (hereafter referred who is a non-executive director. The to the business strategy on economic,
could be achieved by maintaining transparency in dealings, creating to as Board). Their insights and members of the Board demonstrate environmental, and social topics
robust policies and practices for key processes and systems with feedback play a key role in ensuring diversity in subject matter through different committees. The
clear accountability, integrity, transparent governance practices and business resilience and continuous expertise, skills, achievements, and committees instituted by VST include
the highest standard of compliance. improvements. competencies.
Audit Risk Management Nomination and

Committee Committee Remuneration
The Committee is The Committee is entrusted
Committee
entrusted with the with the responsibility of The Committee is entrusted
responsibility to supervise monitoring and reviewing with the responsibility
the internal controls and the risk management plan to identify and appoint
financial reporting process suitable candidates for
representing the Board
based on qualification
criteria and recommend
remuneration for the Board
Corporate Social
Responsibility
Committee
The Committee is
Stakeholder
entrusted with the Relationship
responsibility to monitor Committee
the implementation of the
The Committee manages
CSR projects / programmes
shareholder grievances
/ activities and approve
and resolves immediately
the annual CSR budget for
implementing CSR projects
22
ESG Monitoring
We have established a three layered ESG governance structure at the Board level, Corporate level and Unit level.
At the Board level, the CSR Committee is tasked with reviewing performance, discussing strategic directions , aligning
priorities, and providing feedback to the Corporate ESG Committee.
The Corporate ESG Committee is responsible for planning the ESG strategy, setting up the business mandate , reviewing
the overall ESG performance and providing operational direction to the ESG Council at the Unit level. The Committee
receives advise on strategic directions and receives implementation support from the Advisory Panel as per requirement.
The ESG Council monitors the relevant ESG KPIs, reviews ESG performance against targets and implements programmes.
MR. NARESH KUMAR SETHI MS. RAMA BIJAPURKAR MR. SUDIP BANDYOPADHYAY Our Company Secretary (CS) has been entrusted with the role of leading the overall ESG agenda of the organization, who
Non Executive Director Independent Non Executive Independent Non Executive in turn reports to the CSR Committee.
Chairman Director Director
2 3 4 5 1 2 3 4 5 1 2 3
CSR Committee
Independent Director
Review performance, Discuss strategic
Board direction, Align priorities, Provide advice
oversight Yearly
Chairman, MD & CEO, Independent Non-
executive Directors, ESG Lead (CS)
ESG Lead (CS)
(Responsible
for driving
MR. RAJIV GULATI MR. S. THIRUMALAI MR. ADITYA DEB GOOPTU overall ESG
Independent Non Executive Non-Executive Director Managing Director & CEO implementation)
Corporate ESG Committee Advisory Panel (Internal & External)
Director
MD & CEO, ESG Lead (CS) Provide strategic direction to
1 3 4 5 1 2 3 4 5 2 4 5 Corporate ESG committee,
Planning ESG strategy, strategic
Corporate business update, overall implementation support, Bring
performance review, operational external perspective
Board Diversity – Snapshot direction Ad-hoc
Quarterly Functional Heads & External
1 Audit Committee Experts
Respective Functional Heads, Unit
Non independent Head
2 Risk Management
Female 50% Committee
17% 3 Nomination and ESG Council of Azamabad ESG Council of Toopran
Remuneration Committee
Unit Head, Leaf division - Head Unit Head, Leaf division Head
Corporate Social ESG, KPIs monitoring, ESG ESG KPIs monitoring, ESG
4
Responsibility Committee Operations performance review, project performance review, project
Independent implementation, consolidate implementation, consolidate
Stakeholder Relationship information, unit level information, unit level performance
50% 5
Committee performance review review
Monthly and Ad-hoc Monthly and Ad-Hoc
Chairperson Key resources from relevant Key ESG resource from relevant
Male functions within the site including functions within the site including
Leaf division Leaf division
83%
24 25
Policies, Principles and Standards Risk Management

GRI 102-16 (GRI 102-11, GRI 307-1, GRI 419-1)
Business ethics and integrity are integral parts of our business operations. We operate at highest standards of ethics and We endeavour to bring together elements of best practices for risk management in relation to existing and emerging risk
integrity in dealing with our stakeholders and comply with the applicable laws, rules and regulations, as a responsible faced at both strategic and operational level. The Risk Management Committee is responsible for determining the nature
corporate citizen. and extent of the principal risks to achieve its strategic objectives and for maintaining sound risk management system.
The Committee reviews the risk effectiveness of all material risks including strategic, financial, environmental, social,
Our leadership is responsible for setting the tone at the top and demonstrates our commitment towards ethics, integrity, governance, operational and compliance levels.
transparency and accountability through their behaviour and actions. The same is expected from our employees down the
line. The Code of Conduct and Ethics Policy adopted by us ensures adherance to this commitment.
To further ensure the Policy is embedded into the culture of our organization, all our employees regardless of their
individual role and designation affirm that they have read and understood the Policy. The affirmation also highlights the
responsibility of our employee to speak up in case of any violation against the principles defined in the policy.
Risk Risk Develop risk Risk Risk
The Whistleblower Policy empowers the complainant to bring to the attention of the management any concern pertaining Identification Analysis Mitigation Monitor Control
to suspected misconduct, unethical behaiour, supected fraud, bribery, corruption or violations that undermine the Plan
reputation of the organization without the fear of punishment or unfair treatment. Step Step Step Step Step
We have established a set of corporate guidelines that form our policy framework and help us preemptively identify,
manage and mitigate business risks.These are as follows.
1 2 3 4 5
Our geographical presence attracts variety of risks from economic, regulatory and political situations and from the
Remuneration
competitors. The principal risks impacting VST’s business along with the risk mitigation plans are as follows:
policy
Code of Conduct
Insider & Ethics Policy
Trading Policy and Guidelines
on Recruitment Regulatory restrictions could impair long term Taxation changes could have an impact on
revenue growth short-term revenue growth
Archival Familiarisation We operate under increasingly stringent regulatory We are subjected to GST, excise and other cesses as
Policy Programme for regime (The Cigarettes and Other Tobacco Products may be made applicable, which could require us to
Independent (Prohibition of Advertisement and Regulation of Trade inflate product prices and in absence of such action,
Directors and Commerce, Production, Supply and Distribution) absorb the additional cost in doing business.
Act, 2003 (COTPA) guidelines on packaging and
Corporate labelling, advertising and promotion). This further Potential impact
Corporate Social Policies at Policy for

gets complicated with adoption of differing regulatory
regimes in different states and/or lack of consensus on
This could result in lower revenues as a result of
Responsibility Determination of changes in economic situation, reduction in consumer’s
Policy VST Materiality
interpretation/application.
disposal income and down-trading to cheaper products
Potential impact including non-duty paid illicit cigarettes or alternative
tobacco products.
Such restrictive regulations result in not only monetary
losses due to legal proceedings and loss of reputation, Our Response
Whistle Policy for
but also impair our ability to communicate with adult
Blower Related Party Such risks are addressed through: (a) engagement
smokers and meet consumer expectations through new
Policy Transactions with tax authorities at levels where appropriate; (b)
brand launches or geographic expansion.
Terms & regular management review to build a well laddered
Dividend
conditions of Our Response brand portfolio across new segments including new
Distribution
Appointment brand creation; and (c) capability build-up through
Policy
Independent We address this risk by engaging in continuous social investments in distribution infrastructure to increase
directors dialogue with stakeholders and regulatory community geographical spread.
through industry bodies. At the same time, it works
on developing strategies and capabilities to effectively
launch competitive and consumer acceptable brands
within the changing regulatory environment.
26 27
Regional disruptions could Counter party risk could Data risks Responsible Sourcing
have an impact on short-term have a potential impact
(GRI 308-2, GRI 414-2)
revenue growth as well as on Company’s capital and
loss in reputation. profitability Sustainability is inseparable of our ethos. To meet our adult user’s expectations, as well as quality and regulatory
requirements, we are driven to lead our supply chain through this journey with excellence, agility and innovation, which in
Regional disturbances through We generate positive cash flows Potential impact turn will create value for the suppliers.
state level restriction on trade or which are predominantly invested
through terrorism and political with financial institutions and The loss or misuse of sensitive
violence including bandhs, strikes, mutual funds. information, or its disclosure to Supply Chain Philosophy
have the potential to disrupt outsiders, including competitors
business operations. Potential impact and trading partners, could The general supply chain strategy for selecting suppliers is focused on aspects such as quality, delivery and price.
Delay and/or default in settlement potentially have a significant
Potential impact adverse impact on business However, we recognize that the responsibility to minimize the environmental and social impact is not limited to our
on maturity of such investments
operations and/or give rise to legal operations but also extends to our value chain partners to further optimize the impact of their own business operations.
Such disruptions result in potential could result in liquidity and
loss of assets and increased costs financial loss to VST. liability. Creating a supply chain that is reliable, resilient and above all responsible, is essential for long term business growth.
due to more complex supply chain Internal procedures are in place to ensure that our value chain partners commit to reduce environmental impact of their
Our Response Our Response
arrangements and/ or maintaining own operations, respect human rights and comply with applicable regulations. Going forward we plan to formally embed
inefficient facilities. For this purpose, information more comprehensive ESG criteria in the vendor onboarding process.
Such risks are mitigated through
investment based on principle of technology policies and procedures
Our Response are in place which are reviewed
Safety; Liquidity & Returns (SLR) In this endeavour, we have already established a process for sustainable sourcing of tobacco leaves from our contractual
The risk is addressed through and with institutions having strong regularly. Further, information farmers.
developing secure multiple short-term and long-term ratings technology controls like data
sourcing/delivery (supply chain) assigned by CRISIL. backup mechanism, disaster
strategy and through Insurance recovery center, authorization,
cover and business continuity verification, etc. have also been
planning. established.
Policy Advocacy
Collaboration with industry associations and
trade organizations has fuelled our journey of
sustaining a responsible business model. We
regularly participate in industry events to gain
from mutual learning and actively contribute in
policy advocacy for common cause. Through such
platforms, our senior leadership collaborate with
other industry leaders and share their incisive
insights and put forth noteworthy propositions to
policy makers.
28 29
Integrating ESG in our Tobacco Supply Chain Innovation

