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A Oneindia Venture

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Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Sensex 84,929.36 +0.53%

Nifty 25,966.40 +0.58%

22k Gold ₹ 12,300 /gm

Directors Report of VST Tillers Tractors Ltd.

Mar 31, 2025

Particulars	Standalone		Consolidated
	For the F.Y 2024-25	For the F.Y 2023-24	For the F.Y 2024-25	For the F.Y 2023-24
Operating Income	99,455	96,805	99,455	96,805
Non-Operating Income	3,831	6,058	3,831	6,058
Total Income	1,03,286	1,02,863	1,03,286	1,02,863
Finance Cost	196	215	196	215
Depreciation	2,548	2,701	2,548	2,701
Total Expenses	91,091	87,302	91,091	87,302
Exceptional Item	-	-	-	-
Profit Before Tax	12,195	15,561	12,046	15,516
Tax	2,749	3,410	2,749	3,410
Profit After Tax	9,446	12,151	9,297	12,107
Other Comprehensive Income	(24)	(55)	(24)	(55)
Total Comprehensive Income	9,422	12,096	9,273	12,051
Earnings Per Share (Basic) (Amount in '')	109.33	140.64	107.60	140.13
Earnings Per Share (Diluted) (Amount in '')	109.16	140.62	107.43	140.10

The Board of Directors presents the 57^th Annual Report of the Company ("the Company" or "VST"), along with the audited
financial statements, for the financial year ended March 31, 2025. The consolidated performance of the Company and its
subsidiaries has been referred to wherever required.

FINANCIAL PERFORMANCE

The Company''s financial performance for the year ended March 31,2025, is summarized below:

FINANCIAL PERFORMANCE/ STATE OF COMPANY

AFFAIRS

Overview of Company''s Financial Performance on a

Standalone basis:

â¢ Revenue from Operations of the Company stood at
'' 99,455 Lakhs as against 96,805 Lakhs for the previous
year, registering a growth of 2.74% in the revenue.

â¢ Opr. EBITDA of the Company stood at '' 11,109 Lakhs
as against '' 12,419 Lakhs for the previous year.

â¢ Profit after Tax (PAT) of the Company stood at '' 9,446
Lakhs as against '' 12,151 Lakhs.

Overview of Company''s Financial Performance on a

Consolidated basis:

â¢ Revenue from Operations of the Company stood at
'' 99,455 Lakhs as against 96,805 Lakhs for the previous
year, registering a growth of 2.74% in the revenue.

â¢ Opr. EBITDA of the Company stood at '' 11,109 Lakhs
Lakhs as against '' 12,419 Lakhs for the previous year.

â¢ Profit after Tax (PAT) of the Company stood at '' 9,297
Lakhs as against '' 12,107 Lakhs.

The operational EBITDA has experienced a decline of
approximately ''13 crores, primarily attributable to a strategic
increase in expenditures aimed at supporting the company''s
long-term growth objectives. These additional costs were
incurred as part of our forward-looking investments in
strengthening research and development (R&D) capabilities
and scaling up our product development infrastructure.
Specifically, during the previous financial year, we undertook
significant resourcing initiatives, such as talent acquisition,
infrastructure enhancement, and technology upgrades,
intended to build a robust foundation for future operations.
While these investments have impacted short-term
profitability, they are expected to yield substantial value in
the medium to long term by accelerating innovation and
enhancing our ability to deliver differentiated products to
the market.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your Company deals with a single segment only i.e.
"Manufacturing of Agricultural Machineries".

TRANSFER TO RESERVES

During the year under review, the Company does not
propose any amount to the General Reserve. For complete
details on movement in Reserves and Surplus during the
financial year ended March 31, 2025, please refer to the
''Statement of Changes in Equity'' included in the standalone
and consolidated financial statements of this Annual Report.

DIVIDEND

Based on the Company''s performance, your directors are
pleased to recommend, for the approval of the members,
Dividend of '' 20/- per equity share of face value of ''10/-
each (i.e.200%) payable to those members whose names
appear in the Register of Members as on the Record Date.
i.e. 03^rd September 2025. The dividend payout is subject to
the approval of Members at the ensuing Annual General
Meeting (AGM).

The dividend payout for the period under review has been
formulated in accordance with shareholders'' aspirations and
the Company''s Dividend Distribution Policy to pay sustainable
dividend linked to long-term growth objectives of the
Company to be met by internal cash accruals. The Dividend
will be disbursed on or after 10^th September 2025, if
approved by the members at the 57^th AGM. The total
outflow will be around 17.28 Crores (Approx). The Dividend
Distribution Policy, in terms of Regulation 43A of the
Securities and Exchange Board of India (Listing Obligations
and Disclosure Requirements) Regulations, 2015 ("SEBI
Listing Regulations") is available on the Company''s website at
https://www.vsttractors.com/in/sites/default/files/2021-08/
Dividend Distribution Policy.pdf

QUALITY INITIATIVES

To achieve Operational Excellence, it''s essential to maintain
an ongoing focus on future preparedness. This approach not
only allows for a realistic assessment of the current state of
excellence but also offers valuable insights into what steps
are needed to align with industry leaders. Below are some
of the key Quality Achievements:

Total Quality Management:

Implemented Kaizens - 2656 No''s reported in FY25

Won award for Best Visual Category in 38^th CII Karnataka State
level Quality Circle Competition (August 2024) - Hosur Plant.

Won award " Manufacturing Excellence Category" in
Machinist Super shopfloor awards (June 2024) Organized by
Times Group - Mysuru Plant.

Won award " Machinist Super shopfloor of the Year 2024
Category" in Machinist Super shopfloor awards (June 2024)
Organized by Times Group - Mysuru Plant.

Won Gold Award in 49^th CII National level Kaizen Competition
(June 2024) - Mysuru Plant

Won award for Best Theme Category in 38^th CII Karnataka
State level Quality Circle Competition (August 2024) -
Mysuru Plant.

Won award for Best Use of Tool in 38^th CII Karnataka State
level Quality Circle Competition -(August 2024) - Hosur Plant.

Training Provided on Integrated Management system to 21
employees - Aug-2024.

QUALITY MANAGEMENT SYSTEM:

All VST Plants successfully got IMS Certification (Nov 2024)

QMS - ISO 9001:2015
EMS - ISO 14001: 2015
H&S - ISO 45001: 2018

DETAILS OF DIRECTORS AND KMP APPOINTMENT/
REAPPOINTMENT RETIREMENT OF INDEPENDENT
DIRECTORS

Mr. Moloy Kumar Bannerjee (DIN: 00219178) and
Mr. Kashinath Martu Pai (DIN: 01171860) have retired
from the position of Independent Director of the Company
effective from August 13, 2024 after completion of second
term. The Board recorded its appreciation, expressed their
gratitude and acknowledgment of their contributions to
the Company.

RE-APPOINTMENT/DIRECTOR LIABLE TO RETIRE
BY ROTATION

Mr. Arun V. Surendra (DIN: 01617103) will be liable to
retire by rotation and being eligible, offers himself for
re-appointment as per Section 152(6) of the Act at the 57^thAnnual General Meeting of the Company scheduled to be
held on September 10, 2025.

DECLARATION BY INDEPENDENT DIRECTOR

Pursuant to the provisions of Section 149 of the Act, the
Independent Directors have submitted declarations that each
of them meets the criteria of independence as provided in
Section 149(6) of the Act along with Rules framed thereunder
and Regulation 16(1)(b) of the SEBI Listing Regulations.
There has been no change in the circumstances affecting
their status as independent directors of the Company. In the
opinion of the Board, all the Independent Directors possess
integrity, expertise, and experience (including proficiency).

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Personnel (KMP)
of the Company under section 203 of the Companies'' Act,
2013, during FY 2024-25.

Mr. V.T. Ravindra : Managing Director

Mr. Antony Cherukara : Chief Executive Officer
Mr. Nitin Agrawal: Chief Financial Officer
Mr. Chinmaya Khatua : Company Secretary

SHARE CAPITAL

During the year under review there was no change in the
authorized capital of the Company. However, the subscribed
and paid-up share capital of the Company increased from
86,39,528 number of equity shares @ ''10/- per equity share
amounting to 8,63,95,280/- to 86,43,358 number of equity
shares @ ''10/- per equity share amounting to 8,64,33,580/-.

The aforementioned increase was a result of the allotment
of additional equity shares pursuant to the exercise of stock
options by eligible employees under the "VST Tillers Tractors
Limited - Restricted Stock Unit Plan 2024" ("RSU Plan" or
"the Plan").

CREDIT RATING

The Company enjoys a good reputation for its sound financial
management and the ability to meet its financial obligations.
The Company has received ICRA (AA-) (Stable)/ICRA (A1 )
ratings for its long-term and short-term banking facilities.

SHARE REGISTRAR & TRANSFER AGENT (R&T)

Integrated Registry Management Services Private Limited is
the Registrar and Transfer Agent of the Company.

CORPORATE GOVERNANCE

The Company is committed in maintaining the highest
standards of corporate governance and adherence to the
corporate governance requirements set out by the Securities
and Exchange Board of India (SEBI) and the Companies
Act, 2013. The Company strives to achieve fairness for
all stakeholders and to enhance long-term value to
Shareholders. In compliance with Regulation 34 of the SEBI
Listing Regulations, a report on Corporate Governance and
the Certificate from the Statutory Auditors of the Company
confirming compliance with the conditions of Corporate
Governance are attached to the report on Corporate
Governance which forms part of this Annual Report.
Compliance reports in respect of all laws applicable to the
Company have been reviewed by the Board of Directors.

DIRECTOR''S RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the
information and explanations obtained by us, your Directors
make the following statements in terms of Section 134(3)(c)
of the Companies Act, 2013.

(a) That in the preparation of the annual accounts for the
financial year ended March 31, 2025, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;

(b) That the directors had selected such accounting policies
and applied them consistently and made judgements
and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the
company at the end of the financial year on March 31,

2025 and of the profit and loss of the company for
that period;

(c) That proper and sufficient care had been taken for
the maintenance of adequate accounting records
in accordance with the provisions of the Act for
safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;

(d) That the annual accounts have been prepared on a
going concern basis;

(e) That the internal financial controls to be followed by the
company have been laid down and that such internal
financial controls are adequate and are operating
effectively;

(f) That proper systems to ensure compliance with the
provisions of all applicable laws have been devised
and that such systems are adequate and operating
effectively.

Based on the framework of internal financial controls and
compliance systems established and maintained by the
Company, the work performed by the internal, statutory and
secretarial auditors including the audit of internal financial
controls over financial reporting by the Internal Auditors and
the reviews performed by management and the relevant
board committees, including the audit committee, the
Board is of the opinion that the Company''s internal financial
controls were adequate and effective during FY 2024-25.

AUDITORS & AUDITOR''S REPORT

Pursuant to the provisions of Section 139 of the Act read
with rules thereunder, the shareholders of the Company
at the 53^rd Annual General Meeting ("AGM") held during FY
2020-21 had re-appointed M/s. K.S. Rao & Co, Chartered
Accountants (Firm Regd. No. 003109S), as Statutory Auditors
of the Company for a for a second term of five financial years
to hold office up to the conclusion of the 58^th Annual General
Meeting of the Company to be held in 2026.

The Auditor''s Report for the financial year ended March 31,
2025, has been issued with an unmodified opinion, by the
Statutory Auditors. The report is enclosed with the financial
statements in this integrated annual report. The auditor''s
report has no qualifications, reservation or adverse remarks
for the financial year 2024-25.

REPORTING OF FRAUD BY AUDITORS

There was no fraud reported by the auditors under section
143(12) of the Companies Act, 2013 and the rules made
thereunder.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, read with
the Companies (Cost Records and Audit) Rules, 2014 (as
amended), your Company is required to maintain the cost

records and the said cost records are required to be audited.
The Company maintains all the aforesaid cost records.
Based on the recommendation of the Audit Committee,
the Board of Directors appointed M/s. Rao, Murthy &
Associates (Firm Registration No. 00065), Practising Cost
Accountants, as Cost Auditors of the Company for FY 2024Â¬
25. The remuneration payable to the Cost Auditors for FY
2025-26 is subject to ratification by the members at the
ensuing 57^th Annual General Meeting ("AGM"), and the same
is included in the Notice convening the AGM.

INTERNAL AUDITORS

Pursuant to Section 138 of the Companies Act, 2013, and
based on the recommendation of the Audit Committee
the Board had appointed M/s. Brahmayya & Co, Chartered
Accountant (ICAI Firm Registration No: 000515S) as Internal
Auditors of the Company to conduct the internal audit of
your Company for the financial year 2024-25.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies
Act, 2013 read with Rules made there under, the Board
had appointed M/s Thirupal Gorige & Associates LLP,
Practicing Company Secretaries (FCS:6680, CP No:6424), a
peer reviewed firm, to undertake the Secretarial Audit of the
Company for the FY 2024-25. The Secretarial Audit Report
is enclosed herewith as Annexure-4 to the Board''s Report
which forms the part of this Integrated Annual Report.

In accordance with the recent amendments to the Listing
Regulations, the Board has recommended to the members
for their approval, appointment of M/s Thirupal Gorige &
Associates LLP, Practising Company Secretaries (FCS:6680,
CP No:6424), as the Secretarial Auditors of the Company,
for a term of 5 (five) consecutive financial years commencing
from the financial year 2025-26 to the financial year 2029-30.

The Secretarial Audit certificate on the implementation of
share-based scheme in accordance with SEBI (Share Based
Employee Benefits and Sweat Equity) Regulation, 2021 is
enclosed herewith as Annexure-4.

AUDITORS QUALIFICATION, RESERVATION OR
ADVERSE REMARK OR DISCLAIMER

There were no qualifications, reservations or adverse remarks
or disclaimers from Statutory Auditors & Secretarial Auditors
and the comments (if any) given by the Statutory & Secretarial
Auditors in their respective Reports. The comments, if any
given by them in the report are self-explanatory and hence,
do not call for any further explanations or comments from
the Board.

PARTICULARS OF EMPLOYEES

Disclosures concerning the remuneration of Directors, KMPs
and employees as per Section 197(12) of the Companies Act,

2013 read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014
as well as Details of employee remuneration as required
under provisions of Section 197(12) of the Companies Act,
2013 read with Rule 5(2) & 5(3) of Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014
is given in Annexure-1 to this Report. Your directors affirm
that the remuneration is as per the remuneration policy of
the Company.

CONSERVATION OF ENERGY, TECHNOLOGY
ABSORPTION AND FOREIGN EXCHANGE EARNINGS
AND OUTGO

Information under Section 134 of Companies Act, 2013 read
with rule 8 (3) of the Companies (Accounts) Rules, 2014 is
enclosed as Annexure-2.

INTERNAL FINANCIAL CONTROLS

Internal Financial Controls are an integral part of the risk
management process which in turn is a part of Corporate
Governance addressing financial reporting risks. The Company
has in place a well-defined organizational structure and
adequate internal controls for efficient operations which
are cognizant of applicable laws and regulations, and the
accurate reporting of financial transactions in the financial
statements. The Company reviews and upgrades these
systems on a continuous basis, to ensure their effectiveness.

DISCLOSURE UNDER THE SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013

In accordance with the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act,
2013, VST is committed to fostering a safe, respectful and
a harassment-free workplace environment. VST strongly
believes in gender neutrality and encourages hiring resources
from all genders, ensuring we create an environment free of
any form of discrimination and harassment.

During the financial year ended March 31,2025, there was
no complaint received for sexual harassment. Also, there
are no complaints pending at the end of the financial year.
The Company has complied with provisions relating to the
constitution of Internal Complaints Committee under the
Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.

DEPOSITS

Your Company has not accepted any deposits within the
meaning of Chapter- V of the Companies Act, 2013 and
rules made thereunder. Further, there are no deposits which
remain unpaid or unclaimed as at March 31,2025, nor has
there been any default in repayment of deposits or payment
of interest thereon during the year.

INDUSTRIAL RELATION

Throughout the year under review, the company successfully
fostered and upheld positive and collaborative industrial
relations across all its manufacturing facilities in Malur,
Hosur, and Mysore. By prioritizing open communication and
mutual respect, the company ensured a harmonious working
environment, promoting a culture of trust and cooperation
between management and employees. This commitment to
strong industrial relations played a key role in maintaining
smooth operations and productivity at each of these locations.

As of March 31,2025, the company employed a total of 809
permanent staff across all manufacturing locations.

SAFETY, HEALTH AND ENVIRONMENT

The organization places the highest priority on ensuring a
safe, healthy, and environmentally responsible workplace.
Our Safety, Health and Environment management system
is designed to comply with statutory requirements, industry
best practices, and the principles of sustainable development.

Safety: Comprehensive safety procedures are implemented
across all operations, supported by risk assessments, work
permit systems, and regular safety audits. Employees are
trained through periodic safety drills, toolbox talks, and
hazard awareness programs to foster a strong safety culture.

Health: Occupational health programs focus on preventive
healthcare, periodic medical examinations, and ergonomics
to safeguard employee well-being. First-aid facilities,
emergency response teams, and health awareness initiatives
are maintained on-site.

Environment: The company actively monitors and
minimizes environmental impacts through waste reduction,
pollution control measures, and efficient resource utilization.
Initiatives include emission monitoring, water conservation,
and adherence to environmental regulations.

Ensure contribution to the environment with plantation drive
across the units and planting more than 400 saplings, and
providing a sapling during a employee birthday

INFORMATION TECHNOLOGY

Your company ensures that digital advancements are
harnessed effectively to boost sales and reduce costs, all
within a controlled, secure, and compliant environment.
By adopting the most advanced Theory of Constraints
(TOC) methodologies for Supply Chain Management, the
organization achieves seamless integration between ERP
(SAP S/4HANA), Supplier Relationship Management (SRM),
and Dealer Management System (DMS). This integration
ensures a precise balance between demand and supply,
significantly improving overall operational efficiency.

The company operates a fully functional ERP - SAP S/4HANA,
ensuring data integrity, operational stability, and protection
of critical business information through advanced security

protocols. Supporting this core system are various specialized
platforms, including the Digital Approval System, Travel
Management System, Dealer Management System, Supplier
Relationship Management System, Sales Capability Building
System, Dealer Scouting & Onboarding System, and Quality
Management System.

The infrastructure is robust and secure, with multi-layer
cybersecurity measures and servers hosted across multiple
environments: on-premises, at external data centres, and in
multiple cloud platformsâensuring flexibility, reliability, and
scalability while safeguarding business operations.

BOARD MEETING

The company has conducted 4 meetings of the Board of
Directors during this financial year. For further details,
please refer to the section on Corporate Governance in this
Annual Report.

DISCLOSURE OF RELATIONSHIPS BETWEEN
DIRECTORS

Mr. V.V. Pravindra, Mr. V.T. Ravindra and Mr. Arun V.
Surendra belong to the promoters'' family. Apart from the
promoter directors, none of the other Directors are related
to each other.

DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declarations from all the
Independent Directors of the Company confirming that
they meet the criteria of independence as prescribed under
Section 149(6) of the Act read with Rule 5 of the (Appointment
and Qualification of Directors) Rules, 2014 and Regulation
16(1)(b) of the SEBI Listing Regulations.

In terms of the requirements under the SEBI Listing
Regulations, the Board has identified list of key skills,
expertise and core competencies of the Board, including
the Independent Directors, details of which are provided
in the Corporate Governance Report forming part of this
Annual Report.

In the opinion of the Board, all the Independent Directors of
the Company satisfy the criteria of independence as defined
under the Act, rules framed thereunder and the SEBI Listing
Regulations, and they are independent of the Management
of the Company.

COMMITTEES

The Board of Directors of Company have formed various
Committees, as per the provisions of the Companies Act,
2013 and as per SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 and as a part of the best
corporate governance practices, the terms of reference
and the constitution of these Committees is in compliance
with the applicable laws and to ensure focused attention
on business and for better governance and accountability.
The Committees constituted are as below:

a) Audit Committee; b) Nomination, Compensation anc
Remuneration Committee; c) Stakeholders Relationship
Committee; d) Corporate Social Responsibility Committee,
and e) Risk Management Committee. Details of the
composition, terms of reference, and meetings of these
Committees are provided in the Corporate Governance
Report, which forms part of this Annual Report.

AUDIT COMMITTEE

The Members of the Audit Committee possess accounting
and/or financial management knowledge and expertise
The Company Secretary of the Company is the Secretary ol
the Committee. In pursuance of the SEBI Listing Regulations
members of the audit committee who are Independent
Directors shall approve the related party transactions
Details of the composition, roles and responsibilities
particulars of meeting and attendance thereat are mentioned
in the Corporate Governance Report.

NOMINATION COMPENSATION AND
REMUNERATION COMMITTEE

The Nomination and Remuneration Policy, inter-alia
provides for criteria and qualifications for appointments o
Director, Key Managerial Personnel and Senior Management
Board diversity, remuneration to Directors, Key Manageria
Personnel, etc. The policy can be accessed at the following link
https://www.vsttractors.com/in/sites/default/files/2019-04/
Nomination Renumeration policy.pdf. For more details or
the committee, please refer to the report on Corporate
Governance.

VIGIL MECHANISM CUM-WHISTLE BLOWER POLICY

The Company has formulated the Whistleblower Policy ir
line with the mandated regulatory requirements of Section
177(9) of the Companies Act, 2013 and Regulation 22 ol
Listing Regulations, which mandates listed companies tc
establish a "vigil mechanism" for reporting genuine concerns
The forum is predominantly for the receipt, retention and
treatment of complaints regarding matters of probable
discrepancies in accounting, internal accounting controls
or auditing, irregularities etc. The policy is available on the
website of the Company at the link https://www.vsttractors
com/in/wp-content/uploads/2025/04/VIGIL MECHANISM
WHISTLE BLOWER POLICY.pdf

The Company has in place robust measures to safeguard
whistle blowers against victimization. Directors anc
employees are duly sensitized about mechanisms and
guidelines for direct access to the Chairman of the Audi
Committee, in appropriate cases. Further, during FY 2024-25
the company has not received any complaints.

