To the Members,
The Directors have pleasure in presenting their 69th Annual Report on the business and operations of the Company and the financial results for the Financial Year ended March 31, 2019.
The financial performance of your Company, for the year ended March 31, 2019 is summarized below:
(Rs. in crores)
Year ended March 31, 2019
Year ended March 31, 2018
Total Revenue from operations
Profit Before Taxes
Profit After Tax
Other Comprehensive Income
Total Comprehensive Income
FINANCIAL & OPERATIONAL HIGHLIGHTS
During the financial year (F.Y.) 2018-19, your Company posted a Profit After Tax (PAT) of Rs. 151.66 crore as compared to previous year''s PAT of Rs. 164.56 crore (lower by 8%). Total Comprehensive Income decreased by 8% from Rs. 168.51 crores in 2017-18 to Rs. 154.45 crores in 2018-19.
Revenue from sale of products for the year under review decreased to Rs. 657.91 crore compared to Rs. 667.44 crore for the previous F.Y. (lower by 1%).
Your Company''s seeds'' (DEKALB®) sale is lower at Rs. 449.99 crore in the F.Y. 2018-19 vis-a-vis Rs. 481.78 crore in the F.Y. 2017 - 18, (lower by 7%) due to a challenging Rabi and Spring season.
Net Sales of Roundup® during the year stands at Rs. 207.92 crore (increase of 12%) compared to the previous year net sales of Rs. 185.66 crore (including excise duty) driven by higher volumes. Revenues for 2017-18 includes excise duty up to June 30, 2017 which is discontinued with effect from July 1, 2017 upon implementation of Goods and Services Tax (GST) in India.
Details and status of merger of your Company and Bayer CropScience Limited forms a part of this report.
DIVIDEND & SHARE CAPITAL
During the financial year 2018-19, your Company had declared an interim dividend of Rs. 25/- (Rupees twenty- five only) per equity share. In addition, your Directors are pleased to recommend a payment of Rs. 25/- (Rupees Twenty-five only) per equity share as the final dividend for the financial year ended March 31, 2019.
If approved by the members at the Annual General Meeting to be held on July 4, 2019, the total dividend (interim and final dividend) for the financial year 2018-19 would be Rs. 50/- (Rupees Fifty only) per equity share.
In terms of Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter SEBI LODR) your Company has formulated the Dividend Distribution Policy of the Company which is Annexed as (Annexure 1) and forms a part of this Report. The dividend on Ordinary Shares is subject to the approval of the shareholders at the Annual General Meeting (AGM) scheduled on July 4, 2019. The Register of Members and Share Transfer Books will remain closed from Wednesday, June 12, 2019 to Friday, June 14, 2019 (both days inclusive) for the purpose of payment of the dividend for the Financial Year ended March 31, 2019.
The dividend payout for the year under review has been formulated in accordance with the Company''s policy to pay sustainable dividend linked to long term growth objectives of the Company and is in compliance with the Dividend Distribution Policy of the Company.
There has been no change in the capital structure of the Company.
TRANSFER TO RESERVES
The Company has not transferred any amount to general reserve.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Ms. Shilpa Shridhar Divekar, erstwhile Managing director resigned from the Company w.e.f. September 21, 2018 as she moved on to a Senior Leadership position at the parent Company, Bayer. She however continues to remain as a Non- executive Director of the Company
On recommendation of the Nomination and Remuneration Committee, the Board of directors have appointed Mr. Ravishankar Cherukuri as the Managing Director and Key Managerial Personnel of the Company w.e.f. September 22, 2018 for a period of three years subject to the approval of the shareholders in the ensuing general meeting.
Your directors on the recommendation of the Nomination and Remuneration Committee have appointed Ms. Aarti Arun Sathe as an Independent Woman Director of the Company w.e.f. April 1, 2019 for a period of one- year subject to the approval of the shareholders in the ensuing general meeting. This is in pursuance and in compliance with Regulation 17(1)(a) of revised SEBI LODR (Amendment) Regulations, 2018, wherein top 500 listed entities by market capitalization, shall appoint at least one-woman independent director on the Board. The terms and conditions of her appointment as entered into with Ms. Sathe has been uploaded on the website of the Company.