Our procurement practices for tobacco leaf are commensurate with the Sustainable Tobacco Programme (STP). The
The tastes and preferences of adult smokers are evolving, as they increasingly seek innovation driven products and
programme defines minimum standards to be met by the contracted farmers. It facilitates continuous improvement
move beyond established trademarks. Our strategic focus and track record of successful first to market innovations has
through a measurement framework involving a combination of self-assessment and third-party review. Through cross-
established a platform, which we leverage to strengthen our market position.
industry dialogue and identification of the best practices, the programme has been designed to facilitate supply of tobacco
leaf that meets future environmental sustainability challenges and uplifts labour standards. We, at VST are geared to delivering unmatched experience to adult smokers by collaborating with the best-in-class
consumer and technical specialists to develop a robust product pipeline and upscaling our R&D facilities. Our R&D facility
All our agreements with farmers reflect the criteria defined by STP. Moreover, the agreements are made in vernacular
is ISO 17025:2017 certified, which testifies our commitment to delivering quality products.
language as well to ensure effective implementation of Good Agriculture Practice (GAP) and safeguard the wellbeing of
farm workers through the Agricultural Labour Practices (ALP) Code. Innovation at VST on the following criteria
We have deployed field technicians to proactively monitor and manage implementation of the programme. Field
technicians are equipped and trained in using GMS, an online mobile application that help monitor farm practices Product Final Product Quality
including seedbed management, transplanting, use of Crop Protection Agents (CPAs), topping, crop rotation, curing, Objective Improvement Objective
bulking, bailing, marketing and compliance with Agriculture Labour Practices (ALP).
To build-in innovative product feature(s) To achieve best in class quality which
As of now, we have covered 15% of our contracted farmers through GMS application and we plan to gradually increase and/or creative taste profile(s). leading shall enhance product image and thereby
coverage of this application to all our contracted farmers in a phase wise manner. With the support of the field to consumer delight and consumer build competitive edge in markets for our
appreciation of product. products within the regulatory regime
technicians, we are able to provide constant guidance to the farmers and recommend the good practices, which take
into consideration the financial ability of the farmers. Thus, through this intervention, the gap on sustainable farming is
addressed and bridged.
Our relentless focus on process and product innovation have been the key enablers for our business growth, some of which
have been highlighted in the following sections.
Seedbed
Topping
Management Product Innovation
We have already pioneered the capsule
segment in India through our Total
Bailing Transplanting brand and have successfully introduced
Indian flavours like anise and saffron
in our product mix. This success has
been a precursor for us, encouraging
continuous innovation. We are currently
Use of Crop
working on new projects where we are
Bulking Sustainable Protection
testing out different profiles of smoke,
Agriculture Agents (CPAs)
new flavours, new materials and new
varieties of products.
While product integrity is a key focus

area for us while making our products ,
Curing Crop
we put equal impetus on reducing the
Rotation
negative impactson the environment
due to product packaging. We
partnered with one of our international
suppliers and have replaced the
environmentally polluting plastic BOPP
films used as laminates in packaging,
with biodegradable films that are
internationally certified.
R&D facility at our manufacturing location
30 31
Care for People
We at VST, are focused on creating a high-performance culture and equipping the
organization for business growth and excellence. In this journey, it is these aspects
of our culture that we leverage – the pride, passion and resilience of our employees.
The Head of HR department is responsible for formulating the Human Capital
strategy in close collaboration with the Managing Director and Chief Executive
Officer. These strategies are finalized and implemented by the Corporate Executive
committee (CEC) headed by the Managing Director.
32 33
VST Industries Limited About this Organization Sustainability Responsible Care for Sustainable Sustainable Inclusive Alignment with GRI Assurance
ESG Report 2021-22 Report profile Strategy Governance People Operations Agriculture Growth UNSDG Index Statement
The three levers of our Human Capital strategy that will enable us in achieving our commitment are:
Employment
(GRI 401-1, GRI 401-2, GRI 404-3, GRI 405-1)
Lead and Develop Attract and Engage Transform and Reinvent
At VST, we value the efforts of our employees and recognize that the role they play in setting new benchmarks has
Identify and develop the right Modernise the organisation and Drive differentiation and a enabled us to win consistently and generate long-term value with our stakeholders. We strive to make our organization, a
skills and talent that can drive the business operations performance focused internal great place to work by fostering an attractive and fulfilling work environment and offering exciting career opportunities.
business growth environment We recognize that the unique experiences and perspectives of our employees are critical to reflect diverse viewpoints. In
addition, the wellness of our employees is fundamental for a healthier and happier work environment.
The employee strength as on 31st March 2022 is 773 including both permanent employees and workers.
Talent Mapping - Key and critical Attract right talent Performance Management Male Female
role identification Employee category Total
Employee engagement & wellness Differentiated rewards and benefits Number Percentage Number Percentage
Succession Plans for critical roles Executive Management (CXO) 8 7 87 1 13
Diversity focus Modern internal environment
Capability Development Strategy Senior Management (General
6 6 100 0 0
Employer brand building Recognition programs Manager & Above)
Sales Team capability to
Middle Management (Senior
digitisation
Manager to Deputy General 41 40 98 1 2
Manager)
Junior Management (Assistant

Material Topic Commitment Manager, Deputy Manager & 274 267 97 7 3
Diverse and inclusive Promote an inclusive work environment by - being an equal opportunity Manager)
work environment employer and provide equal opportunity to all employees based on Staff (All Executives, Assistants &
merit and ability 40 32 80 8 20
Trainees)
Provide inclusiveness training to management staff in order to promote Permanent employee 369 352 95 17 5
a work environment free from discrimination, sexual harassment and
Permanent workers 404 404 100 0 0
undue biases in compensation, training and employee benefits based
on caste, religion, disability, gender, sexual orientation, race, colour,
ancestry, marital status or affiliation with a political, religious or union
organisation or majority/ minority group. Attracting the right talent
We seek to attract and hire some of the best
Material Topic talents through campus connect programmes
Commitment
at colleges and universities and provide them
Employment
Continue to invest in employee engagement and conduct the employee with comprehensive development inputs in
engagement survey at regular intervals to track for any course an endeavour to create future leaders of the
correction, track relevant KPIs for the workforce. organization.
We promote an attractive value proposition by

offering unique career opportunities. As an equal
Material Topic opportunity employer, we ensure fair recruitment
Commitment procedures are abided without any discrimination
Health & Safety
“Zero” accident in own operations to caste, religion, disability, gender, sexual
orientation, race, colour, ancestry, marital status,
or affiliation with a political, religious, or union
organisation or majority/ minority group.
34 35
New Employees Hired Employee Turnover Rate Performance Management Percentage of employees
FY 2021-22 FY 2020-21 FY 2021-22 FY 2020-21 We believe in a goal-based approach, which factors in both organization level receiving regular performance
Male 52 33 Male 12.78% 8.70% achievements and individual achievements. Goal setting is undertaken at the and career development
Female 5 2 Female 11.76% 21.43% beginning of the year. The targets based on the strategic objectives set by the reviews
Total 57 35 Total 12.74% 9.19% management team are communicated to everyone, based on which Key Result
Areas (KRAs) are defined and set in the system.
New Workers Hired Workers Turnover Rate Individuals are assessed on their performance against the defined KRAs in
alignment with organization values at the end of each appraisal cycle.
FY 2021-22 FY 2020-21 FY 2021-22 FY 2020-21
Through the process, we periodically analyze the internal capabilities and skills
Male 25 16 Male 8.53% 10.64% Male
of our employees to create opportunities for succession planning and internal
Female 0 0 Female 0 0
100%
job transfers. Functional heads are tasked to identify and map high potential
Total 25 16 Total 8.53% 10.64% employees for managerial roles in the short term and leaders in the long term.
Successor identification follows criteria based on meritocracy and the

Employee wellbeing horizontal nature of profiles. The functional heads and the talent management
Well-being at workplace plays a central role in creating happiness, increasing competence and satisfaction. personnel identify a development plan, based on individual profile in alignment
with the desired qualifications and competencies of the position.
We offer a range of health and wellness benefits that are competitive within the region to meet the needs of our people.
Subsequently, the candidate is groomed in building competencies in the Female
These include medical insurance, personal accident insurance, maternity leave benefits and a range of corporate
100%
partnerships focusing on health, education and well-being. improvement areas and assessed on their readiness for holding a role of higher
responsibility.
Further, our compensation and benefits programs are fair, competitive and meets industry benchmarks and reflect a broad
range of priorities based on the business growth. Employees are provided with incentives and bonuses at the end of each
Rewards and recognition
appraisal cycle and are entitled for provident fund, gratuity and long service rewards over and above their basic pay.
We believe that rewarding and recognizing the efforts of our employees not only motivates and enhances their commitment
but also enables building a strong employer brand. Appreciation of good behaviour and work creates happiness while
Employee engagement promoting teamwork, competitiveness, and loyalty towards the Company.
We believe that the experience and skills of our employees contribute to It is widely accepted that rewards and recognition make employees feel valued and fosters high performance. It also
85
delivering business success. The culture of openness and inclusivity resulting enables the Organization to direct focus on the right behaviours & objectives. With this intent “Gold Star – a Recognition
from various engagement programs are pivotal to fostering a happy work Programme” was launched in January 2022 (for the last Quarter of FY 2021-22). Through this program we aim to
environment. recognize achievements and desired behaviours and also ensure fairness and transparency in recognition. This program is
very well received by the employees across the Organisation. There are five categories in this program-
We engage with our employees periodically through satisfaction surveys to gauge Employee
their perception about the workplace. Our employee’s opinion on improving the Engagement Score The winners are finalized through a rigorous
nomination process, reviewed and signed off by Innovation
workplace environment helps in building trusted relations. The survey is based on 2020
6 major dimensions: the Chief Executive Committee. Every quarter we
recognize the winners by awarding momentos,
appreciation certificates and gift vouchers by
Digital Customer
the Managing Director. For the 1st Quarter of the
skills Centricity
ongoing financial year, the winners have received Gold Star
the momentos from the Board Members. Our Programme
endeavour in the near future is to sustain this
momentum and scale up this initiative which will
Trust in enable our transformational journey by keeping
Positive work Collaboration and Supportive Meaningful Growth
Leadership employees engaged and motivated. This would also
environment Communication management work opportunity
pave the path for “Excellence” going forward and
Encouraging Encouraging new joiners
make the awards aspirational for the employees.
team to seamlessly integrate
Through the survey we identify the gaps in our systems and undertake planned interventions to improve the results on a
achievements into the organization
periodic basis.
36 37
Talent Development
We invest significant resources in nurturing talent by enhancing their skills and leadership capabilities. New recruits
are imbibed with the values and culture of the organization through induction programme. We have designed training
programs to cater to different levels in the organization.
Training needs assessment are undertaken annually based on a feedback conversation between the employee and their
reporting manager. The training needs are mapped, and such trainings are imparted accordingly based on an annual
training calendar.
We follow a three-pronged approach to impart our

trainings. These include
On the job training
Experiential workshops
Stretch assignments
Some of our recent trainings are focused on
Winning Mindset Growth Orientation Enhancing Managerial Stepping into