LOANS, GUARANTEE & INVESTMENT

The Company has made investment during the FY 2024-25
The investment details form part of the notes to the financia
statements provided in this Annual Report. The company has
not given any Loan or Guarantee during FY 2024-25.

RELATED PARTY TRANSACTIONS

We ensure that all the transactions that are entered into with
related parties during the financial year meets the criteria of
an arm''s length price basis. There are no materially significant
related party transactions made by the company with
Promoters, Directors, Key Managerial Personnel or other
designated persons which may have a potential conflict with
the interests of the Company at large.

All Related Party Transactions were placed before the
Audit Committee and Board for approval. Prior omnibus
approval of the Audit Committee was obtained for the
transactions which are of a foreseen and repetitive nature.
The transactions entered into pursuant to the omnibus
approval so granted were audited and a statement giving
details of all related party transactions were placed before
the Audit Committee and the Board of Directors for their
information and approval.

The Related Party Transaction details including the
transaction(s) of the Company if any, with a person/entity
belonging to the promoter/promoter group which hold(s)
more than 10% shareholding in the Company as required
pursuant to para A of Schedule V of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations,
2015 forms part of the notes to the financial statements
provided in this Annual Report. Please refer to the details in
Annexure -5 for AOC-2 Form.

RELATED PARTY TRANSACTIONS POLICY

The policy on dealing with Related Party Transactions
as approved by the Board can be accessed at https://
www.vsttractors.com/in/wp-content/uploads/2025/06/
Policy-on-Related-Party-Transactions-new.pdf

MATERIAL CHANGES AND COMMITMENTS
AFFECTING THE FINANCIAL POSITION

There are no material changes affecting the financial position
of the Company subsequent to the closure of FY25 till the
date of this report.

RISK MANAGEMENT

The Board of Directors of the Company has a Risk
Management Committee to frame, implement and
monitor the risk management plan for the Company.
The Committee is responsible for monitoring and reviewing
the risk management plan and ensuring its effectiveness.
The Audit Committee has additional oversight in the area
of financial risks and controls. The major risks identified by
the businesses and functions are systematically addressed
through mitigating actions on a continuing basis.

The Company has a robust framework in place to effectively
manage risks. The Risk Management Committee, which
is constituted by the Board, is responsible for overseeing
the Risk Management Framework. The Framework covers
the Company''s risk appetite statement, risk limits, risk

VARIATION IN MARKET CAPITALISATION

Date	Paid-up Capital (in '')	Closing Market Price per shares	EPS	PE Ratio	Market Capitalization (in Crores)
31.03.2024	8,63,95,280	3,248.90	140.64	23.09	2806.09
31.03.2025	8,64,33,580	3879.00	109.33	35.47	3836.61
Increase/Decrease	38,300	630.10	(31.31)	12.38	1030.52
% Increase/Decrease	0.004	19.39	(22.27)	53.61	36.72
No issue of shares during the year (Due to allotment of ESOP)	1	-	-	-	-

ANNUAL RETURN

The draft Annual Return for FY 2024-25 is available on the
Company''s website i.e. https://www.vsttractors.com/in/
investor/disclosure/?tab=v-pills-disclosure14-tab

LISTING ON STOCK EXCHANGE

The Company''s shares are listed at BSE & NSE.

SECRETARIAL STANDARDS

The Company has complied with Secretarial Standards
issued by the ICSI on Meetings of the Board of Directors,
General Meetings, and voluntarily the Secretarial Standards
on Dividend and Report of the Board of Directors issued by
the Institute of Company Secretaries of India (ICSI).

dashboards, and early warning signals. The risk management
framework works at various levels across the enterprise.
These levels form the strategic defense cover of the
Company''s risk management. The Company has adopted a
Risk Management Policy in accordance with the provisions
of the Act and Regulation 21 of the Listing Regulations.
The policy is available on the website of the Company at
https://www.vsttractors.com/in/sites/default/files/2021-08/
RISK MANAGEMENT FRAMEWORK.pdf

The Risk Management Committee has been entrusted with
the responsibility to assist the Board in (a) Overseeing and
approving the Company''s enterprise wide risk management
framework; and (b) Overseeing that all the risks that the
organization faces such as strategic, financial, credit, market,
liquidity, security, IT, legal and other risks have been identified
and assessed and there is an adequate risk management
infrastructure in place capable of addressing those risks.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

During the year, the Company undertook various Corporate
Social Responsibility (CSR) initiatives with a focus on promoting
education, supporting the fight against cancer addressing
mental health issues such as stress, anxiety, and depression,
empowering individuals with disabilities, facilitating the
rehabilitation of the visually impaired, advancing wildlife
conservation and fostering skill development.

The Company has formed CSR policy and CSR Committee as
required by the Act and the details of the same are available
on the Company website i.e. https://www.vsttractors.com/in/
wp-content/uploads/2025/04/CSR POLICY.pdf.

During FY 2024-25 the Company has spent '' 2,21,84,543/-
for towards CSR activities. The prescribed particulars,
including details of the amount spent, unspent (if any), and
related explanations, are provided in Annexure-3 to this
Board''s Report, prepared in the format prescribed under
the Companies (CSR Policy) Rules, 2014.

EVALUATION OF BOARD PERFORMANCE

In accordance with the provisions of Section 134(3)(p) and
Section 178(2) of the Companies Act, 2013, and Regulation
17(10) of the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015 ("SEBI Listing Regulations"),
the Board of Directors carried out an annual evaluation of
its own performance, board committees, chairman and,
individual directors. The evaluation process was facilitated by
the Nomination, Compensation & Remuneration Committee,
which laid down the evaluation criteria in line with the
requirements prescribed under Schedule II, Part D of the
SEBI Listing Regulations. The process was conducted through
a structured peer-evaluation methodology, excluding the
Director being evaluated.

As part of the process, The Board evaluated the performance
of its committees and individual Directors.

The Independent Directors have evaluated the performance
of the Non-Independent Directors, the Board as a whole, and
the Chairman, taking into account the views of the Executive
and Non-Executive Directors.

The evaluation was conducted as per the established
procedure of the Company, and further details are provided
in the Corporate Governance Report forming part of this
Annual Report

CHANGE IN THE NATURE OF BUSINESS

There is no change in the nature of business of the Company.

DETAILS OF SUBSIDIARY, ASSOCIATE, OR JOINT
VENTURE COMPANY.

The Company established a Joint Venture Cum Subsidiary
Company in the name of VST ZETOR PRIVATE LIMITED
and also incorporated a Wholly Owned Subsidiary in the
name of VST Americas Inc and stepped down subsidiary
named as VST FIELDTRAC LLC in the United States.
There is no material change in the nature of the business
of the subsidiaries. Pursuant to the provisions of Section
129(3) of the Act, a statement containing the salient features
of financial statements of the Company''s subsidiaries in
Form No. AOC-1 is attached to the financial statements of
the Company as Annexure-7. The Subsidiary Company has
a turnover of '' 1,784.55 Lakhs for FY 2024-25. We expect
performance will improve during the current financial
year. The complete financial of the subsidiary Company
is available at https://www.vsttractors.com/in/investor/
financials/?tab=vst-tab-btn-5

SIGNIFICANT AND MATERIAL ORDERS

There is no significant material orders passed by any
Regulators/Courts which would impact on the going-concern
status of the Company and its future operations.

EMPLOYEE STOCK OPTIONS / RESTRICTED STOCK
UNITS (RSUS)

The Company grants share-based benefits to eligible
employees with a view to retaining talent, have long term
commitment and association of employees for sustained
growth, development and long-term interest of the Company.
The complete ESOP- Restricted Stock Unit Plan 2024 of the
Company is available at https://www.vsttractors.com/in/
wp-content/uploads/2024/08/ESOP-PLAN.pdf.

The 1^st tranche of the options (25%) was vested on
26^th February 2025 and the same has been exercised by the
following grantees on 03^rd March 2025 by submitting the
exercise application to the company along with application
money, for the allotment of shares pursuant to the
vested RSUs:

Sr. No.	Name of Employee	Designation	No of equity shares allotted
1	Antony Cherukara	KMP-CEO	1500
2	Nitin Agrawal	KMP-CFO	810
3	Kodiganti Bheem Reddy VP		800
4	Krishan Kumar Tiwari	VP	720
Tota			3,830

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING

A Business Responsibility and Sustainability Report ("BRSR")
describing the initiatives taken by the Company from an
environment, social and governance perspective, as required
in terms of the provisions of Regulation 34 (2) (f) of SEBI
Regulations, 2015, separately forms a part of the Annual
Report of the Company.

PREVENTION OF INSIDER TRADING

The Company has adopted a Code of Conduct to Regulate,
Monitor and Report Trading by Designated Persons and Code
of practices & procedures for fair disclosure of Unpublished
Price Sensitive Information, for Prevention of Insider Trading,
in accordance with the requirements of Securities and
Exchange Board of India (Prohibition of Insider Trading)
Regulations 2015, as amended from time to time.

The Company Secretary is the Compliance Officer
for monitoring adherence to the said Regulations.
The Code is displayed on the Company''s website at https://
www.vsttractors.com/in/sites/default/files/policies/VTTL
code conduct board sr mgmt.pdf

DISCLOSURE OF CERTAIN TYPE OF AGREEMENTS
BINDING LISTED ENTITY

Pursuant to Regulation 30A(2) of SEBI Listing Regulations
there are no agreements entered into by the Company
which, either directly or indirectly impact on the management
or control of the Company or imposing any restrictions or
creating any liability upon the Company.

INVESTOR EDUCATION AND PROTECTION FUND

During the FY 2024-25, the Company has transfered
'' 9,96,885/- unpaid and unclaimed dividend to Investor
Education and Protection Fund (IEPF) and further transferred
7,408 Nos of shares to IEPF Authority as per IEPF Rules
during the FY 2024-25. As per the said rule, any benefits
such as dividend shall be transferred to IEPF with respect
to shares transferred to IEPF and accordingly the dividend
of the corresponding shares transferred to IEPF, has also
been transferred to IEPF. The details of such Dividends and
shares are available on the Company''s website at https://
www.vsttractors.com/in/investor/disclosure/?tab=v-pills-
disclosure5-tab. Mr. Chinmaya Khatua has been appointed
as nodal officer under IEPF Rule.

The details of unclaimed dividends & shares summary as on 31/03/2025 are given below:

Sl. Nos.	Years	Total No. of Shareholders	Unclaimed Dividend Amount (In '')	No. of Corresponding Shares	Due Date of Transfer To IEPF
1	2017-18 FINAL	257	2000700.00	40014	11-10-2025
2	2018-19 FINAL	253	584460.00	38964	10-10-2026
3	2019-20 INTERIM	283	605580.00	40372	21-05-2027
4	2020-21 FINAL	243	615975.00	35739	28-10-2028
5	2021-22 FINAL	209	531605.00	31162	21-10-2029
6	2022-23 FINAL	230	622776.00	29319	10-11-2030
7	2023-24 FINAL	392	1100751.00	63712	21-10-2031

DETAILS OF NODAL OFFICER:

Name: Mr. Chinmaya Khatua [Company Secretary &
Compliance Officer]

Email: investors@vsttractors.com
Phone: 080-67141111

CAUTIONARY STATEMENT

Statements in the Board''s Report and the Management
Discussion & Analysis Report describing the Company''s
objectives, expectations or forecasts may be forward-looking
within the meaning of applicable laws and regulations.
Actual results may differ from those expressed in the
statements.

OTHER DISCLOSURE
MATERNITY BENEFITS

We are committed to supporting our women employees
throughout their motherhood journey by offering maternity
leave in accordance with the Maternity Benefit Act.
Our comprehensive wellness framework includes health
awareness sessions, medical insurance coverage, creche
facilities, etc. These initiatives are designed to help women
balance their personal and professional responsibilities
more effectively and with greater comfort.

HEALTH AND LIFE INSURANCE

Employees are provided with health, accident, and term life
insurance coverage, ensuring access to quality medical care
when needed and offering a sense of security and peace of
mind during challenging times.

AFFIRMATIONS

a. The details of the difference between the amount of the
valuation done at the time of one-time settlement and
the valuation done while taking loans from the Banks or
Financial Institutions along with the reasons thereof: Nil

b. There were no proceedings either filed by or against the
Company pending under the Insolvency and Bankruptcy
Code, 2016 before the NCLT or any other Court.

ACKNOWLEDGEMENTS

The directors would like to extend their sincere gratitude
towards customers, vendors, dealers, investors, business
associates and bankers for their continued support during
the year. We take the opportunity to express our sincere
appreciation for the contribution made by the employees at
all levels. Our resilience to meet challenges and the consistent
growth of the Company was made possible by their hard
work, solidarity, co-operation, and support. Your directors
would like to express their sincere appreciation of the positive
co-operation received from the government agencies for
their support and look forward to their continued support
in the future.

The Board also takes this opportunity to express its deep
gratitude for the continued co-operation and support
received from its valued shareholders.

For V.S.T. TILLERS TRACTORS LTD.

Arun V. Surendra

Date: August 11,2025 Chairman

Place: Bengaluru DIN: 01617103

Mar 31, 2024

The Board of Directors hereby submits the 56^th Annual Report of your Company ("the Company" or "VST"), along with the audited financial statements, for the financial year ended March 31, 2024. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

Amount ('' in Lakhs)

FINANCIAL PERFORMANCE

Particulars	Standalone		Consolidated
	For the	For the	For the	For the
	F.Y 2023-24	F.Y 2022-23	F.Y 2023-24	F.Y 2022-23
Operating Income	96,805	1,00,643	96,805	1,00,643
Non-Operating Income	6,058	2,495	6,058	2,495
Total Income	1,02,863	1,03,138	1,02,863	1,03,138
Finance Cost	215	127	215	127
Depreciation	2,701	2,694	2,701	2,694
Total Expenses	87,302	90,743	87,302	90,743
Exceptional Item	-	-	-	-
Profit Before Tax	15,561	12,394	15,516	12,394
Tax	3,410	3,158	3,410	3,158
Profit After Tax	12,151	9,236	12,106	9,236
Other Comprehensive Income	(55)	(16)	(55)	(16)
Total Comprehensive Income	12,096	9,220	12,051	9,220
Earnings Per Share (Basic ) (Amount in '')	140.64	106.90	140.13	106.90
Earnings Per Share (Diluted) (Amount in '')	140.62	106.90	139.83	106.90

FINANCIAL PERFORMANCE/ STATE OF COMPANY AFFAIRS

The brief highlights of the Company''s performance for the financial year (''FY'') ended March 31,2024, are:

During the year under review i.e. FY 2023-24, your Company''s Operating income is '' 96,805 lakhs as against '' 100,643 lakhs in the previous FY 2022-23.

Profit Before Tax (PBT) for FY 2023-24 is '' 15,561 lakhs as against '' 12,394 lakhs in the previous FY 2022-23.

Profit after Tax (PAT) for FY 2023-24 is '' 12,151 lakhs as against '' 9,236 lakhs in the previous FY 2022-23.

With respect to volumes, your Company has sold 36,480 Nos of Power tillers against the previous year of 38,247 Nos and on tractors, 5,388 Nos against the previous year of 6,875 Nos of tractors.

Despite challenging market conditions, your Company''s Compact Tractor market share stood at ~10% and power tiller market share at 70% in FY24.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your Company deals with a single segment only i.e. "Manufacturing of Agricultural Machineries".

DIVIDEND

Based on the Company''s performance, your directors are pleased to recommend, for the approval of the members, Dividend of '' 20 /- per equity share of face value of ''10 each (i.e. @ 200%) payable to those members whose names appear in the Register of Members as on the Record Date. i.e. September 12, 2024

The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).

QUALITY INITIATIVES

For Operational Excellence, it is necessary to be continually introspective of readiness into the future. It not only helps benchmark an existing state of excellence in a realistic way but also provides seasoned advisory on what needs to be done for emulating the best in the industry. Few of the Quality Initiatives are given below:

IMexI 2023-24 Assessment (Integrated Manufacturing Excellence)

â¢ 3-day Assessment conducted by Kaizen Hansei team for both Hosur & Malur Plant

â¢ Received IMexI Commitment Silver Medallion Award for both Hosur & Malur Plant

â¢ Based on Assessment Identified the Improvement Areas for Operation related 20 Projects in Hosur & 13 Projects in Malur for Excellence Initiatives.

Total Quality Management

â¢ Implemented Kaizens - 2845 Nos reported in FY24

â¢ Training for Capability building of the people with respect to their roles

â¢ Participate the ExternalQCC Competition 37^th CII Karnataka Region - Won the Best Tool Category in Hosur Plant, Special Award in Malur Plant & Best Theme in Mysuru Plant.

â¢ Mysuru Plant participated in QCFI competition & won the Gold Award.

Quality Management System

â¢ Kick off the Integrated Management System -

Implementation in all ''3'' Manufacturing Plant & HO IMS - ISO 9001, ISO 14001 & ISO 45001

â¢ The Company successfully completed 2^nd annual Surveillance audit and retained the ISO certification for All ''3'' Plants QMS - ISO 9001:2015

â¢ The Company successfully completed Re-Certification audit and received the ISO certification for EMS & Safety in Hosur Plant - ISO14001:2015 & ISO 45001:2018

DETAILS OF DIRECTORS AND KMP APPOINTMENT/ REAPPOINTMENT

â¢ Mr. Rajen Krishnanand Padukone (DIN:00262729) has been appointed as Independent Director of the Company for 5 consecutive years effective from May 04, 2023 through postal ballot and he is not liable to retire by rotation.

â¢ Mr. Ajith Kumar Rai (DIN: 01160327) has been appointed as Independent Director of the Company for 5 consecutive years effective from November 07, 2023 through postal ballot and he is not liable to retire by rotation.

â¢ Mr. V.T. Ravindra (DIN: 00396156) has been reappointed as the Managing Director of the Company for a period of 3 years effective from April 01, 2024 through postal ballot on January 21, 2024, liable to retire by rotation. Further he will be liable to retire by rotation and being eligible, offers himself for re appointment at the 56^th Annual General Meeting of the Company scheduled to be held on September 19, 2024

â¢ Mr. V.K Surendra (DIN:00459069) resigned from the position of Chairman and Non-Executive Director of the Company effective from February 01,2024, allowing the Company to continue its journey under new leadership.

â¢ Mr. Arun V. Surendra (DIN:01617103), was appointed as the new Chairman of the Company. He will continue as Non-Executive Director of the company.

â¢ Mr. Nitin Agrawal has been appointed as Chief Financial Officer of the Company w.e.f. May 12, 2023.

In the opinion of the Board, all the Independent Directors possess integrity, expertise, and experience (including the proficiency).

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Personnel (KMP) of the Company under section 203 of the Companies'' Act, 2013, during the FY 2023-24.

Mr. V.T Ravindra	: Managing Director
Mr. Antony Cherukara	: Chief Executive Officer
Mr. Nitin Agrawal	: Chief Financial Officer
Mr. Chinmaya Khatua	: Company Secretary

Mr. Pankaj Khemka had resigned from the post of CFO w.e.f. April 03, 2023

CORPORATE GOVERNANCE

Your Company believes that strong corporate governance is criticalto enhancing and retaining investor trust. Your Company also endeavors to enhance long-term shareholder value and respect minority rights in all its business decisions. Corporate Governance is about maximizing shareholders value, ethically and sustainably. Your Company reaffirms its commitment to good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policies with all its requisite standards. Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided in this Report. A report of the Statutory Auditors

of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report.

Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.

DIRECTOR''S RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013.

(a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) That the directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year on March 31, 2024 and of the profit and loss of the company for that period;

(c) That proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) That the annual accounts have been prepared on a going concern basis;

(e) That the internal financial controls to be followed by the company have been laid down and that such internal financial controls are adequate and are operating effectively;

(f) That proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and operating effectively.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors including the audit of internal financial controls over financial reporting by the Internal Auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2023-24.

AUDITORS

Pursuant to the provisions of Section 139 of the Act read with rules thereunder, the shareholders of the Company at the 53^rd Annual General Meeting ("AGM") held during FY 2020-21 had re-appointed M/s. K.S. Rao & Co, Chartered Accountants (Firm Regd. No. 003109S), as Statutory Auditors of the Company for a for a second term of five financial years effective from the FY 2021-22.

COST AUDITORS

Pursuant to Section 148 of the Companies Act, read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), your Company is required to maintain the cost records and the said cost records are required to be audited. The Company is maintaining all the aforesaid cost records. M/s. Rao, Murthy & Associates (Firm Registration No: 00065), Practicing Cost Accountants were appointed as Cost Auditors of the Company for FY25 by the Board on the recommendations of Audit Committee. The remuneration payable to the Cost Auditor is subject to ratification of members at the ensuing AGM and the same is included in 56^th AGM Notice.

INTERNAL AUDITORS

Pursuant to Section 138 of Companies Act, your directors, on the recommendation of the Audit Committee had appointed M/s. Brahmayya & Co, Chartered Accountant as Internal Auditors for the FY 2023-24.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with Rules made there under, the Board had appointed M/s Thirupal Gorige & Associates LLP, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the FY 2023-24. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure 1 and forms part of this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 134 of Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-2.

DEPOSITS

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Act, 2013 and rules made thereunder.

