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EQUITY - MARKET SCREENER

Escorts Kubota Ltd
Industry :  Automobiles - Tractors
BSE Code
ISIN Demat
Book Value()
500495
INE042A01014
597.1005411
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
ESCORTS
25.57
19337.21
EPS(TTM)
Face Value()
Div & Yield %
57.31
10
0.48
 

As on: Jul 02, 2022 10:12 AM

Dear Members,

Your Directors have pleasure in presenting this Integrated Annual Report (‘Annual Report') of the Company along with Company's audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2022.

Financial Results

(Rs. crores)

Standalone Consolidated
Particulars Year ended on March 31, 2022 Year ended on March 31, 2021 Year ended on March 31, 2022 Year ended on March 31, 2021
Revenue from operations 7,152.68 6929.29 7,238.43 7014.42
Other income 213.02 154.56 218.02 160.38
Total income 7,365.70 7083.85 7,456.45 7174.80
Profit from operations before Interest, Depreciation & Tax 1,164.33 1283.79 1,139.86 1286.40
Finance Cost 12.70 10.98 14.97 13.34
Profit from operations before Depreciation & Tax 1,151.63 1272.81 1,124.89 1273.06
Depreciation & Amortisation 129.75 115.70 132.06 118.28
Profit from operations before Tax 1,021.88 1157.11 992.83 1154.78
Tax Expense 256.27 283.05 257.22 283.15
Net profit for the period 765.61 874.06 735.61 871.63

Financial Performance/ State of Company Affairs

The brief highlights of the Company's performance

(Standalone) for the financial year (‘FY') ended March 31, 2022 are:-our Company sold 94,228 tractors during the year under review as against 1,06,741 tractors sold during the last financial year.

The brief highlights of the Company's performance (Consolidated) for the FY ended March 31, 2022 are:-

• Total income of the Company for FY 2022 stood at Rs. 7,456.45 crores ( Rs. 7,174.80 crores in FY 2021)

• Profit from operations before Interest, Depreciation & Tax stood at Rs. 1,139.86 crores.

• Profit from operations before Tax (PBT) stood at Rs. 992.83 crores. Net profit for the period stood at Rs. 735.61 crores.

The details on the individual businesses of the Company are provided in the Management Discussion & Analysis section provided in this annual report.

Management Discussion & Analysis

In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the "SEBI Listing Regulations"), the Management Discussion and Analysis is set out in this Annual Report and provides a detailed analysis on the performance of individual businesses and their outlook.

Dividend

Based on the Company's performance, your Directors are pleased to recommend, for approval of the members, Dividend @ 70% per share of face value of Rs. 10/- each (i.e. Rs. 7 per share) for the FY ended March 31, 2022, payable on all outstanding shares except on the equity shares held by ‘Escorts Benefit & Welfare Trust'.

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

The dividend payout for the period under review has been formulated in accordance with shareholders' aspirations and the Company's Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.

The record date for the purpose of dividend will be July 1, 2022.

The dividend distribution policy is available on our website at https://www.escortsgroup.com/investors/governance.html.

Transfer to Reserves

An amount of Rs. 0.07 crores (previous year: Rs. 0.21 crores) transferred to general reserves on account of vested employees stock options lapsed during the FY ended March 31, 2022.

For complete details on movement in Reserves and Surplus during the financial year ended March 31, 2022, please refer the Statement of Changes in Equity and note 17 of the Standalone and Consolidated Financial Statements.

Employee Stock Option Scheme

The Escorts Employees Stock Option Scheme ("Scheme") is in line with the SEBI (Share Based Employee Benefits and

Sweat Equity) Regulations, 2021 ("SBEB Regulations") and there were no material changes to the scheme during the financial year 2021 22. However, during the year under review, the Members of the Company had approved the following 2 (two) key variations to the Scheme:

(i) Vesting period extended from 4 (four) to 5 (five) years from the date of grant of option (for new grants);

(ii) Exercise period extended from 3 (three) to 5 (five) years from the last date of vesting (for new grants).

The amendments to the Scheme also contain certain editorial changes, such as provisions so as to conform to the Companies Act, 2013 (‘the Act') and SBEB Regulations.: -

The Scheme is being implemented in accordance with the SBEB Regulations and the resolution passed by the members. The Secretarial Auditors certificate would be available during the AGM for inspection by the members. The details as required to be disclosed under the SBEB Regulations would be available on the Company's website at www.escortsgroup.com.

