Company Information
VST Industries Limited (the 'Company') is a public
limited Company domiciled in India with its registered
office located at 1-7-1063/1065, Azamabad, Hyderabad
- 500020. The Company is listed on the Bombay Stock
Exchange (BSE) and the National Stock Exchange (NSE).
The Company is engaged inter-alia in manufacture
and trading of Cigarettes, Tobacco and Tobacco
products.
The financial statements were authorised for issue by
the Company's Board of Directors on 16th April 2026.
Statement of Compliance
These financial statements have been prepared in
accordance with Indian Accounting Standards (Ind
AS) notified under Section 133 of the Companies Act,
2013 read with the Companies (Indian Accounting
Standards) Rules, 2015 as amendment from time to
time.
The financial statements have also been prepared
in accordance with the relevant presentation
requirements of the Companies Act, 2013.
Basis of Preparation of Financial Statements
The financial statements have been prepared on
accrual and going concern basis. The material
Accounting Policies as disclosed below are applied
consistently to all the periods presented in the
financial statements. All assets and liabilities have
been classified as current or non-current as per
the Company's normal operating cycle and other
criteria as set out in the Division II of Schedule III to
the Companies Act, 2013 as amended from time to
time. Based on the nature of products and the time
between acquisition of assets for processing and their
realisation in cash and cash equivalents, the Company
has ascertained its operating cycle as 12 months for
the purpose of current or non-current classification of
assets and liabilities.
The statement of cash flows has been prepared under
indirect method.
Basis of Measurement
These financial statements are prepared in accordance
with Indian Accounting Standards (Ind AS) under the
historical cost convention on accrual basis, except for
certain financial instruments and defined benefit plans
which are measured at fair value, as explained in the
accounting policies.
Fair Value is the price that would be received to sell
an asset or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date, regardless of whether that price
is directly observable or estimated using another
valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account
the characteristics of the asset or liability, if market
participants would take those characteristics into
account when pricing the asset or liability at the
measurement date. Fair value for measurement and
/ or disclosure purposes in these financial statements
is determined on such a basis, except leasing
transactions that are within the scope of Ind AS 116 -
Leases, and measurements that have some similarities
to fair value but are not fair value, such as net realisable
value in Ind AS 2 - Inventories or value in use in Ind AS
36 - Impairment of Assets.
Key Accountng Estimates and Judgements
The preparation of financial statements in conformity
with Ind AS requires management to make judgements,
estimates and assumptions that affect the application
of the accounting policies and the reported amounts
of assets and liabilities, disclosure of contingent assets
and liabilities as at the date of the financial statements,
and the reported amounts of revenues and expenses
for the year. The estimates and underlying assumptions
are reviewed on an ongoing basis. Actual results could
differ from those estimates.
Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision
affects only that period; they are recognised in the
period of the revision and future periods if the revision
affects both current and future periods.
Following is the information about critical judgements
in applying accounting policies, as well as estimates
and assumptions that have the most significant effect
to the carrying amounts of assets and liabilities within
the next financial year.
(a) Useful lives of property, plant and
equipment and intangible assets
As described in the material accounting policies,
the Company reviews the estimated useful lives
of property, plant and equipment, and intangible
assets at the end of each reporting period. (Refer
Note 2A)
(b) Recognition of deferred tax assets - Refer
Note 6
Deferred tax is recorded on temporary differences
between the tax bases of assets and liabilities and
their carrying amounts, at the rates that have been
enacted or substantively enacted at the reporting
date. The ultimate realisation of deferred tax
assets is dependent upon the generation of future
taxable profits during the periods in which those
temporary differences and tax loss carry-forwards
become deductible. The Company considers
expected reversal of deferred tax liabilities and
projected future taxable income in making this
assessment. The amount of deferred tax assets
considered realisable, however, could reduce in
the carry-forward period are reduced.
(c) Measurement and likelihood of occurrence
of provisions and contingencies - Refer
Note 25
As described in the material accounting policies,
the Company has ongoing litigations with various
regulatory authorities and third parties. Where an
outflow of funds is believed to be probable and a
reliable estimate of the outcome of the dispute can
be made based on management's assessment
of specific circumstances of each dispute and
relevant external advice, management accrues a
liability for its best estimate of it. Such accruals are
by nature complex and can take number of years
to resolve and can involve estimation uncertainty.
Information about such litigations is provided in
notes to the financial statements.