In accordance with provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Bangla Bose, Non-executive Director retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for reappointment.
A brief profile of Mr. Bangla Bose Radhakrishna Mallepeddi, Mr. Ravishankar Cherukuri and Ms. Aarti Arun Sathe and the details of directorship held by them, forms a part of the Notice convening the 69th Annual General Meeting, contained in this Annual Report. The Independent Directors of your Company have confirmed that they meet the criteria of independence as prescribed under Section 149 of the Act and Regulation 16 of the SEBI LODR.
The Board of directors as on the date of report comprises of three Independent Non-executive Directors, three Non-Independent Non-executive Directors and one Executive Director.
FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS
Every Independent Director of the Company is provided with ongoing information about the industry and the Company so as to familiarise them with the latest developments. The Independent Directors also visit the facilities at various locations of the Company where they can visit and familiarise themselves with the operations of the Company.
The details of familiarization programs provided to the Directors of the Company are available on the Company''s website www.monsantoindia.com.
FORMAL ANNUAL EVALUATION OF BOARD OF DIRECTORS, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Companies Act, 2013 and SEBI LODR, the Board has carried out the annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committee. The evaluation process focussed on various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board dynamics, execution and performance of specific duties, obligations and governance. A separate exercise was carried out to evaluate the performance of individual directors including the Chairman of the Board, who are evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders, etc. The criteria applied in the Board evaluation process is explained in the Corporate Governance Report.
The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the independent directors who also reviewed the adequacy and flow of information to the Board. The directors expressed their satisfaction with the evaluation process.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS
The Board meets at regular intervals to discuss and decide on Company/business policies and strategies apart from other Board businesses. The Board/Committee Meetings are pre-scheduled, and a tentative annual calendar of the Board and Committee Meetings is circulated to the Directors in advance to facilitate them to plan their schedule and to ensure meaningful participation in the meetings.
The notice of Board meeting is given well in advance to all the Directors. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.
During the year under review 8 (eight) Board Meetings and 7 (seven) Audit Committee Meetings were convened and held. Details of each such meetings are given in the Corporate Governance Report. The intervening gap between the meetings was within the time limit as prescribed under the Companies Act, 2013.
COMMITTEES OF THE BOARD
Currently, there are seven (7) Committees of the Board, namely
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders'' Relationship Committee
4. Corporate Social Responsibility Committee
5. Share Transfer Committee
6. Independent Directors Committee
7. Risk Management Committee (w.e.f April 1, 2019)
The Board decides the terms of reference for these Committees. Minutes of meetings of the Committees are placed before the Board for information. The details as to the composition, terms of reference, number of meetings and related attendance, etc., of these Committees are provided in detail, in the Corporate Governance Report, which forms a part of this Annual Report.
Your directors have also constituted a Risk Management Committee pursuant to Regulation 21(2) and 21(5) of the SEBI LODR, 2015 with effect from April 1, 2019.
INTERNAL FINANCIAL CONTROL
The Company has an internal control system commensurate with the size, scale and complexity of its operations. The Internal Auditors are an integral part of the internal control mechanism of the Company. To maintain its objective and independence, the Internal Auditors report to the Audit Committee of the Board.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with the operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal auditors, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the 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 statements and disclosure.
RISK MANAGEMENT POLICY
Pursuant to the requirement of LODR, the Company has constituted a Risk Management Committee.
A Risk Management Committee of the Board of Directors has been constituted to ensure that the Company has implemented an effective ongoing process to identify risk, to measure its potential impact against a broad set of assumptions and then to activate what is necessary to pro-actively manage these risks, and to decide the Company''s tolerance level for risk. The Committee shall also ensure that a systematic, documented assessment of the processes and outcomes surrounding key risks is undertaken at least annually for the purpose of making its public statement on risk management including internal control. Also, the Committee shall oversee formal reviews of activities associated with the effectiveness of risk management, internal control processes, cyber security and to ensure that risks are mitigated and that the Company''s objectives are attained.