Competencies Leadership
Health and Safety

Diverse and Inclusive Work (GRI 403-1, GRI 403-2, GRI 403-5, GRI 403-6, GRI 403-7, GRI 403-9)
Environment We are committed to the highest standards of health and safety for our people, keeping in mind
our primary goal to ensure an accident-free workplace.
At VST, diversity of people and culture is encouraged at all levels of the organization. Fostering diversity & inclusion in our We believe that achieving excellence in safety starts with creating a safety culture within
strategy, from developing teams to cultivating leaders is of top priority for us. the organization. In this endeavour, our entire workforce including the contractual workers is
dedicated towards ensuring workplace safety while strictly adhering to the safety policy set by the
We encourage diversity and inclusion in our workforce by creating a culture of openness and providing equal opportunities organization.
for career growth and development. We provide the necessary support and infrastructure for people from diverse
backgrounds to come together, speak freely of their concerns and actively participate in the decision-making process. Our own manufacturing facilities are ISO 45001: 2018 certified, which lays emphasis on
improving our health and safety performance by setting targets and monitoring the progress made
Training and Education (against the targets) on a continual basis.
Our Vice President (Technical Division) has been assigned responsibility for driving our
GRI 404-2 organization level health & safety management programs. As a practice, our organizational
For VST, talent management includes two primary areas of focus: Providing a workplace that is attractive to prospective safety performance is reported on a quarterly basis to the Board. Through our health and safety
employees and in which they can enhance leading qualities personally and professionally; and develop careers that are management system we comply with the local regulations, deploy a robust risk management
engaging and rewarding. process, undertake the necessary safety training and measure performance.
38 39
Managing Compliance Safety Performance

We maintain proper licenses and documentation as per requirements of the Factories Act and Management Standards.
This is ensured through periodic internal and external audit. Non-conformities identified during such audits are addressed
We continuously measure our health and safety performance parameters using
the right metric and monitor our progress against a set of internal benchmarks;
this has helped us to improve upon our performance in this domain. Our health
Zero Zero
with immediate corrective actions followed by a set of preventive measures (going forward). Lost time Injury- Total Recordable
and safety performance numbers for FY 21-22 is as follows:
Frequency Rate Incidents -
Risk Management Frequency Rate
The establishment of an effective Risk Management System is based on identification of hazards, the qualitative and Human Rights
quantitative assessment of risks associated with such hazards, the planning and implementation of the corrective and (GRI 406-1, GRI 407-1, GRI 408-1, GRI 409-1)
preventive measures. In line with our commitment towards ‘Zero Accidents’ (in our operations), we conduct ‘Hazard
Identification and Risk Assessment’ (HIRA) as well as ‘Job Safety Analysis’ (JSA) for routine and non-routine jobs. We, at VST recognize our fundamental responsibilities in respecting and protecting human rights. Our long-standing
commitment to human rights is contained in the Code of Conduct and Ethics Policy. This is reflected in all employee or
Through such assessment procedures we are able to identify the right set of risks associated with our operations and
contracts with third party.
accordingly classify them under high, moderate, or acceptable categories. For the identified set of risks, we develop
appropriate risk control and minimization measures to bring down the risk level to the minimum possible extent. The commitment to human rights is in adherence to applicable regional laws and the principles and guidelines enshrined
in existing international standards such as the Universal Declaration and the Fundamental Human Rights Conventions of
• We undertake several measures to mitigate our health and safety risks. Some of these initiatives include
the International Labour Organization (ILO).
• Up-gradation / replacement of old machineries
Our approach towards maintaining a decent work environment and upholding the human rights of every individual involves
• Periodical health survey and medical check-up for our workforce. strengthening our monitoring systems and systematic implementation of policies and procedures.
• Provision of adequate personal protective equipment (PPE) that are routinely tested in an endeavour to mitigate harm
from probable risks
• Maintaining proper stacking measures in warehouses and transport vehicles
• Removal of all the old cables and panels (more than 25 years old) from our operational sites
No Child No Forced Working Hours Freedom of
Apart from the above initiatives we also undertake routine safety trainings which are equally important for risk mitigation Labour Labour and Fair Wages Association and
by developing awareness among our workforces. Our recruitment and We strictly prohibit Our people are provided fair Collective Bargaining
security practices recruitment based on and equal compensation, Our people are provided fair
ensure zero tolerance individual bond, debt based on their skills and
and equal compensation, based
Health and Safety Training towards child labour. or obligations towards experience. We provide
The recruitment the Company or its wages and statutory on their skills and experience.
Sensitization on health and safety related risks for guidelines specify representatives. We do not benefits on a timely We provide wages and statutory
job related activities, as well as training on necessary the minimum age accept cash deposits or a basis to ensure social benefits on a timely basis to
safety rules and emergency preparedness plans are standard as 18 years recruitment fee to secure and economic security. ensure social and economic
for employment employment. Our people Wage documentation
essential for imbibing a safety culture within an security. Wage documentation
opportunities. We are hired on the grounds of is maintained for each
organization. We carry out daily shop floor trainings scrutinize essential merit and competency only. individual, illustrates the is maintained for each
and toolbox talks for both our permanent and documents to wage calculation based individual, illustrates the wage
contractual workers in the workplace. Through the verify the person’s on working hours with calculation based on working
inculcation of safety culture, our employees and the age during the transparency on overtimes, hours with transparency on
recruitment process. bonuses, incentives and overtimes, bonuses, incentives
workforce are able to identify unsafe acts and unsafe
deductions received
conditions before the occurrence of any incident. Our security Non- for the month. This is
and deductions received for the
We, at VST have defined procedures to document personnel are also Discrimination in compliance with the month. This is in compliance
near-miss cases and undertake the requisite steps sensitized and minimum wages mandate with the minimum wages
trained to check and Recruitment and
through investigation of the root causes, followed as per local laws and mandate as per local laws and
verify the age and career development
by formulation of implementation for corrective and regulations. regulations.
identity of third-party opportunities are
preventive actions. contractual workers consistent, transparent Our people are entitled to
and unbiased Our people are entitled to
entering the premise. weekly offs and holidays
preventing any form of based on local customs weekly offs and holidays based
discrimination against and days of national and on local customs and days
any caste, race, religion international significance. of national and international
or gender as prescribed significance.
under Indian regulations.
COVID Vaccination Camp
40 41
Sustainable
Operations
42 43
We are approaching one of the decisive moments in this decade to tackle the pressing challenges of climate crisis. The At VST, we take significant effort to integrate sustainability practices into our operations across all relevant stages. Our
sixth Assessment Report (AR6) laid down by the Intergovernmental Panel on Climate Change (IPCC) states that India will manufacturing facilities strive towards minimising their environmental footprint and associated impact. We continue to
face some of the most severe impacts of climate change including intense heat waves, high and variable rainfall, flooding optimize natural resource use in our processes and products as we aim to improve up on our environmental performance
and reduction in crop yields. This calls for urgent and collaborative actions from business houses, regulatory bodies and aligned with technology-related advancement and evolving stakeholder expectations. VST’s Environment, Health & Safety
civic societies. (EHS) Policy establishes and showcases our vision to go beyond the required compliances, legislations, and regulations.
Today, climate change is part of the agenda of every country and the expectation is nothing less than becoming Net Zero. The management and employees jointly work together to accomplish our common goal towards achieving a safe, healthy,
India too is committed to achieving net zero emissions by 2070. As a responsible corporate citizen, we at VST firmly and environment-friendly workplace.
affirm our commitment towards contributing to the nation’s promise by achieving carbon neutral operations by 2030 .
Proactive management of issues related to aspects like - energy, emissions, water, waste, circular economy, and climate
action is core component of our business strategy and culture. We periodically review our operational and environmental
performance to ensure that ouractions are effectively governed by the EHS Policy and we are committed towards working
together with our stakeholders to combat all the environmental and ecological risks as well as challenges faced by the
organisation. We continue to make investments into renewable and non-conventional energy resources to reduce our
Material Topic Target Target Year Status emission footprint and combat the global challenge of climate change. Both of our manufacturing facilities are accredited
with ISO 14001:2015 (Environmental Management System) and ISO 45001:2018 (Occupational Health & Safety
Energy 50% renewable energy in overall energy mix 2030 On-track Management System).
(subject to regulatory environment)
Energy and Emissions Management

(GRI 302-1, GRI 302-3, GRI 302-4, GRI 305-1, GRI 305-2, GRI 305-4, GRI 305-7)
100% of fleet (owned and third-party passenger 2030 On-track
vehicles) will operate on electric vehicles by Our energy transformation strategy aims at improving our operational efficiency through adoption of innovative practices
and energy efficient technologies and building reliance on alternative fuels and energy.Presently, we depend on the
2030
following two energy options in our operations:
Emissions 100% carbon offset for VST’s own operations 2030 On-track • Electricity purchased from utilities (Indirect energy)
(scope 1+2 emissions) by 2030 • Fuels (such as natural gas, diesel) for our boiler operations, DG sets and onsite renewable energy (Direct energy)
In FY 2021-22, indirect energy (purchased In FY 2021-22, of the total direct energy consumed,
gridelectricity) contributed to 56% of the total fossil fuel consumption including HSD and PNG
Water Rainwater Harvesting Potential equivalent to 2030 On-track requirements. consumption contributes to approximately 90% of
over 3 times the Net Water Consumption in own the requirements whereas the installed solar plants
operations contribute to 10% of the energy requirements.
Energy consumption by source Categorisation of direct energy consumption

Waste 100% of packaging to be reusable, recyclable, 2030 On-track
by type
or biodegradable by 2030
10%
56%
100% offsetting of plastic packaging (plastic 2030 On-track
neutrality) through post-consumer plastic waste 44%
collection and processing under Extended
Producer Responsibility (EPR) 29 TJ 42% 12.81 TJ 48%
High speed Diesel (HSD)

