Bayer Annual Report 2005

Bayer CropScience Limited Annual Report 2005
Bayer CropScience Limited

Annual Report 2005
Directors Dr. Vijay Mallya — Chairman

Mr. Yezdi H. Malegam
Mr. Johannes M. Dietsch
Mr. A. K. Ravi Nedungadi
Mr. Raj Kaul
Mr. Sharad M. Kulkarni
Mr. Stephan Gerlich — Managing Director
Ms. Christiane Kunze — Whole-time Director
General Counsel &

Company Secretary Shirin V. Balsara
Bankers Bank of America

Contents
BNP Paribas
Central Bank of India Board of Directors 1
Citibank N.A. Notice 2

Deutsche Bank Directors’ Report 7
HDFC Bank Limited Corporate Governance 13
Societe Generale Management Discussion & Analysis Report 33
State Bank of India
Auditors’ Report 41
Union Bank of India
Balance Sheet 46
Auditors Price Waterhouse Profit and Loss Account 47
Schedules forming part of the Balance Sheet 48
Solicitors Crawford Bayley & Co.
Schedules forming part of the Profit and
Registered Bayer House, Central Avenue, Loss Account 52
Office Hiranandani Gardens, Powai, Notes forming part of the Accounts 56
Mumbai-400 076.
Cash Flow 70
Tel. No. 2571 1234
Fax No. 2570 0147. Statement pursuant to Section 212 72
Subsidiary 73
Registrars TSR Darashaw Limited (formerly
and Share Tata Share Registry Limited) Consolidated Financial Statement 85
Transfer Army & Navy Building, Facts 108
Agents 148, M. G. Road, Fort,
Mumbai-400 001.
Tel. No. 6656 8484.
Members are requested to direct all
Fax No. 6656 8494.
correspondence relating to share matters to the
Factories (1) Kolshet Road, Company’s Registrars and Share Transfer Agents.
Thane-400 607, Maharashtra. Members are requested to bring their copies of the
(2) Plot Nos. 6009 - 10 & 6301 - 10A, Annual Report to the Annual General Meeting.
GIDC Industrial Estate,
Members are requested to send their queries, if
Ankleshwar 393 002, Gujarat.
any, relating to the accounts of the Company, well
(3) Plot Nos. 66/1 to 75/2, GIDC in advance, so that the necessary information can
Estate, Himatnagar-383 001, be made available at the Meeting.
Gujarat.
1
Notice to Shareholders
NOTICE is hereby given that the Forty Eighth Annual General Meeting of Bayer CropScience Limited will be held on
Monday, 12th June, 2006 at 11.30 a.m. at “Yashwantrao Chavan Pratishtan Auditorium”, Y. B. Chavan Centre, Near
Mantralaya, Gen. J. Bhosale Marg, Mumbai - 400 021 to transact the following business:
ORDINARY BUSINESS:
1. To receive, consider, approve and adopt the audited Balance Sheet as at 31st December, 2005 and the Profit and
Loss Account for the year ended on that date and the Report of the Directors and Auditors thereon.
2. To declare dividend on equity shares for the year ended 31st December, 2005.
3. To appoint a Director in place of Dr. Vijay Mallya, who retires by rotation and being eligible, offers himself for
re-appointment.
4. To appoint a Director in place of Mr. A. K. Ravi Nedungadi, who retires by rotation and being eligible, offers himself
for re-appointment.
5. To appoint Auditors and to fix their remuneration.
SPECIAL BUSINESS:
6. To consider and, if thought fit, to pass, with or without modification, the following Resolution as an Ordinary
Resolution:
“RESOLVED THAT Mr. Sharad M. Kulkarni who was appointed as an Additional Director of the Company from
1st April, 2006 by the Board of Directors and holds office upto the date of this Annual General Meeting under Section
260 of the Companies Act, 1956 (the Act) read with Article 117 (2) of the Articles of Association of the Company, but
being eligible, offers himself for re-appointment and in respect of whom the Company has received a notice in writing
under Section 257 of the Act from a shareholder signifying his intention to propose Mr. Sharad M. Kulkarni as a
candidate for the office of Director, be and is hereby appointed as a Director of the Company and whose term of
office shall be liable to determination by retirement of the Directors by rotation.”
7. To consider and, if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, 310, 311 and other applicable provisions of
the Companies Act, 1956 and Schedule XIII thereto consent be and is hereby granted for the variation in the terms
and conditions of the appointment of Mr. Stephan Gerlich, Managing Director with effect from 1st January, 2006 to
include the following component:
Long-Term Incentive : An amount decided as per the Global Policy of Bayer AG, Germany for Senior
Management.
RESOLVED FURTHER THAT Ms. Christiane Kunze,, Whole-time Director or Shirin V. Balsara, Head – Legal &
Company Secretary or Mr. Pradnesh Kamat, Manager – Secretarial, be and are hereby severally authorised to sign
and file such forms and documents as may be required and to do all such acts, deeds and things as may be
necessary to give effect to the aforesaid resolution.”
8. To consider and, if thought fit, to pass, with or without modification, the following resolution as a Special Resolution:
“RESOLVED THAT pursuant to the provisions of Sections 198, 269, 309, Schedule XIII and other applicable
provisions, if any, of the Companies Act, 1956 and subject to the approval of the Central Government, if applicable,
approval of the Company be and is hereby accorded to the appointment of Ms. Christiane Kunze as the Whole-time
Director of the Company for a period of five years commencing from 1st April, 2006 upon and, subject to the terms,
conditions and stipulations hereinafter mentioned and be paid and provided with the following remuneration,
perquisites and amenities:
(a) Salary : (i) Rs. 1,50,076/- (Rupees One Lakh Fifty Thousand and Seventy Six
only) per month.
(ii) An amount equivalent to Euro 9,778/- (Euro Nine Thousand
Seven Hundred Seventy Eight only) per month in Indian Rupees
at the prevailing exchange rate.
(iii) Special Allowance – Rs. 30,015/- (Rupees Thirty Thousand
Fifteen Only) per month.
(b) Annual Increment : An amount as may be decided by the Board of Directors from time to
time.
(c) Performance Award/Bonus/ : An amount as may be decided by the Board of Directors from time to
Incentive/Ex-gratia time.
2
Notice to Shareholders (Contd.)
(d) Long-Term Incentive : An amount decided as per the Global Policy of Bayer AG, Germany
for Senior Management.
(e) Perquisites : As per the provisions of Sections 198 and 309 of the Companies Act,
1956 and Schedule XIII to the said Act for the time being in force or
any statutory modification or re-enactment thereof.
The perquisites (including allowances) payable are as follows:
(i) Housing : The Company shall provide free furnished accommodation.
(ii) Home Travel Allowance : An amount as may be decided by the Board of Directors from time to
time in accordance with Bayer’s International Assignment Policy.
(iii) Club fees : Entrance and annual fees of one club.
(iv) Children’s education expenses : Actual educational expenses shall be paid.
(v) Allowances/Reimbursement of : Actual expenses incurred on travel and on packing, forwarding,
expenses incurred on joining loading/unloading as well as freight, insurance, customs duty,
duty in India/returning to the clearing expenses, local transportation and installation expenses,
Whole-time Director’s home relocation allowance, electrical appliances allowance in connection
country after completion of with the moving of personal effects for self and family for joining
tenure of her service duty in India may be allowed in case these have not been claimed
from the previous employer. After completion of the tenure, such
expenses may be reimbursed if the Whole-time Director is finally
leaving the employment of the Company.
(vi) Retirement Benefits : Retirement benefits under the Employee Benefit Programme/Scheme
as per the rules of the Company.
(vii) Free use of Motor Car : Free use of a motor car with chauffeur; alternatively the Company
shall bear all running, maintenance and repair expenses plus the
remuneration of a chauffeur for her own car.
(viii) Earned/Privilege Leave : As per rules of the Company.
(ix) Encashment of Leave : Encashment of leave at the end of the tenure as per the rules of the
Company.
(x) Entertainment Expenses : Reimbursement of entertainment expenses actually and properly
incurred in the course of legitimate business of the Company.
RESOLVED FURTHER THAT the remuneration, aforesaid, including expressly the benefits and amenities aforesaid,
shall be paid and provided as minimum remuneration to Ms. Christiane Kunze subject to the approval of the Central
Government, if necessary, or any other authority notwithstanding the absence or inadequacy of profits in any
accounting year of the Company during the tenure of her office as the Whole-time Director of the Company.
RESOLVED FURTHER THAT in the event of any relaxation made by the Government in the guidelines or ceiling on
Managerial Remuneration during the period of this agreement, the remuneration (including “Minimum
Remuneration”) payable to the Whole-time Director shall be increased as the Board may deem fit in accordance with
the guidelines or ceiling.
RESOLVED FURTHER THAT the Board, may subject to the requisite approvals, if required, of the Central
Government, increase, augment, vary and modify the remuneration payable and the benefits and amenities provided
to Ms. Christiane Kunze including the monetary value thereof, upto the limits prescribed in that behalf under or
pursuant to the Companies Act, 1956 or any statutory amendment, modification or re-enactment thereof from time to
time in force and/or the guidelines for managerial remuneration issued by the Central Government from time to time,
from the date of the statutory amendment, modification, re-enactment and/or the Guidelines coming into force.
RESOLVED FURTHER THAT so long as Ms. Christiane Kunze functions as Whole-time Director of the Company, she
shall not be paid any sitting fees for attending the meetings of the Board of Directors or Committee thereof.
RESOLVED FURTHER THAT Ms. Christiane Kunze shall not be liable to retire by rotation during her tenure as
Whole-time Director of the Company.
RESOLVED FURTHER THAT Mr. Stephan Gerlich, Managing Director or Shirin V. Balsara, Head – Legal & Company
Secretary or Mr. Pradnesh Kamat, Manager – Secretarial, be and are hereby severally authorised to sign and file
such forms and documents as may be required and to do all such acts, deeds and things as may be necessary to
give effect to the aforesaid Resolution.”
3
NOTES:
(a) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE
INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER. The instrument appointing a proxy in order to
be effective shall be duly filled, stamped, signed and deposited at the Registered Office of the Company not less
than 48 hours before the commencement of the meeting.
(b) The relevant Explanatory Statement pursuant to Section 173 of the Companies Act, 1956 (the Act), in respect of
the business under Item Nos. 6 to 8 is annexed hereto and forms part of this Notice. The details under Clause 49 of
the Listing Agreement with the Bombay Stock Exchange Limited, Mumbai, in respect of Directors seeking
appointment/re-appointment at the Annual General Meeting forms part of the Corporate Governance Report.
(c) The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, 27th May,
2006 to Monday, 12th June, 2006 (both days inclusive).
(d) The dividend of Rs. 2.20 (22%) per Equity Share, as recommended by the Board of Directors, if declared at the
ensuing 48th Annual General Meeting to be held on 12th June, 2006, will be paid at par within 30 days of 12th June,
2006:
• To those members who hold shares in physical form and whose names appear on the Company’s Register of
Members as holders of Equity Shares on Monday, 12th June, 2006.
• In respect of Shares held in electronic form, to the beneficial owners of the Shares as at the close of business
hours on Saturday, 27th May, 2006, as per details to be furnished by National Securities Depository Limited and
Central Depository Services (India) Limited.
(e) The shareholders are requested to address all correspondence to TSR Darashaw Limited, the Registrars & Share
Transfer Agents of the Company at the following address:
TSR Darashaw Limited
(Formerly Tata Share Registry Limited)
Unit : Bayer CropScience Limited,
Army & Navy Building,
148, M. G. Road,
Mumbai - 400 001.
Tel. No. 6656 8484
Fax No. 6656 8494
E-mail : csg-unit@tsrdarashaw.com
(f) Members holding shares in physical form are requested to notify/send the following to the Company’s Registrars and
Share Transfer Agents on or before 26th May, 2006 to facilitate better service:
(i) any change in their address/mandate/bank details;
(ii) particulars of their bank account in case the same have not been sent earlier; and
(iii) share certificate(s) held in multiple accounts in identical names or joint accounts in the same order of names for
consolidation of such shareholdings into one account.
(g) Members holding shares in the dematerialised mode are requested to intimate all changes pertaining to their bank
details, ECS, mandates, nominations, power of attorney, change of address/name, etc. to their Depository Participant
only and not to the Company’s Registrars and Share Transfer Agents. Changes intimated to the Depository
Participant will then be automatically reflected in the Company’s records which will help the Company and its
Registrars and Share Transfer Agents to provide efficient and better service to the Members.
(h) The Members are requested to encash the Dividend Warrants immediately on its receipt, as pursuant to
the provisions of Section 205A(5) of the Companies Act, 1956 (the Act) dividends remaining unclaimed for
seven years from the date they first became due for payment are now required to be transferred to the
“Investor Education and Protection Fund” established by the Central Government under Section 205C of
the Act. Members shall not be able to claim any unpaid dividend from the said Fund or the Company
thereafter.
The dividend paid in the year 1999 is now due to be transferred to the Investor Education and Protection
Fund. The members are requested to encash the unclaimed dividend.
(i) Members can avail of the facility of nomination in respect of shares held by them by sending their nomination in the
prescribed Form No. 2B duly filled in to the Company’s Registrars and Share Transfer Agents, quoting their
respective Folio Nos., Certificate Nos. and Distinctive Nos.
4
(j) Kindly forward all accounts related queries well in advance, so as to reach the Company atleast 10 days before the
Annual General Meeting.
(k) All documents referred to in the accompanying Notice and Explanatory Statement are open for inspection at the
Registered Office of the Company on all working days between 10.00 a.m. and 12.00 noon upto the date of the
Annual General Meeting.
By Order of the Board of Directors

SHIRIN V. BALSARA
Head – Legal & Company Secretary
Mumbai, 18th April, 2006.
Registered Office:
Bayer House,
Central Avenue,
Hiranandani Gardens,
Powai,
Mumbai - 400 076.
5
Annexure to Notice
The following Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 sets out all material facts
relating to the business mentioned at Item Nos. 6 to 8 in the accompanying notice dated 18th April, 2006.
EXPLANATORY STATEMENT
Item No. 6
Mr. Sharad M. Kulkarni was appointed as an Additional Director of the Company with effect from 1st April, 2006 by the
Board of Directors and he holds office upto the date of this Annual General Meeting. A notice in writing under Section 257
of the Companies Act, 1956, has been received from a Shareholder of the Company signifying his intention to propose
Mr. Kulkarni as a candidate for the office of Director.
Mr. Kulkarni was an Alternate Director to Mr. J. M. Dietsch and has ceased to be his alternate with effect from 31st March,
2006.
A brief profile of Mr. Kulkarni along with the required particulars is given in paragraph 4.3 of the Report on Corporate
Governance for the information of the members.
The Board recommends the appointment of Mr. Kulkarni as a Director of the Company. Except Mr. Kulkarni, none of the
Directors are concerned or interested in the passing of this resolution.
Item No. 7
Mr. Stephan Gerlich was appointed as the Managing Director of the Company with effect from 14th September, 2004. It
is now, proposed to change the terms of his appointment with effect from 1st January, 2006 by including the payment of
long-term incentive by way of an amount decided as per the Global Policy of Bayer AG, Germany for Senior Management.
The agreement entered into with Mr. Gerlich is available for inspection at the Registered Office of the Company on all
working days between 10.00 a.m. and 12.00 noon upto the date of the Annual General Meeting. The terms of
appointment mentioned in the Notice shall be treated as an Abstract required under Section 302 of the Companies Act,
1956.
Except Mr. Stephan Gerlich, no Director is concerned or interested in the passing of this resolution.
Item No. 8
Ms. Christiane Kunze was appointed as a Director in casual vacancy, caused due to resignation of Mr. Johannes Frick,
and the Whole-time Director of the Company with effect from 1st April, 2006.
A brief profile of Ms. Kunze along with the required particulars is given in paragraph 4.4 of the Report on Corporate
Governance for the information of members.
The terms and conditions of payment of remuneration to Ms. Christiane Kunze as the Whole-time Director of the
Company are within the limits as prescribed under Schedule XIII of the Companies Act, 1956.
The agreement entered into with Ms. Kunze is available for inspection at the Registered Office of the Company on all
working days between 10.00 a.m. and 12.00 noon upto the date of the Annual General Meeting. Abstract as required
under Section 302 of the Companies Act, 1956 has already been circulated to all the Members of the Company.
The Board recommends the appointment of Ms. Christiane Kunze as the Whole-time Director of the Company for a
period of five years from 1st April, 2006. Except Ms. Christiane Kunze, no Director is concerned or interested in the
passing of this resolution.
By Order of the Board of Directors

SHIRIN V. BALSARA
Head – Legal & Company Secretary
Mumbai, 18th April, 2006.
Registered Office:
Bayer House,
Central Avenue,
Powai,
Mumbai - 400 076.
6
Directors’ Report
Dear Members,
Your Directors have pleasure in presenting the Forty Eighth Annual Report on the business and operations of the
Company together with the audited Statements of Accounts and the Report of the Auditors for the year ended
31st December, 2005.
FINANCIAL PERFORMANCE
Rs. Million
Particulars 2005 2004
Sales and Other Operating Income 7,664.60 7,563.56

Other Income 391.38 261.72
Total Income 8,055.98 7,825.28
Profit before Interest and Depreciation, Prior Period, Exceptional Items and Taxation 1,116.06 885.07
Less: Interest 74.35 111.62
Profit before Depreciation, Prior Period, Exceptional Items and Taxation 1,041.71 773.45
Less: Depreciation 225.74 260.18
Profit for the year before Prior Period, Exceptional Items and Taxation 815.97 513.27
Add/(Less): Prior Period and Exceptional Items (Net) (69.13) 10.77
Profit for the Year before Taxation 746.84 524.04
Less: Provision for Taxation on Income 295.85 231.00

Less: Provision for Deferred Taxes 50.23 29.43
Less: Provision for Fringe Benefit Tax 29.29 —
Profit for the Year After Tax 371.47 263.61
Add: Profit & Loss balance Brought Forward 1,383.18 1,245.02
Amount available for Appropriation 1,754.65 1,508.63

Appropriations:
Proposed Dividend 86.90 86.90
Provision for Taxation on Proposed Dividend 12.19 12.19
Transferred to General Reserve 37.14 26.36
Profit & Loss Balance Carried Forward 1,618.42 1,383.18
Operations:
The Company’s profit after tax increased to Rs. 371.47 million this year as compared to Rs. 263.61 million in the last year,
an increase of 41%.
Dividend:
The Board of Directors is pleased to recommend the payment of dividend of Rs. 2.20 per Equity Share of Rs. 10/- each
for the year ended 31st December, 2005 subject to the approval of members (previous year Rs. 2.20 per Equity Share of
Rs. 10/- each). The proposed dividend will absorb a sum of Rs. 86.90 million. Your Company has been consistently
paying dividend at the above rate for the last four years. The Register of Members will remain closed from Saturday,
27th May, 2006 to Monday, 12th June, 2006 (both days inclusive).
Exports:
The Company is a recognised Export House. The export turnover during the year was Rs. 867.76 million compared to
Rs. 688.17 million achieved during the previous year.
Public Deposits:
The Company discontinued its Fixed Deposit Scheme in the year 2003. A sum of Rs. 8,35,000/- relating to 26 deposits
remained unclaimed as on 31st December, 2005. No interest is payable on such unclaimed deposits after the maturity
dates.
7
Directors’ Report (Contd.)
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, among other things.
In addition to this coverage, a Statutory Public Liability Insurance Policy has been taken to cover public liability arising out
of industrial accidents. Also, all the employees are covered against the risk of Hospitalisation and Personal Accident.
Subsidiary:
The Board of the Subsidiary Company, Bayer Polychem (India) Limited, comprises of Mr. Stephan Gerlich, as Chairman,
Mr. K. R. V. Subrahmanian, Independent Director, Mr. D. C. Shroff, Independent Director, Mr. Praveen Singh and
Mr. Johannes Frick. Mr. J. Frick will cease to be director from 31st March, 2006 and Ms. Christiane Kunze will be
appointed as director with effect from 1st April, 2006.
The audited statement of accounts of the Subsidiary Company for the year ended 31st December, 2005 together with
Reports of the Directors and the Auditors and the Statement pursuant to Section 212 of the Companies Act, 1956 are
attached.
The audited Consolidated Accounts and Cash Flow Statement, comprising of the Company and its wholly owned
Subsidiary Company, Bayer Polychem (India) Limited form part of this report. The Consolidated Accounts have been
prepared in accordance with the Accounting Standards (AS)-21 Consolidated Financial Statement issued by The Institute
of Chartered Accountants of India in this regard.
Directors Responsibility Statement:

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, the Directors confirm that, to the best of their
knowledge and belief:
1. in the preparation of the annual accounts, the applicable accounting standards have been followed;
2. appropriate accounting policies have been selected and applied consistently, and such judgements 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 on 31st December, 2005 and of the profit of the Company for the year ended on 31st December, 2005;
3. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with
the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
4. the annual accounts have been prepared on a going concern basis.
Responsible Care and Quality:

Your Company accords high priority to health, safety and environment.
Your Company has achieved a landmark of “Zero Reportable Injuries” in the year 2005. This is the second consecutive
year the Company has achieved zero reportable injuries. This includes all the three Manufacturing Units at Thane,
Himatnagar and Ankleshwar. The Company celebrated National Safety Day and Fire Prevention Day with various activities
throughout the week to spread greater awareness amongst employees.
Ankleshwar plant was awarded with Safety Appreciation Certificate by Gujarat Safety Council for Accident free 10,00,000
man hours.
Your Company, covering all the Manufacturing Units, all India business operations and supporting services, were audited
on Quality Management System by TUV India Pvt. Ltd. (TUV) and the Company was recommended continuance of the
ISO 9001:2000 certificate with inclusion of Development Activities.
The Environmental Management System for Himatnagar was audited by TUV and TUV recommended upgradation
of Certificate from ISO 14001:1996 to ISO 14001:2004. The Environmental Management System for Thane was audited
by Det Norske Veritas (DNV) and DNV recommended recertification with upgradation from ISO 14001:1996 to
ISO 14001:2004.
TUV conducted Surveillance Audit of Environmental Management System at Ankleshwar and recommended continuance
of ISO 14001 Certificate.
Your Company continued to offer the spare capacity of incineration facility at Thane for disposal of hazardous wastes
from other industries.
Continual improvement and sustainability resulted in conservation of energy, reduction in waste generation, recycling of
resources and cost savings.
8
Social Responsibility
Your Company remains committed to Social Responsibility by continuing to be involved in community projects.
Emergency safety training in case of an earthquake was imparted to over 300 children from Balkum school. During the
floods in Mumbai in July 2005, food and utensils were provided to the flood-hit victims. Your Company provided
emergency relief to those affected by the earthquake in Jammu & Kashmir in October 2005. The Company representative
went to Jammu and flagged off two trucks containing relief material to the Red Cross Society in Srinagar. Transport was
provided to handicapped children for their annual picnic and donation of PCs was made to schools. Sub-officers
studying in the National Fire Service College, Nagpur who came to the Thane Factory for an industrial visit appreciated
the facilities.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:
The information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 with respect to these matters forms part of this Report and
is annexed hereto.
Human Resources:
Employee relations during the year were cordial. Developmental needs of the employees were chalked out and training
was imparted to them. Training for the field force in general management skills was conducted in conjunction with
management development programmes of the various management institutes.
Information pursuant to Section 217(2A) of the Companies Act, 1956

The information as prescribed by Section 217(2A) of the Companies Act, 1956 read along with Companies (Particulars of
Employees) Rules, 1975 as amended are set out as an annexure to the Directors’ Report. However, as per the provisions
of Section 219(1)(b)(iv) of the Companies Act, 1956, the Report and Accounts are being sent to all the shareholders
excluding the aforesaid annexure. Shareholders desirous of obtaining the same may write to the Company Secretary at
the Registered Office of the Company.
Bayer Mission & Values, REX II and Compliance Training