INDUSTRIAL RELATION

Our manufacturing facilities in Mysore, Malur, and Hosur all maintained positive industrial relations throughout the year under review.

â¢ Malur Plant: Successfully negotiated and settled annual increments and bonuses with employees.

â¢ Hosur Plant: Achieved a negotiated settlement on bonuses with employees.

â¢ Mysore Plant: Delivered annual increments and bonuses as per the established agreement.

As of March 31,2024, the company employed a total of 755 permanent staff across all manufacturing locations.

SAFETY, HEALTH AND ENVIRONMENT

VST considers its people as the most valuable assets and upholding their mental and physical health as a top priority. Your Company is a safe workplace and the Safety & Health of our employees, as per the requirement of the Factories Act are ensured to the best of our efforts. Our motto is "Zero Accident". Our commitment is to protect the environment as per the policy.

At each Plant location, annual events like National Safety Day/Month and Fire Service Week were organized. As per new norms, various topics and projects were undertaken to train employees on Safety, Health and Environment.

The following are some of the key initiatives undertaken during FY 2023-24:

â¢ Creation and Drive on Safety Culture and employee awareness/engagement program.

â¢ Emergency Preparedness and Response - Creating of team and imparting of training.

â¢ Implementation of Sustainability Practice by reducing water waste.

INFORMATION TECHNOLOGY

Your company ensures that digitaladvancements are utilized effectively to improve Sales and Reduce Costs in a controlled and safe environment.

Your company follows the most advanced TOC (Theory of Constraints) for effective Supply Chain Management and has seamless integration between ERP (SAP S4 Hana), Supplier Relationship Management (SRM) and Dealer Management System (DMS). This ensures that the Demand and Supply are balanced, thereby improving the overall efficiency in the system.

Your company has a fully functional ERP - SAP S4 Hana which ensures data integrity and functional stability. To support it there are other functional systems - Digital Approval System, Travel Management System, Dealer Management System, Supplier Relationship Management System, Sales Capability Building System, Dealer Scouting & Onboarding System and Quality Management System.

The infrastructure is strong with Servers hosted on premises, at an external data center and multiple clouds.

BOARD MEETING

The company has conducted 7 meetings of the Board of Directors during this financial year. For further details, please refer to the section on Corporate Governance in this Annual Report.

DISCLOSURE OF RELATIONSHIPS BETWEEN DIRECTORS

Mr. V.V. Pravindra, Mr. V.T. Ravindra and Mr. Arun V. Surendra belong to the promoters'' family. Apart from the promoter directors, none of the other Directors are related to each other.

DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declarations from all Independent Directors of the Company that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulations 16 and 25 of SEBI Listing Regulations and there has been no change in the circumstances affecting their status as Independent Directors of the Company. The Company has also received a declaration from all the Independent Directors that they have registered their names in the Independent Director data bank and have passed/ are exempt from the requisite proficiency test conducted by Ministry of Corporate Affairs. or same will be completed with in the due date as may be prescribed by MCA.

The respective second term of Mr. K.M Pai (DIN: 01171860) and Mr. M.K. Bannerjee (DIN: 00219178) as Independent Directors of the Company is set to expire on August 13, 2024.

The Board places on record its appreciation for the valuable contribution made by Mr. M.K. Bannerjee & Mr. K.M. Pai during their tenure as Directors of the Company.

During the FY 2023-24, in compliance with the provisions of Schedule IV to the Companies'' Act 2013, a separate meeting, exclusively of the Independent Directors was held on March 14, 2024, without the participation of nonindependent Directors or members of the management.

COMMITTEES

Our Board has established 5 committees as per the statutory requirements of SEBI(LODR) & Companies Act

2013 i.e. Audit Committee, Corporate Social Responsibility Committee, Nomination Compensation & Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. We place all minutes of Committees meetings before the Board of Directors. Details of these Committees may be found in the Report on Corporate Governance forming part of the Directors'' Report.

VIGIL MECHANISM CUM-WHISTLE BLOWER POLICY

The Company has formulated the Whistleblower Policy in line with the mandated regulatory requirements of Section 177(9) of the Companies Act, 2013 and Regulation 22 of Listing Regulations, which mandates listed companies to establish a "vigil mechanism" for reporting genuine concerns. The forum is predominantly for the receipt, retention and treatment of complaints regarding matters of probable discrepancies in accounting, internal accounting controls or auditing, irregularities etc. The policy is available on the website of the Company at the link https://www.vsttractors. com/investor/disclosure/?tab=v-pills-disclosure9-tab.

The Company has in place robust measures to safeguard whistle blowers against victimization. Directors and employees are duly sensitized about mechanisms and guidelines for direct access to the Chairman of the Audit Committee, in appropriate cases. Further, during the FY 2023-24, the company has not received any complaints.

AUDITORS QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER

There was no qualification, reservation or adverse remark or disclaimer from Statutory & Secretarial Auditors and the comments (if any) given by the Statutory & Secretarial Auditors in their respective Reports are self-explanatory and hence, do not call for any further explanations or comments from the Board.

There was no fraud reported by the auditors under section 143(12) of the Companies Act, 2013 and the rules made thereunder.

LOANS, GUARANTEE & INVESTMENT

The Company has made investment during the FY 202324. The investments details forms part of the notes to the financial statements provided in this Annual Report. The company has not given any Loan or Guarantee during the FY 2023-24.

RELATED PARTY TRANSACTIONS

We ensure that all the transactions that are entered into with related parties during the financial year meets the criteria of an arm''s length price basis. There are no materially significant related party transactions made by the company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interests of the Company at large.

All Related Party Transactions were placed before the Audit Committee and before the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were audited and a statement giving details of all related party transactions were placed before the Audit Committee and the Board of Directors for their information and approval. The policy on dealing with Related Party Transactions as approved by the Board can be accessed at https://www.vsttractors.com/ investor/disclosure/?tab=v-pills-disclosure9-tab The Related Party Transaction details including the transaction(s) of the Company if any, with a person/entity belonging to the promoter/promoter group which hold(s) more than 10% shareholding in the Company as required pursuant to para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the notes to the financial statements provided in this Annual Report. Please refer to the details in Annexure -5 for AOC-2 Form.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

There are no materialchanges affecting the financial position of the Company subsequent to the closure of FY24 till the date of this report.

AUDIT COMMITTEE

The Members of the Audit Committee possess accounting and/ or financial management knowledge and expertise. The Company Secretary of the Company is the Secretary of the Committee. In pursuance of the amended SEBI Listing Regulations effective from January 01, 2022, members of the audit committee who are Independent Directors approve the related party transactions. Details of the composition, roles and responsibilities, particulars of meeting and attendance thereat are mentioned in the Corporate Governance Report

NOMINATION COMPENSATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Policy, inter-alia, provides for criteria and qualifications for appointment of Director, Key Managerial Personnel and Senior Management, Board diversity, remuneration to Directors, Key Managerial Personnel, etc. The policy can be accessed at the following link: https://www.vsttractors.com/investor/ disclosure/?tab=v-pills-disclosure9-tab. For more details on the committee, please refer to the report on Corporate Governance.

RISK MANAGEMENT

Your Company has a robust framework in place to effectively manage risks. The Risk Management Committee, which is constituted by the Board, is responsible for overseeing the Risk Management Framework. The Framework covers the Company''s risk appetite statement, risk limits, risk dashboards, and early warning signals. The risk management framework works at various levels across the enterprise. These levels form the strategic defense cover of the Company''s risk management. The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 21 of the Listing Regulations.

The Risk Management Committee has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has formed CSR policy and Committee as required by the Act and the details of the same are available on the Company website i.e. http://www. vsttractors.com/investors/policies. During the FY 2023-24 the Company was supposed to has spent ''2,17,62,446 /-for CSR activities. Out of which the '' 1,20,00,000/- for CSR activities during FY24 and an amount of '' 97,62,446/- had been earmarked for an ongoing project pursuant to the decision taken by the Board at its meeting along with the recommendations of CSR Committee. The same has been transfered to the "UNSPENT CSR ACCOUNT"

Further pursuant to the resolution passed at the CSR Committee and Board meetings, the earmarked CSR fund amounting to '' 1,93,30,867/- pertaining to the FY 2020-21 had been utilized before 31st March 2024.

The CSR details form part of annexure -3 to the Board''s Report. For more details, please refer annexure to the Board Report.

EVALUATION OF BOARD PERFORMANCE

The Board works with the Nomination Compensation & Remuneration Committee to lay down the evaluation criteria for the performance of executive/non-executive/ independent directors through a peer-evaluation process excluding the director being evaluated. The evaluation of Board, Committees and Individual Directors was conducted as per the procedure followed by the Company. The details are provided in the Corporate Governance section of the Annual Report.

There is no change in the nature of the business during the year.

Details of subsidiary, Associate, or joint Venture Company.

During the under review during the FY 2023-24, the Company incorporated a Joint Venture Cum Subsidiary Company in the name of VST ZETOR PRIVATE LIMITED, on September 26, 2023, jointly with HTC INVESTMENTS a.s. , Czech Republic.

The Company has also on April 25, 2024, incorporated a Wholly Owned Subsidiary in the name of VST Americas Inc and stepped down subsidiary named as VST FIELDTRAC LLC in the United States, to inter-alia assist the Company in augmenting the growth opportunities by catering to the needs of the US market in tractor and farm machineries segment.

The statement containing the salient features of the company''s subsidiaries/Joint ventures/ Associates are given in form AOC-1 forming part of this report as Annexure-7 The Subsidiary Company has started it''s operation at the end of the last year with a turnover of Rs.161.34 lakhs. we expect the permanence will improve during current financial year. The complete financial of the subsidiary Company is available in https://www.vsttractors.com/ investor/financials/?tab=vst-tab-btn-5

SIGNIFICANT AND MATERIAL ORDERS

There are no significant material orders passed by any Regulators / Courts which would impact the going concern status of the Company and its future operations.

VARIATION IN MARKET CAPITALISATION

Date	Paid up Capital (in '')	Closing Market Price per shares	EPS	PE Ratio	Market Capitalization ('' in Crores)
31.03.2023	8,63,95,280	2,272.70	106.90	21.26	1963.51
31.03.2024	8,63,95,280	3,248.90	140.65	23.09	2806.9
Increase/Decrease	NIL	976.2	33.75	1.83	843.39
% Increase/Decrease	NIL	42.95	31.57	8.60	42.95
No of issue of shares during the year	-	-	-	-	-

Sl. Nos.	Years	Total No. of Shareholders	Unclaimed Dividend Amount (In '')	No. of Corresponding Shares	Due Date of Transfer To IEPF
1	2016-17 FINAL	448	1002150	66810	12-10-2024
2	2017-18 FINAL	260	2055450	41109	11-10-2025
3	2018-19 FINAL	254	589725	39315	10-10-2026
4	2019-20 INTERIM	283	605580	40372	21-05-2027
5	2020-21 FINAL	245	627987	36439	28-10-2028
6	2021-22 FINAL	212	555617	32612	21-10-2029
7	2022-23 FINAL	232	646776	30519	10-11-2030

Disclosure of Certain Type of Agreements Binding Listed Entity

Pursuant to Regulation 30A(2) of SEBI Listing Regulations there is no agreement impacting the management or control of the Company or imposing any restrictions or create any liability upon the Company.

Investor Education and Protection Fund

During the FY 2023-24, the Company had transferred ''9,09,330/- unpaid and unclaimed dividend to Investor Education and Protection Fund (IEPF) and further transferred 3,118 Nos of shares to IEPF Authority as per IEPF Rules during the FY 202324. As per the said rule, any benefits such as dividend shall be transferred to IEPF with respect to shares transferred to IEPF and accordingly dividend of the corresponding shares transferred to IEPF, has also been transferred to IEPF. The details of such Dividends and shares are available on Company''s website at www.vsttractors.com. Mr. Chinmaya Khatua has been appointed as nodal officer under IEPF Rule.

The details of unclaimed dividends & shares summary as on 31/03/2024 is given below:

Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013.

During the year under review, no complaint was received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

Employee stock options / Restricted Stock Units (RSUs)

The Company grants share-based benefits to eligible employees with a view to retain talent, have long term commitment and association of employees for sustained growth, development and long-term interest of the Company.

RESTRICTED STOCK UNITS PLAN

The Company has adopted and implemented "VST Tillers Tractors Limited - Restricted Stock Unit Plan 2024'' ("RSU 2024" / "Plan") for granting Restricted Stock units ("RSUs") to the employees of the Company, its subsidiary & associate company(ies).

In terms of the RSU Plan, a maximum of 50,000 (Fifty thousand) RSUs in one or more tranches may be granted, which on exercise would entitle not more than 50,000 (Fifty thousand) equity shares of INR 10/- each (approximately 0.58% of the paid-up equity share capital as on March 31, 2024), with each such RSU conferring a right to apply for one equity share of the Company against each RSU vested. The RSU Plan has been implemented directly by the company by issuing the fresh equity shares of the company for transferring the same to the eligible employees on exercise of the vested RSUs. Accordingly, 50,000 fresh shares will be issued by the Company under this plan.

RSU Plan is in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended from time to time and there have been no changes in the said plan during the financial year under review. The RSU Plan was approved by the shareholders of the Company on 21st January, 2024. The details of RSU Plan including requirements specified under Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and disclosure under companies act 2013, Rule 12(9) of Companies (share Capital and Debentures) Rules 2014 are available on the Company''s website at https://www.vsttractors.com/investor/ disclosure/?tab=v-pills-disclosure9-tab.

The details of the RSU 2024 form part of the Notes to accounts of the financial statements in this Annual Report. The Company has obtained a certificate from Auditor Pursuant to Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The same is available in above link.

OTHER DISCLOSURES

No disclosure or reporting is required with respect to the following items, as there were no transactions or the same were not applicable during the year under review:

â¢ The issue of equity shares with differential rights as to dividend, voting or otherwise.

â¢ The company does not have any scheme or provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

- Redemption of shares/debentures

- Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

- The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

Annual Return

The draft Annual Return for FY 2023-24 is available on the Company''s website i.e. https://www.vsttractors.com/ investor/disclosure/?tab=v-pills-disclosure14-tab

Secretarial Standards

The Company is in compliances with all the applicable Secretarial Standards, issued by the Institute of Company Secretaries of India (ICSI).

Details of Nodal officer:

Name: Mr. Chinmaya Khatua (Company Secretary)

Email: investors@vsttractors.com Phone: 080-67141111

The above details are available in Company website: www.vsttractors.com

ACKNOWLEDGEMENTS

Your directors would like to extend their sincere gratitude towards customers, vendors, dealers, investors, business associates and bankers for their continued support during the year.

We take the opportunity to express our sincere appreciation for the contribution made by the employees at all levels.

Our resilience to meet challenges and the consistent growth of the Company was made possible by their hard work, solidarity, co- operation, and support.

Your Directors would like to express their sincere appreciation of the positive co-operation received from the Government of India, the State Governments and other regulatory authorities and government agencies for their support and look forward to their continued support in the future.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

For V.S.T. TILLERS TRACTORS LTD.

Arun V. Surendra

Date: August 13, 2024 Chairman

Place: Bengaluru DIN: 01617103

Mar 31, 2023

The directors have pleasure in presenting this 55^th Annual Report along with Company''s audited financial statements for the financial year ended on March 31, 2023.

FINANCIAL PERFORMANCE

Amount (Rs. in Lakhs)
Particulars	Year 2022-23	Year 2021-22
Operating Income	100,643	85,386
Non-Operating Income	2495	3,409
Total Income	103,137	88,795
Finance Cost	127	105
Depreciation	2,694	2,504
Total Expenses	90,743	75,577
Exceptional Item	-	-
Profit Before Tax	12,394	13,218
Tax	3,158	3,287
Profit After Tax	9,236	9,931
Other Comprehensive Income	-16.46	-6.40
Total Comprehensive Income	9,219	9,925
Earnings Per Share (Basic and Diluted) (Amount in H)	106.90	114.95

Financial Performance/ State of Company Affairs

The brief highlights of the Company''s performance for the financial year (''FY'') ended March 31, 2023, are:

K 100,643 Lakhs.

During the year under review i.e. FY 2022-23, your Company''s Operating income is H 100,643 lakhs as against H 85,386 lakhs in the previous Financial Year 2021 -22

K 12,394 Lakhs.

Profit Before Tax (PBT) for the FY 2022-23 is H 12,394 lakhs as against H 13,218 lakhs in the previous Financial Year 2021-22. K 9,236 Lakhs.

Profit after Tax (PAT) for the FY 2022-23 is H 9,236 lakhs as against H 9,931 lakhs in the previous Financial Year 2021-22.

With respect to volumes, your Company has sold 38,247 Nos of Power tillers against the previous year of 31,776 Nos and on tractors, 6875 Nos against previous year of 7,991 Nos of tractors.

Despite challenging market conditions, your Company''s Compact Tractor market share stood at 8% and power tiller market share at 71 % in FY23.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your Company deals with single segment only i.e. "Manufacturing of Agricultural Machineries".

DIVIDEND

Based on the Company''s performance, your directors are pleased to recommend, for approval of the members, Dividend of H 25 /- per equity share of face value of H10 each ( i.e. @ 250% ) payable to those members whose names appear in the Register of Members as on the Record Date i.e. August 25, 2023.

The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).

TRANSFER TO RESERVES

The Board of Directors of your company has decided not to transfer any amount to the Reserves for the year under review. QUALITY INITIATIVES

â¢ IMexI Initiative (Integrated manufacturing excellence Initiative)

- 3 Days Assessment conducted by Kaizen Hansei / Kaizen Institute team.

- Received Imexi commitment Silver Prize for VST - Malur plant

- Workshop conducted to understand the Improvement areas based on assessment & identified 11 strategic projects for Excellence in all areas of performance.

â¢ TQM Kick off

- QM portal kick off for Kaizen, Suggestion, FTR, Deviation & Lesson learnt management.

- Kiosk Implemented across all plants for easier access of TQM portal

- Kaizen initiative - 2059 Kaizen reported in FY23

- Training for Capability building of the people with respect to roles.

â¢ The Company continues to sustain its commitment to the highest levels of quality.

- The Company successfully completed the annual Surveillance audit and retained the ISO certification for QMS - ISO 9001:2015

- The Company successfully completed the annual Surveillance audit and retained the ISO certification for EMS & Safety - ISO14001:2015 & ISO 45001:2018

â¢ Initiated QCC (Quality Control Circle) at all the plants of VST & participated in External competition at CII Karnataka regional QCC competition and received Best Implementation award.

DETAILS OF DIRECTORS AND KMP APPOINTMENT/ REAPPOINTMENT

Mr. Rajen Krishnanand Padukone (DIN:00262729) has been appointed as Independent Director of the Company for 5 consecutive years effective from May 04, 2023 through postal ballot and he is not liable to retire by rotation.

Mr. R Subramanian (DIN: 00357153), Independent Director has resigned from Directorship of the Company on February 18, 2023, due to health reason. There was no material reason other than the health reason as mentioned in the resignation letter.

Mr. V. V Pravindra (DIN: 00239888) will be liable to retire by rotation and being eligible, offers himself for re appointment at the 55^th Annual General Meeting of the Company scheduled to be held on September 01, 2023.

Mr. Pankaj Khemka has resigned from the post of CFO w.e.f April 3, 2023, and Mr. Nitin Agrawal has been appointed as CFO of the Company w.e.f. May 12, 2023.

With deep regret, we report the sad demise of our Vice chairman and non-Executive director, Mr. V P Mahendra (DIN: 00033270), on May 30, 2023. Your directors would like to place on record their highest gratitude and appreciation for the guidance given by Mr. Mahendra to the Board during his tenure as a director.

In the opinion of the Board, all the Independent Directors possesses integrity, expertise, and experience (including the proficiency).

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Personnel (KMP) of the Company under section 203 of the Companies Act, 2013, during the year 2022-23.

1. Mr. V.T. Ravindra - Managing Director

2. Mr. Antony Cherukara - Chief Executive Officer

3. Mr. Pankaj Khemka - Chief Financial Officer (Resigned w.e.f April 03, 2023)

4. Mr. Chinmaya Khatua - Company Secretary

# Mr. Nitin Agrawal was appointed as Chief Financial Officer on May 12, 2023.

CORPORATE GOVERNANCE

Your Company believes that strong corporate governance is critical to enhancing and retaining investor trust. Your Company also endeavours to enhance long term shareholder value and respect minority rights in all its business decisions. Corporate Governance is about maximising shareholders value, ethically and sustainably.

Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policies all its requisite standards. Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance practices followed by the Company is provided in this Report. A report of the Statutory Auditors of the Company confirming the compliance of conditions of Corporate Governance as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this report.

Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors. DIRECTOR''S RESPONSIBILITY STATEMENT

To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013

(a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) That the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year on March 31, 2023 and of the profit and loss of the company for that period;

(c) That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) That the annual accounts have been prepared on a going concern basis;

(e) That the internal financial controls to be followed by the company have been laid down and that such internal financial controls are adequate and are operating effectively;

(f) That proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems are adequate and operating effectively.

committees, including the audit committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during FY 2022-23.

AUDITORS

Pursuant to the provisions of Section 139 of the Act read with rules thereunder, the shareholders of the Company at the 53^rd Annual General Meeting ("AGM") held during 2021 had re-appointed M/s. K.S. Rao & Co, Chartered Accountants (Firm Regd. No. 003109S), as Statutory Auditors of the Company for a for a second term of five financial years effective from the financial year 2021 -22.

