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Directors Report of VST Tillers Tractors Ltd.

Mar 31, 2015

Dear Shareholder,

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

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

OPERATING INCOME 55160 62422

NON-OPERATING INCOME 1186 870

TOTAL INCOME 56346 63292

PROFIT BEFORE DEPRECIATION & FINANCE COST 11208 12764

FINANCE COST 212 177

DEPRECIATION 941 391

PROFIT BEFORE TAX 10055 12196

INCOME TAX 3104 3902

PROFIT AFTER TAX 6952 8294

BALANCE B/F 5023 5245

SURPLUS AVAILABLE FOR APPROPRIATION TO : 11974 13539

PROPOSED DIVIDEND 1296 1296

PROPOSED TAX ON DIVIDEND 264 220

TRANSFER TO GENERAL RESERVE 5000 7000

DEPRECIATION ADJUSTMENT 71 -

CSR EXPENDITURE 177 -

BALANCE CARRIED FORWARD 5166 5023

COMPANY'S PERFORMANCE

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

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

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

DIVIDEND:

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

Transfer to reserves

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

MANAGEMENT DISCUSSION AND ANALYSIS

Industry - Opportunities & Challenges

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

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

RISKS AND CONCERNS

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

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

CURRENT YEAR OUTLOOK

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

DIRECTORS REAPPOINTMENT:

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

APPOINTMENT OF KEY MANAGERIAL PERSONNEL (KMP)

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

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

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

3. Mr. Chinmaya Khatua - Company Secretary

CORPORATE GOVERNANCE:

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

DIRECTOR'S RESPONSIBILITY STATEMENT:

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

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

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

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

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

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

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

AUDITORS:

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

COST AUDITORS:

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

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

INTERNAL AUDITORS

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

SECRETARIAL AUDITORS

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

PARTICULARS OF EMPLOYEES:

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

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

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

DEPOSITS:

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

Internal Control System and their Adequacy

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

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

Industrial Relation

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

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

Forward-Looking Statements

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

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

Board Meeting

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

Declaration of Independent directors.

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

Committees

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

Vigil Mechanism

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

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

Auditors qualification, reservation or adverse remark or disclaimer.

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

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

Explanation

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

Loans, Guarantee & Investment

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

Related Party Transactions

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

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

Material changes and commitments affecting the Financial Position

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

Risk Management Policy

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

Corporate Social Responsibility (CSR)

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

Evaluation of Board Performance.

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

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

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

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

Significant and material orders

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

VARIATION IN MARKET CAPITALISATION :

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

31.03.2014 86395280 937.70

31.03.2015 86395280 1243.50

Increase/Decrease NIL 305.80

% Increase/Decrease NIL 32.60

No issue of shares during the year - -

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

31.03.2014 96.00 9.77 810.12

31.03.2015 80.46 15.45 1074.32

Increase/Decrease -15.54 5.68 264.2

% Increase/Decrease -16.18 58.14 32.60

No issue of shares - - - during the year

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

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

Extract of Annual Return

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

ACKNOWLEDGEMENTS:

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

For V.S.T. TILLERS TRACTORS LTD.

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


Mar 31, 2013

Dear Shareholder,

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

FINANCIAL PERFORMANCE

(Rupees in lacs)

Period Year 2012-13 Year 2011-12

URNOVER 48166 53064

OtHER INCOME 210 463

tOtAL INCOME 48376 53527

PROFIt BEFORE DEPRECIAtION & FINANCE COSt 7425 7743

FINANCE COSt 128 86

DEPRECIAtION 335 321

PROFIt BEFORE tAX 6962 7336

INCOME tAX 2105 2343

PROFIt AFtER tAX 4857 4993

BALANCE B/F 4297 3008

SURPLUS AVAILABLE FOR APPROPRIAtION tO: 9155 8001

PROPOSED DIVIDEND 778 778

PROPOSED tAX ON DIVIDEND 132 126

tRANSFER tO GENERAL RESERVE 3000 2800

BALANCE CARRIED FORWARD 5245 4297

COMPANY''S PERFORMANCE

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

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

DIVIDEND:

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

NSE LISTING:

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

DIRECTORS:

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

CORPORATE GOVERNANCE:

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

DIRECTOR''S RESPONSIBILITY STATEMENT:

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

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

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

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

the observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 45th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 30, 2013. the Cost Audit Report for the fnancial year 2011-12 was fled on January 15, 2013 and the due date for fling the report was February 28, 2013.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (particular of employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors'' Report for the year ended 31st March 2013 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fxed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

Internal Control Systems

Your Company maintains adequate internal control system, which provides reasonable assurance that transactions in signifcant areas are monitored to prevent any misuse. to strengthen this area your Company is looking at improved responsiveness from a fully integrated ERP. this will enable vendors to get information on material requirement and ensure streamlined supply of materials. the new system will improve its capability and speed of information to add more value. the Internal auditors carry out audits on a regular basis and submit their report once in a quarter to the Audit Committee. the Audit Committee reviews the report and recommendations of the Internal Auditors and advises the Management to strengthen and streamline the system wherever required.

Industrial Relation

Industrial relations have been cordial across all the plants during the year. the tri-annual agreement for wage settlement has recently been concluded with mutual satisfaction. Your Company is continuously taking initiatives for building organizational capabilities and enhancing people productivity. Various training and development programs were offered to the managerial cadre to upgrade their skills and develop the human resource base. Steps are also being implemented to strengthen specifc areas that are considered key to the Company in achieving its business goals.

Forward-Looking Statements

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

All information in this release is as of May 30, 2013, the Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the company''s expectations.

ACKNOWLEDGEMENTS:

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

for VSt tILLERS tRACtORS LtD.

Place: Bangalore V. K. Surendra

Date : May 30, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the 44th Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2012.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2011-12 Year 2010-11

TURNOVER 53064 42531

OTHER INCOME 463 597

TOTAL INCOME 53527 43128

PROFIT BEFORE DEPRECIATION & INTEREST 7739 7403

INTEREST 82 72

DEPRECIATION 321 227

PROFIT BEFORE TAX 7336 7104

INCOME TAX 2343 2485

PROFIT AFTER TAX 4993 4619

BALANCE B/F 3008 2493

SURPLUS AVAILABLE FOR APPROPRIATION TO: 8001 7112

PROPOSED DIVIDEND 778 778

PROPOSED TAX ON DIVIDEND 126 126

TRANSFER TO GENERAL RESERVE 2800 3200

BALANCE CARRIED FORWARD 4297 3008

COMPANY'S PERFORMANCE

The financial year 2011-12 is of great significance to the Company as it records surpassing a turnover of Rs. 500 crores. During the year under review your Company has been on a consistent upward path with the turnover increasing by 24% from Rs. 425 crores in 2010-2011 to Rs. 530 crores. Your Company has clocked a modest growth by selling over 26000 Tillers and maintained its leadership position in the power tiller industry while significantly improving tractor sales which crossed 7000 units.

Though the farm sector was well placed to attain a moderate growth, challenges remained high for the Company during the year. The operating profit increased marginally by 3% to Rs. 68 crores. This marginal increase on a 24% higher turnover is due to steep escalation in cost of raw materials and margins continued to be under pressure. The profit after tax amounted to Rs. 50 crores, an increase of 9% over the previous year and earnings per share during the year increased from Rs. 53.46 to Rs. 57.79 On the financial front, your Company has adopted a disciplined approach towards managing liquidity though delays in realization of government subsidies have significantly pushed up the receivables and working capital.

The sale of power tillers during the year increased by 12% and Chinese made "Dragon" tiller sale improved significantly over the previous year though on a lower base. The Tractor sales have grown by a robust 50% in line with the growing demand. Your Company's plan to market Rice Transplanters has been encouraging primarily driven by non availability of farm labour during transplanting season. During the year, 370 units were sold in the rice growing belts in India.