The Company undertook a nationwide training for its employees at all levels informing the importance of Bayer’s values,
its mission and importance of compliance. The need, meaning, importance and benefits of the Bayer Values and the
requirement for compliance of all laws both in letter and in spirit were explained to all.
As the parent company Bayer AG is listed on the New York Stock Exchange, it is required to comply with the provisions
of the Sarbanes – Oxley Act. It has, therefore, formulated a detailed process of compliance named REX II. Accordingly,
every department of the Company initiated the process of formulating and documenting detailed procedures and policies
for each and every area of activity. The process is ongoing and continuously reviewed and updated to meet current
requirements.
Bayer worldwide has also initiated the process of Corporate Compliance which needs to be rolled out to all the Bayer
employees worldwide. The Company has, in compliance with this initiative rolled out the Corporate Compliance Training
programme to all employees.
Code of Conduct & Whistle Blower Policy

In compliance with the new Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited, the Company
has formulated a Code of Conduct for the Directors. A Code of Business Conduct (for employees) and Whistle Blower
Policy have also been formulated which have been cascaded to all the employees of the Company. For more details
kindly refer to the Report on Corporate Governance.
Corporate Governance:
Your Company believes in transparency and has always maintained high level of Corporate Governance. As required by
Clause 49 of the Listing Agreement, a detailed Report on Corporate Governance 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.
A Certificate from a practising Company Secretary confirming compliance of the Corporate Governance requirements by
the Company is attached to the Report on Corporate Governance.
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.
9
Directors
Mr. Johannes Frick ceased to be a Whole-time Director with effect from 13th October, 2005 and will cease to be a
Director of the Company with effect from 31st March, 2006. The Directors avail this opportunity to place on record their
recognition and appreciation of the valuable contributions made by Mr. Frick, through his leadership and guidance, to the
Company.
Ms. Christiane Kunze has been appointed as a Director in casual vacancy, caused due to resignation of Mr. Frick, and
Whole-time Director with effect from 1st April, 2006.
Mr. Sharad Kulkarni will cease to be an Alternate Director to Mr. Johannes M. Dietsch and has been appointed as an
Additional Director with effect from 1st April, 2006.
Dr. Vijay Mallya and Mr. A. K. Ravi Nedungadi retire by rotation and, being eligible, offer themselves for re-appointment.
A brief profile of the Directors seeking appointment/re-appointment is given under the Report on Corporate Governance.
Cost Audit:
In accordance with the directive received from the Central Government, every year, an audit of the cost accounts relating
to insecticides manufactured by the Company is required to be conducted by an auditor with the requisite qualifications
as prescribed under Section 233B of the Companies Act, 1956.
The Company is also required to conduct cost audit for pharmaceuticals formulations which is manufactured by the
Company on job-work basis.
Your Board has appointed M/s. N. I. Mehta and Co., qualified Cost Accountants for the conduct of the audit of
Insecticides and Pharmaceutical Formulations for the year ending 31st December, 2006. The requisite approval for their
appointment from the Central Government is awaited.
Auditors:
M/s. Price Waterhouse, Chartered Accountants, 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 to the
effect that their appointment as Statutory Auditors, if made, will be within the limits prescribed under Section 224 (1B) of
the Companies Act, 1956. The Audit Committee and the Board recommend the re-appointment of M/s. Price Waterhouse,
as Statutory Auditors of the Company for the year 2006.
Acknowledgements:
The Board of Directors places on record its sincere appreciation for the dedicated services rendered by employees at all
levels. We would like to express our grateful appreciation for the assistance and support extended by all government
authorities, financial institutions, banks, shareholders, suppliers and other business associates. We also acknowledge the
continual support and guidance from Bayer AG — the parent company.
For and on behalf of the Board of Directors

DR. VIJAY MALLYA
Chairman
Mumbai, 23rd March, 2006
10
Annexure to the Directors’ Report (Annexure I)
Information as per Section 217(1)(e) read with Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 and forming part of the Directors’ Report for the period ended 31st December, 2005.
I. CONSERVATION OF ENERGY
(a) Energy conservation measures taken

1. Power factor for Thane factory was maintained above 0.95. This has resulted in savings of Rs. 1.05 million
by way of incentive. Also Time Of Day (TOD) tariff benefit of Rs. 0.48 million was received.
2. Variable Frequency Drive (VFD) was installed on a reactor-stirrer in AC-3 plant (Ankleshwar).
3. A detailed energy audit for Incinerator and Effluent Treatment plants was conducted at Thane factory.
(b) Additional Investment and proposals for energy conservation

1. Energy audit of Active Ingredient plants at Ankleshwar.
2. Gas engine generators capacity & thermal efficiency enhancement through optimisation at Ankleshwar
plant.
3. Power factor improvement in electrical distribution network at Ankleshwar plant.
4. Improvement in condensate recovery system for Ankleshwar plant.
(c) Impact of the measures at (a) and (b) above for reduction of Energy Consumption and consequent
impact on the cost of production of goods.
The Company’s present system does not allow us to identify and hence determine precisely the reduction of
energy consumption per unit and consequent impact on the cost of production of goods.
(d) Total energy consumption and energy consumption per unit of production as per Form A of the
Annexure to the Rules in respect of industries specified in the schedule thereto:
FORM A
A. Power and Fuel Consumption
Current Year Previous Year
(2005) (2004)
1. Electricity:
(a) Purchased:*
Unit (KWH) 13,326,368 13,251,515
Total Amount (Rs. Million) 51.73 50.83
Rate/Unit (Rs.) 3.88 3.84
(b) Own Generation:**

(i) Through diesel generator
Units (KWH) 26,978 31,319
Units/litre of diesel oil 1.63 2.03
Cost/Unit — No separate unit cost calculated
since generation is marginal
(ii) Through gas turbine/generator***

Units 4,408,843 4,375,862
Units/SM3 of gas 3.37 3.34
Cost/unit 3.82 3.51
2. Coal (specify quality and where used):
Quantity (tonnes) N.A. N.A.
Total cost N.A. N.A.
Average cost (Rs.) N.A. N.A.
3. Furnace oil + LSHS**
Quantity (KI) 672 1,590
Total amount (Rs. Million) 9.33 20.13
Average rate (Rs./KI) 15,431 12,658
4. Others/internal generation (please give details)***
Quantity (Sm3) — Natural Gas 1,634,493 1,618,612
Total cost (Rs. Million) 14.40 14.34
Rate/Unit (Rs.) 8.81 8.86
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Annexure to the Directors’ Report (Contd.)
B. Consumption per unit of production

Since the Company is a multi-divisional unit, producing a variety of products, proper allocation of energy
cannot be ascertained.
* Figures are total of Thane, Himatnagar and Ankleshwar plants.

** Thane plant.
*** Ankleshwar plant.
II. TECHNOLOGY ABSORPTION

Efforts made in technology absorption as per Form B hereunder
hereunder:
FORM B
A. Research and Development (R & D)
1. Specific Areas:
(a) True to the tradition of Bayer in Research & Development of new products, the year 2005 has been
encouraging due to a number of registrations secured and subsequent launch of excellent new
products in Crop Protection, viz. Dadeci 5.625 EC – a combination insecticide for use in Rice, Calypso
240 SC - Rice and Cotton insecticide, Protega 300 SC – Rice fungicide and Atlantis 3.6 WG - a broad
spectrum oneshot herbicide for controlling weeds in wheat. The Company also received registration for
Oxadiargyl Technical and Ethoprophos Technical. The Company satisfied the requirement of National
MRLs (Maximum Residue Limits) fixation process in crops (food commodities), a prerequisite for
registration of new agrochemical products.
The Company, after dedicated research and spending resources in generating required scientific data,
has submitted application for obtaining registration for the new products for future launch in the Indian
market.
(b) In the field of Environmental Science, in the year 2005, the Company secured registration and launched
Ficam 80 WP, a carbamate insecticide for indoor residual spray for control of mosquitoes, a vector
responsible for transmission of malaria. This product will offer an excellent tool for resistance
management of mosquitoes in malaria control programme at a national level. Environmental Science, in
its continued effort to register and introduce new products in the market, has been engaged in
generating scientific data on new products.
2. Future Plans:
With the ushering in of the new scenario of WTO and implementation of Patent Regime, the Company is
planning to accelerate the introduction of new and better products and technology in Crop Protection as
well as Environmental Science, to take advantage of patent protection.
Pursuing its philosophy of offering new and better cost-effective solutions to farmers for various crops to
manage pest/disease menace, the Company is evaluating a number of molecules for a variety of key crops.
The Company receives the benefit of the continued Research & Developement efforts of the parent company –
Bayer AG.
3. Expenditure on R & D (Rs.’000)
(a) Capital NIL
(b) Recurring 56,913
(c) Total 56,913
(d) Total R & D expenses are 0.85% of total turnover
III. FOREIGN EXCHANGE EARNINGS AND OUTGO

(i) Information relating to exports is contained in the Directors’ Report.
(ii) Total foreign exchange used and earned:
Rs. Million
2005 2004
1. Foreign Exchange Earned 889.913 690.292
2. Foreign Exchange Outgo 1,552.506 1,201.175
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Corporate Governance
Working to Create Value

“Bayer is committed to create sustained value for its shareholders. We want to
convince through performance as well as open, fair and honest communication.”
– Werner Wenning, Chairman of the Board of Management of Bayer AG, Germany
1.0 Philosophy
The Company’s philosophy of Code of Corporate Governance is aimed at assisting the top management in the
efficient conduct of its business and fulfilling its obligations towards the Government, its shareholders, employees
and other stakeholders.
Over the years, the Company has shown a high level of commitment towards effective Corporate Governance and
has maintained high business ethics. The Company believes that its operations and actions must serve the
underlying goal of enhancing the interests of its stakeholders over a sustained period of time in a socially
responsible way.
In ensuring strict adherence to the Corporate Governance Code, the Company believes in the following principles:
• Integrity
• Accountability
• Transparency
• Confidentiality
• Control
• Social Responsibility
The Company believes that the practice of each of these principles leads to the creation of right corporate culture
that enables the Company to be managed and monitored in a manner geared to value creation with the ultimate
objective of realizing and enhancing shareholders’ values.
Your Company ensures that timely and accurate disclosure is made on all material matters regarding the
corporation including the financial situation, performance, ownership and governance of the Company. The
Company believes that a strong and independent Board and transparent accounting policies will preserve the
stakeholder value and enhance their trust and confidence.
Our corporate mission statement describes the future perspectives, strategy and values. We believe in practicing
a set of values that form the basis of our actions and corporate culture.
Your Board believes that Corporate Governance is a powerful medium of sub-serving the long-term interests of its
stakeholders for the attainment of transparency, accountability and equity in all facets of its operations by
enhancing and sustaining its corporate value through growth and innovation.
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Corporate Governance (Contd.)
1.1 Code of Conduct for Directors

The Company has been handed over by the various stakeholders in trust and the Board of Directors are the
trustees of these stakeholders and owe a responsibility to ensure that the organisation is managed in a manner
that protects and furthers the interest of our stakeholders.
At the core of Corporate Governance is the role of the Board of Directors in overseeing how management serves
the long-term interests of shareowners and other stakeholders. An active, informed, independent and involved
Board is essential for ensuring Bayer’s integrity, transparency and long-term strength.
The Company believes that at the core of Corporate Governance is the role of the Board of Directors in
overseeing how management serves the long-term interests of shareowners and other stakeholders. Further,
adoption of a Code of Conduct will send a strong message regarding the importance of ethical behaviour at
Bayer and the protection of investors’ interests. With this in mind and also with a view to ensure compliance of
Clause 49 of the Listing Agreement, The Bayer CropScience Code of Conduct for Directors was approved and
adopted by the Board at its meeting held on 24th March, 2005.
1.2 Code of Business Conduct

The success of the Bayer Group is based on many factors. Among the most important – along with our technical
expertise – is our employees’ sense of responsibility. Bayer is committed to conducting its operations not only in
compliance with law but also according to ethical principles as our success is also very much the result of our
values, which we are constantly working to reinforce and communicate to our employees, shareholders and
clients.
The Code of Business Conduct applicable to all employees of the Company was approved by the Board at its
meeting held on 24th April, 2005 and was disseminated to all employees.
The Company has also rolled out the Corporate Compliance Training Programme of Bayer AG to all employees of
the Company to further increase the standards of compliance and governance.
1.3 Whistle Blower Policy

The Bayer Group of Companies in India has a tradition of conducting business based on high values, principles
and beliefs. Our commitment is towards reaching the goals with utmost respect for human values and to serve the
interests of Bayer with integrity. Good Corporate Governance entails that the interest of the employees, the
shareholders and the society in general be protected at all times.
The management realises that this is possible only if there exists an open and transparent culture wherein the
concerns of the employees at all levels can be raised and expressed without fear of retribution. To achieve this
objective, this Policy was formulated which will enable the employees to report their concerns, which would be
looked into by the Audit Committee comprising of Mr. S. M. Kulkarni, Mr. Y. H. Malegam and Mr. A. K. R.
Nedungadi (all independent directors).
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The Board approved the Bayer Whistle Blower Policy at its meeting held on 24th March, 2005. The policy aims at:
• Encouraging the employees to feel confident in raising serious concerns.
• Providing ways for employees to raise their concerns.
• Ensuring that the employees get a response to their concerns.
• Reassuring the employees that if the concerns are raised in good faith, they will be protected from
victimisation.
• Initiating action, where necessary, to set right the concern so raised.
• Provide for direct access to the Chairman of the Audit Committee in exceptional cases.
1.4 Sexual Harassment Policy

Bayer’s quest for competitive excellence consists of our commitment to lawful and ethical conduct and adhering
to Bayer’s values. Integrity, honesty and respect for people remain some of our core values. The Company is
committed to provide a safe and conducive work environment, free of sexual harassment, to its employees and
expects them to combine “Expertise with Responsibility”.
The Bayer Prevention of Sexual Harassment Policy has been formed to prohibit, prevent or deter the commission
of acts of sexual harassment at workplace and to provide the procedure for the redressal of complaints pertaining
to sexual harassment. A three member Complaints Committee, headed by a woman (Shirin V. Balsara, Head –
Legal & Company Secretary) has been constituted; and to prevent the possibility of any undue pressure or
influence from senior levels, the Complaints Committee consists also of Ms. Charu Singh as an outside neutral
representative. Mr. Ganesh Kamath, Head – Internal Audit is the third Committee member.
No matter has been referred to the Committee till date.
All the above Codes/Policies have been disseminated and are accessible to the Company’s employees on the
Company’s intranet and its website www.bayer.co.in
1.5 Risk Management

Risk management is the process whereby organizations methodically address the risks attached to their activities
with the goal of achieving each activity and across the portfolio of all activities.
Risk Management is a practice with processes, methods and tools for managing risks. It provides a disciplined
environment for proactive decision making to:
• assess continuously what could go wrong (risks)
• determine which risks are important to deal with
• implement strategies to deal with those risks
Mr. Ganesh Kamath, Head – Internal Audit has been appointed as the Risk Management Champion for reporting
the assessments made with regard to various risks, the manner of handling the risks, adequacy of mitigating
factors, identify deviations and to recommend a corrective course of action.
2.1 Board of Directors

Your Board of Directors have a primary role of trusteeship to protect and enhance shareholder value through
strategic supervision of the Company by providing direction and exercising appropriate controls. All statutory,
significant and material information is placed before the Board. Your Board includes eminent professionals who
have excelled in their respective areas of specialisation and comprises individuals from management, finance,
accounts and other fields.
Presently the Board consists of total of eight Directors (including one Alternate Director) of which one is an
Executive Director and seven are Non-Executive Directors. Mr. Johannes Frick will cease to be a Director of the
Company with effect from 31st March, 2006. Ms. Christiane Kunze has been appointed as a Director in casual
vacancy, caused due to the resignation of Mr. Frick, and as Whole-time Director of the Company with effect from
1st April, 2006. Mr. S. M. Kulkarni will cease to be an Alternate Director to Mr. Johannes Dietsch with effect
from 31st March, 2006 and has been appointed as an Additional Director with effect from 1st April, 2006.
The composition of the Board with effect from 1st April, 2006 will consist of two Executive Directors and six
non-Executive Directors. The Chairman of the Board is an Independent Director. The number of Independent
Directors constitutes one half of the total number of Directors.
The Managing Director and three other Directors are from the Promoter Group. The remaining four are
Non-Executive Independent Directors. Apart from drawing sitting fees, none of the Independent Directors have
any other material pecuniary relationship or transactions with the Company, its Promoters, its Management or its
subsidiaries, which in the judgement of the Board would affect the independence or judgement of the Directors.
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The Company has not entered into any materially significant transactions with its promoters, directors,
management or their relatives that may have potential conflict with the interests of the Company at large.
Except Dr. Vijay Mallya who holds 53 shares in the Company, none of the Directors hold any shares in the
Company.
Details of the composition of the Board and changes therein during the year, category of the Director, number of
their other directorships and committee memberships are given below:
Table 1: Constitution of the Board — as on 31st December, 2005:
Sr. Name of Director Status Age Directorship Relationship with

No. @ (years) Tenure other Directors
1. Dr. Vijay Mallya, Chairman NED-(I) 50 2 years None
2. Mr. Yezdi H. Malegam NED-(I) 72 16 years and 8 months None
3. Mr. Johannes M. Dietsch* NED 43 4 years and 9 months None
4. Mr. A. K. Ravi Nedungadi NED-(I) 48 2 years None
5. Mr. Raj Kaul* NED 63 1 year and 3 months None
6. Mr. Sharad M. Kulkarni** NED-(I) 66 11 years and 4 months None
(Alternate to Mr. J. M. Dietsch)
7. Mr. Stephan Gerlich* MD 47 2 years and 6 months None
8. Mr. Johannes Frick*+ NED 41 3 years and 2 months None
@ Status:
MD – Managing Director. NED – Non-Executive Director.
NED (I) – Non-Executive and Independent Director.
* Represents the Promoter Group.
** Mr. S. M. Kulkarni will cease to be an alternate director to Mr. J. M. Dietsch with effect from 31st March, 2006 and has
been appointed as an additional director with effect from 1st April, 2006.
+ Mr. Johannes Frick ceased to be the Wholetime Director with effect from 13th October, 2005, and will cease to be a
Director of the Company with effect from 31st March, 2006. Ms. Christiane Kunze has been appointed as a director in the
casual vacancy, caused due to the resignation of Mr. Frick, and as Whole-time Director of the Company with effect from
1st April, 2006.
Table 2: Directorship in other companies/committee position as on 31st December, 2005:
Sr. Name of Director No. of other No. of other Committee

No. Directorships Memberships
Chairman Memberships
1. Dr. Vijay Mallya, Chairman 50 1 NIL
2. Mr. Yezdi H. Malegam 12 5 4
3. Mr. Johannes M. Dietsch 10 NIL NIL
4. Mr. A. K. Ravi Nedungadi 14 NIL 4
5. Mr. Raj Kaul 3 NIL NIL
6. Mr. Sharad M. Kulkarni (Alternate to Mr. J. M. Dietsch) 12 2 4
7. Mr. Stephan Gerlich, Managing Director 6 NIL 1
8. Mr. Johannes Frick 4 NIL NIL
Notes:
1. Directorships mentioned above include alternate directorships and directorships in private companies and foreign
directorships.
2. The details mentioned above are for companies other than Bayer CropScience Limited.
3. Committee details consists only of Audit, Remuneration and Shareholders’ Grievance Committees.
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2.2 RESPONSIBILITIES
2.2.1 Managing Director

Mr. Stephan Gerlich, Managing Director of the Company, is also the Country Speaker for the Bayer Group in India.
He is responsible for the overall management of the Company. As the Managing Director, he periodically apprises
the Board about the performance of the Company.
2.2.2 Whole-time Director

Ms. Christiane Kunze is appointed as Whole-time Director with effect from 1st April 2006. She is responsible for
the function which includes Accounts, Taxation, Treasury, Financial Services, Secretarial & Legal and Information
Technology.
2.2.3 Independent Directors

The independent directors play a vital role in decision making at the Board Meetings and bring to the Company
their wide experience in the fields of Corporate Management, Accounts, Finance and Taxation.
Independent Directors constitute one half of the strength of the Board. The Audit Committee consists entirely of
Non-Executive Independent Directors. Independent Directors have unfettered and complete access to all
information within the Company.
3.1 Board Procedure

The annual calendar of meetings is agreed upon at the beginning of each year. The meetings are governed by a
detailed Agenda. All issues included in the agenda are backed up by detailed notes and comprehensive
background information and are circulated in advance to the Directors to enable the Board to take informed
decisions. The Managing Director/Country Head – BCS briefs the Board on the overall performance of the
Company. The Chairman of the Audit Committee briefs the Board on important matters discussed at the meetings
of the Audit Committee. The Shareholders’/Investors’ grievances received and resolved are also placed before the
Board.
3.2 Information given to the Board

The Board has complete access to all information within the Company. The information regularly provided to the
Board includes:
• Annual operating plans and budgets and updates.
• Capital budgets and updates.
• Quarterly results for the Company and its operating divisions or business segments.
• Minutes of meetings of audit committee and other committees of the board.
• Information on recruitment and remuneration of senior officers just below the board level, including
appointment or removal of Chief Financial Officer and the Company Secretary.
• Show cause, demand, prosecution notices and penalty notices, which are materially important.
• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
• Any material default in financial obligations to and by the Company, or substantial non-payment for goods
sold by the Company.
• Any issue, which involves possible public or product liability claims of substantial nature, including any
judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse
view regarding another enterprise that can have negative implications on the Company.
• Details of any joint venture or collaboration agreement.
• Transactions that involve substantial payment towards goodwill, brand equity or intellectual property.
• Significant labour problems and their proposed solutions. Any significant development in Human
Resources/Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement
Scheme etc.
• Sale of material nature, of investments, subsidiaries, assets, which is not in normal course of business.
• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of
adverse exchange rate movement, if material.
• Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as
non-payment of dividend, delay in share transfer etc.
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3.3 Attendance Record of the Directors at Meetings of the Board and of the Members
Six Board Meetings were held during the year 2005, the details of which are as under:
Sr. Date of Meeting For the Quarter No. of days from Maximum days
No. previous Board permitted as per
Meeting Clause 49
1. 9th February, 2005 January – March 103
2. 24th March, 2005 January – March 43
3. 28th April, 2005 April – June 35 120 days
4. 22nd June, 2005 April – June 55 (4 months)
5. 28th July, 2005 July – September 36
6. 27th October, 2005 October – December 91
The maximum time gap between any two meetings is much less as compared to the mandatory requirement of
not more than 120 days (four months) as per Clause 49.
The Annual General Meeting was held on 22nd June, 2005. The attendance of the Directors at the Board and
Annual General Meetings held during the year 2005 is as under:
Sr. Director Board Attendance Remark

No. Meetings Board AGM held
held in Meeting on
Director's 22.06.2005
tenure
1. Dr. V. Mallya 6 5 Yes –
2. Mr. Y. H. Malegam 6 4 Yes –
3. Mr. S. M. Kulkarni 6 5 Yes –
4. Mr. S. Gerlich 6 5 Yes –
5. Mr. J. Frick 6 4 No Ceased to be a Whole-time Director with effect
from 13th October, 2005.
6. Mr. J. M. Dietsch 6 N. A. N. A. Mr. S. M. Kulkarni is an Alternate Director to
Mr. Dietsch.
7. Mr. A. K. R. Nedungadi 6 5 Yes –
8. Mr. R. Kaul 6 2 Yes –
4.0 DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT

Dr. Mallya and Mr. Nedungadi retire by rotation and being eligible, have offered themselves for re-appointment.
Ms. Kunze has been appointed as a Whole-time Director of the Company and Mr. Kulkarni has been appointed as
an Additional Director with effect from 1st April, 2006 and seek your approval at the ensuing Annual General
Meeting.
Particulars of the above directors of the Company, seeking appointment/re-appointment are as under.
4.1 Dr. Vijay Mallya

Dr. Mallya, who is a Doctorate in Business Administration, is an Independent Director and Chairman of your
Company.
He is the Chairman of the United Breweries Group, a multi-national business conglomerate of over 60 companies
which has wide business interests from spirits to airlines. He has received several professional awards both in
India and overseas including been nominated as a Global Leader for Tomorrow by the World Economic Forum.
He is a keen sportsman and is an ardent aviator and yachtsman of distinction. Dr. Mallya has also contributed
generously to various charities and foundations in several countries.
As on 31st December, 2005, he is on the Board of Directors of the following companies:
• Kingfisher Airlines Limited, Bangalore
• Aventis Pharma Limited, Mumbai
• Herbertsons Limited, Mumbai
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• Kamsco Industries Private Limited, Kolkata

