Notes to Accounts of VST Tillers Tractors Ltd.

Mar 31, 2025

p) Provisions:

Provisions are recognized when there is a present
legal or constructive obligation that can be estimated
reliably, as a result of a past event, when it is probable
that an outflow of resources embodying economic
benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the
obligation. Provisions are not recognized for future
operating losses.

Any reimbursement that the Company can be virtually
certain to collect from a third party with respect to
the obligation is recognized as a separate asset.
However, this asset may not exceed the amount of the
related provisions.

Provisions are reviewed at each reporting date and
adjusted to reflect the current best estimate. If it is no
longer probable that an outflow of economic resources
will be required to settle the obligation, the provisions
are reversed. Where the effect of the time of money
is material, provisions are discounted using a current
pre-tax rate that reflects, where appropriate, the risks
specific to the liability. When discounting is used, the
increase in the provisions due to the passage of time is
recognized as a finance cost.

q) Contingencies:

Where it is not probable that an inflow or an outflow
of economic resources will be required, or the amount
cannot be estimated reliably, the asset or the obligation
is not recognized in the Balance Sheet and is disclosed
as a contingent asset or contingent liability, unless the
probability of inflow or outflow of economic benefits is
remote. Possible outcomes on obligations/rights, whose
existence will only be confirmed by the occurrence or
non-occurrence of one or more future events, are also
disclosed as contingent assets or contingent liabilities
unless the probability of inflow or outflow of economic
benefits is remote.

r) Taxes on Income:

Tax expense comprises of current and deferred tax.
Current income tax is measured at the amount expected
to be paid to the tax authorities in accordance with the
Income Tax Act, 1961. Current tax includes taxes to be
paid on the profit earned during the year and for the
prior periods.

Deferred income taxes are provided based on the
balance sheet approach considering the temporary

differences between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes at the reporting date

Deferred tax is measured based on the tax rates and
the tax laws enacted or substantively enacted at the
balance sheet date. Deferred tax assets are recognized
only to the extent that there is reasonable certainty
that sufficient future taxable income will be available
against which such deferred tax assets can be realized.
In situations where the company has unabsorbed
depreciation or carried forward tax losses, all deferred
tax assets are recognized only if it is probable that they
can be utilized against future taxable profits.

The carrying amount of deferred tax assets are reviewed
at each balance sheet date. The company can write-off
the carrying amount of a deferred tax asset to the
extent that it is no longer probable that sufficient future
taxable income will be available against which deferred
tax asset can be realized. Any such write-off is reversed
to the extent that it becomes reasonably certain that
sufficient future taxable income will be available.

s) Prior period items:

In case prior period adjustments are material in nature,
the Company prepares the restated financial statement
as required under Ind AS 8 - "Accounting Policies,
Changes in Accounting Estimates and Errors". In case
of immaterial items pertaining to prior periods, they will
be shown under respective items in the Statement of
Profit and Loss.

t) Cash and cash equivalents:

Cash and cash equivalents includes cash on hand and at
bank, deposits held at call with banks, other short-term
highly liquid investment with original maturities of three
months or less that are readily convertible to a known
amount of cash as are subject to an insignificant risk of
changes in value and are held for meeting short-term
cash commitments.

For the Statement of Cash Flows, cash and cash
equivalents consists of short-term deposits, as defined
above, net of outstanding bank overdraft (if any) as they
being considered as integral part of the Company''s cash
management.

u) Financial instruments:

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

Financial Assets:

A. Initial recognition and measurement:

Financial assets are recognized when the Company
becomes a party to the contractual provisions of
the instrument. Financial assets are recognized
initially at fair value plus, in the case of financial
assets not recorded at fair value through profit or
loss, transaction costs that are attributable to the
acquisition of the financial asset. Transaction costs
of financial assets carried at fair value through
profit or loss are expensed in statement of profit
or loss. Purchases or sales of financial assets that
require delivery of assets within a time frame
established by regulation or convention in the
market place (regular way trades) are recognized
on the trade date, i.e., the date that the Company
commits to purchase or sell the asset.

B. Subsequent measurement:

For subsequent measurement, financial assets are
classified into following categories:

a. Debt instruments at amortized cost

b. Debt instruments at fair value through
profit and loss

c. Equity instruments at fair value through
profit and loss

a. Debt Instruments at amortized cost:

A ''debt instrument'' is measured at the
amortized cost if both the following
conditions are met:

i. The asset is held within a business model
whose objective is to hold assets for
collecting contractual cash flows, and

ii. Contractual terms of the asset give rise
on specified dates to cash flows that
are solely payments of principal and
interest (SPPI) on the principal amount
outstanding.

After initial measurement, such financial
assets are subsequently measured at
amortized cost using the effective interest
rate (EIR) method. Amortized cost is
calculated by taking into account any discount
or premium on acquisition and fees or costs
that are an integral part of the EIR. The EIR

amortization is included in finance income
in the profit or loss. The losses arising from
impairment are recognized in the Statement
of Profit and Loss.

b. Debt instrument at fair value through
profit and loss (FVTPL):

FVTPL is a residual category for debt
instruments. Any debt instrument, which
does not meet the criteria for categorization
as amortized cost or as FVTOCI, is classified
as at FVTPL. In addition, the Company may
elect to designate a debt instrument, which
otherwise meets amortized cost or FVTOCI
criteria, as at FVTPL. However, such election is
allowed only if doing so reduces or eliminates
a measurement or recognition inconsistency
(referred to as ''accounting mismatch'').

Debt instruments included within the FVTPL
category are measured at fair value with all
changes recognized in the Statement of
Profit and Loss.

c. Equity Instruments at fair value through
profit and loss (FVTPL):

Equity instruments/Mutual funds in the scope
of Ind AS 109 are measured at fair value.
The classification is made on initial recognition
and is irrevocable. Subsequent changes in
the fair values at each reporting date are
recognized in the Statement of Profit and Loss.

C. Derecognition:

A financial asset or where applicable, a part of a

financial asset is primarily derecognized when:

a. The rights to receive cash flows from the asset
have expired, or

b. The company has transferred its rights to
receive cash flows from the asset or has
assumed an obligation to pay the received
cash flows in full without material delay
to a third party under a ''pass-through''
arrangement; and either (a) the Company
has transferred substantially all the risks and
rewards of the asset, or (b) the Company has
neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.

When the Company has transferred its rights
to receive cash flows from an asset or has

entered into a pass-through arrangement,
it evaluates if and to what extent it has
retained the risks and rewards of ownership.
When it has neither transferred nor retained
substantially all of the risks and rewards
of the asset, nor transferred control of the
asset, the Company continues to recognize
the transferred asset to the extent of the
Company''s continuing involvement.

D. Impairment of financial assets:

In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement
and recognition of impairment loss on the debt
instruments, that are measured at amortized
cost e.g., loans, debt securities, deposits, trade
receivables and bank balance.

Expected credit loss is the difference between all
contractual cash flows that are due to the company
in accordance with the contract and all the cash
flows that the entity expects to receive.

The management uses a provision matrix to
determine the impairment loss on the portfolio
of trade and other receivables. Provision matrix
is based on its historically observed expected
credit loss rates over the expected life of the trade
receivables and is adjusted for forward looking
estimates.

Expected credit loss allowance or reversal
recognized during the period is recognized as
income or expense, as the case may be, in the
Statement of Profit and Loss. In case of Balance
Sheet it is shown as reduction from the specific
financial asset.

Financial liabilities:

A. Initial recognition and measurement:

At initial recognition, all financial liabilities
are recognized at fair value and in the case
of loans, borrowings and payables, net of
directly attributable transaction costs.

B. Subsequent measurement:

a. Financial liabilities at fair value
through profit or loss:

Financial liabilities at fair value through
profit or loss include financial liabilities
held for trading and financial liabilities
designated upon initial recognition
as at fair value through profit or loss.

Gain or losses on liabilities held for
trading are recognized in the Statement
of Profit and Loss.

The company doesn''t designate any
financial liability at fair value through
profit or loss.

b. Financial liabilities at amortized
cost:

Amortized cost, in case of financial
liabilities with maturity more than
one year, is calculated by discounting
the future cash flows with effective
interest rate. The effective interest rate
amortization is included as finance costs
in the Statement of Profit and Loss.

Financial liability with maturity of less than
one year is shown at transaction value.