Change in Share Capital

During the FY 2021-22, the Company allotted 93,63,726 shares, on preferential allotment basis, of face value Rs. 10 each at a premium of Rs. 1990/- each for a total consideration of Rs. 1,872.75 crores. Your Company also extinguished/ cancelled 1,22,57,688 equity shares (‘First Scheme of Reduction'), held by Escorts Benefit and Welfare Trust (‘EBWT' or ‘Trust') pursuant to the scheme approved by the Hon'ble National Company Law Tribunal, Chandigarh Bench (NCLT), without payment of any consideration, vide its order dated December 23, 2021 and upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana, the First Scheme of reduction has become effective on December 27, 2021. Consequently, the paid-up equity shares capital of the Company as of March 31, 2022 stood at Rs. 131,94,06,040 consisting of 13,19,40,604 equity shares of Rs. 10/- each.

Further, the Audit Committee and Board of Directors, in their meeting held on February 18, 2022, had approved the scheme for reduction of share capital (‘Second Capital Reduction') for reduction of remaining 2,14,42,343 Equity Shares of Rs. 10/- each of the Company, held by the EBWT, without payment of any consideration. The same has been filed with BSE Limited and National Stock Exchange of India Limited to get no objection letter as required under Regulation 37 of the SEBI Listing Regulations.

Utilisation of Funds

The reporting of the utilisation of funds, as on March 31, 2022, raised through the above preferential allotment and the previous preferential allotment is as follows:

Original Object Modified Object, if any Original Allocation Modified allocation, if any Funds Utilised Amount of Deviation/Variation for the quarter according to applicable object Remarks if any
For the Agri Machinery Business of the Company i.e. the business of manufacturing, assembly, sales, marketing, financing, servicing, research and development of: (a) tractors; (b) construction equipment (i.e., backhoe loaders and other items to be mutually agreed between Promoters and Kubota Corporation); (c) implements; (d) transmission for tractors, construction equipment (i.e., backhoe loaders and other items to be mutually agreed between the Promoters and Kubota Corporation) and implements; and (e) spare parts of the items referred in (a), (b), (c) and (d), and for the manufacture of engines by the Company Not Applicable Rs. 1,041.90 crores NIL Rs. 318.35 crores (Including Rs. 176.05 crores utilised during the year) NIL -
For expansion of its agri-machinery business of manufacturing, assembly, sales, marketing, financing, servicing, research and development of: (a) tractors; (b) combine harvester & rice transplanter; (c) utility vehicles; (d) turf equipment; (e) construction machinery; (f) engines; (g) implements; (h) transmission for tractors, construction equipment and implements; (i) other farm mechanisation equipment; (j) spare parts of the items referred in (a) to (i) above Not Applicable Rs. 1,855.31 crores* NIL NIL NIL -

* Net proceeds post deduction of expenditure of Rs. 17.44 crores incurred towards preferential issue and allotment.

Directors and Key Managerial Personnel

In accordance with the provisions of the Act and Articles of Association of the Company, Mr. Hardeep Singh (DIN: 00088096) and Mr. Dai Watanabe (DIN: 08736520), Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.

The Company has received the nomination letter for two more Nominee Directors from Kubota Corporation ( Kubota), pursuant to the terms of the Shareholders' Agreement (SHA) dated November 18, 2021, executed among and between the Company, Kubota, EBWT and the Specified Promoters (as specified in SHA), for appointment of following person as Directors of the Company :

a. Mr. Seiji Fukuoka – Whole Time Director to be designated as Deputy Managing Director

b. Mr. Shiro Watanabe – Non Executive Director

The Board of Directors, at its meeting held on May 13, 2022, has, on the recommendations of Nomination Remuneration and Compensation Committee ( NRC), appointed Mr. Seiji Fukuoka (DIN: 08786470), not liable to retire by rotation, and Mr. Shiro Watanabe (DIN: 09588547), liable to retire by rotation, as an Additional Directors of the Company.