(d) Fair value measurements and valuation
processes
Some of the Company's assets and liabilities are
measured at fair value for financial reporting
purposes. In estimating the fair value of an
asset or a liability, the Company uses market-
observable data to the extent it is available. Where
market observable inputs are not available, the
Company engages third party valuers, where
required, to perform the valuation. Information
about the valuation techniques and inputs
used in determining the fair value of various
assets, liabilities and share based payments are
disclosed in the concerned notes to the financial
statements.
(e) Measurement of defined benefit obligations
- Refer Note 30
The determination of Company's liability towards
defined benefit obligation to employees is made
through independent actuarial valuation including
determination of amounts to be recognised in
the Statement of Profit and Loss and in other
comprehensive income.
Such valuation depends upon assumptions
determined after taking into account inflation,
seniority, promotion and other relevant factors
such as supply and demand factors in the
employment market. Information about such
valuation is provided in notes to the financial
statements.
Property, Plant and Equipment
Property, plant and equipment are stated at acquisition
or construction cost, net of accumulated depreciation
and accumulated impairment losses, if any. Upon
adoption of Ind AS, the Company had elected to
measure all its property, plant and equipment at the
Previous GAAP carrying amount as its deemed cost on
the date of transition to Ind AS i.e., 1st April 2016.
Cost is inclusive of freight, installation costs, duties
and taxes, interest on specific borrowings utilised for
financing the assets and other incidental expenses.
When parts of an item of property, plant and equipment
having significant cost have different useful lives, then
they are accounted for as separate items (major
components) of property, plant and equipment.
All upgradations / enhancements are charged off
as revenue expenditure unless they bring similar
significant future economic benefits.
An item of property, plant and equipment is de¬
recognised upon disposal or when no future economic
benefits are expected to arise from the continued use of
asset. Any gain or loss arising on retirement or disposal
of property, plant and equipment is determined as
difference between the sale proceed and the carrying
amount of the asset and is recognised in the Statement
of Profit and Loss.
Property, plant and equipment which are not ready
for intended use as on the date of Balance Sheet are
disclosed as "Capital work-in-progress".
Depreciation
Depreciation is provided for Property, Plant and
Equipment on a straight line method at the rates based
on estimated useful life of assets as prescribed under
Part C of Schedule II to the Companies Act, 2013 with the
exception of the following:
Building - 20 Years
Plant & Equipment - 5 - 20 Years
Motor Vehicles - 4 Years.
Land is not depreciated.
Based on technical evaluation, the management
believes that the useful lives as given above best
represent the period over which management expects
to use these assets. Hence, the useful lives for these
assets is different from the useful lives as prescribed
under Part C of Schedule II of the Companies Act 2013.
The residual values, useful lives and method of
depreciation of property, plant and equipment are
reviewed at each financial year-end and adjusted
prospectively, if appropriate.
Intangible Assets
Intangible assets are stated at cost less any
accumulated amortisation and accumulated
impairment losses, if any.
Computer Software (including license fee and cost
of implementation / system integration services) is
capitalised where ever it is expected to provide future
enduring economic benefits. Cost of upgradation/
enhancements is charged off as revenue expenditure
unless they bring similar significant benefits.
The useful lives of intangible assets are assessed as
either finite or infinite. Finite-life intangible assets are
amortised on a straight-line basis over the period of
their expected useful lives. Estimated useful lives by
major class of finite-life intangible assets are as follows:
Computer software - 4 years
The amortisation period and the amortisation method
for finite-life intangible assets is reviewed at each
financial year end and adjusted prospectively, where
appropriate.
The assessment of infinite life is reviewed annually to
determine whether the infinite life continues, if not, it is
impaired or changed prospectively basis such revised
estimates.
Impairment of Non-Financial Assets
Assessment for impairment is done at each Balance
Sheet date as to whether there is any indication that a
non-financial asset may be impaired.
Impairment loss, if any, is provided to the extent, the
carrying amount of non-financial assets or cash
generating units exceed their recoverable amount.
Recoverable amount is higher of an asset's or cash
generating unit's fair value less cost of disposal and
its value in use. Value in use is the net present value of
estimated future cash flows expected to arise from the
continuing use of an asset or cash generating unit and
from its disposal at the end of its useful life.
Assessment is also done at each Balance Sheet date as
to whether there is any indication that an impairment
loss recognised for an asset in prior accounting periods
may no longer exist or may have decreased. Basis the
assessment a reversal of an impairment loss of an
asset is recognised in the Statement of Profit and Loss.