C. Derecognition:

A financial liability is de-recognized when the
obligation under the liability is discharged or
cancelled or expires. The difference between
the carrying amount of a financial liability
that has been extinguished or transferred
to another party and the consideration paid,
including any non-cash assets transferred or
liabilities assumed, is recognized in Statement
of Profit and Loss as other income or
finance costs.

v) Warranty:

The Company periodically assesses and provides for
the estimated liability on warranty given on sale of its
products based on past experience of claims.

w) Segment reporting:

The Company has only one reportable business
segment, which is manufacturing and trading of
agriculture machinery and operates in a single business
segment. Accordingly, the amounts appearing in the
standalone financial statements relate to the company''s
single business segment.

x) Exceptional items:

Significant gains/losses or expenses incurred arising
from external events that is not expected to recur are
disclosed as ''Exceptional Item''.

y) Recent Pronouncements:

Ministry of Corporate affairs ("MCA") notifes new
standard or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. During the year ended
March 31,2025, MCA has notified Ind AS117 Insurance
Contracts and amendments to Ind As 116 - Leases,
relating to sale and lease back transactions applicable
from April 1, 2024. The Company has assessed that
there is no significant impact on its financial statements

35. EMPLOYEE STOCK OPTION PLAN

VST Tillers Tractors Limited - Restricted Stock Units Plan 2024

On January 22, 2024, pursuant to the approval by the shareholders through postal ballot, the Board was authorized to
introduce, offer, issue and allot share based incentives to the eligible employees of the Company under the "VST Tillers
Tractors Limited - Restricted Stock Units Plan 2024" ("the RSU plan"). The maximum number of shares under the RSU plan
shall not exceed 50,000 equity shares. These instruments will generally vest equally over a period of 4 years starting from
February 26, 2025 for Grant 1 and February 26, 2026 for Grant 2. The options shall be exercisable within the period as
approved by the Nomination and Remuneration Committee (NRC). The exercise price of the equity-settled RSUs will be equal
to the par value of the shares.

The fair value of the options is estimated using the Black-Scholes Model. The inputs to the model include the share price
at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk-free rate of interest.
Expected volatility during the expected term of the options is based on historical volatility of the observed market prices of the
Company''s publicly traded equity shares during a period equivalent to the expected term of the options. Expected volatility of
the comparative company have been modelled based on historical movements in the market prices of their publicly traded
equity shares during a period equivalent to the expected term of the options.

37. FAIR VALUE OF FINANCIAL INSTRUMENTS

The management assessed that cash and cash equivalents, other bank balances, trade receivables, trade payables, and
other current financial assets and financial liabilities approximates to their carrying amount largely due to the short-term
maturities of these instruments.

The fair value of the financial assets and liabilities is reported at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:

a. The fair value of investment in quoted instruments is measured at quoted price at the reporting date. The fair value of
unquoted instruments is valued using inputs based on information about market participants assumptions and other
data that are available.

b. Fair value of Interest free Security deposits are calculated by discounting future cash flows using rates currently available
for debt on similar terms credit risk and remaining maturities.

Description of significant observable inputs to valuation:

- Interest free Security Deposits (assets & liabilities):

Interest Rate factor has been considered at a rate of 6.06% p.a. by the company for discounting the amount receivable
at the time of maturity.

The carrying amount of all financial assets and liabilities (except for those instruments carried at fair value) appearing
in the financial statements is reasonable approximation of fair values.

40. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES:

The Companies activities expose it to variety of Financial risks- interest rate risk, foreign currency risk, market risk, credit risk
and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize
potential adverse effects on its financial performance and there has been no change to the Company''s exposure to these
financial risks or the manner in which it manages and measures the risks

The following sections provide the details regarding the Company''s exposure to the financial risks associated with financial
instruments held in the ordinary course of business and the objectives, policies and processes for the management of
these risks.

i. Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks,
such as equity risk. Financial instruments affected by market risk include loans and advances, deposits, investments in
debt securities, mutual funds, and other equity funds.

a. Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial
instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate
risk arises primarily from the investment in debt securities, investment in debt mutual funds and cash and cash
equivalents and other bank balances.

The Company''s policy is to manage its interest rate risk by monitoring of changes in interest rates. Further, as there
are no borrowings, the Company''s policy to manage its interest cost does not arise.

b. Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange
rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from Exports or imports that are denominated in a
currency other than the functional currency. The foreign currencies in which these transactions are denominated
are mainly in US Dollars ($) and Euros (€). The Company''s trade receivable and trade payable balances at the end
of the reporting period have similar exposures.

ii. Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on
its obligations. The Company''s exposure to credit risk arises primarily from trade and other receivables. For other
financial assets (including investment securities, cash and short-term deposit), the Company minimizes the credit risk by
dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth
while minimizing losses incurred due to increased credit risk exposure. The Company trades only with recognized and
creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject
to credit verification procedures.

In addition, Outstanding customer receivables are regularly monitored and any credit to new customers are generally
covered by appropriate security in the form of deposits.

a. Exposure to credit risk:

At the end of the reporting period, the Company''s maximum exposure to credit risk is represented by the carrying
amount of each class of financial assets recognized in the statement of financial position. No other financial assets
carry a significant exposure to credit risk.

b. Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures
to credit risk in relation to each class of recognized financial assets is represented by the carrying amount of each
financial assets as indicated in the balance sheet.

c. Financial assets that are neither past due nor impaired:

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment
record with the Company. Cash and short-term deposits, investment securities that are neither past due nor
impaired are placed with or entered with reputable banks, financial institutions or companies with high credit
ratings and no history of default.

d. Financial assets that are either past due or impaired:

Trade receivables that are past due or impaired at the end of the reporting period, for which lifetime expected
credit loss has been provided by the company according to its policy. These are shown in the balance sheet at
carrying value less impairment/expected credit loss (information provided in note no. 13).

iii. Liquidity risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled
by delivering cash or another financial asset.

42. CAPITAL MANAGEMENT:

Capital includes equity attributable to the equity holders of the Company. The primary objective of the capital management
is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and
maximize shareholder''s value.

The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or
its business requirements. To maintain or adjust the capital structure, Company may adjust the dividend payment to
shareholders or return capital to shareholders or issue new shares.

Currently the Company does not have any borrowings and maintains the entire capital in form of equity share capital.

Note: The fair values of investment properties have been determined by independent valuers. The main inputs used are the
rental growth rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair
value estimates for investment properties are included in level 3.

Depreciation and Useful Life: Depreciation method used by the entity for Investment Property is Straight line method.
Useful life of buildings is considered as 30-60 years.

45. MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 (MSMED ACT)

The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated August 26, 2008 which
recommends that the Micro and Small Enterprises should mention in their correspondence with their customers about the
Entrepreneurs Memorandum number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of
the amount payable to such enterprises as at March 31,2025 has been made in the Standalone financial statements based
on the information received and available with the Company. The Company has not received any claim for interest from any

46. LEASES
Company as Lessee:

The Company lease assets consist of leases for land, building and computers. The Company assesses whether a contract
contains a lease, at the inception of the contract. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for a consideration.

47. CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENDITURE:

CSR amount required to be spent by the Company during the year is '' 221.85 lakhs (Previous year '' 217.62 lakhs).
Further, during the year, the Company has spent an amount '' 221.85 lakhs related to current year liability, details of which
are as follows:

b) Nature of Obligation

The Company gives warranties for its products, undertaking to repair or replace the items that fail to perform satisfactorily
during the warranty period. The provision made as at March 31,2025 represents the amount of expected cost of meeting
such obligations on account of rectification / replacement. The timing of outflow is expected to be within a period of
one year from the end of the year.

The Company generally offers 12 months warranties for tillers products except 135DI and 165DI tillers, 17HP-50HP
tractors are offered 24 months warranties. Management estimates the related provision for future warranty claims
based on historical warranty claim information as well as recent trends that might suggest that past cost information
may differ from future claims.

54. DISCLOSURE REQUIRED UNDER SCHEDULE III AS AMENDED, THAT ARE NOT COVERED ABOVE:

a) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

b) No proceedings have been initiated or are pending against the Company for holding any benami property under
the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

c) The Company has not been declared as wilful defaulter by any bank or financial institution or government or any
government authority.

d) No scheme of arrangement has been approved by the competent authority in terms of section 230 to 237 of the
Companies Act, 2013, hence this is not applicable.

e) No registration and/or satisfaction of charges are pending to be filed with ROC.

f) There are no transactions which are not recorded in the books of account which have been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

g) The Company does not have any relationship with struck off companies.

55. The Company is engaged only in the business of manufacturing and trading of agriculture machinery and accordingly
the business activity falls within a single business segment in terms of Ind AS 108 on Operating Segments.

56. The Board has recommended dividend of '' 20 per equity share having face value of '' 10 each for the financial year
2024-2025.

