We believe that productivity levels can be nearly doubled if land is
 used in a more professional way with better technology and farm
 management practices. One can- not wish away more than 60 per cent of
 the holdings touching the lives of nearly 400 million of the countrys
 population. It is a great challenge to the nation to make these units
 viable and sustainable.
 
 At Escorts, we are engaging with one farmer at a time. By under-
 standing him completely, we have synchronized our mechanisation
 solutions to bring clear and pre sent value to him. In recent years,
 weve made great strides in ex- tending the power, reliability and
 lifetime-cost-of-ownership of our tractors to ensure profitable re-
 turns for our farmers. Weve spent extensive time in studying various
 different applications and evolved reliable and functioning solutions
 for them. Weve also adapted our tractors to provide as much ease and
 convenience as possible to compensate for their rigorous and arduous
 lifestyle. By way of exam- ple, during FY10, we introduced the first
 ever Inverter Tractor which allows a farmer to double- up his tractor
 at nights to serve as a electricity generator for lighting up his home.
 This facility can give him better access to communi-
 
 cation mediums for knowledge and improve the quality of his life
 significantly. Our role has not been limited to India alone: for over
 10 years we have also been part of hundreds of farmers lives in Europe
 and Africa through our fully owned subsidiary in Poland and channel
 partners respectively.  Weve also used our learnings in Europe and
 Africa to bring value to our farmers in India.
 
 Enabling Road Infrastructure & Realty Construction
 
 Construction activity is an integral part of Indias infrastructure and
 industrial development. Hence it can rightly be termed as the basic
 input for socio-economic development. All statistics on the growth of
 four and two wheel- ers point to an irrefutable fact: India is becoming
 a nation of cars and bikes. However, our road infrastructure leaves
 much to be desired. Even though we have 3.3 million km. of road
 network, the second largest in the world, highways make up only 2 per
 cent of the overall road network by length. When one considers that
 they account for around 40 per cent of traffic, its easy to see the
 need for enhancing our road networks at every level - high- ways,
 branch and rural roads. As the arteries of the nation, impact- ing
 every city, town, village and neighborhood inhabited by over 1.2
 billion people, we need to widen existing roads and build new branches
 to enable Indias growth and efficiency as a nation.  The Government of
 India is aware of this bottleneck to growth and is on the path of
 investing heavily for releasing access capacity. As a leading
 manufacturer of construc- tion equipment in India, we are at the
 forefront of understanding the needs of the construction industry that
 has this task at hand.  Our portfolio of construction equipment for
 road developments is second to none and we are closely working with our
 custom- ers in grappling with the general shortage of skilled operators
 by offering in-depth training and ac- creditation.
 
 Where there are roads and access, realty assets soon follow. Today,
 India is witnessing quantum growth in general construction of retail,
 affordable housing, hospital- ity, commercial and industrial as- sets
 across the country. According to IHS Global Insight, construction
 spending is expected to increase to US0 billion by the end of 2013,
 with residential totaling US billion and nonresidential registering
 US7 billion.  This represents a compound annual growth rate (CAGR)
 of 13.3 per cent. Undoubtedly, construction is an important part of the
 industrial sector and one of the core sectors of Indias econ- omy. Not
 surprisingly, the con- struction sector is also the second largest
 employer in the country following agriculture, employing some 18
 million people directly and 14 million indirectly. With solid growth
 momentum fore- casted over the next 20 years, our construction
 equipments business is well positioned for the future.
 
 Serving the Railways Expansion Programmes
 
 Indian Railways (IR) operates more than 8,500 passenger trains and
 transports around 5 billion people annually across twenty-seven states
 and three union territories (Delhi, Pondicherry and Chandi- garh). With
 its 64,015 kilometres network, it is the third largest railway in the
 world under a single management. Undoubtedly, the railways form a key
 pillar to Indias infrastructure impacting most Indians. The key
 challenges before it. is to meet the accelerated trans- port demand and
 provide high quality service. Thus, capacity en- hancement,
 technological upgra- dation and service improvement of Indian Railways
 are the major thrust areas of the current Plan.
 
 The government also envisages a 51 per cent increase in freight traffic
 and 32 per cent increase in passenger traffic during the plan period.
 With an expenditure of Rs.2,51,000Crores on various ca- pacity
 enhancement and replace- ment programmes including new lines, doubling,
 gauge conversion, electrification, new dedicated freight corridors and
 new rolling stocks, your Company is deeply Involved with the Indian
 Railways on multiple levels. Arguably, we are in the largest investment
 cycle the IR Mas ever undertaken and at Escorts, we are playing our
 part in giving them world class compo- nents, systems and solutions.
 
 Prudent Financial Management
 
 One of the significant achieve- ments of your Company this year was its
 ability to reduce interest costs through a mix of initiatives such as
 quicker sales realisation, better access to low cost funds for working
 capital and increased earnings through treasury operations. We also
 enhanced key functional areas such as Risk Management through Standard
 Operating Procedures; Investor Relations through a dedicated desk to
 serve analysts and funds and new channel finance models for finance
 tie-ups with dealers.
 
 Going forward, these initiatives along with post ERP implementa- tion
 initiatives such as a shared resources department for ac- counting
 operations and auto- mating risk management practic- es, should deliver
 robust financial controls, streamlined processes, reduced operating
 costs and sustainable business growth.
 
 Conclusion
 
 Despite myriad of complex issues facing the country, I am extremely
 optimistic about, the potential of agriculture, infrastructure and
 transport development in India.  I also believe that our home- grown
 agricultural mechanisa- tion solutions can not only help improve the
 economic status of our farmers but also help generate a handsome
 surplus for the nation as well. Similarly our work within the
 construction and the railways industries should also leave a posi- tive
 national imprint. I would like to take this opportunity to thank all
 our stakeholders for taking part with us in this exciting journey.
 
 Rajan Nanda
 
 Chairman and Managing Director