2024-12-23 05:10:10 :
Top billionaire investor and D-Mart promoter Radhakishan Damani has opposed British American Tobacco’s (BAT) candidate for chairman of its Indian unit VST Industries Ltd, according to voting disclosures and an executive with knowledge of the development. , resulting in his rejection in a shareholder vote. .
Damani owns nearly a third of India’s third-largest cigarette maker, and his opposition marks a rare pushback from an investor who holds more than 1% of shares in 11 listed companies.
VST Industries promoter British American Tobacco (BAT), which holds 32.16 per cent stake, had first appointed its executive Naresh Kumar Sethi as a board director of the Hyderabad-based cigarette maker in November 2018. VST sought shareholder approval to re-appoint Sethi from non-executive director to executive chairman for a period of five years from November 5.
Damani, however, opposed Seti’s appointment. Of the non-institutions that hold 56.9% of VST shares, 95% voted against Sethi’s candidacy. Although the public body with a 10.9% stake secured 91% support and sponsors voted in favor of the resolution, Sethi’s appointment failed as it received only 56% of the votes cast. Special resolutions require the approval of 75% of shareholders.
Damani’s opposition to Sisi’s candidacy for chairman means VST’s largest public shareholder is at odds with BAT’s decision.
“Damani is concerned about VST’s strategy and how they intend to grow the business,” said a company executive who spoke on condition of anonymity.
Emails sent to Damani, BAT and VST Industries managing director Aditya Gooptu remained unanswered.
Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research, said: “This was a rare, if not first, instance of major shareholders opposing the resolution, ultimately leading to its defeat.” Redesignation of BAT nominees and the VST Industries board of directors was dissatisfied with the lack of transparency in the process. “
Share of BAT
As of the end of September, British American Tobacco owned 32.16% of VST Industries, with employees holding 0.19% and public investors holding 67.65%. Damani, in his personal capacity, holds 3.15% and 25.95% shares respectively through his investment company Bright Star Investments Pvt Ltd, taking his total shareholding to 29.1%.
Damani opposed an important resolution of VST Industries after selling 3.24 per cent stake in the last two years. As of September 2022, Damani owns 32.34% of the shares, exceeding promoter British American Tobacco’s shareholding in VST Industries.
VST Industries, which owns Charms brand cigarettes, reported business growth of 9.8%, ending $Operating income for FY24 was Rs 1,837.5 billion. However, its total cigarette sales fell by 3.2% from 8.25 million in 2023 to 7.98 million last year. Profit after tax fell 7.8% $327 Crores $301.6 Crores.
Tobacco industry growth
ITC’s tobacco business grew 8.5% last year $30,596.6 billion, profitability increased by 6.5% $19,089 Crores. Godfrey Phillips India Ltd, which sells cigarettes under the Four Square and Red & White brands, last year $Revenue was 48.2 billion rupees, an increase of 26.6% over the previous year $3,805 crore in FY23.
Shares of VST Industries have lagged peers and the Sensex over the past five years: they fell 12.3% between December 20, 2019 and December 20 this year. During this period, shares of diversified conglomerates ITC and Godfrey Phillips India have returned 93% and 304% respectively. The Sensex gained 87.2% during the period.
According to Mint’s review, Damani promotes and owns 74.65% of Avenue Supermart Ltd and also owns more than 1% of 11 listed companies, including 3M India Ltd, Trent Ltd, Mangalam Organics Ltd and Advani Hotels & Resorts Ltd.
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