DIRECTORS' REPORT Dear Members, Your Directors take pleasure in presenting the 57th Annual Report on the business and operations of the Company together with the audited Financial Statements along with the Report of the Auditors for the financial year ended March 31, 2015. Operations: Your Company's Revenue from Operation (Net) has increased by 15%, from Rs. 32,452 Millions in 2013-14 to Rs. 37,233 Millions in 2014-15. Profit before Exceptional Items and Taxation has increased by 30%, from Rs. 4,408 Millions in 2013-14 to Rs. 5,735 Millions in 2014-15. Dividend: The Board of Directors is pleased to recommend the payment of final dividend of Rs. 17.00 per Equity Share of Rs. 10 each for the financial year ended March 31, 2015, subject to the approval of the members (previous year Rs. 5.50 per Equity Share ofRs. 10 each). With the final dividend of Rs. 17.00 per Equity Share proposed by the Board of Directors and an interim dividend of Rs. 4.00 per Equity Share already paid, the total dividend for the financial year ended March 31, 2015 amounts to Rs. 21.00 per Equity Share. The Register of Members will remain closed from Saturday, September 05, 2015 to Tuesday, September 15, 2015 (both days inclusive). Exports: Your Company is a recognised Export House. The export sale (FOB) for the year ended March 31, 2015 was Rs. 6,287 Millions compared to Rs. 4,960 Millions during the previous year. Insurance: The Company's assets continue to be adequately insured against the risk of fire, riot, earthquake, terrorism and the risk of loss of profits, amongst other things. In addition, adequate coverage has been taken to cover public liability, environmental liability and product liability claims. Also, all the employees are covered against the risk of hospitalisation and personal accident. Foreign Exchange Management: The Company's exposure to foreign exchange risk comprises the risk of a foreign currency versus the local currency. The goal is to reduce the negative impact of the risks arising from fluctuations in exchange rates in the earnings. The majority of the forex transactions are denominated in US dollar. To mitigate the currency fluctuations, the net exposure of the Bayer Group is hedged after taking advantage of the natural hedge on fortnightly basis. Foreign currency loans, including interest, ifany, are completely hedged. The exports receivables are offset against the imports payables pertaining to the major party on fortnightly basis and the balance receivables / payables are hedged to mitigate the currency risk. Directors' Responsibility Statement: Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and belief, confirm that: 1. in the preparation of the annual accounts, the applicable accounting standards had been followed; 2. appropriate accounting policies have been selected and applied consistently and such judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the financial year ended March 31, 2015; 3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. the annual accounts have been prepared on a going concern basis; 5. internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively and 6. proper systems to ensure compliance with the provisions of all applicable laws have been devised and that such systems were adequate and operating effectively. Responsible Care and Quality: Your Company observed National Safety Week and Fire Prevention Week during the year and conducted various activities throughout the week to spread awareness on safety amongst employees. September 16, 2014 was observed as the Bayer Safety Day. Your Company observed Environment Day at Himatnagar site during the year. A"Road Safety Campaign" was launched in 2012 and was continued in 2014 to increase awareness amongst Bayer employees in India. This year, the theme was "Responsible Driving". Himatnagar Site completed 15 years without lost time injury in 2014. Your Company, covering all the manufacturing sites, all India business operations and supporting services, was audited on Quality Management System by TUV India Pvt. Ltd. (TUV) and the Company was recertified for ISO 9001:2008. The Environmental Management System for Himatnagar site was audited by TUV and was recertified for ISO 14001:2004. Your Company accords high priority to health, safety and environment. Corporate Sustainability and Social Responsibility: To Bayer CropScience Limited, sustainability basically means future viability and it forms an integral part of our business strategy. We believe that innovation is essential for achieving sustainable economic success. We at Bayer carefully develop products and services specifically designed to benefit people. In this endeavour, we are committed to achieving the economic, ecological and social responsibility objectives of Sustainable Development. Sustainable agriculture, higher crop yields and improved crop quality are becoming increasingly important. In this context, ensuring ample food supplies is one of the biggest challenges of our time. Bayer CropScience Limited is developing solutions to this problem and has firmly established the topic of "high-quality food for all" as a central objective of its sustainability programme. For us, the only way to achieve this goal is through sustainable agriculture. Two key prongs of our commitment to sustainability are improving resource and energy efficiency. At Bayer CropScience Limited, we are constantly working to reduce environmental impact and find innovative product solutions that benefit the environment. Our mission states - "Bayer: Science For A Better Life" For us, it is therefore important to contribute to society's future viability and create value in diverse ways. Within the scope of our social commitment, we thus make targeted strategic investments in the areas of science and education, health, social needs and community projects. This