Derivatives and Hedge Accounting
Derivatives are initially recognised at fair value and are
subsequently re-measured to their fair value at the end
of each reporting period.
The resulting gain / loss is recognised in the Statement
of Profit and Loss immediately unless the derivative
is designated as an effective hedging instrument, in
which event the timing of recognition in profit or loss
depends on the nature of the hedging relationship and
the nature of the hedged item.
The Company complies with the principles of hedge
accounting where derivative contracts are designated
as hedge instruments. At the inception of the hedge
relationship, the Company documents the relationship
between the hedge instrument and the hedged item
along with the risk management objectives and its
strategy for undertaking hedge transaction, which can
be a fair value hedge or a cash flow hedge.
(i) Fair value hedges
Changes in fair value of the designated portion of
derivatives / hedging instruments that qualify as
fair value hedges together with any changes in
the fair value of the hedged asset or liability that
are attributable to the hedged risk are recognised
in the Statement of Profit and Loss in the line item
relating to the hedged item.
Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies for
hedge accounting. The fair value adjustment to
the carrying amount of the hedged item arising
from the hedged risk is amortised to profit or loss
from that date.
(ii) Cash flow hedges
The effective portion of changes in the fair value
of derivatives that are designated and qualify
as cash flow hedges is recognised in the other
comprehensive income and accumulated as
'Cash Flow Hedge' in Equity. The gains / losses
relating to the ineffective portion is recognised
in the statement of profit and loss. Amounts
previously recognised and accumulated in other
comprehensive income are reclassified to profit or
loss when the hedged item affects the Statement
of Profit and Loss. However, when the hedged item
results in the recognition of a non-financial asset,
such gains / losses are transferred from equity
(but not as reclassification adjustment) and
included in the initial measurement cost of the
non-financial asset.
Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or when it no longer qualifies for
hedge accounting. Any gains/losses recognised in
other comprehensive income and accumulated
in equity at that time remains in equity and
is reclassified to statement of profit and loss
when the underlying transaction is ultimately
recognised. When an underlying transaction is
no longer expected to occur, the gains / losses
accumulated in equity is recognised immediately
in the Statement of Profit and Loss.
Foreign Currencies
The financial statements are presented in INR, the
functional currency of the Company. Items included
in the financial statements of the Company are
recorded using the currency of the primary economic
environment in which the Company operates (the
'functional currency').
Foreign currency transactions are translated into
the functional currency using exchange rates on the
date of the transaction. Foreign exchange gains and
losses from settlement of these transactions and
from translation of monetary assets and liabilities at
the exchange rate prevailing on reporting date are
recognised in the Statement of Profit and Loss.
Financial Instruments
I. Financial Assets
Financial assets are recognised when the
Company becomes a party to the contractual
provisions of the instrument. On initial recognition,
a financial asset is recognised at fair value. In case
of financial assets which are recognised at fair
value through profit and loss, its transaction cost
are recognised in the Statement of Profit and Loss.
In other cases, the transaction cost are attributed
to the acquisition value of the financial asset.
Financial assets are subsequently classified as
measured at
• amortised cost
• fair value through profit and loss ('FVTPL')
• fair value through other comprehensive
income ('FVOCI').
Financial assets are not reclassified subsequent
to their recognition, except if and in the period
the Company changes its business model for
managing financial assets.
Trade Receivables
Trade receivables are recognised initially at
transaction price and subsequently remeasured
considering provision made for doubtful
receivables as per expected credit loss method
over the life of the asset depending on the
customer ageing, customer category, specific
credit circumstances and the historical experience
of the Company.
Debt Instruments
Debt instruments are initially measured at
amortised cost, or FVTPL or FVOCI till derecognition,
on the basis of (i) the entity's business model
for managing the financial assets and (ii) the
contractual cash flow characteristics of the
financial asset.
(a) Measured at amortised cost: Financial assets
that are held within a business model whose
objective is to hold financial assets in order
to collect contractual cash flows that are
solely payment of principal and interest,
are subsequently measured at amortised
cost using the EIR method less impairment,
if any. The amortisation of EIR and loss arising
from impairment, if any is recognised in the
Statement of Profit and Loss.
(b) Measured at fair value through other
comprehensive income: Financial assets
that are held within a business model whose
objective is achieved by both, selling financial
assets and collecting contractual cash flows
that are solely payments of principal and
interest, are subsequently measured at fair
value through other comprehensive income.