• Mallya Private Limited, Kolkatta
• Mangalore Chemicals & Fertilizers Limited, Bangalore
• Millenium Alcobev Private Limited, Chennai
• McDowell & Company Limited, Bangalore
• Pharma Trading Company Private Limited, Kolkata
• Shaw Wallace & Company Limited, Kolkata
• Shaw Wallace Financial Services Limited, Kolkata
• Shaw Wallace Distilleries Limited, Mumbai
• Shaw Wallace Breweries Limited, Mumbai
• The Gem Investment & Trading Company Private Limited, Kolkata
• United Breweries Limited, Bangalore
• United Breweries (Holdings) Limited, Bangalore
• United East Bengal Football Team Private Limited, Kolkata
• United Mohun Bagan Football Team Private Limited, Kolkata
• United Racing and Bloodstock Breeders Limited, Bangalore
• Motor Sports Association of India, Mumbai
• Shaw Wallace Executives’ Welfare & Benefit Company
• Catamaran Corporation Inc., USA
• Connectics Pte Ltd., Singapore
• Jenson & Nicholson (Singapore) Pte Ltd., Singapore
• Kingfisher America Inc., USA
• Imbali Holdings (Pty) Ltd., South Africa
• Lake Kyle Holdings (Pty) Ltd., South Africa
• Mabula Game Reserve (Pty) Ltd., South Africa
• Mabula Investments (Pty) Ltd., South Africa
• Marinscope Inc., USA
• McDowell Nepal Limited, Nepal
• Mendocino Brewering Company, USA
• Millionaire Media & Ecom S.A. (Pty) Ltd., South Africa
• Pacific Blitz Inc. USA
• Specialty Beer Investments Inc., USA
• The Cape Milner SA (Pty) Ltd., South Africa
• UB Emirates LLC, Dubai
• UB Gulf FZE, Dubai
• UB Holdings SA (Pty) Ltd., South Africa
• UB Resorts Holdings SA (Pty) Ltd., South Africa
• UB Resorts Management SA (Pty) Ltd., South Africa
• UB South Africa (Pty) Ltd., South Africa
• UB Textiles (South Africa) (Pty) Ltd., South Africa
• UBICS Inc., USA
• UBICS (Pty) Ltd., South Africa
• UBSN Limited, U.K.
• United Breweries of America Inc., USA
• United Breweries & Distilleries (Pacific) Pte Ltd., Singapore
• United National Breweries (SA) Ltd., South Africa
• United Wineries of America, USA
• Vantage Investments Pte Ltd., Singapore
• Wotan Pte Ltd., Singapore
19
In addition to being a Committee Member of the Federation of Indian Chambers of Commerce and Industry, he
holds the Fellowship of The Institute of Directors, U.K. and is a Member of the World Economic Forum, Geneva,
Switzerland.
He is the Chairman of the Remuneration Committee of Millenium Alcobev Private Limited, Chennai.
4.2 Mr. A. K. Ravi Nedungadi

Mr. Nedungadi is a Chartered and a Cost Accountant by profession. He joined the UB Group in 1980 as head of
Corporate Treasury. From 1982, he was designated as the Group Finance Director of UB International Limited,
United Kingdom – an International Paint Major with operations in 25 countries around the world and played a lead
role in getting various constituents listed on major International Stock Exchanges.
In April 1997, he returned to India to head Finance at McDowell & Co. Limited, the flagship company of the UB
Group, and then moved on to the position of President and CFO of the UB Group in October 1999.
He has been conferred the “Udyog Ratna Award” by the Institute of Economic Studies in Delhi.

• Millenium Alcobev Private Limited, Chennai
• Aventis Pharma Limited, Mumbai
• United Breweries Limited, Bangalore
• McDowell Nepal Limited, Nepal
• Idea Streamz Consultants Pvt. Ltd., New Delhi
• Triumph Distillers & Vintners Pvt. Ltd., Mumbai
• Kingfisher Airlines Limited, Banglore
• Wotan Pte Limited, Singapore
• Pie Education Limited, New Delhi
• Millenea Vision Advertising (P) Limited, New Delhi
• Shaw Wallace & Company Limited, Kolkata
• Shaw Wallace Financial Services Limited, Kolkata
• Shaw Wallace Distilleries Limited, Mumbai
• Shaw Wallace Breweries Limited, Mumbai
He is also a Member of various committees in the following companies:
Sr. No. Name of the Company Committee Position Held
1. Aventis Pharma Limited Audit Member
2. Bayer CropScience Limited Audit Member
3. United Breweries Limited Share Transfer Member
4. Aventis Pharma Limited Shareholders’ Grievance Member
5. Shaw Wallace & Company Limited Remuneration Member
6. Shaw Wallace Financial Services Limited Audit Member
4.3 Mr. Sharad Kulkarni

Mr. Kulkarni is a Corporate and Business Advisor to several Indian and International companies. He has had a
distinguished international career spanning over 40 years as head of major Indian and multinational companies in
wide ranging areas of businesses from information technology to biotechnology, financial services to venture
funds, industrial products to speciality chemicals, construction to property development.
He is associated with several educational institutions such as Vidyaprathishthan-Baramati and University of
Pune’s School of Management. He is involved with several NGOs in the city and acts as Trustee of research
centres, charitable trusts and hospital councils.
20

• LANXESS ABS Limited
• Hindustan Construction Company Limited
• KEC International Limited
• Raychem RPG Limited
• RPG Enterprises
• Global Procurement Consultants Limited (EXIM Bank Subsidiary)
• Hilltop Holdings Limited
• Indiaco Ventures Limited
• Travel Voyages Limited
• Protect Insurance Services Limited
• Hincon Realty Ltd.
• J. M. Financial Trustee Company Ltd.
He is also a Chairman/Member of various committees in the following companies:
Sr. No. Name of the Company Committee Position Held

1. LANXESS ABS Limited Audit Chairman
2. Hindustan Construction Co. Ltd. Audit Chairman
3. Bayer CropScience Limited Shareholders’ Grievance Chairman
4. Bayer CropScience Limited Audit Chairman
5. KEC International Limited Audit Member
6. KEC International Limited Shareholders’ Grievance Member
7. KEC International Limited Remuneration Member
8. LANXESS ABS Limited Remuneration Member
4.4 Ms. Christiane Kunze

Ms. Kunze has done Management Economics from University of Cologne, Germany and began her career with
the Internal Audit Department at Bayer AG (1989 to 1994). She then moved to Bayer Sp Z o o, Poland as Director
of Finance and Administration (1994 to 1998) and then back to Bayer AG in Corporate Projects Compensation
Systems (1998-2002). Her last assignment was with Bayer S.A., Columbia where she was responsible for Local
Service – Andean Region, BG-LS.
5.0 REMUNERATION OF DIRECTORS

The Company has not formed any Remuneration/Compensation Committee, the same being non-mandatory.
5.1 Remuneration to Non-Executive Directors

The Non-Executive Directors do not draw any remuneration from the Company. Non–Executive Independent
Directors are entitled to sitting fees for every meeting of the Board and Audit Committee attended.
Non–Executive Independent Directors are paid Rs. 20,000/- for attending Board Meeting and Rs. 10,000/- for
Audit Committee Meeting. The Board has at its Meeting held on 27th October, 2005, increased the sitting fees
payable to the members of the Audit Committee from Rs.10,000/- to Rs. 20,000/-.
5.2 Sitting fees paid during the year ended 31st December, 2005
(Rs. In Lakhs)
Sr. No. Director Fees paid for attending Board and Committee Meetings
1. Dr. V. Mallya 1.00
2. Mr. Y. H. Malegam 1.50
3. Mr. S. M. Kulkarni 1.70
4. Mr. A. K. R. Nedungadi 1.30
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5.3 Remuneration paid to Managing/Executive Directors

Mr. Gerlich, Managing Director is paid remuneration as per his agreement with the Company, which has been
approved by the Board. The members had approved the same at the last Annual General Meeting of the
Company held on 22nd June, 2005.
Mr. Frick, Director was paid remuneration for part of the year as per the agreement entered into by him with the
Company. This agreement has been approved by the Board and also by the members at the Extraordinary
General Meeting held on 18th March, 2004.
Details of the remuneration paid during the year 2005

(All figures in Rupees)
Sr. Director Position Salary & Perquisites Total Contract

No. Allowances Period
1. Mr. Gerlich Managing Director 7,917,898 8,682,012 16,599,910 04.09.2004 to 13.09.2009
2. Mr. Frick* Whole-time Director 8,779,693 2,675,049 11,454,743 12.11.2003 to 13.10.2005
* Part of the year

Ms. Kunze has been appointed as a Whole-time Director of the Company with effect from 1st April, 2006 and will be paid
remuneration from the said date.
5.4 Service contract, notice period and severance fees

Mr. Gerlich was appointed as the Managing Director of the Company w.e.f. 14th September, 2004. His
employment is contractual for a period of five years and terminable by six months’ notice on either side.
Mr. Frick ceased to be the Whole-time Director of the Company w.e.f. 13th October, 2005. His employment was
contractual for a period of five years and terminable by six months’ notice on either side. His agreement was
terminated with effect from 13th October, 2005.
Ms. Kunze has been appointed as the Whole-time Director of the Company w.e.f. 1st April, 2006. Her employment
is contractual for a period of five years and terminable by six months’ notice on either side.
The Company does not have a scheme for stock options, either for the Directors or its employees. There is no
severance fees paid to the Managing Director or Whole-time Director.
6.0 COMMITTEES OF THE BOARD
6.1 Audit Committee

The Audit Committee comprises of all Non-Executive Independent members as under:
Sr. No. Name Designation Category

1. Mr. S. M. Kulkarni Chairman Non-Executive Independent
2. Mr. Y. H. Malegam Member Non-Executive Independent
3. Mr. A. K. R. Nedungadi Member Non-Executive Independent
The Committee held six meetings during the year 2005 on 23rd March, 2005, 27th April, 2005, 21st June, 2005,
26th July, 2005, 25th October, 2005 and 1st December, 2005. The attendance at the meetings was as under:
Sr. No. Name Number of Audit Committee No. of Committee

Meetings held in Director’s tenure Meetings attended
1. Mr. S. M. Kulkarni 6 6
2. Mr. Y. H. Malegam 6 6
3. Mr. A. K. R. Nedungadi 6 3
The Managing Director, Chief Financial Officer and the Heads of Corporate Accounting and Internal Audit are
permanent invitees to all Audit Committee meetings. The Statutory Auditors are also invited to attend the
meetings. The Company Secretary acts as the Secretary to the Committee.
The Audit Committee acts as a link between the Statutory and the Internal Auditors on the one side and the Board
of Directors of the Company on the other side.
22
The role of the Audit Committee includes the following:

1. Oversight of the Company’s financial reporting process and the disclosure of its financial information to
ensure that the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal
of the statutory auditor and the fixation of audit fees.
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.
4. Reviewing, with the management, the annual financial statements before submission to the board for
approval, with particular reference to:
(a) Matters required to be included in the Director’s Responsibility Statement to be included in the
Board’s report in terms of clause (2AA) of section 217 of the Companies Act, 1956.
(b) Changes, if any, in accounting policies and practices and reasons for the same.
(c) Major accounting entries involving estimates based on the exercise of judgment by management.
(d) Significant adjustments made in the financial statements arising out of audit findings.
(e) Compliance with listing and other legal requirements relating to financial statements.
(f) Disclosure of any related party transactions.
(g) Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial statements before submission to the board for
approval.
6. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the
internal control systems.
7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit
department, staffing and seniority of the official heading the department, reporting structure coverage and
frequency of internal audit.
8. Discussion with internal auditors any significant findings and follow-up thereon.
9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is
suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the
matter to the Board.
10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well
as post-audit discussion to ascertain any area of concern.
11. To look into the reasons for substantial defaults in the payment to the depositors, debentureholders,
shareholders (in case of non-payment of declared dividends) and creditors.
12. To review the functioning of the Whistle Blower mechanism.
13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The minutes of the meetings of the Audit Committee are placed before the Board of Directors.
6.2 Shareholders’/ Investors’ Grievance Committee

The Company had initially in March 2001 constituted a Shareholders’/Investors’ Grievance Committee of the
Board of Directors under the Chairmanship of Mr. S. M. Kulkarni, a Non-Executive Independent Director to attend
to and redress the grievances received from the shareholders of the Company.
Meetings and attendance during the year
S. No. Name of the Shareholders’/Investors’ Grievance No. of Committee

Director Committee Meetings held in Meetings attended
Director’s tenure
1. Mr. S. M. Kulkarni 5 5
2. Mr. S. Gerlich 5 4
3. Mr. J. Frick 5 4
At the Board Meeting held on 23rd March 2006, the Committee was reconstituted with effect from 1st April 2006
and the composition is as under:
S. No. Name Designation Category
1. Mr. S. M. Kulkarni Chairman Non-Executive Independent
2. Mr. S. Gerlich Member Managing Director
3. Ms. C. Kunze Member Whole-time Director
23
During the year, the Company received seven grievances which were attended to and resolved to the satisfaction
of the shareholders. The details of the same were also placed before the Board.
A comparative statement of the various complaints received and resolved by the Company during the last year is
given below:
2005
Nature of Complaints
Received Resolved
Non-receipt of Share Certificates duly transferred 1 1
Non-receipt of dividend warrant 2 2
Non-receipt of Annual Report 0 0
Letters from SEBI 2 2
Letters from Stock Exchange 0 0
Letters referred by Reserve Bank of India/Department of Company Affairs 0 0
Letters referred by other Government bodies 2 2
6.3 Share Transfer Committee

In compliance with the amended Clause 49 of the Listing Agreement and in order to expedite the process of share
transfer, power to approve share transfers has been delegated to officials of the Company and the existing share
transfer committee stands dissolved with effect from 24th March, 2005.
Further, a sub-committee has been constituted for attending matters relating to issue of duplicate share
certificates, transmission of shares etc. With effect from 1st April, 2006 the composition of the said committee is
as under:
S. No. Name Designation Category
1. Mr. Stephan Gerlich Chairman Managing Director
2. Ms. Christiane Kunze Member Whole-time Director
3. Ms. Shirin V. Balsara Member Head – Legal & Company Secretary
6.4 Remuneration/Compensation Committee [a non-mandatory requirement]

The Company does not have a remuneration committee.
7.0 COMPLIANCE OFFICER

Shirin V. Balsara, Head – Legal & Company Secretary, is the Compliance Officer of the Company since
21st October, 2003.
8.0 SHAREHOLDER INFORMATION

8.1 Annual General Meeting
Date of AGM : 12th June, 2006.
Venue and time : Yashwantrao Chavan Pratisthan Auditorium, Y. B. Chavan Centre,
Gen. J. Bhosale Marg, Mumbai 400 021 at 11.30 a.m.
8.2 Dates of Book Closure

The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, 27th May,
2006 to Monday, 12th June, 2006 (both days inclusive).
8.3 Proposed Date of Dividend Payment

The dividend of Rs. 2.20 (22%) per Equity Share, as recommended by the Board of Directors, if declared at the
ensuing 48th Annual General Meeting to be held on 12th June, 2006, will be paid at par within 30 days of
12th June, 2006:
(a) To those members who hold shares in physical form and whose names appear on the Company’s Register
of Members as holders of Equity Shares on Monday, 12th June, 2006.
24
(b) In respect of Shares held in electronic form, to the beneficial owners of the Shares as at the close of
business hours on Saturday, 27th May, 2006, as per details to be furnished by National Securities
Depository Limited and Central Depository Services (India) Limited.
8.4 Financial Calendar

The financial calendar of the Company is from 1st January to 31st December.
8.5 Board Meetings for Quarterly Results

(Tentative and subject to change)
Quarter ending 31st March, 2006 : Mid April 2006.
Half year ending 30th June, 2006 : End July 2006.
Third quarter ending 30th September, 2006 : End October 2006.
Year ending 31st December, 2006 : On or before 31st March, 2007.
Annual General Meeting for the year ending 31st December, 2006 : On or before 30th June, 2007.
8.6 Registered Office

Bayer House, Central Avenue,
Powai, Mumbai 400 076.
8.7 Listing of Equity Shares on Stock Exchanges

The Company is listed with the Bombay Stock Exchange Limited and has paid the annual listing fees.
8.8 Stock Code

Bombay Stock Exchange Limited : 506285
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 023.
Demat International Security Identification Number (ISIN) : INE462A01022

in NSDL and CDSL for equity shares.
8.9 Stock Performance

Stock performance of the Company on the Bombay Stock Exchange Limited from 1st January, 2005 to
31st December, 2005.
25
8.10 Stock Price Data
The monthly high and low prices of the Company’s shares on the Bombay Stock Exchange Limited,
Mumbai (BSE) during the year 2005 was as under:
Month Share Prices (Rs.)

High Low
January 276.00 233.20
February 298.90 242.00
March 270.00 196.00
April 221.00 195.00
May 228.45 160.00
June 236.50 185.15
July 240.00 188.50
August 257.90 198.50
September 323.65 235.00
October 316.00 210.15
November 255.00 217.00
December 275.00 227.50
8.11 Registrars & Share Transfer Agents:

Tata Share Registry Limited (TSRL) acts as the Registrars and Transfer Agents of the Company. You are
requested to note that the name of TSRL is changed to TSR Darashaw Limited consequent to the acquisition of
51% stake by Darashaw Holdings in TSRL. Share transfers, dividend payment, requests for duplicates,
revalidation, transmission and other investor related requests are attended by TSRL at :
TSR Darashaw Ltd. (Formerly Tata Share Registry Limited)
(Unit – Bayer CropScience Limited)
148, Mahatma Gandhi Road,
Mumbai-400 001
Web : www.tsrdarashaw.com
Contact Persons: Ms. Madhuri Narang and Ms. Chithra Sridhar
Investors may also contact the following TSRL branch offices:
1. TSR Darashaw Ltd. 2. TSR Darashaw Ltd.
503, Barton Centre, 5th Floor, Tata Centre, 1st Floor,
84, Mahatma Gandhi Road, 43, Chowringhee Road,
Bangalore-560 001. Kolkata-700 071.
Tel. : 080-2532 0321, Fax : 080-2558 0019 Tel. : 033-2288 3087, Fax : 033-2288 3062
E-mail : tsrlbang@tsrdarashaw.com E-mail : tsrlcal@tsrdarashaw.com
3. TSR Darashaw Ltd. 4. TSR Darashaw Ltd.

Bungalow No. 1, “E” Road, Plot No. 2/42, Sant Vihar,
Northern Town, Bistupur, Ansari Road, Daryaganj,
Jamshedpur-831 001. New Delhi-110 002.
Tel.: 0657-242 6616, Fax: 0657-242 6937 Tel. : 011-2327 1805, Fax : 011-2327 1802
E-mail : tsrljsr@tsrdarashaw.com E-mail : tsrldel@tsrdarashaw.com
8.12 Share Transfer System

The shares of the Company, being in the compulsory demat list, are transferable through the depository system.
Shares in physical form are processed by TSR Darashaw Ltd. (TSR), Registrars & Share Transfer Agents of the
Company and approved by the Company.
Share Transfers in physical form can be lodged with TSR at the abovementioned address. If the documents are
complete in all respects, transfers are normally processed within 20 days from the date of receipt. To expedite the
process of share transfer, powers to approve share transfers have been delegated to the officials of the
Company.
26
8.13 Distribution of shareholding as on 31st December, 2005
Range of Number of Number of Percentage of share

Shares Shareholders Shares amount to total
1 – 500 18,952 20,35,440 5.15
501 – 1,000 861 6,49,412 1.64
1,001 – 2,000 408 6,03,213 1.53
2,001 – 3,000 114 2,84,139 0.72
3,001 – 4,000 38 1,34,569 0.34
4,001 – 5,000 36 1,68,509 0.43
5,001 – 10,000 64 4,54,527 1.15
10,001 and above 66 3,51,68,938 89.04
Total 20,539 3,94,98,747 100.00
Shareholding Pattern as on 31st December, 2005 as per Clause 35 of Listing Agreement
Sr. Category of Shareholders No. of Percentage of

No. shares held Shareholding
A. Promoters’ Holding
1. Promoters
(a) Indian Promoter** 6,54,850 1.66
(b) Foreign Promoters* 2,74,31,812 69.45
2. Persons acting in concert 0 0.00

Sub-Total 2,80,86,662 71.11
B. Non-Promoters’ Holding
3. Institutional Investors
(a) Mutual Funds & UTI 1,75,966 0.45
(b) Banks, Financial Institutions, Insurance 28,85,635 7.31

Companies (Central/State Govt. Institutions,
Non-Govt. Institutions)
(c) Foreign Institutional Investors * 5,17,536 1.31
Sub-Total 35,79,137 9.06
4. Others
(a) Private Corporate Bodies 35,90,666 9.09
(b) Indian Public 39,96,861 10.12
(c) NRIs/OCBs* 2,44,902 0.62
(d) Independent Directors and their Relatives(NRI)*** 53 0.00
(e) Trust 466 0.00
Sub-Total 78,32,948 19.83
Grand Total 3,94,98,747 100.00
* Total Foreign Holding is 2,81,94,303 i.e. 71.38% of total paid-up capital.

** Indian Promoter is a 100% subsidiary of the Foreign Promoter.
*** 53 shares are held by an Independent Director who is a Non-Resident and the shares are included in Foreign Holdings.
27
8.14 Dematerialisation of Shares and Liquidity

As per the notification received from Securities Exchange Board of India, the shares of the Company are traded
compulsorily in dematerialised form with effect from 21st March, 2000. Your Company has signed an Agreement
with both the Depositories in the country, viz. National Securities Depository Limited and Central Depository
Services (India) Limited whereby the shareholders have an option to get the shares dematerialised with any of the
Depositories.
The conversion of the shares from physical form to electronic form is known as Dematerialisation. The
shareholder desiring to dematerialise the shares has to open a demat account with a Depository Participant (DP)
of his choice. Many nationalised banks, private sector undertakings are offering this facility. After opening the
demat account, the shareholder has to handover the physical share certificates along with the Demat Request
Form to his Depository Participant who, in turn, will forward the documents to the Registrars and Share Transfer
Agents (TSR) both physically and electronically. On receipt of the physical documents and electronic request
routed through the Depository, TSR shall dematerialise the shares and give a credit into your demat account
maintained with the DP.
As of 31st December 2005, 36.88% of the shares issued by the Company have been dematerialised.
8.15 Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact
on equity
Not Applicable
8.16 Plant Locations

(a) Kolshet Road
Thane 400 607, Maharashtra.
(b) Plot Nos. 6009 - 10 & 6301 - 10A
GIDC Industrial Estate,
Ankleshwar 393 002, Gujarat.
(c) Plot Nos. 66/1 to 75, G.I.D.C. Estate,
Dist. Sabarkantha,
Himatnagar 383 001, Gujarat.
8.17 Address for correspondence:

Investors and shareholders can correspond with
(1) The Company at the following address:

Secretarial & Legal Department
Bayer House, Central Avenue,
Powai, Mumbai 400 076.
Tel. : (91-22) 2571 1391
Fax : (91-22) 2570 0147
E-mail : shirin.balsara@bayercropscience.com
Website : www.bayer.co.in
(2) The Registrars & Share Transfer Agents of the Company at their following address:
TSR Darashaw Ltd.
(Unit – Bayer CropScience Limited)
148, Mahatma Gandhi Road,
Mumbai-400 001
Tel. : (91-22) 6656 8484
Fax : (91-22) 6656 8494
Web : www.tsrdarashaw.com
All information/requests for share transfers, dematerialisation, transmissions, change of address, non-receipt of
dividend warrants, duplicate/missing share certificates and other matters connected therewith may please be
addressed to the Companies Registrars and Share Transfer Agents at the address mentioned above.
28
9.0 OTHER DISCLOSURES
9.1 Details of Annual General Meetings/Extraordinary General Meetings
Details of Annual General Meetings held in the last 3 years
Year Location Date Time

2004 Yashwantrao Chavan Pratishtan Auditorium, 22nd June, 2005 11.30 a.m.
Y. B. Chavan Centre, Gen. J. Bhosale Marg,
Mumbai - 400 021
2003 –do– 3rd June, 2004 11.30 a.m.
2002 –do– 12th June, 2003 11.00 a.m.
Details of Extraordinary General Meeting/Court Convened Meeting held in the last 3 years
Year Type of Meeting Location Date Time

2004 Extraordinary Yashwantrao Chavan Pratishtan Auditorium, 18th March, 2004 12 noon
General Meeting Y. B. Chavan Centre, Gen. J. Bhosale Marg,
Mumbai 400 021
2003 Court Convened –do– 5th August, 2003 10.00 a.m.

