4th richest Indian shrugs off ESG rules to own one-third in a cigarette firm

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NEW DELHI: Seasoned investor and owner of DMart chain of hypermarkets Radhakishan Damani now owns nearly one-third stake in cigarette maker .

Damani and his investment firms Bright Star Investments and Derive Trading and Resorts together held about 32.3 per cent stake in VST Industries, up 210 basis points sequentially, which at Tuesday’s market value was worth Rs 1,729 crore.

He held 30.2 per cent stake in this company as of June 30, 2021, and 26 per cent as of September 30, 2019. This is even as cigarette stocks, including VST Industries, have underperformed the market due to concerns relating to ESG (environmental, social and corporate governance).



The retailing magnate is the fourth richest Indian, with a net worth of $29.4 billion, as per Forbes.

Shares of VST Industries have fallen 7 per cent year-to-date. They have risen mere 6 per cent in the last one year and 29 per cent from April 2020 low. Yet, Damani has been raising stake in the firm over the last couple of quarters.

VST is an established player in the cigarette industry with over eight decades of operations. It is the third largest player in the Indian cigarette market, with significant presence in West Bengal, Andhra Pradesh, Telangana, Bihar and Uttar Pradesh. The cigarette maker owns brands such as Charminar, Charms, Special, Moments, Total and Editions in the 64 millimetre (mm) and 69 mm segments.

ICICIdirect in its earnings preview expects VST Industries to report a 12.1 per cent YoY rise in net profit at Rs 99.3 crore for the September quarter. It expects revenue to grow 9.3 per cent on the back of a sharp recovery in cigarettes volumes.

“We believe normalised activity after the second wave of pandemic would have resulted in strong volume recovery in cigarettes segment. Cigarettes & tobacco business sales are likely to grow 6.9 per cent and 20.3 per cent, respectively,” it said while estimating operating profit for VST Industries at Rs 130.50 crore, up 15.5 per cent.

The cigarette maker will report its quarterly earnings on September 21.

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