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Bayer CropScience Ltd.

BSE: 506285 Sector: Agri and agri inputs
NSE: BAYERCROP ISIN Code: INE462A01022
BSE 00:00 | 18 May 5263.00 -127.30
(-2.36%)
OPEN

5404.15

HIGH

5435.10

LOW

5160.00

NSE 00:00 | 18 May 5300.50 -80.80
(-1.50%)
OPEN

5408.75

HIGH

5450.00

LOW

5283.00

OPEN 5404.15
PREVIOUS CLOSE 5390.30
VOLUME 3902
52-Week high 6550.00
52-Week low 4294.05
P/E 48.05
Mkt Cap.(Rs cr) 23,652
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 5404.15
CLOSE 5390.30
VOLUME 3902
52-Week high 6550.00
52-Week low 4294.05
P/E 48.05
Mkt Cap.(Rs cr) 23,652
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Bayer CropScience Ltd. (BAYERCROP) - Auditors Report

Company auditors report

To The Members of Bayer Crop Science Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the accompanying financial statements of Bayer Crop Science Limited("the Company”) which comprise the Balance Sheet as at March 31 2020 and theStatement of Profit and Loss (including Other Comprehensive Income) the Statement of CashFlows and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by theCompanies Act 2013 (“the Act”) in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended(“Ind AS”) and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 312020 and its profit total comprehensiveincome its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards onAuditing specified under section 143(10) of the Act (SAs). Our responsibilities underthose Standards are further described in the Auditor's Responsibility for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules made thereunder and wehave fulfilled our other ethical responsibilities in accordance with these requirementsand the ICAI's Code of Ethics. We believe that the audit evidence obtained by us issufficient and appropriate to provide a basis for our audit opinion on the financialstatements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.

Key Audit Matter Auditor's Response
1 Revenue Recognition - Rebates/ Discounts and Returns. Principal audit procedures performed:
A description of key accounting policies for revenue recognition rebates/ discounts and returns is disclosed in Note 1(d) Significant accounting policies of the financial statements. We obtained an understanding of the policies applied to estimate rebates/ discount and returns and the Company's process for making estimates in these areas and performed the following procedures:
Management is required to make certain judgements in respect of revenue recognition and level of expected rebates/ discounts and returns which are deducted in arriving at revenue. These estimates are material to the financial statement and require significant judgement. We tested the design and operating effectiveness of key controls related to rebates/ discounts and returns. We obtained an understanding of key contractual arrangements with customers for rebates/ discounts and returns.
We considered the accuracy of management's estimates in previous years by comparing historical accrued liabilities to the actual settlements.
To determine these estimates Management is required to consider historical experience specific contractual terms and future expectation of revenue. Management judgement is also significantly impacted by volatility in the market weather conditions and action of third parties. Hence the estimation of refund liabilities is complex subjective and susceptible to material misstatement if judgement is inaccurate. We assessed the accuracy of the refund liabilities by recalculating the amount based on historical actual returns adjusted for volatility in the market and weather condition.

We considered the adequacy of the Company's revenue recognition accounting policies including the recognition and measurement of deductions to gross sales relating to rebates/ discounts and returns and related disclosures.

The Management has determined refund liabilities of Rs 2621 Million as at March 312020 (Refer Note 21 to the financial statement).
2 Litigation related to Direct tax matters. Principal audit procedures performed:
The Company has significant outstanding income tax litigation. As of March 31 2020 contingent liabilities pertaining to Income tax are Rs 6477 Million (Refer Note 34 to the financial statements) We evaluated the design and tested the operating effectiveness of internal controls related to the assessment of the likely outcome of income tax litigation and the provision made if any. We discussed significant open matters and developments with the Company's direct tax team.
Management applies significant judgment in estimating the likelihood of the future outcome in each case based on its own past assessments judicial precedents and opinions of experts/ legal counsels when considering whether and how much to provide or in determining the required disclosure for the potential exposure. We involved our internal tax experts to understand and evaluate the status of direct tax matters review legal precedence and external expert opinions if any obtained by the management to evaluate whether the direct tax position is appropriate after taking into account recent developments if any.
Due to inherent complexity and magnitude of potential exposures these matters are susceptible to material misstatement if judgement is inaccurate. We verified the appropriateness of the accounting policies and disclosures related to Contingent liabilities pertaining to Income tax.