Direct energy consumption
Pipe natural gas PNG
Indirect energy consumption
Renewable (Solar)
44 45
The below figure represents our energy consumption for the two financial years Total GHG Emissions (Scope 1+2) In our path towards, achieving carbon neutrality of our own
in FY 2021-22 operations, we are working primarily towards the following
30.2 levers and have progressed significantly over the previous year
29
18%
Renewable energy:
Installation of onsite rooftop solar
18.6
16.2 4,321 Fuel substitution:

82% tCO2eq Replacement of High-Speed Diesel (HSD) with
Piped Natural Gas (PNG) in boiler operations
and incineration at Toopran
12.8
11.6
Internal energy efficiency initiatives
FY 2020-21
FY 2021-22
FY 2020-21
FY 2021-22
FY 2020-21
FY 2021-22
Scope-1 Scope-2
Also, going forward we plan to explore feasibility of using

hydrogen as a fuel for our boiler operations.
Direct Energy Consumption Indirect Energy Consumption Total Energy Consumption

(in TJ) (in TJ) (in TJ) Renewable energy
We are cognizant of our accountability towards all three types of GHG emissions(Scope 1, Scope 2 & Scope 3) arising out
of our operations and both upstream & downstream value chain. However, at present we are measuring and monitoring our
While we improve upon our operational efficiency through
identification and implementation of energy saving opportunities, 330 KW Corporate office
we continue to offset fossil fuel consumption for our own operations
Scope 1 & Scope 2 emissions. We are strengthening our data monitoring system focusing on relevant Scope 3 emission
sources in our value chain andaccordingly plan to disclose our Scope 3 emission going forward. The below figures
through renewable energy. We are committed to source 50% of our
energy requirements from renewable energy sources by 2030. In
472 KW SMD (Azamabad)
represent GHG emissions profile and the emission intensity of theorganization for the two financial years:
this endeavour we have installed rooftop solar panels to the tune of
5,559
1 MW at our manufacturing plants and corporate office. 200 KW PMD
SMD (Toopran)
(Azamabad)
4,693 4,321
3,559
Our solar rooftop installation at Azamabad and Toopran

866
762
1.26 TJ
The total renewable energy consumption for VST during the reporting period was 1.26 TJ. This
FY 2020-21
FY 2021-22
FY 2020-21
FY 2021-22
FY 2020-21
FY 2021-22
initiative has contributed to not only building our reliance on conventional energy sources, but
also avoiding 275 tCO2 emissions during the reporting period.
Renewable energy
While we integrate renewable energy in our operations we are also exploring and identifying consumption in FY
the various means for accessing low carbon intensive sources of energy that are economical 2021-22
Scope 1 Scope 2 Total GHG emission and involve no capital investments.
(in tCO2eq) (in tCO2eq) (in tCO2eq)
46 47
Through implementation of the above measures, we have Subsequently we have also reduced our carbon footprint
been able to reduce our energy intensity by 8% in FY substantially by 24% in FY 2021-22 from previous
Fuel substitution 2021-22 compared to the previous financial year. We will financial year, which testify our aspirations towards
During the year, we have replaced the continue to enhance the scale and coverage of the above achieving carbon neutral operations. Our Scope 1
use of HSD fuel with cleaner fuel Piped levers across our operations in the coming years. emissions have reduced by 12% from 866 tCO2e
Natural gas (PNG) in our boiler operations emissions in FY 2020-21 to 762 tCO2e emissions in FY
at Toopran with an objective to reduce 2021-22 while our Scope 2 emissions have reduced by
our GHG emissions. Piped Natural gas Energy Intensity (GJ/MNC) 24% from 4,693 tCO2eq emissions in FY 2020-21 to
(PNG) is considered as economical, 3,559 tCO2eq emissions in FY 2021-22.
safer and one of the cleanest burning GHG intensity (tCO2e/MNC)
fuels, which reduce emissions and helps 4.71
improve the quality of air. We have also
planned to replace diesel consumption 4.33
in the incinerator with PNG by FY 2024- 0.86
25. The initiative has enabled us to avoid
estimated carbon footprint of 378 tCO2e 0.65
during the reporting period.
Boiler fuel conversion from HSD to PNG
FY 2020-21
FY 2021-22
FY 2020-21
FY 2021-22
Energy efficiency measures
We have adopted several measures that have enabled us to improve our efficiencies.
• Reduced energy consumption at the DRF plant by implementing a closed-loop system

• Reduced energy consumption by installing LED lights
Other Emissions
• Carried out power quality audit and reduced the harmonics through the installation of active harmonic filters Preserving the air quality in and around our plants and mines has been a priority for us. We monitor our stack emissions
We are also implementing energy management system in line with ISO 50001:2018 (Energy Management System) on a monthly basis through NABL accredited third party agencies and have taken proactive measures to arrest dust
requirements and will go for ISO 50001: 2018 certification for both the manufacturing facilities in near future. Our pollution through installation of bag filters at our DG set stacks. Our air emissions during the reporting period are as
manufacturing facility at Toopran, has also renewed its “Gold Rating Green factory building Certification” from CII, IGBC, follows.
Hyderabad, which is valid up to March 2024.
28.68
Our environmentally friendly smart factory: Toopran 22.36
IGBC green factory building rating certification

Our environmentally friendly factory is an approach to resolve and
address sustainability in industrial buildings. It has provided us
with both tangible and intangible benefits. The approach has led to
reduction in water consumption by 30-50% and energy consumption 6.72
by 20-30% in comparison to conventional buildings.
Adopting to the green factory has enhanced air quality at the

premises, excellent daylighting, health & well-being of the occupants,
safety benefits and conservation of scarce natural resources.
NOx emissions SOx emissions PM emissions
(In MT) (In MT) (In MT)
48 49
Water Management As highlighted above, the major water source for our
manufacturing operations is ground water followed
4.21
by municipal water which is used for drinking and

(GRI 303-1, GRI 303-2, GRI 303-3, GRI 303-4)
utility purposes. There haven’t been any changes
Water is a precious resource for all and requires efficient management across industry sectors. We consider water in percentage water withdrawal from both the water 4
conservation and wastewater recovery as a significant aspect for our manufacturing operations. We continuously measure sources over the last two financial years.
our water consumption, wastewater generation and discharge parameters to monitor our progress against our internal site-
We are also creating rain water harvesting structures to
specific targets and benchmarks. As part of our accreditation to ISO 14001:2015 certification, we continually identify
ensure optimum ground water level is maintained. This
the areas for improvement of our water performance and accordingly devise action plan. A detailed action plan with set
is also reflective in our larger objective of becoming
objectives and targets is currently being reviewed by MR of ISO cell. Besides this, we periodically carry out water audits
three times water positive by 2030. As of FY 2021-22,
and water balance studies by internal experts and by third party to have a more comprehensive understanding of our water
we have created ten rainwater harvesting pits across our
consumption hotspots within our manufacturing operations.
manufacturing facilities, with total rainwater harvesting
Both of our manufacturing facilities are zero liquid discharge sites with wastewater being recycled for gardening purpose. potential of 1,37,606 KL, which are used for recharging
We have mechanisms in place to continuously monitor our ground water consumption and effluent treatment plants ground water through percolation.
performance. Ground water and effluent report are shared with pollution control boards on periodic basis as per applicable
regulatory requirement. As shown above, during the reporting period, we have
been able to reduce our water intensity by 5% over the FY 2020-21 FY 2021-22
previous financial year, which is largely contributed
through various internal water optimization initiatives Water intensity in KL/MNC*
across our process and utility areas. *MNC- Million cigarettes
Effluent treatment plant at Toopran
Water withdrawal by source
3% 3%
97% 97%
28,087 27,204
FY 2020-21 FY 2021-22
Ground Water
Municipal Water Rainwater Harvesting Pit at Toopran
50 51
Waste Management Sustainable Material

(GRI 306-1; GRI 306-2, GRI 306-3) GRI 301-1
Proper waste handling, management and disposal is critical for maintaining human health, biodiversity, and ecological Continuity of business operations largely depends upon the uninterrupted and timely availability of raw materials. We
cycles by lowering the risk of air, water, and land pollution. As a responsible corporate citizen, we make conscious effort continuously strive to enhance our raw material utilisation efficiency. The 3R philosophy of effective waste management
to minimise waste generation from our manufacturing facilities. Waste generated from our operations is duly segregated is well-ingrained into our business operations with the objective to minimise impacts of resource scarcity and efficient
into hazardous and non-hazardous waste and disposed through proper channels. Hazardous waste is sent to Government utilisation. We also emphasise on maximising the utilisation of recycled materials in our operations and production
authorised vendors for disposal and non-hazardous waste is sold to scrap vendors. We follow the 3R principle (Reduce, processes. We have been able to increase our production while reducing consumption by implementing efficient shopfloor
Reuse and Recycle) while managing our waste. 100% of Biodegradable BOPP film is used in our packaging of the initiatives, upgradation of technology and process reengineering.
products. We do not have any waste sent to landfill or incineration.
We have taken multiple initiatives to use alternative and sustainable materials within our operations in order to further
reduce our environmental footprint. We have shifted to 100% biodegradable Biaxially Oriented Polypropylene (BOPP)
Particulars FY 2021-22 FY 2020-21 overwrap during FY 2021-22. We have also implemented traceability system by printing the laser date coding system on
Hazardous waste generated (Metric Tons) NIL 0.19 each packet and Corrugated Fibreboard Carton (CFC). We have been using metallised paper in place of aluminium foil for
Non-Hazardous waste generated (Metric Tons) 40.45 41.31 close to two decades now and exploring the possibility of using paper in place of metallised paper. We have been recycling
the incoming packaging material for more than a decade now and almost 50% of our incoming packaging material is
recycled.
Raw Material Unit FY 2021-22