COST AUDITORS

Pursuant to the Section 148 of the Companies Act, read with the Companies (Cost Records and Audit) Rules, 2014 (as amended), your Company is required to maintain the cost records and the said cost records are required to be audited. The Company is maintaining all the aforesaid cost records. M/S. Rao, Murthy & Associates (Firm Registration No: 00065), Practicing Cost Accountants were appointed as Cost Auditors of the Company for FY23 and have been reappointed as the Cost Auditors of the Company for FY24 by the Board on the recommendations of Audit Committee. The remuneration payable to the Cost Auditor is subject to ratification of members at the ensuing AGM and the same is included in 55^th AGM Notice.

INTERNAL AUDITORS

Pursuant to Section 138 of Companies Act, your directors, on the recommendation of the Audit Committee have appointed M/s. Brahmayya & Co, Chartered Accountant as Internal Auditors for the financial year 2022-23.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and read with Rules made there under, the Board had appointed M/s Thirupal Gorige & Associates LLP, Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2022-23. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information under Section 134 of Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-2.

DEPOSITS

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Act, 2013 and rules made thereunder.

INDUSTRIAL RELATION

The year under review witnessed a very positive Industrial Relations scenario across all manufacturing locations at Mysore, Malur and Hosur plants.

During the year under review, wage settlement agreements have been signed with Hosur and Malur union employees. There were 742 number of permanent employees on roll as on March 31, 2023.

SAFETY, HEALTH AND ENVIRONMENT

VST considers its people as the most valuable assets and upholding their mental and physical health as a top priority. Your Company is a safe workplace and the Safety & Health of our employees as per the requirement of the Factories Act are ensured. Our motto is "Zero Accident". Our commitment is to protect the environment as per the policy.

At each Plant location, annual events like National Safety Day/Month and Fire Service Week were organized. As per new normal, various topics were deployed to train employees on Safety, Health and Environment.

The following are some of the key initiatives undertaken during FY 2022-23:

â¢ Conducting safety audits, led by the National Safety Council, at each operating location, and developing action plans based on the audit findings

â¢ Strengthening the consequence management system and creating awareness across locations

â¢ Taking our Proactive Safety Indicators to the next level INFORMATION TECHNOLOGY

Your company is focused on digitalizing the entire organization by:

1. Automation of Processes

2. Simplification of Processes

3. Elimination of Non-Value-Added Processes

4. Providing meaningful data to improve the decision making process

To enable the above to function seamlessly, your company has it''s servers in high end external data centers, in-house as well as on multiple cloud environments.

Theory of Constraints (TOC) is integrated with Supplier Relationship Management (SRM) tool due to which, demand to the supplier is clearly visible and supply level has improved and resulted in reduction of inventory.

An end-to-end integration of all business processes, Order To Cash and Procure To Pay is in progress, which will improve the entire supply chain efficiency.

BOARD MEETING

5 meetings of the Board of Directors were held during the financial year. For further details, please refer report on Corporate Governance section of this Annual Report.

DISCLOSURE OF RELATIONSHIPS BETWEEN DIRECTORS

Mr. V.K. Surendra, Mr. V.V. Pravindra, Mr. V.T. Ravindra and Mr. V S Arun belong to promoters'' family. Apart from the promoter directors, none of the other Directors are related to each other.

DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declarations from all Independent Directors of the Company that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulations 16 and 25 of SEBI Listing Regulations and there has been no change in the circumstances affecting their status as Independent Directors of the Company. The Company has also received a declaration from all the Independent Directors that they have registered their names in the Independent Director data bank and have passed/ are exempt from the requisite proficiency test conducted by Ministry of Corporate Affairs. Mr. Rajen Padukone (DIN:00262729) is yet to complete the requisite proficiency test, since his name has been registered in the Independent Director databank recently, the said test is required to be completed within 2 years of inclusion of his name in the said databank.

COMMITTEES

The Company has constituted Audit Committee, Corporate Social Responsibility Committee, Nomination, Compensation & Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. The details of the Committees are mentioned in Corporate Governance Report.

VIGIL MECHANISM CUM-WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) of the Act and Regulation 22 of Listing Regulations, the Company has established a Vigil Mechanism/ Whistle Blower Policy for Directors and employees to report their genuine concerns. The Policy provides for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Company''s Code of Governance and Ethics. The policy is available on the website of the Company at the link http://www.vsttractors. com/investors/policies.

The Company has in place robust measures to safeguard whistle blowers against victimisation. Directors and employees are duly sensitised about mechanisms and guidelines for direct access to the Chairman of the Audit Committee, in appropriate cases. Further, during FY 2022-23, the company has not received any complaints.

AUDITORS QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER

There was no qualification, reservation or adverse remark or disclaimer from Statutory & Secretarial Auditors and the comments given by the Statutory & Secretarial Auditors in their respective Reports are self-explanatory and hence, do not call for any further explanations or comments from the Board.

There was no fraud reported by the auditors under section 143(12) of the Companies Act, 2013.

LOANS, GUARANTEE & INVESTMENT

The Company has made investment during the financial year 2022-23. The investments details forms part of the notes to the financial statements provided in this Annual Report. The company has not given any Loan or Guarantee during the financial year 2022-23.

RELATED PARTY TRANSACTIONS

We ensure that all related party transactions that are entered with related-parties during the financial year meets the criteria of an arm''s length price basis. There are no materially significant related party transactions made by the company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interests of the Company at large.

The Related Party Transaction details including the transaction(s) of the Company if any, with a person/entity belonging to the promoter/promoter group which hold(s) more than 10% shareholding in the Company as required pursuant to para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the notes to the financial statements provided in this Annual Report. Please refer the details in Annexure -5 for AOC-2 Form.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

There are no material changes affecting the financial position of the Company subsequent to the closure of FY23 till the date of this report.

NOMINATION COMPENSATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Policy, inter-alia, provides for criteria and qualifications for appointment of Director, Key Managerial Personnel and Senior Management, Board diversity, remuneration to Directors, Key Managerial Personnel, etc. The policy can be accessed at the following link: https://www.vsttractors.com/investors/policies. For more details on the committee, please refer the report on Corporate Governance.

RISK MANAGEMENT

Your Company has a well-defined risk management framework in place. The risk management framework works at various levels across the enterprise. These levels form the strategic defence cover of the Company''s risk management. The Company has adopted a Risk Management Policy in accordance with the provisions of the Act and Regulation 21 of the Listing Regulations.

The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company has formed CSR policy and Committee as required by the Act and same are available in Company website i.e. http://www.vsttractors.com/investors/policies. During the financial year 2022-23 the Company had spent H 1,73,80,163 /- in CSR Activities. The CSR details forms part of annexure -3 to the Board''s Report. For more details, please refer Corporate Governance section of the Annual Report.

EVALUATION OF BOARD PERFORMANCE

The Board works with the Nomination Compensation & Remuneration Committee to lay down the evaluation criteria for the performance of executive/non-executive/independent directors through a peer-evaluation process excluding the director being evaluated. The evaluation of Board, Committees and Individual Directors was conducted as per the procedure followed by the Company. The details are provided in the Corporate Governance section of the Annual Report.

There is no change in nature of the business during the year.Details of subsidiary, Associate, or joint Venture Company.

The company has no subsidiary, Associate or joint Venture Company as on March 31, 2023.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

VARIATION IN MARKET CAPITALISATION

Date	Paid up Capital (in K)	Closing Market Price per shares	EPS	PE Ratio	Market Capitalisation (K in Lakhs)
31.03.2022	8,63,95,280	2,403.25	114.95	20.91	207409
31.03.2023	8,63,95,280	2,272.70	106.90	21.26	196493
Increase/Decrease	NIL	(130.55)	(8.05)	0.35	(10,960)
% Increase/Decrease	NIL	(5.43)	(7)	1.67	(5.26)
No of issue of shares during the year	-	-	-	-	-
Data Source: BSE Ltd.

Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on Prevention, Prohibition and Redressal of Sexual Harassment at Workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

During the year under review, no complaint was received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013.

OTHER DISCLOSURES

No disclosure or reporting is required with respect to the following items, as there were no transactions or not applicable during the year under review:

â¢ The issue of equity shares with differential rights as to dividend, voting or otherwise.

â¢ The issue of shares to the employees of the company under any scheme (sweat equity or stock options). There is no change in the Share Capital Structure during the year under review.

â¢ The company does not have any scheme or provision of money for the purchase of its own shares by employees or by trustees for the benefits of employees.

- Redemption of shares/debentures

- Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year.

Annual Return

The draft Annual Return for Financial Year 2022-23 is available on the Company''s website i.e. https://www.vsttractors. com/investors/annual-return

Secretarial Standards

The Company is in compliances with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).

Investor Education and Protection Fund

Company has transferred H 9,45,045 unpaid and unclaimed dividend to Investor Education and Protection Fund (IEPF) and further transferred 3,214 Nos of shares to IEPF Authority as per IEPF Rules during the Financial Year 2022-23. As per the said rule, any benefits such as dividend shall be transferred to IEPF with respect to shares transferred to IEPF and accordingly dividend of the corresponding shares transferred to IEPF, has also been transferred to IEPF. The details of such Dividends and shares are available on Company''s website at www.vsttractors.com. Mr. Chinmaya Khatua has been appointed as nodal officer under IEPF Rule.

The details of unclaimed dividends as on 31/03/2023 is given below:
Sl. No.	Financial Year	Unclaimed Dividend Amount (in RS)	No of corresponding Shares	Due date of Transfer to IEPF
1	2016-17	1020675.00	68045	12-10-2024
2	2017-18	2104100.00	42082	11-10-2025
3	2018-19	608100.00	40540	10-10-2026
4	2019-20 (Interim)	636000.00	42400	21-05-2027
5	2020-21	658889.00	38139	28-10-2028
6	2021-22	573037.00	33533	21-10-2029

Details of Nodal officer:

Name- Mr. Chinmaya Khatua (Company Secretary)

Email- investors@vsttractors.com Phone No- 080-67141111

The above details are available in Company website: www.vsttractors.com ACKNOWLEDGEMENTS

Your directors would like to extend their sincere gratitude towards customers, vendors, dealers, investors, business associates and bankers for their continued support during the year. We place on record our appreciation of the contribution made by employees at all levels. Our resilience to meet challenges was made possible by their hard work, solidarity, cooperation, and support.

The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all employees at all levels of the Company resulting in the successful performance of the Company during the year.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

Mar 31, 2018

Dear Shareholder,

The Directors have pleasure in presenting the 50th Annual Report of the Company and the Audited Statement of accounts for the year ended March 31, 2018.

FINANCIAL PERFORMANCE (Rupees in lakhs)

Period	Year 2017-18	Year 2016-17
OPERATING INCOME	76395	67766
NON-OPERATING INCOME	4521	2616
TOTAL INCOME	80916	70382
FINANCE COST	169	302
DEPRECIATION	1086	1181
TOTAL EXPENSES	65693	59124
EXCEPTIONAL ITEM	-	330
PROFIT BEFORE TAX	15223	11588
TAX	4025	3318
PROFIT AFTER TAX	11198	8271
OTHER COMPREHENSIVE INCOME	-3	-166
TOTAL COMPREHENSIVE INCOME	11195	8105
EARNING PER SHARE (Basic and Diluted)	129.61	95.73

COMPANYâS PERFORMANCE

The year under report was partially impacted in first half of the year with weak monsoon in June in States of Karnataka, Tamil Nadu and Kerala. In other parts of the country the monsoon was normal during the Kharif season. Structural changes in the subsidy schemes in few States, change over to DBT schemes in few states and price fixation delays impacted the sales of Power tillers during the year 2017-18.

The number of Power Tillers sold during the year was 30,143 units as against the previous year sale of 25,515 units registering growth in sales of 25%. The company market share moved to 60%.

Your company registered growth of 18% in Tractor numbers. 11,367 tractors were sold as against 9,635 tractors in 2016-17. The company market share is around 15.5% in the compact segment category.

Your company will be investing over 240 crores from the year 2016-17 until 2020-21 in infrastructure, up gradation and new product development. The company has launched new Tractor models, Tractor variants and Tiller models. During the year 2016-17 your company launched the 27 HP Viraat model to the market, and the upgraded version âVST SHAKTI VIRAAT PLUSâ in April 2017. Both these models are with 8 2 constant mesh gear box. The Viraat Plus has gained market share while the Samrat model is lagging

as we need to change the mind-set of the farmers to adapt engine with Electronic governor. The new modelâs introduction, penetration in new areas, industry growth and our marketing communication has enabled growth in sales during the year 2017-18.

The Custom Hiring & Service Centers that are under the VST umbrella which was allocated under the scheme launched by the Government of Karnataka are running successfully.

The new plant for Power Tiller at Malur became operational in March 2018. This new plant is capable of higher productivity. The entire production of Power Tiller will be done in this plant effective August 2018. The existing plant at Bengaluru will be used for manufacture of higher HP range of Tractors and the Self-propelled Power reapers.

DIVIDEND:

The Board has recommended 500% Dividend (150% Normal dividend and 350% special dividend on account of Golden Jubilee year) i.e. Rs.50/- per equity share of Rs.10 each, for the financial year 2017-18 and the same will be disbursed on or after 13 th August 2018, if approved by the shareholder at the 50th AGM. The total outflow will be Rs.51,84,52,993 including

MANAGEMENT DISCUSSION AND ANALYSIS Industry - Opportunities & Challenges

Need to mechanize agriculture will continue to be a necessity due to limited availability of labour and high cost of labour. The trend in any segment is towards mechanization/automation to reduce the manual effort. Your company is in the business to âCreate Sustainable Crop Solutions To Enhance Farm Productivityâ. The company products mainly target the small and marginal farmers who account for more than 70% of the land holding. Shortage of rural labour force continues to be the key driver for business growth. The income of our farmers need to increase and this is possible with increase in productivity in the land size that they own. Your company is offering total crop solutions to the farmers at competitive pricing which will assist in their business. The company has developed packages for various crops like Paddy, Cotton, Sugarcane, Horticulture, Grapes etc. for Compact tractors and Power tillers.

Delays in announcing subsidy schemes by the State Governments, bureaucracy associated with the administration of schemes, weak Monsoon etc. will continue to be the challenge for your company. Entry of more and more competition tractors in the compact segment is demanding your company to come out with more and more variants to counter the competition. The commodity prices have increased over 20% in 2017-18. Many suppliers are seeking price increases. Due to price increase of components the contribution margin will get eroded and hence can have adverse impact on the company operating margins.

RISK & CONCERN

The inability of the Central Government to come out with strict guideline/policy to curb imports of poor quality Power Tillers without adequate service and spares is a cause for concern. State Governments are encouraging more and more Custom Hiring Centres to support the marginal and small farmers. This initiative may marginally impact the sales of Tillers to the farmers. More than 95% of Power Tillers are sold under government subsidy schemes. In case the subsidy allocations are reduced it can adversely affect the demand for these products. In some States even the compact tractors are given attractive subsidy. This will have an impact on Direct sales of Tractors. While the subsidy was most prevalent in Karnataka, Tamil Nadu and Andhra very recently Maharashtra government has announced a subsidy scheme for tractor. This is

not necessarily a good trend for the tractor industry. Most State Governments have switched over to DBT scheme for subsidy which will have a positive impact on working capital.

Your company is diversifying to manufacture and sell higher HP tractors to the domestic market. Having been in compact segment tractor manufacturing and sales it may take more than anticipated time for us to penetrate and establish the presence in higher HP segment.

CURRENT YEAR OUTLOOK

With prediction of normal monsoon, launch of new products models/ variants along with continued focus on farm mechanization to double the farmer income by the Central Government it is expected that the company growth will be on par with the overall industry growth.

DETAILS OF DIRECTORS APPOINTMENT/ REAPPOINTMENT:

In accordance with the provisions of the Companies Act, 2013 Mr. V T Ravindra (DIN-00396156) will retire at the ensuing AGM and is eligible for reappointment. Mr. Arun V Surendra (DIN-01617103) appointed as Additional Director of the Company effective from 11/05/2018. His appointment as Non-Executive Director forms part of Notice of 50th Annual General Meeting.

Mr. V.T. Ravindra appointed as whole-time Director of the Company effective from 11/05/2018. His appointment as whole-time Director forms part of Notice of 50th Annual General Meeting.

During the year, no non-executive director had any pecuniary relationship or transactions with the Company other than the sitting fees and reimbursement of expenses incurred by them for attending meetings of the Company.

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Personnel (KMP) of the Company under section 203 of the Companies Act, 2013. During the year 2017-18, Mr.R.Thiyagarajan resigned as CFO of the Company w.e.f. 01/06/2017 and Mr. P.M. Keshava appointed as CFO w.e.f. 01/06/2017.

1. Mr. V.P. Mahendra - Vice Chairman & Managing Director

2. Mr. P.M.Keshava - Chief Financial Officer

3. Mr. Chinmaya Khatua - Company Secretary

CORPORATE GOVERNANCE:

The Company strives to ensure good in Corporate Governance and levels of transparency with all the provisions of SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015. A certificate from the Auditors to this effect forms part of Corporate Governance Report.

Compliance reports in respect of all laws applicable to the Company have been reviewed by the Board of Directors.

DIRECTORâS RESPONSIBILITY STATEMENT:

Pursuant to subsection 5 of Section 134 of the Companies Act 2013, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS:

M/s. K.S. Rao & Co, Chartered Accountants (Firm Regn No. 003109S) were appointed as Auditors of the Company for five financial years w.e.f FY 2016-17, at the 48th Annual General Meeting of the Company.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Rao, Murthy & Associates, Cost Accountants to audit the cost records of the Company for the financial year 2018-19 on a remuneration of Rs.2,50,000/- lakhs (Exclusive of applicable taxes) plus out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their approval. Accordingly, a Resolution seeking Memberâs approval for the remuneration payable to M/s. Rao, Murthy & Associates., Cost Auditors is included in the Notice of the Annual General Meeting.

INTERNAL AUDITORS

M/s.Brahmayya & Co, Chartered Accountant were appointed as Internal Auditors under section 138 of the Companies Act, 2013 for the financial year 2017-18.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and read with Rules made thereunder, the Company had appointed Mr. Thirupal Gorige Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES:

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 134 Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-2.

DEPOSITS:

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Act, 2013 and rules made thereunder.

Internal Control System and their Adequacy

The Company has put in place adequate internal financial controls over financial reporting Systems commensurate to the nature of its business and complexity of its operations. These are regularly tested for their effectiveness by Statutory as well as Internal Auditors.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matches them with the books of account. Explanations are sought for any variance noticed from the respective functional heads.

The Company is planning to implement new ERP system during the year 2019-20 to further strengthen the internal control system of the Company.

The Significant observations made by the Auditors and follow up actions there on reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Companyâs Internal Control Environment and monitors the implementation of the Audit recommendations.

Industrial Relation

Industrial relations have been cordial at the Bengaluru, Mysore and Hosur plants during the year.

Your company has taken appropriate steps to build organizational capability which will enable the long term growth plans. There were 713 No. of permanent employees on roll as on 31st March 2018.

Forward-Looking Statements

Statements in this release that are âforward-looking statementsâ are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product price discounts, delays in product development and related product release schedules, sales and vendor channel disruption.

All information in this release is as of May 11, 2018, The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the companyâs expectations. Information Technology

Your Companyâs operations are supported by a full- fledged Data Centre. Your company has a well-planned Business Continuity Plan and Disaster Recovery Set-up for all critical applications with near real-time data replication.

The delivery centers meet the Information Security Management System and CIA (Confidentiality, Integrity and Availability) Standards. To cater to the ever-changing customer needs, the IT infrastructure is being constantly upgraded with new / enhanced features to facilitate smooth functioning of operations and deliver customer satisfaction. We are using industry best standard mailing solutions with compliance and availability of mails which controls various spam mails. The Company is planning to implement new ERP system during the year 2019-20 to further strengthen the internal control system of the Company along with 24*7 availability of critical applications and standard business analytical tools.

Board Meeting

Five meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report. Declaration of Independent directors.

The Company has received declarations from Independent directors as mentioned in sub-section (6) of section 149 of the Companies Act, 2013. Committees

The Company has constituted Audit Committee, CSR Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. The details of the Committees are mentioned in Corporate Governance Report.

Vigil Mechanism

The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It is to protect employees wishing to raise a concern about serious irregularities within the Company.

The Company has vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism are explained in the Corporate Governance Report and also posted on the website(www.vsttillers.com) of the Company. Technology Transfer Agreement with M/s. Kukje Machinery Co. Ltd.

During the year 2017-18 the Company has entered into a Technology Transfer Agreement with

M/s. Kukje Machinery Co. Ltd., Korea to manufacture 47 HP tractors.

Auditors qualification, reservation or adverse remark or disclaimer.

Auditors Qualification on Internal financial control:

âThe Company has designed and established internal financial controls over accounting of expenditure and payment processing. However, adequate âmaker and checker controlsâ were not effective with respect to review of expenditure entries, generation of EDI (Electronic Data Interchange) file for payments, modifications to EDI file and uploading the EDI file onto the Bankâs website for payments, as detailed in note no. 45 to financial statements as at March 31, 2018 which resulted in creation of fictitious accounting entries in the system and payments to unauthorized parties.â

Management Response:

Looking into the unblemished track records, management believed that the internal control systems which includes design and financial controls were working effectively and in totality. However, it was realized that the operation of the internal controls and procedures were not effective and needed further improvement. The management has taken necessary steps to go into the depth of the fraud, the extent of possible damage done, legal proceeding, recovery of the amount embezzled and correcting the lapses in the internal financial controls. With this in mind, the management had already embarked on introducing a new ERP system (SAP) to overcome the shortfall in the present system.

There was no qualification, reservation or adverse remark or disclaimer from Secretarial Auditors.