The Precision Components Division's performance has been steady despite the continuous increase in cost of inputs and overheads. Export margins have contracted due to spiralling raw material costs with very little scope for passing on the higher cost. Several cost cutting measures and low cost automation was introduced. Due to the volatility of overseas orders, export revenue slowed down resulting in lower capacity utilization in some areas. This division is primarily contributing to the overall performance of your Company on a lower cost base and is now focusing on producing components for captive use.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs.9/- per equity share of Rs.10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs. 904 lacs including the distribution tax.

NSE LISTING:

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

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and Articles of Association, Mr. R Subramanian and Mr. V. Ramachandran Directors of the Company retire by rotation and are eligible for re-appointment.

CORPORATE GOVERNANCE:

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

DIRECTOR'S RESPONSIBILITY STATEMENT:

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

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

Appropriate Accounting policies have been selected and applied consistently, reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2012 and the profits of your company for the year ended March 31, 2012.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis. The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retires as Auditors of the Company at the conclusion of 44th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 29, 2012. The Cost Audit Report for the financial year 2010-11 was filed on August 19, 2011 and the due date for filing the report was September 30, 2011.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors' Report for the year ended 31st March 2012 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

MANAGEMENT's DISCUSSION AND ANALYSIS

Industry structure and developments:

The GDP growth of the Indian economy declined to 6.5% during 2011-12 against 8.4% recorded in 2010- 11 due to high inflation and lower rate of growth in manufacturing. With the various measures adopted by the government and a normal monsoon the agriculture sector is expected to grow by 3% compared to 5% growth during 2010-2011. The relatively weak responses to price hikes in agricultural commodities brings back into focus on the need for sustained levels of growth in agriculture and allied sectors.

The Power Tiller industry which is growing at around 20% per annum largely relies on Government subsidies and agricultural lending by banks. On the demand side, Power Tillers being imported from China by various players has seen robust growth during the year and is posing a challenge to your company in its endeavor to increase its market share. It is encouraging for the industry that due to shortage of labor, potential for power tillers, rice transplanters and other farm equipment is well positioned to attain a high growth trajectory.

The Indian tractor market which is the largest in the world is expected to increase at a CAGR of 6-7% by 2014-15. The biggest markets for the tractor industry include States like Uttar Pradesh (UP), Andhra Pradesh (AP), Madhya Pradesh (MP), Rajasthan, and Maharashtra, which together accounted for around 50% of the total tractor sales in India during 2011-12. In the domestic tractor market, the industry as a whole grew to 607658 units during 2011-12 from 545109 units in the previous year. Your company commands a significant market share in Maharashtra and Gujarat in the smaller HP tractors and sales in this segment are expected to grow in the coming year. New players are entering the below 20-25hp segment to tap the potential in these markets. To cater to market demand, the manufacturing capacities will be established by the year end. A new model with better aesthetics are being planned that will lead to higher revenue streams during the year.

OPPORTUNITIES

The growth of the Power tiller and Tractor industry could be directly linked to the GDP growth of the Indian economy. Agriculture which is slated to register a positive growth of 3% which will benefit farm mechanization and provide opportunities for higher sales and optimum utilization of capacities. Government schemes such as Rashtriya Krishi Vikas Yojana (RKVY), Macro Management Scheme and National Food Security Mission will also support a strong demand and help the Company to increase volumes in absolute terms. With infrastructure projects and rural employment schemes increasing employment opportunities, availability of labour for agricultural activities continued to decline, compelling farmers with small and medium-sized land holdings to mechanize. Being an organized player in the power tiller industry along with a strong after sales service, your Company is constantly evolving by taking initiatives like brand building and upgrading dealers to face competition.

RISKS AND CONCERNS

Agriculture is the backbone of India's economy. Though various irrigation schemes have been conceived to enhance the cultivable area, the agricultural sector continues to be monsoon dependent. On another front, higher interest rate of bank finance for your Company's products and increasing delay in releasing timely subsidy by various states for power tillers is an area of concern. During the year, sale of Chinese made power tillers under various subsidy schemes has intensified competition for your Company. Appropriate marketing strategies are being adopted to gain market share and strengthen our competitive edge in the current scenario. The government's fiscal policy of controlling inflation by hardening of interest rates could have an adverse impact on the demand for power tillers and tractors. As for margins, the Company would remain vulnerable to adverse changes in input costs during the year.