57. Corresponding previous year figures have been reclassified / regrouped wherever necessary.

As per our report of even date For and on behalf of the Board of Directors of

For K.S. Rao & Co., V.S.T. Tillers Tractors Limited

Chartered Accountants

Firm Registration No.: 003109S V.T.Ravindra Rajen Padukone

DIN: 00396156 DIN: 00262729

Hitesh Kumar. P Managing Director Director

Partner

Membership No.: 233734 Antony Cherukara Nitin Agrawal Chinmaya Khatua

Chief Executive Officer Chief Financial Officer ACS - 21759

Company Secretary

Place: Bengaluru Place: Bengaluru

Date: May 13, 2025 Date: May 13, 2025

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Mar 31, 2024

p) Provisions:

Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably, as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating losses.

Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provisions.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provisions are reversed. Where the effect of the time of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provisions due to the passage of time is recognized as a finance cost.

q) Contingencies:

Where it is not probable that an inflow or an outflow of economic resources will be required, or the amount cannot be estimated reliably, the asset or the obligation is not recognized in the Balance Sheet and is disclosed as a contingent asset or contingent liability, unless the probability of inflow or outflow of economic benefits is remote. Possible outcomes on obligations/ rights, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also disclosed as contingent assets or contingent liabilities unless the probability of inflow or outflow of economic benefits is remote.

r) Taxes on Income:

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961. Current tax includes taxes to be paid on the profit earned during the year and for the prior periods.

Deferred income taxes are provided based on the balance sheet approach considering the temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carried forward tax losses, all deferred tax assets are recognized only if it is probable that they can be utilized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company can write-off the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-off is reversed to the extent that it becomes reasonably certain that sufficient future taxable income will be available.

s) Prior period items:

In case prior period adjustments are material in nature, the Company prepares the restated financial statement as required under Ind AS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors". In case of immaterial items pertaining to prior periods, they will be shown under respective items in the Statement of Profit and Loss.

t) Cash and cash equivalents:

Cash and cash equivalents includes cash on hand and at bank, deposits held at call with banks, other shortterm highly liquid investment with original maturities of three months or less that are readily convertible to a known amount of cash as are subject to an insignificant risk of changes in value and are held for meeting short-term cash commitments.

For the Statement of Cash Flows, cash and cash equivalents consists of short-term deposits, as defined above, net of outstanding bank overdraft (if any) as they being considered as integral part of the Company''s cash management.

u) Financial instruments:

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

Financial Assets:

A. Initial recognition and measurement:

Financial assets are recognized when the Company becomes a party to the contractual

provisions of the instrument. Financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in statement of profit or loss. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.

B. Subsequent measurement:

For subsequent measurement, financial assets are classified into following categories:

a. Debt instruments at amortized cost

b. Debt instruments at fair value through profit and loss

c. Equity instruments at fair value through profit and loss

a. Debt Instruments at amortized cost:

A ''debt instrument'' is measured at the amortized cost if both the following conditions are met:

i. The asset is held within a business model whose objective is to hold assets for collecting contractual cash flows, and

ii. Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

After initialmeasurement, such financial assets are subsequently measured at amortized cost using the effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the profit or loss. The losses arising from impairment are recognized in the Statement of Profit and Loss.

b. Financial liabilities at amortized cost:

Amortized cost, in case of financial liabilities with maturity more than one year, is calculated by discounting the future cash flows with effective interest rate. The effective interest rate amortization is included as finance costs in the Statement of Profit and Loss.

Financial liability with maturity of less than one year is shown at transaction value.

C. Derecognition:

A financial liability is de-recognized when the obligation under the liability is discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the

b. Debt instrument at fair value through profit and loss (FVTPL):

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria for categorization as amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a debt instrument, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as ''accounting mismatch'').

Debt instruments included within the FVTPL category are measured at fair value with all changes recognized in the Statement of Profit and Loss.

c. Equity Instruments at fair value through profit and loss (FVTPL):

Equity instruments/Mutual funds in the scope of Ind AS 109 are measured at fair value. The classification is made on initial recognition and is irrevocable. Subsequent changes in the fair values at each reporting date are recognized in the Statement of Profit and Loss.

C. Derecognition:

A financial asset or where applicable, a part of a financial asset is primarily derecognized when:

a. The rights to receive cash flows from the asset have expired, or

b. The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither

transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement.

D. Impairment of financial assets:

In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the debt instruments, that are measured at amortized cost e.g., loans, debt securities, deposits, trade receivables and bank balance. Expected credit loss is the difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the entity expects to receive. The management uses a provision matrix to determine the impairment loss on the portfolio of trade and other receivables. Provision matrix is based on its historically observed expected credit loss rates over the expected life of the trade receivables and is adjusted for forward looking estimates.

Expected credit loss allowance or reversal recognized during the period is recognized as income or expense, as the case may be, in the Statement of Profit and Loss. In case of Balance Sheet it is shown as reduction from the specific financial asset.

Financial liabilities:

A. Initial recognition and measurement:

At initial recognition, all financial liabilities are recognized at fair value and in the case of loans, borrowings and payables, net of directly attributable transaction costs.

B. Subsequent measurement:

a. Financial liabilities at fair value through profit or loss:

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Gain or losses on liabilities held for trading are recognized in the Statement of Profit and Loss.

The Company doesn''t designate any financial liability at fair value through profit or loss.

consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in Statement of Profit and Loss as other income or finance costs.

v) Warranty:

The Company periodically assesses and provides for the estimated liability on warranty given on sale of its products based on past experience of claims.

w) Segment reporting:

The Company has only one reportable business segment, which is manufacturing and trading of agriculture machinery and operates in a single business segment. Accordingly, the amounts appearing in the standalone financial statements relate to the Company''s single business segment.

x) Exceptional items:

Significant gains/losses or expenses incurred arising from external events that is not expected to recur are disclosed as ''Exceptional Item''.

VST Tillers Tractors Limited - Restricted Stock Units Plan 2024

On January 22, 2024, pursuant to the approval by the shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share based incentives to the eligible employees of the Company under the "VST Tillers Tractors Limited - Restricted Stock Units Plan 2024" ("the RSU plan"). The maximum number of shares under the RSU plan shall not exceed 50,000 equity shares. These instruments will generally vest equally over a period of 4 years starting from March 31, 2025. The options shall be exercisable within the period as approved by the Nomination and Remuneration Committee (NRC). The exercise price of the equity-settled RSUs will be equal to the par value of the shares.

The fair value of the options is estimated using the Black-Scholes Model. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk-free rate of interest. Expected volatility during the expected term of the options is based on historical volatility of the observed market prices of the Company''s publicly traded equity shares during a period equivalent to the expected term of the options. Expected volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity in the peer group.

The fair value of the equity-settled options is estimated on the date of grant using the following assumptions:

The management assessed that cash and cash equivalents, other bank balances, trade receivables, trade payables, and other current financial assets and financial liabilities approximates to their carrying amount largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is reported at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The fair value of investment in quoted instruments is measured at quoted price at the reporting date. The fair value of unquoted instruments is valued using inputs based on information about market participants assumptions and other data that are available.

b. Fair value of Interest free Security deposits are calculated by discounting future cash flows using rates currently available for debt on similar terms credit risk and remaining maturities.

Description of significant observable inputs to valuation:

- Interest free Security Deposits (assets & liabilities):

Interest Rate factor has been considered at a rate of 6.06% p.a. by the Company for discounting the amount receivable at the time of maturity.

The carrying amount of all financial assets and liabilities (except for those instruments carried at fair value) appearing in the financial statements is reasonable approximation of fair values.

The Companies activities expose it to variety of Financial risks- interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance and there has been no change to the Company''s exposure to these financial risks or the manner in which it manages and measures the risks

The following sections provide the details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for the management of these risks.

i. Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity risk. Financial instruments affected by market risk include loans and advances, deposits, investments in debt securities, mutual funds, and other equity funds.

a. Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk arises primarily from the investment in debt securities, investment in debt mutual funds and cash and cash equivalents and other bank balances.

The Company''s policy is to manage its interest rate risk by investing in fixed deposits, debt securities and debt mutual funds. Further, as there are no borrowings, the Company''s policy to manage its interest cost does not arise.

b. Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from Exports or imports that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does not use any financial derivatives such as foreign currency forward contracts, foreign currency options or swaps for hedging purposes.