Meeting
9.2 Special resolutions passed in the General Meetings held in previous 3 years
(i) Amalgamation of Bayer Cropscience India Limited with the Company – passed with majority (99.99% of
value of Equity Shares) (Court Convened Meeting held on 5th August, 2003).
(ii) Sub-division of shares of the Company – passed unanimously (Court Convened Meeting held on
5th August, 2003).
(iii) Increase in Authorised Share Capital of the Company – passed with majority (99.99% of value of Equity
Shares) (Court Convened Meeting held on 5th August, 2003).
(iv) Change in name of the Company from Bayer (India) Limited to Bayer CropScience Limited – passed
unanimously (EGM held on 18th March, 2004).
(v) Relocating the Statutory Register, Records and copies of all annual returns to the premises of
Tata Consultancy Services – passed unanimously (EGM held on 18th March, 2004).
(vi) Relocating the Statutory Register, Records and copies of all annual returns to the premises of
Tata Share Registry Limited – passed unanimously (AGM 22nd June, 2005).
9.3 Postal Ballot
During the year under review, no resolutions were put through by Postal Ballot.
9.4 Related party disclosures

The Company has not entered into any transaction of a material nature with the promoters, directors, the
management, their relatives or its subsidiaries etc. that may have potential conflict with the interests of the
Company. Transactions with related parties as per the requirements of Accounting Standards 18 are disclosed in
Notes to Accounts.
9.5 Code of Conduct for Prevention of Insider Trading

Pursuant to the requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, the
Company has adopted a “Code of Conduct for Dealing in Securities” at the meeting of the Board of Directors held
on 25th July, 2002. The Company has from time to time updated the Code as per the requirements of SEBI.
9.6 Details of non-compliance

There was no non-compliance by Bayer CropScience Limited on any matters related to capital markets during the
last three years.
9.7 Means of communication

Financial results: The quarterly, half-yearly and annual results of the Company are published in widely circulated
newspapers, viz. The Financial Express and the Loksatta. These are also submitted to Stock Exchange in
accordance with Listing Agreement.
29
Website: The results are also regularly posted on the Company’s website: www.bayer.co.in. The annual report is
also available on the website in a user-friendly and downloadable manner. Apart from this official news releases,
Codes of Conduct, Whistle Blower Policy, shareholding patterns, board structure etc are also available on the
Company’s website.
SEBI EDIFAR: The financial results, shareholding pattern, corporate governance – clause 49 compliance report,
etc. of the Company are periodically uploaded on SEBI’s website:www.sebiedifar.nic.in.
Since the half-yearly financial results are published in leading newspapers as well as displayed on the website, the
same are not seperatly sent to the shareholders of the Company.
9.8 Office of the Chairman etc.

Your Company maintains the office of Chairman at Hoechst House, 5th floor, Nariman Point,
Mumbai-400 021.
10.0 Compliance with the Non-Mandatory Requirements of Clause 49 of the Listing Agreement.
The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement relating to
Corporate Governance, as detailed above. With regard to Non-Mandatory Requirements of Clause 49, you may
kindly note the following:
1 – The Board
(i) Maintenance of Non-Executive Chairman’s office and reimbursement of expenses incurred in
performance of duties.
The Company contributes towards the maintenance of the Non-Executive Chairman’s office.
(ii) Tenure of Independent Director may not exceed nine years.
The Company presently does not have any policy for the tenure of Independent Directors.
2 – Remuneration Committee
The Company has not formed a Remuneration Committee.
3 – Shareholders’ Right
A half-yearly declaration of financial performance including summary of the significant events in
last six months, may be sent to each household of shareholders.
The Company publishes its quarterly, half yearly and yearly financial results in leading newspapers in
English and Marathi. The same are also available on the website of Bombay Stock Exchange Limited
(www.bseindia.com), Sebi EDIFAR (https://sebiedifar.nic.in) and also on the Company’s website
(www.bayer.co.in). Hence these are not seperatly sent to each household of shareholders.
4 – Audit Qualification
Not applicable to the Company.
5 – Training of Board Members
Training of Board Members with regard to the business profile of the Company, risk profile of the business
and responsibilities of Directors.
New Non-Executive Directors are given an overview of the Company’s operations, group structure,
subsidiaries, Company’s constitution, Board procedure etc. The Audit Committee and Board are regularly
updated about major risks and steps taken to mitigate the risks. Directors are also updated on business
related issues and new initiatives.
6 – Mechanism for evaluating Non-Executive Board Members.
The Independent Directors play a key role of governance, control and guidance. However, presently the
Company does not have any mechanism for evaluating the performance of its Non-Executive Directors.
7 – Whistle Blower Policy
The Company has formulated the Bayer Whistle Blower Policy. Kindly refer to point 1.3 of this Report for
further details.
DR. VIJAY MALLYA

Chairman
Mumbai, 23rd March, 2006.
30
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER &

CHIEF FINANCIAL OFFICER OF THE COMPANY
I, Stephan Gerlich, Vice-Chairman & Managing Director (Chief Executive Officer & Chief Financial Officer) to the best of
my knowledge and belief, hereby certify that:
1. I have reviewed the Balance Sheet as at 31st December, 2005, Profit & Loss Account for the year ended on that
date along with all its schedules, notes to accounts as well as cash flow statements and directors report for the
year and based on my knowledge and information confirm that:
(a) these statements do not contain any materially untrue statement or omit to state any material fact or contain
statements that may be misleading
(b) these statements together present true and fair view of the Company affairs and are in compliance with
existing accounting standards, applicable laws and regulations.
2. Based on my knowledge and information, there are no transactions entered into by the Company during the year
which are fraudulent, illegal or violative of the Company’s Code of Conduct.
3. I along with the Company’s other certifying officers accept responsibility for establishing and maintaining internal
controls and have evaluated the effectiveness of internal control systems of the Company and have disclosed to
the Auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which
I am aware and the steps we have taken or propose to take to rectify these deficiencies.
4. The Company’s other certifying officers and I, are responsible for establishing and maintaining disclosure controls
and procedures for the Company, and we have :
(a) designed such disclosure controls and procedures to ensure that material information relating to the
Company, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared; and
(b) evaluated the effectiveness of the Company’s disclosure, controls and procedures.
5. I along with the Company’s other certifying officers, have indicated to the Auditors and the Audit Committee of the
Company, the following:
(a) Significant changes in internal control during the year,
(b) Significant changes in accounting policies during the year and that the same have been disclosed in the
notes to the financial statements; and
(c) Instances of significant fraud of which they have become aware and the involvement therein, if any, of the
management or an employee having a significant role in the Company’s internal control system.
6. I affirm that we have not denied any personnel access to the audit committee of the Company (in respect of
matters involving alleged misconduct) and I have provided protection to ‘whistle blowers’ from unfair termination
and other unfair or prejudicial employment practices; and
7. I further declare that all Board members and senior managerial personnel have affirmed compliance with the
Code of Conduct for the year under review.
Stephan Gerlich
Vice-Chairman & Managing Director
Chief Executive Officer & Chief Financial Officer
Place : Mumbai
Date : 23rd March, 2006
31
CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE

To the Members of Bayer CropScience Limited
We have examined the compliance of conditions of Corporate Governance by Bayer CropScience Limited, for the
Financial Year of the Company ended on 31st December, 2005, as stipulated in Revised Clause 49 of the Listing
Agreement of the said Company with the Stock Exchange, Mumbai made applicable to all listed companies with effect
from 1st April, 2006.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was
limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the
conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of
the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the
Company has complied with the conditions on Corporate Governance as stipulated in the abovementioned Listing
Agreement.
We state that no investor grievances are pending for a period exceeding one month against the Company as per the
records maintained by the Shareholders’/Investors’ Grievance Committee.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency
or effectiveness with which the management has conducted the affairs of the Company.
For J. P. Associates
Company Secretaries
Nilesh Pradhan
Partner
C. P. No. 3659
Place : Mumbai
Date : 28th February, 2006
32
Management Discussion & Analysis Report
1.0 OVERVIEW
India’s economy is on the fulcrum of an ever increasing growth curve, with positive indicators such as a stable 8%
annual growth, rising foreign exchange reserves of more than US$ 150 billion, a booming capital market with the
popular “Sensex” index topping the majestic 10,000 mark, flowing foreign direct investment in excess of US$ 10
billion, and a remarkable 25 percent surge in exports.
Agriculture is an integral part of the Indian economy as it is the means of livelihood of almost two thirds of the
workforce in the country. Though it is the most important part of the Indian economy, it is highly dependent on the
vagaries of weather. The performance of agriculture in a particular year has cascading effect on other industries
and overall development of the economy.
In 2005, delay in arrival of monsoon during the month of June affected the sowing of major Kharif crops. Though
the monsoon was considered as normal with a marginal deviation of -2%, the distribution of rainfall was erratic
and uneven leading to excessive rainfall in southern and western parts of the country. Unprecedented rains from
the month of July lead to floods in the important agricultural states like Gujarat, Maharashtra, Andhra Pradesh,
Tamil Nadu and parts of Madhya Pradesh causing damage to life, property and crops. As a result the agricultural
sector did not meet the expectations, though it still surpassed 2004 levels.
The Country’s food grain production is estimated to be at 209 million tonnes compared to 204.6 million tonnes in
2004. The overall agricultural growth is estimated at 2.3% for 2005-06 compared to 1.1% of 2004 but lower than
the forecast of 4%.
2.0 INDUSTRY STRUCTURE AND DEVELOPMENT
2.1 Crop Protection

The Crop Protection industry is engaged in manufacturing of Insecticides, Fungicides and Herbicides which
protects crops from pests and improves crop productivity. The two main activities in this industry are
manufacturing of technical grade pesticides and formulations which are finished products used by the end
consumer. Technical grade pesticides are manufactured indigenously as well as imported. Out of more than 145
agrochemicals registered in India, more than 85 of technical grades are locally manufactured. The Indian Crop
Protection Industry is highly fragmented with the presence of large manufacturers operating on a national level
and several small and regional players. The channel partners include distributors and dealers which are spread
across the length and breadth of the country.
The Indian Crop Protection market is highly dependent on insecticides (65% of total agrochemical market), which
is in sharp contrast to developed countries that have high dependence on herbicides. The growth in the
agrochemical industry has direct correlation with the monsoon situation and development of pest complex.
In the year 2005, the Crop Protection industry has shown a decline of 12% over the previous year. The key factors
that affected the industry were increase of Bt Cotton acreages to almost double over previous year leading to
poor pest infestation of Cotton bollworms, loss of sprays due to excess rains in south and western parts of India
and steep price erosion in wheat herbicides segment.
2.2 Environmental Science

During the year 2005, the Vector Control (VC) segment witnessed heavy price erosion due to stiff competition
from generic companies. In the Professional Pest Control (PPC) segment with the entry of a major corporate,
which is investing heavily in creating customer awareness, the entire industry has grown significantly. Your
Company has entered into a supply agreement with most of the key players in this industry.
3.0 ACTIVITIES
The total turnover for the year ended 31st December, 2005 amounted to Rs. 7,664.60 million as compared to
Rs. 7,563.56 million for the last year and profit after tax amounted to Rs. 371.47 million as against Rs. 263.61
million for the last year.
3.1 Crop Protection

Bayer CropScience is working towards protecting the crops from damage by weeds, pests, insects and fungus,
both pre and post harvest. Your Company is involved in advisory services to farmers by individual and mass
contact through technically qualified trained field personnel. Your Company offers complete solution to farmers to
secure good harvest in almost all the crops across the country.
33
Management Discussion & Analysis Report (Contd.)
In the year 2005, the Company’s business was primarily affected by high acceptability of Bt cotton leading to low
demand for cotton bollworm insecticides and price erosion in CNI group of Insecticides due to generic pressure.
Inspite of unfavourable circumstances, your Company has increased its market share to 16% with the help of wide
range of crop protection chemicals and presence in diverse crop-pest segments. Your Company continued to
post growth in key chemistries of CNI group of Insecticides, Fiproles, Thiodicarb, Fungicides and also in rice &
soya herbicides.
During the year your Company obtained registration of 3 new products viz. “Calypso”, “Drado” & “Protega” and
full registration of “Atlantis” which was previously under provisional registration. These products have been
successfully launched and are expected to provide steady growth to overall business performance in the coming
years.

In the Vector Control (VC) segment, Bayer secured major orders for its synthetic Pyrethroids from most of its key
customers. ‘Baytex’, the age old tried and tested mosquito larvicide, performed well despite stiff competition from
generics.
In the Professional Pest Control (PPC) segment Bayer was able to consolidate its position by entering into a
partnership programme with key players in the industry. The launch of ‘Maxforce’ brand of cockroach gels,
‘Responsar’ for general disinfestations and ‘Premise’ a new generation termicide has given immense strength to
the Company.
4.0 OPPORTUNITIES, THREATS & RISKS
4.1 Crop Protection

With increasing levels of consumer awareness and regulatory requirements, your Company is continuously
engaged in developing a wide range of environmentally safe products which can meet the future requirements.
Emergence of new pest complex in different crops has opened up growth avenues resulting in less dependence
on one or two segments. Increasing scarcity of farm labour will create additional demand for Herbicides. Apart
from field crops, there will be additional demand for crop protection chemical in fruits & vegetables segments.
This has especially given an additional advantage to your Company which has a wide product range.
Your Company is likely to benefit once there is a complete compliance of the Indian Patents Act. This Act will give
exclusive marketing rights to the Company and will ensure better profitability.

With the entry of generic players in the VC segment the only way to sustain the Company’s market share is to
differentiate by launching new generation formulations and newer products. Bayer has been successful in
securing the complete registration of ‘Ficam’ (a different chemistry product for Indoor Residual Spray to aid
control of adult mosquitoes). This product is expected to contribute significantly in the mid-term. In the PPC
segment Bayer has improved its position considerably by launching a new product, ‘Maxforce Gold’ (a specialty
gel for cockroach control). The sales of all the new products launched in the recent past were beyond
expectations, which show a high degree of acceptance at the customer level.
The risk of small local companies copying and launching Bayer specialty products do exist. This, however, is
mitigated by the fact that Bayer has a pool of highly trained and well motivated human resource, apart from
excellent and highly committed distribution network.
5.0 OUTLOOK
5.1 Crop Protection

The Indian Crop Protection market in the coming year will largely depend on the normalcy of monsoon, its
distribution, commodity prices and impact of genetically modified crops. With cyclical nature of demand in
pesticide industry, it is expected to recover to its previous level with slight segmentwise adjustments.
In future, growth in crop protection market is likely to come from the smaller segments. The present portfolio and
the products in the pipeline will give the Company scope to develop these segments into significant business. In
the year 2006, your Company is expecting registration of 3 new products which shall bring additional revenues
from new crop-pest segments.
34
Management Discussion & Analysis Report (Contd.)

Apart from the recent product launches, Bayer is in a position to launch 2 more products in 2006, which will help
leverage its leadership position in both the VC & PPC segments. A clear strategy is in place to tackle obstacles
and ensure the realisation of growth plans.
6.0 SEGMENT WISE PERFORMANCE

Rs. (Million)
Particulars Year ended Year ended
31st December, 2005 31st December, 2004
1. Segment Revenue
Segment – Pesticides 7,664.60 7,563.56
Total 7,664.60 7,563.56
Sales & Other Operating Income 7,664.60 7,563.56
2. Segment Results
Segment – Pesticides 888.15 623.75
Total 888.15 623.75
Add/(Less):
(i) Interest (Net) (72.18)) (110.48)
(ii) Other un-allocable income/(expenses) (net) — —
Profit for the year before Prior Period, Exceptional Items
and Taxation 815.97 513.27
Add/(Less): Prior Period and Exceptional items (Net) (69.13) 10.76
Total Profit Before Tax 746.84 524.03
7.0 INTERNAL CONTROL SYSTEMS

The Company’s internal control systems are adequate and are regularly reviewed by the statutory and internal
auditors. The internal audit is conducted at regular intervals at various locations of the Company and covers all
key areas. All audit observations and follow-up actions are discussed with the management and the Audit
Committee and reviewed regularly.
8.0 MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has successfully implemented its restructuring plan, revised the service conditions of the officers
and introduced performance based salary. The industrial relations situation continues to be cordial and
harmonious. The Company had offered Voluntary Retirement Scheme (VRS) to the employees at the Thane
Factory. A total of 52 employees had opted for the aforesaid VRS. The Company conducted 98 training
programmes primarily to enhance the skills of its workforce.
The contributions and initiatives made by all employees towards achieving improved productivity, flexibility in
operations and overall business performance of the Company is commendable.
Cautionary Statement
The statements in the “Management Discussion and Analysis Report” section describes the Company’s objectives,
projections, estimates, expectations and predictions, which may be “forward looking statements” within the meaning of
the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending
upon the economic and climatic conditions, Government policies and other incidental factors.
35
Bayer Group Companies in India and Worldwide
Bayer CropScience is a part of the Bayer Group which operates worldwide in the areas of HelathCare, CropScience and MaterialScience. The name of Bayer Group Companies in
India and Worldwide are as under
Sr. Company name Country Sr. Company name Country

No No
1 Bayer Algerie S.P.A. Algeria 56 Bayer Technology Services (Shanghai) Co. Ltd. China
2 Bayer S.A. Argentina 57 BCS Tianjin Company Ltd. China
3 Farmanet S.A. Argentina 58 Hennecke Maruka (Shanghai) Limited China
4 Bayer Australia Limited Australia 59 Bayer CropScience SA Columbia
5 Bayer CropScience Cotton Pty. Ltd. Australia 60 Bayer S.A. Columbia
6 Bayer CropScience Holdings Pty. Ltd. Australia 61 Cropsa Ltda. Columbia
7 Bayer CropScience Pty. Limited Australia 62 Bayer S.A. Costa Rica
8 Bayer CropScience Seeds Pty. Ltd. Australia 63 Bayer d.o.o. Croatia
9 Bayer CropScience Superannuation Pty. Ltd. Australia 64 Bayer Pharma d.o.o. Croatia
10 Cotton Growers Services Pty. Ltd. Australia 65 Quimicas Unidas S.A. Cuba
11 C-Qentec Diagnostics Pty. Ltd. Australia 66 AgrEvo Middle East (Cyprus) Ltd. Cyprus
12 Laserlite Australia Pty. Ltd. Australia 67 Kyrgyz Agra Investment Company Ltd. Cyprus
13 UIM Agrochemicals Pty. Ltd. Australia 68 BAYER S.R.O. Czech Republic
14 UIM Consolidated Ltd. Australia 69 BCS CR s.r.o. Czech Republic
15 Bayer Austria Gesellschaft m.b.H. Austria 70 Bayer A/S Denmark
16 Bayer CropScience Ltd. Bangladesh 71 Tectrade A/S Denmark
17 Bayer Antwerpen Comm.V Belgium 72 Bayer S.A. Dominican Republic
18 Bayer BioScience N.V. Belgium 73 BCS, S.A. Dominican Republic
19 Bayer CropScience s.a.-n.v. Belgium 74 Bayer S.A. Ecuador
20 Bayer S.A.-N.V. Belgium 75 Bayer Middle East, Ltd. Egypt
21 Bayer Sheet Europe N.V. Belgium 76 Egytrade for Import and Export Ltd. Egypt
22 Immobiliere Avenue Louise et Rue de Livourne S.A. Belgium 77 Bayer, S.A. El Salvador
23 Indaver N.V. Belgium 78 Corporacion Bonima S.A. de C.V. El Salvador
24 Innogenetics NV Belgium 79 Bayer Oy Finland
25 Bayer CropScience Boliviana Ltda Bolivia 80 Suomen Tectrade Oy Finland
26 Bayer Pharma d.o.o. Sarajevo Bosnia & Herzegowina 81 Bayer CropScience France S.A.S. France
27 Baydiag Ltda. Brazil 82 Bayer CropScience Holding SA France
28 Bayer CropScience Ltda. Brazil 83 Bayer CropScience Nufarm SA France
29 Bayer S.A. Brazil 84 Bayer CropScience S.A. France
30 Farmaco Ltda. Brazil 85 Bayer Diagnostics S.A. France
31 Nunhems do Brasil Comercio de Sementes Ltda Brazil 86 Bayer Environmental Science S.A.S. France
32 Previbayer Sociedade de Previdencia Privada Brazil 87 Bayer Pharma SAS France
33 Tribel Trat de Resid Indust B Roxo S/A Brazil 88 Bayer Polyols S.N.C. France
34 Bayer Bulgaria EOOD Bulgaria 89 Bayer S.A.S. France
35 Bayer CropScience Cameroun SARL Cameroon 90 Bayer Sante Familiale SAS France
36 2283247 CANADA INC. Canada 91 GIE AIFOR France
37 3099351 CANADA INC. Canada 92 Hubwoo.com France
38 Bayer Canadian Holdings Inc. Canada 93 MultiPUR S.A.S.U. France
39 Bayer CropScience Holdings Inc. Canada 94 Novance SA France
40 Bayer CropScience Inc. Canada 95 Nunhems France S.A.R.L. France
41 Bayer Inc. Canada 96 Philagro Holding SA France
42 Schein Pharmaceutical Canada, Inc. Canada 97 PYCO SA France
43 Bayer S.A. Chile 98 Societe de Conditionnement Bayer S.A.R.L. France
44 Nunhems Chile S.A. Chile 99 Societe Immobiliere de Gaillard d’Economie Mixte France
45 Asia Sunseeds Co. Ltd. China (SIGEM)
46 Bayer (China) Limited China 100 Societe Immobiliere Distri S.A. France
101 1. BBSV GmbH Germany
47 Bayer (Sichuan) Animal Health Co. Ltd. China
102 1. BCrSV GmbH Germany
48 Bayer Coatings Systems Shanghai Co. Ltd. China
103 1. BPOV GmbH Germany
49 Bayer CropScience Hangzhou Company Ltd. China
104 2. BHCV GmbH Germany
50 Bayer Guangyi Panel Co. Ltd. China 105 AF Personalpartner GmbH Germany
51 Bayer Healthcare Co. Ltd. China 106 Agreva GmbH Germany
52 Bayer Jinling Polyurethane Company Ltd. China 107 AgrEvo Verwaltungsgesellschaft mbH Germany
53 Bayer MaterialScience Trading (Shanghai) Company China 108 AI Anti-Infectives Research & Development GmbH Germany
Limited & Co. KG
54 Bayer Polymers Shanghai Co. Ltd. China 109 AI Anti-Infectives Research & Development Germany
55 Bayer Polyurethanes (Shanghai) Co. Ltd. China Verwaltungs-GmbH
36
Bayer Group Companies in India and Worldwide (Contd.)