commitment is an integral element of our corporate policy. For Bayer CropScience Limited, India's traditional CSR spend was focussed on rural development. For the future, we intend to make India, a Role Model, with a focus on innovative CSR projects and system-changing social seed-funding under Bayer's strategic CSR policy areas. The CSR for India portfolio target structure has three distinct pillars: 1. Society Progress Pilots for pioneering ideas and topics of nationwide importance 2. Science Excellence with focus on life science talents and frontier research 3. Community development for neighbourhood projects on farming/rural topics, health and education Corporate Social Responsibility: In accordance of the requirements of Section 135 of the Companies Act, 2013, your Company has constituted a Corporate Social Responsibility Committee. The Composition and terms of reference of the Corporate Social Responsibility Committee is provided in the Corporate Governance Report. The Brief outline of the CSR Policy of the Company and the initiatives undertaken by the Company on CSR Activities during the financial year 2014-15 are set out in Annexure "A" of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. Human Resources: Employee engagement is an important factor in your Company's success. Central to this engagement are culture and LIFE values. They provide the employees with guidance for daily work and encourage them for sustainable performance. Your Company reaffirmed its commitment to personal growth and learning with the launch of 24 different training & development initiatives to support the employees in an increasingly dynamic and complex business landscape. The year was marked with special focus on enhancing the feedback culture and on leadership development. Additionally, our employees were nominated to 39 identified external training programs. Your Company launched its Employer Value proposition - its Employer Brand - 'Passion to Innovate Power to Change'. Bayer's Employer Brand promise is based upon the Bayer strong Corporate Brand - Bayer: Science for a Better Life. It is a reflection of what makes Bayer and what is expected of every employee who joins Bayer. The Employer Brand brings a strong value proposition for future talents and further strengthens Bayeras an Employer of choice. It further continued its strong Employer Branding initiatives by continuing the "Bayer Scholarship Program" with front ranking universities in India, with the aim to further strengthen the interface between the educational institutes and the industry. Roll out of the global Bayer Competency Model which forms the base for all HR subsystems. The Model conveys our focus on 8 core and 8 leadership competencies that link our People Processes, Performance Management, Talent Development initiatives across the employee lifecycle. To establish on-boarding practices to integrate employees smoothly into the organization and to make them productive as quickly as possible, the Bayer Group in India launched an on-boarding process which includes the 'Hello Bayer' portal. New employees are curious to know more about the organization they are going to join. Hello Bayer is an internet based customized India on-boarding portal which offers new employees information so as to help them quickly acclimatize to the organization. In line with Bayer's talent management philosophy of "Building the Leadership Pipeline" & "Valuing the Expertise of employees", a number of employees went through various Development Centres. These exercises not only built capabilities, but also presented opportunities for employees to move into different roles and positions. Our strong work on XCEDO, the Bayer CropScience Training Academy was recognised at the Asia Pacific level. An addition to the academy was the SKILL CAMP which is a global marketing and sales initiative. In continuation to last year's efforts towards providing opportunities for Learning and Development to the employees, additional batches of our employee development initiatives like NIEV - Bayer Management Program and My Growth My Life - Employee Development Program were launched. Employee relations during the year were harmonious and cordial. Directors: Mr. Kaikobad B. Mistry retires by rotation and being eligible, offers himself for re-appointment. Dr. Regine Juergens was appointed as an Additional Director of the Company with effect from February 02, 2015. Brief profile of both Directors is given in the explanatory statement annexed to the Notice. Mr. Tobias Marchand, Non-Executive Non-independent Director resigned from the Board of the Directors of the Company with effect from closing hours of January 31, 2015. Dr. Vijay Mallya, Mr. Sharad M. Kulkarni, Mr. A.K.R Nedungadi and Mr. Vimal Bhandari, the Independent Directors have given declaration to the Board that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Meetings of the Board: During the financial year ended March 31, 2015, five Board Meetings were convened and held. The details of which are given in the Corporate Governance Report. Audit Committee: All the recommendations made by the Audit Committee were accepted by the Board. The composition of the Audit Committee is given in the Corporate Governance Report. Board Evaluation: Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance and that of its committees and individual directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Nomination and Remuneration Policy: The Board has, on the recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration Policy in accordance with Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Policy provides for appointment and removal of Directors, Key Managerial Personnel and Senior Management employees and their remuneration. The Policy is stated in the Corporate Governance Report. Whistle Blower Policy (Vigil