Mr. Seiji Fukuoka and Mr. Shiro Watanabe shall hold office of Director(s) upto date of ensuing AGM. However, the Company has also received requisite notices, in writing from Kubota, a member of the Company, proposing candidatures of Mr. Seiji Fukuoka and Mr. Shiro Watanabe for the said appointment. Accordingly, Board of Directors, based upon the recommendation of the NRC, had recommended the appointments, to shareholders for approval, of Mr. Seiji Fukuoka, as Whole Time Director designated as Deputy Managing Director for a period of 5 years w.e.f. May 13, 2022 along with his remuneration, not liable to retire by rotation, and Mr. Shiro Watanabe, as Non-Executive Director, liable to retire by rotation, in the ensuing AGM.

In order to meet the criteria of 50% independent directors on the Board, the Board of Directors, at its meeting held on May 13, 2022, on the recommendations of NRC, appointed Mr. Ravindra Chandra Bhargava (DIN: 00007620) and Mr. Kenichiro Toyofuku (DIN: 08619076) as an ‘Additional

Independent Director.

They shall hold office as an Additional Independent Director(s) of the Company upto the date of ensuing Annual General Meeting. However, the Company has also received requisite notices, in writing from a member of the Company, proposing candidatures of Ravindra Chandra Bhargava and Mr. Kenichiro Toyofuku for the said appointment. Accordingly, Board of Directors, based upon the recommendation of the NRC, had recommended the appointment to shareholders for approval for a period of 5 years w.e.f. May 13, 2022, not liable to retire by rotation, in the ensuing AGM.

The NRC and the Board at their respective meetings have assessed their candidature and are of view that Mr. Seiji Fukuoka, Mr. Shiro Watanabe, Mr. Ravindra Chandra Bhargava and Mr. Kenichiro Toyofuku possesses necessary competencies and skill identified by the Board of directors for effective managing its business.

The tenure of Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishi, Independent Directors is expiring in the ensuing AGM. Mr. Ravikumar and Mrs. Rishi were appointed as an Independent Directors in 2014 and completing the second term which will be ending in the ensuing AGM. The Board of Directors upon recommendation of the NRC has recommended the appointment of Mr. Vimal Bhandari (DIN: 00001318) and Mrs. Reema Rameshchandra Nanavati (DIN: 00690270), as Independent Directors, not liable to retire by rotation, from the conclusion of ensuing Annual General Meeting for a period of 5 consequent years.

The Board of Directors, in its meeting held on May 13, 2022, has, on the recommendations of Nomination Remuneration and Compensation Committee (NRC), has recommended the re-appointment and remuneration of Mr. Nikhil Nanda (DIN: 00043432) as Managing Director, not liable to retire by rotation, for a period of 5 years w.e.f. September 19, 2022, for shareholders approval.

The Company has received declarations from all Independent Directors of the Company that they meet the criteria of independence as prescribed under subsection (6) of Section 149 of the Act and under Regulation 16 and 25 of SEBI Listing Regulations and there has been no change in the circumstances affecting their status as independent director 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 pass/ exempt requisite proficiency test conducted by Ministry of Corporate Affairs.

The policy on Appointment and Removal of Director's and Members of Senior Management was reviewed and amended by the Board at its meeting held on May 13, 2022.

The said policy is annexed as Annexure – A and forms an integral part of this Report.

Annual performance evaluation of the Board, its committees and individual directors (including independent directors) pursuant to the provisions of the Act and the Corporate Governance requirements under SEBI Listing Regulations have been carried out. In accordance with the Policy, a process was followed by the Board for evaluation of its own performance and its committees and individual Directors including independent directors.

The remuneration policy for directors, key managerial personnel, senior management and other employees was reviewed and amended by the Board at its meeting held on May 13, 2022. The said policy is annexed as Annexure – B and forms an integral part of this Report.

The Company has devised a process whereby various presentations/ programs are being conducted to familiarise the Directors with various developments at Industry level, new business initiatives and organisation strategies etc. The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company – www.escortsgroup.com.

The Company recognises and embraces the importance of a diverse board in its success. Your Company believes that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help it retain its competitive advantage.

The brief resumes and other details relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed as per the provisions of the SEBI Listing Regulations/ secretarial standard is given in the Annexure to the Notice of the 76th AGM.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure – C and forms an integral part of this Report.

Corporate Governance

Corporate Governance is about maximising shareholders value, ethically and sustainably. At Escorts the goal of corporate governance is to ensure fairness for every stakeholder. Your Company believes that strong corporate governance is critical to enhancing and retaining investor trust. Your Company also endeavours to enhance long term shareholder value and respect minority rights in all its business decisions.