No No
110 ALiZ GmbH & Co. KG Germany 165 DV Dämmstoffe GmbH Germany
111 Apovia AG Germany 166 Dynevo GmbH Germany
112 Ausbildungsinitiative Rheinland GmbH Germany 167 Ehrfeld Mikrotechnik BTS GmbH Germany
113 BAYDEG Kautschukchemikalien GmbH Germany 168 Eigenjagd Logemann/Wolff GbR Germany
114 Bayer 04 Immobilien GmbH Germany 169 EPUREX Films Geschäftsführungs-GmbH Germany
115 Bayer 04 Leverkusen Fußball GmbH Germany 170 EPUREX Films GmbH & Co. KG Germany
116 Bayer 04 Leverkusen Sportförderung GmbH Germany 171 Erste K-W-A Beteiligungsgesellschaft mbH Germany
117 Bayer 04 Mobilien GmbH Germany 172 Euroservices Bayer GmbH Germany
118 Bayer AG Germany 173 Exatec Geschäftsführungs-GmbH Germany
119 Bayer Beteiligungsverwaltungsgesellschaft mbH Germany 174 Exatec GmbH & Co. KG Germany
120 Bayer BioScience GmbH Germany 175 Farbenfabriken Bayer GmbH Germany
121 Bayer Bitterfeld GmbH Germany 176 Faserwerke Hüls GmbH Germany
122 Bayer Business Services GmbH Germany 177 GE Bayer Silicones GmbH & Co. KG Germany
123 Bayer Chemicals AG Germany 178 GE Bayer Silicones Holding GmbH Germany
124 Bayer CropScience Aktiengesellschaft Germany 179 GE Bayer Silicones Verwaltungs-GmbH Germany
125 Bayer CropScience Beteiligungsgesellschaft mbh Germany 180 Gebr. Borchers AG Germany
126 Bayer CropScience Deutschland GmbH Germany 181 Generics Holding GmbH Germany
127 Bayer CropScience GmbH Germany 182 GENUS Grundstücks- und Vermietungsgesellschaft Germany
128 Bayer CropScience Germany mbH & Co.KG
Vermögensverwaltungsgesellschaft mbH 183 Gerhard Peter GmbH Germany
129 Bayer Gastronomie GmbH Germany 184 GeWoGe Gesellschaft für Wohnen und Germany
130 Bayer Generikaprodukte GmbH Germany Gebäudemanagement mbH
131 Bayer Gesellschaft für Beteiligungen mbH Germany 185 GIGAS Grundstücks-Vermietungsgesellschaft mbH Germany
132 Bayer HealthCare AG Germany 186 GIGAS Grundstücks-Vermietungs-GmbH & Co., Germany
Objekt Monheim KG
133 Bayer Industry Services Geschäftsführungs-GmbH Germany
187 Ginger GmbH Germany
134 Bayer Industry Services GmbH & Co. OHG Germany
188 GP Grenzach Produktions GmbH Germany
135 Bayer Innovation GmbH Germany
189 Gründer- und Innovationszentrum Leverkusen GmbH Germany
136 Bayer Innovation Ventures GmbH Germany
190 H. C. Starck GmbH Germany
137 Bayer International Services G.m.b.H. Germany
191 H.C. Starck Ceramics Geschäftsführungs-GmbH Germany
138 Bayer MaterialScience AG Germany
192 H.C. Starck Ceramics GmbH & Co. KG Germany
139 Bayer MaterialScience Customer Services Germany
Geschäftsführungs-GmbH 193 H.C. Starck Hermsdorf GmbH Germany
140 Bayer MaterialScience Customer Services GmbH Germany 194 H.C. Starck Hermsdorf Vermögensverw. Germany
Geschäftsführungs GmbH
141 Bayer Sheet Europe GmbH Germany
195 H.C. Starck Hermsdorf Vermögensverwaltungs-GmbH Germany
142 Bayer Technology Services GmbH Germany & Co. KG
143 Bayer Unterstützungskasse GmbH Germany 196 Hennecke GmbH Germany
144 Bayer Verwaltungsgesellschaft für Anlagevermögen Germany 197 Hi-BIS GmbH Germany
m.b.H.
198 Hild Samen GmbH Germany
145 Bayer Vital GmbH Germany
199 IPW Sicherheitsdienst GmbH Germany
146 Bayer-Handelsgesellschaft mbH Germany
200 ISF Internationale Schule Frankfurt-Rhein-Main GmbH Germany
147 Bayer-Kaufhaus GmbH Germany & Co. KG
148 Bayfin GmbH Germany 201 ISF Internationale Schule Frankfurt-Rhein-Main Germany
149 BaySecur GmbH Germany Verwaltungs-GmbH
150 BaySports-Travel GmbH Germany 202 Job@ctive GmbH Germany
151 Baywoge GmbH Germany 203 KG III Augusta Grundstücksverwaltungsgesellschaft Germany
152 BioM Aktiengesellschaft Munich BioTech Development Germany mbH & Co.
153 Bioregion Halle-Leipzig Management GmbH Germany 204 Konsortium Hennecke GmbH, W+K Industrie Technik Germany
GmbH & Co. GbR
154 BKV Beteiligungs- und Germany
Kunststoffverwertungsgesellschaft mbH 205 KVP Pharma+Veterinär-Produkte GmbH Germany
155 BÜFA Polyurethane GmbH & Co. KG Germany 206 LensWista GmbH Germany
156 BÜFA Polyurethane Verwaltungs GmbH Germany 207 LION Bioscience AG Germany
157 CaseTech Geschäftsführungs-GmbH Germany 208 Molypress Deutschland GmbH Germany
158 CaseTech GmbH & Co. KG Germany 209 Niedersächs. Ges. zur Endablagerung von Germany
159 Chemion Logistik GmbH Germany Sonderabfall mbH
160 Chemische Fabrik Altherzberg GmbH Germany 210 Pallas Versicherung Aktiengesellschaft Germany
161 Chemische Fabriken Oker und Braunschweig AG Germany 211 Probis GmbH Germany
162 CPI ChemiePark-Institut GmbH Germany 212 Salzgewinnung Westfalen Verwaltungs GmbH Germany
163 Dritte BV GmbH Germany 213 Salzgewinnungsgesellschaft Westfalen mbH & Co. KG Germany
164 Drugofa GmbH Germany 214 Sauerstoff- und Stickstoffrohrleitungsgesellschaft mbH Germany
37

No No
215 SIRENADE PHARMACEUTICALS AG Germany 271 Visible Genetics Israel Ltd. Israel
216 Solavista GmbH & Co. KG Germany 272 3R ASSOCIATI S.p.A. Italy
217 Solavista Verwaltungs GmbH Germany 273 Agriformula Srl Italy
218 Sportrechte Vermarktungs- und Verwertungs-GmbH Germany 274 Axxam Srl Italy
& Co. oHG 275 Baycare S.r.l. Italy
219 Staxera GmbH Germany 276 Bayer Biologicals S.r.l. Italy
220 STAXERA Holding GmbH & Co. KG Germany 277 Bayer CropScience S.r.l. Italy
221 STAXERA Holding Verwaltungsgesellschaft mbH Germany 278 Bayer Diagnostics S.r.l. Italy
222 Stefes Import/Export GmbH Germany 279 Bayer Healthcare Srl Italy
223 SuNyx GmbH Germany 280 Bayer MaterialScience S.r.l. Italy
224 SuNyx Surface Nanotechnologies GmbH Germany 281 Bayer S.p.A. Italy
225 Tecpol Technologieentwicklungs GmbH Germany 282 Bayer Sheet Europe S.p.A. Italy
für ökoeffiziente Polym.
283 Consorzio Dafne Italy
226 TravelBoard GmbH Germany
284 Deltapur S.p.A. Italy
227 Vierte BV GmbH Germany
285 GE Bayer Silicones S.r.l. Italy
228 WFL Wirtschaftsförderung Leverkusen GmbH Germany
286 Nunhems Italy S.r.l. Italy
229 Wohnstätte Krefeld, Wohnungs-Aktiengesellschaft Germany
287 Pharbenia S.r.l. Italy
230 Wolff Cellulosics Geschäftsführungs-GmbH Germany
288 Bayer CropScience Cote D’Ivoire SA Ivory Coast
231 Wolff Cellulosics GmbH & Co. KG Germany
289 Rhone-Poulenc (Caribbean) Ltd. Jamaica
232 Wolff Walsrode Aktiengesellschaft Germany
290 Bayer CropScience K.K. Japan
233 Zweite K-W-A Beteiligungsgesellschaft mbH Germany
291 Bayer Ltd. Japan
234 Abuakwa Formulation Plant Limited Ghana
292 Bayer Medical Ltd. Japan
235 Bayer Hellas AG Greece
293 Bayer Yakuhin, Ltd. Japan
236 Bayer S.A. Guatemala
294 DIC Bayer Polymer Ltd. Japan
237 Comercial Interamericana, S.A. Guatemala
295 H.C. Starck Ltd. Japan
238 Miles, S.A. Guatemala Branch Guatemala
296 MEG-MARUKA KAKOUKI CO. & LTD. Japan
239 Bayer S.A. de C.V. Honduras
297 Sumika Bayer Urethane Co., Ltd. Japan
240 Comercial Interamericana, S.A. de C.V. Honduras
298 Teijin-Bayer Polytec Ltd. Japan
241 Aventis CropScience China Ltd. Hong Kong
299 Bayer CropScience LLP Kazakhstan
242 Bayer Far East Service Co. Ltd. Hong Kong
300 AgrEvo East Africa Ltd. Kenya
243 Bayer HealthCare Limited Hong Kong
301 Bayer East Africa Ltd. Kenya
244 Bayer MaterialScience Limited Hong Kong
302 Bayer Kenya Ltd. Kenya
245 BAYER HUNGARIA Kft. Hungary
303 Kyrghyz Agro Investment Kirghistan
246 CSEBER Csomagoloeszköz Begyüjtesi Rendszer Kht Hungary
304 Bayer CropScience Ltd. Korea Republic
247 Nunhems Hungary Kft. Hungary
305 Bayer Korea Ltd. Korea Republic
248 Bayer CropScience Limited India
306 Bayer Sewon Ltd. Korea Republic
249 Bayer Diagnostics India Limited India
307 INDURISK RÜCKVERSICHERUNG AG Luxemburg
250 Bayer MaterialScience Private Limited India
308 Aventis CropScience Malawi Ltd. Malawi
251 Bayer Pharmaceuticals Private Limited India
309 Bayer (Malaysia) Sdn. Bhd. Malaysia
252 Bayer Polychem (India) Limited India
310 Bayer CropScience (Malaysia) Sdn, Bhd, Malaysia
253 Bilag Industries Private Ltd. India
311 Bayer CropScience (OHQ) (Malaysia) Sdn. Bhd. Malaysia
254 Hybrid Rice International Pvt. Ltd. India
312 Bayer Environmental Health (Malaysia) Sdn. Bhd. Malaysia
255 Nunhems Seeds Private Ltd. India
313 Bayer HealthCare S.A. Morocco
256 Proagro Hybrid International Ltd. India
314 Bayer Immobiliere Maroc SARL Morocco
257 Proagro Seed Company Pvt. Ltd. India
315 Bayer Maghreb S.A. Morocco
258 PT Bayer Indonesia Indonesia
316 Sunseeds Holding Ltd. Mauritius
259 PT Bayer Kimia Farmasindo Indonesia
317 Bayer de Mexico, S.A. de C.V. Mexico
260 PT Bayer MaterialScience Indonesia Indonesia
318 Bayer IMSA, S.A. de C.V. Mexico
261 Bayer Iranchemie AG Iran 319 Industrias Gustafson, S.A. de C.V. Mexico
262 Bayer CropScience Ireland Limited Ireland 320 Nunhems Mexico S.A. de C.V. Mexico
263 Bayer Diagnostics Europe Ltd. Ireland 321 Myanmar Aventis CropScience Ltd. Myanmar
264 Bayer Diagnostics Manufacturing Limited Ireland 322 Bayer Namibia (Proprietary) Limited Namibia
265 Bayer Limited Ireland 323 AgrEvo Benelux B.V. Netherlands
266 Medica II L.P. Israel 324 Bayer B.V. Netherlands
267 Mediterranean Seeds Ltd. Israel 325 Bayer Capital Corporation B.V. Netherlands
268 Millenium Materials Technologies Fund II Ltd. Israel 326 Bayer CropScience B.V. Netherlands
269 Palthough Industries (1998) Ltd. Israel 327 Bayer Polyurethanes B.V. Netherlands
270 Polygal Plastics Industries Ltd. Israel 328 Biogenetic Technologies B.V. Netherlands
38

No No
329 GE Bayer Silicones B.V. Netherlands 383 Bayer CropScience S.L. Spain
330 Innovative Dutch Electro Ceramics Pilot Production Netherlands 384 Bayer Hispania, S.L. Spain
B.V. 385 Bayer Polimeros S.L. Spain
331 Lyondell Bayer Manufacturing Maasvlakte VOF Netherlands 386 BAYHEALTH S.L. Spain
332 Nunhems BV Netherlands 387 Bayropharm Medica, S.L. Spain
333 Nunhems Netherlands B.V. Netherlands 388 BAYROPHARM S.L. Spain
334 OMNEXUS N.V. Netherlands 389 BaySystems Iberia, S.L. Spain
335 Plant Genetics System International NV Netherlands 390 Consorci D’aigües de Tarragona Spain
336 Visible Genetics B.V. Netherlands 391 DISALFARM, S.A. Spain
337 Zilip Pharma B.V. Netherlands 392 Euroservices Bayer S.L. Spain
338 Bayer New Zealand Limited New Zealand 393 Nunhems Spain, S.A. Spain
339 Bayer S.A. Nicaragua 394 Quimica Farmaceutica Bayer, S.A. Spain
340 Corp. Farmaceutica Interamericana, S.A. Nicaragua 395 Racks de la zona Sur, C.B. Spain
341 Bayer AS Norway 396 Sociedad Espanola de materiales Plasticos, S.A. Spain
342 Bayer CropScience (Private) Limited Pakistan 397 Vapeltar, A.I.E. Spain
343 Bayer DAS (Private) Limited Pakistan 398 Swaziland Agricultural Supplies Limited Swaziland
344 Bayer Pakistan (Private) Limited Pakistan 399 Bayer AB Sweden
345 BCS (Private) Limited Pakistan 400 H.C. Starck AB Sweden
346 Chemdyes Pakistan (Private) Limited Pakistan 401 Bayer (Schweiz) AG Switzerland
347 Bayer Panama, S.A. Panama 402 Bayer Consumer Care AG Switzerland
348 Bayer S.A. Panama 403 Bayer International S.A. Switzerland
349 Bayer S.A. Paraguay 404 Chemie-Beteiligungsaktiengesellschaft Switzerland
350 Bayer S.A. Peru 405 EMP-Estrusione Materiali Plastici S.A. Switzerland
351 CROPSA S.A.C. Peru 406 Bayer CropScience Taiwan Ltd. Taiwan
352 Bayer CropScience, Inc. Philippines 407 Bayer Polyurethanes Taiwan Ltd. Taiwan
353 Bayer Philippines, Inc. Philippines 408 Bayer Taiwan Company Ltd. Taiwan
354 BAYER SP.Z.O.O. Poland 409 CropScience Tanzania Limited Tanzania
355 Nunhems Poland Sp.Zo.o. Poland 410 AgrEvo (Thailand) Limited Thailand
356 Bayer CropScience (Portugal)-Produtos para a Portugal 411 Bayer CropScience (Thailand) Company Limited Thailand
Agricultura, Lda
412 BAYER THAI COMPANY LIMITED Thailand
357 Bayer Portugal S.A. Portugal
413 H.C. Starck Co. Ltd. Thailand
358 Bayhealth Comercializacao de Produtos Portugal
414 RHONE-POULENC AGRO (THAILAND) COMPANY Thailand
Farmaceuticos Unipessoal Lda.
LIMITED
359 CENTROFARMA-Industria e Comercio de Prod. Portugal
415 Bayer Ilac Fabrikalari Anonim Sireti Turkey
Farmaceuticos, Lda.
416 Bayer Kimya Üretim ve Hizmet Limited Sirketi Turkey
360 Bayer Puerto Rico Inc. Puerto Rico
417 Bayer Türk Kimya Sanayi Limited Sirketi Turkey
361 BCS Romania Srl Romania
418 Nunhems Tohumculuk Limited Sirketi Turkey
362 SC Bayer SRL Romania
419 CropScience Uganda Limited Uganda
363 BAYER A/O Russia
420 Bayer Ltd. Ukraina
364 OOO Bayer CropScience Russia
421 Ukrinterzukor JV Ltd. Ukraina
365 ZAO Rhone-Poulenc AO Russia
422 Bayer ACI Limited United Kingdom
366 Bayer d.o.o. Serbia & Montenegro
423 Bayer ACSH Limited United Kingdom
367 Bayer Environmental Health Singapore Private Singapore
Limited 424 Bayer AEH Limited United Kingdom
368 Bayer South East Asia Pte. Ltd. Singapore 425 Bayer AGCO Limited United Kingdom
369 Hennecke-Maruka Asia Pte. Ltd. Singapore 426 Bayer Agriculture Limited United Kingdom
370 Bayer, spol. s.r.o. Slovakia 427 Bayer CropScience Holdings United Kingdom
371 Bayer CropScience d.o.o. (Slovenia) Slovenia 428 Bayer CropScience Limited United Kingdom
372 Bayer Pharma d.o.o. Slovenia 429 Bayer CropScience Nufarm Limited United Kingdom
373 AgrEvo South Africa (Pty.) Ltd. South Africa 430 Bayer Diagnostics Manufacturing (Sudbury) Limited United Kingdom
374 Bayer (Proprietary) Limited South Africa 431 Bayer Diagnostics Manufacturing Limited United Kingdom
375 Bayer Animal Health (Pty.) Ltd. South Africa 432 Bayer Public Limited Company United Kingdom
376 Coopers Environmental Health Pty. Ltd. South Africa 433 Bayer UK Limited United Kingdom
377 Milborrow Animal Health (Proprietary) Limited South Africa 434 FBC Industrial Chemical Ltd. United Kingdom
378 Mincape (Pty.) Ltd. South Africa 435 H.C. Starck (West Horndon) Ltd. United Kingdom
379 Rustenburg Chrome Mine Holdings (Pty.) Ltd. South Africa 436 H.C. Starck Ltd. United Kingdom
380 Wenkem SA (Proprietary) Limited South Africa 437 pbi Home & Garden Limited United Kingdom
381 Aguas Industriales de Tarragona, S.A. (AITASA) Spain 438 Reldy Ltd. United Kingdom
382 Avantcoat S.L. Spain 439 Scipher plc United Kingdom
39

No No
440 Stapleford Services Ltd. United Kingdom 472 ChromaDex Inc. United States
441 Trustee of the CropScience Pension Fund Ltd. United Kingdom 473 CMEA Ventures II, L.P. United States
442 TWINAGRO LIMITED United Kingdom 474 Company 113 Corporation United States
443 Visible Genetics UK Ltd. United Kingdom 475 Cooper Land Company of New Jersey, Inc. United States
444 Accelrys, Inc. United States 476 CuraGen Corporation United States
445 Aderis Pharmaceuticals, Inc. United States 477 Deerfield Urethane, Inc. United States
446 AEROVANCE, INC. United States 478 DYSTAR HOLDING COMPANY United States
447 Avigen Inc. United States 479 Exatec, LLC United States
448 Bayer Consumer Care LLC United States 480 H. C. Starck Inc. United States
449 Bayer Corporate and Business Services LLC United States 481 H.C. Starck Holding Inc. United States
450 Bayer Corporation United States 482 H.C.S.T. Corp. United States
451 Bayer Cotton Seed International Inc. United States 483 InPhase Technologies, Inc. United States
452 Bayer CropScience Holding Inc. United States 484 NGEN Enabling Technologies Fund, LP United States
453 Bayer CropScience Inc. United States 485 NGEN II, L.P. United States
454 Bayer CropScience LLC United States 486 Nunhems USA, Inc. United States
455 Bayer CropScience LP United States 487 Onyx Pharmaceuticals, Inc. United States
456 Bayer HealthCare LLC United States 488 Oxford Bioscience Partners II Limited Partnership United States
457 Bayer MaterialScience LLC United States 489 Paratek Pharmaceuticals, Inc. United States
458 Bayer Pharmaceuticals Corporation United States 490 Pharmacopeia Drug Discovery Inc. United States
459 BayOne Urethane Systems LLC United States 491 PharmaNetics, Inc United States
460 Baypo I LLC United States 492 PO JV, LP United States
461 Baypo II LLC United States 493 Scynexis, Inc. United States
462 BAYPO Limited Partnership United States 494 Sheffield Plastics Inc. United States
463 BaySystems North America LLC United States 495 STWB Inc. United States
464 BIPPO Corporation United States 496 Talecris BioTherapeutics Holdings Corp. United States
465 Burril Agbio Capital Fund II, Limited Partnership United States 497 The SDI Divestiture Corporation United States
466 Burrill Agbio Capital Fund Annex Limited Partnership United States 498 Viterion TeleHealthcare LLC United States
467 Burrill Agbio Capital Fund Limited Partnership United States 499 Bayer S.A. Uruguay
468 BURRILL BIOTECHNOLOGY CAPITAL FUND United States 500 Bayer S.A. Venezuela
469 Burrill Life Sciences Capital Fund, L.P. United States 501 Bayer Vietnam Ltd. Vietnam
470 Burrill Nutraceuticals Capital Fund Limited Partnership United States 502 Bayer CropScience Zimbabwe (Private) Limited Zimbabwe
471 ChemConnect. Inc United States 503 Bayer Zimbabwe (Private) Limited Zimbabwe
Any other subsidiary of Bayer AG worldwide (existing or incorporated hereafter)
40
Bayer CropScience Limited [Formerly Bayer (India) Limited] Annual Report 2005
AUDITORS’ REPORT
TO THE MEMBERS OF BAYER CROPSCIENCE LIMITED [FORMERLY BAYER (INDIA) LIMITED]
1. We have audited the attached Balance Sheet of Bayer CropScience Limited (formerly Bayer (India) Limited)
(the Company) as at December 31, 2005 and the related Profit and Loss Account and Cash Flow Statement for the
year ended on that date annexed thereto, which we have signed under reference to this report. These financial
statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on these
financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by the Management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 as amended by the Companies (Auditor’s Report)
(Amendment) Order, 2004, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of
‘The Companies Act, 1956’ of India (the Act) and on the basis of such checks of the books and records of the
Company as we considered appropriate and according to the information and explanations given to us, we give in
the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of 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 the Company so far as appears
from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement
with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report
comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from the Directors, as on December 31, 2005 and taken on
record by the Board of Directors, none of the Directors is disqualified as on December 31, 2005 from being
appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial
statements together with the notes thereon and attached thereto give in the prescribed manner the information
required by the Act and give a true and fair view in conformity with the accounting principles generally accepted
in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2005;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Natraj Ramkrishna
Partner
Membership Number: F-32815
For and on behalf of
Place : Mumbai Price Waterhouse
Date : March 23, 2006 Chartered Accountants
41
Page 1 of 2
ANNEXURE TO THE AUDITORS’ REPORT

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Bayer CropScience Limited (formerly
Bayer (India) Limited) on the financial statements for the year ended December 31, 2005]
1. (a) The Company is maintaining proper records showing full particulars including quantitative details and situation of
its fixed assets.
(b) The fixed assets are physically verified by the Management according to a phased programme designed to
cover all the items over a period of three years, which in our opinion, is reasonable having regard to the size of
the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been
physically verified by the Management during the year and no material discrepancies between the book records
and the physical inventory have been noticed.
(c) In our opinion and according to the information and explanations given to us, a substantial part of fixed assets
has not been disposed of by the Company during the year.
2. (a) The inventory (including stocks with third parties) has been physically verified by the Management during the
year. In our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable
and adequate in relation to the size of the Company and the nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper
records of inventory. The discrepancies noticed on physical verification of inventory as compared to book
records were not material.
3. (a) The Company has granted unsecured loans to two companies covered in the register maintained under Section
301 of the Act. The maximum amount involved during the year and the year-end balance of such loans
aggregates Rs. 64,500 (‘000s) and Rs. Nil, respectively.
(b) In our opinion, the rate of interest and other terms and conditions of the aforesaid unsecured loans granted by
the Company are not prima facie prejudicial to the interest of the Company.
(c) In respect of the aforesaid unsecured loans granted by the Company, the companies are repaying the principal
amounts as stipulated and are also regular in payment of interest, where applicable.
(d) In respect of the aforesaid unsecured loans granted by the Company, there is no overdue amount more than
Rupees One Lakh.
(e) The Company has taken unsecured loans from three companies covered in the register maintained under
Section 301 of the Act. The maximum amount involved during the year and the year-end balance of such loans
aggregates Rs. 410,000 (‘000s) and Rs. 170,000 (‘000s), respectively.
(f) In our opinion, the rate of interest and other terms and conditions of the aforesaid unsecured loans taken by the
Company, are not prima facie prejudicial to the interest of the Company.
(g) In respect of the aforesaid unsecured loans taken by the Company, the Company is regular in repaying the
principal amounts as stipulated and is also regular in payment of interest, where applicable.
4. In our opinion and according to the information and explanations given to us, having regard to the explanation
that certain items purchased are of special nature for which suitable alternative sources do not exist for obtaining
comparative quotations, there is an adequate internal control system commensurate with the size of the
Company and the nature of its business for the purchase of inventory, fixed assets and for the sale of goods and
services. Further, on the basis of our examination of the books and records of the Company, and according to
the information and explanations given to us, we have neither come across nor have been informed of any
continuing failure to correct major weaknesses in the aforesaid internal control system.
5. (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or
arrangements referred to in Section 301 of the Act have been entered in the register maintained under that
Section.
(b) In our opinion and according to the information and explanations given to us, the transactions made in
pursuance of contracts or arrangements entered into the register in pursuance of section 301 of the Act
and exceeding the value of Rupees Five Lakhs in respect of each party during the year have been made at
prices which are reasonable having regard to the prevailing market prices at the relevant time except for
transactions which according to Management are of special nature and for which no comparative prices are
available.
6. The Company has not accepted any deposits from the public during the year within the meaning of Sections
58A and 58AA of the Act and the rules framed thereunder.
42
Page 2 of 2
ANNEXURE TO THE AUDITORS’ REPORT