There was no fraud reported by the auditors under section 143 (12) of the Companies Act, 2013 other than those which are reportable to the Central Government.

Loans, Guarantee & Investment

The Company has made investment during the year 2017-18. However, the investments and Loan formed part of the notes to the financial statements provided in this Annual Report. The company has not given any Loan or Guarantee during the year 2017-18.

Related Party Transactions

All related party transactions that are entered into during the financial year were on an armâs length basis. There are no materially significant related party transactions made by the company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their information and approval. The policy on dealing with Related Party Transactions as approved by the Board can be accessed at http://www.vsttillers.com/sites/default/ files/policies/policy_on_related_party_transc.pdf.

Material changes and commitments affecting the Financial Position

There are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

Risk Management Policy

The Company is having a risk management policy. The risk pertaining to business of the Company is discussed at the Risk Management Committee, Audit Committee and at the Board Meetings on regular basis. There are no risks which in the opinion of the Board threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms a part of this report.

The Committee composition :

Mr. M.K. Bannerjee, Chairman, Mr. V. K. Surendra, Member, Mr. K.M. Pai, Member, Mr. V.P. Mahendra, Member

The details of the policy are given below:

Risk Category

Risk Description

Mitigation

Iudustry Risk

Concentration on Agri Business Specific Risks are:

- Industry Downturn in Agri Industry will adversely affect business

- Strong competition and ability to market models faster.

High focus on specific Segment

Specific Risks are:

- Business will be adversely affected when Agri segment experiences sluggish growth

- Highly dependent on subsidy and Govt, policy on Agriculture development.

? Tapping of wider segments in products and geographies including its aftermarket foot print in the core business

? Explore to releasing new models ahead of competition in the future. 5 year strategic business plan to be formulated.

? Explore & grow businesses in the Engines, Attachments and other Agricultural Machinery, while remaining focused on core business

? Diversification in non-agri segment

Raw Material Risk

a. Volatility in Raw material, commodity and fuel prices.

b. Single source

a. Volatility in prices of raw materials and commodities may impact our profit.

b. Single source purchasing increases the bargaining power of the supplier

Specific risks are:

â Business disruption

â Continuous price escalation by the supplier

? Vendor rationalization & Commodity based approach in sourcing, leading to focused negotiation to manage prices of raw materials etc.

? Sourcing options to develop alternate sources for all critical single source purchases.

0 VA/VE efforts by Engineering resulting in material cost reduction through better designs

Quality & Integrity of the Product

Poor quality or integrity of our products may result in reputation and brand damage, resulting in lower volumes and financial claims Specific risks are:

â Poor quality of the products

â Increase in Cost of Quality leads to bottom-line erosion

â Loss of customers & Lost opportunities in new programs

? Effective process control

0 Supplier cluster programs to improve quality of incoming parts 0 Warranty procedure & performance sign off with Suppliers.

Volatility in Currency Exchange Rate

Currency exchange gain or loss will impact the bottom line. Specific risks are:

â Increase material cost in case of weakening rupee

â Lower revenue realization in case of strengthening rupee against USD

[] PCFC to protect exports against currency fluctuation

? Restructuring of credit options for both imports & exports

? Hedging imports through forward contracts

Demand Risk

Inaccuracy in Sales forecasting leads to poor delivery performance thereby leading to loss of customers Specific Risks are

â Excess Inventory

â Lower vendor ratings (Mysore plant)

â Premium freight

â Customer Loss

? Implementation of IcSoft for big dealers.

0 Effective Implementation of demand management in by S&OP.

? Measurement of forecast accuracy to smoothen out demand variation

D Enhance Vendor Managed Inventory

Information Security

Loss of business data, proprietary & confidential information and disruption of processes due to unavailability of robust IT systems, thereby causing financial damage.

Specific risks are:

â Failure of IT systems thereby business continuity

â Susceptibility to Cyber crime

? Implementation of measures to secure confidentiality and integrity of data D Ensuring data redundancy by storage in data replication center 0 Far site data recovery center, (proposed)

D Robust firewall mechanisms, thereby preventing cyber crimes

Technology Risk

Technological Obsolescence with the changes in technological trends in the Industry

Specific risks are:

â Loss of Business opportunity, and market share

Risks arising through technology partnership

â by disclosure of technology to competition & being a competitor themselves

â Inability to provide effective technical solutions Specific risks are:

â Threat of competition from technology partner & competitors

â Ineffective utilization of Intellectual Infrastructure bandwidth

D Formulation of technology road map in line with the Industry trends aligning with the 5 year strategic plan.

0 Collaborate with leading technology partners to shorten the development cycle stay in sync with the market

0 Assessment of the capability of technical partner through a formal diligence process

0 Formal engagement model with exclusivity and no compete provisions in the agreement

People & Organization

Failure to attract with the right skills and talent to seize opportunities, achieve challenging returns and fulfil the strategy Specific Risks are:

â Delay in Strategy & project execution & Growth plans

D Alignment of company performance and employee performance incentives through the effective compensation & benefit structure 0 Develop a talent pipeline through an annual talent review process and talent development 0 Values culture reinforced through induction,

mandatory training, performance management, and employee interaction programs.

Product Liability

Specific risks are: Product Liability Product Guarantee Financial Loss Product recall

D Availing product liability with recall insurance policy .

Corporate Social Responsibility (CSR)

The Company has formed CSR policy and Committee details as required by the Act are available in Company website i.e. http://www.vsttillers.com/investors/policies. The Company has spent Rs.165 lakhs in CSR activities during the financial year 2017-18.

Evaluation of Board Performance.

The Board works with the nomination and remuneration committee to lay down the evaluation criteria for the performance of executive / non-executive / independent directors through a peer-evaluation excluding the director being evaluated. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and frame work adopted by the

Board. None of the Independent Directors are due for reappointment.

There is no change in nature of the business during the year.

Details of subsidiary, Associate or joint Venture Company.

During the year 2017-18 there is no change in Subsidiary Associate or Joint Venture Company.

Significant and material orders

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

The ratio of the remuneration of each Director and KMP to the median remuneration of the employees of the company for the financial year as follows:

Sl. No.	Name	Designation	Salary 2017-18 (in Rs)	Salary 2016-17 (in Rs)	Increase in salary	Ratio/Times per Median of employee remuneration
1	Mr.VP. Mahendra	Vice Chairman & Managing Director	77,10,739	77,49,081	-38,342 (-0.49%)	19.12
2	Mr. R. Thiyagarajan*	Chief Financial Officer	57,59,599	45,62,423	11,97,176 (26.24%)	14.28
3	Mr. P M Keshava**	Chief Financial Officer	35,38,136	26,33,631	9,04,505 (34.34%)	18.77
4	Mr. Chinmaya Khatua	Company Secretary	15,37,589	13,89,647	1,47,942 (10.64%)	3.81

* Mr.R.Thiyagarajan resigned from CFO w.e.f. 1st June 2017 and from Director w.e.f 31st March 2017.

** Mr.P.M.Keshava appointed as CFO w.e.f 1st June 2017.

There is a marginal increase in median remuneration of the employee during the year 2017-18.

The Companyâs PAT has increased from Rs.8105 lakhs to Rs.11195 lakhs. The increase in KMP remuneration is line with the current market scenario and with Company policy. However, salary of Vice Chairman & Managing Director was approved by the shareholders.

The Company has given about 10.4% average increase in salaries to the employees keeping in view the overall industry standard and interest of the employees. The

unionized employees of the Company are getting salary increment as per the terms and conditions of their wage settlement. There is no exceptional circumstances of increase in the managerial remuneration.

The Company has 713 Nos permanent employees on roll as on 31st March 2018. The Company fixes salary of the employees on the basis of Remuneration Policy of the Company.

Payment of Commission to Managing Director.

The Managing Director is being paid commission on net profit of the Company as approved by the shareholders. The commission criteria is given below :

Name	Designation	Commission
VP. Mahendra	Vice Chairman & Managing Director	One percent on the net profit of the Company subject to a maximum of one and half times of annual basic salary drawn

Mr K.U.Subbaiah, CEO receives remuneration in excess of the highest paid director during the year the details are given in Page No.13

Date Paid up Capital Closing Market EPS PE Ratio Market

(in Rs) Price per shares Capitalisation

(Rs. in crore)

31.03.2017 86395280 1800 95.73 21.67 1555.12

31.03.2018 86395280 2511.75 129.61 19.38 2170 Increase/Decrease NIL

% Increase/Decrease NIL No issue of shares

during the year - - - - -

VARIATION IN MARKET CAPITALISATION :

Notes: Data based on share prices quoted on BSE.

Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has formed Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and no complaint was received during the year 2017-18.

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts / arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain armâs length transactions under third proviso thereto:

1. Details of contracts or arrangements or transactions not at armâs length basis: V.S.T. Tillers Tractors Ltd (the Company) has not entered into any contract/arrangement/transaction with its related parties which is not at armâs length during FY 2017-18.

(a) Name(s) of the related party and nature of relationship: Not Applicable

(b) Nature of contracts/arrangements/transactions: Not Applicable

(d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

(e) Justification for entering into such contracts or arrangements or transactions: Not Applicable

(f) Date(s) of approval by the Board: Not Applicable

(g) Amount paid as advances, if any: Not Applicable

(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188: Not Applicable

2. Details of material contracts or arrangement or transactions at armâs length basis:

a. Name(s) of the related party and nature of relationship: Not Applicable

b. Nature of contracts / arrangements / transactions: Not Applicable

c. Duration of the contracts / arrangements / transactions: Not Applicable

d. Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

e. Date(s) of approval by the Board, if any: Not Applicable

f. Amount paid as advances, if any: None on behalf of Board of Directors

V. K. Surendra

Place: Bengaluru Chairman

Date: 11th May, 2018

Extract of Annual Return

Annual Return of the Company is available in Company website i.e. www.vsttillers.com, extract of Annual Return is annexed herewith as Annexure 5 to this report.

Secretarial Standards:

The Company Complies with all applicable secretarial standards.

Investor Education And Protection Fund

In accordance with the applicable provisions of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (The Rules) any dividends unpaid or unclaimed for seven years from the date of transfer to Unpaid Dividend Account, shall be transferred to the Investor Education and Protection Fund established by the Central Government. Further according to that Rule the shares in respect of which dividend has remained unclaimed or unpaid for 7 (seven) consecutive years or more are required to be transferred to the Demat Account of the IEPF Authority. Accordingly the Company has transferred Rs.4,66,259/- unpaid and unclaimed dividend to Investor Education and Protection Fund and corresponding shares of 24,314 Nos to IEPF Authority as per IEPF Rules. The details of such Dividend and shares are available in Company website at www.vsttillers.com. Mr. Chinmaya Khatua has been appointed as nodal officer for IEPF Regulations.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by employees, dealers, vendors, Bankers and the customers at large.

for V.S.T. TILLERS TRACTORS LTD.

Place: Bengaluru V. K. Surendra

Date : May 11, 2018 Chairman

Mar 31, 2017

DIRECTORSâ REPORT

Dear Shareholder,

The Directors have pleasure in presenting the 49th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 207

FINANCIAL PERFORMANCE (Rupees in lakhs)

Period	Year 2016-17	Year 2015-16
OPERATING INCOME	69512	64667
NON-OPERATING INCOME	1560	1227
TOTAL INCOME	71072	65894
PROFIT BEFORE DEPRECIATION, FINANCE COST & EXTRAORDINARY I TEM	11434	12513
FINANCE COST	298	256
DEPRECIATION	1181	1254
EXTRA ORDINARY ITEM	331	-
PROFIT BEFORE T AX	10285	BC3
INCOME TA X	3110	3590
PROFIT AFTER T AX	7175	7413
BALANCE B/ F	10823	5166
SURPLUS AVAILABLE FOR APPROPRIATION TO	17998	12579
FINAL / INTERIM DIVIDEND	-	1296
TAX ON DIVIDEN D	-	264
CSR EXPENDIT URE	222	196
BALANCE CARRIED FORWARD	17776	10823

Your company will be investing around Rs.80 crores ip new product development over next 4 years. The company will launch new Tiller variants and Tractor Variants. During the year 2016-17 your company synched the 27 HP Viraat Tractor model to the market Which made us represent in the 21-30 HP compact segment category which otherwise we were not present. We also launched the 7 HP single cylinder tractor VST SHAKTI SAMRAAT â and the upgraded version VS T SHAKTI VIRAAT PLUS â in April 207. Both these models are with 8 2 constant mesh gear box. The enhanced marketing campaign to reach out to end users and offering innovative & affordable farm mechanization solution enabled us to grow during the year.

COMPANYâS PERFORMANCE

The year under report was partially impacted wit¹! drought in States of Karnataka, Tamil Nadu and Ker In other parts of the country the monsoon was nor during the season. Structural changes in the subsidy schemes in few States, change over to DBT scheme! and price fixation delays impacted the sales of Power tillers during the year 2016-17

The number of Power Tillers sold in during the year was 25,55 units as against the previous year sale of 27,387; registering an adverse growth in sales of 6.8%, while the industry as a whole shrunk by 10.6%. However, your market share moved up to 59%.

Your company registered a recordable growth in Tractor numbers. We sold 9,635 tractors as against 7801 tractors in 2015-6 registering a growth of 23.5% in ^t the compact segment in comparison to 1% industry growth in the compact segment. Your company market share in the compact segment moved from B.2% in. 2015-15 to 6.5% in 2016-17. &

Your Company has been successfully running more than 75 Custom Hiring & Service Centers under the s cheme launched by the Government of Karnataka. Small farmers and marginal farmers are taking the farm equipment on lease through these Custom Hiring & Service Centers.

RISK & CONCERN

Your company has planned to invest around Rs.150 crores which includes new product development (Rs.80 crores), plant infrastructure and machinery over t next 4 years. 1

DIVIDEND:

The Board has recommended final dividend of Rs.15150%) per share for the financial year 2016- 17 and the same will be disbursed on or after 14th August 2017. The total outflow will be Rs.1560 lakhs , including the dividend distribution tax of Rs. 264 lakhs, if approved by the shareholder at the 49th AGM.

Transfer to reserves

There was no proposal for transfer to general reseal for the year 2016-17.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry - Opportunities & Challenges

Need of mechanization in agriculture has become | necessity due to limited availability of labor and high cost of labour. The aging population in the agriculture sector needs machines to reduce the manual effort. Yo company is in the business of manufacturing and solid machines and attachments for various crop cultivation The company products target largely the small an( marginal farmers who account for more than 70% o the land holding. Also, there is necessity to increase] the productivity in agriculture through mechanization and shortage of rural labour force continues to b the key driver for business growth. Moreover, to income of our farmers need to increase with increase productivity in the land size that they own. There lot of opportunity to support the farmers for customize crop solutions. Your company is offering total crore solutions to the farmers at competitive pricing which will assist in growing the business. The company has developed packages for various crops like Paddy, Cotton, Sugarcane, Horticulture, Grapes etc. for Compact tractors and Power tillers.

Delays in subsidy schemes announcement by the State Government, bureaucracy associated with the administration of schemes, weak Monsoon etc continues to be the challenge for your company.

Entry of more and more competition tractors in t compact segment is demanding your company to

The Central as well as State Governments are encouraging more and more Custom Hiring Centreâs to support the marginal and small farmers. This movement can impact the sales of Tillers and Tractors to the farmers as they may use the machines available in the Custom Hiring Centreâs on hire. Major portion ^, of Power Tillers are sold under government subsidy schemes. In case the subsidy allocations are reduced it can adversely affect the demand for these products. ;Mist State Governments are switching over to DBT scheme for subsidy which would mean without good retail finance support available for the farmers they will not be able to buy the tillers.

Your company fully endorses the call to Make in ^India.

CURRENT YEAR OUTLOOK

With prediction of normal monsoon and continued focus on farm mechanization by the Government. We expect our revenue growth will be on par with the overall industry growth.

(DETAILS OF DIRECTORS APPOINTMENT/ reappointment AND RESIGNATION:

% accordance with the provisions of the Companies Act, 2013 Mr. V V Pravindra (00239888) Nonexecutive Director of the Company will retire at the in ensuing AGM and is eligible for reappointment. V.T.Ravindra (DIN: 00396156) has been appointed ops Non-Executive Director of the Company with effect chrome 27/05/2016 Ms.Siva Kameswari Vissa (DIN: 02336249) has been appointed as Independent Director of the Company the effect from 29/07/2016.

Ms. K P Anuradha (DIN : 07214890) has resigned from Independent Director of the Company with effect If rom 0/08/206.

âMr. R.Thiyagarajan (DIN: 06906198) has been appointed as Whole-time Director of the company w.e.f the 9/ 10/2016 and has resigned from the directorship of the Company with act from 31st March 2017.

During the year, no non-executive director had

e) they, have laid down internal financial controls to not be followed by the company and that such internal s financial controls are adequate and were operating effectively. any pecuniary relationship or transactions with the Company other than the sitting fees and reimbursement of expenses incurred by them for attending meeting of the Company.

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Person (KMP) of the Company under section 2013 of the Companies Act, 2013. There is no change in KMP during the year 2016-17.

1 Mr V.P. Mahendra - Vice Chairman & Managing Director

2. Mr. R. Thiyagarajan - Chief Financial Officer

3. Mr Chinmaya Khatua - Company Secretary

CORPORATE GOVERNANCE:

DIRECTORâS RESPONSIBILITY STATEMENT:

Pursuant to subsection 5 of Section 134 of the Companies Act 2013, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so to give a true and fair view of the state of affair of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Ac for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

f) they have devised proper systems to ensure _l compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

Based on the internal financial controls and compliance System establish and maintained by the Company, he Board is of the opinion that the Companyâs internal financial controls were adequate during financial year 2016-17.

AUDITORS:

M/s. K.S. Rao & Co, Chartered Accountants (Firm Regn No. 003109S) were appointed as Auditors of the Company for five financial years w.e.f FY 2016-17, St the 48thAnnual General Meeting of the Company.

CO ST AUDITORS:

Pursuant to Section 148 of the Companies Act, 203 eat with The Companies (Cost Records and Audit) Amendment Rules, 204, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Rao, Murthy & Associates, Cost Accountants to audit the cost records )f the Company for the financial year 2017-18 on a remuneration of Rs.2 lakhs (Exclusive of applicable taxes) plus out of pocket expenses. As required under the Companies Act, 203, the remuneration payable o the cost auditor is required to be placed before if Members in a general meeting for their approval. Accordingly, a Resolution seeking Members approval ''or the remuneration payable to M/s. Rao, Murthy & Associates., Cost Auditors is included in the Notice fry the Annual General Meeting.

NTERNAL AUDITORS

M/s.Brahmayya & Co, Chartered Accountant were appointed as Internal Auditors under section 138 of the Companies Act, 2013 for the financial year 2016-17.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the

Your company has taken appropriate steps to build organizational capability which will enable the long term growth plans.

Forward-Looking Statements

Companies Act, 2013 and read with Rules made hereunder, the Company had appointed M/s. K Narayana Swamy & Co., Company Secretaries in Practice to undertake the Secretarial Audit of 1 Company for the financial year 2016-17. The Secretarial Audit Report is enclose herewith as Annexure-4. PARTICULARS OF EMPLOYEES:

As required by provisions of section 197 of the Companies Act, 203 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 204, except Mr. V.P. Mahendra, Vice Chairman & Managing Director and Mr. K.U. Subbaiah, Chief Executive Officer, the details of which are given Annexure- there are no employees who draw remuneration as set out the aforesaid provision of the Companies Act, 203. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 134 Companies Act, 203 read with rule 8 (3) of the Companies (Accounts Rules, 204 is enclosed as Annexure-2.

DEPOSITS:

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Ac 203 and rules made there under.

Internal Control System and their Adequacy The Company has put in place adequate internal financial controls over financial reporting Systems commensurate to the nature of its business and complexity of its operations. These are regularly tested for their effectiveness by Statutory as well Internal Auditors with focused attention on validation of I T. Security.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matchesâ hem with the books of account. , Explanations are sought for any variance noticed from the respective functional heads.

The Significant observations made by the Auditors and follow up actions there on reported to Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Companyâs Internal Contract Environment and monitors the implementation of the Audit recommendations.

Industrial Relation

Industrial relations have been cordial at the Bangalore Mysore and Hosur plants during the year. Statements in this release that are forward-looking statementsâ are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product job ice discounts, delays in product development and related product release schedules, sales and vendor channel disruption.

All information in this release is as of May 25, 207, The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the companyâs expectations.

Board Meeting

Six meetings of the Board of Directors were held during the year. For further details, please refer repot on Corporate Governance of this Annual Report. Declaration of Independent directors.

The Company has received declarations from Independent directors as mentioned in sub-section (6) section 149 of the Companies Act, 2013.

Committees

The Company has constitute Audit Committee, CSR Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. The details of the Committees are mentioned in Corporate Governance Report. Vigil Mechanism

The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. yt is to protect employees wishing to raise a concern flout serious irregularities within the Company.

T^e he Company has vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism are explained in the Corporate Governance Report and also posted on the website (www.vsttillers.com) of the Company.

Committee was obtained for the transactions which are of a foreseen and repetitive nature. The transactions tinkered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the A_ud_it Committee and the Board of Directors for their information and approval. The policy on dealing with Related Party Transactions as approved by the Board can be accessed at http://www.vsttillers.com/sites/ default/files/policies/policy_on_related_party_transc.pdf Material changes and commitments affecting the Financial Position

here are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

Auditors qualification, reservation or adverse remark or disclaimer.

The Statutory Auditors have given a clean report without any qualification, reservation or adverse remark or disclaimer except as mentioned in Clause 2 (g)(iv) of the Auditors Report. The Secretarial Auditors ] made the following observation.