The following table demonstrates the sensitivity in the USD, GBP and Euro to the Indian Rupee with all other variables held constant. The impact on the Company''s profit before tax due to changes in the fair value of monetary assets is given below:

minimizing losses incurred due to increased credit risk exposure. The Company trades only with recognized and creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, Outstanding customer receivables are regularly monitored and any credit to new customers are generally covered by appropriate security in the form of deposits.

a. Exposure to credit risk:

At the end of the reporting period, the Company''s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognized in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

b. Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognized financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

c. Financial assets that are neither past due nor impaired:

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Company. Cash and short-term deposits, investment securities that are neither past due nor impaired are placed with or entered with reputable banks, financial institutions or companies with high credit ratings and no history of default.

d. Financial assets that are either past due or impaired:

Trade receivables that are past due or impaired at the end of the reporting period, for which lifetime expected credit loss has been provided by the Company according to its policy. These are shown in the balance sheet at carrying value less impairment/expected credit loss (information provided in note no. 13).

iii. Liquidity risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Company ensures that it has sufficient cash on demand to meet expected operational demands, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

ii. Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company''s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and short-term deposit), the Company minimizes the credit risk by dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth while

Capital includes equity attributable to the equity holders of the Company. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximize shareholder''s value.

The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders or return capital to shareholders or issue new shares.

Currently the Company does not have any borrowings and maintains the entire capital in form of equity share capital.

54. | Disclosure required under Schedule III as amended, that are not covered above:

a) The Company has not traded or invested in crypto currency or virtual currency during the financial year.

b) No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

c) The Company has not been declared as willful defaulter by any bank or financial institution or government or any government authority.

d) The Company has not entered into any scheme of arrangement.

e) No registration and/or satisfaction of charges are pending to be filed with ROC.

f) There are no transactions which are not recorded in the books of account which have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

g) The Company does not have any relationship with struck off companies.

55. |The Company is engaged only in the business of manufacturing and trading of agriculture machinery and accordingly the business activity falls within a single business segment in terms of Ind AS 108 on Operating Segments.

56. |The Board has recommended dividend of '' 20 per equity share having face value of '' 10 each for the financial year

2023-2024.

57. | Corresponding previous year figures have been reclassified / regrouped wherever necessary.

As per our report of even date For and on behalf of the Board of Directors of

For K.S. Rao & Co., V.S.T. Tillers Tractors Limited

Chartered Accountants Firm Registration No. 003109S

Hitesh Kumar. P V.T.Ravindra K.M. Pai

Partner DIN: 00396156 DIN:01171860

Membership No:233734 Managing Director Director

Antony Cherukara Nitin Agrawal Chinmaya Khatua

Chief Executive Officer Chief Financial Officer Company Secretary

Membership No. ACS-21759

Place: Bengaluru Place: Bengaluru

Date: May 09, 2024. Date: May 09, 2024.

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Mar 31, 2023

(a) Terms / Rights attached to equity shares

i. The Company has only one class of equity shares having a par value of H 10/- per share. Each holder of equity share is entitled to one vote per share.

ii. In event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the share holders.

8. Other Information:

i The Company has invested planned assets with Life Insurance Corporation of India. Expected Return on Assets is based on rate of return declared by fund managers.

ii Present value of defined benefit obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit method (PUC Method). Under the PUC method a "projected accrued benefit" is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The "projected accrued benefit" is based on the Plan''s accrual formula and upon service as of the beginning or end of the year, but using a member''s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the "projected accrued benefits" as of the beginning of the year for active members.

C. Compensated absences amounting to H 102.57 lakhs (March 31,2022: H 109.47 lakhs) is recognized as expense and included in the Note 27 ''Employee Benefit Expenses''.

36. Fair Value of Financial Instruments:

The management assessed that cash and cash equivalents, other bank balances, trade receivables, trade payables, and other current financial assets and financial liabilities approximates to their carrying amount largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is reported at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The fair value of investment in quoted instruments is measured at quoted price at the reporting date. The fair value of unquoted instruments is valued using inputs based on information about market participants assumptions and other data that are available.

b. Fair value of Interest free Security deposits are calculated by discounting future cash flows using rates currently available for debt on similar terms credit risk and remaining maturities.

Description of significant observable inputs to valuation:

- Interest free Security Deposits (assets & liabilities):

Interest Rate factor has been considered at a rate of 6.06% p.a. by the company for discounting the amount receivable at the time of maturity.

The carrying amount of all financial assets and liabilities (except for those instruments carried at fair value) appearing in the financial statements is reasonable approximation of fair values.

39. Financial Risk Management objectives and policies:

The Companies activities expose it to variety of Financial risks- interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance and there has been no change to the Company''s exposure to these financial risks or the manner in which it manages and measures the risks

The following sections provide the details regarding the Company''s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for the management of these risks.

i. Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity risk. Financial instruments affected by market risk include loans and advances, deposits, investments in debt securities, mutual funds, and other equity funds.

a. Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company''s financial instruments will fluctuate because of changes in market interest rates. The Company''s exposure to interest rate risk arises primarily from the investment in debt securities, investment in debt mutual funds and cash and cash equivalents and other bank balances.

The Company''s policy is to manage its interest rate risk by investing in fixed deposits, debt securities and debt mutual funds. Further, as there are no borrowings, the Company''s policy to manage its interest cost does not arise.

b. Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from Exports or imports that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company''s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does not use any financial derivatives such as foreign currency forward contracts, foreign currency options or swaps for hedging purposes.

ii. Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty defaults on its obligations. The Company''s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and short-term deposit), the Company minimizes the credit risk by dealing exclusively with high credit rating counterparties. The Company''s objective is to seek continual revenue growth while minimizing losses incurred due to increased credit risk exposure. The Company trades only with recognized and creditworthy third parties. It is the Company''s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, Outstanding customer receivables are regularly monitored and any credit to new customers are generally covered by appropriate security in the form of deposits.

a. Exposure to credit risk:

At the end of the reporting period, the Company''s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognized in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

b. Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognized financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

c. Financial assets that are neither past due nor impaired:

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Company. Cash and short-term deposits, investment securities that are neither past due nor impaired are placed with or entered with reputable banks, financial institutions or companies with high credit ratings and no history of default.

d. Financial assets that are either past due or impaired:

Trade receivables that are past due or impaired at the end of the reporting period, for which lifetime expected credit loss has been provided by the company according to its policy. These are shown in the balance sheet at carrying value less impairment/expected credit loss (information provided in note no. 13).

iii. Liquidity risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The Company ensures that it has sufficient cash on demand to meet expected operational demands, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments.

41. Capital Management:

Capital includes equity attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximize shareholder''s value.

The Company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, Company may adjust the dividend payment to shareholders return capital to shareholders or issue new shares.

Currently the Company does not have any borrowings and maintains the entire capital in form of equity share capital.

40. Investment Property:

The Company as at the end of reporting period recognizes the income earned from renting of Investment property under the head other income with all the incidental expenditure in relation to the property under their respective sub-heads in other expenses.

Note: The fair values of investment properties have been determined by independent valuers. The main inputs used are the rental growth rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.

Depreciation and Useful Life: Depreciation method used by the entity for Investment Property is Straight line method. Useful life of buildings is considered as 30-60 years.

44. Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act):

The Ministry of Micro, small and medium Enterprises has issued an Office Memorandum dated August 26, 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers about the Entrepreneurs Memorandum number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amount payable to such enterprises as at March 31, 2023 has been made in the financial statements based on the information received and available with the Company. The Company has not received any claim for interest from any supplier under the said acts. Further in view of the Management, the impact of interest, if any, that may be applicable in accordance with provisions of the Act is not expected to be material.

45. LeasesCompany as Lessee:

The Company leases assets consists of leases for land, building and computers. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

46. Corporate Social Responsibility (CSR) Expenditure:

CSR amount required to be spent by the Company during the year is H 173.80 lakhs (Previous year H 159.49 lakhs). Further, during the year, the Company has spent an amount H 173.80 lakhs related to current year liability, details of which are as follows:

b) Nature of Obligation

The Company gives warranties for its products, undertaking to repair or replace the items that fail to perform satisfactorily during the warranty period. The provision made as at March 31, 2023 represents the amount of expected cost of meeting such obligations on account of rectification / replacement. The timing of outflow is expected to be within a period of one year from the end of the year.

The Company generally offers 12 months warranties for tiller products except 135DI tiller, 17HP-50HP tractors which are offered 24 months warranties. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest that past cost information may differ from future claims.

51. Reconciliation of monthly information filed with Lender:

The Company has availed working capital facility from HDFC Bank Limited which is paid within the Financial Year. As per the terms & conditions of the sanction letter, the Company is required to file monthly statement of inventory, trade receivables and trade payables. On reconciliation of books of account and periodical submissions made with the banker, there are no significant variances.

54. The Company is engaged only in business of manufacturing and trading of agriculture machinery and accordingly the business activity falls within a single business segment in terms of Ind AS 108 on Operating Segments.