STAUTORY AUDITORS AND AUDITOR''S REPORT
In the 67th Annual General Meeting (AGM) of the Company, M/s. MSKA 8 Associates, Chartered Accountants, (Firm Registration No :105047W), Statutory Auditors of the Company, have been appointed for five consecutive years i.e., until the conclusion of 72nd Annual General Meeting. Pursuant to the notification of the Companies Amendment Act, 2017, the requirement of annual ratification of the Statutory Auditors is no longer required.
The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark. Further in compliance with statutory requirements, the Statutory Auditors have not rendered to the Company during the financial year under review, directly or indirectly, any of the services enumerated under Section 144(1) of the Companies Act, 2013.
Maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is required by the Company and accordingly such accounts and records are made and maintained. Pursuant to the direction from the Ministry of Corporate Affairs for appointment of Cost Auditors, your Board had reappointed M/s ABK 8 Associates, as the Cost Auditor of your Company for the financial year 2018-19 to conduct the audit of the cost records of the Company. The Auditors'' Report for the financial year under review does not contain any qualification, reservation or adverse remark.
Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made thereunder and as per the recommendation of the Audit Committee, the Board of Directors of the Company at its meeting held on April 30, 2019, has reappointed M/s ABK 8 Associates, (Registration no. 000036) as the Cost Auditors of your Company for the financial year 2019 20 to conduct the audit of the cost records of the Company. A resolution for ratification of the remuneration of the said Cost Auditors is included in the Notice convening the 69th AGM of the Company for seeking approval of members. The report with respect to the audit of cost accounts maintained in respect of insecticides manufactured by the Company, will be submitted to the Central Government within the period stipulated under the Act.
Pursuant to the provisions of Section 204 of the Act and Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. Vinod Kothari 8 Co., Practising Company Secretaries, to undertake the Secretarial Audit of the Company for the year under review.
The Secretarial Audit Report for the FY 2018 - 19 is annexed as (Annexure 2) and forms a part of the Board''s Report to the members. The Secretarial Audit Report does not contain any adverse remark. During the audit period, your Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, etc. except for filing of certain forms with Investor Education and Protection Fund Authority (IEPF) due to delay in receipt of relevant data from the Bank and your Company is in the process of filing of certain e-forms with IEPF Authority for the period under review.
The Board has appointed M/s. Vinod Kothari 8 Co., Practising Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2019 - 20.
GLOBAL ACQUISTION OF MONSANTO COMPANY, USA BY BAYER AG
The global acquisition of Monsanto Company, a company incorporated under the laws of Delaware, United States of America (Monsanto Co.) by Bayer Aktiengesellschaft, Germany (Bayer AG or the Acquirer) was completed on June 7, 2018 (the Primary Transaction). Upon the completion of the Primary Transaction Monsanto Co. became a wholly owned subsidiary of Bayer AG. Prior to the completion of the Primary Transaction, Monsanto Co. directly as well as indirectly held 72.14% voting share capital in Monsanto India Limited (MIL). As a consequence of the completion of the Primary Transaction on June 7, 2018, the Acquirer indirectly acquired 72.14% of the fully diluted voting rights in MIL, resulting in change in control of MIL.