âThere was an imbalance regarding constitution of the Board which was duly communicated to the Stock Exchanges and the same was restored during the year under review â

No fraud has been reported by the Auditors un section 143 (12) of the Companies Act, 203.

Loans, Guarantee & Investment

The Company has given loan and made investment during the year 206-7. However, the investments and Loan formed part of the notes to the financial statements provided in this Annual Report. The company has no given any Guarantee during the year 206-7.

Related Party Transactions

All related party transactions that are entered into du the financial year were on an armâs length basis. There are no materially significant related party transactions made by the company with Promoters, Directors, Managerial Personnel or other designated person which may have a potential conflict with the interest of the Company at lager.

All Related Party Transactions are placed be the Audit Committee and also before the Boa for approval. Prior omnibus approval of the Audit

Risk Management Policy

The Company is having a risk management policy.

The risk pertaining to business of the Company is discussed at the Audit Committee and at the Board Meetings on regular basis.

are no risks which in the opinion of the Board threaten the existence of the Company. However, some ^of the risks which may pose challenges are set out in nosier Management Discussion and Analysis which forms a part of this report.

The Committee composition :

Mr. M.K. Bannered, Chairman, Mr. V K. Surendra, Member âK.M. Pai, Member, Mr. VP. Mahendra, Member

The details of the policy are given below:

Risk Category

Risk Description

Mitigation

Industry Risk

Concentration on Agri Business Specific Risks are:

- Industry Downturn in Agri Industry will adversely affect business

- Strong competition and ability to market models faster.

High focus on specific Segment

Svecific Risks are:

- Business will be adversely affected when Agri segment experiences sluggish growth

- Highly dependent on subsidy and Govt, policy on Agriculture development.

? Tapping of wider segments in products and geographies including its aftermarket foot print in the core business

? Explore to releasing new models ahead of competition in the future. 5 year strategic business plan to be formulated.

? Explore & grow businesses in the Engines,

Attachments and other Agricultural Machinery, while remaining focused on core business

? Diversification in non-agri segment

Raw Material Risk

a. Volatility in Raw material, commodity and fuel prices.

b. Single source

a. Volatility in prices of raw materials and commodities may impact our profit.

b. Single source purchasing increases the bargaining power of the supplier

Specific risks are:

- Business disruption

- Continuous price escalation by the supplier

? Vendor rationalization & Commodity based approach in sourcing, leading to focused negotiation to manage prices of raw materials etc.

? Sourcing options to develop alternate sources for all critical single source purchases.

? VA/VE efforts by Engineering resulting in material cost reduction through better designs

Quality & Integrity of the Product

Poor quality or integrity of our products may result in reputation and brand damage, resulting in lower volumes and financial claims Specific risks are:

- Poor quality of the products

- Increase in Cost of Quality leads to bottom-line erosion

- Loss of customers & Lost opportunities in new programs

? Effective process control

? Supplier cluster programs to improve quality of incoming parts

? Warranty procedure & performance sign off with Suppliers.

Volatility in Currency Exchange Rate

Currency exchange gain or loss will impact the bottom line. Specific risks are:

- Increase material cost in case of weakening rupee

- Lower revenue realization in case of strengthening rupee against USD

? Hedging imports through forward contracts

? PCFC¹ to protect exports against currency fluctuation

? Restructuring of credit options for both imports & exports

Demand Risk

Inaccuracy in Sales forecasting leads to poor delivery performance thereby leading to loss of customers Specific Risks are

â Excess Inventory

â Lower vendor ratings (Mysore plant)

â Premium freight

â Customer Loss

? Implementation of IcSoft for big dealers.

D Effective Implementation of demand management in by S&OP.

? Measurement of forecast accuracy to smoothen out demand variation

? Enhance Vendor Managed Inventory

Information Security

Loss of business data, proprietary & confidential information and disruption of processes due to unavailability of robust IT systems, thereby causing financial damage.

Specific risks are:

- Failure of IT systems thereby business continuity

- Susceptibility to Cyber crime

? Implementation of measures to secure confidentiality and integrity of data

? Ensuring data redundancy by storage in data replication center

? Far site data recovery center, (proposed)

? Robust firewall mechanisms, thereby preventing cyber crimes

Technology Risk

Technological Obsolescence with the changes in technological trends in the Industry

Specific risks are:

- Loss of Business opportunity, and market share

Risks arising through technology partnership

- by disclosure of technology to competition & being a competitor themselves

- Inability to provide effective technical solutions Specific risks are:

- Threat of competition from technology partner & competitors

- Ineffective utilization of Intellectual Infrastructure bandwidth

? Formulation of technology road map in line with the Industry trends aligning with the 5 year strategic plan.

? Collaborate with leading technology partners to shorten the development cycle stay in sync with the market

? Assessment of the capability of technical partner through a formal diligence process

? Formal engagement model with exclusivity and no compete provisions in the agreement

People & Organization

Failure to attract with the right skills and talent to seize opportunities, achieve challenging returns and fulfill the strategy Specific Risks are:

- Delay in Strategy & project execution & Growth plans

? Alignment of company performance and employee performance incentives through the effective compensation & benefit structure D Develop a talent pipeline through an annual talent review process and talent development D Values culture reinforced through induction,

mandatory training, performance management, and employee interaction programs.

Product Liability

Specific risks are: Product Liability Product Guarantee Financial Loss Product recall

D Availing product liability with recall insurance policy.

Directors and the Board as a whole was conducted based on the criteria and frame work adopted by the Board.

None of the Independent Directors are due for re-appointment.

There is no change in nature of the business during the year.

Details of subsidiary, Associate or joint Venture ^co^mpany.

During the year 206 -17 there is no change in Subsidiary Associate or Joint Venture Company.

Significant and material orders

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operatic

The ratio of the remuneration of each Director and KMP to the median remuneration of the employees _r of the company for the financial year as follows:

S l. No.	Name	Designation	_Salary2016-07	Salary 2015-2016 (in Rs)	Increase in salary	Ratio/Times per median of employee remuneration
1	Mr.V.P. Mahendra	Vice Chairman & Managing Director (KMP)	77,49,081	77,49,901	(820)	15.20
2	Mr. B.C.S Iyengar #	Whole-time Director	4,52,760	54,23,602	(49,70,842)	(0.89)
3	Mr. R. Thiyagarajan²	Chief Financial Officer (KMP)	45,62,423	38,92,170	6,70,253 17.22%	8.95
4	Mr. Chinmaya Khatua	Company Secretary (KMP )	13,89,647	11,28,215	2,61,432 23.7%	2.72

# Mr.B C S Iyengar resigned on 30th April 2016.

* Mr.R.Thiyagarajan salary details as Whole-time Director and CFO.

The Companyâs PAT has marginally decreased from R 7413 lakhs to Rs. 7175 lakhs. The increase in KMP remuneration is line with the current market scene and with Company policy. However salary of Vice Chairman & Managing Director and other Whole-time Directors was approved by the shareholders.

The Company has given about 8.73% average increase in salaries to the employees keeping in view the overact industry standard and interest of the employees. Tunionized employees of the Company are getting salary increment as per the terms and conditions of their settlement. There is no exceptional circumstances of increase in the managerial remuneration.

The Company has 633 permanent employees on roll. The Company fixes salary of the employees on the basis of Remuneration*p olicy of the Company.

Payment of Commission to Managing Director & Whole-time Director.

The Managing Director and Whole-time Directors are being paid commission on net profit of the Company as approved by the shareholders. The commission criteria are given below :

N ame	Designation	Commission
VP. Mahendra	Vice Chairman & Managing Director	One percent on the net profit of the Company subject to a maximum of one and half times of annual basic salary drawn
*B C S Iyengar	Whole-time Director	One percent on the net profit of the Company subject to a maximum of annual basic salary drawn

VARIATION IN MARKET CAPITALISATION :

Date	Paid up Capital (in Rs)	Closing Market Price per shares	EPS	PE Ratio	M arket Capitalization (Rs. in crore)
31.03.2016	86395280	1484.50	85.81	17.30	1074.32
31.03.2017	86395280	1800.00	83.05	21.67	1555.12
Increase/Decrease	NIL
% Increase/Decrea s	e NIL
No issue of shar es during the year	-	-	-	-	-

Notes : Data based on share prices quoted on BSE.

(d) Salient terms of the contracts or arrangements or rejections including the value, if any: Not Applicable

Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has formed Internal Complaint Committee under Sexual Harassment of Women a Workplace (Prevention, Prohibition and Redressal) Act, 203 and no complaint was received during the year 206-7.

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014) ₂

Form for disclosure of particulars of contracts arrangements entered into by the company with relate parties referred to in sub-section (!) of section 88 of the Companies Act, 203 including certain arms length transactions under third proviso thereto:

1 Details of contracts or arrangements or transactions not at armâs length basis: V.S.T. Tillers Tractors Ltd (the Company) has not entered into any contract/arrangement/transaction with its related parties which is not at arms length during FY 20B-7.

(a) Name(s) of the related party and nature of relationship: Not Applicable

(b) Nature of contracts/arrangements/transaction Not Applicable

(c) Duration of the contracts / arrangement? transactions: Not Applicable

(e) Justification for entering into such contracts or _at arrangements) transactions: Not Applicable ) (f) Date(s) of approval by the Board: Not Applicable

(g) Amount paid as advances, if any: Not Applicable

(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188: Not Applicable

2. Details of material contracts or arrangement or / transactions at armâs length basis: Name(s) of the relate party and nature of ^f relationship: Not Applicable

b. Nature of contracts / arrangements / transactions: Not Applicable

c. Duration of the contracts / arrangements / transactions Not Applicable

d. Salient terms of the contracts or arrangements ^on rogations including the value, if any: Not ^the Applicable

e. Date(s) of approval by the Board, if any: Not f Applicable

f. Amount paid as advances, if any: None

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for faith reposed in your Company by employees, dealers,

on behalf of Board of Directors

V. K. Surendra

Ps/lace: Bengaluru Chairman

Date: 25th May, 2017

Mar 31, 2016

Dear Shareholder,

The Directors have pleasure in presenting the 48th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2016.

FINANCIAL PERFORMANCE

(Rupees in lacs)

Period	Year 2015-16	Year 2014-15
OPERATING INCOME	64667	55160
NON-OPERATING INCOME	1227	1186
TOTAL INCOME	65894	56346
PROFIT BEFORE DEPRECIATION & FINANCE COST	12513	11208
FINANCE COST	256	212
DEPRECIATION	1254	941
PROFIT BEFORE TAX	11003	10055
INCOME TAX	3590	3104
PROFIT AFTER TAX	7413	6952
BALANCE B/F	5166	5023
SURPLUS AVAILABLE FOR APPROPRIATION TO :	12579	11974
INTERIM/FINAL DIVIDEND	1296	1296
PROPOSED TAX ON DIVIDEND	264	264
TRANSFER TO GENERAL RESERVE	-	5000
DEPRECIATION ADJUSTMENT	-	71
CSR EXPENDITURE	196	177
BALANCE CARRIED FORWARD	10823	5166

COMPANYâS PERFORMANCE

The year under report was riddled with adverse factors with second consecutive year of scanty rain fall in many parts of Western India and Central India affecting crops in many areas. In addition, the returns to the sugar cane and cotton growers were also severely affected, added to this was the non-availability of subsidy for power tiller in some of the key States in the Eastern Region. However Southern states and Gujarat had a healthy growth thereby nullifying the negative effect of the adverse factors. We could grow in power tiller volumes by over 19% while the overall industry grew by less than 3%.

The number of Power Tillers sold during the year was 27387 units as against the previous year sales of 23,103 units with the market share growth to over 55 % an increase of 5 % over the previous year In the Tractor segment it was consecutive second year failure of monsoon which resulted in 10% de-growth of Industry in domestic market. Your company however gained 3.1% market share (Sub 30 HP segment) & registered 17% growth in volume from 6694 nos. in 2014-15 to 7801 nos in 2015-16. Expansion of product variants, release of new Tractor model, strengthening the marketing strategy by expanding to new markets, improved marketing campaign to reach out to end user and offering innovative & affordable farm mechanization solution enabled us to grow during the year.

DIVIDEND:

Your Directors had declared interim dividend of Rs.15/-(150%) per share for the financial year 2015-16 and the same was paid on 28/03/2016. The total outflow was Rs.1560 lacs including the dividend distribution tax. 264 lacs. The directors do not recommend any final dividend.

Transfer to reserves

An amount of Rs. 108.23 crore is proposed to be retained in the surplus without transferring to general reserve for the year 2015-16.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry - Opportunities & Challenges

Your company is fortunate to be in the business of priority sector and uniquely placed with a range of machineries required for mechanized paddy and other crop cultivation. The products target largely the small farmers who account for more than 70% of the land holding. The ever growing need to increase the production and productivity in agriculture vis-a-vis the shortage of rural labour force continues to be the key driver for business growth. The comparative statistics of China and other rice growing countries of Asia instantly point to the tremendous opportunities for power tillers and mechanized translators in India. At the same time the liberal imports from China, uncertainties in subsidy and the problems associated with the administration of schemes, pose a constant challenge to the industry for short term as well as long term planning. The mechanized transplantation of paddy is a difficult concept to market but is sure to grow steadily.

The general decline in tractor industry is a matter of concern, however there are signs that the demand for small tractors will keep growing. Lower investment, running and maintenance cost and the advantages of compact size tractors are becoming more important factors for buying decisions, especially for agricultural usage. As pioneers in this segment we foresee a paradigm shift in the mind set of farmers from big machines to appropriate needs.

RISKS AND CONCERNS

It is well known that in as much as subsidy has greatly helped the power tiller industry to grow, the absence or delay in the subsidy schemes adversely affects the demand. While farm mechanization continues to be in focus, the share of funds from the Centre to the States is getting reduced. Special schemes to give thrust for custom hiring of agricultural machinery to benefit small farmers is yet to gain large scale acceptance. Your company is constantly trying to work with the Government to address many of the impediments that are coming in the way of greater success in small farm mechanization.

We have always conceded that we are not insulated from competition both in power tillers and tractors. We believe that it is helping the concept to grow and we have to create a space for ourselves by honing our skills and competitive edge. Your company fully endorses the call to âMake in Indiaâ and fervently hopes that domestic manufacturers interest will be accorded preference.

CURRENT YEAR OUTLOOK

With prediction of normal monsoon and continued focus on farm mechanisation by the Government. We expect our revenue growth will be par with the overall industry growth.

DETAILS OF DIRECTORS APPOINTMENT/ REAPPOINTMENT AND RESIGNATION:

In accordance with the provisions of the Companies Act, 2013 Mr. V.P. Mahendra, Vice Chairman & Managing Director of the Company will retire at the ensuing AGM and he is eligible for reappointment.

Mr. VT. Ravindra (DIN- 00396156) has been appointed by the Board as an additional director of the Company. His appointment as director of the Company has been included in the notice of 48th Annual General Meeting.

Mr. K.M. Pai has been appointed as an Independent Director with effect from 5th August, 2015, to fill the casual vacancy caused due to resignation of Mr. V. Ramachandran.

Mr. B.C.S. Iyengar has resigned from the directorship of the Company with effect from 30th April, 2016.

Mr.K.K. Rai and Mr.VRamachandran had resigned on 20/06/2015 and 25/06/2015 respectively.

KEY MANAGERIAL PERSONNEL (KMP)

The following persons are Key Managerial Personnel (KMP) of the Company under section 203 of the Companies Act, 2013. There are no change in KMP during the year 2015-16.

1. Mr. VP. Mahendra - Vice Chairman & Managing Director

2. Mr. R. Thiyagarajan - Chief Financial Officer

3. Mr. Chinmaya Khatua - Company Secretary CORPORATE GOVERNANCE:

DIRECTORâS RESPONSIBILITY STATEMENT:

Pursuant to subsection 5 of Section 134 of the Companies Act 2013, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(d) they have prepared the annual accounts on a going concern basis;

(e) they, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Based on the internal financial controls and compliance system established and maintained by the Company, the Board is of the opinion that the Companyâs internal financial controls were adequate during financial year 2015-16.

AUDITORS:

M/s. Brahmayya & Co, Chartered Accountants who were appointed as Auditors of the Company for three financial years w.e.f FY 2014-15 at the 46th Annual General Meeting, have given their resignation to be effective from conclusion of the 48th Annual General Meeting, to accommodate the Auditors rotation as per Companies Act, 2013.

The Audit Committee and Board have recommended M/s. K.S. Rao & Co, Chartered Accountants as Auditors of the Company. The appointment of new Auditors is included in the notice of the 48th Annual General Meeting for shareholder approval.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Rao, Murthy & Associates, Cost Accountants to audit the cost records of the Company for the financial year 2016-17 on a remuneration of Rs.2 lakhs (Exclusive of service tax) plus out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members in a general meeting for their ratification. Accordingly, a Resolution seeking Memberâs ratification for the remuneration payable to M/s. Rao, Murthy & Associates., Cost Auditors is included in the Notice of the Annual General Meeting.

INTERNAL AUDITORS

M/s. K.P.Rao & Co, Chartered Accountant were appointed as Internal Auditors under section 138 of the Companies Act, 2013 for the financial year 2015-16.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. K Narayana Swamy & Co, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2015-16. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES:

As required by provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, except Mr. V.P. Mahendra, Vice Chairman & Managing Director and Mr. K.U. Subbaiah, Chief Executive Officer, the details of which are given in Annexure-1, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 134 Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-2.

DEPOSITS:

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Act, 2013 and rules made there under.

Internal Control System and their Adequacy

The Company maintains adequate Internal Control Systems commensurate to the nature of its business and complexity of its operations. These are regularly tested for their effectiveness by Statutory as well as Internal Auditors with focused attention on validation of I T. Security.

Environment and monitors the implementation of the Audit recommendations.

Industrial Relation

Industrial relations have been cordial at the Bengaluru, Mysore and Hosur plants during the year. Wage settlements were cordially concluded in our Mysore and Bangalore plants during the year.

Your company has taken appropriate steps to build organizational capability which will enable the long term growth plans.

Forward-Looking Statements

Statements in this release that are âforward-looking statementsâ are based on current expectations and assumptions that are subject to risks and uncertainties.

Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product price discounts, delays in product development and related product release schedules, sales and vendor channel disruption.

All information in this release is as of May 27, 2016, The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the companyâs expectations.

Board Meeting

Seven meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report.

Declaration of Independent directors.

The Company has received declarations from Independent directors as mentioned in sub-section (6) of section 149 of the Companies Act, 2013.

Committees

The Company has constituted Audit Committee, CSR Committee, Nomination & Remuneration Committee,

Stakeholders Relationship Committee and Risk Management Committee. The details of the Committees are mentioned in Corporate Governance Report.

Vigil Mechanism

The Company has vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism is explained in the Corporate Governance Report and also posted on the website (www.vsttillers.com) of the Company.

Auditors qualification, reservation or adverse remark or disclaimer.

The Statutory Auditors and Secretarial Auditors have given a âclean reportâ without any qualification, reservation or adverse remark or disclaimer. No fraud has been reported by the Auditors under section 143 (12) of the Companies Act, 2013.

Loans, Guarantee & Investment

The Company has not given any loan or guarantee under section 186 of the Companies Act, 2013 during the year 2015-16. However the investments formed part of the notes to the financial statements provided in this Annual Report.

Related Party Transactions

Risk Category

Risk Description

Mitigation

Industry Risk

Concentration on Agri Business Specific Risks are:

- Industry Downturn in Agri Industry will adversely affect business

- Strong competition and ability to market models faster.

High focus on specific Segment

Specific Risks are:

- Business will be adversely affected when Agri segment experiences sluggish growth

- Highly dependent on subsidy and Govt, policy on Agriculture development.

? Tapping of wider segments in products and geographies including its aftermarket foot print in the core business

D Explore to releasing new models ahead of

competition in the future. 5 year strategic business plan to be formulated.

D Explore & grow businesses in the Engines,

Attachments and other Agricultural Machinery, while remaining focused on core business

? Diversification in non-agri segment

All Related Party Transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their information and approval. The policy on dealing with Related Party Transactions as approved by the Board can be accessed at http://www.vsttillers.com/sites/ default/files/policies/policy_on_related_party_transc.pdf

Material changes and commitments affecting the Financial Position

Risk Management Policy

The Company is having a risk management policy. The risk pertaining to business of the Company is discussed at the Audit Committee and at the Board Meetings on regular basis. The details of the policy are given below :

Corporate Social Responsibility (CSR)

Raw Material Risk

a. Volatility in Raw material, commodity and fuel prices.

b. Single source

a. Volatility in prices of raw materials and commodities may impact our profit.

b. Single source purchasing increases the bargaining power of the supplier

Specific risks are:

- Business disruption

- Continuous price escalation by the supplier

? Vendor rationalization & Commodity based approach in sourcing, leading to focused negotiation to manage prices of raw materials etc.

? Sourcing options to develop alternate sources for all critical single source purchases.

D VA/VE efforts by Engineering resulting in material cost reduction through better designs

Quality & Integrity of the Product

Poor quality or integrity of our products may result in reputation and brand damage, resulting in lower volumes and financial claims Specific risks are:

- Poor quality of the products

- Increase in Cost of Quality leads to bottom-line erosion

- Loss of customers & Lost opportunities in new programs

? Effective process control

? Supplier cluster programs to improve quality of incoming parts

? Warranty procedure & performance sign off with Suppliers.