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 conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations,

Corporate Governance Report and a Certificate regarding compliance of conditions of Corporate Governance from Company Secretary in Practice are enclosed as Annexure – D and forms an integral part of this Report.

Corporate Social Responsibility (CSR)

The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities. The Company intends to undertake other need-based initiatives in compliance with Schedule VII of the Act.

The CSR Policy may be accessed on the Company's website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent Rs. 15.83 crores. {Including amount transferred to unspent CSR account (refer note 29 of the Standalone Financial Statement)}.

During FY ended March 31, 2022, the Company has spent Rs. 6.91 crores on various projects. The balance of Rs. 8.92 crores, towards ongoing project, had been transferred to unspent CSR account and will be spent in accordance with the provisions of the Act.

The Annual Report on CSR activities is enclosed as Annexure – E and forms an integral part of this Report.

Consolidated Financial Statements

The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS)–110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors' Report thereon are annexed with this Report.

Subsidiaries, Joint Ventures and Associate Companies

In accordance with Section 129(3) of the Act, a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is provided in this report. The statement also provides details of performance and financial position of each of the subsidiaries. Audited financial statements together with related information and other reports of each of the subsidiary companies have also been placed on the website of the Company at https:// www.escortsgroup.com/investors/annual-reports.html. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.

In terms of the Company's Policy on determining "material subsidiary", during the FY ended March 31, 2022, there is no material subsidiary of the Company whose income exceeds 10% of the consolidated income of the Company in the immediately preceding FY.

During the FY ended on March 31, 2022, the Company has infused additional equity capital in the following Companies:

1. Escorts Crop Solutions Limited, Subsidiary

2. Tadano Escorts India Private Limited, Joint Venture

Further, the Company has also acquired the remaining equity share capital of M/s Escorts Skill Development (ESD), apart from the existing equity shares already held by the Company. Consequently, ESD has become the wholly owned subsidiary of the Company w.e.f. November 1, 2021.

The complete list of subsidiaries, joint ventures and associate companies as on March 31, 2022, in terms of the Act and IND-AS is provided herein below:

Sl. Name of the subsidiary / associate No. companies / joint ventures Relationship % of shares
1 Escorts Crop Solutions Limited Subsidiary *100%
2 Escorts Skill Development Subsidiary 100%
3 Escorts Finance Limited Subsidiary 69.42%
4 Farmtrac Tractors Europe Spolka Z.o.o. Subsidiary 100%
5 Escorts Benefit and Welfare Trust Subsidiary 100%
6 Escorts Benefit Trust Subsidiary 100%
7 Adico Escorts Agri Equipments Private Limited Joint Venture 40%
8 Tadano Escorts India Limited Joint Venture 40%
9 Escorts Kubota India Private Limited Joint Venture 40%
10 Kubota Agricultural Machinery India Private Limited Joint Venture 40%
11 Escorts Consumer Credit Limited Associate 29.4%

* Rounded off to 100%

During the year under review , the Company along with other shareholders of Escorts Securities Limited ("ESL"), has transferred the entire shareholding in ESL to M/s Choice Equity Broking Private Limited and their nominee consequently ESL ceased to be Subsidiary of the Company w.e.f. February 14, 2022.

The details of the above investments/ disinvestment are provided in the note 7 & 15 of the Notes to Accounts of Standalone Financial Statements of the Company.

Contracts and Arrangements with Related Parties

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions. However, the Company has obtained the approval of shareholders, by way of Postal Ballot, for material related party transaction(s) with M/s Kubota Corporation and its subsidiary(ies)/ group company(ies), for a period of 5 years, effective from the date of commencement of SHA.

The particulars of contracts or arrangements, with related parties referred to in Section 188(1) of the Act, in the prescribed Form AOC-2, is appended as Annexure – F to this report.

The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Company's website www.escortsgroup.com under Investors Information Section.

Your Directors draw attention of the members to note 45 in the notes to accounts in the Standalone Financial Statement and to note 45 in the notes to accounts in the Consolidated Financial Statement which sets out related party disclosures.

Auditors and Auditors' Report

Statutory Auditors Pursuant to the provisions of Section 139 of the Act read with rules thereunder, M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/ N500013), were appointed as statutory auditors of the Company for a term of five (5) years from the conclusion of 71st AGM, held on September 21, 2017, till the conclusion of the 76th AGM to be held in the year 2022.