CURRENT YEAR OUTLOOK

Agriculture is the mainstay of more than two-thirds of the country's population and with the expansion of non-farm economic activities there is a tendency to exit this field. The Government is targeting over 4% growth for agriculture which is necessary to support a 9% GDP growth which is the theme of the 12th Five Year Plan. Expenditure on rural development and investments are expected to grow, besides improving infrastructure according to the Economic Survey. A favourable monsoon coupled with ease of credit availability to farmers will have a positive influence on the power tiller and tractor industry. During the current year, with various marketing and development initiatives undertaken, your Company is confident of maintaining its growth momentum. On the export front, the outlook is positive for tractors and your Company is presently taking steps for obtaining export certification for marketing in European countries.

The steps taken to introduce Rice Transplanters in various states are proving to be sustainable in the long term with government support. Extensive work to train self-help groups who have been effective agents of change on various aspects of adapting to mechanized transplantation have been undertaken. Your Company driven by these initiatives is expecting to reap rewards in the future with more models.

Currently, the pressing need is efficiency in procuring raw material. Due to the growth experienced in industry coupled with shortage of power in certain areas, availability of key raw materials have had adverse repercussions on the Company's production leading to opportunity losses. The year ahead could be challenging if inflationary conditions are not contained which may lead to lower than expected contribution. Recognizing that for enhancing production, scale is essential, your Company is developing new vendors and focusing on improved efficiency from supply chain management.

During the year, your Company has commenced work on establishing a new Tractor manufacturing plant located in Hosur, Tamil Nadu with an installed capacity of 36000 units p.a. The financial outlay for this project is budgeted at Rs. 66 crores and funded with a mixture of internal accruals and debt. The plant is expected to go on stream during the end of the first quarter of 2013. This project will also give the Company the prospect of introducing more tractor models and de-risk its current portfolio and seize growth opportunities in the future

At Precision Component Division, investment in critical machinery has been made only in required areas to cater to higher captive consumption. We believe the export demand would remain flat due to the economic downturn in overseas market and the static customer base. Realizing the current scenario, your Company's plan is to continue its focus on in-house supply.

Internal Control Systems

Your Company maintains adequate internal control system, which provides reasonable assurance that transactions in significant areas are monitored to prevent any misuse. To strengthen this area your Company is looking at improved responsiveness from a fully integrated ERP. This will enable vendors to get information on material requirement and ensure streamlined supply of materials. The new system will improve its capability and speed of information to add more value. The Internal auditors carry out audits on a regular basis and submit their report once in a quarter to the Audit Committee. The Audit Committee reviews the report and recommendations of the Internal Auditors and advises the Management to strengthen and streamline the system wherever required.

Industrial Relation

Industrial relations have been cordial across all the plants during the year. Your Company is continuously taking initiatives for building organizational capabilities and enhancing people productivity. Various training and development programs were offered to the managerial cadre to upgrade their skills and develop the human resource base. Your company has been increasing the strength of apprentices and trainees across various departments to cultivate new talent. Steps are also being implemented to strengthen specific areas that are considered key to the Company in achieving its business goals.

Forward-Looking Statements

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

All information in this release is as of May 29, 2012, The Company undertakes no duty to update any forward looking statement to conform the statement to actual results or changes in the company's expectations.

ACKNOWLEDGEMENTS:

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

for VST TILLERS TRACTORS LTD.