Filters Million Nos. 1,508
HLPS Million Nos. 866
Cigarette paper Million meters 377.63
PPCT Million meters 121.36
Adhesive Metric ton 145
CFC Nos. 5,96,161
Bundling paper Million meters 110.21
Inner frame Metric ton 443
Gay wrapper Million meters 9
BOPP Metric ton 1,87,522.7
52 53
Circular Economy
At VST, we have embraced the concept of Circular Economy, where every product or component involved in business
operations and product lifecycle are taken back to the economic stream, minimising our environmental impact across our
value chain.
All our raw material components can be recycled except BOPP films and filter rods. To further our commitment to circular
economy, we have shifted to 100% biodegradable BOPP overwrap in 2021. Further, all our packaging material which is
made from paper / paperboard is recyclable.
We constantly strive to segregate the waste generated by our factories into hazardous and non-hazardous waste which is
then disposed off through appropriate mechanism in place. Hazardous waste is disposed by State Pollution Control Board
(SPCB) approved third party recycler. We have partnered with PCB approved recycler for implementation of Extended
Producer Responsibility (EPR)
We employ processes that reclaim our packaging materials (particularly plastic waste) for safe disposal at the end of life.
During FY 2021-22, we undertook plastic waste management programmes under the EPR guidelines for safely disposing
all non MLP plastic waste categories. During the reporting period we have collected and safely disposed 173.33 MT of
post-consumer plastic waste across 31 states and union territories in India, which will be subsequently recycled in the
upcoming reporting period.
Biodiversity
Caring for ecological security and balance is an essential part of VST’s sustainability agenda We try to ensure that paper
and paperboard materials for our operations are procured from Forest Stewardship Council (FSC) certified vendors. We also
make sure that tobacco leaves procured by us are not associated with the risk of deforestation to primary and protected
forest lands.
We encourage and promote the sustainable use of renewable sources (self-sufficient firewood and biomass) for tobacco
curing by our contracted tobacco farmers. We also encourage our tobacco farmers to deploy efficient curing technologies
that uses lesser fuel and reduced number of curing days. Our recommendation and implementation of change in barn
dimensions has reduced the fuel consumption from 8 Kg/ Kilo to 5Kg/ Kilo and required curing days from 30 to 18.
At both the manufacturing facilities, we have taken conscious decisions of maintaining a green cover.
54 55
Sustainable Creating shared value is at the heart of VST’s approach
to sustainable development. Our continuous endeavour
is to ensure that the decisions we take are not only good
practices, that are leveraged to achieve our ambitions.
We have also deployed a team of field technicians who
provide regular guidance to farmers on the application
Agriculture for doing business but also good for the society and the
planet.
of the good agricultural practices and keeps the famers
updated on the latest technologies and developments in
farming. The field technicians are equipped with GMS, an
For this purpose, one significant pillar of our journey online mobile application that help monitor farm practices
is sustainable agriculture. Sustainable agriculture that include seedbed management, transplanting, use of
focusses on operating our upstream value chain in a Crop Protection Agents (CPAs), topping, curing, bulking,
more responsible manner and ensuring good agricultural bailing, marketing and compliance with Agriculture Labour
practices are undertaken at scale. This involves supporting Practices (ALP)
the development of systems that protect and restore the
environment, improve livelihood of farmers and strengthen On receiving data through the GMS, the leaf function
resilience and wellbeing of the farming community. analyzes field level data and reviews progress against
our targets and goals. Our mid-term and long-term goals
The Farmer Handbook illustrates the good agricultural towards sustainable farming are detailed below.
Material Topic Target Target Year Status

Farmer Livelihood “We have zero tolerance towards child labour 2030 Ongoing
or forced labour. We shall continue to have
adequate measures in place to identify and
mitigate such risks within the leaf supply
chain”
“We shall continue to ensure minimum legal 2030 Ongoing
wage is provided to farm workers”
Implement mechanization of field preparation 2030 Ongoing

and removal of stubbles for 100% of area
under tobacco
Explore and implement mechanization of other 2030 Ongoing

farm operations (harvesting & plantation) for
at least 20% of tobacco area
Climate resilience 30% of contracted farmers (for Talmari & 2030 Ongoing
Oriental crops) to use drip irrigation
30% of crop protection agents used by 2030 Ongoing

contracted farmers to be biofertilizer/
biochemicals based
20% improvement in soil organic matter 2030 Ongoing

through green manuring crops for better water
holding capacity
Over the course of this section, you will be familiarized with our approach and interventions to mitigate the negative
impacts of our upstream.
56 57
Farmer Livelihood Ensuring the highest quality

Quality is equally important as crop productivity. A high-
(GRI 406-1, GRI 407-1, GRI 408-1, GRI 409-1, GRI 413-1) quality produce fetches a higher income. We at VST,
ensure the pesticide residue levels and TSNAs (Tobacco
Specific Nitrosamines) are within international standards.
We consider our contracted farmers as one of the valued business partners who plays a crucial role in contributing to our We provide both domestic and international market
overall sustainability objective. While maintaining stable income could be challenging amid climate change, geopolitical linkages for the farmers by catering to the local demand
tension, pandemic situations amongst other market forces, our continuous endeavour is to ensure sustainable livelihood and selling cut tobacco to some of our international
for the farming community through various well-being initiatives. traders who are ready to pay a premium for good quality.
We facilitate the farmers in identifying Non-Tobacco
Investing in the Farming in eliminating monocropping practices. All our farmers

practice crop rotation which is desirable for balancing soil
Related Material (NTRM) through sorting of the bales and
subsequently cleaning them.
Community nutrients.
We firmly believe that the above interventions to enhance
Investing on enhanced famer livelihood that benefit the farmer livelihood will alleviate farmers from poverty and Field technicians are deployed to continuously monitor
farmers through improved yield and higher income is a key Farm productivity will translate into providing better working conditions for farm holdings and identify human right violations. Human
focus for us at VST. We provide technical assistance on the farming community. right violations identified are reported through the GMS
With the assistance of the Tobacco Board, technologically
some of the best agricultural practices that are designed application.
advanced threshing plants and re-drying facilities are now
towards making agriculture more productive, remunerative
and environment friendly.
being used to increase the tobacco yield and conform
with the export quality standards. We support through
Protection of Human We understand that human rights issues are complex in
nature and requires a thorough due diligence to conclude
provision of seed varieties that offer great yield and are not
Rights to any solution. Remediation requires cooperation and
Improving soil quality harmful to the ecology and soil health. We are exploring
options for introducing mechanization infield preparation, As we continue to work on enhancing farmer livelihood and
dialogue rather than confrontation. Hence, we are taking
the necessary steps by sensitizing them on actions that
Soil plays a vital role in maintaining nutrient value and removal of stubbles and harvesting activities which will wellbeing, we also keep a vigilant watch on farm practices
can interfere with human rights, the requirements to
ensuring land is cultivable. We engage with farmers to further improve profit margin of farmers by increasing farm to identify and prevent human right abuses.
adhere to the local laws and the means to report any
sensitize them on the negative impacts of monocropping productivity and reducing cost of produce. challenges in executing the code.
All farmer agreements are embedded with the ALP code
and intensive tillage practices. We have been successful
which illustrates the various aspects of human rights
Our approach emphasizes on working with families of
the farmers are expected to abide by. On affirming to
farmers and the community in which they reside to identify
an agreement with VST, farmers agree to compliance
sustainable solutions that address their challenges and
with all local, state (provincial) and national laws and
enhance social equity.
regulations in connection with labor standards, (which
include minimum compensation, working hours, non-
discrimination, fair treatment, safe working environment, Growing Tobacco Safely
freedom of association).
Cultivation of tobacco is associated with health and safety
They specifically agree to concerns at the upstream. Exposure to pesticides while
handling wet green tobacco leaves during harvesting and
a. not employing any child below the age of 14 in their stitching may lead to Green Tobacco Sickness (GTS).
farm
We ensure the farmers, and the farm workers have access
b. not employing persons under conditions that demand to adequate PPE kits. So far, we have made provisions for
work or service under the threat of any penalty and PPE kits for 20% of the workforce and going forward we
for which such person has not offered himself/ herself aim to increase our coverage to 100% of the contracted
voluntarily, or as a means of repayment of debt farmers in a phase wise manner. Additionally, training
sessions are arranged for the farmers to make them aware
c. strictly complying with the minimum wage provided by
of the root causes of GTS occurrence and to demonstrate
the applicable national law
to them the usage of PPE kits on field days, once during
d. strictly prohibiting any form of discrimination the season and once on the commencement of the season.
e. ensuring provision of clean drinking water and The effectiveness of our measures is ensured by our field
adequate access to PPE kits technicians who periodically visit each farm to monitor
adequacy of PPE kits and its usage by farm workers.
f. providing workers their entitled breaks and rest periods
58 59
Climate Resilience Water Stewardship