[Referred to in paragraph 3 of the Auditors’ Report of even date to the members of Bayer CropScience Limited (formerly
Bayer (India) Limited) on the financial statements for the year ended December 31, 2005]
7. In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
8. We have broadly reviewed the books of account maintained by the Company in respect of products where,
pursuant to the Rules made by the Central Government of India, the maintenance of cost records has been
prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie,
the prescribed accounts and records have been made and maintained. We have not, however, made a detailed
examination of the records with a view to determine whether they are accurate or complete.
9. (a) According to the information and explanations given to us and the records of the Company examined by us, in
our opinion, the Company is generally regular in depositing the undisputed statutory dues including provident
fund, investor education and protection fund, employees’ state insurance, income tax, sales-tax, wealth tax,
service tax, customs duty, excise duty, cess and other material statutory dues as applicable with the appropriate
authorities in India.
(b) According to the information and explanations given to us and the records of the Company examined by us,
there are no dues of custom duty, wealth-tax, service tax and cess as at December 31, 2005 which have not
been deposited on account of any dispute. Refer Annexure A for particulars of dues of income tax, sales tax and
excise duty as at December 31, 2005 which have not been deposited on account of dispute.
10. The Company has no accumulated losses as at December 31, 2005 and it has not incurred any cash losses in
the financial year ended on that date or in the immediately preceding financial year.
11. According to the records of the Company examined by us and the information and explanations given to us, the
Company has not defaulted in repayment of dues to any banks as at the Balance Sheet date. Further, there are
no dues payable to financial institutions or debenture holders as at Balance Sheet date.
12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares,
debentures and other securities.
13. The provisions of any special statute applicable to chit fund/ nidhi/ mutual benefit fund/ societies are not
applicable to the Company.
14. In our opinion, the Company is not a dealer or trader in shares, securities, debentures and other investments.
15. In our opinion and according to the information and explanations given to us, the Company has not given any
guarantee for loans taken by others from banks or financial institutions during the year.
16. In our opinion and according to the information and explanations given to us, the term loans have been applied
for the purposes for which they were obtained.
17. On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the
information and explanations given to us, there are no funds raised on a short term basis which have been used
for long term investments.
18. The Company has not made any preferential allotment of shares to parties and companies covered in the
register maintained under Section 301 of the Act during the year.
19. The Company has not issued any debenture during the year.
20. The Company has not raised any money by public issue during the year.
21. During the course of our examination of the books and records of the Company, carried out in accordance with
the generally accepted auditing practices in India, and according to the information and explanations given to
us, we have neither come across any instance of material fraud on or by the Company, noticed or reported
during the year, nor have we been informed of any such case by the Management.
Natraj Ramkrishna
Partner
Membership Number: F-32815
Place : Mumbai Price Waterhouse
Date : March 23, 2006 Chartered Accountants
43
Annexure A
[Referred to in paragraph (9) (b) of our annexure to the Auditors’ Report of even date to the members of Bayer
CropScience Limited [formerly Bayer (India) Limited] on the financial statements for the year ended December 31, 2005]
Page 1 of 2
Name of the Statute Nature of Dues Amount Forum where

(Rs. in ’000s) dispute is pending
1. Excise Duty
The Central Excise Act, Clearance of other finished goods as 753 The Assistant Commissioner
1944 waste without payment of excise duty for of Central Excise
the period October 1986 to January 1991.
Denial of Modvat Credit on account of 212 The Custom, Excise and
invalid documents for the Year 1994 Service Tax Appellate
and 1995. Tribunal
Non reduction of MRP on reduction in 30,176 The Assistant Commissioner
rate of excise duty for the period March of Central Excise
1997 to June 1998.
Denial of Modvat credit on account of 1,416 The Assistant Commissioner
invalid documents and penalty thereon of Central Excise
for the Years 1994, 1995 and 1996.
Denial of Modvat credit on paper and 652 The Commissioner of
paperboard. Central Excise (Appeals)
Denial of Modvat credit on the furnace 1,058 The Commissioner of
oil and penalty thereon for the period 1995. Central Excise (Appeals)
Denial of Modvat credit on the furnace 1,270 The Commissioner of
oil and penalty thereon for the period Central Excise (Appeals)
April 1998 to December 2003 and for the
period January 2004 and June 2004.
Dispute on valuation of goods for the 5,751 The Custom, Excise and
period September 2000 to December Service Tax Appellate
2001 and penalty thereon. Tribunal
Dispute on classification of goods with 1,000 The Supreme Court of India
interest and penalty thereon for the period
June 2000 to March 2001.
Dispute on classification of goods with 8,441 The Custom, Excise and
interest and penalty thereon for the Service Tax Appellate
period April 2001 to February 2003 and Tribunal.
for the period 2004-2005.
Sub Total 50,729
2. Income Tax
The Income Tax Act, Disallowance of certain expenses for the 382 Income Tax Appellate
1961 Assessment Year 2001-2002. Tribunal
Dispute over treatment of consideration 28,373 Income Tax Appellate
received towards sale of marketing rights Tribunal
of Household Insecticide Business for
the Assessment Year 2002-2003.
Disallowance of certain expenses and 16,397 The Commissioner of
unutilised modvat credit for the Assessment Income Tax (Appeals)
Year 2003-2004.
Disallowance of certain expenses for the 548 Income Tax Appellate
Assessment Year 1993-1994. Tribunal
Disallowance of excise duty on closing stock 12,423 The Commissioner of
for the Assessment Year 1998-1999. Income Tax (Appeals)
Treatment of income arising on transfer of 15,132 Income Tax Appellate
Marketing Rights and disallowance of some Tribunal
expenses for the Assessment Year 2001-2002.
Disallowance under rule 6B and 6D of the 339 Income Tax Appellate
Income Tax Act and denial of set off of Tribunal
unabsorbed depreciation for the Assessment
Year 1996-1997.
Dispute over higher interest charged u/s 234 B 2,117 Additional Commissioner
for the Assessment Year 1997-1998. of Income tax.
Disallowances of Expenses with respect to 275 Income Tax Appellate
technical Know-how and higher valuation of Tribunal
Closing stock for the Assessment
Year 1999-2000.
Sub Total 75,986
44
Annexure A
[Referred to in paragraph (9) (b) of our annexure to the Auditors’ Report of even date to the members of Bayer
CropScience Limited [formerly Bayer (India) Limited] on the financial statements for the year ended December 31, 2005]
Page 2 of 2
Name of the Statute Nature of Dues Amount Forum where
(Rs. in ’000s) dispute is pending
3. Sales Tax
The Central Sales Non submission of various forms for the 9,367 Deputy Commissioner
Tax Act,1956 Year 1999-2000, 2000-2001, 2001-2002. (Appeals), West Bengal
Non-receipt of declaration forms for the 163 Assessing Authority,
Year 2002-2003. Kerala
Disallowance/ Non submission of various 16,610 The High Court of
forms for the Assessment Year 2003-2004. Tamil Nadu
Disallowance/ Non submission of various 120 Assessing Authority,
forms for the Assessment Year 2000-2001. Uttar Pradesh
Disallowance/ Non submission of various 273 Deputy Commissioner
forms for the Assessment Year 2003-2004. Sales Tax, Delhi
Disallowance/ Non submission of various 6,504 Deputy Commissioner
forms for the Years 1999-2000, 2000-2001, Commercial Taxes,
2002-2003. West Bengal
The West Bengal Enhancement of taxable turnover and 8,279 Assistant Commissioner
Sales Tax Act, 1994 disallowance of certain claims made by the of Commercial taxes
Company for the period 2002.
Disputes over trading stock and disallowance 5,503 Deputy Commissioner
of discounts. (Appeals), West Bengal
Disallowance of Discount and non submission 267 Appellate Authority,
of Form ‘C’. Kerala
Disallowance in respect of sales returns 393 Deputy Commissioner
(withdrawal) of goods and discount for the Commercial Taxes,
Year 1999-2000. West Bengal
Non submission of various forms for the 1,570 West Bengal Commercial
Year 1996. taxes Appellate & Revisional
Board, West Bengal
The Bihar Finance Disallowance of Discount for the 460 Joint Commissioner of
Act, 1981 Year 1999-2000. Commercial Tax (Appeal)
The Kerala General Disallowance/ Non submission of supporting 239 Assistant Commissioner
Sales Tax Act, 1963 for payment of taxes for the Assessment (Assessment), Kerala
Years 1977-1978, 1979-1980 and from
1980-1981 to 1984-1985.
The Kerala General Disallowance/ Non submission of supporting 35 The Kerala Appellate
Sales Tax Act, 1963 for payment of taxes for the Assessment Tribunal
Year 1994-1995.
Sales tax and registration fees for the 204 The Kerala Appellate
Year 1999-2000. Tribunal
Enhancement of gross taxable turnover for 26 Deputy Commissioner,
the Assessment Year 1999-2000 and Appeals, Kerala
2000-2001 and penalty thereon.
Disallowance of Stock transfer for the 70 Deputy Commissioner,
Year 1997-1998. Appeals, Kerala
The Assam General Interest and Penalty imposed for the 145 The Superintendent of Taxes,
Sales Tax Act, 1993 Year 1999-2000. Guwahati
The Punjab General Tax and penalty imposed on stock transfers 1,155 The Sales Tax Tribunal for
Sales Tax Act, 1948 effected vide invoice dated November 25, 2000. the State of Punjab
The Rajasthan Sales Tax and penalty on non submission of stock 1,085 The Rajasthan Tax Board,
Tax Act, 1994 transfer forms in the Year 1999. Ajmer
The Karnataka Sales Disallowance of Branch transfer due to non 32 Assessing Officer,
Tax Act, 1957 submission of F Form for 2001-2002. Bangalore
The Delhi Sales Tax Stock transfer of rubber chemicals from 688 Deputy Commissioner Sales
Act, 1975 consignment agent to Bayer Polychem (India) Tax, Delhi
Limited disallowed and penalty thereon for
2003-2004.
The Uttar Pradesh Disallowances of various claims and penalty 839 Assessing Authority,
Trade Tax Act, 1948 thereon for 2002-2003. Uttar Pradesh
The Bombay Sales Tax Purchase tax levied on Anilene oil disputed for 222 The Sales Tax Appellate
Act, 1959 Assessment Years 1986-1987 to 1991-1992. Tribunal, Maharashtra
Tamil Nadu Sales Enhancement of taxable turnover and 42,691 The High Court of
Tax Act, 1959 penalty thereon. Tamil Nadu
Sub Total 96,940
Total 223,655
45
Balance Sheet as at December 31, 2005 Rupees ’000s
Schedule As at As at
31.12.2005 31.12.2004
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share Capital 1 394,987 394,987
Reserves and Surplus 2 2,461,650 2,189,265
2,856,637 2,584,252
LOAN FUNDS
Secured Loans 3 195,798 173,789
Unsecured Loans 4 964,760 602,300
1,160,558 776,089
4,017,195 3,360,341
APPLICATION OF FUNDS
FIXED ASSETS 5
Gross Block 3,265,927 2,893,741
Less: Depreciation/ Amortisation 1,712,221 1,543,636
Net Block 1,553,706 1,350,105
Capital Work-In-Progress 79,546 87,971
1,633,252 1,438,076
INVESTMENTS 6 40,043 120,131
DEFERRED TAX ASSET (NET) 15,041 65,270

(Refer Notes 1(h) and 5 of Schedule 22)
CURRENT ASSETS, LOANS AND ADVANCES

Inventories 7 1,760,648 1,339,316
Sundry Debtors 8 1,682,436 1,507,199
Cash and Bank Balances 9 309,711 525,918
Other Current Assets 10 34,550 5,940
Loans and Advances 11 618,455 601,620
4,405,800 3,979,993
Less: CURRENT LIABILITIES AND PROVISIONS

Current Liabilities 12 1,794,472 1,870,841
Provisions 13 282,469 372,288
2,076,941 2,243,129
NET CURRENT ASSETS 2,328,859 1,736,864
4,017,195 3,360,341
Notes to Accounts 22
Schedules referred to above form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in our report of even date. For and on behalf of the Board
Chairman Dr. Vijay Mallya
Natraj Ramkrishna
Partner Managing Directors Stephan Gerlich
Membership No.: F-32815 Directors Y. H. Malegam
For and on behalf of Shirin V. Balsara
Head – Legal & Raj Kaul
Price Waterhouse
Chartered Accountants Company Secretary A. K. R. Nedungadi
Place : Mumbai, Place : Mumbai,
Date : March 23, 2006 Date : March 23, 2006
46
Profit and Loss Account for the year ended December 31, 2005 Rupees ’000s
Schedule Year Ended Year Ended

31.12.2005 31.12.2004
INCOME
Sales (Refer Note 1 (e) of Schedule 22) 7,561,333 7,417,343
Less: Excise Duty 872,826 867,529
6,688,507 6,549,814
Other Operating Income 14 103,271 146,219
Other Income 15 391,375 261,724
7,183,153 6,957,757
EXPENDITURE
Materials Consumed 16 3,186,045 3,154,618
Cost of Traded Goods Sold 17 510,242 633,736
Employee Cost 18 572,110 658,081
Other Expenses 19 1,900,609 2,053,397
Finance Charges 20 74,352 111,617
Depreciation 225,743 260,181
6,469,101 6,871,630
Less: Recoveries from Group Companies 165,603 263,522
6,303,498 6,608,108
Add/ (Less): (Increase)/ Decrease in Stock 21 63,688 (163,617)
6,367,186 6,444,491
PROFIT BEFORE PRIOR PERIOD,
EXCEPTIONAL ITEMS AND TAXATION 815,967 513,266
Add:Prior Period Item — 18,748
Less: Exceptional Items — Voluntary Retirement Scheme 69,128 7,979
PROFIT FOR THE YEAR BEFORE TAXATION 746,839 524,035
Taxation
— Current Tax (Refer Note 4 of Schedule 22) 295,852 231,000
[including for earlier years Rs. 82,652 (Previous Year Rs. 10,150)]
— Deferred Tax (Refer Notes 1(h) and 5 of Schedule 22) 50,229 29,431
— Fringe Benefit Tax 29,288 375,369 —
PROFIT AFTER TAX 371,470 263,604
Add: Balance brought forward 1,383,183 1,245,024
AMOUNT AVAILABLE FOR APPROPRIATION 1,754,653 1,508,628
APPROPRIATIONS
Proposed Dividend 86,897 86,897
Provision for Tax on Proposed Dividend 12,188 12,188
Transfer to General Reserve 37,147 26,360
Balance carried to Balance Sheet 1,618,421 1,383,183
1,754,653 1,508,628
Earnings Per Share before Prior Period and Exceptional Item
after Taxation - Basic and Diluted (Net of Tax) 10.57 6.48
Earnings Per Share after Prior Period and Exceptional Item
after Taxation - Basic and Diluted (Net of Tax)
(Refer Note 24 of Schedule 22) 9.40 6.67
Schedules referred to above form an integral part of the Profit and Loss Account.
This is the Profit and Loss Account referred to in our report of even date. For and on behalf of the Board
Natraj Ramkrishna Chairman Dr. Vijay Mallya

Partner Managing Directors Stephan Gerlich
Price Waterhouse Head – Legal & Raj Kaul
47
Schedules forming part of the Balance Sheet as at December 31, 2005 Rupees ’000s
As at As at
31.12.2005 31.12.2004
SCHEDULE 1
SHARE CAPITAL
Authorised:
46,300,000 (Previous Year 46,300,000) Equity Shares of Rs. 10 each 463,000 463,000
Issued, Subscribed and Paid-up:

39,498,747 (Previous Year 39,498,747)
Equity Shares of Rs. 10 each, fully paid-up 394,987 394,987
Notes:
(a) Of the above, 12,632,500 (Previous Year 12,632,500) Equity Shares of Rs. 10 each
are allotted as fully paid-up Bonus Shares by way of capitalisation of Capital Reserve,
Premium received on Shares and General Reserve.
(b) 28,086,662 (Previous Year 28,086,662) Equity Shares of Rs. 10 each are held by
Bayer AG, Germany, the Ultimate Holding Company and its subsidiaries.
(c) Pursuant to the Scheme of Amalgamation of erstwhile Bayer Cropscience India
Limited with the Company, 23,278,747 Equity Shares of Rs. 10 each have been
issued and allotted as fully paid-up to the shareholders of erstwhile Bayer
Cropscience India Limited without payment being received in cash.
SCHEDULE 2
RESERVES AND SURPLUS
General Reserve
As per last Balance Sheet 801,964 775,604
Add: Transfer from Profit and Loss Account 37,147 26,360
839,111 801,964
Investment Allowance Utilised Reserve 4,118 4,118
Profit and Loss Account 1,618,421 1,383,183
2,461,650 2,189,265
SCHEDULE 3
SECURED LOANS
Loan from Banks 195,000 162,228
(Secured by Pari Passu charge by hypothecation of Stocks and Book Debts)
[Due within a year Rs. 195,000 (Previous Year Rs. 162,228)]
Lease Liability 798 11,561
(Secured on the underlying leased assets)
[Due within a year Rs. 798 (Previous Year Rs. 10,677)]
(Refer Note 18 of Schedule 22)
195,798 173,789
SCHEDULE 4
UNSECURED LOANS
[Includes interest accrued and due Rs. 2,709 (Previous Year Rs. Nil)]
[Due within a year Rs. 782,960 (Previous Year Rs. Nil)]
Inter-Corporate Deposits 170,000 190,500
Loan from Others 11,800 11,800
964,760 602,300
48
Schedules forming part of the Balance Sheet as at December 31, 2005
SCHEDULE 5
FIXED ASSETS
(Refer Notes 1(b) and 1 (k) of Schedule 22)
Rupees ’000s
Cost Depreciation/Amortisation
Assets Net Book Value
(Refer Notes 1 and 2 below) (Refer Notes 2 and 3 below)
As at Additions/ Deletions/ As at As at For the year/ Deletions/ As at Net Block Net Block
01.01.2005 Adjustments Adjustments 31.12.2005 01.01.2005 Adjustments Adjustments 31.12.2005 31.12.2005 31.12.2004
Owned Assets
Intangibles
Goodwill 93,256 — — 93,256 62,217 31,039 — 93,256 — 31,039
Technical Know-how 15,633 — — 15,633 15,633 — — 15,633 — —
Sub-total 108,889 — — 108,889 77,850 31,039 — 108,889 — 31,039
Tangibles
Freehold Land 5,789 3,236 — 9,025 — — — — 9,025 5,789

(Refer Note 1 below)
Leasehold Land 9,100 — — 9,100 2,266 121 — 2,387 6,713 6,834
Buildings 835,125 43,724 44,259 834,590 207,459 32,138 9,709 229,888 604,702 627,666
Plant and Machinery 1,326,161 361,465 30,757 1,656,869 932,718 121,899 25,923 1,028,694 628,175 393,443
Office Equipment &

Computers 396,249 55,719 90,780 361,188 206,715 54,082 45,557 215,240 145,948 189,534
Furniture & Fixtures 80,644 41,066 2,483 119,227 57,058 9,230 2,241 64,047 55,180 23,586
Vehicles 78,509 66,387 14,258 130,638 30,956 13,123 8,978 35,101 95,537 47,553
Sub-total 2,731,577 571,597 182,537 3,120,637 1,437,172 230,593 92,408 1,575,357 1,545,280 1,294,405
Total 2,840,466 571,597 182,537 3,229,526 1,515,022 261,632 92,408 1,684,246 1,545,280 1,325,444
Leased Assets
Computers 53,275 — 16,874 36,401 28,614 12,330 12,969 27,975 8,426 24,661
Total 53,275 — 16,874 36,401 28,614 12,330 12,969 27,975 8,426 24,661
Capital Work-In-progress includes Capital Advances 79,546 87,971
Grand Total 2,893,741 571,597 199,411 3,265,927 1,543,636 273,962 105,377 1,712,221 1,633,252 1,438,076
Previous Year 2,916,479 322,427 345,165 2,893,741 1,387,243 276,465 120,072 1,543,636 — —
NOTES:
1. The Company has agreed to transfer certain portion of the land (book value Rs. 1,153) and Building (written down value Rs. 103,047) located at Kolshet, Thane,
Maharashtra to Lanxess India Private Limited vide Memorandum Of Understanding dated November 18, 2004, consequent to the divestment of chemical business,
globally. This transfer has not been effected as at the year-end pending approval from the Collector of Thane.
2. Additions/Deletions to fixed assets and Depreciation for the year/on deletions includes adjustments on account of reclassification within the above categories of Fixed
Assets aggregating Rs. 94,443 and Rs. 48,219 respectively.
3. Depreciation on Leased assets for the year includes depreciation for earlier years Rs. Nil (Previous Year Rs. 16,284)
49
As at As at
31.12.2005 31.12.2004
SCHEDULE 6
INVESTMENTS
LONG TERM, At Cost
(Refer Notes 1(c) and 21 of Schedule 22)
TRADE, UNQUOTED
Investment in Subsidiary:
50,000 (Previous Year 50,000) Equity Shares of Rs. 10 each, fully paid-up in
Bayer Polychem (India) Limited 500 500
NON-TRADE:
UNQUOTED
4,900 (Previous Year 4,900) Equity Shares in Bharuch Enviro Infrastructure
Limited of Rs. 10 each, fully paid-up 49 49
209,880 (Previous Year 190,800) Equity Shares in Bharuch Eco Acqua
Infrastructure Limited of Rs. 10 each, fully paid-up 2,099 1,908
QUOTED
287,350 (Previous Year 287,350) Equity Shares in Bayer Diagnostics
India Limited of Rs. 10 each, fully paid-up
Market value Rs. 154,953 (Previous Year Rs. 106,032) 25,330 25,330
120,646 (Previous Year 120,646) 6.75% Tax Free US64 Bonds of Rs. 100 each
CURRENT
Nil (Previous Year 1,024,054) units of Rs. 10 each in HSBC Mutual Fund –
Floating rate fund
Market value Rs. Nil (Previous Year Rs. 10,254) — 10,254
Nil (Previous Year 4,331,713) units of Rs. 10 each in Birla Sun Life
Mutual Fund - Dividend reinvestment
Nil (Previous Year 2,498,487) units of Rs. 10 each in J M Financial Mutual
Fund - Daily Dividend
40,043 120,131
Note: Aggregate Market value of Quoted Investments Rs. 167,507

(Previous Year Rs. 118,097).
SCHEDULE 7
INVENTORIES
(Refer Note 1(d) of Schedule 22)
Stores and Spares 47,336 20,269
Stock-in-Trade:
Raw Materials 413,237 195,344
Packing Materials 68,895 60,732
Semi-Finished Goods 197,251 107,503
Finished Goods 677,132 830,568
Traded Goods 274,896 68,277
Goods in Transit 81,901 56,623
1,760,648 1,339,316
50
As at As at
31.12.2005 31.12.2004
SCHEDULE 8
SUNDRY DEBTORS
Debts outstanding for a period exceeding six months
Considered Good 35,513 180,140
Considered Doubtful 275,058 352,572
310,571 532,712
Less: Provision for Doubtful Debts 275,058 352,572