Pursuant to the indirect acquisition of voting rights and control by the Acquirer over MIL as a result of the Primary Transaction, it was mandatory for the Acquirer to make an open offer to the minority shareholders of MIL under the relevant regulations of SEBI (Substantial Acquisition of Shares 8 Takeover Regulations, 2011) (the SAST). Consequently, the Acquirer and Bayer CropScience Limited (BCSL), a publicly listed Indian company (as a Person acting in Concert) jointly made an Open Offer (the Open Offer) to all the public shareholders of MIL to acquire upto 4,488,315 (Four Million, Four Hundred and Eighty Eight Thousand Three Hundred and Fifteen) equity shares representing 26% of the voting share capital of MIL at the price of INR. 2,926.87. Based on the tender offer submissions by the minority shareholders of MIL, Bayer CropScience Limited (BCSL), an indirect subsidiary of Bayer AG, acquired and now holds 7.82% shareholding in MIL. Bayer AG holds 8.8% shareholding in MIL. As a result, both MIL and BCSL are commonly controlled subsidiaries of Bayer AG Germany. Due to the tender submissions, the promoter shareholding of your Company has increased to 81.87%.
MERGER OF MONSANTO INDIA LIMITED (MIL) AND BAYER CROPSCIENCE LIMITED (BCSL)
In order to attain efficiencies and create a unified platform for growth, the Board of Directors of MIL as well as the Board of Directors of BCSL considered and approved the amalgamation of MIL with BCSL on November 14, 2018. MIL and BCSL, both being listed entities, the process of merger is long drawn and complex as it involves approvals from various authorities. Both the Companies have received in-principal approval from the Stock Exchange Board of India to enable the Company to file the scheme with the National Company Law Tribunal (NCLT). On February 21, 2019, the Company has filed the application seeking NCLT''s approval for the merger of MIL with BCSL vide an Order dated April 22, 2019, the Hon''ble National Company Law Tribunal, Bench at Mumbai (NCLT) has directed a meeting to be held of the equity shareholders of your Company for the purpose of considering, and if thought fit, approving, with or without modification(s), the arrangement embodied in the Scheme of Amalgamation of Monsanto India Limited (the Transferor Company) with Bayer CropScience Limited (the Transferee Company) and their respective shareholders under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder (Scheme). In pursuance of the said Order of NCLT, further notice has been given to the equity shareholders of the Transferor Company that a meeting is scheduled to be held on June 4, 2019.
EXTRACT OF THE ANNUAL RETURN
In accordance with requirements under Section 134(3)(a) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the details forming part of the extract of the Annual Return in form MGT 9 shall be annexed as (Annexure 3).
A copy of the annual return shall be placed on the website of the company after the same is filed with the Registrar and can be accessed at http://www.monsantoglobal.com/global/in/ whoweare/Pages/agm-2019.aspx
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
Information required under Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 shall be annexed as (Annexure 4). The Policy for the same is available on http://www.monsanto. com/global/in/whoweare/pages/policies.aspx.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTOR AND EMPLOYEES
Your Company maintains a Code of Business Conduct and Anti-Corruption Program. Additionally, a vigil/whistle blower mechanism (''Monsanto Speak-Up Protocol for India'') has also been developed pursuant to requirements of Section 177(9) and (10) of the Act and Regulation 22 of the SEBI LODR with the Stock Exchanges in India and is available on http://www. monsantoglobal.com/global/in/whoweare/pages/policies.aspx.
The Company''s ''Monsanto Speak-Up Protocol for India'' aims at:
a) informing employees of their obligation to report serious wrongdoing within the Company;
b) providing employees with guidance on how to raise concerns;
c) reassuring employees that they should be able to raise genuine concerns in good faith without fear of retaliation; and
d) providing specific direction on how to contact the Chairperson of the Audit Committee of Board of Directors.
The Company has made available to its employees, anonymous email and telephone hotlines for reporting of any deviations / concerns.
NOMINATION AND REMUNERATION POLICY
The Nomination and Remuneration Committee of the Board of Directors has adopted a Charter which deals with the manner of selection of Board of Directors and Managing Director and their remuneration. This Policy is in compliance with Section 178 of the Companies Act, 2013, read with the applicable rules thereto and Clause 49 under the Listing Agreement with the Stock Exchanges.