The Board of Directors, at its meeting held on May 13, 2022, on the recommendation of Audit Committee, had recommended the re-appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company, for another period of five (5) years, to hold office from the conclusion of the ensuing AGM till the conclusion of the AGM to be held in the year 2027.

The Company has received a letter from M/s. Walker Chandiok & Co LLP, Chartered Accountants confirming that their appointment, if made, would be within the limits prescribed under Section 139 of the Act and that they are not disqualified for such appointment within the meaning of Section 141 of the Act, read with rules thereunder.

The comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors, in their report read together with notes to Accounts for the FY ended March 31, 2022 are self-explanatory and hence, do not call for any further explanations or comments under Section 134 of the Act.

Pursuant to provisions of the Section 143(12) of the Act neither the statutory auditors nor Secretarial auditors nor Cost Auditors have reported any incident of fraud to the Audit Committee or the Board during the year under review.

Cost Auditors

Pursuant to the Section 148 of the Act read with rules thereunder, your Company is required to maintain the cost records and the said cost records are required to be audited.

Accordingly, maintaining of cost records is applicable to the Company and the Company is maintaining all the aforesaid cost records.

The Board of Directors, on the recommendation of Audit Committee, has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants (Firm Registration No. 000019), as Cost Auditors of the Company for conducting the audit of cost records for the financial year 2022 23.

The due date of filing the Cost Audit Report for the year ended on March 31, 2021 was September 30, 2021 and the same had been filed on August 27, 2021.

Secretarial Auditors

The Board had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries, as Secretarial Auditors to conduct secretarial audit of the Company for the financial year 2021-22.

The Secretarial Audit Report of the Company as prescribed under Section 204 of the Act is annexed herewith as Annexure – G and forms an integral part of this Report.

The Secretarial Audit report does not contain any qualification, reservation and adverse remarks and the comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further explanations or comments under Section 204(3) of the Act.

The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the FY 2022-23.

Risk Management

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

The Company has laid down a Risk Management Policy and the same is available on the website of the Company at https://www.escortsgroup.com/investors/governance.html.

The details of constitution of Risk Management Committee of the Company is provided in Report on Corporate Governance at Annexure – D of the Directors' Report.

Internal Financial Control and its Adequacy

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business.

During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

Disclosures

Meetings of the Board Eight meetings of the Board of Directors were held during the year. A detailed note on the composition of the Board including its committees are provided in the Corporate Governance Report.

Audit Committee

For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure – D to this Report.

All the recommendations made by the Audit Committee were accepted by the Board.

CSR Committee

For constitution and other details of the CSR Committee, please refer Report on Corporate Governance annexed as Annexure – D to this Report.

Annual Return

The Annual Return for Financial Year 2021-22 is available on the Company's website at www.escortsgroup.com.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. The mechanism provides for adequate safeguards against victimisation of effected Director(s) and Employee(s). In exceptional or appropriate cases, Directors and Employees have direct access to the Chairman of the

Audit Committee. It is affirmed that no personnel of the

Company has been denied access to the Audit Committee.

The Whistle Blower Policy is available on Company's website at https://www.escortsgroup.com/investors/ governance.html.

Registrar and Share Transfer Agent

The Share Transfer and related activities are being carried out by M/s KFin Technologies Limited (earlier KFin Technologies Private Limited), Registrar and Share Transfer Agent from the following address:-

M/s KFin Technologies Limited

Tower B, Plot No. 31-32, Selenium Building, Gachibowli, Financial District, Nanakramguda, Hyderabad-500032, Telangana

Shareholders' Agreement

During the year, the Company, Kubota Corporation, Japan

(‘Kubota'), Escorts Benefit and Welfare Trust (‘EBWT' or ‘Trust') and the Specified Promoter (as specified in the shareholders' agreement) had entered into an shareholders' agreement on November 18, 2021 (Shareholders' Agreement or SHA) with a common objective of making the Company a global leader in the manufacture, assembly, sales, marketing, financing, servicing, research and development of value-based tractors and relationship amongst them regarding their rights and obligations, and other matters in connection therewith including undertaking the specific obligations as set out in this SHA. The said SHA was become effective from April 11, 2022 post completion of Open Offer pursuant to the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011, consequently, Kubota acquired control over the Company and became the joint promoter of the Company.