Mechanism): In terms of Section 177 of the Companies Act, 2013 and requirements of Clause 49 of Listing Agreement, the Company has a Whistle Blower Policy as its vigil mechanism. The details of this Policy is explained in the Corporate Governance Report and also posted on the website of the Company. Risk Management Policy: The Company has adopted a Risk Management Policy which outlines the risk management framework of the Company. The policy contains the following aspects: • overview of risk management • roles and responsibilities of the Board of Directors, Audit Committee and other key personnel of the company with regards to risk management. • structure for identification, escalation, and minimization of risks • procedure for risk identification, escalation, and minimization of risks. The risks identified can be of various types/categories (Risk categorisation). The categories that are being used are Operational/Business, Regulatory/Compliance, People, Information Technology, Environmental and Reputation. The details on risk management are given in the Corporate Governance Report. Information pursuant to Section 197(12) of the Companies Act, 2013: The information as prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out as an Annexure "E" to the Directors' Report. However, as per the proviso to Rule 5, the Directors' Report and Financial Statements are being sent to the Members excluding the statement giving particulars of employees under Section 197(12). Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the Registered Office of the Company. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo: The information required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 with respect to these matters forms part of this Report and is enclosed as Annexure "B" hereto. Particular of Loans, guarantees or investments under Section 186 of the Companies Act, 2013: During the financial year ended March 31, 2015 the Company gave loan to its group companies. As on March 31,2015 no loan is outstanding. The particulars of the loans is given under Note No. 37 in Financial Statement. The Company did not give any guarantee or provide security in connection with any loan or acquire any securities during the financial year ended March 31, 2015. Related Party Transactions: In terms of the requirements as per the Companies Act, 2013 and the Listing Agreement, your Company has formulated a Related Party Transaction Policy. All the transactions entered with related parties are as per the Related Party Transaction Policy and are in the ordinary course of business and at arm's length. Information on transactions with the related parties pursuant to Section 134(3)(h) of the Companies Act, 2013 read with rule 8(2) of the Companies (Accounts) Rules, 2014 are given under Annexure "C". Prevention of Sexual Harassment at Workplace: The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The following is a summary of sexual harassment complaints received and disposed off during each calendar year. • No of complaints received : Nil • No of complaints disposed off : Nil Extract of Annual Return: The details forming part of the extract of the Annual Return in Form MGT 9 is enclosed as Annexure "D" hereto. Corporate Governance: Your Company believes in transparency and has always maintained a very high level of Corporate Governance. As required by Clause 49 of the Listing Agreement, a detailed Corporate Governance Report is given as an Annexure to this Report. The Company is in full compliance with the requirements and disclosures that have to be made in this regard. The Certificate from a Company Secretary in whole-time practice confirming compliance of the Corporate Governance requirements by the Company is attached to the Corporate Governance Report. Management Discussion and Analysis Report: A detailed review of operations, performance and future outlook of the Company is given separately under the head Management Discussion and Analysis Report. Cost Audit: Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of 'Insecticides' is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. N. I. Mehta & Co. to audit the cost accounts of the Company pertaining to 'Insecticides' for the financial year ending March 31, 2016. Statutory Auditors: M/s. Price Waterhouse, Chartered Accountants, (Firm Registration Number 301112E) retire as Statutory Auditors at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from the retiring Auditors that their appointment as Statutory Auditors, if made, would be within the limits prescribed under the Companies Act, 2013. The Audit Committee and the Board recommends the re-appointment of M/s. Price Waterhouse, Chartered Accountants, (Firm Registration Number 301112E) as Statutory Auditors for the financial year ending March 31, 2016. Members are requested to consider and re-appoint M/s. Price Waterhouse, Chartered Accountants, (Firm Registration Number 301112E) as the Statutory Auditors of the Company for conducting the audit for the financial year ending March 31, 2016. Secretarial Audit: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. BNP & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is enclosed as Annexure "F" hereto. Acknowledgements: The Board of Directors wishes to express its sincere appreciation for the dedicated services rendered by employees at all levels and the constructive co-operation extended by them. Your Directors would like to express their grateful appreciation for the assistance and support extended by all customers, government authorities, financial institutions, banks, shareholders, suppliers and other business associates. We also acknowledge the consistent support and guidance from Bayer AG, Bayer CropScience AG, Bayer SAS and Bayer Vapi Private Limited. For and on behalf of the Board of Directors Dr. Vijay Mallya Chairman Thane, May 27, 2015 |