As climate change becomes prevalent, lack of precipitation over an extended period can result in depletion of water
Securing resources in a climate resilient supply chain is key to our business strategy. We engage with farmers to sensitize resources. Increase in water demand beyond availability results in water stress risks. At VST, we strive to understand
about the global concern. Through such engagements, we also try to understand the farm level challenges posed due to the water stress in our value chain and engage with our stakeholders to explore sustainable ways to water crops while
climate change and explore meaningful solutions to address such challenges. protecting the access of the local communities to water resources.
Tobacco is primarily a rain-fed crop and majority of our contracted farmers are dependent on rainfall for a good yield. We
Sustainable Alternatives understand our responsibility to mitigate risk of water shortage due to insufficient rainfall and for this purpose we have
been adopting various initiatives such as drip irrigation, micro sprinklers and green manuring.
Across the tobacco supply chain, we understand the use of synthetic fertilizers and pesticides are prevalent. The synthetic
fertilizers undergo a chain of chemical reactions, resulting in generation of nitrous oxide which is 265 times more potent For example, we are introducing farmers to drip irrigation technology, micro sprinklers for nursery operations and have
greenhouse gas than carbon dioxide. recommended green manuring to improve water holding capacity of the soil.
We recognize the challenges in replacing 100% of conventional chemicals with biochemicals is not feasible. We have As a water steward, we continue to monitor the implementation of such practices on a periodic basis and explore new
initiated a pilot programme by introducing some of our farmers to suppliers of biochemicals to assess the impact and ways to optimise water usage at the upstream.
accordingly will push for mass adoption of biochemicals going forward. Through this programme we will aim to substitute
30% of the Crop Protection Agents (CPAs) with these alternatives.
Waste Management
Low Carbon Curing The tobacco supply chain is highly dependent on agrochemicals and crop protection agents for enriching the soil nutrients
and improving the crop yield. These chemicals if not handled responsibly are harmful to humans and other living
Curing is a major source of emissions in the tobacco supply chain, if not sustainably managed. Our objective towards low
organisms.
carbon curing involves strong resentment towards deforestation and use of forest wood for curing purpose. Majority of our
contract farmers indulge in sun curing, air curing and use agricultural waste such as tobacco stalks, maize husk, saw dust, Our contracts direct farmers to ensure safe disposal of the empty containers of crop protection agents. Upon emptying
sunflower head, groundnut shell and cotton stalks. However, these agricultural wastes produce biogenic emissions and a CPA container, the farmer should rinse the container three times and pour the liquid into the spray tank. The
addressing it is a part of our plan. container is then punctured to prevent re-use and is disposed/recycled in accordance with the CPA manufacturer’s label
recommendations and/or national regulations.
Curing is a process by which harvested tobacco leaf is made ready for the market. One of the popular ways of curing
is flue curing method in which the harvested leaves are strung on sticks, which are then stacked in a barn and heated. We continue to create awareness amongst the farmers on the use and safe disposal of agrochemicals and have initiated
Recognizing the impacts of flue curing in our value chain we ideated a plan towards resource efficiency by upgrading barn the provision of CPA boxes for safe storage of agrochemical containers.
structure. After careful considerations and extensive research, we found out that increasing the specifications of the barn
will improve efficiency. We upgraded our barn structures by increasing the capacity of the barn structures from 15 ft.*10
ft* 12ft to 24 ft*18 ft*12 ft. This initiative not only reduced our fuel requirement by 38% and but also the curing time by
40%.
60 61
We firmly believe in creating shared value and
inclusive growth for all our stakeholders in the entire
value chain. We are fully committed to fulfil our
responsibility towards all our stakeholders to the best
of our capabilities. At all our manufacturing facilities
we engage with local communities, assess direct and
indirect impacts of our business operations on these
communities, and take up developmental initiatives
accordingly. We continuously engage and encourage
our tobacco farmers to adopt new, improved, and
sustainable ways of tobacco plantation.
We continue to adhere to Cigarette and Other Tobacco

Products Act (COTPA) guidelines, 2016 for packaging
and labelling, advertising, and promotion. We engage
in continuous social dialogue with our stakeholders and
regulatory community through industry bodies.
Our CSR policy and initiatives reflects our vision,

mission, thrust areas and lists out various areas in
which corporate entities are expected to deploy their
CSR funds and implement programmes for social
development.
Responsible Marketing
(GRI 417-1, GRI 417-2, GRI 417-3)
VST’s marketing policy is governed by COTPA guidelines, We have established a toll-free number on which
2016 enacted by Government of India (GoI). COTPA is distributors/ customers can register their complaints. The
aligned to the FCTC treaty by WHO. Article 11 of FCTC complaints are checked by grievance redressal executive
requires labelling & packaging to discourage by any and transferred to the concerned department. All the
means that are false, misleading, deceptive, or likely departments are required to take all the necessary efforts
to create an erroneous impression about the product's to resolve the issues as soon as possible. Our sales team
characteristics, health effects, hazards or emissions and surveys retailers periodically on any servicing issues and to
Article 13 pertains to advertising, sponsorship, promotion take stock of competition activity.
ban of tobacco products. Both article 11 & 13 are
comprehensively covered under COTPA. Every new joiner is For consumer surveys we only reach out to smokers above
explained and trained on these guidelines by senior team the age of 21 years though the mandated age as per law
is 18 years. Consumer surveys in general are conducted
Inclusive Growth
members.
to assess equity of brands and consumption pattern. We
Our sales team sensitizes stakeholders in the value chain ensure exclusion of people below 18 years in tobacco
about applicable and relevant regulations to be abided related campaigns or consumption activities till our last
under COTPA and if necessary, material support is also point of contact (i.e., Territory Manager). There have been
provided. "Not for Sale to Minors” signages as per COTPA no complaints received from our consumers.
guidelines were/ are provided to the distributors/retailers
for display outside their counters.
62 63
Littering Prevention Building upon our ethos on giving back to the society, we have further strategized our approach and have aligned our focus
areas with VST’s ESG strategy. For FY 2021-22, our CSR obligation as per the Companies Act was INR 1,004.65 Lakhs,
which were completely spent in the projects during the year.
We are in a constant endeavour to reduce our environmental footprint. We have embraced the concept of Circular
Economy, where every product or component involved in business operations and product lifecycle are taken back to the
economic stream, minimising our environmental impact across our value chain. We also have plans of engaging with waste Focus Area-1
management companies in near future to conduct butt clean-up drive and other activities to tackle the issue of littering
waste. We have partnered with SPCB approved recycler for implementation of Extended Producer Responsibility (EPR). Health & Sanitation:
We employ processes that reclaim our packaging materials (particularly plastic waste) for safe disposal at the end of life.
During FY 2021-22, we undertook plastic waste management programmes under the EPR guidelines for safely disposing
all non MLP plastic waste categories. During the reporting period we have collected 173.33 MT of post-consumer plastic We have along with Gramalaya, a non-profit organization, We have also contributed INR 100 Lakhs to Telangana
waste across 31 states and union territories in India. constructed toilets in individual homes (of farmers living) State Disaster Management Authority to undertake
in and around Jogulamba-Gadwal district of Telangana COVID-19 related activities.
near our manufacturing facility, under the ‘Swachh Ghar’
Community Initiatives programme. Communities around the beneficiary villages
have also been sensitised regarding the importance of Supported Covid Care Hospital by
(GRI 413-1) health & sanitation. We have constructed 1685 toilets setting up Oxygen Concentrator –
8 villages and 7675 toilets till date in 30 villages Over
We have formulated a Corporate Social Responsibility Policy with the objective to promote inclusive growth and equitable KIMS hospital, Hyderabad
1600 household toilets have already been constructed
development. We have identified our focus areas by contributing back to the society as per the Schedule VII of Section
during the financial year, and plans are also in place
135 of the Companies Act, 2013. Over the years, we have been involved in the social activities focusing on the following
to extend it further to other houses in the same area.
thrust areas.
As a result of our CSR initiatives, 4 villages have been Sponsored CII initiative to build
declared free from open defecation (ODF) and other 10 bedded Covid makeshift
CSR focus areas villages are work in progress.
hospital for Hyderabad Police
Advancing community relationships by constructing smart and

sustainable toilets
Health and Promoting Environment Our toilet models promoted under this program has machines and sanitary napkin incinerator. The
Sanitation Education sustainability sustainable sanitation models with twin leach-pits initiative has led to develop water and sanitation
to ensure the human excreta safely disposed and facilities as well as behaviour changes among the
• VST ‘Swachh Ghar • ‘Project Gyandeep’: • Projects promoting reused. These households’ toilets are built on the communities particularly among the women and
Mission’-Household/School Providing infra support sustainability in SMART model (Simple, Maintainable, Appropriate, adolescent girls, improving the living conditions of
toilets construction & also for schools ((buildings, association with gram- Reusable and Technically Perfect), with an outcome the people with safety, security, and dignity.
creating awareness on safe library, etc) & vocational panchayats eg: Solar of increasing the usability of the toilets. Towards
hygiene habits training for employability street lights in villages implementation of the programme, we undertook
• VST cares- Extending • Mid-Day meals program • Solid Waste Management the participatory rural appraisal programs by
Covid support to for school children & Water Conservation mapping village, transect walk and door-to-door
communities hygiene education by inter-personal communication
that ensured people’s participation in the Swachh
• Installation of streetlights
Ghar Mission program. Through this initiative
we imparted hygiene education, motivation, and
community mobilisation for demand creation
for toilet construction. These toilets incorporate
full cycle approach in sustainable sanitation by
Integrating various technologies. They offer women
friendly accessories like, sanitary napkin vending
Swachh Ghar Programme
64 65
Focus Area-2 Our approach to building effective CSR

Promoting Education: implementation
Strengthening community initiatives embraces efforts for continuous improvement of our CSR programs, involving project
Our focus in these thrust areas is to promote education, including
planning, implementation and reviewing its effectiveness. Our monthly monitoring and assessment of projects provides us
special education and employment enhancing vocation skills especially
insight on the progress of a program, gap analysis and planning to fill up those gaps. To support a strategic shift towards
among children, women, elderly, and the differently abled and livelihood
impactful results, we have established a strong and coherent monitoring and evaluation methodology which provides
enhancement projects. During the FY 2021-22, we have taken the following
information to improve efficiency and effectiveness of CSR programmes as well as adequate monitoring of all the projects.
initiatives.
• Supporting upgradation of School infrastructure

We have supported 72 schools in and around Hyderabad with
infrastructure upgradation such as buildings, libraries, labs among
Employee’s volunteering
others. During the FY 2021-22, we have constructed 10 classrooms (in We firmly believe employee volunteering programs offer our people a sense of purpose and pride in their work. Our
Government schools) in 9 villages of Kurnool (AP) and 1 drinking water program on employee volunteering initiative encourages employees to use their interests, skillsets, and time to assist
facility supporting upgradation of school infrastructure. others in solving community challenges.
• Vocational skill training programs
We have undertaken various skill development programs for the benefit of
unemployed youth on various aspects to improve skills, employability and
Way forward
hence generating source of income. As part of our continuous improvement in CSR activities and to find out the areas where we can make larger impact, we
• Nutrition for school children – Mid-day meal carry out need assessment to identify strategic areas for CSR investment, project identification and defining long term
We are supporting more than 200 schools with mid-day meals by success measures for the projects along with short-term and long-term milestones. Before entering the details of the CSR
bringing wholesome meal cooked in highly hygienic kitchens through our activities, we carry out proper planning to estimate the budget. Through our thorough need assessment, we decide on the
implementation partner Akshaya Patra. roles and responsibilities of the team members for complete value chain.
Solar streetlight
Focus Area-3
Environment Sustainability:
We have taken up an initiative of supporting environment sustainability by installing 400 solar streetlights in 8 villages/
towns in Jogulamba-Gadwal districts of Telangana.
Waste management approach to properly dispose human waste