Particulars of Loans given, Investments made, Guarantees given and Securities provided

A statement regarding Loans/ Guarantees given and Investments covered under the provisions of the Section 186 of the Act is made in the notes to the financial statement.

Particulars of Employees and related disclosures

In terms of provisions of Section 197(12) of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the prescribed limits are available with the Company Secretary.

in terms of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.

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 – H and forms an integral part of this Report.

Public Deposits

The Company has not accepted/ renewed any Fixed Deposit during the financial year under review and as such no amount of principal or interest was outstanding as of the Balance Sheet date.

Investor Education and Protection Fund (IEPF)

Pursuant to the applicable provisions of the Act, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules'), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years. Accordingly, the Company has transferred Rs. 9.08 lakhs, pertaining to unclaimed dividend, during the period under review, to IEPF.

Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. The detailed information is available at our website www. escortsgroup.com.

As on March 31, 2022, no unclaimed deposits are pending which required to be transferred to Investor Education and Protection Fund.

Credit Rating

The present credit rating of the Company is as under:

ICRA Limited has upgraded the long-term rating by one notch from "ICRA AA" to "ICRA "AA+" with revision in outlook from "watch with developing implication" to "Stable" and reaffirmed Short term rating at "ICRA A1+".

CRISIL has upgraded the long term rating by one notch from "CRISIL AA" to "CRISIL AA+" with revision in outlook from "watch with positive implications" to "Stable" and reaffirmed Short-term rating at "CRISIL A1+".

Material Changes and Commitment affecting the financial position

There are no material changes affecting the financial position of the Company subsequent to the closure of the FY 2022 till the date of this report.

Prevention of Sexual Harassment

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 is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Company's office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.

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.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Human Resources Management

Our professional are our most important assets. We are committed to hiring and retaining the best talent being among the industry's leading employers. For this, we focus on promoting a collaborative, transparent and participative organisation culture, and rewarding merit and sustain high performance. Our human resources management focuses on allowing our employees to develop their skills, grow in their career and navigate their next.

Secretarial Standards

The Company is in compliance with all the applicable Secretarial Standards issued by the Instituted of Company Secretary of India.

Integrated Report

The Company, has voluntarily provided Integrated Report, which includes non financial and financial information have a better understanding of the Company's long term strategy. This report covers six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital as per International <IR> framework.

Business Responsibility and Sustainability Report

(BRSR)

In November 2018, the Ministry of Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting ("the Committee") to finalize business responsibility reporting formats for listed and unlisted companies, based on the framework of the National Guidelines on Responsible Business Conduct (NGRBC). Through its report, the Committee recommended that BRR be rechristened BRSR, where disclosures are based on ESG parameters, compelling organizations to holistically engage with stakeholders and go beyond regulatory compliances in terms of business measures and their reporting. SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market capitalization) from FY 2023, while disclosure is voluntary for FY 2022.

The Committee Report encourages companies to report their performance for FY 2022 to be better prepared to adopt this framework from the next FY. Escorts has adopted the BRSR voluntarily for FY 2022. The BRSR disclosures form a part of Escorts' Integrated Annual Report 2021-22.

Application made or any proceeding pending under the Insolvency and Bankruptcy Code

As on the date of the Report no application is pending under the Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under (IBC) during theFinancial Year 2021-22. Further, the Company has not made any one-time settlement.

Compliance by Large Corporate Your Company does not fall under the category of large corporate, as defined under SEBI vide its circular SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018, as such no disclosure is required in this regard.

Directors' Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Act, with respect to Directors' Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures; (ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the

Company for the year ended on that date;

(iii) the Directors have taken proper and sufficient care 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; (iv) the Directors have prepared the annual accounts for financial year ended March 31, 2022 on a ‘going concern' basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

3. Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. However, members attention is drawn to note 32 in the notes to accounts in the standalone financial statement and to note 33 in the notes to accounts in the consolidated financial statement which sets out information on Commitments and Contingencies.

5. Details of difference between amount of 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.

Acknowledgement

Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Karnataka, Financial Institutions and the Company's Bankers, Customers, Dealers and all other business associates.

The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff 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 and on behalf of the Board of Directors

Sd/-
Place: Faridabad Nikhil Nanda
Date: May 13, 2022 Chairman and Managing Director