Fair value movements are recognised in
the other comprehensive income (OCI).
On derecognition, cumulative gain or loss
previously recognised in OCI is reclassified
from the 'equity' to 'other income' in the
Statement of Profit and Loss.
(c) Measured at fair value through profit or loss:
A financial asset not classified as either at
amortised cost or FVOCI, is classified as FVTPL.
Such financial assets are measured at fair
value with all changes in fair value, including
interest income and dividend income if any,
recognised as 'other income' in the Statement
of Profit and Loss.
Equity Instruments
All investments in equity instruments classified
under financial assets are initially measured at
fair value, the Company may, on initial recognition,
irrevocably elect to measure the same either at
FVOCI or FVTPL. The Company makes such election
on an instrument-by-instrument basis. Fair value
changes on an equity instrument is recognised as
'Other Income' in the Statement of Profit and Loss
unless the Company has elected to measure such
instrument at FVOCI. Fair value changes excluding
dividends, on an equity instrument measured at
FVOCI is recognised in OCI. Amounts recognised
in OCI are not subsequently reclassified to the
Statement of Profit and Loss. Dividend income
on the investment in equity instruments are
recognised as 'other income' in the Statement of
Profit and Loss.
Derecognition
The Company derecognises a financial asset
when the contractual rights to the cash flows
from the financial asset expire, or it transfers the
contractual rights to receive the cash flows from
the asset. Impairment of Financial Asset
Impairment of Financial Asset
Expected credit losses are recognised for all
financial assets subsequent to initial recognition
other than financial assets in FVTPL category.
For financial assets other than trade receivables,
as per Ind AS 109, the Company recognises 12
month expected credit losses for all originated
or acquired financial assets if at the reporting
date the credit risk of the financial asset has not
increased significantly since its initial recognition.
The expected credit losses are measured as
lifetime expected credit losses if the credit risk on
financial asset increases significantly since its initial
recognition. The Company's trade receivables do
not contain significant financing component and
loss allowance on trade receivables are measured
at an amount equal to life time expected losses i.e.
expected cash shortfall.
The impairment losses and reversals are
recognised in the Statement of Profit and Loss.
II. Financial Liabilities
Initial recognition and measurement
Financial liabilities are recognised when the
Company becomes a party to the contractual
provisions of the instrument. Financial liabilities
are initially measured at the amortised cost
unless at initial recognition, they are classified as
fair value through profit and loss. In case of trade
payables, they are initially recognised at fair value
and subsequently, these liabilities are held at
amortised cost, using the EIR method.
Subsequent measurement
Financial liabilities are subsequently measured
at amortised cost using the EIR method. Financial
liabilities carried at fair value through profit or loss
are measured at fair value with all changes in fair
value recognised in the Statement of Profit and
Loss.
Derecognition
A financial liability is derecognised when the
obligation specified in the contract is discharged,
cancelled or expires.
Offsetting Financial Instrument
Financial assets and liabilities are offset and the
net amount is included in the Balance Sheet where
there is a legally enforceable right to offset the
recognised amounts and there is an intention to
settle on a net basis or realize the assets and settle
the liability simultaneously.
Inventories
Inventories are valued at the lower of cost and net
realisable value. Cost is computed on a weighted
average basis. Cost includes all costs of purchases
net of input tax credit availed, conversion costs and
other attributable expenses incurred in bringing the
inventories to their present location and condition and
includes, where applicable, appropriate overhead cost
based on normal level of activity. The net realisable
value is the estimated selling price in the ordinary
course of business less the estimated costs of
completion and estimated costs necessary to make
the sale.
Obsolete, slow moving and defective inventories are
identified from time to time and, where necessary, a
provision is made for such inventories.
Assets Held for Sale
Non-current assets or disposal groups comprising of
assets and liabilities are classified as 'held for sale'
when all of the following criteria's are met: (i) decision
has been made to sell (ii) the asset is available for
immediate sale in its present condition (iii) the asset is
being actively marketed and (iv) sale has been agreed
or is expected to be concluded within 12 months of the
Balance Sheet date. Subsequently, such non-current
assets and disposal groups classified as held for sale
are measured at the lower of its carrying value and fair
value less costs to sell.
Non-current assets held for sale are not depreciated
or amortised.
Cash and Cash Equivalents
Cash and cash equivalents are cash, balances with
bank and short-term (three months or less from the
date of acquisition), highly liquid investments that are
readily convertible into cash and which are subject to
an insignificant risk of changes in value.
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