The Directors have pleasure in presenting the Sixty Fifth Annual
 Report for the financial year ended 30th September, 2010.
 
 FINANCIAL RESULTS
 
 (Rs. crores)
 
                                        Year Ended     Year Ended
                                        30.09.2010     30.09.2000
 
 INCOME &PROFIT/(LOSS)
 
 1.  Net Saies & Business Incomes         2764.77         2181.62
 
 2.  Total Expenses                       2533.47         1982.14
 
 3.  Profit before Interest, Depreciation, 231.30          199.48
     Amortisation & Exceptional Items(1-2)
 
 4.  Interest & Finance Charges             11.74           47.26
 
 5.  Cash Profit before Tax (3-4)          219.56          152.22
 
 6.  Depreciation & Amortisation            43.47           49.15
 
 7.  Profit/floss) before Tax & Exceptional 
     Items (5-6)                           176.09          103.07
 
 8.  Exceptional lncome/(Expense)           11.93            7.99
 
 9.  Tax & Deferred Tax                     50.47           21.33
 
 10.  Profit after Tax                     137.55           89.73
 
 FINANCIAL PERFORMANCE
 
 The Net Revenue of the Company for the year was Rs. 2,764.67 crores as
 against Rs. 2,180.08 crores in the previous year showing a growth of 27
 per cent. Sale of Tractors increased by 32 per cent to 60,086 from
 45,627 in the previous year.
 
 Profit Before Interest, Depreciation, Amortisation (PBITDA) stood at
 Rs. 243.13 crores against Rs. 205.93 crores in the previous year.
 
 Better working capita! management has lead to the interest cost coming
 down by 75 per cent to Rs. 11.74 crores against Rs. 47.26 crores in the
 previous year.
 
 Profit Before Tax (PBT) stood at Rs.187.92 crores against Rs. 109.52
 crores in the previous year and Profit After Tax (PAT) stood at Rs.
 137.55 crores against Rs. 89.73 crores in the previous year.
 
 The Agri Machinery Group (AMG) saw a sales growth of 30.2 per cent at
 Rs.2,473croresasagainstRs.1,899crores in the previous year, Auto
 Suspension Parts (ASP) division saw a sales growth of 30 per cent at
 Rs.l 10 crores against Rs. 85 crores sales in the previous year and
 Railway Eguipment Division (RED) has maintained its topline at
 Rs.197crores as against Rs. 198 crores in the previous year.
 
 MANAGEMENT DISCUSSION & ANALYSIS
 
 Management Discussion & Analysis (refer pages 14 - 25), which forms an
 integral part of this Directors Report provides a more detailed
 analysis on the performance of individual businesses and their outlook.
 
 DIVIDEND
 
 Your Directors are pleased to recommend a dividend @15 per cent i.e.
 Re.1.50 per Eguity Share of Rs. 10 each for the year ended 30th
 September, 2010, payable to those Shareholders whose names appear in
 the Register of Members as on the Book Closure Date, subject to the
 approval of shareholders at the ensuing Annual General Meeting.
 
 SHARE CAPITAL
 
 During the year your Company has allotted 1,49,08,540 Equity Shares of
 Rs.10/- each fully paid-up at a premium as per details given below and
 accordingly the share capital has been increased to Rs. 105.62 crores:
 
 S. 
 No.  Particulars of
      Shares Allotted           Date of    No of Shares      Premium
                               Allotment   Alloted        Amount in Rs. 
 
 1   Shares issued under Escorts 
     Employees Stock Option    09.11.2009   36,11,612    269,065,094.00 
     Scheme- 2006
 
 2   Shares issued pursuant to 
     the Scheme of             14.05.2010    5,00,000     42,000,000.00
     Arrangement & Compromise 
     under Delhi High Court 
     order dated 13.05.2010
 
 3   Shares issued pursuant to 
     the Scheme of             31.05.2010   66,01,050  1,109,966,557.50
     Arrangement & Compromise 
     under Delhi High Court 
     order dated 24.05.2010
 
 4   Shares issued on Conversion 
     of 4.25% Secured          24.07.2010   18,94,035    255,694,725.00
     Convertible Debenture Part 
     B of Rs. 9900/- each
 
 5   Shares issued on Conversion 
     of 4 25% Secured          30.08.2010   23,01,843    310,748,805.00
     Convertible Debenture Part 
     B of Rs. 9900/- each
 
 SCHEME OF ARRANGEMENT & COMPROMISE
 
 Your company had filed a Scheme of Compromise & Arrangement (Scheme)
 in the Honble High Court of Delhi (High Court) to bail out fixed
 deposit holders of Escorts Finance Limited (EFL). The Scheme was
 approved by the Shareholders, Secured and Unsecured Creditors of your
 Company and the Fixed Deposit holders and Secured Creditors of EFL. on
 10[ May, 2006 and 5th May, 2006 respectively in the court convened
 meetings. The approval of the scheme by the High Court is still
 awaited.
 