35,513 180,140
Other Debts
Considered Good 1,646,923 1,327,059
1,682,436 1,507,199
Sundry Debtors:
Secured 94,082 129,512
Unsecured 1,588,354 1,377,687
1,682,436 1,507,199
SCHEDULE 9
CASH AND BANK BALANCES
Cash on Hand 491 953
With Scheduled Banks:
In Current Accounts 183,070 57,810
In Deposit Accounts* 6,807 6,807
In Unclaimed Dividend Accounts 2,563 2,507
In Cash Credit Accounts 116,780 457,841
* Deposits with bank aggregating Rs. 4,807 (Previous year Rs. 4,807)
taken for the purpose of Earnest Money Deposits.
309,711 525,918
SCHEDULE 10
OTHER CURRENT ASSETS
Fixed assets held for sale (valued at Cost or Net Realisable Value whichever
is lower) 34,550 5,940
34,550 5,940
51
As at As at
31.12.2005 31.12.2004
SCHEDULE 11
LOANS AND ADVANCES
(Unsecured – considered good unless stated otherwise)
Advances recoverable in cash or in kind or for value to be received
Considered Good [Includes due from a Company in which Directors are
interested Rs. 6,341(Previous Year Rs. 4,567)] 208,037 252,432
223,480 254,990
Less: Provision for Doubtful Advances 15,443 2,558
208,037 252,432
Deposits
121,550 122,162
Less: Provision for Doubtful Deposits 9,925 9,454
111,625 112,708
Balance with Excise, Customs and Port Authorities 116,604 23,793
Advance payment of Income-tax 182,189 212,687
(Net of Provision for Taxation Rs. 2,067,473 (Previous Year Rs. 1,771,621)
618,455 601,620
SCHEDULE 12
CURRENT LIABILITIES
Sundry Creditors:
Due to Small Scale Industrial Undertakings
(Refer Note 8 of Schedule 22) 10,113 13,520
Due to Creditors other than Small Scale Industrial Undertakings 1,567,808 1,615,806
Interest accrued but not due 3,997 2,629
Investor Education and Protection Fund shall be credited
by the following amounts:
Unclaimed Dividends* 2,563 2,507
Unclaimed Public Deposits* 855 975
Deposits from Agents, Dealers and Customers 78,423 129,512
Due to Subsidiary Company 11,688 29,320
Other Liabilities 119,025 76,572
1,794,472 1,870,841
* There are no amounts as at year end which are due to be credited

to Investor Education and Protection Fund.
SCHEDULE 13
PROVISIONS
Tax on Proposed Dividend 12,188 12,188
Leave Encashment 50,023 63,277
Gratuity 25,493 38,664
Pension 8,181 6,854
Fringe Benefit Tax [Net of Advance Tax Rs. 10,730 (Previous Year Rs. Nil)] 18,558 —
Direct Tax Matters (Refer Notes 1(j) and 9 of Schedule 22) 48,558 107,371
[Net of Advance Tax Rs. 104,775 (Previous Year Rs. 45,962)]
Indirect Tax Matters (Refer Notes 1(j) and 9 of Schedule 22) 25,700 50,166
Commercial and Other Matters (Refer Note 1(j) and 9 of Schedule 22) 6,871 6,871
282,469 372,288
52
Schedules forming part of the Profit and Loss Account for the year ended Rupees ’000s
December 31, 2005
Year Ended Year Ended

31.12.2005 31.12.2004
SCHEDULE 14
OTHER OPERATING INCOME
Commission — Indenting Business and others 14,315 2,937
(Tax deducted at source Rs. 269 — Previous Year Rs. 56)
Manufacturing Services rendered 71,500 135,026
(Tax deducted at source Rs. 1,581 — Previous Year Rs. 2,735)
Export Incentives 17,456 8,256
103,271 146,219
SCHEDULE 15
OTHER INCOME
Interest Received (Tax deducted at source Rs. 63 — Previous Year Rs. 439) 2,165 1,135
Dividend Income
Long-term 2,299 2,155
Current 3,821 2,118
6,120 4,273
Profit on Assets sold/ discarded (Net) 169 58,641
Profit on sale of Investments 251 2,365
Rent Income (Tax deducted at source Rs. 1,784 — Previous Year Rs. 1,632) 8,088 8,088
Insurance Claims 1,127 563
Bad Debts recovered 1,010 2,185
Foreign Exchange Fluctuations (Net) — 3,430
Provisions No Longer Required Written Back 197,975 136,301
Common Facility Charges 127,649 —
(Tax deducted at source Rs. 3,507 — Previous Year Rs. NIL)
Miscellaneous (Tax deducted at source Rs. 3,946 — Previous Year Rs. 1,181) 46,821 44,743
391,375 261,724
SCHEDULE 16
MATERIALS CONSUMED*
Raw Materials:
Opening Stock 195,344 221,529
Add: Purchases 3,087,495 2,830,210
3,282,839 3,051,739
Less: Closing Stock 413,237 195,344
2,869,602 2,856,395
3,186,045 3,154,618
* Includes Rs. 21,914 (Previous Year Rs. 14,965) on account of Write off/
write downs in carrying values of Raw Materials and Packing Materials.
53
December 31, 2005

31.12.2005 31.12.2004
SCHEDULE 17
COST OF TRADED GOODS SOLD*
Add: Purchases 716,861 598,918
785,138 702,013
510,242 633,736
* Includes Rs.1,891 (Previous Year Rs. 54,447) on account of Write off/ write
downs in carrying values of Traded Goods.
SCHEDULE 18
EMPLOYEE COST
Payments to and Provisions for:
Salaries, Wages, Bonus and Allowances 474,251 515,896
Contribution to Provident, Gratuity, Superannuation and Other Funds 64,652 107,143
Staff Welfare Expenses 33,207 35,042
572,110 658,081
SCHEDULE 19
OTHER EXPENSES
Stores and Spares consumed 28,242 31,345
Power, Fuel and Water charges 173,330 160,397
Freight and Clearing charges 247,872 185,143
Rent 71,045 73,080
Rates and Taxes 29,652 17,989
Job work charges 131,353 122,314
Insurance 17,147 21,882
Excise Duty 1,300 72,863
Loss on Asset held for sale — 48,549
Repairs and Maintenance :
Plant and Machinery 18,373 24,454
Buildings 34,441 8,913
Others 29,302 110,273
82,116 143,640
Travelling and Conveyance 143,562 129,430
Communication 81,143 70,829
Printing and Stationery 10,921 12,338
Directors’ Sitting Fees 550 610
Auditors’ Remuneration (Refer Note 6 of Schedule 22) 3,413 2,994
Advertisement and Publicity 322,549 231,031
Legal and Professional Fees 116,037 127,559
Discounts 175,397 202,361
Commission : Others 40,286 34,076
Donations 207 11,000
Bad Debts/ Advances Written Off 116,199 9,743
Less: Withdrawn from Provision for Doubtful debts 115,389 3,713
810 6,030
Compensation 29,600 —
Provision for Doubtful Debts/ Advances 51,231 190,224
Foreign Exchange Fluctuations (Net) 437 —
Miscellaneous 142,409 157,713
1,900,609 2,053,397
54
December 31, 2005

31.12.2005 31.12.2004
SCHEDULE 20
FINANCE CHARGES
Interest on
Debentures — 1,644
Others 16,559 29,022
Bank Charges 17,067 24,740
74,352 111,617
SCHEDULE 21
DECREASE/ (INCREASE) IN STOCKS*
Opening Stock
–Semi-Finished 107,503 81,358
–Finished 830,568 693,096
938,071 774,454
Closing Stock
–Semi-Finished 197,251 107,503
–Finished 677,132 830,568
874,383 938,071
63,688 (163,617)
* Includes Rs. 25,584 (Previous Year Rs. 123,623)

on account of Write off/ write downs in carrying values of Finished Goods.
55
Schedules Annexed to the Balance Sheet as at December 31, 2005 and Profit and Loss Account for the year ended on that date.
SCHEDULE 22 – NOTES TO ACCOUNTS

1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
These financial statements have been prepared under historical cost convention from the books of account maintained on an accrual
basis in conformity with accounting principles generally accepted in India and comply with the Accounting Standards issued by
The Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956, of India (the Act).
(b) Fixed Assets and Depreciation/ Amortisation

Fixed Assets are stated at cost of acquisition less depreciation. Cost comprises of cost of acquisition, cost of improvements and any
attributable cost of bringing the asset to its working condition for intended use.
Owned Assets:
Depreciation on tangible assets is provided on Straight Line Method at the following rates, which are higher than or equal to the rates
prescribed in Schedule XIV of the Act.
Assets Rates (%)

Buildings 3.50/5.00
Plant and Machinery 8.33/10.34
Office Equipment 10.00
Computers 20.00
Furniture and Fixtures 10.00
Vehicles 12.50
Leasehold land is amortised over the period of lease. Depreciation on assets costing Rs. 5,000 or less is provided at the rate of 100%
in the year of acquisition of the assets.
Goodwill is amortised over a period of three years.
Leased Assets:
Assets acquired under finance lease are stated at the present value of the minimum lease payments inclusive of all direct attributable
cost of bringing the same to their working conditions. Leased assets (Computers) are depreciated over the period of its useful life of
five years.
(c) Investments
Long term Investments are stated at cost and provision is made for diminution, other than temporary, in value of investments. Current
investments are valued at lower of cost or market value/ net asset value.
(d) Inventories
Inventories are stated at cost or net realisable value, whichever is lower.
Cost of raw materials, packing materials and traded goods are determined on Weighted Average Method.
Cost of finished goods and semi-finished goods include cost of raw materials and packing materials, cost of conversion and other
costs incurred in bringing the inventories to the present location and condition.
(e) Revenue Recognition

Sales are accounted for, inclusive of excise duty but excluding sales tax, rebates and trade discount.
Revenue is recognised when the property and all significant risks and rewards of ownership are transferred to the buyer or no
significant uncertainty exists regarding the amount of consideration that is derived from the sale of goods.
Interest Income is accounted on accrual basis and dividend income is accounted when right to receive payment is established.
(f) Foreign Currency Transactions

Foreign currency transactions are accounted at the exchange rates prevailing on the date of the transactions. Gains and losses, if any,
at the year-end in respect of foreign currency assets and liabilities not covered by forward contracts, are recognised in the Profit and
Loss Account. Exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets are adjusted
with the carrying amount of the respective fixed assets.
Forward Premia in respect of forward exchange contracts are recognised over the life of the contract.
(g) Retirement Benefits

The Company has created Employees Group Gratuity Fund which has taken a Group Gratuity-Cum-Life Insurance Policy from the
Life Insurance Corporation of India (LIC). Gratuity is provided on the basis of premium on the above policy as intimated by LIC.
The adequacy of accumulated fund balance available with LIC has been compared with actuarial valuation obtained at the year-end
and shortfall, if any, has been provided for in the financial statement.
Contributions to Provident Fund, Employees’ State Insurance Corporation and Superannuation Funds are accounted for on actual
liability basis and is charged to Profit and Loss Account.
Provision for leave encashment and pension is determined and accrued on the basis of actuarial valuation.
56
SCHEDULE 22 – NOTES TO ACCOUNTS (Contd.)

(h) Deferred Taxation
Deferred Tax is recognised, subject to the consideration of prudence, on timing differences being the difference between taxable
income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred
Tax Asset is not recognised unless there are timing differences, the reversal of which will result in sufficient income or there is virtual
certainty that sufficient future taxable income will be available against which such deferred tax asset can be realised.
(i) Borrowing Costs

Borrowing cost directly related to the acquisition or construction of an asset is capitalised as part of the cost of that asset. Other
borrowing costs are charged to the Profit and Loss Account.
(j) Provision and Contingent Liabilities

Provisions are recognised when the Company has a legal and constructive obligation as a result of a past event, for which it is
probable that a cash outflow will be required and a reliable estimate can be made of the amount of the obligation.
Contingent Liabilities are disclosed when the Company has a possible obligation or a present obligation and it is probable that a cash
outflow will not be required to settle the obligation.
(k) Impairment of Assets

The Company assesses at each Balance Sheet date whether there is any indication that an asset may be impaired. If any such
indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable
amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance
Sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed
and the asset is reflected at the recoverable amount.
2. Estimated amount of contracts net of advances remaining to be executed on capital account and not provided for Rs. 10,560 (‘000)
[Previous Year Rs. 60,952 (‘000)].
3. Contingent Liabilities not provided for:

Rupees in '000s
As at As at
Particulars December 31, December 31, Remark
2005 2004
(a) In respect of Bank Guarantees 20,407 49,496 Pertains to guarantees issued in favour
of various statutory bodies and custom
authorities. The Company does not
foresee any outflow in this regard.
(b) Counter Guarantee by the Company 2,967 2,967 Pertains to guarantees issued in favour
of Gujarat Industrial Development
Corporation. The Company does not
(c) Claims against the Company not 7,832 11,168 Pertains to litigation/ claims against the
acknowledged as debts Company by customers/ vendors/ labour.
(to the extent ascertainable) The Company has strong grounds of
appeal and does not foresee any
outflow in this regard.
(d) In respect of non-fulfillment of 63,995 — Represents export obligation against
Export obligation advance licenses acquired by the
Company and the Company does not
(e) In respect of Excise and Custom matters 43,998 299,714 Pertains to litigations/ disputes with
(f) In respect of Sales tax matters 100,838 17,352 various tax/ custom and excise
authorities. The Company has filed
(g) In respect of Income-tax matters* 110,951 161,289 appeal against the demand. The
Company does not expect any
(h) Demand raised by Ministry of Chemicals 27,581 27,581 Demand dated October 25, 1990, for
and Fertilisers, Department of Chemicals payment to the credit of the Drug Prices
and Petro-Chemicals. The Company has Equalisation Account, being the
filed a writ petition in the Hon’able High difference between the pooled price
Court of Mumbai, challenging this and the retention price on the
demand. production of Chloroquine Phosphate
from 1979-1980 upto December 14,
1988. The Company does not
*As at December 31, 2005, Advance Income Tax of Rs. 83,523 ('000), attributable towards this is included under the head ‘Advance
payment of Income Tax’ in Schedule 11 ‘Loans & Advances.’
57

4. Having regard to the requirement of uniform accounting year-end for taxation purposes, the ultimate taxation liability, if any, of the
Company can be determined only on the basis of the taxable income for the year ending on March 31, 2006.
5. Deferred Tax
During the year, the Company has accounted for Deferred Tax in accordance with the Accounting Standard 22 – "Accounting for
Taxes on Income" issued by the Council of The Institute of Chartered Accountants of India.
The Deferred tax balances are set out below:
Rupees in '000s
Particulars As at As at
December 31, December 31,
2005 2004
Deferred Tax Assets
Provision for Doubtful Debts/ Advances/ Deposits 101,123 129,015
VRS Expenses 83,336 96,794
Disallowances u/s. 43B 33,680 47,623
Others 4,759 40,891
222,898 314,323
Deferred Tax Liability

Others 2,619 55
207,857 249,053
Net Deferred Tax Assets 15,041 65,270
6. Auditors' Remuneration
Rupees in '000s
Particulars For the year For the year

ended ended
2005 2004
(a) Audit Fees

– for statutory audit 1,200 1,200
– for limited review 600 400
(b) Tax Accounts and Tax Audit 825 619
(c) Other Services 600 775
(d) Reimbursement of out-of-pocket expenses 188 —
Total 3,413 2,994
7. Research and Development Expense
Research and Development Revenue Expenses 56,913 38,963
8. Dues to Small Scale Industrial Undertakings for more than 30 days include amounts payable to:
• Agarwal Containers Private Limited
• Agarwal Packaging Private Limited
• Ameet Polyfilm Private Limited
• Award Packaging
• Bago Cans Private Limited
• Balkrishna Polymers
• Bescoat
• Caps & Container Industries
• Corru-Cartons (I) Private Limited
• Dimple Drums and Barrels Private Limited
• Empire Packages (P) Limited
• Euro Containers
• Gaurav Composite Containers
58

8. Dues to Small Scale Industrial Undertakings for more than 30 days include amounts payable to: (Contd.)
• Grip Tight Packing (I) Private Limited

• Holloware Manufacturing Syndicate
• Ideal Printers Private Limited
• Impact Metals Limited
• Ishan Industries
• Kajay Remedies Private Limited
• Kinetic Chemicals
• Marvin Chem Corporation
• Mumbai Co-op. Industries Limited
• Okara Trade Parcel Carriers
• Olympic Chemicals
• Payal Industries
• Pest Control India Limited
• Prasad Plastic & Engg Work
• Pruthvi Industries
• Rajpura Printing Press
• Ravira Polyplast Industries
• Real Hydrofit & Co.
• Standard Pesticides Private Limited
• Unitop Chemicals Limited
• Vijay Enterprises
• Yagnesh Printing Company Private Limited
9. Disclosure of Provisions Rupees in ‘000s
S. Particulars Income Tax Indirect Tax Commercial &

No. (net of Other Matters
advance tax)
1 Balance as on January 1, 2005 107,371 50,166 6,871
2 Additional provision during 2005 — — —
3 Advance Tax payment during 2005 58,813 — —
4 Provision used during 2005 — 4,988 —
5 Provision reversed during 2005 — 19,478 —
6 Balance as on December 31, 2005 48,558 25,700 6,871
Direct and Indirect tax

Provisions in this category represents estimates made for probable liabilities arising out of pending disputes/ litigations with
various tax authorities. The outflow with regard to the said matter depends on the exhaustion of remedies available to the Company
under the law and hence the Company is not able to reasonably ascertain the timing of the outflow.
Commercial and other matters
Provisions in this category represent estimates made for probable liabilities/ claims arising out of commercial transaction with
vendors. The outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law
and hence the Company is not able to reasonably ascertain the timing of the outflow.
10. Managerial Remuneration:
Rupees in ‘000s

ended ended
2005 2004
(a) Directors’ Sitting Fees 550 610
(b) Salaries and Allowances 28,449 28,284
Total 28,999 28,894
Note:
The computation of profits under Section 309(5) of the Companies Act, 1956 is not required to be given, as no commission is payable
to the Directors.
59

11. Non-Convertible Debentures issued and redeemed during the year Rs. Nil [Previous Year Rs. 650,000 (‘000)].
12. Remittance in foreign currency on account of dividend on equity shares:

Rupees in ‘000s
Particulars Number of For the year For the year
non-resident ended ended
shareholders December 31, December 31,
2005 2004
Net amount of final dividend for the year ended December 31, 2004 on 27,433,252
Equity Shares 5 60,353 —
Net amount of final dividend for the year ended December 31, 2003 on 27,433,252
Equity Shares 5 — 60,353
The above information pertains only to those shareholders where direct remittances are made by the Company.
13. Information given under clause 3(i)(a), 3(ii), 4-C, 4-D(c), of part II of Schedule VI to the Act.
(a) Turnover of goods produced/ purchased
Class of Goods Unit of Quantity Value

Measurement Rupees in ’000s
(a) Active Ingredients Tons 2,594 794,879

(2,246) (635,970)
(b) Formulations
(1) Powders Tons 20,550 2,311,134
(20,313) (1,953,261)
(2) Liquids KL 9,136 4,183,519
(10,560) (4,827,164)
(3) Tablets ‘000 Nos. 641 3,701
(51) (948)
(4) Others 268,100
7,561,333
(7,417,343)
Notes:
Figures shown in brackets are in respect of previous year.
(b) Opening and Closing stock of goods produced/ purchased:
Class of Goods Opening Stock Closing Stock

Unit of Value Rupees Value Rupees
Measurement Quantity in ’000s Quantity in ’000s
(a) Active Ingredients Tons 278 70,957 451 95,295

Tons (238) (122,812) (278) (70,957)
(b) Formulations
(1) Powders Tons 2,535 288,596 1,256 211,489
Tons (4,137) (174,365) (2,535) (288,596)
(2) Liquids KL 1,582 537,694 1,463 644,178
KL (1,527) (496,577) (1,582) (537,694)
(3) Tablets ‘000 Nos. 223 1,598 137 1,066
‘000 Nos. (442) (2,437) (223) (1,598)
898,845 952,028
(796,191) (898,845)
Notes:
(1) The Closing Stock stated above are after adjustments for free goods, breakages/ damages and expired goods. The difference in
closing stock figures derived from opening stock, production, purchases and sales would be due to above factors.
(2) Opening and Closing stock do not include Semi-finished goods.
(3) Figures shown in brackets are in respect of previous year.
60

(c) Installed Capacity and Actual Production
Class of Goods Unit of Installed Actual

Measurement Capacity Production
(a) Active Ingredients Tons 6,345 2,767

(Refer note 2 and 5 below) Tons (7,260) (2,366)
(b) Formulations
(Refer note 2, 3, 5 and 6 below)
(1) Powders Tons 7,650 19,364
Tons (19,850) (18,381)
(2) Liquids KL 10,025 8,807
KL (10,025) (10,980)
(3) Tablets ‘000 Nos. 6,200 92
‘000 Nos. (6,200) (225)
Notes:
(1) The installed capacities are as per the certificate given by the Management of the Company on which auditors have relied.
(2) Actual production does not include quantities of goods used for captive consumption.
(3) Includes quantities manufactured by others on Lease/ Job work basis.
(4) Figures shown in brackets are in respect of previous year.
(5) Being multipurpose plants, installed capacity is variable in view of different product mix produced in the plant.
(6) Actual production in terms of 100% active ingredient aggregates to 7,014 (Previous Year 7,684).
(d) Purchase of Traded goods
Class of Goods 2005 2004

Unit of Quantity Value Quantity Value
Measurement Rupees in ‘000s Rupees in ‘000s
(a) Liquids KL 358 506,909 98 404,346

(b) Solids Tons — — 991 193,412
(c) Tablets 000 Nos. 489 207 558 1,160
(d) Others — 209,745 — —
Total 716,861 598,918
(e) Raw Materials Consumed
Raw Materials Consumed 2005 2004

Quantity Value Quantity Value
Tons Rupees in ‘000s Tons Rupees in ‘000s
Imidacloprid 117 228,891 71 212,062

Fenoxyprop-p-ethyl 13 58,057 37 173,716
Endosulfan 824 179,194 776 166,505
Thiodicarb 261 184,473 207 150,738
DETCL 1,314 143,215 1,514 161,794
Deltamethrine 19 105,610 28 156,050
Fipronil TC 1*20KG Box WW 32 156,840 — —
Be-cisthemetic acid 4 25,330 7 44,890
Others 1,787,992 1,790,640
Total 2,869,602 2,856,395
Value of all imported and indigenous Raw Materials, Spare parts, Components and other items consumed
2005 2004
Raw Materials Spares, Raw Materials Spares,
Components Components
and other and other
items items
Rupees Rupees Rupees Rupees
in ‘000s % in ‘000s % in ‘000s % in ‘000s %
Imported 1,285,053 45 733 3 1,341,947 47 4,153 13
Indigenous 1,584,549 55 27,509 97 1,514,448 53 27,192 87
Total 2,869,602 100 28,242 100 2,856,395 100 31,345 100
61
SCHEDULE 22 – NOTES TO THE ACCOUNTS (Contd.)

