vst tillers tractors ltd Directors report

Dear Members,

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

FINANCIAL PERFORMANCE

Amount (Rs in Lakhs)

Particulars	Year 2022-23	Year 2021-22
Operating Income	100,643	85,386
Non-Operating Income	2495	3,409
Total Income	103,137	88,795
Finance Cost	127	105
Depreciation	2,694	2,504
Total Expenses	90,743	75,577
Exceptional Item	-	-
Profit Before Tax	12,394	13,218
Tax	3,158	3,287
Profit After Tax	9,236	9,931
Other Comprehensive Income	-16.46	-6.40
Total Comprehensive Income	9,219	9,925
Earnings Per Share (Basic and Diluted) (Amount in 7)	106.90	114.95

Financial Performance/ State of Company Affairs

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

7100,643 Lakhs.

During the year under review i.e. FY 2022-23, your Companys Operating income is 7 100,643 lakhs as against Rs. 85,386 lakhs in the previous Financial Year 2021 -22

712,394 Lakhs.

Profit Before Tax (PBT)forthe FY 2022-23 is Rs. 12,394 lakhs as against Rs. 13,218 lakhs in the previous Financial Year 2021-22. 7 9,236 Lakhs.

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

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

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

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

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

DIVIDEND

Based on the Companys performance, your directors are pleased to recommend, for approval of the members, Dividend of Rs. 25 /- per equity share of face value of 710 each (i.e. @ 250%) payable to those members whose names appear in the Register of Members as on the Record Date i.e. August 25, 2023.

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

The dividend payout for the period under review has been formulated in accordance with shareholders aspirations and the Companys Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Companyto be met by internal cash accruals. The Dividend will be disbursed on or after September 01,2023, if approved by the members at the 55^th AGM. The total outflow will be Rs. 21.60 Crores

TRANSFER TO RESERVES

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

QUALITY INITIATIVES

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

• IMexI Initiative (Integrated manufacturing excellence Initiative)

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

- Received Imexi commitment Silver Prize for VST - Malur plant

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

• TQM Kick off

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

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

- Kaizen initiative - 2059 Kaizen reported in FY23

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

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

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

- The Company successfully completed the annual Surveillance audit and retained the ISO certification for EMS & Safety - IS014001:2015 & ISO 45001:2018

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

DETAILS OF DIRECTORS AND KMP APPOINTMENT/ REAPPOINTMENT

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

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

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

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

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

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

KEY MANAGERIAL PERSONNEL (KMP)

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

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

2. Mr. Antony Cherukara - Chief Executive Officer

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

4. Mr. Chinmaya Khatua - Company Secretary

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

CORPORATE GOVERNANCE

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

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

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

DIRECTORS RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors including the audit of internal financial controls over financial reporting by the Internal Auditors and the reviews performed by management and the relevant board committees, including the audit committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2022-23.

AUDITORS

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

COST AUDITORS

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

INTERNAL AUDITORS

Pursuant to Section 138 of Companies Act, your directors, on the recommendation of the Audit Committee have appointed M/s. Brahmayya 8< Co, Chartered Accountant as Internal Auditors for the financial year 2022-23.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and read with Rules made there under, the Board had appointed M/s Thirupal Gorige 8< Associates LLP, Practising Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2022-23. The Secretarial Audit Report is enclosed herewith as Annexure-4.

PARTICULARS OF EMPLOYEES

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

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

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

DEPOSITS

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

INDUSTRIAL RELATION

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

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

SAFETY, HEALTH AND ENVIRONMENT

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

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

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

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

• Strengthening the consequence management system and creating awareness across locations

• Taking our Proactive Safety Indicators to the next level

INFORMATION TECHNOLOGY

Your company is focused on digitalizing the entire organization by:

1. Automation of Processes

2. Simplification of Processes

3. Elimination of Non-Value-Added Processes

4. Providing meaningful data to improve the decision making process

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

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

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

BOARD MEETING

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

DISCLOSURE OF RELATIONSHIPS BETWEEN DIRECTORS

Mr. V.K. Surendra, Mr. V.V. Pravindra, Mr. V.T. Ravindra and Mr. V S Arun belong to promoters family. Apart from the promoter directors, none of the other Directors are related to each other.

DECLARATION OF INDEPENDENT DIRECTORS

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

COMMITTEES

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

VIGIL MECHANISM CUM-WHISTLE BLOWER POLICY

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

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

AUDITORS QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER

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

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

LOANS, GUARANTEE & INVESTMENT

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

RELATED PARTY TRANSACTIONS

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

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

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION

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

NOMINATION COMPENSATION AND REMUNERATION COMMITTEE

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

RISK MANAGEMENT

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

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

CORPORATE SOCIAL RESPONSIBILITY (CSR)

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

EVALUATION OF BOARD PERFORMANCE

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

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

Details of subsidiary. Associate, or joint Venture Company.

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

SIGNIFICANT AND MATERIAL ORDERS

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

VARIATION IN MARKET CAPITALISATION

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

Data Source: BSE Ltd.

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

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

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

OTHER DISCLOSURES

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

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

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

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

- Redemption of shares/debentures

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

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

Annual Return

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

Secretarial Standards

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

Investor Education and Protection Fund

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

The details of unclaimed dividends as on 31/03/2023 is given below:

SI. No.	Financial Year	Unclaimed Dividend Amount (in RS)	No of corresponding Shares	Due date of Transfer to IEPF
1	2016-17	1020675.00	68045	12-10-2024
2	2017-18	2104100.00	42082	11-10-2025
3	2018-19	608100.00	40540	10-10-2026
4	2019-20 (Interim)	636000.00	42400	21-05-2027
5	2020-21	658889.00	38139	28-10-2028
6	2021-22	573037.00	33533	21-10-2029

Details of Nodal officer:

Name- Mr. Chinmaya Khatua (Company Secretary)

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

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

ACKNOWLEDGEMENTS

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

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

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

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

	for V.S.T. TILLERS TRACTORS LTD.
	V. K.Surendra
Place: Bengaluru	Chairman
Date: August 04, 2023	(DIN: 00459069)