 Pending approval of the Scheme, the Honble High Court had constituted
 a Hardship Committee to settle payments to fixed deposit holders of EFL
 who are facing hardship such as medical, marriage, education and
 others. On 24Th May, 2010 the High Court had directed the Hardship
 Committee to offer maturity value of fixed deposit amount (i.e.
 Principle + Interest till the date of maturity) as stated in the face
 of fixed deposit receipt (Maturity Value) in full and final
 settlement of the fixed deposit liability of EFL towards the FD
 Holders.  Accordingly, Hardship Committee had sent Letters to all FD
 Holders of EFL on 7th June, 2010 and also reminder
 
 letters on 20th July, 2010, 30th September, 2010 and also given public
 notice in all India editions of Times of India on 23rd October, 2010
 and Dainik Jagran on 25th October, 2010 asking FD holders of EFL to
 submit documents so that Maturity value of their FD could be paid. In
 accordance with the directions of the High Court on 24th May 2010, the
 Company had also allotted 66,01,050 equity shares of Rs. 10/- each at a
 price of Rs. 178.15/- per share aggregating Rs.117.60 crores to
 Hardship Committee for the purpose of selling the same in the open
 market, realising the proceeds thereof and its distribution to the FD
 holders of EFL by issuing Demand Draft(s) to settle their outstanding
 liability (Maturity Value).
 
 The Hardship Committee has so far paid an amount of Rs. 120 crores
 (approx) to FD holders of EFL and is in the process of paying the
 Maturity Value to the remaining FD holders in accordance with the above
 directions.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Disclosure pursuant to the SEBI (Employees Stock Option Scheme and
 Employees Stock Purchase Scheme) Guidelines, 1999 is enclosed at
 Annexure-A and forms part of the Directors Report for the year ended
 30th September, 2010.
 
 DIRECTORS
 
 Dr. P.S. Pritam, Director, retires by rotation at the ensuing Annual
 General Meeting of your Company, and being eligible, offers himself for
 reappointment.
 
 CONSERVATION OF ENERGYJECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
 AND OUTGO
 
 Information required under Section 217(1)(e) of the Companies Act, 1956
 read with Companies (Disclosure of particulars in the Report of the
 Board of Directors) Rules, 1988 is given in Annexure - B and forms an
 integral part of this Report.
 
 CORPORATE GOVERNANCE
 
 Your Company reaffirms its commitment to good corporate governance
 practices. Pursuant to Clause 49 of the Listing Agreement, Corporate
 Governance Report and Auditors Certificate regarding compliance
 thereof are enclosed at Annexure - C and forms an integral part of this
 report.
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 Pursuant to Clause 32 and 50 of the Listing Agreement, your Company has
 prepared Consolidated Financial
 
 Statements as per the Accounting Standards applicable to the
 Consolidated Financial Statements issued by the Institute of Chartered
 Accountants of India. Audited Consolidated Financial Statements along
 with the Auditors Report are annexed with this Report.
 
 SUBSIDIARY COMPANIES
 
 During the year under report, the Company has disinvested its entire
 equity shareholdings in Escorts Automotive Ltd. (EAL). Accordingly, EAL
 is no longer a subsidiary of the Company.
 
 The Central Government has vide its letter No.  47/700/2010-CL-l 11
 dated 27th October, 2010 exempted the Company from attaching Annual
 Accounts and other documents in respect of its subsidiaries to the
 Annual Report of the Company for the year ended 30th September, 2010.
 
 As required vide above letter, statement in respect of each of the
 subsidiary except EAL as stated above, as on 30th September, 2010,
 giving the details of capital, reserves, total assetsand liabilities,
 details of investments, turnover, profit before taxation and proposed
 dividend is attached to the Consolidated Balance Sheet.
 
 The Annual Accounts of the subsidiary companies and the related
 detailed information will be made available to the holding and
 subsidiary company investors, seeking such information and will also be
 available for inspection at the Corporate Office of the Company.
 
 AUDITORS
 
 M/s. S. N. Dhawan & Co., Chartered Accountants, Auditors of the
 Company, retire at the ensuing Annual General Meeting and are eligible
 for reappointment.  The observations of the Auditors in their Report on
 Accounts read the with the relevant notes to accounts are
 self-explanatory.
 
 PARTICULARS OF EMPLOYEES
 
 Information in accordance with provisions of Section 217(2A) of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 Rules, 1975 as amended is annexed to this Report as Annexure - D.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 As required under Section 217 (2AA) of the Companies Act, 1956, (Act)
 your Directors state that:
 
 i) In the preparation of Annual Accounts for the year ended 30th
 September, 2010, the applicable accounting standards have been followed
 along with proper explanation relating to material departures;
 
 ii) Accounting policies selected and applied are consistent and
 judgement and estimates made are reasonable and prudent so as to give a
 true and fair view of the state of affairs of the Company at the end of
 the financial year and of the profit of the Company for that period;
 
 iii) 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 irregu- larities; and
 
 iv) The Annual Accounts have been prepared on a going concern basis.
 
 PUBLIC DEPOSITS
 
 The Company has not accepted/renewed any Fixed Deposit during the year.
 All Fixed Deposits which were due and claimed by the deposit holder
 have been paid on time. 1255 Fixed Deposits aggregating to Rs.2.26
 crores were unclaimed as on 30th September, 2010.  Subsequently, out of
 the above, 24 fixed deposits amounting to Rs. 0.04 crore have been
 repaid till the date of this Report.
 
 ACKNOWLEDGEMENT
 
 Your Directors wish to thank the Customers, Dealers, Lenders,
 Financiers, Vendors, the Central and State Governments and Employees
 for their continued support and commitment to the Company.
 
                                      On behalf of the Board
 
                                                       Sd/-
                                                 RAJAN NANDA
 
 Place; Faridabad                                 Chairman &
 
 Date : 29th November, 2010                Managing Director