55. The Board had recommended dividend of H 25 per equity share having face value of H 10 each for the financial year 2022-2023.

56. Corresponding previous year figures have been reclassified / regrouped wherever necessary.

53. The disclosure on the following matters required under Schedule III as amended, same are not covered above:

a) The Company has not traded or invested in crypto currency or virtual currency during the financial year

b) No proceedings have been initiated or are pending against the Company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

c) The Company has not been declared as wilful defaulter by any bank or financial institution or government or any government authority.

d) The Company has not entered into any scheme of arrangement.

e) No registration and/or satisfaction of charges are pending to be filed with ROC.

f) There are no transactions which are not recorded in the books of account which have been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

g) The Company does not have any relationship with struck off companies.

h) The Company does not have any subsidiary, associate or Joint venture. Hence disclosure w.r.t compliance with number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of layers) Rules, 2017, is not applicable.

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Mar 31, 2018

1. Share Capital (Contd.)

D. Rights attached to the Equity Shares

The company has only one class of equity shares having a face value of Rs. 10/- per share with one vote per each share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

The above sensitivity analysis is based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (projected unit credit method) has been applied as when calculating the defined benefit obligation recognised within the Balance Sheet.

2. Other Information:

i. The company has invested planned assets with Life Insurance Corporation of India. Expected Return on Assets is based on rate of return declared by fund managers.

ii. Present value of defined benefit obligation:

Present value of the defined benefit obligation is calculated by using Projected Unit Credit method (PUC Method). Under the PUC method a “projected accrued benefit” is calculated at the beginning of the year and again at the end of the year for each benefit that will accrue for all active members of the Plan. The “projected accrued benefit” is based on the Plan’s accrual formula and upon service as of the beginning or end of the year, but using a member’s final compensation, projected to the age at which the employee is assumed to leave active service. The Plan Liability is the actuarial present value of the “projected accrued benefits” as of the beginning of the year for active members.

B. Compensated absences amounting to Rs. 78,81,730 (March 31, 2017: 1,14,05,478) is recognised as expense and included in the Note 24’Salaries, wages and bonus’.

3. Fair Value of Financial Instruments:

The management assessed that cash and cash equivalents, trade receivables, trade payables, and other current assets and liabilities approximate to their carrying amount largely due to the short-term maturities of these instruments.

The fair value of the financials assets and liabilities is reported at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

a. The fair values of the quoted instruments are based on price quotations at the reporting date. The fair value of unquoted instruments are based on the Net Asset Value provided by the Management as on the date of reporting.

b. Fair value of Interest free Security deposits are calculated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.

Description of significant observable inputs to valuation:

- Interest free Security Deposits (assets& liabilities):

Interest Rate factor has been considered at a rate currently available for debt on similar terms, by the company for discounting the amount receivable at the time of maturity.

4. Related Party Transactions:

During the year under reference the Company has entered following transactions with Related Parties:

Names of the Related parties and description of relationship:

i) Key Management Personnel

Name of the Key Description of Relationship

Management Personnel

Mr. V.K.Surendra Chairman

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

Mr. K.U.Subbaiah Chief Executive Officer

Mr. P.M. Keshava* Chief Financial Officer

Mr.B.C.S. Iyengar# Whole Time Director (Refer Note below)

Mr.R.Thiyagarajan## Chief Financial Officer (Refer Note below)

Mr.Chinmaya Khatua Company Secretary

Mr. K.M. Pai Non-Executive Director

Mr. M.K. Bannerjee Non-Executive Director

Mr. V.V. Pravindra Non-Executive Director

Mr. R. Subramanian Non-Executive Director

Mr. V.T. Ravindra Non-Executive Director

Mrs. Siva Kameswari Vissa Non-Executive Director

ii) Enterprises over which the Shareholders of the Company, KMP/relatives of KMP exercise Control or significant influence:

1. VST Motors Private Limited

2. VST & Sons

3. Gove Finance Limited

4. Automobile Service Centre

5. Anand & Associates

Note: The details of related parties with whom the company has entered into transactions during the reporting periods have been disclosed.

# Mr.B.C.S.Iyengar resigned from the post of Whole time director with effect from April 30, 2016.

## Mr.R.Thiyagarajan served as CFO for the year 2016-17 and Whole time director and CFO for the period October 19, 2016 to March 31, 2017.

* Mr.P.M.Keshava has been appointed as CFO from June 01, 2017.

5. Financial Risk Management objectives and policies:

The company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks include interest rate risk, foreign currency risk, market risk, credit risk and liquidity risk. The company’s risk management policies focus on the unpredictability of financial markets and seek to, where appropriate, minimize potential and guidelines and there has been no change to the company’s exposure to these financial risks or the manner in which it manages and measures the risks or the manner in which it manages and measures the risks.

The following sections provide the details regarding the Company’s exposure to the financial risks associated with financial instruments held in the ordinary course of business and the objectives, policies and processes for the management of these risks.

i. Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market prices comprise three types of risk: currency rate risk, interest rate risk and other price risks, such as equity risk. Financial instruments affected by market risk include loans and advances, deposits, investments in debt securities, mutual funds, and other equity funds.

a. Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of the Company and the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company’s exposure to interest rate risk arises primarily from the investment in debt securities, investment in debt mutual funds and cash and cash equivalents.

The company’s policy is to manage its interest rate risk by investing in fixed deposits, debt securities and debt mutual funds. Further, as there are no borrowings, the company’s policy to manage its interest cost does not arise.

b. Foreign Currency Risk:

Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises when transactions are denominated in foreign currencies.

The Company has transactional currency exposures arising from Exports or imports that are denominated in a currency other than the functional currency. The foreign currencies in which these transactions are denominated are mainly in US Dollars ($). The Company’s trade receivable and trade payable balances at the end of the reporting period have similar exposures.

The Company does not use any financial derivatives such as foreign currency forward contracts, foreign currency options or swaps for hedging purposes.

ii. Credit risk:

Credit risk is the risk of loss that may arise on outstanding financial instruments when a counterparty default on its obligations. The Company’s exposure to credit risk arises primarily from trade and other receivables. For other financial assets (including investment securities, cash and short-term deposit), the Company minimizes the credit risk by dealing exclusively with high credit rating counterparties. The Company’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Company trades only with recognised and creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In addition, Outstanding customer receivables are regularly monitored and any credit to new customers are generally covered by appropriate security in the form of deposits.

a. Exposure to credit risk:

At the end of the reporting period, the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position. No other financial assets carry a significant exposure to credit risk.

b. Credit risk concentration profile:

At the end of the reporting period, there were no significant concentrations of credit risk. The maximum exposures to credit risk in relation to each class of recognised financial assets is represented by the carrying amount of each financial assets as indicated in the balance sheet.

c. Financial assets that are neither past due nor impaired:

Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record with the Company. Cash and short-term deposits, investment securities that are neither past due nor impaired are placed with or entered with reputable banks, financial institutions or companies with high credit ratings and no history of default.

d. Financial assets that are either past due or impaired:

Trade receivables that are past due or impaired at the end of the reporting period, for which life time expected credit loss has been provided by the company according to its policy. These are shown in the balance sheet at carrying value less impairment/expected credit loss (information provided in note no. 11).

iii. Liquidity risk:

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.

The company ensures that it has sufficient cash on demand to meet expected operational demands, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted.

The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments which are payable within 12 months.

6. Investment Property:

The company recognizes the income earned from renting of Investment property under the head other income with all the incidental expenditure in relation to the property under their respective sub-heads in Other expenses.

Note: The fair values of investment properties have been determined by independent valuers. The main inputs used are the rental growth rates, terminal yields and discount rates based on comparable transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.

Depreciation and Useful Life: Depreciation method used by the entity for Investment Property is Straight line method. Useful life of buildings is considered as 30-60 years.

Transfer from PPE to Investment Property:

During the year 2017-18, the company has transferred Land amounting to 36,92,815/- from Property Plant and Equipment to Investment Property which are held for earning income by way of rental or for capital appreciation.

7. Capital Management:

Capital includes equity attributable to the equity holders of the parent. The primary objective of the capital management is to ensure that it maintain an efficient capital structure and healthy capital ratios in order to support its business and maximise shareholder’s value.

The company manages its capital structure and make adjustments to it, in light of changes in economic conditions or its business requirements. To maintain or adjust the capital structure, company may adjust the dividend payment to shareholders return capital to shareholders or issue new shares.

Currently the company does not have any borrowings and maintains the entire capital in form of equity share capital.

8. The Board of Directors of the company have recommended 500% dividend (150% normal dividend and 350% Special dividend on account of Golden Jubilee year) on Equity share (Rs. 50 per share) for the Financial year 2017-18.

