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VST Tillers Tractors Ltd.

BSE: 531266 Sector: Auto
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OPEN 2354.00
52-Week high 3085.00
52-Week low 1935.00
P/E 17.92
Mkt Cap.(Rs cr) 2,006
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Sell Price 0.00
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OPEN 2354.00
CLOSE 2363.55
52-Week high 3085.00
52-Week low 1935.00
P/E 17.92
Mkt Cap.(Rs cr) 2,006
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

VST Tillers Tractors Ltd. (VSTTILLERS) - Director Report

Company director report

Dear Shareholder

Your Directors have pleasure in presenting the 49th Annual Report of the Company andthe audited statement of accounts for the year ended March 31 2017.


(Rupees in lakhs)

Period Year 2016-17 Year 2015-16
TOTAL INCOME 71072 65894
INCOME TAX 3110 3590
BALANCE B/F 10823 5166


The year under report was partially impacted with drought in States of Karnataka TamilNadu and Kerala. In other parts of the country the monsoon was normal during the season.Structural changes in the subsidy schemes in few States change over to DBT schemes andprice fixation delays impacted the sales of Power tillers during the year 2016-17.

The number of Power Tillers sold in during the year was 25515 units as against theprevious year sale of 27387; registering an adverse growth in sales of 6.8% while theindustry as a whole shrunk by 10.6%.

However your market share moved up to 59%.

Your company registered a recordable growth in Tractor numbers. We sold 9635 tractorsas against 7801 tractors in 2015-16 registering a growth of 23.5% in the compact segmentin comparison to 1% industry growth in the compact segment. Your company market share inthe compact segment moved from 13.2% in 2015-16 to 16.5% in 2016-17.

Your company will be investing around Rs.80 crores in new product development over next4 years. The company will launch new Tiller variants and Tractor variants. During the year2016-17 your company launched the 27 HP Viraat Tractor model to the market which made usrepresent in the 21-30 HP compact segment category which otherwise we were not present. Wealso launched the 17 HP single cylinder tractor ‘VST SHAKTI SAMRAAT' and the upgradedversion ‘VST SHAKTI VIRAAT PLUS' in April 2017. Both these models are with 8+2constant mesh gear box. The enhanced marketing campaign to reach out to end users andoffering innovative & affordable farm mechanisation solution enabled us to grow duringthe year. Your Company has been successfully running more than 75 Custom Hiring &Service Centers under the scheme launched by the Government of Karnataka. Small farmersand marginal farmers are taking the farm equipment on lease through these Custom Hiring& Service Centers.

Your company has planned to invest around Rs.150 crores which includes new productdevelopment (Rs.80 crores) plant infrastructure and machinery over the next 4 years.


The Board has recommended final dividend of Rs.15(150%) per share for the financialyear 2016-17 and the same will be disbursed on or after 14th August 2017. The totaloutflow will be Rs.1560 lakhs including the dividend distribution tax of Rs. 264 lakhs ifapproved by the shareholder at the 49th AGM.

Transfer to reserves

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


Industry – Opportunities & Challenges

Need of mechanization in agriculture has become a necessity due to limited availabilityof labour and high cost of labour. The aging population in the agriculture sector needsmachines to reduce the manual effort. Your company is in the business of manufacturing andselling machines and attachments for various crop cultivation. The company products targetlargely the small and marginal farmers who account for more than 70% of the land holding.Also there is necessity to increase the productivity in agriculture through mechanizationand shortage of rural labour force continues to be the key driver for business growth.Moreover the income of our farmers need to increase with increase in productivity in theland size that they own. There is lot of opportunity to support the farmers for customizedcrop solutions. Your company is offering total crop solutions to the farmers atcompetitive pricing which will assist in growing the business. The company has developedpackages for various crops like Paddy Cotton Sugarcane Horticulture Grapes etc. forCompact tractors and Power tillers.

Delays in subsidy schemes announcement by the State Government bureaucracy associatedwith the administration of schemes weak Monsoon etc. continues to be the challenge foryour company. Entry of more and more competition tractors in the compact segment isdemanding your company to come out with more and more variants to counter the competition.


