Hi Ranjna,
Probably have seen this - http://kb.vmware.com/selfservice/microsites/search.do?language=en_US&cmd=displayKC&externalId=1006810
Unlike NTFS or other similar file systems the nature of what is store on VMFS means de-fragging it doesn't buy much and in fact causes more trouble than its worth (increased IO)
Also take a look at:
http://blogs.vmware.com/vsphere/2011/09/should-i-defrag-my-guest-os.html
From a guest OS perspective - also interestingly issues doing that too
Many tx