Information Other than the Financial Statements and Auditor's Report Thereon

• The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Director's Report CorporateGovernance Report and Management Discussion & Analysis Report but does not includethe financial statements and our auditor's report thereon.

• Our opinion on the financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.

• In connection with our audit of the financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

• If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Management's Responsibility for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these financial statements that givea true and fair view of the financial position financial performance including othercomprehensive income cash flows and changes in equity of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibility for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern.

If we conclude that a material uncertainty exists we are required to draw attention inour auditor's report to the related disclosures in the financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

Other Matters

The comparative financial information of the Company for the year ended March 31 2019included in the financial statements have been restated to give effect to the Scheme ofAmalgamation (“the Scheme”) of Monsanto India Limited (‘MIL') with theCompany as explained in Note 43 to the financial statements.

The financial information of erstwhile MIL included in the restated comparativefinancial information have been audited by the other auditors.

The adjustments made to the previously issued financial information to give effect tothe Scheme have been audited by us.

Our report is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act based on our audit we report that:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books

c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Cash Flows and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid financial statements comply with the Ind AS specifiedunder Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 312020 from being appointed as a director in terms of Section 164(2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in “Annexure A”. Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 34

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.

iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.

2. As required by the Companies (Auditor's Report) Order 2016 (“the Order”)issued by the Central Government in terms of Section 143(11) of the Act we give in“Annexure B” a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sampada S Narvankar
Partner
Date: May 22 2020 (Membership No. 102911)
Place: Mumbai UDIN No: 20102911AAAAAZ1121

Annexure "A" To The Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of BayerCrop Science Limited (“the Company”) as of March 31 2020 in conjunctionwith our audit of the Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on “the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India”. These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the “Guidance Note”) issued by the Institute of CharteredAccountants of India and the Standards on Auditing prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controls.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 312020 based on the criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sampada S Narvankar
Partner
Date: May 22 2020 (Membership No. 102911)
Place: Mumbai UDIN No: 20102911AAAAAZ1121

i In respect of its fixed assets:

a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

b) The Company has a program of verification of fixed assets to cover all the items ina phased manner over a period of three years which in our opinion is reasonable havingregard to the size of the Company and the nature of its assets. Pursuant to the programcertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanations given to us no material discrepancies were noticed onsuch verification.

c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed/ transfer deed/ conveyancedeed provided to us we report that the title deeds comprising all the immovableproperties of land and buildings which are freehold are held in the name of the Companyas at the balance sheet date except as stated below:

Particulars

No ofAssets

As at March 31 2020

Remarks
Gross Block (Rs in Million) Net Block (Rs in Million)
Freehold Land 15 130 130 The title deeds are in the name of Monsanto India Limited erstwhile company that was merged with the Company under section 230 to 232 of the Companies Act 2013 in terms of the approval of the National Company Law tribunal
Freehold Buildings 1 16 2

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as Right of Use asset in the financial statements the lease agreements arein the name of the Company where the Company is the lessee in the agreement except asstated below:

Particulars No of

As at March 31 2020

Remarks
Assets Gross Block (Rs in Million) Net Block (Rs in Million)
Leasehold Land 19 9 6 The title deeds are in the name of Monsanto India Limited erstwhile company that was merged with the Company under section 230 to 232 of the Companies Act 2013 in terms of the approval of the National Company Law tribunal
Leasehold Buildings 8 7 2

ii. The physical verification of inventory [excluding goods in transit and stocks withthird parties] have been conducted at reasonable intervals by the Management during theyear. In respect of inventory lying with third parties this has been substantiallyconfirmed by them during the year. The discrepancies noticed on physical verification ofinventory as compared to book records were not material.

iii. The Company has not granted any loans secured or unsecured to companies firmslimited liability Partnerships or other parties covered in the register maintained undersection 189 of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Section 186 of the Act in respect of makinginvestments. The Company has not granted any loans or provided guarantees and securities.