9. The Company has established internal financial controls over accounting of expenditure in the accounting system (ERP) and payments process. As per the established process, the entries accounted in ERP and EDI (Electronic Data Interchange) files generated from ERP for the payment purpose, are to be reviewed and approved by the Manager-Finance. However, Internal Financial Controls were not effective with respect to (1) review of payment voucher by Manager-Finance; (2) restriction of EDI files for editing; and (3) segregation of duties in respect of EDI file generation, which enabled the Deputy Officer - Finance to make fictitious accounting entries in the Company’s ERP system to divert funds to his personal bank account by modifying the EDI files generated from ERP before uploading them in the bank’s website by the AGM - Finance.

The management has identified that in the month of April 2018, the fraudulent siphoning of funds by the Deputy Officer-Finance to the tune of Rs. 37,89,699, of which an amount of Rs. 33,50,000 has been recovered from the employee concerned as on date of May 11, 2018. The concerned employee has submitted his resignation and legal proceedings have been initiated, including the recovery of the balance amount. Further, Management is evaluating to appoint an independent agency to carry out a detailed investigation.

Subsequently, the Company has taken adequate steps for(1) review and approval of expenditure entries; (2) generation of EDI files with appropriate segregation of duties; and (3) review of EDI files before uploading in bank’s website.

10. First Time Adoption of Ind AS:

The company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 01, 2017, with a transition date of April 01, 2016. These financial statements for the year ended March 31, 2018 are the first financial statements the company has prepared under Ind AS.

For all periods, up to and including the year ended March 31, 2017, the company has prepared its financial statements in accordance with generally accepted accounting principles and accounting standards notified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014 (“Previous GAAP”). This note explains the principle adjustment made by the company in restating its Previous GAAP Balance Sheet.

Mandatory exceptions to retrospective applications:

i. Estimates:

On assessment of the estimates made under the previous GAAP financial statements, the company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates.

However, estimates that were required under Ind AS but not required under previous GAAP are made by the company for the relevant reporting dates reflecting conditions existing as at that date.

ii. De-recognition of Financial assets and liabilities:

There are no items of financial asset and liabilities which are required to be de-recognised as per Ind AS 109.

iii. Classification of Financial Assets:

The company has classified financial assets in accordance with conditions that existed at the date of transition to Ind AS.

Optional exemptions applied: i. Deemed-Cost Previous GAAP carrying amount:

For transition to Ind AS, the Company has elected to carry the values of Property Plant and Equipment, intangible assets and investment property recognized as of March 31, 2016 measured as per previous GAAP and used that carrying value as its deemed cost.

Explanatory Notes

1. The company has elected to carry the values of Property, Plant and Equipment as at March 31, 2016 measured as per previous GAAP and used that carrying value as its deemed cost. Thus, the revaluation reserve balance as on March 31, 2016 under IGAAP is adjusted.

2. Under previous GAAP, current investments were measured at lower of cost or fair value and long-term investments were measured at cost less diminution in value (which is other than temporary). Under Ind AS 109, Financial assets other than amortized cost are measured at fair value through Profit and Loss and are reported at fair value as at April 01, 2016.

Accordingly, the company has recognized a net fair value gain of Rs.72,06,347/-on non-current investments and Rs. 1,22,77,939/- on current investments as on April 01, 2016,by crediting to Retained Earnings.

3. Under previous GAAP, interest free security deposits received/given (that are refundable in cash on completion of its term) are recorded at their transaction value. Under Ind AS, the company has fair valued these security deposits as per Ind AS 109.

The difference between fair value and transaction value of the security deposits received, have been recognized as deferred revenue. Consequent to this change, the amount of security deposit received has been decreased by Rs.7,24,960/-. The Deferred income has been increased by Rs. 5,47,866/-. The differential amount of Rs.1,77,094/-has been credited to retained earnings as on April 01, 2016.

The difference between fair value and transaction value of the security deposits given, have been recognized as Prepaid lease rentals. Consequent to this change, the amount of security deposit given has been decreased by Rs.5,10,479/. The prepaid lease rentals has been increased by Rs. 4,64,402/-. The differential amount of Rs. 46,077/-has been debited to retained earnings as on April 01, 2016

4. The company has accounted for the deferred tax on the various adjustments between Previous GAAP and Ind AS at the tax rate at which they are expected to be reversed. Accordingly, the resultant deferred tax is recorded in the books of accounts as at April 01, 2016.

1. Under previous GAAP, current investments were measured at lower of cost or fair value and long- term investments were measured at cost less diminution in value (which is other than temporary). Under Ind AS 109, Financial assets other than amortized cost are measured at fair value through Profit and Loss and are reported at fair value as at April 01, 2016.

Accordingly, the company has recognized a net fair value gain of Rs. 1,94,84,286/-as on April 01, 2016,by crediting to retained earnings and as on the reporting date March 31, 2017 the company has additionally recognized a fair value gain on Investments ofRs. 10,49,58,134/- credited to Statement of Profit and Loss under the head Other Income.

2. Under previous GAAP, interest free security deposits received/given (that are refundable in cash on completion of its term) are recorded at their transaction value. Under Ind AS, the company has fair valued these security deposits as per Ind AS 109.

Consequent to this change, on security deposits received,the Company has recorded a deferred income of Rs. 3,44,899/and interest cost of Rs. 4,40,956/-for the year ended March 31, 2017.

On security deposits given, the company has recorded an interest income of Rs. 2,15,309/-and prepaid lease rentals expense of Rs. 2,07,835/-for the year ended March 31, 2017.

3. The company has accounted for the deferred tax on the various adjustments between Previous GAAP and Ind AS at the tax rate at which they are expected to be reversed. Accordingly, the resultant deferred tax is recorded in the books of accounts as at March 31, 2017.

Explanatory Notes:

1 Under Previous GAAP, Company followed the policy of recognizing the trade discounts, cash discounts and other discounts under the head Selling expenses. Based on the requirements of Ind AS 18, Revenue from operations is recognised at the fair value of consideration received/receivable, after deduction of any discounts, rebates, price reductions and incentives given to customers.

The change has resulted in re-classification of discount expenditure amounting to Rs. 19,77,34,166/- from Selling expenses to Revenue from Operations. However, there is no impact on the Total Comprehensive Income for the period ended March 31, 2017.

2 Under previous GAAP, current investments were measured at lower of cost or fair value and long-term investments were measured at cost less diminution in value (which is other than temporary). Under Ind AS 109, Financial Assets other than Amortized cost have been designated at fair value through profit or loss and reported at fair value as at March 31, 2017.

The resulting fair value changes of these investments are recognized in the Statement of Profit and Loss, amounting to Rs. 10,49,58,134/-.

3 Under previous GAAP, interest free security deposits received/given (that are refundable in cash on completion of its term) are recorded at their transaction value. Under Ind AS, the company has fair valued these security deposits as per Ind AS 109.

Consequent to this change, on security deposits received, the Company has recorded a deferred rental income of Rs. 3,44,899/- and interest cost of Rs. 4,40,956/- for the year ended March 31, 2017.

On security deposits given, the Company has recorded an interest income of Rs. 2,15,309/- and prepaid lease rentals expenditure of Rs. 2,07,835/ for the year ended March 31, 2017.

4 The company has accounted for the deferred tax on the various adjustments between Previous GAAP and Ind AS at the tax rate at which they are expected to be reversed. Accordingly, the resultant deferred tax is recorded in the books of accounts as at March 31, 2017.

5 Under Ind AS, re-measurements of post-employment benefits i.e., actuarial gain and losses and the return on plan assets, except for amounts included in the net interest expense on the net defined liability are recognised in other comprehensive income instead of statement of profit and loss. Under the previous GAAP, these measurements were forming part of the profit or loss. As a result, profit for the year ended March 31, 2016 is increased by Rs.1,66,15,787/-. There is no impact on the total equity as at March 31, 2017.

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Mar 31, 2017

1 The Actuarial value of gratuity liability as at 31st March 2017 is Rs. 8,80,92,911/- (31st March, 2016 is Rs. 6,63,74,616/-) as per the workings under AS 15 (Revised) issued by the Institute of Chartered Accountants of India.

The following table sets out the funded status of the gratuity'' and the amounts recognized in the company’s financial statements as at March 31, 2017.

Notes :

1 The estimates of future salary increases considered in actuarial valuation take into consideration for inflation, seniority, promotion and other relevant factors.

2 The expected return on plan assets is determined considering several applicable factors such as the composition o the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the company policy for plan assets is expected to vary from year to year reflecting the returns on matching Government bonds.