Volatility in Currency Exchange Rate

Currency exchange gain or loss will impact the bottom line. Specific risks are:

- Increase material cost in case of weakening rupee

- Lower revenue realization in case of strengthening rupee against USD

D Hedging imports through forward contracts

? PCFC¹ to protect exports against currency fluctuation

? Restructuring of credit options for both imports & exports

Demand Risk

Inaccuracy in Sales forecasting leads to poor delivery performance thereby leading to loss of customers Specific Risks are

- Excess Inventory

- Lower vendor ratings (Mysore plant)

- Premium freight

- Customer Loss

D Implementation of IcSoft for big dealers.

? Effective Implementation of demand management in by S&OP.

D Measurement of forecast accuracy to smoothen out demand variation D Enhance Vendor Managed Inventory

Information Security

Loss of business data, proprietary & confidential information and disruption of processes due to unavailability of robust IT systems, thereby causing financial damage.

Specific risks are:

â Failure of IT systems thereby business continuity

- Susceptibility to Cyber crime

D Implementation of measures to secure confidentiality and integrity of data

? Ensuring data redundancy by storage in data replication center

? Far site data recovery center, (proposed)

D Robust firewall mechanisms, thereby preventing cyber crimes

Technology Risk

Technological Obsolescence with the changes in technological trends in the Industry

Specific risks are:

- Loss of Business opportunity, and market share

Risks arising through technology partnership

- by disclosure of technology to competition & being a competitor themselves

- Inability to provide effective technical solutions Specific risks are:

- Threat of competition from technology partner & competitors

- Ineffective utilization of Intellectual Infrastructure bandwidth

? Formulation of technology road map in line with the Industry trends aligning with the 5 year strategic plan.

? Collaborate with leading technology partners to shorten the development cycle stay in sync with the market

D Assessment of the capability of technical partner through a formal diligence process

? Formal engagement model with exclusivity and noncompete provisions in the agreement

People & Organization

Failure to attract with the right skills and talent to seize opportunities, achieve challenging returns and fulfill the strategy Specific Risks are:

- Delay in Strategy & project execution & Growth plans

? Alignment of company performance and employee performance incentives through the effective compensation & benefit structure

? Develop a talent pipeline through an annual talent review process and talent development

? Values culture reinforced through induction, mandatory training, performance management, and employee interaction programs.

Product Liability

Specific risks are: Product Liability Product Guarantee Financial Loss Product recall

? Availing product liability with recall insurance policy.

The Company has formed CSR policy and Committee during the year and details of CSR policy is available in Company website i.e. http://www.vsttillers.com/ policies. The Company has spent Rs.95 lakhs in CSR activities during the financial year 2015-16.

Evaluation of Board Performance.

None of the Independent Directors are due for reappointment.

There is no change in nature of the business during the year.

Details of subsidiary, Associate or joint Venture Company.

During the year 2015-16 there is no change in Subsidiary Associate or Joint Venture Company.

Significant and material orders

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

The ratio of the remuneration of each Director and KMP to the median remuneration of the employees of the company for the financial year as follows:

Sl. No.	Name	Designation	Salary 2015-16 (in Rs)	Salary 2014-15 (in Rs)	Increase in salary	Ratio/Times per Median of employee remuneration
1	Mr.V.P. Mahendra	Vice Chairman & Managing Director (KMP)	77,49,901	76,26,104	1,23,797 (1.62%)	34.12
2	Mr. B C S Iyengar	Director Corporate Strategy	54,23,602	39,18,499	15,05,103 (38.41%)	23.88
4	Mr. R. Thiyagarajan	Chief Financial Officer (KMP)	38,92,170	31,22,978	7,69,192 (24.63%)	17.13
5	Mr. Chinmaya Khatua	Company Secretary (KMP)	11,28,215	9,00,570	2,27,648 (25.28%)	4.96

The Companyâs PAT has increased from Rs. 6952 lakhs to Rs. 7413 lakhs, an increase of 6.63 % and this increase of KMP remuneration is line with the current market scenario and with Company policy. However salary of Vice Chairman & Managing Director and other whole time directors was approved by the shareholders.

The Company has given about 9% increase in salaries to the employees keeping in view the overall industry standard and interest of the employees. The unionized employees of the Company are getting salary increment as per the terms and conditions of their wage settlement. There is no exceptional circumstances of increase in the managerial remuneration.

The Company has 574 permanent employees on roll. The Company fixes salary of the employees on the basis of Remuneration Policy of the Company.

Payment of Commission to Managing Director & Whole time Director.

The Managing Director and Whole Time Directors are being paid commission on net profit of the Company as approved by the shareholders. The commission criteria is given below:

Internal Complaint Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Name	Designation	Commission
VP. Mahendra	Vice Chairman & Managing Director	One percent on the net profit of the Company subject to a maximum of one and half times of annual basic salary drawn
B C S Iyengar	Director Corporate strategy	One percent on the net profit of the Company subject to a maximum of the annual basic salary drawn

There are no employees who are not directors but receive remuneration in excess of the highest paid director during the year.

VARIATION IN MARKET CAPITALISATION :

Date	Paid up Capital (in Rs)	Closing Market Price per shares	EPS	PE Ratio	Market Capitalization (Rs. in crore)
31.03.2015	86395280	1243.50	80.46	15.45	1074.32
31.03.2016	86395280	1484.50	85.81	17.30	1282.54
Increase/Decrease	NIL	241.00	5.35	1.85	208.22
% Increase/Decrease	NIL	19.38	6.65	11.97	19.38
No issue of shares during the year	-	-	-	-	-

Notes : Data based on share prices quoted on BSE.

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at armâs length basis: V.S.T. Tillers Tractors Ltd (the Company) has not entered into any contract/arrangement/transaction with its related parties which is not at armâs length during FY 2015-16.

(a) Name(s) of the related party and nature of relationship: Not Applicable

(b) Nature of contracts/arrangements/transactions: Not Applicable

(d) Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

(e) Justification for entering into such contracts or arrangements or transactions: Not Applicable

(f) Date(s) of approval by the Board: Not Applicable

(g) Amount paid as advances, if any: Not Applicable

(h) Date on which the special resolution was passed in general meeting as required under first proviso to section 188: Not Applicable

2. Details of material contracts or arrangement or

transactions at armâs length basis:

a. Name(s) of the related party and nature of relationship: Not Applicable

b. Nature of contracts / arrangements / transactions: Not Applicable

c. Duration of the contracts / arrangements / transactions: Not Applicable

d. Salient terms of the contracts or arrangements or transactions including the value, if any: Not Applicable

e. Date(s) of approval by the Board, if any: Not Applicable

f. Amount paid as advances, if any: None

on behalf of Board of Directors

V. K. Surendra

Place: Bengaluru Chairman

Date: 27th May, 2016

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure-5 to this Report.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, employees, dealers, vendors, Bankers and the customers at large.

for V.S.T. TILLERS TRACTORS LTD.

Place: Bengaluru V. K. Surendra

Date : May 27, 2016 Chairman

Mar 31, 2015

Dear Shareholder,

The Directors have pleasure in presenting the 47th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2015.

FINANCIAL PERFORMANCE (Rupees in lacs) Period Year 2014-15 Year 2013-14

OPERATING INCOME 55160 62422

NON-OPERATING INCOME 1186 870

TOTAL INCOME 56346 63292

PROFIT BEFORE DEPRECIATION & FINANCE COST 11208 12764

FINANCE COST 212 177

DEPRECIATION 941 391

PROFIT BEFORE TAX 10055 12196

INCOME TAX 3104 3902

PROFIT AFTER TAX 6952 8294

BALANCE B/F 5023 5245

SURPLUS AVAILABLE FOR APPROPRIATION TO : 11974 13539

PROPOSED DIVIDEND 1296 1296

PROPOSED TAX ON DIVIDEND 264 220

TRANSFER TO GENERAL RESERVE 5000 7000

DEPRECIATION ADJUSTMENT 71 -

CSR EXPENDITURE 177 -

BALANCE CARRIED FORWARD 5166 5023

COMPANY'S PERFORMANCE

The year under report was riddled with adverse factors such as scanty rain fall in many parts of western India crop failure, plight of sugarcane and cotton growers, non-availability of subsidy for Power Tillers in key States, all of which have resulted in de-growth of tractor and power tiller volumes.

The number of Power Tillers sold during the year was 23103 units as against the previous year's 27252 while Tractor sales was down to 6694 units compared to 7452 during 2013-14.

However it is gratifying to note that while the Income from operation of the Company fell by 12%, better realisation on product price and stable raw material prices, control on overheads have enabled the company to minimize the dent on the bottom line.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs.15/- per equity share of Rs.10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs.1560 lacs including the distribution tax.

Transfer to reserves

We propose to transfer Rs.50 crore to the general reserve. An amount of Rs.52 crore is proposed to be retained in the surplus.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry - Opportunities & Challenges

Your company is fortunate to be in the business of priority sector and uniquely placed with a range of machineries required for mechanized paddy cultivation. The products target largely the small farmers who account for more than 70% of the land holding. The ever growing need to increase the production and productivity in agriculture vis-a-vis the shortage of rural labour force continues to be the key driver for business growth. The comparative statistics of China and other rice growing countries of Asia instantly point to the tremendous opportunities for power tillers and mechanized trans planters in India. At the same time the liberal imports from China , uncertainties in subsidy and the problems associated with the administration of schemes, pose a constant challenge to the industry for short term as well as long term planning. The mechanized transplantation of paddy is a difficult concept to market but is sure to grow steadily.

The general decline in tractor industry is a matter of concern, however there are signs that the demand for small tractors will keep growing. Lower investment, running and maintenance cost and advantages of compact size tractors are becoming more important factors for buying decisions, especially for agricultural usage. As pioneers in this segment we foresee a paradigm shift in the mind set of farmers from big machines to appropriate needs.

RISKS AND CONCERNS

It is well known that in as much as subsidy has greatly helped the power tiller industry to grow, the absence or delay in the subsidy schemes adversely affects the demand. While farm mechanization continues to be in focus, the share of funds from the Centre to the States is getting reduced. Special schemes to give thrust for custom hiring of agricultural machinery to benefit small farmers is yet to gain large scale acceptance. Your company is constantly trying to work with the Government to address many of the impediments that are coming in the way of greater success in small farm mechanization.

We have always conceded that we are not insulated from competition both in power tillers and tractors . We believe that it is helping the concept to grow and we have to create a space for ourselves by honing our skills and competitive edge. Your company fully endorses the call to "Make in India" and fervently hopes that domestic manufacturers interest will be accorded preference.

CURRENT YEAR OUTLOOK

Your Directors sincerely believe that the year 2014-15 was an aberration and the company should plan for returning to healthy growth for the current financial year. The products that your company manufac -tures requires a long lead time for production to match the seasonal fluctuation in demand and intimation to hundreds of vendors from whom the components are sourced. The opportunity loss during peak season is far greater than the carrying cost of inventory. This will be addressed with the new plant for Tractors in Hosur gearing up to increase the capacity utilization through the new variants that are added to the existing tractor model. The Bengaluru plant is also geared up to meet the anticipated increase in demand for power tillers.

DIRECTORS REAPPOINTMENT:

In accordance with the provisions of the Companies Act, 2013 Mr. V.V Pravindra, Director of the Company will retire at the ensuing AGM and he is eligible for reappointment.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL (KMP)

During the year following persons were appointed as Key Managerial Personnel (KMP) of the Company under section 203 of the Companies Act, 2013.

1. Mr. V.P. Mahendra - Vice Chairman, Managing Director & CEO

2. Mr. R. Thiyagarajan - Executive Vice President & CFO

3. Mr. Chinmaya Khatua - Company Secretary

CORPORATE GOVERNANCE:

The Company strives to ensure good in Corporate Governance and levels of transparency with all the provisions of Clause-49 of the Listing Agreement. A certificate from the Auditors to this effect forms part of Corporate Governance Report.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to subsection 5 of Section 134 of the Companies Act 2013, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) they had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) they had prepared the annual accounts on a going concern basis; and

(e) they, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

AUDITORS:

M/s. Brahmayya & Co, Chartered Accountants were appointed as Auditors of the Company for three financial year w.e.f 2014-15 at the 46th Annual General Meeting. Their appointment will be ratified at the forth coming Annual General Meeting.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Rao, Murthy & Associates, Cost Accountants to audit the cost records of the Company for the financial year 2015-16 on a remuneration of Rs.2 lakh (Exclusive of service tax) plus out of pocket expenses. As required under the Companies Act, 2013, the remuneration payable to the cost auditor is required to be placed before the Members

in a general meeting for their ratification. Accordingly, a Resolution seeking Member's ratification for the remuneration payable to M/s. Rao, Murthy & Associates., Cost Auditors is included at Item No.6 of the Notice convening the Annual General Meeting.

INTERNAL AUDITORS

M/s. K.P.Rao & Co, Chartered Accountant were appointed as Internal Auditors under section 138 of the Companies Act, 2013 for the financial year 2014-15.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. K Narayana Swamy & Co, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES:

As required by provisions of section 197 of the Companies Act, 2013 read with Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, except Vice Chairman & Managing Director, the details of which are given in Annexure-1, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 134 Companies Act, 2013 read with rule 8 (3) of the Companies (Accounts) Rules, 2014 is enclosed as Annexure-2.

DEPOSITS:

Your Company has not accepted any deposits within the meaning of Chapter- V of the Companies Act, 2013 and rules made there under.

Internal Control System and their Adequacy

The Company maintains adequate Internal Control Systems commensurate to the nature of its business and complexity of its operations. These are regularly tested for their effectiveness by Statutory as well as Internal Auditors with focused attention on validation of I T.Security.

The Significant observations made by the Auditors and follow up actions there on reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Company's Internal Control Environment and monitors the implementation of the Audit recommendations.

Industrial Relation

Industrial relations have been cordial at the Bengaluru and Hosur plants during the year. At the Mysore plant the previous memorandum of settlement has expired and negotiations are under progress for an amicable settlement.

Your company has initiated steps to building organizational capabilities and strengthen human resources at all levels in line with the corporate growth plans.

Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product price discounts, delays in product development and related product release schedules, sales and vendor channel disruption.

All information in this release is as of May 29, 2015, The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the company's expectations.

Board Meeting

Four meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report.

Declaration of Independent directors.

The Company has received declarations from Independent directors as mentioned in sub-section (6) of section 149 of the Companies Act, 2013.

Committees

The Company has constituted Audit Committee, CSR Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee. The details of the Committees are mentioned in Corporate Governance Report.

Vigil Mechanism

The purpose of this policy is to provide a framework to promote responsible and secure whistle blowing. It is to protect employees wishing to raise a concern about serious irregularities within the Company.

The Company has vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism is explained in the Corporate Governance Report and also posted on the website of the Company.

Auditors qualification, reservation or adverse remark or disclaimer.

The Auditors have given a "clean report" without any qualification, reservation or adverse remark or disclaime r. Except slight delay in payment of TDS. Management explained, the same has been addressed. The Secretarial Auditors have made the following observation.

"The Company is yet to appoint Woman Director on the Board of the Company in compliance with Clause 49 (H)(A)(1) of the Listing Agreement read with Section 149 of the Companies Act, 2013."

Explanation

We wish to inform that the Company has been making best efforts to find a suitable person for appointment as a woman director on the Board. We hasten to add that we are confident of complying with requirement at the earliest.

Loans, Guarantee & Investment

The Company has not given any loan or guarantee under section 186 of the Companies Act, 2013 during the year 2014-15. However the investments formed part of the notes to the financial statements provided in this Annual Report.

Related Party Transactions

All related party transactions that are entered into during the financial year were on an arm's length basis . There are no materially significant related party transactions made by the company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their information and approval. The policy on dealing with Related Party Transactions as approved by the Board can be accessed at http://www.vsttillers.com/sites/ default/files/policies/policy_on_related_party_transc.pdf

Material changes and commitments affecting the Financial Position

There are no material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;

Risk Management Policy

With regard to risk management policy, the Company is in process of finalization of the risk management policy however risk pertaining to business of the Company is discussed at the Audit Committee and at the Board Meetings on regular basis.

Corporate Social Responsibility (CSR)

The Company has formed CSR policy and Committee during the year and details of CSR policy is available in Company website i.e. http://www.vsttillers.com/ policies. The Company has not spent any amount in CSR activities during the financial year 2014-15. However, as a matter of principle your Company has been supporting approved Trusts/NGOs in social, economic & educational fields.

Evaluation of Board Performance.

The Board works with the nomination and remuneration committee to lay down the evaluation criteria for the performance of executive / non-executive / independent directors through a peer-evaluation excluding the director being evaluated. The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and frame work adopted by the Board.

None of the Independent Directors are due for re-appointment.

There is no change in nature of the business during the year. Details of subsidiary, Associate or joint Venture Company.

Under Companies Act, 2013, M/s. Mitsubishi Heavy Industries-VST Diesel Engines Pvt Ltd (CIN- U34107KA2007PTC043432) will be treated as Joint Venture Company.

Significant and material orders

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

The ratio of the remuneration of each Director and KMP to the median remuneration of the employees of the company for the financial year as follows:

Name Designation Salary Salary 2014-15 2013-14 (in Rs) (in Rs)

Mr.VP. Mahendra Vice Chairman & 76,26,104 46,15,503 Managing Director (KMP)

Mr. B C S Iyengar Director 39,18,499 39,32,338 Corporate Strategy

Mr. V.V. Pravindra Director 32,55,690 35,21,414

Mr. R. Thiyagarajan Executive Vice 31,22,978 27,90,878 President & CFO (KMP)

Mr. Chinmaya Khatua Company Secretary 9,00,570 7,13,383 (KMP)

Name Increase Ratio/Times in salary per Median of employee remuneration

Mr.VP. Mahendra 30,10,601 17.52 (65%)

Mr. B C S Iyengar (13,839) 9.00 (-.35%)

Mr. V.V. Pravindra (2,65,724) 7.48 (-7.5%)

Mr. R. Thiyagarajan 3,32,100 7.18 (11.90%)

Mr. Chinmaya Khatua 1,87,187 2.07 (26.24%)

The Company's PAT has decreased from Rs. 8294 lakhs to Rs. 6952 lakhs, a decrease of 16 % and this increase of KMP remuneration is line with the current market scenario and with Company policy. However salary of Vice Chairman & Managing Director and other whole time directors was approved by the shareholders.

In spite of reduction in profit, the Company has given marginal normal increase in salaries to the employees keeping in view the overall industry standard and interest of the employees. The unionized employees of the Company are getting salary increment as per the terms and conditions of their wage settlement. There is no exceptional circumstances of increase in the managerial remuneration. The salary of the Vice Chairman & Managing Director was increased due to terms and conditions of his re-appointment as approved by the members at the last AGM.

The Company has 536 permanent employees on roll. The Company fixes salary of the employees on the basis of Remuneration Policy of the Company. Payment of Commission to Managing Director & Whole time Director.

The Managing Director and Whole Time Directors are being paid commission on net profit of the Company as approved by the shareholders. The commission criteria is given below:

Name Designation Commission V.P. Mahendra Vice Chairman, One percent on the net profit of Managing Director the Company subject to a maximum & CEO of one and half times of annual basic salary drawn

B C S Iyengar Director Corporate One percent on the net profit of strategy the Company subject to a maximum of the annual basic salary drawn

V.V. Pravindra Director One percent on the net profit of the Company subject to a maximum of the annual basic salary drawn There are no employees who are not directors but receive remuneration in excess of the highest paid director during the year.

VARIATION IN MARKET CAPITALISATION :

Date Paid up Capital Closing Market (in Rs) Price per shares

31.03.2014 86395280 937.70

31.03.2015 86395280 1243.50

Increase/Decrease NIL 305.80

% Increase/Decrease NIL 32.60

No issue of shares during the year - -

Date EPS PE Ratio Market Capitalisation (Rs. in crore)

31.03.2014 96.00 9.77 810.12

31.03.2015 80.46 15.45 1074.32

Increase/Decrease -15.54 5.68 264.2

% Increase/Decrease -16.18 58.14 32.60

No issue of shares - - - during the year

Internal Complaint Committee under Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Redressal ) Act, 2013.

The Company has formed Internal Complaint Committee under Sexual Harassment of Women at Workplace ( Prevention, Prohibition and Redressal ) Act, 2013 and no complaint was received during the year 2014-15.

Extract of Annual Return

Extract of Annual Return of the Company is annexed herewith as Annexure-5 to this Report.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, employees, dealers, vendors, Bankers and the customers at large.

For V.S.T. TILLERS TRACTORS LTD.

Place: Bengaluru V. K. Surendra Date : May 29, 2015 Chairman

Mar 31, 2013

Dear Shareholder,

The Directors have pleasure in presenting the 45th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2013.

FINANCIAL PERFORMANCE

(Rupees in lacs)

Period Year 2012-13 Year 2011-12

URNOVER 48166 53064

OtHER INCOME 210 463

tOtAL INCOME 48376 53527

PROFIt BEFORE DEPRECIAtION & FINANCE COSt 7425 7743

FINANCE COSt 128 86

DEPRECIAtION 335 321

PROFIt BEFORE tAX 6962 7336

INCOME tAX 2105 2343

PROFIt AFtER tAX 4857 4993

BALANCE B/F 4297 3008

SURPLUS AVAILABLE FOR APPROPRIAtION tO: 9155 8001

PROPOSED DIVIDEND 778 778

PROPOSED tAX ON DIVIDEND 132 126

tRANSFER tO GENERAL RESERVE 3000 2800

BALANCE CARRIED FORWARD 5245 4297

COMPANY''S PERFORMANCE

the year under report was challenging for your Company with growth slowing down in the agriculture sector impacting sales. the turnover for the year stood at, Rs.482 crores which is 10% lower than previous year fgure of Rs. 530 crores. However the operating proft at Rs. 69 crs. was almost on par with the previous year due to higher realisation. EBIDtA margin was constant at 14% and the proft after tax is Rs. 48 crs as against Rs.50 crs. Power tillers sold during the year was 21231 units as against the previous year''s 26154 units while tractor sales were lower at 6233 units compared to 7038 units during 2011-12. Your Company has also marketed 404 nos Rice transplanters in the rice growing regions in India which is slowly shifting in favour of these machines due to shortage of labour.