The Central as well as State Governments are encouraging more and more Custom HiringCentres to support the marginal and small farmers. This movement can impact the sales ofTillers and Tractors to the farmers as they may use the machines available in the CustomHiring Centres on hire. Major portion of Power Tillers are sold under government subsidyschemes. In case the subsidy allocations are reduced it can adversely affect the demandfor these products. Most State Governments are switching over to DBT scheme for subsidywhich would mean without good retail finance support available for the farmers they willnot be able to buy the Tillers.

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


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


In accordance with the provisions of the Companies Act 2013 Mr. V V Pravindra(00239888) Non-Executive Director of the Company will retire at the ensuing AGM and iseligible for reappointment.

Mr.V.T.Ravindra (DIN: 00396156) has been appointed as Non-Executive Director of theCompany with effect from 27/05/2016

Ms.Siva Kameswari Vissa (DIN: 02336249) has been appointed as Independent Director ofthe Company with effect from 29/07/2016.

Ms. K P Anuradha (DIN : 07214890) has resigned from Independent Director of the Companywith effect from 01/08/2016.

Mr. R.Thiyagarajan (DIN: 06906198) has been appointed as Whole-time Director of thecompany w.e.f 19/10/2016 and has resigned from the directorship of the Company with effectfrom 31st March 2017. During the year no non-executive director had any pecuniaryrelationship or transactions with the Company other than the sitting fees andreimbursement of expenses incurred by them for attending meetings of the Company.


The following persons are Key Managerial Personnel (KMP) of the Company under section203 of the Companies Act 2013. There is no change in KMP during the year 2016-17.

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

2. Mr. R. Thiyagarajan Chief Financial Officer

3. Mr. Chinmaya Khatua - Company Secretary


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


Pursuant to subsection 5 of Section 134 of the Companies Act 2013 the Directorsconfirm that:

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

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

(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities; (d)they have prepared the annual accounts on a going concern basis;

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

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

Based on the internal financial controls and compliance system established andmaintained by the Company the Board is of the opinion that the Company's internalfinancial controls were adequate during financial year 2016-17.


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


Pursuant to Section 148 of the Companies Act 2013 read with The Companies (CostRecords and Audit) Amendment Rules 2014 the cost audit records maintained by the Companyis required to be audited. Your Directors had on the recommendation of the AuditCommittee appointed M/s. Rao Murthy & Associates Cost Accountants to audit the costrecords of the Company for the financial year 2017-18 on a remuneration of Rs.2 lakhs(Exclusive of applicable taxes) plus out of pocket expenses. As required under theCompanies Act 2013 the remuneration payable to the cost auditor is required to be placedbefore the Members in a general meeting for their approval. Accordingly a Resolutionseeking Member's approval for the remuneration payable to M/s. Rao Murthy &Associates. Cost Auditors is included in the Notice of the Annual General Meeting.


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


Pursuant to the provisions of Section 204 of the Companies Act 2013 and read withRules made thereunder the Company had appointed M/s. K Narayana Swamy & Co. CompanySecretaries in Practice to undertake the Secretarial Audit of the Company for thefinancial year 2016-17. The Secretarial Audit Report is enclosed herewith as Annexure-4.


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) Rules2014 except Mr. V.P. Mahendra Vice Chairman & Managing Director and Mr. K.U.Subbaiah Chief Executive Officer the details of which are given in Annexure-1 there areno employees who draw remuneration as set out in the aforesaid provision of the CompaniesAct 2013.


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


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

Internal Control System and their Adequacy

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

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

The Significant observations made by the Auditors and follow up actions there onreported to the Audit Committee. The Audit Committee reviews the adequacy andeffectiveness of the Company's Internal Control Environment and monitors theimplementation of the Audit recommendations.

Industrial Relation

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

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

Forward-Looking Statements

Statements in this release that are "forward-looking statements" are based oncurrent expectations and assumptions that are subject to risks and uncertainties. Actualresults could differ materially from those either expressed or implied due to factors suchas Raw material prices Government policies Competition tax regime market acceptance ofnew products and services continued acceptance of existing products and services changesin licensing programs product price discounts delays in product development and relatedproduct release schedules sales and vendor channel disruption.

All information in this release is as of May 25 2017 The Company undertakes no dutyto update any forward looking statement to conform the statement to actual results orchanges in the company's expectations.

Board Meeting

Six meetings of the Board of Directors were held during the year. For further detailsplease refer report on Corporate Governance of this Annual Report.