As part of providing toilets to the community, we have emphasized on constructing eco-san toilets. These toilets are
constructed above the ground-level having two chambers and two squat holes with urine separation facilities.
Using alternate
chambers once
Diverting wash water to
primary chambers
the kitchen garden and Separating urine form
are filled and can be
preventing from mixing the toilet and store and
used as manure after
with human faeces drain using a mud pot
one year period to the
agricultural fields
66 67
Need assessment In-depth Interviews
methodology Sarpanches, Government Education

and Health Officials
We have identified following thematic areas where

we will take our strategic approach to build better
community relationships. These thematic areas Focus Group Discussions
are aligned with our ESG strategic objectives and Male and Female Farmers
priorities with sharpened focus to cover Burley
and High Nic tobacco growing areas.
Household survey
Alignment
with UNSDG
Rural Health and Environment &
Education
Development Sanitation Sustainability
Integrated water Training on personal Farmer training on impact Solar energy solutions for
management though hygiene and menstrual of child labor and linkage irrigation pumps, street
watershed creation and cycle hygiene. with farmer livelihood lights, Primary Health Care
management. Centers and Schools under
Facilitate government Education support though the VST Power banner
Women farmer self help health insurance coverage infrastructure for schools,
groups. mobile libraries and IT Wild life conservation
Health screening camps
infrastructure
Farmer training on modern and referral linkages with
farming techniques hospitals Mid day meals for students
68 69
From our inception, we have been contributing to sustainable development and its scale and extent have changed as SDGs Initiatives
we have progressed. We are contributing to the achievement of the SDGs through our business activities for all the
• We provide employment opportunities to the women and local youth
disadvantaged communities, farmers etc. The theme below plots each SDGs according to stakeholder expectations, versus
the degree of relevance for VST’s activities based on the five materiality themes. • We procure many raw materials form the local communities
With sustainability now at the centre of our business models and strategies, SDG roadmaps are used as a tool to lead, • Implemented Agriculture Labour Practices (ALP) Code which ensures adherence to labour
innovate, and challenge our approaches to shape a more sustainable future. Our business directly contributes to following standards
SDGs.
• 100% of Biodegradable BOPP film is used in our packaging of the products.

SDGs Initiatives
• Introduced technologically advanced threshing plants and re-drying facilities to increase the
• Waste generated from our operations is duly segregated into hazardous and non-hazardous
tobacco yield and conform with the export quality standards.
waste and disposed through proper channels
• Supported farmers through provision of seed varieties that offer high yield
• We continue to create awareness amongst the farmers on the use and safe disposal of
agrochemicals and provide CPA boxes for safe storage of agrochemical containers.
• Introduced biochemicals to replace toxic crop protection agents

• Provided mid-day meals to children from more than 200 schools
• Sourced paper and paperboard materials for our operations that are Forest Stewardship Council
(FSC) certified
• Zero incidents and fatalities through the implementation of a robust health and safety
management system • Implemented Extended Producer Responsibility (EPR) plans for responsible management and
safe disposal of post-consumer plastic waste
• Ensured the farmers, and the farm workers have access to adequate PPE kits • Our Toopran manufacturing facility is an IGBC Gold Rating Green factory building Certification
• Extended Covid support to communities through Telangana State Disaster Management • Replaced the use of HSD fuel with cleaner fuel Piped Natural gas (PNG) in our boiler
Authority operations with an objective to reduce our GHG emissions
• Installed 472 KW in Azamabad; 200 KW in Toopran; 330 KW at corporate office capacity of

• Supported upgradation of School infrastructure under ‘Project Gyandeep rooftop solar
• Installed solar streetlights at villages/ towns in Jogulamba-Gadwal districts of Telangana
• Implemented rainwater harvesting pits of 1,37,606 m3 capacity at the manufacturing facilities • Promoted the sustainable use of renewable sources (self-sufficient firewood and biomass) for
tobacco curing by our contracted tobacco farmers.
• Both our manufacturing facilities are zero liquid discharge facilities
• Increased the capacity of the barn structures to reduce the fuel consumption
• Introduced farmers to drip irrigation technology, micro sprinklers for nursery operations and
have recommended green manuring to improve water holding capacity of the soil • Zero incidents on corruption and bribery
• Constructed household/school toilets including ecosan toilets & also created awareness on safe • Adhere to Cigarette and Other Tobacco Products Act (COTPA) guidelines, 2016 ensuring
hygiene habits under the ‘Swachh Ghar Mission’, we have responsible marketing of our products
• Our Toopran manufacturing facility is an IGBC Gold Rating Green factory building Certification
• Replaced the use of HSD fuel with cleaner fuel Piped Natural gas (PNG) in our boiler
operations with an objective to reduce our GHG emissions
• Installed 472 KW in Azamabad; 200 KW in Toopran; 330 KW at corporate office capacity of

rooftop solar
• Installed solar streetlights at villages/ towns in Jogulamba-Gadwal districts of Telangana
70 71
GRI Index Disclosure Disclosure title Page number/
comment
General Disclosures
GRI 102: General Organization Profile
Disclosures 2016
102-1 Name of the organization 10
102-2 Activities, brands, products, and services 10
102-3 Location of headquarters 10
102-4 Location of operations 10
102-5 Ownership and legal form 10
102-6 Markets served 10
102-7 Scale of the organization 10
102-8 Information on employees and other workers 10
102-9 Supply chain 12
102-10 Significant changes to the organization and its supply chain 12
102-11 Precautionary Principle or approach 27
102-12 External initiatives 13
102-13 Membership of associations 13
Strategy
102-14 Statement from senior decision-maker 4
Ethics and Integrity
102-16 Values, principles, standards, and norms of behavior 26
Governance
102-18 Governance structure 23
Stakeholder Engagement
102-40 List of stakeholder groups 16
102-41 Collective bargaining agreements 100% workers
covered under
collective
bargaining
agreement
102-42 Identifying and selecting stakeholders 16
102-43 Approach to stakeholder engagement 16
102-44 Key topics and concerns raised 17
72 73
Disclosure Disclosure title Page number/ Disclosure Disclosure title Page number/
comment comment
GRI 102: General Reporting Practice GRI 103: 103-1 Explanation of the material topic and its boundaries 50
Disclosures 2016 Management
102-45 Entities included in the consolidated financial statements 3 103-2 The management approach and its components 50
Approach 2016
102-46 Defining report content and topic Boundaries 3 103-3 Evaluation of the management approach 50
102-47 List of material topics 17 GRI 303: Water 303-1 Interactions with water as a shared resource 50
and Effluents
102-48 Restatements of information 3 303-2 Management of water discharge-related impacts 50
102-49 Changes in reporting 3 303-3 Water withdrawal 50
102-50 Reporting period 3 303-4 Water discharge 50
102-51 Date of most recent report 3 Emissions
102-52 Reporting cycle 3 GRI 103: 103-1 Explanation of the material topic and its boundaries 45
Management
102-53 Contact point for questions regarding the report Back page 103-2 The management approach and its components 45
Approach 2016
102-54 Claims of reporting in accordance with the GRI Standards 3 103-3 Evaluation of the management approach 45
102-55 GRI content index 72 GRI 305: 305-1 Direct (Scope 1) GHG emissions 45
Emissions 2016
102-56 External assurance 77 305-2 Energy indirect (Scope 2) GHG emissions 45
Economic 305-4 GHG emissions intensity 45
Anti-Corruption 305-7 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air 45
emissions
GRI 103: 103-1 Explanation of the material topic and its boundaries 26
Management Waste
103-2 The management approach and its components 26
Approach 2016 GRI 103: 103-1 Explanation of the material topic and its boundaries 52
103-3 Evaluation of the management approach 26
Management
GRI 205: Anti- 205-3 Confirmed incidents of corruption and actions taken Nil Approach 2016
Corruption 2016 103-3 Evaluation of the management approach 52
Environment GRI 306: Waste 306-1 Waste generation and significant waste-related impacts 52
2016
Materials 306-2 Management of significant waste related impacts 52
GRI 103: 103-1 Explanation of the material topic and its boundaries 53 306-3 Waste generated 52
Management Environmental Compliance
Approach 2016
103-3 Evaluation of the management approach 53 GRI 103: 103-1 Explanation of the material topic and its boundaries 27
Management
GRI 301: 301-1 Materials used by weight or volume 53 103-2 The management approach and its components 27
Approach 2016
Materials 2016 103-3 Evaluation of the management approach 27
Energy
GRI 307: 307-1 Non-compliance with environmental laws and regulations 27
Environmental
Management
103-2 The management approach and its components 45 Compliance 2016
Approach 2016
103-3 Evaluation of the management approach 45 Supplier Environmental Assessment
GRI 302: Energy 302-1 Energy consumption within the organization 45 GRI 103: 103-1 Explanation of the material topic and its boundaries 26
2016 Management
302-3 Energy intensity 45 103-2 The management approach and its components 26
Approach 2016
302-4 Reduction of energy consumption 45 103-3 Evaluation of the management approach 26
74 75
Disclosure Disclosure title Page number/ Disclosure Disclosure title Page number/
comment comment
GRI 308: 308-2 Negative environmental impacts in the supply chain and actions taken 26 Non-Discrimination
Supplier
GRI 103: 103-1 Explanation of the material topic and its boundaries 41,58
Environmental
Management
Assessment 2016 103-2 The management approach and its components 41,58
Approach 2016
Social 103-3 Evaluation of the management approach 41,58
Employment GRI 406: Non- 406-1 Incidents of discrimination and corrective actions taken 41,58
discrimination
GRI 103: 103-1 Explanation of the material topic and its boundaries 35 2016
Management
103-2 The management approach and its components 35 Freedom of Association and Collective Bargaining
Approach 2016
103-3 Evaluation of the management approach 35 GRI 103: 103-1 Explanation of the material topic and its boundaries 41,58
GRI 401: 401-1 New employee hires and employee turnover 36 Management
103-2 The management approach and its components 41,58
Employment Approach 2016
401-2 Benefits provided to full-time employees that are not provided to 36 103-3 Evaluation of the management approach 41,58
2016
temporary or part-time employees
GRI 407: 407-1 Operations and suppliers in which the right to freedom of association 41,58
Occupational Health and Safety Freedom of and collective bargaining may be at risk
GRI 103: 103-1 Explanation of the material topic and its boundaries 39 Association
Management and Collective
Approach 2016 Bargaining 2016
Child Labor
GRI 403: 403-1 Occupational health and safety management system 39
Occupational
403-2 Hazard identification, risk assessment and incident investigation 39 Management
Health and Safety 103-2 The management approach and its components 41,58
Approach 2016
2016 403-5 Worker training on occupational health and safety 39
103-3 Evaluation of the management approach 41,58
403-6 Promotion of worker health 39
GRI 408: Child 408-1 Operations and suppliers at significant risk for incidents of child labor 41,58
403-7 Prevention and mitigation of occupational health and safety impacts 39 Labor 2016
directly linked by business relationships
Forced or Compulsory Labor
Training and Education
GRI 103: 103-1 Explanation of the material topic and its boundaries 35 Management
103-2 The management approach and its components 41,58
Management Approach 2016
Approach 2016 103-3 Evaluation of the management approach 41,58
GRI 409: Forced 409-1 Operations and suppliers at significant risk for incidents of forced or 41,58
GRI 404: Training 404-2 Programs for upgrading employee skills and transition assistance 39 or Compulsory compulsory labor
and Education programs Labor 2016
2016
404-3 Percentage of employees receiving regular performance and career 37 Local Communities
development reviews
GRI 103: 103-1 Explanation of the material topic and its boundaries 58, 63
Diversity and Equal Opportunity Management
103-2 The management approach and its components 58, 63
Approach 2016
103-3 Evaluation of the management approach 58, 63
Management
Approach 2016 GRI 413: Local 413-1 Operations with local community engagement, impact assessments, 58, 63
103-3 Evaluation of the management approach 35 Communities and development programs
2016
GRI 405: 405-1 Diversity of governance bodies and employees 35
Diversity and
Equal Opportunity
2016
76 77
Disclosure Disclosure title Page number/
comment Assurance
Supplier Social Assessment
GRI 103: 103-1 Explanation of the material topic and its boundaries 29 Statement
Management
Approach 2016
414-2 Negative social impacts in the supply chain and actions taken 29
Marketing and Labeling
Management
Approach 2016
GRI 417: 417-1 Requirements for product and service information and labeling 57
Marketing and
417-2 Incidents of non-compliance concerning product and service 57
Labelling 2016
information and labeling
417-3 Incidents of non-compliance concerning marketing communications 57
Socioeconomic Compliance
Management
Approach 2016
GRI 419: 419-1 Non-compliance with laws and regulations in the social and economic 27
Socioeconomic area
Compliance 2016
78 79
Ernst & Young Associates LLP Tel: +91 33 6615 3400