V. K. Surendra

Chairman

Place: Bangalore

Date : May 29, 2012


Mar 31, 2011

The Directors have pleasure in presenting the 43rd Annual Report of the Company and the audited statement of accounts for the year ended March 31, 2011.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2010-11 Year 2009-10

TURNOVER 42531 34454

OTHER INCOME 597 277

TOTAL INCOME 43128 34731

PROFIT BEFORE DEPRECIATION & INTEREST 7403 6506

INTEREST 72 67

DEPRECIATION 227 259

PROFIT BEFORE TAX 7104 6180

INCOME TAX 2485 1947

PROFIT AFTER TAX 4619 4233

BALANCE B/F 2493 1016

SURPLUS AVAILABLE FOR APPROPRIATION TO: 7112 5249

DIVIDEND 778 648

TAX ON DIVIDEND 126 108

TRANSFER TO GENERAL RESERVE 3200 2000

BALANCE CARRIED FORWARD 3008 2493

COMPANYS PERFORMANCE

We are pleased to report another successful period for your Companys business. Your Company has clocked a modest growth by selling over 23000 Tillers and 4700 Tractors and continues to maintain its leadership position in the power tiller industry.

The turnover for the year registered an increase by 23% from Rs.344 crores in 2009-10 to Rs. 425 crores while the operating profit increased to Rs. 65 crores compared to Rs.59 crores. However, the operating margin declined by 1.83% due to increase in raw material costs. Profit after tax was Rs. 46 crores, an increase of 9% over the previous year and earnings per share during the year increased from Rs.48.99 to Rs.53.46.

The sale of power tillers during the year increased by 23%. While the Tractor sales have grown by 26% during the year. Your Companys aggressive plan to market Rice Transplanters has been encouraging primarily driven by expensive farm labor and government subsidy.

The performance of Precision Component Division improved with exports registering a growth of 45% from Rs. 5.5 crores to Rs. 8 crores . However export margins have been impacted due to spiraling raw material costs with very little scope for passing on the increase to our overseas customers. During the year, this division has capitalized on growth opportunity in production of components for captive consumption which has indirectly contributed to the overall performance of your Company.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs. 9/- per equity share of Rs.10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs. 904 lacs including the distribution tax.

NSE LISTING

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

DIRECTORS:

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

CORPORATE GOVERNANCE:

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

DIRECTORS RESPONSIBILITY STATEMENT:

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

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

Appropriate Accounting policies have been selected and applied consistently, and reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2011 and the profits of your company for the year ended March 31, 2011.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis.

The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 43rd Annual General Meeting and are eligible for re-appointment.

COST AUDITORS:

M/s. Rao, Murthy & Associates, Cost Accountants were re-appointed by the Board of Directors in its meeting held on May 30, 2011. The Cost Audit Report for the financial year 2009-10 was filed on September 8, 2010 and the due date for filing the report was September 30, 2010.

PARTICULARS OF EMPLOYEES:

As required by provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, there are no employees who draw remuneration as set out in the aforesaid provision of the Companies Act.

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

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31st March 2011 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

ACKNOWLEDGEMENTS:

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

for VST TILLERS TRACTORS LTD.

Sd/-

Place: Bangalore V. K. Surendra

Date : May 30, 2011 Chairman






Mar 31, 2010

The Directors record with deep sadness, the demise of founder Managing Director, Shri VT.Krishnamoorthy. His guidance to your Company in the above capacity and subsequently as Chairman during the formative and difficult years was invaluable. We pay our respect and homage to the departed soul.

Your Directors are pleased to present the 42nd Annual Report and the audited statement of accounts for the year ended March 31, 2010.

FINANCIAL PERFORMANCE (Rupees in lacs)

Period Year 2009-10 Year 2008-09

TURNOVER 34454 27414

OTHER INCOME 277 482

TOTAL INCOME 34731 27896

PROFIT BEFORE DEPRECIATION & INTEREST 6506 4748

INTEREST 67 53

DEPRECIATION 259 281

PROFIT BEFORE TAX 6180 4414

INCOME TAX 1947 1523

PROFIT AFTER TAX 4233 2891

BALANCE B/F 1016 880

SURPLUS AVAILABLE FOR APPROPRIATION TO: 5249 3771

DIVIDEND 648 432

TAX ON DIVIDEND 108 73

TRANSFER TO GENERAL RESERVE 2000 2250

BALANCE CARRIED FORWARD 2493 1016

COMPANYS PERFORMANCE

During the year under review your company continued to improve upon the progress made during the previous year by selling over 19000 Tillers which helped the Company to consolidate its position as market leader in the power tiller industry. The sale of tractors also increased significantly by over 3700 nos. Both these figures are a milestone.