Declaration of Independent directors.

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


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

Vigil Mechanism

The purpose of this policy is to provide a framework to promote responsible and securewhistle blowing. It is to protect employees wishing to raise a concern about seriousirregularities within the Company. The Company has vigil mechanism to deal with instanceof fraud and mismanagement if any. The details of the vigil mechanism are explained inthe Corporate Governance Report and also posted on the website ( of theCompany.

Auditors qualification reservation or adverse remark or disclaimer.

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

"There was an imbalance regarding constitution of the Board which was dulycommunicated to the Stock Exchanges and the same was restored during the year underreview." No fraud has been reported by the Auditors under section 143 (12) of theCompanies Act 2013.

Loans Guarantee & Investment

The Company has given loan and made investment during the year 2016-17. However theinvestments and Loan formed part of the notes to the financial statements provided in thisAnnual Report. The company has not given any Guarantee during the year 2016-17.

Related Party Transactions

All related party transactions that are entered into during the financial year were onan arm's length basis. There are no materially significant related party transactions madeby the company with Promoters Directors Key Managerial Personnel or other designatedpersons 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 beforethe Board for approval. Prior omnibus approval of the Audit Committee was obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their information and approval. The policy on dealing with Related PartyTransactions as approved by the Board can be accessed at

Material changes and commitments affecting the Financial Position

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

Risk Management Policy

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

There are no risks which in the opinion of the Board threaten the existence of theCompany. However some of the risks which may pose challenges are set out in theManagement Discussion and Analysis which forms a part of this report.

The Committee composition :

Mr. M.K. Bannerjee Chairman Mr. V. K. Surendra Member Mr. K.M. Pai Member Mr.V.P. Mahendra Member The details of the policy are given below:

1Packing Credit in Foreign Currency

Corporate Social Responsibility (CSR)

The Company has formed CSR policy and Committee details as required by the Act areavailable in Company website i.e. TheCompany has spent Rs.160 lakhs in CSR activities during the financial year 2016-17.

Evaluation of Board Performance.

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

None of the Independent Directors are due for reappointment.

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

During the year 2016 -17 there is no change in Subsidiary Associate or Joint VentureCompany.

Significant and material orders

There are no significant material orders passed by the Regulators / Courts which wouldimpact 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 ofthe employees of the company for the financial year as follows:

Sl. No. Name Designation Salary 2016-17 (in Rs) Salary 2015-16 (in Rs) Increase in salary Ratio/Times per Median of employee remuneration
1 Mr.V.P. Mahendra Vice Chairman & Managing Director (KMP) 7749081 7749901 (820) 15.20
2 Mr. B.C.S Iyengar # Whole-time Director 452760

5423602 (4970842)

3 Mr. R. Thiyagarajan* Chief Financial Officer (KMP) 4562423 3892170 670253 8.95
4 Mr. Chinmaya Khatua Company Secretary (KMP) 1389647 1128215 261432 2.72

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

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

The Company's PAT has marginally decreased from Rs. 7413 lakhs to Rs. 7175 lakhs. Theincrease in KMP remuneration is line with the current market scenario and with Companypolicy. However salary of Vice Chairman & Managing Director and other Whole-timeDirectors was approved by the shareholders.

The Company has given about 8.73% average increase in salaries to the employees keepingin view the overall industry standard and interest of the employees. The unionizedemployees of the Company are getting salary increment as per the terms and conditions oftheir wage settlement. There is no exceptional circumstances of increase in the managerialremuneration.

The Company has 633 permanent employees on roll.

The Company fixes salary of the employees on the basis of Remuneration Policy of theCompany.

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

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

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

*Note : Mr.Iyengar resigned as Executive Director on 30th April 2016

Mr K.U.Subbaiah receives remuneration in excess of the highest paid director during theyear the details are given in Page No.12


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

Notes : Data based on share prices quoted on BSE.

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

The Company has formed Internal Complaint Committee under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and no complaint was receivedduring the year 2016-17.

Form No. AOC-2

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

Form for disclosure of particulars of contracts / arrangements entered into by thecompany with related parties referred to in sub-section (1) of section 188 of theCompanies Act 2013 including certain arm's length transactions under third provisothereto:

1. Details of contracts or arrangements or transactions not at arm's length basis:V.S.T. Tillers Tractors Ltd (the Company) has not enteredinto anycontract/arrangement/transaction with its related parties which is not at arm's lengthduring FY 2016-17.