On the fnancial front, your Company continues to remain debt free with cash fows adequately covering working capital requirements. However, on account of unprecedented fall in the demand during the year the Company was constrained to carry higher inventory.the performance of the Precision Components Division continues to depend largely on captive consumption and consequently reported a subdued performance.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Re.9/- per equity share of Rs.10/- each for approval at the Annual General Meeting. the dividend if declared will result in an outfow of Re.909.70 lacs including the distribution tax.

NSE LISTING:

the shares of the Company were listed and admitted to dealings on the National Stock Exchange of India Limited w.e.f. June 20, 2011.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association, Mr. V.K Surendra and Mr.M.K Bannerjee Directors of the Company retire by rotation and are eligible for re-appointment.

CORPORATE GOVERNANCE:

the Company strives to ensure good in Corporate Governance and levels of transparency with all the provisions of Clause-49 of the Listing Agreement. A certifcate from the Auditors to this effect forms part of Corporate Governance Report.

DIRECTOR''S RESPONSIBILITY STATEMENT:

Pursuant to sec 217(2AA) of the Companies Act 1956, amended as per Companies (Amendment) Act 2000, the Directors confrm that:

In preparation of the Annual Accounts of your Company the Accounting Standards laid down by the Institute of Chartered accountants of India from time to time have been followed.

Appropriate Accounting policies have been selected and applied consistently, reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2013 and the profts of your company for the year ended March 31, 2013.

Proper and suffcient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities. the annual accounts have been prepared on a going concern basis.

the observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 45th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 30, 2013. the Cost Audit Report for the fnancial year 2011-12 was fled on January 15, 2013 and the due date for fling the report was February 28, 2013.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (particular of employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March 2013 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fxed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

Internal Control Systems

Your Company maintains adequate internal control system, which provides reasonable assurance that transactions in signifcant areas are monitored to prevent any misuse. to strengthen this area your Company is looking at improved responsiveness from a fully integrated ERP. this will enable vendors to get information on material requirement and ensure streamlined supply of materials. the new system will improve its capability and speed of information to add more value. the Internal auditors carry out audits on a regular basis and submit their report once in a quarter to the Audit Committee. the Audit Committee reviews the report and recommendations of the Internal Auditors and advises the Management to strengthen and streamline the system wherever required.

Industrial Relation

Industrial relations have been cordial across all the plants during the year. the tri-annual agreement for wage settlement has recently been concluded with mutual satisfaction. Your Company is continuously taking initiatives for building organizational capabilities and enhancing people productivity. Various training and development programs were offered to the managerial cadre to upgrade their skills and develop the human resource base. Steps are also being implemented to strengthen specifc areas that are considered key to the Company in achieving its business goals.

Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product price discounts, delays in product development and related product release schedules, sales and vendor channel disruption.

All information in this release is as of May 30, 2013, the Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the company''s expectations.

ACKNOWLEDGEMENTS:

the Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, the fnancial institutions, employees, dealers, vendors and the customers at large.

for VSt tILLERS tRACtORS LtD.

Place: Bangalore V. K. Surendra

Date : May 30, 2013 Chairman

Mar 31, 2012

The Directors have pleasure in presenting the 44th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2012.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2011-12 Year 2010-11

TURNOVER 53064 42531

OTHER INCOME 463 597

TOTAL INCOME 53527 43128

PROFIT BEFORE DEPRECIATION & INTEREST 7739 7403

INTEREST 82 72

DEPRECIATION 321 227

PROFIT BEFORE TAX 7336 7104

INCOME TAX 2343 2485

PROFIT AFTER TAX 4993 4619

BALANCE B/F 3008 2493

SURPLUS AVAILABLE FOR APPROPRIATION TO: 8001 7112

PROPOSED DIVIDEND 778 778

PROPOSED TAX ON DIVIDEND 126 126

TRANSFER TO GENERAL RESERVE 2800 3200

BALANCE CARRIED FORWARD 4297 3008

COMPANY'S PERFORMANCE

The financial year 2011-12 is of great significance to the Company as it records surpassing a turnover of Rs. 500 crores. During the year under review your Company has been on a consistent upward path with the turnover increasing by 24% from Rs. 425 crores in 2010-2011 to Rs. 530 crores. Your Company has clocked a modest growth by selling over 26000 Tillers and maintained its leadership position in the power tiller industry while significantly improving tractor sales which crossed 7000 units.

Though the farm sector was well placed to attain a moderate growth, challenges remained high for the Company during the year. The operating profit increased marginally by 3% to Rs. 68 crores. This marginal increase on a 24% higher turnover is due to steep escalation in cost of raw materials and margins continued to be under pressure. The profit after tax amounted to Rs. 50 crores, an increase of 9% over the previous year and earnings per share during the year increased from Rs. 53.46 to Rs. 57.79 On the financial front, your Company has adopted a disciplined approach towards managing liquidity though delays in realization of government subsidies have significantly pushed up the receivables and working capital.

The sale of power tillers during the year increased by 12% and Chinese made "Dragon" tiller sale improved significantly over the previous year though on a lower base. The Tractor sales have grown by a robust 50% in line with the growing demand. Your Company's plan to market Rice Transplanters has been encouraging primarily driven by non availability of farm labour during transplanting season. During the year, 370 units were sold in the rice growing belts in India.

The Precision Components Division's performance has been steady despite the continuous increase in cost of inputs and overheads. Export margins have contracted due to spiralling raw material costs with very little scope for passing on the higher cost. Several cost cutting measures and low cost automation was introduced. Due to the volatility of overseas orders, export revenue slowed down resulting in lower capacity utilization in some areas. This division is primarily contributing to the overall performance of your Company on a lower cost base and is now focusing on producing components for captive use.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs.9/- per equity share of Rs.10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs. 904 lacs including the distribution tax.

NSE LISTING:

The shares of the Company were listed and admitted to dealings on the National Stock Exchange of India Limited w.e.f. June 20, 2011.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association, Mr. R Subramanian and Mr. V. Ramachandran Directors of the Company retire by rotation and are eligible for re-appointment.

CORPORATE GOVERNANCE:

The Company strives to ensure highest standards in Corporate Governance and levels of transparency with all the provisions of Clause-49 of the Listing Agreement. A certificate from the Auditors to this effect forms part of Corporate Governance Report.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to sec 217(2AA) of the Companies Act 1956, amended as per Companies (Amendment) Act 2000, the Directors confirm that:

In preparation of the Annual Accounts of your Company the Accounting Standards laid down by the Institute of Chartered accountants of India from time to time have been followed.

Appropriate Accounting policies have been selected and applied consistently, reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2012 and the profits of your company for the year ended March 31, 2012.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis. The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retires as Auditors of the Company at the conclusion of 44th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 29, 2012. The Cost Audit Report for the financial year 2010-11 was filed on August 19, 2011 and the due date for filing the report was September 30, 2011.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' Report for the year ended 31st March 2012 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

MANAGEMENT's DISCUSSION AND ANALYSIS

Industry structure and developments:

The GDP growth of the Indian economy declined to 6.5% during 2011-12 against 8.4% recorded in 2010- 11 due to high inflation and lower rate of growth in manufacturing. With the various measures adopted by the government and a normal monsoon the agriculture sector is expected to grow by 3% compared to 5% growth during 2010-2011. The relatively weak responses to price hikes in agricultural commodities brings back into focus on the need for sustained levels of growth in agriculture and allied sectors.

The Power Tiller industry which is growing at around 20% per annum largely relies on Government subsidies and agricultural lending by banks. On the demand side, Power Tillers being imported from China by various players has seen robust growth during the year and is posing a challenge to your company in its endeavor to increase its market share. It is encouraging for the industry that due to shortage of labor, potential for power tillers, rice transplanters and other farm equipment is well positioned to attain a high growth trajectory.

The Indian tractor market which is the largest in the world is expected to increase at a CAGR of 6-7% by 2014-15. The biggest markets for the tractor industry include States like Uttar Pradesh (UP), Andhra Pradesh (AP), Madhya Pradesh (MP), Rajasthan, and Maharashtra, which together accounted for around 50% of the total tractor sales in India during 2011-12. In the domestic tractor market, the industry as a whole grew to 607658 units during 2011-12 from 545109 units in the previous year. Your company commands a significant market share in Maharashtra and Gujarat in the smaller HP tractors and sales in this segment are expected to grow in the coming year. New players are entering the below 20-25hp segment to tap the potential in these markets. To cater to market demand, the manufacturing capacities will be established by the year end. A new model with better aesthetics are being planned that will lead to higher revenue streams during the year.

OPPORTUNITIES

The growth of the Power tiller and Tractor industry could be directly linked to the GDP growth of the Indian economy. Agriculture which is slated to register a positive growth of 3% which will benefit farm mechanization and provide opportunities for higher sales and optimum utilization of capacities. Government schemes such as Rashtriya Krishi Vikas Yojana (RKVY), Macro Management Scheme and National Food Security Mission will also support a strong demand and help the Company to increase volumes in absolute terms. With infrastructure projects and rural employment schemes increasing employment opportunities, availability of labour for agricultural activities continued to decline, compelling farmers with small and medium-sized land holdings to mechanize. Being an organized player in the power tiller industry along with a strong after sales service, your Company is constantly evolving by taking initiatives like brand building and upgrading dealers to face competition.

RISKS AND CONCERNS

Agriculture is the backbone of India's economy. Though various irrigation schemes have been conceived to enhance the cultivable area, the agricultural sector continues to be monsoon dependent. On another front, higher interest rate of bank finance for your Company's products and increasing delay in releasing timely subsidy by various states for power tillers is an area of concern. During the year, sale of Chinese made power tillers under various subsidy schemes has intensified competition for your Company. Appropriate marketing strategies are being adopted to gain market share and strengthen our competitive edge in the current scenario. The government's fiscal policy of controlling inflation by hardening of interest rates could have an adverse impact on the demand for power tillers and tractors. As for margins, the Company would remain vulnerable to adverse changes in input costs during the year.

CURRENT YEAR OUTLOOK

Agriculture is the mainstay of more than two-thirds of the country's population and with the expansion of non-farm economic activities there is a tendency to exit this field. The Government is targeting over 4% growth for agriculture which is necessary to support a 9% GDP growth which is the theme of the 12th Five Year Plan. Expenditure on rural development and investments are expected to grow, besides improving infrastructure according to the Economic Survey. A favourable monsoon coupled with ease of credit availability to farmers will have a positive influence on the power tiller and tractor industry. During the current year, with various marketing and development initiatives undertaken, your Company is confident of maintaining its growth momentum. On the export front, the outlook is positive for tractors and your Company is presently taking steps for obtaining export certification for marketing in European countries.

The steps taken to introduce Rice Transplanters in various states are proving to be sustainable in the long term with government support. Extensive work to train self-help groups who have been effective agents of change on various aspects of adapting to mechanized transplantation have been undertaken. Your Company driven by these initiatives is expecting to reap rewards in the future with more models.

Currently, the pressing need is efficiency in procuring raw material. Due to the growth experienced in industry coupled with shortage of power in certain areas, availability of key raw materials have had adverse repercussions on the Company's production leading to opportunity losses. The year ahead could be challenging if inflationary conditions are not contained which may lead to lower than expected contribution. Recognizing that for enhancing production, scale is essential, your Company is developing new vendors and focusing on improved efficiency from supply chain management.

During the year, your Company has commenced work on establishing a new Tractor manufacturing plant located in Hosur, Tamil Nadu with an installed capacity of 36000 units p.a. The financial outlay for this project is budgeted at Rs. 66 crores and funded with a mixture of internal accruals and debt. The plant is expected to go on stream during the end of the first quarter of 2013. This project will also give the Company the prospect of introducing more tractor models and de-risk its current portfolio and seize growth opportunities in the future

At Precision Component Division, investment in critical machinery has been made only in required areas to cater to higher captive consumption. We believe the export demand would remain flat due to the economic downturn in overseas market and the static customer base. Realizing the current scenario, your Company's plan is to continue its focus on in-house supply.

Internal Control Systems

Your Company maintains adequate internal control system, which provides reasonable assurance that transactions in significant areas are monitored to prevent any misuse. To strengthen this area your Company is looking at improved responsiveness from a fully integrated ERP. This will enable vendors to get information on material requirement and ensure streamlined supply of materials. The new system will improve its capability and speed of information to add more value. The Internal auditors carry out audits on a regular basis and submit their report once in a quarter to the Audit Committee. The Audit Committee reviews the report and recommendations of the Internal Auditors and advises the Management to strengthen and streamline the system wherever required.

Industrial Relation

Industrial relations have been cordial across all the plants during the year. Your Company is continuously taking initiatives for building organizational capabilities and enhancing people productivity. Various training and development programs were offered to the managerial cadre to upgrade their skills and develop the human resource base. Your company has been increasing the strength of apprentices and trainees across various departments to cultivate new talent. Steps are also being implemented to strengthen specific areas that are considered key to the Company in achieving its business goals.

Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those either expressed or implied due to factors such as Raw material prices, Government policies, Competition, tax regime, market acceptance of new products and services, continued acceptance of existing products and services, changes in licensing programs, product price discounts, delays in product development and related product release schedules, sales channel disruption.

All information in this release is as of May 29, 2012, The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the company's expectations.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, the financial institutions, employees and the customers at large.

for VST TILLERS TRACTORS LTD.

V. K. Surendra

Chairman

Place: Bangalore

Date : May 29, 2012

Mar 31, 2011

The Directors have pleasure in presenting the 43rd Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2011.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2010-11 Year 2009-10

TURNOVER 42531 34454

OTHER INCOME 597 277

TOTAL INCOME 43128 34731

PROFIT BEFORE DEPRECIATION & INTEREST 7403 6506

INTEREST 72 67

DEPRECIATION 227 259

PROFIT BEFORE TAX 7104 6180

INCOME TAX 2485 1947

PROFIT AFTER TAX 4619 4233

BALANCE B/F 2493 1016

SURPLUS AVAILABLE FOR APPROPRIATION TO: 7112 5249

DIVIDEND 778 648

TAX ON DIVIDEND 126 108

TRANSFER TO GENERAL RESERVE 3200 2000

BALANCE CARRIED FORWARD 3008 2493

COMPANYS PERFORMANCE

We are pleased to report another successful period for your Companys business. Your Company has clocked a modest growth by selling over 23000 Tillers and 4700 Tractors and continues to maintain its leadership position in the power tiller industry.

The turnover for the year registered an increase by 23% from Rs.344 crores in 2009-10 to Rs. 425 crores while the operating profit increased to Rs. 65 crores compared to Rs.59 crores. However, the operating margin declined by 1.83% due to increase in raw material costs. Profit after tax was Rs. 46 crores, an increase of 9% over the previous year and earnings per share during the year increased from Rs.48.99 to Rs.53.46.

The sale of power tillers during the year increased by 23%. While the Tractor sales have grown by 26% during the year. Your Companys aggressive plan to market Rice Transplanters has been encouraging primarily driven by expensive farm labor and government subsidy.

The performance of Precision Component Division improved with exports registering a growth of 45% from Rs. 5.5 crores to Rs. 8 crores . However export margins have been impacted due to spiraling raw material costs with very little scope for passing on the increase to our overseas customers. During the year, this division has capitalized on growth opportunity in production of components for captive consumption which has indirectly contributed to the overall performance of your Company.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs. 9/- per equity share of Rs.10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs. 904 lacs including the distribution tax.

NSE LISTING

The shares of the Company were listed and admitted to dealings on the National Stock Exchange of India Limited w.e.f. June 20, 2011.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association, Mr. K K Rai, Mr. M K Bannerjee and Mr. A Hishikawa, Directors of the Company retire by rotation and are eligible for re-appointment.

CORPORATE GOVERNANCE:

The Company strives to ensure highest standards in Corporate Governance and levels of transparency in accordance with the provisions of Clause-49 of the Listing Agreement. A certificate from the Auditors to this effect forms part of Corporate Governance Report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to sec 217(2AA) of the Companies Act 1956, amended as per Companies (Amendment) Act 2000, the Directors confirm that:

In preparation of the Annual Accounts of your Company the Accounting Standards laid down by the Institute of Chartered accountants of India from time to time have been followed.

Appropriate Accounting policies have been selected and applied consistently, and reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2011 and the profits of your company for the year ended March 31, 2011.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis.

The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 43rd Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 30, 2011. The Cost Audit Report for the financial year 2009-10 was filed on September 8, 2010 and the due date for filing the report was September 30, 2010.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31st March 2011 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, the financial institutions, employees and the customers at large.

for VST TILLERS TRACTORS LTD.

Sd/-

Place: Bangalore V. K. Surendra

Date : May 30, 2011 Chairman

Mar 31, 2010

The Directors record with deep sadness, the demise of founder Managing Director, Shri VT.Krishnamoorthy. His guidance to your Company in the above capacity and subsequently as Chairman during the formative and difficult years was invaluable. We pay our respect and homage to the departed soul.

Your Directors are pleased to present the 42nd Annual Report and the audited statement of accounts for the year ended March 31, 2010.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2009-10 Year 2008-09

TURNOVER 34454 27414

OTHER INCOME 277 482

TOTAL INCOME 34731 27896

PROFIT BEFORE DEPRECIATION & INTEREST 6506 4748

INTEREST 67 53

DEPRECIATION 259 281

PROFIT BEFORE TAX 6180 4414

INCOME TAX 1947 1523

PROFIT AFTER TAX 4233 2891

BALANCE B/F 1016 880

SURPLUS AVAILABLE FOR APPROPRIATION TO: 5249 3771

DIVIDEND 648 432

TAX ON DIVIDEND 108 73

TRANSFER TO GENERAL RESERVE 2000 2250

BALANCE CARRIED FORWARD 2493 1016

COMPANYS PERFORMANCE

During the year under review your company continued to improve upon the progress made during the previous year by selling over 19000 Tillers which helped the Company to consolidate its position as market leader in the power tiller industry. The sale of tractors also increased significantly by over 3700 nos. Both these figures are a milestone.

The turnover for the year registered an increase by 26% from Rs 274 crores in 2008-09 to Rs.344 crores while the operating profit increased to Rs. 59 crores compared to Rs.39 crores. This was mainly due to higher growth and operating efficiency. Profit after tax amounted to Rs. 42 crores, an increase of 46% over the previous year. Consequently, earnings per share increased from Rs. 50.20 to Rs. 68.69 and

your company continues to remain debt free while short term borrowings were limited to only need based working capital requirements. Power Tillers and Tractors contributed 62% and 24% of the sales during the year. Export revenue from Precision Component Division declined by 58% due to the global recession in the component business.

The sale of power tillers during the year increased to 19068 units as against the previous years sales of 16691 units, an increase of 14%. The companys tractor sales also accelerated to 3758 units as against 2327 units in the previous year. As a result of an aggressive plan to market Rice Transplanters, 858 units were sold mainly in the paddy growing belts of Punjab, Tamil Nadu and Kerala. This steadily shift towards mechanization has been due to acute shortage of labour and cost effectiveness of these machines.

DIRECTORS REPORT

The performance of the Component Division went through a difficult time due to the global economic slowdown and profits from exports declined on a standalone basis. During the second half of the year, export margins were impacted due to higher raw material prices. This apart, the strengthening of the Rupee against the Sterling and Euro compounded the problems as realizations declined. Despite these conditions, increase in production of components for captive consumption enabled this division to record a moderate increase in top line and sustain its operations.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs.7.507- per equity share of Rs. 10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs.756 lacs including the distribution tax.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association, Mr. V K Surendra and Mr. V Ramachandran Directors of the Company retire by rotation and being eligible, offer themselves for re-appointment.

CORPORATE GOVERNANCE:

The Company strives to ensure highest standards in Corporate Governance and levels of transparency and has been compliant with all the provisions of Clause-49 of the Listing Agreement. A certificate from the Auditors to this effect forms part of Corporate Governance Report.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to sec 217(2AA) of the Companies Act 1956, amended as per Companies (Amendment) Act 2000, the Directors confirm that:

In preparation of the Annual Accounts of your Company the Accounting Standards laid down by the Institute of Chartered accountants of India from time to time have been followed.

Appropriate Accounting policies have been selected and applied consistently, and reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2010 and the profits of your company for the year ended March 31, 2010.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis.

The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 42nd Annual General Meeting and are eligible for re-appointment.

PARTICULARS OF EMPLOYEES:

Information as per Section 21 7(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, details of employee who was employed throughout the financial year and was in receipt of remuneration aggregating to not less than 24 lacs p.a. is as follows :

Mr. V P Manendra - Managing Director

Aged - 68 years

Gross Remuneration recieved - Rs. 35,39,518/-

Qualification - B.E. - Electrical

Experience - 30 Years

Date of Employment - 01/10/1980

Last position held - as Deputy Managing Director

of the Company

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information under Section 217( I )(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31 st March 2010 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

ACKNOWLEDGEMENTS:

The Directors wish to convey their gratitude for the faith reposed in your Company by Mitsubishi Heavy Industries Limited, the financial institutions, employees and the customers at large.

For VST TILLERS TRACTORS LTD.

Sd/- Place: Bangalore V. K. Surendra

Date : May 28, 2010 Chairman

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