The Nomination and Remuneration policy is annexed as (Annexure 5) as stated in the Corporate Governance Report and is available on http://www.monsanto.com/global/in/whoweare/ pages/policies.aspx
PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTY
The particulars of every contract /arrangement entered into by the Company with the related parties referred to in Sub section 1 of Section 188 of the Companies Act, 2013 including certain arms'' length transaction under third proviso thereto has been disclosed in Form AOC 2 as (Annexure 6).
The Policy on related party transactions as approved by the Board is uploaded on the Company''s website and is available on http://www.monsanto.com/global/in/whoweare/pages/policies. aspx. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company.
CORPORATE GOVERNANCE CERTIFICATE
A detailed report on the corporate governance system and practices of the Company forming part of this report is given as a separate section of the Annual Report. The Compliance Certificate from the Statutory Auditors regarding compliance of conditions of corporate governance as stipulated under Regulation 34 of the SEBI LODR is annexed to the report as (Annexure 7).
DIRECTORS'' RESPONSIBILITY STATEMENT
In compliance with Section 134(3)(c) of the Companies Act, 2013 (the Act), your Directors, on the basis of information made available to them, confirm the following for the year under review:
a) i n the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;
b) They have selected such accounting policies and applied them consistently and made judgments and estimates that 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 or loss of the Company for that period;
c) They have taken proper and sufficient care to the best of their knowledge and ability, 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; and
d) They have prepared the annual accounts on a going concern basis.
e) They have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating efficiently.
f) They have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
BUSINESS RESPONSIBILITY REPORT
As stipulated under Regulation 34 of the SEBI LODR, the Business Responsibility Report on Company''s as required by Regulation 34(2) of the SEBI LODR, initiatives on environmental, social and governance aspects forming part of this report is given as a separate section of the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
A Management Discussion and Analysis on the business and operations of the Company as required by Regulation 34(2) of the SEBI LODR, forming part of this report is given as a separate section of the Annual Report.
Disclosures with respect to the remuneration of Directors, KMPs and employees 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 are given in (Annexure 8) to this Report.
Details of employee remuneration as required under provisions of Section 197(12) of the Act read with Rule 5(2) 8 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report. In terms of the first proviso to Section 136(1) of the Act, the reports and accounts are being sent to the shareholders excluding the aforesaid remuneration.
Having regard to the provisions 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. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request.
Total number of permanent employees employed with your Company as on March 31, 2019 is 252 as compared to 257 as on March 31, 2018.
CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION
The information required to be furnished pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 forms part of this report.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of earnings and expenditure in foreign currency are annexed to this Report.
POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
The Company has zero tolerance towards sexual harassment at the workplace and has constituted an Internal Complaints'' Committee for prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Section 4(1) of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.
No cases of Sexual Harassment were received during the year under review.
Your Directors state that no disclosure or reporting is required in respect of the following items as transactions on these items during the year under review:
1. There are no material changes and commitments affecting the financial position of the company, having occurred since the end of the Year and till the date of the Report.
2. Details relating to deposits covered under Chapter V of the Act.
3. Issue of equity shares with differential rights as to dividend, voting or otherwise.
4. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
5. Voting rights not exercised directly by the employees as per Section 67 (3) of Companies Act, 2013
6. There has been no non-acceptance of any recommendation of Audit Committee by the Board as required under Section 177 (8) of Companies Act, 2013.
7. The Managing Director of the Company does not receive any remuneration or commission from any of its subsidiaries.
8. There has been no fraud reporting under Section 143(12) of the Companies Act, 2013
9. Particulars of Loans given, Investments made, Guarantees'' given, and Securities provided under Section 186 of Companies Act, 2013
Your Directors would like to express their appreciation for the assistance and co-operation received from its shareholders, Government authorities, vendors, channel partners, and other business associates. Your Directors appreciate the continued support from Monsanto Company, USA and Bayer AG and would also wish to place on record their deep sense of appreciation for the committed services by the employees of the Company. Without this support, the Company would not be able to successfully serve its farmer customers whose success eventually determines the Company''s success.
For and on behalf of the Board of Directors
Mumbai: April 30, 2019 DIN: 01031445