Anand,
what plasticity model are you using ?
bi linear or multi linear ?
are you loading by displacement or force ?
i have simulated necking with a 2D axisymmetric model with multi linear plasticity and displacement control, displace it to a reasonable level, you should be able to calculate what this is, for say 30% strain.
your high distortion elements warning is probably in the necking region.
Track reaction force and if necking has occured, you will see a peak force that then drops.