v. According to the information and explanations given to us the Company has notaccepted any deposit during the year and hence reporting under clause (v) of the saidOrder is not applicable.

vi. The maintenance of cost records has been specified by the Central Government undersection 148(1) of the Act. We have broadly reviewed the cost records maintained by theCompany pursuant to the Companies (Cost Records and Audit) Rules 2014 as amendedprescribed by the Central Government under sub-section (1) of Section 148 of the Act andare of the opinion that prima facie the prescribed cost records have been madeand maintained. We have however not made a detailed examination of the cost records witha view to determine whether they are accurate or complete.

vii. According to the information and explanations given to us in respect of statutorydues:

a) The Company is generally regular in depositing undisputed statutory dues in respectof Tax Deducted at Source Professional tax though there have been slight delays in fewcases and is regular in depositing undisputed statutory dues including Provident FundEmployees' State Insurance Income-tax Labour Welfare Fund Customs Duty Excise DutyValue Added Tax Sales Tax Service Tax Goods and Service tax cess and other materialstatutory dues applicable to it to the appropriate authorities.

b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Professional Tax Labour Welfare Fund Sales Tax ServiceTax Customs Duty Excise Duty Value Added Tax Goods and service tax cess and othermaterial statutory dues in arrears as at March 31 2020 for a period of more than sixmonths from the date they became payable.

c) Details of dues of Income-tax Sales Tax Service Tax Excise Duty Entry TaxCustoms Duty Value Added Tax and Goods and service tax which have not been deposited ason March 31 2020 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount (? In Million)
Income Tax Act 19611 Income Tax Dues Appellate Authority - up to Appellate Tribunal level Assessment Years 2002-03 2003-04 2007-08 to 2017-18 1675
Supreme Court Assessment Years 1999-2000 2001-02 2003-04 to 2008-09 2729
The Central Sales Tax Act 1956 and Local Sales Tax Acts 2 Sales Tax and Value Added Tax liability Appellate Authority - up to Commissioner's level Financial Years

1977-1978 1979-1980 to 19811982 1983-1984 to 1984-1985 1998-1999 to 2016-2017

396
Sales Tax Appellate Tribunal Financial Years

1989-1990 to 1990-1991 19951996 to 1996-1997 2009-2010

3
Central Excise Act 1944 Excise Duty liability Supreme Court Financial Years 2000-2001 to 2002-2003 10
The Finance Act 1994 Service Tax Liability Custom Excise and Service Tax Appellate Tribunal Financial Years 2005-06 2006-07 2009-10 to 2017-18 271
The Custom Act 1962 Custom

Duty

Appellate Authority - up to Commissioner's level Financial Years 2002-2003 8
The Entry Tax Act1976 Entry Tax Appellate Authority - up to Commissioner's level Financial year 2015-16 1
The Central Goods and Service Tax Act 2017 3 Goods and Service Tax Appellate Authority - up to Commissioner's level Financial Year 2018-19 *

* Denotes figures below Rs Million.

1. Net of Rs 1875 Million paid;

2. Net of Rs 63 Million paid;

3. Net of Rs 0.5 Million paid.

viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in the repayment of loans or borrowings to banks. The Companyhas not taken any loans or borrowings from financial institutions and government. TheCompany has not issued any debentures.

ix. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause (ix) ofthe said Order is not applicable.

x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company and no material fraud on the Company by its officers oremployees has been noticed or reported during the year.

xi. In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

xii. The Company is not a Nidhi Company and hence reporting under clause (xii) of thesaid Order is not applicable.

xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Act for all transactions withthe related parties and the details of related party transactions have been disclosed inthe financial statements etc. as required by the applicable accounting standards.

xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of said Order is not applicable to the Company.

xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any noncash transactions with itsdirectors or persons connected with them and hence provisions of section 192 of the Actare not applicable.

xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sampada S Narvankar
Partner
Date: May 22 2020 (Membership No. 102911)
Place: Mumbai UDIN No: 20102911AAAAAZ1121

   

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