The turnover for the year registered an increase by 26% from Rs 274 crores in 2008-09 to Rs.344 crores while the operating profit increased to Rs. 59 crores compared to Rs.39 crores. This was mainly due to higher growth and operating efficiency. Profit after tax amounted to Rs. 42 crores, an increase of 46% over the previous year. Consequently, earnings per share increased from Rs. 50.20 to Rs. 68.69 and

your company continues to remain debt free while short term borrowings were limited to only need based working capital requirements. Power Tillers and Tractors contributed 62% and 24% of the sales during the year. Export revenue from Precision Component Division declined by 58% due to the global recession in the component business.

The sale of power tillers during the year increased to 19068 units as against the previous years sales of 16691 units, an increase of 14%. The companys tractor sales also accelerated to 3758 units as against 2327 units in the previous year. As a result of an aggressive plan to market Rice Transplanters, 858 units were sold mainly in the paddy growing belts of Punjab, Tamil Nadu and Kerala. This steadily shift towards mechanization has been due to acute shortage of labour and cost effectiveness of these machines.

DIRECTORS REPORT

The performance of the Component Division went through a difficult time due to the global economic slowdown and profits from exports declined on a standalone basis. During the second half of the year, export margins were impacted due to higher raw material prices. This apart, the strengthening of the Rupee against the Sterling and Euro compounded the problems as realizations declined. Despite these conditions, increase in production of components for captive consumption enabled this division to record a moderate increase in top line and sustain its operations.

DIVIDEND:

Your Directors have pleasure in recommending a dividend of Rs.7.507- per equity share of Rs. 10/- each for approval at the Annual General Meeting. The dividend if declared will result in an outflow of Rs.756 lacs including the distribution tax.

DIRECTORS:

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

CORPORATE GOVERNANCE:

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

DIRECTORS RESPONSIBILITY STATEMENT:

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

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

Appropriate Accounting policies have been selected and applied consistently, and reasonable and prudent judgment and estimates have been made so as to ensure that the accounts give a true and fair view of affairs of your company as at March 31, 2010 and the profits of your company for the year ended March 31, 2010.

Proper and sufficient care has been taken for the maintenance of appropriate accounting records in accordance with the provisions of the act for safeguarding the assets of your company and for preventing and detecting frauds and other irregularities.

The annual accounts have been prepared on a going concern basis.

The observations of Auditors in their report to Members have been adequately dealt with in the relevant notes to accounts. Hence no additional explanation is considered necessary.

AUDITORS:

M/s. Brahmayya & Company, Chartered Accountants, retire as Auditors of the Company at the conclusion of 42nd Annual General Meeting and are eligible for re-appointment.

PARTICULARS OF EMPLOYEES:

Information as per Section 21 7(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, details of employee who was employed throughout the financial year and was in receipt of remuneration aggregating to not less than 24 lacs p.a. is as follows :

Mr. V P Manendra - Managing Director

Aged - 68 years

Gross Remuneration recieved - Rs. 35,39,518/-

Qualification - B.E. - Electrical

Experience - 30 Years

Date of Employment - 01/10/1980

Last position held - as Deputy Managing Director

of the Company

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

Information under Section 217( I )(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 and forming part of the Directors Report for the year ended 31 st March 2010 is enclosed as Annexure.

FIXED DEPOSITS:

Your Company has not accepted any fixed deposits within the meaning of Section 58A of the Companies Act, 1956 and rules made there under.

ACKNOWLEDGEMENTS:

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

For VST TILLERS TRACTORS LTD.

Sd/- Place: Bangalore V. K. Surendra

Date : May 28, 2010 Chairman

 
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