3 Related Party Transactions:

Information given in accordance with the requirements of Accounting Standard 18 - Related party disclosures notified by Ministry of Corpora Mafias under Section 33 of the Companies Act, 203.

Name of the Related Party Nature of Relationship

a) Mitsubishi Heavy Industries-VSD''esel Engines Private Limited Associates/Joint Ventures

b) Anand & Associates Associates/JointVentures

c) Automobile Service Centr e Associates/Joint Ventures

d) VST & Sons Associates/JointVentures

e) Gove Finance Limited Common Director

f) VST Motors Private Limited Company where directors are interested

g) MrV.P.Mahendr a Key Management Personnel

h) M!B.C.S.Iyengar Key ManagementPersonnel

i) MlR.Thiyagarajan# Key Management Personnel

* Managerial remuneration includes Commission.

MrB.C.S.Iyengar has resigned from the post of Whole time director with effect from April 30 2016.

# Mr.Thiyagarajan has served as Whole time director and CFO for the period October 19 , 2016 to March 31, 2017.

4 Corporate Social Responsibility (CSR) Expenditure

CSR amount required to be spent by the Company during the year is Rs. 2,21,87,888

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Mar 31, 2016

(b) Terms/ rights attached to equity shares

The company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the company, the holders of equity shares would be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management

1 The actuarial value of gratuity liability as at 31st March 2016 is Rs.6,63,74,616/-( Rs.7,44,01,266) as per the workings under AS 15 (Revised) issued by the Institute of Chartered Accountants of India.

Gratuity report under AS-15 (Revised 2005) for the year ended March 31, 2016

The following table sets out the funded status of the gratuity plans and the amounts recognized in the company’s financial statements as at March 31, 2016.

Notes :

2 The estimates of future salary increases considered in actuarial valuation take into consideration for inflation, seniority, promotion and other relevant factors.

3 The expected return on plan assets is determined considering several applicable factors such as the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the company’s policy for plan assets is expected to vary from year to year reflecting the returns on matching Government bonds.

4 Related Party Transactions:

Information given in accordance with the requirements of Accounting Standard 18 - Related party disclosures notified by Ministry of Corporate Affairs under sub section (3C) of Section 211 of the Companies Act, 1956 read with General circular 8/2014 dated April 04,2014, issued by the Ministry of Corporate Affairs.

Name of the Party Nature of Relationship

a) Mitsubishi Heavy Industries-VST Diesel Engines Private Limited Associates/Joint Ventures

b) Anand & Associates Associates/Joint Ventures

c) Automobile Service Centre Associates/Joint Ventures

d) VST & Sons Associates/Joint Ventures

e) Mr.V.P.Mahendra Key Management Personnel

f) Mr.V.V.Pravindra Key Management Personnel

g) Mr.B.C.S.Iyengar Key Management Personnel

5 a. These financial statements have been prepared in the format prescribed by the Revised Schedule III to the Companies Act 2013.

b. Previous year figures have been recast/restated to conform to the classification of the current year.

c. Company doesn’t have any amount outstanding to be transferred to the Investor Education and Protection Fund.

d. Company doesn’t have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

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Mar 31, 2015

(A) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

As per records of the Company, including its register of shareholders/ members, the above shareholding represent legal ownership of shares.

(d) Shares allotted as fully paid up by way of bonus shares (during 5 years preceding March 31, 2015)

Issued, Subscribed and Paid-up Capital includes 28,79,843 equity shares of Rs.10 each, which were allotted as fully paid up by way of bonus shares by capitalisation of Share Premium on 9th Feb, 2010.

2 Contingent Liabilities

a) Cases filed by customers in various consumer courts not acknowledged as debts 43,79,000 43,79,000

b) Appeal filed by company in respect of 2,40,20,873 - income tax matters

c) Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances). 42,42,977 4,22,57,591

d) Bank guarantees issued to Government agencies by way of security 1,15,36,907 56,49,300

The vendor financing facility with M/s AXIS Bank Limited aggregating to Rs.25.00 crores to the vendors of the company is with recourse to the company on the delayed payment at interest rate of 2% p.a. over and above the contracted rate.

3 Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act):

Based on the information available with the company, there are no Micro, Small and Medium enterprises, to which the company owes dues, which are outstanding for more than 45 days as at March 31, 2015. Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

4 The actuarial value of gratuity liablity as at 31st March 2015 is Rs.7,44,01,266/- (Rs.6,61,58,554) as per the workings under AS 15 (Revised) Employee Benefits, notified by Ministry of Corporate Affairs Under Subsection 3C of Section 211 of the Companies Act, 1956 read with GeneralCircular 8/2014 dated April 04, 2014, issued by the Ministry of Corporate Affairs.

Gratuity report under AS-15 (Revised 2005) for the year ended March 31, 2015

The following table sets out the funded status of the gratuity plans and the amounts recognised in the company's financial statements as at March 31, 2015.

Notes :

1. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

2. The expected return on plan assets is determined considering several applicable factors such as the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the company's policy for plan assets is expected to vary from year to year reflecting the returns on matching Government bonds.

3. Gratuity liability in case of employees of Precision Components Division, Mysore are unfunded and the gratuity liability for the year was Rs.9,11,997 (31st March, 2014 Rs.3,13,444) and the cumulative liability as on 31st March 2015 was Rs.43,18,763 (31st March, 2014 Rs.34,99,015).

5 Related Party Transactions:

Information given in accordance with the requirements of Accounting Standard 18 - Related Party disclosures notified by Ministry of Corporate Affairs Under sub section (3C) of Section 211 of the Companies Act, 1956 read with General circular 8/2014 dated April 04, 2014, issued by the Ministry of Corporate Affairs

Name of the Party Nature of Relationship

a) India Garage Service Station Associates/Joint Ventures

b) India Garage Petrol Pump Associates/Joint Ventures

c) MHI-VST Diesel Engines Private Ltd Associates/Joint Ventures

d) Anand & Associates Associates/Joint Ventures

e) Automobile Service Centre Associates/Joint Ventures

f) VST & Sons Associates/Joint Ventures

g) Mr.V.P.Mahendra Key Management Personnel

h) Mr.V.V.Pravindra Key Management Personnel

i) Mr.B.C.S.Iyengar Key Management Personnel

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Mar 31, 2013

Note 1: Company overview

VSt tillers tractors Limited (VttL) was incorporated on December 18, 1967in Bangalore, India. It was promoted by the VSt Group, a well-known business house in South India, in technical collaboration and joint venture with Mitsubishi Heavy Industries and Mitsubishi Corporation, Japan for the manufacture of Power tillers and Diesel Engines. the plant went into production in the year 1970.

In 1984, an additional technical and financial collaboration with Mitsubishi Agricultural Machinery Company Ltd, Japan for the manufacture of 18.5 HP, 4 wheel drive tractor was entered into. the company was incorporated for the purpose of manufacture and or deal with tractor, tillers, Diesel Engines, Harvestors, Reapers, Binders, transplanters/ planters, trench Cutters, Front end Loaders and all kinds of allied agricultural, plantation and horticultural machinery including attachments, components, accessories, spares implements and other equipments required for the satisfactory functioning of the agricultural equipments.

2 Contingent Liabilities

a) Cases fled by customers in various consumer courts not acknowledged as debts 43,79,000 47,04,000

b) Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances). 8,68,66,454 4,64,44,394

c) Bank Guarantees issued to Government agencies by way of security. 1,33,62,500 63,80,500

the Vendor Financing Facility with M/S. Axis Bank Ltd., aggregating to Rs. 25.00 Crores to the vendors of the Company is with recourse to the Company on the delayed payments at interest rate of 2% p.a over and above the contracted rate.

3 Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act):

Based on the information available with the company, there are no Micro, Small and Medium enterprises, to which the company owes dues, which are outstanding for more than 45 days as at 31st March, 2013. Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

4 The actuarial value of gratuity liability as at 31st March 2013 is Rs.5,74,97,126/- (Rs.5,11,09,025) as per the workings under AS 15(Revised) issued by the institute of charted accountants of India.

Gratuity Report under AS-15 (Revised 2005) for year ended March 31, 2013

the following tables sets out the funded status of the gratuity plans and the amounts recognized in the Company''s fnancial statements as at March 31, 2013.

5 Previous year fgures have been regrouped/reclassifed to conform to the classifcation of the current year.

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Mar 31, 2012

Note 1: Company overview

V.S.T. Tillers Tractors Limited (VTTL) was incorporated on December 18, 1967 in Bangalore, India. It was promoted by the V.S.T Group, a well-known business house in South India, in technical collaboration and joint venture with Mitsubishi Heavy Industries and Mitsubishi Corporation, Japan for the manufacture of Power Tillers and Diesel Engines. The plant went into production in the year 1970.