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

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

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

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

(e) Justification for entering into such contracts or arrangements or transactions: NotApplicable

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

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

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

2. Details of material contracts or arrangement or transactions at arm's length basis:

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

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

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

d. Salient terms of the contracts or arrangements or transactions including the valueif any: Not Applicable

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

f. Amount paid as advances if any: None

on behalf of Board of Directors
Place: Bengaluru V. K. Surendra
Date: 25th May 2017 Chairman

Extract of Annual Return

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


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

Place: Bengaluru V. K. Surendra
Date : May 25 2017 Chairman


Information as per Rule 5 of Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014

Name Designation Remuneration (in Rs) Qualification & experience Date of Commence- ment of employment Age Last employ- ment % of equity share held Whether relative of Director or Manager
V.P. Mahendra Vice Chairman & Managing Director 7749081 BE (Electrical) having more than 50 years of experience 20.02.1984 74 NA 7% No
K U Subbaiah CEO 9706414 BE (Mechanical) with over 34 years of experience. 17.08.2015 57 Pricol Ltd 0.0003 No

Note: All the appointments are as per the service contract of the Company and can beterminated by giving notice by either party.



1. Conservation of energy :

As the industry is not a power intensive unit no capital investment was madeduring the year

2016-17 and hence no benefit could accrue.

2. Research and Development (R&D) :



a. 27 HP VST SHAKTI VIRAAT Tractor - variants with additional features like Side ShiftSmart Hydraulics and Narrow Track created and released to Market.

b. Upgraded version of 27 HP i.e. VIRAAT PLUS Conceptualised with advanced technicalfeatures like 8+2 constant mesh gearbox Oil immersed brakes and upgraded 4 cylinderengine. This product has since been launched. II. 17 HP TRACTOR :

a. Single cylinder (17 HP) engine 2W drive tractor conceptualised with 8+2 constantmesh gearbox and the product has since been launched.


a. 18.5 HP and 22 HP Tractors were European homologated which opened up the ExportMarket.

b. 18.5 HP and 22 HP Tractors are taken up for EU Homologation to new standards whichwill be effective from 1st Jaunary 2018.

c. 22 HP Tractor upgraded with advanced features like Oil immersed brakes and dry typeAir cleaner and has completed the Approval tests at Budni.

IV. COP approval of all Tractor Engines obtained from M/s. ARAI.


I. 135 DI Ultra Power Tiller :

II. Upgraded version of 130 DI Power Tiller with new styling. Phase-1 released Phase-2will be introduced during Q3-2017-18. III.COP Approval for Power Tiller engines obtainedfrom M/s. ARAI.


New Engine Dynamometers have been procured and is under installation and commissioningat Tractor R & D Test Lab.

Benefits Derived :

i. New dynamometers once commissioned has the capacity of testing engines up to 60 HP.

ii. Design software upgradation has improved our Time of Market and design quality.

4. Application Engineering :

a. Validation of attachments mounted on our Tractors and Tillers completed which wouldenable us to provide total crop solutions to the farming community.

5. Futur e Plans :


i. Higher HP 2WD tractor is planned for the year 2017-18.

ii. Higher HP with various technical features planned for introduction during the year2017-18.

iii. Enhancement of features on existing 18 & 22 HP Tractors.


i. Release of Higher HP Power Tiller

ii. Release of Ultra power tiller with further improvements in styling.

iii. Release of self propelled reaper.

c. Procurement of new Software for R & D

Expenditure on R&D:

The Companies expenditure on R&D (including revenue expenditure) during the yearwas Rs.41520840/- (refer note no-34 page no. 70 of Annual Report)

3. Foreign exchange earnings and outgo:

a) Complete information about exports which have contributed towards foreign exchangeearnings is given in note no. 36 to the Audited Accounts annexed to this Report.Similarly details of foreign exchange outgo on account of imports expenditure ontraveling dividend etc. are shown in note no. 35 & 37 respectively in Notes formingpart of Accounts.

b) Total foreign exchange used and earned:

Foreign exchange earnings : Rs.102167494/-

Foreign exchange outgo : Rs.108941658/-