22 Camac Street, Fax: +91 33 6615 3750
3rd Floor, Block-‘C’ ey.com
Kolkata-700016,
India
Independent Assurance Statement

Our Independence and Quality Control
The Management and Board of Directors

We have maintained our independence and confirm that we have met the requirements of the Code
VST Industries Limited
of Ethics for Professional Accountants issued by the International Ethics Standards Board for
1-7-1063/1065, Azamabad
Hyderabad- 500020 Accountants and have the required competencies and experience to conduct this assurance
Telangana, India engagement.
Scope EY also applies International Standard on Quality Control 1, Quality Control for Firms that Perform
Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements,
and accordingly maintains a comprehensive system of quality control including documented policies
We have been engaged by VST Industries Limited (hereafter “VST”) to perform a ‘limited assurance and procedures regarding compliance with ethical requirements, professional standards, and
engagement,’ as defined by International Standards on Assurance Engagements, hereafter referred to applicable legal and regulatory requirements.
as the engagement, to report on VST’s ESG performance as included in their ESG Report FY 2021-22
(the “Subject Matter”) for the period 1st April 2021 to 31st March 2022. Description of procedures performed
Other than as described in the preceding paragraph, which sets out the scope of our engagement, we Procedures performed in a limited assurance engagement vary in nature and timing from and are less
did not perform assurance procedures on the remaining information included in the Report, and in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained
accordingly, we do not express a conclusion on this information. in a limited assurance engagement is substantially lower than the assurance that would have been
obtained had a reasonable assurance engagement been performed. Our procedures were designed to
obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence
Criteria applied by VST
that would be required to provide a reasonable level of assurance.
In preparing the ESG Report FY 2021-22, VST applied the Global Reporting Initiative (GRI) Standards,
Although we considered the effectiveness of management’s internal controls when determining the
in accordance with Core Criteria. GRI Standards - Core Criteria were specifically designed for ESG
nature and extent of our procedures, our assurance engagement was not designed to provide
Report FY 2022; as a result, the subject matter information may not be suitable for another purpose.
assurance on internal controls. Our procedures did not include testing controls or performing
procedures relating to checking aggregation or calculation of data within IT systems.
VST’s responsibilities
A limited assurance engagement consists of making enquiries, primarily of persons responsible for
VST’s management is responsible for selecting the Criteria, and for presenting the ESG Report FY
preparing the ESG Report and related information and applying analytical and other appropriate
2021-22 in accordance with that Criteria, in all material respects. This responsibility includes
procedures.
establishing and maintaining internal controls, maintaining adequate records, and making estimates
relevant to the preparation of the subject matter, such that it is free from material misstatement,
whether due to fraud or error. Our procedures included:
EY’s responsibilities • Review of the standard disclosures as per GRI Standards regarding the company’s material
sustainability aspects contained in the report;
Our responsibility is to express a conclusion on the presentation of the Subject Matter based on the • Review of consistency of data / information within the report;
evidence we have obtained. • Undertake assurance review of the data and information reported in the subject matter
remotely for the following sample facilities
We conducted our engagement in accordance with the International Standard for Assurance
S.No. Facility Location
Engagements Other Than Audits or Reviews of Historical Financial Information (‘ISAE 3000’), and
1 Primary Manufacturing Division (PMD) Toopran, Telangana
the terms of reference for this engagement as agreed with VST on 6th August 2021. Those
2 Secondary Manufacturing Division (SMD) Azamabad, Telangana
standards require that we plan and perform our engagement to obtain limited assurance about
whether, in all material respects, the Subject Matter is presented in accordance with the Criteria, 3 Corporate Office Hyderabad, Telangana
and to issue a report. The nature, timing, and extent of the procedures selected depend on our
judgment, including an assessment of the risk of material misstatement, whether due to fraud or • Review and execution of an audit trail of claims and data streams, on a selective test basis,
error. to determine the level of accuracy in collection, transcription and aggregation processes
followed;
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our • Conduct interview of select representatives of Company’s management to understand the
limited assurance conclusions. current processes in place for capturing sustainability performance data as per GRI
Standards, the Company’s sustainability vision and the progress made during the reporting
period;
80 81
Page 1 of 3 Page 2 of 3
• Review of the Company's plans, policies, and practices, pertaining to their social,
environment and sustainable development, to be able to make comments on the
completeness of the reporting and degree to which EY believes the report provides a fair
and honest representation of the Company’s activities.
We also performed such other procedures as we considered necessary in the circumstances.
The assurance scope excludes:
• Data and information outside the defined reporting period-1st April 2021 to 31st March
2022;
• Data and information on economic and financial performance of the Company;
• Data, statements and claims already available in the public domain through Annual Report,
or other sources;
• The Company's statements that describe the expression of opinion, belief, inference,
aspiration, expectation, aim or future intention;
• The Company’s compliance with regulations, acts, guidelines with respect to various
regulatory agencies and other legal matters.
Conclusion
• Based on our procedures and the evidence obtained, we are not aware of any material
modifications that should be made to the ESG Report for the period of 1st April 2021 to 31st
March 2022, in order for it to be in accordance with the Criteria.
Restricted use
This report is intended solely for the information and use of VST and is not intended to be and
should not be used by anyone other than VST.
For and on behalf of Ernst & Young Associates LLP.
Saunak Saha
Partner
01 November 2022
Kolkata, India
82
Page 3 of 3
Contact Details
Mr. Phani K Mangipudi,
VP - Legal & Secretarial
Telephone: +91 040 2768 8000
Registered Address
P. O. Box No. 1804
Azamabad, Hyderabad 500020,
Telangana, INDIA.

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ES G

About this Report

future is Reporting Period and Principle

one word: the report content and ensure quality of information:

a) GRI guiding principles for defining the content: Materiality, Stakeholder

This report includes our performance on select environmental, social and

We disclose our performance on business responsibility and sustainability

Message from Message from

Notes To The Financial Statements 133

Who VST Industries Limited (formerly known as Vazir Sultan Tobacco

(GRI 102-1, 102-3, 102-4, 102-5,

of a reliable and trusted network of distributors, wholesale dealers and

06 Regional offices in Hyderabad,

New Delhi Net Revenue

Products and Brands

Our Value Chain Memberships and Associations

As a responsible corporate citizen, we are cognizant of

We firmly believe that we must demonstrate our

We believe in open and transparent

11 Energy Sustainable Operations Manufacturing Facilities & Corporate Office

Emissions Sustainable Operations Manufacturing Facilities & Corporate Office

20 13 18 Waste Management Sustainable Operations Manufacturing Facilities, Corporate Office, and

17 Biodiversity Sustainable Operations Manufacturing Facilities, Corporate Office and

Low Importance to business High

Our ESG Roadmap: Onward to 2030 Our continuous endeavours

Waste 100% of packaging to be reusable, recyclable, or biodegradable

Extended Producer Responsibility (EPR)

20% improvement in soil organic matter by 2030 through green

“We shall continue to ensure minimum legal wage is provided to farm

100% area under tobacco cultivation to be mechanized for field

Audit Risk Management Nomination and

Policies, Principles and Standards Risk Management

Corporate Social Policies at Policy for

Integrating ESG in our Tobacco Supply Chain Innovation

While product integrity is a key focus

Junior Management (Assistant

We promote an attractive value proposition by

Successor identification follows criteria based on meritocracy and the

We follow a three-pronged approach to impart our

On the job training

Some of our recent trainings are focused on

Winning Mindset Growth Orientation Enhancing Managerial Stepping into

Health and Safety

Training and Education (against the targets) on a continual basis.

Managing Compliance Safety Performance

Energy and Emissions Management

Energy consumption by source Categorisation of direct energy consumption

High speed Diesel (HSD)

16.2 4,321 Fuel substitution:

Also, going forward we plan to explore feasibility of using

Direct Energy Consumption Indirect Energy Consumption Total Energy Consumption

Our solar rooftop installation at Azamabad and Toopran

Boiler fuel conversion from HSD to PNG

• Reduced energy consumption at the DRF plant by implementing a closed-loop system

Our environmentally friendly smart factory: Toopran 22.36

IGBC green factory building rating certification

Adopting to the green factory has enhanced air quality at the

by municipal water which is used for drinking and

Effluent treatment plant at Toopran