In 1984, an additional technical and financial collaboration with Mitsubishi Agricultural Machinery Company Ltd, Japan for the manufacture of 18.5 HP, 4 wheel drive Tractor was entered into.

The company was incorporated for the purpose of manufacture and or deal with Tractor, Tillers, Diesel Engines, Harvestors, Reapers, Binders, Transplanters/ planters, Trench Cutters, Front end Loaders and all kinds of allied agricultural, plantation and horticultural machinery including attachments, components, accessories, spares implements and other equipments required for the satisfactory functioning of the agricultural equipments.

2 Share Capital

(a) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares would be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% shares in the Company

(1) includes all schemes under their management

As per records of the Company, including its register of shareholders/members, the above shareholding represent legal ownership of shares.

(d) Shares allotted as fully paid up by way of bonus shares (during 5 years preceding March 31, 2012)

Issued, Subscribed and Paid-up Capital includes 28,79,843 equity shares of Rs. 10 each, which were allotted as fully paid up by way of bonus shares by capitalisation of Share Premium on Feb 9, 2010.

3 Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act):

Based on the information available with the company, there are no Micro, Small and Medium enterprises, to which the company owes dues, which are outstanding for more than 45 days as at 31st March, 2012. Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

Notes :

1. The estimates of future salary increases considered in actuarial valuation take into consideration for inflation, seniority, promotion and other relevant factors

2. The expected return on plan assets is determined considering several applicable factors such as the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the company's policy for plan assets is expected to vary from year to year reflecting the returns on matching Government bonds.

3. Gratuity liability in case of employees of Precision Components Division, Mysore are unfunded and the gratuity liability for the year was Rs. 8,60,525 and the cumulative liability as on 31 March, 2012 was Rs. 25,84,555.

4 Related Party Transactions:

Information given in accordance with the requirements of Accounting Standard 18 on related party disclosures issued by the Institute of Chartered Accountants of India

Name of the Party Nature of Relationship

i. Vinay Industries Associates/Joint Ventures

ii. India Garage Service Station Associates/Joint Ventures

iii. India Garage Petrol Pump Associates/Joint Ventures

iv. MHI-VST Diesel Engines Private Associates/Joint Ventures Limited

v. Anand & Associates Associates/Joint Ventures

vi. Rama Infotech Associates/Joint Ventures

vii. Mr. V.P.Mahendra Key Management Personnel

ix. Mr. V.V.Pravindra Key Management Personnel

x. Mr. B.C.S.Iyengar Key Management Personnel

4 These financial statements have been prepared in the format prescribed by the Revised Schedule VI to the Companies Act 1956. Previous period figures have been recast/restated to conform to the classification of the current year.

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Mar 31, 2011

BACK GROUND

V.S.T. Tillers Tractors Limited (VTTL) was incorporated on December 18, 1967 in Bangalore, India. It was promoted by the V.S.T Group, a well known business house in South India, in technical collaboration and joint venture with Mitsubishi Heavy Industries and Mitsubishi Corporation, Japan for the manufacture of Power Tillers and Diesel Engines. The plant went into production in the year 1970.

In 1984, an additional technical and financial collaboration with Mitsubishi Agricultural Machinery Company Ltd, Japan for the manufacture of 18.5 H P, 4 wheel drive Tractor was entered into.

The company was incorporated for the purpose of manufacture and or deal with Tractor, Tillers, Diesel Engines, Harvesters, Reapers, Binders, Transplanters/ planters, Trench Cutters, Front end Loaders and all kinds of allied agricultural, plantation and horticultural machinery including attachments, components, accessories, spares implements and other equipments required for the satisfactory functioning of the agricultural equipments.

1. Share capital

i) Issued, Subscribed and Paid-up Capital includes 1,50,000 (Previous year: 1,50,000) equity shares of Rs.10 each, which were allotted as fully paid pursuant to a contract for consideration other than cash.

ii) issued, Subscribed and Paid-up Capital includes 28,79,843 (Previous year: 28,79,843) equity shares of Rs.10 each, which were allotted as fully paid up by way of bonus shares by capitalisation of share premium.

2. Secured Loans

Working Capital loans sanctioned by Commercial Banks are secured by way of first charge on hypothecation of inventories, bills receivable and other current assets and a second charge on all fixed assets of the company, ranking pari passu basis with other members of the consortium.

3. Receivables

Sundry debtors includes amount due from firms in which Directors of the company are partner of Rs.56,57,207 (previous year Rs. 39,15,592) (Maximum balance outstanding at any time during the year Rs.90,71,338/- (P.Y. Rs.83,00,967/-).

4. Central Government approval under section 297 of the Companies Act, 1956

The Company has applied to Central Government on 3rd July 2009, 2nd April 2010 and 2nd November 2010 for approval under section 297 of the Companies Act, 1956 for the execution of contracts in which Directors are interested, pending approval from Central Government the company has executed the contracts with such parties. The Company is confident of getting the approval from the concerned authorities from the date of filing of application.

5. Cash and Bank balance

Bank balance with others on deposit account includes deposit with West Bengal State Rural Cooperative Bank Limited of Rs. 1,50,000 (previous year Rs. 1,00,000). Maximum amount outstanding at any time during the year was Rs. 1,50,000 (previous year Rs. 1,00,000). None of the Directors are interested in the Bank and none of the Directors are relatives of the Directors of the Bank.

6. Micro, Small and Medium Enterprises Development Act, 2006(MSMED Act)

7. Depreciation on Research and Development assets and Revalued assets

i. Depreciation on Research and Development assets amounting to Rs.7,37,178 (Previous year Rs.8,68,754) has been charged off during the current year. Capital expenditure on Research and Development Rs.Nil (Previous year Rs.Nil) is shown as addition to fixed assets.

ii. Depreciation on the revalued assets amounting to Rs.64,575 (Previous year Rs. 64,575) has been deducted from the Revaluation Reserve.

8. Contingent Liabilities not provided for

I. Cases filed by the customers in various consumer courts not acknowledged as debt Rs.42,37,000 (Previous year Rs. 41,85,000)

II. Bank Guarantee Outstanding with Canara Bank Rs.62,22,000/- as at March 31, 2011 (Previous year 1,07,74,500/-)

III. Foreign Letter of Credit (FLC) Outstanding with Canara Bank Rs. 2,08,74,488/- as at March 31, 2011 (Previous year Nil)

IV. Input Cenvat claim not admitted by the department of Customs, Central Excise and Service Tax is Rs.l 1,56,440. Company has appealed to the Commissioner (Appeals) of Customs, Central Excise and Service Tax.

9. Capital Commitments

Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) Rs.169,16,720 (previous year Rs. 112,34,822).

10. RELATED PARTY TRANSACTIONS

a) Names of related parties and description of relationship :

Description of relationship Names of Related Parties

i) Associates :

VST Auto Ancilliaries Pvt. Limited

Vinay Industries

India Garage Service Station

India Garage Petrol Pump

MHI-VST Diesel Engines Private Limited

Anand & Associates

Rama Infotech

ii) Joint Ventures MHI-VST Diesel Engines Pvt. Limited

iii) Key Management Personnel :

Managing Director Mr. V. P. Mahendra

Whole Time Directors Mr. V. V. Pravindra

Mr. B.C.S. Iyengar

b) Defined Benefit Plan:

The employees gratuity fund scheme managed by a Trust (Life Insurance Corporation of India for Bangalore unit Employees) is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognised in the same manner as gratuity.

11. DETAILS OF JOINT VENTURE

1. Name of Joint Venture MHI-VST Diesel Engines Private Limited

2. Description of Interest Jointly Controlled Entity

3. Financial Interest in Jointly Controlled Entity (*)

Amount in Rs.

a Assets 46,90,00,000

b Liabilities 46,90,00,000

c Income 21,38,25,936

d Expenditure 31,68,21,829

e Capital Commitments -

f Contingent Liabilities -

(*) The above are as per the unaudited information furnished by the Joint Venture Company as on 31st March, 2011.

12. Figures for the previous year have been re-grouped wherever necessary for comparison purposes.

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Mar 31, 2010

1) Contingent Liabilities not provided for

A) Cases filed by the customers in various consumer courts not acknowledged as debt Rs.41,85,000 (previous year Rs.37,12,000).

B) Demands raised by Central Excise Department not acknowledged as debt Rs.4,18,564. The Company has filed appeals before The Revision Authority, Department of Revenue, Ministry of Finance, New Delhi challenging the demands raised by the department.

2) Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) Rs. 1, 12,34,822 (previous year Rs.34,05,617)

3) Figures for the previous year have been re-grouped wherever necessary for comparison purposes.