Rupees in ‘000s
Particulars For the For the
year ended year ended
2005 2004
14. Value of Imports on C.I.F. basis
Raw and Packing Materials 1,364,190 1,091,160
Stores, Spares and Components 10,266 3,592
Capital Goods 64,094 7,796
15. Export of Goods on F.O.B. Basis 867,764 688,173
16. Earnings in Foreign Currency

Indenting Commission and Others 5,321 —
Reimbursements from Group Companies 16,828 2,119
17. Expenditure in Foreign Currency

Travelling 6,674 7,328
Other Expenses 104,218 68,634
18. Finance Lease

The Company has acquired Computers under finance lease. Minimum Lease payment outstanding as at December 31, 2005 in respect of
these assets are as under:
Rupees in ‘000s
Particulars Minimum Future Lease Rentals

Less than Between More than Total
1 Year 1 to 5 Years 5 Years
Total Minimum lease payments outstanding as at December 31, 2005 823 — — 823
Interest not due 25 — — 25
Present Value of Minimum Lease Payments* 798 — — 798
*Included under Schedule 3 - Secured Loans.
19. Segment Reporting

In accordance with Accounting Standard 17 – ‘‘Segment Reporting” issued by The Institute of Chartered Accountants of India, the Company
has determined its business segment as “Pesticides”. Since 100% of the Company’s business is from Pesticides, there are no other primary
reportable segments.
Rupees in ‘000s
Secondary Segmental Reporting For the For the
December 31,, December 31,
2005 2004
1. Segmental Revenue
(a) Segment – Local 6,743,221 6,875,389
(b) Segment – Exports 921,383 688,173
Total 7,664,604 7,563,562
2. Segmental Assets (excluding Deferred Tax Assets)

(a) In India 5,880,160 5,295,558
(b) Outside India 198,935 242,642
Total 6,079,095 5,538,200
3. Capital Expenpditure during the year in India 468,729 269,576
62

20. Related Party Transaction
(i) Ultimate Holding Company Bayer AG, Germany
(ii) Subsidiary Company Bayer Polychem (India) Limited
(iii) Parties under common control:
• Bayer (China) Limited, Beijing
• Bayer (Malaysia) Sdn. Bhd., Shah Alam
• Bayer (Proprietary) Limited, Isando
• Lanxess ABS Limited (formerly Bayer ABS Limited) (upto January 31, 2005)
• Bayer CropScience AG
• Bayer CropScience GmbH
• Bayer CropScience K.K., Tokyo
• Bayer CropScience LP, Triangle Park
• Bayer CropScience Pty. Limited, Australia
• Bayer CropScience SA, France
• Bayer CropScience Limited, Bangladesh
• Bayer CropScience Limited, Seoul
• Bayer Diagnostics India Limited, Baroda
• Lanxess Distribution Service GmbH, Leverkusen (formerly Bayer Distribution Service GmbH)
• Bayer East Africa Limited, Nairobi
• Bayer Environment Science SA, France
• Bayer Business Services GmbH
• Bayer MaterialScience Private Limited, Mumbai.
• Bayer Health Care Company Limited
• Bayer MaterialScience AG
• Bayer Pakistan (Private) Limited, Karachi
• Bayer Pharmaceuticals Private Limited, Mumbai
• Bayer South East Asia Pte Limited, Singapore
• Bayer Thai Company Limited, Bangkok
• Bayer Türk Kimya Sanayi Limited Sti., Istanbul
• Bayer Vietnam Limited
• Bilag Industries Private Limited, Gujarat
• Hybrid Rice International Private Limited, Hyderabad
• Nunhems Proagro Seeds Private Limited, Gurgaon
• Proagro Seed Company Private Limited, Hyderabad
• PT Bayer Urethanes Indonesia, Jakarta

• Lanxess India Private Limited (upto January 31, 2005)
(iv) Key Management Personnel

Mr. S. Gerlich (From September 14, 2004) Managing Director
Mr. P. G. L. Dupont (upto September 13, 2004) Managing Director
Mr. J. Frick (Upto October 13, 2005) Wholetime Director
63

(v) The transactions with and outstanding balances of related parties are furnished below
Rupees in ’000s
Nature of Transaction Parties referred to Parties referred to Parties referred to
in (i) above in (ii) above in (iii) above Total
2005 2004 2005 2004 2005 2004 2005 2004
Purchase of Goods
Bayer CropScience AG — — — — 1,072,047 522,588 1,072,047 522,588
Bayer CropScience SA — — — — 44,534 414,268 44,534 414,268
Bilag Industries Private Limited — — — — 618,611 350,628 618,611 350,628
Others — — — — 70,550 97,327 70,550 97,327
Total — — — — 1,805,742 1,384,811 1,805,742 1,384,811
Sale of Goods
Bayer CropScience AG — — — — 659,664 29,705 659,664 29,705
Lanxess Distribution
Services GmbH — — — — — 153,046 — 153,046
Others — — — — 109,992 76,954 109,992 76,954
Total — — — — 818,957 503,196 818,957 503,196

Sale of Services
Bayer Polychem (India) Limited — — — 63,238 — — — 63,238
Bayer Pharmaceuticals
Private Limited — — — — 71,500 70,040 71,500 70,040
Others — — — — — 1,749 — 1,749
Total — — — 63,238 71,500 71,789 71,500 135,027
Dividend Received
Bayer Diagnostics India Limited — — — — 2,299 2,155 2,299 2,155
Total — — — — 2,299 2,155 2,299 2,155
Dividend Paid
Bayer AG 18,200 18,200 — — — — 18,200 18,200
Bayer CropScience GmbH — — — — 16,923 16,923 16,923 16,923
Bayer MaterialScience Private

Limited — — — — 1,441 1,441 1,441 1,441
Total 18,200 18,200 — — 43,592 43,592 61,792 61,792
Purchase of Services
Bayer Polychem (India)

Limited — — 33,870 32,621 — — 33,870 32,621
Total — — 33,870 32,621 — — 33,870 32,621
Interest Income
Bayer Polychem (India) Limited — — 212 48 — — 212 48
Private Limited — — — — — 93 — 93
Total — — 212 48 — 93 212 141
64
Schedules Annexed to the Balance Sheet as at December

December 31,
31, 2005
2005 and
and Profit
Profit and
and Loss
Loss Account
Account for
for the
the year
year ended
ended on
on that
that date.
date.

(v) The transactions with and outstanding balances of related parties are furnished below (Contd.)
Rupees in ’000s
2005 2004 2005 2004 2005 2004 2005 2004

Interest Expense
Lanxess ABS Limited — — — — — 2,476 — 2,476
Bayer Diagnostics India
Limited — — — — 2,071 7,956 2,071 7,956
Hybrid Rice International
Private Limited — — — — 463 3,737 463 3,737
Limited — — — — 646 — 646 —
Others — — — — 8 290 8 290
Total — — — — 3,188 14,459 3,188 14,459
Commission Expense
Bayer CropScience AG — — — — 3,884 — 3,884 —
Total — — — — 3,884 — 3,884 —
Commission Income
Bayer CropScience AG — — — — 4,367 — 4,367 —
Total — — — — 4,367 — 4,367 —
Cost Sharing Recoveries/
Expenses Reimbursement
by other Companies
Bayer AG — 2,226 — — — — — 2,226
Limited — — — — 35,180 76,719 35,180 76,719
Limited — — 3,815 45,251 — — 3,815 45,251
Lanxess India Private Limited — — — — 8,752 62,890 8,752 62,890
Proagro Seed Company
Private Limited — — — — 35,333 34,334 35,333 34,334
Private Limited — — — — 37,413 12,740 37,413 12,740
Others — — — — 55,797 29,362 55,797 29,362
Total — 2,226 3,815 45,251 172,475 216,045 176,290 263,522
Cost Sharing Payments/
Expenses Reimbursement
to other Companies
Bayer AG 6,131 2,479 — — — — 6,131 2,479
Bayer Business Services
GmbH — — — — 12,068 19,251 12,068 19,251
Limited — — — 19,329 — — — 19,329
Bayer CropScience Pty. Limited — — — — 40,286 51,025 40,286 51,025
Limited — — — — 438 27,712 438 27,712
Bayer South East Asia Pte.
Limited — — — — 38,468 41,712 38,468 41,712
Others — — — — 5,892 20,234 5,892 20,234
Total 6,131 2,479 — 19,329 97,152 159,934 103,283 181,742
65

Rupees in ’000s
2005 2004 2005 2004 2005 2004 2005 2004
Outstanding Receivables
net of Payables
Lanxess India Private Limited — — — — — 106,028 — 106,028
Private Limited — — — — 8,883 10,316 8,883 10,316
Lanxess ABS Ltd. — — — — — 3,312 — 3,312

Limited — — — — 1,016 149 1,016 149

Limited — — — — 6,340 4,567 6,340 4,567
Proagro Seed Company

Private Limited — — — — 3,029 8,358 3,029 8,358
Others — — — — 7,581 13,028 7,581 13,028
Total — — — — 40,845 174,466 40,845 174,466
Outstanding Payables net

of Receivables

Limited — — 10,885 14,007 — — 10,885 14,007
Bayer South East Asia

Pte Limited — — — — 68,841 39,471 68,841 39,471
Bilag Industries Private Limited — — — — 48,597 54,553 48,597 54,553
Others — — — — 53,010 113,793 53,010 113,793
Total — — 10,885 14,007 271,462 388,303 282,347 402,310
Sale of Fixed Assets
Lanxess India Private

Limited — — — — — 31,547 — 31,547
PT Bayer Urethanes Indonesia — — — — — 9,544 — 9,544
Bayer CropScience Limited,

Seoul — — — — 4,913 — 4,913 —
Bayer Turk Kimya Sanayi

Limited — — — — 4,074 — 4,074 —
Total — — — — 8,987 41,091 8,987 41,091

Inter Company Deposit
Given
Limited — — 18,500 5,000 — — 18,500 5,000
Lanxess ABS Ltd. — — — — — 80,000 — 80,000
Total — — 18,500 5,000 — 80,000 18,500 85,000
66
Schedules
Schedules Annexed
Annexed to
to the
the Balance
Balance Sheet
Sheet as
as at
at December
December 31,
31, 2005
2005 and
and Profit
Profit and
and Loss
Loss Account
Account for
for the
the year
year ended
ended on
on that
that date.
date.

Rupees in ’000s
2005 2004 2005 2004 2005 2004 2005 2004
Inter Company Deposit

Taken
Lanxess ABS Ltd. — — — — — 1,293,000 — 1,293,000
Ltd. — — — — 330,000 45,000 330,000 45,000
Private Limited — — — — 203,000 — 203,000 —
Limited — — — — 10,000 40,000 10,000 40,000
Total — — — — 543,000 1,378,000 543,000 1,378,000
Inter Company Payable
Balances
Private Limited — — — — — 50,500 — 50,500
Limited — — — — — 140,000 — 140,000
Ltd. — — — — 170,000 — 170,000 —
Total — — — — 170,000 190,500 170,000 190,500
Provisions/ Payment made to Directors
Related Party Designation Nature of Transaction 2005 2004
Mr. S. Gerlich (from September 14, 2004) Managing Director Remuneration 16,994 4,272
Mr. P. G. L. Dupont (upto September 13, 2004) Managing Director Remuneration — 7,999
Mr. J. Frick (upto October 13, 2005) Wholetime Director Remuneration 11,455 16,013
Total 28,449 28,284
21. Current Investments bought and sold during the year
Particulars No. of Units
ABN Amro Mutual Fund 4,506,773

Alliance Capital Mutual Fund 43,553,257
Birla Mutual Fund 16,451,716
Deutsche Mutual Fund 31,807,165
DSP Merrill Lynch Mutual Fund 3,048,915
Grindlays Mutual Fund 5,678,935
HSBC Mutual Fund 1,034,980
J. M. Mutual Fund 2,500,126
Kotak Mahindra Mutual Fund 3,278,678
LIC Mutual Fund 17,018,681
Prudential ICICI Mutual Fund 12,247,371
Reliance Mutual Fund 26,305,658
Tata Mutual Fund 2,758,534
UTI Mutual Fund 340,696
22. With effect from April 5, 2004, the name of the Company has been changed from Bayer (India) Limited to Bayer CropScience Limited.
67
Schedules Annexed to the Balance Sheet as at December
December 31,
31, 2005
2005 and
and Profit
Profit and
and Loss
Loss Account
Account for
for the
the year
year ended
ended on
on that
that date.
date.

23. Loans and Advances in the nature of Loans to subsidiaries
Rupees in ‘000s
As at December 31, 2005 As at December 31, 2004
Name of the Company Particulars Balance Maximum Balance Maximum

Outstanding amount Outstanding amount
outstanding outstanding
during the year during the year
Bayer Polychem (India) Limited Inter Corporate Deposit — 15,000 — 5,000
24. Earnings Per Share:

Rupees in ‘000s
2005 2004
Profit before Prior Period and Exceptional Items and after Taxation 417,330 255,872
Profit after Prior Period and Exceptional Items and after Taxation 371,470 263,604
Weighted average number of equity shares outstanding at year end 39,498,747 39,498,747
Nominal value Per Equity Share (in Rupees) 10 10
Earnings Per Share before Prior Period and Exceptional Item and after Taxation
[Basic and Diluted] (in Rupees) 10.57 6.48
Earnings Per Share after Prior Period and Exceptional Item and after Taxation
[Basic and Diluted] (in Rupees) 9.40 6.67
25. Refer Annexure for additional information pursant to Part IV of Schedule VI of the Companies Act, 1956.
26. Previous Year’s figures have been regrouped wherever necessary.
Signatures to the Schedules forming part of the Balance Sheet and Profit and Loss Account and to the above Notes.
For and on behalf of the Board

Natraj Ramkrishna Managing Director Stephan Gerlich
Partner
For and on behalf of Shirin V. Balsara Raj Kaul
Price Waterhouse Head – Legal &

68
Notes forming part of the Balance Sheet as at December 31, 2005 and Profit and Loss Account for the year ended December 31, 2005
Additional Information pursuant to Part IV of Schedule VI to the Companies Act, 1956, of India.
Balance Sheet Abstract and Company's General Business Profile:
I. Registration Details
Registration No. : 11173
State Code : 11
Balance Sheet Date : 31.12.2005
II. Capital Raised during the year (Amount in Rs. Thousands)

Public issue : Nil
Rights issue : Nil
Bonus issue : Nil
Private Placement : Nil
III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities (including shareholder's funds) : 4,017,195
Total Assets : 4,017,195
Sources of Funds
Paid up Capital : 394,987
Reserves & Surplus : 2,461,650
Secured Loans : 195,798
Unsecured Loans : 964,760
Application of Funds
Net Fixed Assets : 1,633,252
Investments : 40,043
Net Current Assets* : 2,343,900
Miscellaneous Expenditure : Nil
*Including Deferred Tax Assets Rs. 15,041 (’000s)
IV. Performance of the Company (Amount in Rs. Thousands)

Total Income : 7,183,153
Total Expenditure : 6,436,314
+/– Profit/ Loss Before Tax : 746,839
+/– Profit/ Loss After Tax : 371,470
Earning Per Share in Rs. ** : 9.40
Dividend Rate % : 22%
** After Prior Period and Exceptional Items and Taxation
V. Generic Names of Three Principal Product(s)/ Service(s) of the Company

(as per Monetary terms)
Item Code No. (ITC Code) : 380810.11
Product Description : IMIDACLOPRID
Product Description : TRIAZOPHOS
Product Description : METHYL PARATHION

Managing Director Stephan Gerlich
Directors Y. H. Malegam
Shirin V. Balsara
Place : Mumbai, Raj Kaul
Head – Legal &
Date : March 23, 2006 Company Secretary A. K. R. Nedungadi
69
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2005
Rupees in ’000s

31.12.2005 31.12.2004
A. Cash flow from Operating activities:
Net Profit before Prior Period, Exceptional Items and Taxation 815,967 513,266
Adjustments for:
Interest Expense 57,285 86,877
Interest Income (2,165) (1,135)
Dividend Income (6,120) (4,273)
Profit on Fixed Assets sold/ discarded (Net) (169) (58,641)
Profit on sale of Investments (Net) (251) (2,365)
Bad Debts/ Advances Written off (Net of recovery) 115,189 7,558
Provision for Bad & Doubtful Debts/ Advances (64,158) 186,511
Liability no longer required written back (197,975) (136,301)
Provision for Gratuity, Leave Encashment & Pension (25,098) (4,642)
Inventory Write off/ write down 49,389 151,670 193,035 575,354
Operating Profit before Working Capital changes 967,637 1,088,620
Adjustments for changes in Working Capital:

(Increase)/ Decrease in Sundry Debtors (212,915) 320,906
(Increase)/ Decrease in Other Receivables (63,890) 736,027
(Increase)/ Decrease in Inventories (470,721) (320,658)
Increase/ (Decrease) in Trade and Other Payables/ Provisions 89,439 (658,087) (6,871) 729,404
Cash generated from Operations 309,550 1,818,024
Taxes Paid (334,832) (271,489)
Payment under Voluntary Retirement Scheme (72,595) (4,512)
(407,427) (276,001)
Net Cash from/ (used in) Operating activities (97,877) 1,542,023
B. Cash flow from Investing activities:

Purchase of Fixed Assets (458,985) (242,844)
Proceeds from Sale of Fixed Assets 19,371 144,215
Proceeds from Sale of Investments 2,293,251 4,152,365
Purchase of Investments (2,212,912) (4,230,000)
Interest Received 5,303 1,354
Dividend Received 6,120 3,994
Net Cash used in Investing activities (347,852) (170,916)
C. Cash flow from Financing activities:

Proceeds from/ (Repayment of) short term borrowings 384,469 (1,487,729)
Interest Paid (55,917) (84,903)
Dividend Paid (86,842) (86,971)
Dividend Tax Paid (12,188) (11,134)
Net Cash from/ (used in) Financing activities 229,522 (1,670,737)
70
CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2005 (Contd.)
Rupees in ’000s

31.12.2005 31.12.2004
Net Decrease in Cash & Cash Equivalents (216,207) (299,630)
Cash and Cash Equivalents at the beginning of the year 525,918 825,548
Cash and Cash Equivalents at the end of the year 309,711 525,918
Cash and Cash Equivalents comprise

Cash on hand 491 953
Balance with Scheduled Banks – in Unclaimed dividend account 2,563 2,507
Balance with Scheduled Banks – in other accounts 306,657 522,458
309,711 525,918
Notes:
1. The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard-3 on Cash Flow Statements
issued by The Institute of Chartered Accountants of India.
2. Figures in brackets indicate cash outgo.
3. Previous Year’s figures have been reclassified to conform to the current years presentation.
4. Taxes paid includes TDS deducted by third parties aggregating to Rs. 11,087 (Previous Year Rs. 5,604).
This is the Cash Flow Statement referred to in our report of even date.

Natraj Ramkrishna
Partner
Price Waterhouse Raj Kaul
Head – Legal &

71
Statement Pursuant to Section 212 of the Companies Act, 1956 relating to Subsidiary Companies
1. Name of the Subsidiary Company : Bayer Polychem (India) Limited
2. Financial Year of the Subsidiary : 31st December, 2005
3. (a) No. of Shares held in Subsidiary Company on the

above date: Equity : 50,000 Shares of Rs. 10/- each
(b) Extent of Holding : 100%
4. The Net Aggregate Profits less Losses of Subsidiary Company

as far as it concerns the Members of the Holding Company:
(i) Not dealt with in the Holding Company’s Account: (Rs. ’000)
(a) Of the Subsidiary for the Year Ended 31.12.05 : 12,003 Profit
(b) For the previous Financial Years since it became the

Holding Company’s Subsidiary : 26,040 Profit
(ii) Dealt with in the Holding Company’s Accounts:
(a) For the Financial Year of the Subsidiary : Nil
(b) For the previous Financial Years since it became

the Holding Company’s Subsidiary : Nil
5. Change in the interest of the Holding Company between the end of

the Financial Year of the Subsidiary and the end of Holding
Company’s Financial Year : Not Applicable
6. Material changes between the end of the Financial Year of the

Subsidiary and the end of the Holding Company’s Financial Year
in respect of the Subsidiary’s:
(i) Fixed Assets : Not Applicable
(ii) Investments : Not Applicable
(iii) Moneys lent by the Subsidiary : Not Applicable
(iv) Moneys borrowed by the Subsidiary : Not Applicable

Directors Y. H. Malegam
Shirin V. Balsara Raj Kaul
Place : Mumbai, Head – Legal &
Date : March 23, 2006 Company Secretary A. K. R. Nedungadi
72
Bayer Polychem (India) Limited Annual Report 2005
Directors’ Report
Your Directors have pleasure in presenting the Third Annual Report with the audited Share Capital:
statements of Accounts alongwith the Report of the Auditors for the year ended 31st
December, 2005. The entire share capital of the Company of Rs. 5,00,000/- is held by Bayer CropScience
Limited.
Financial Performance: Board of Directors:
Rs. Million Rs. Million Mr. Johannes Frick will cease to be a Director of the Company with effect from
2005 2004 31st March, 2006. The Directors avail this opportunity to place on record their recognition
and appreciation of the valuable contributions made by Mr. Frick, through his leadership
Sales and other Operating Income 107.58 916.36 and guidance, to the Company.
Other Income 2.87 2.34
Ms. Christiane Kunze has been appointed as Director in casual vacancy caused due to
Total Income 110.45 918.70 resignation of Mr. Frick with effect from 1st April, 2006.
Gross Profit before interest and depreciation 29.12 78.22
Pursuant to Sections 255 and 256 and Article 132 of the Articles of Association of the
Less: Interest 1.79 2.50 Company, Ms. Christiane Kunze and Mr. D. C. Scroff, Directors retire by rotation and
Gross Profit before depreciation 27.33 75.72 being eligible, offer themselves for re-appointment.
Less: Depreciation 7.30 23.79 Particulars of Employees Information pursuant to Section 217(2A) of the
Profit for the year before extra-ordinary items 20.03 51.93 Companies Act, 1956:
Less: Extra-ordinary items — 30.81 With regard to the provision of Section 217(2A) of the Companies Act, 1956 read along
Profit for the year before taxation 20.03 82.74 with Companies (Particulars of Employees) Rules, 1975 there was no employee drawing
salary more than the stipulated limit during the year ended 31st December, 2005.
Less: Provision for Taxation on Income 7.40 53.53
Less: Provision for Deferred Taxes 0.33 (21.72) Energy Conservation, Technology Absorption and Foreign Exchange Earnings
and Outgo:
Less: Provision for Fringe Benefit Tax 0.30 —
As the Company is not engaged in any manufacturing activities, the disclosure
8.03 31.81
requirements relating to conservation of energy and technology absorption as required
Profit for the year after Tax 12.00 50.92 under Section 217 (1)(e) of the Companies Act, 1956 read with Companies (Disclosure of
Profit/(Loss) carried forward from previous period 26.04 (24.89) Particulars in the Report of the Board of Directors) Rules, 1988 does not apply.
Profit/(Loss) carried to Balance Sheet 38.04 26.04 Details of Foreign Exchange Earnings and Outgo are as under:
Foreign Exchange Earnings : Rs. 22.32 Million

Operations:
The gross total turnover for the year ended 31st December, 2005 amounted to Rs. 107.58 Foreign Exchange Outgo : Rs. 21.01 Million
million as compared to Rs. 916.36 million for the last year and profit after tax amounted to
Rs. 12.00 million as against Rs. 50.92 million for the previous year. Auditors:
M/s. Price Waterhouse, Chartered Accountants, retire as Statutory Auditors at the
Dividend:: conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.
Your Directors do not recommend any dividend for the period under review. The Company has received a letter from the retiring Auditors to the effect that their
appointment as Statutory Auditors, if made, will be within the limits prescribed under
Section 224 (1B) of the Companies Act, 1956. The Board recommend the re-appointment
Fixed Deposits:
of M/s. Price Waterhouse, as Statutory Auditors of the Company for the year 2006.
The Company has not accepted any deposits during the year.
Personnel:
Corporate Governance: The Board wishes to place on record its appreciation of the dedication and commitment
The Company is a 100% subsidiary of Bayer CropScience Limited but is not its “material of the employees of your Company, at all levels.
non-listed Indian subsidiary”. As per Clause 49 of the listing agreement “material non-
listed Indian subsidiary” means an unlisted subsidiary, incorporated in India, whose
turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the
consolidated turnover or net worth respectively, of the listed holding company and its STEPHAN GERLICH
subsidiaries in the immediately preceding accounting year. The turnover of the Company Chairman
is 2% of its holding company and the net worth of the Company is 1% of its holding Mumbai, 22nd March, 2006
company. Hence the provision relating to appointment of a independent director of the
holding company on the Board of the Company is not applicable.
However, the Board of the Company comprise of two independent Directors; Mr. K. R. V.
Subrahmanian and Mr. D. C. Shroff.
The financial statements and investments made by the Company are reviewed by the
Audit Committee and the Board of Directors of Bayer CropScience Limited, the 100%
holding Company. The minutes of the Board meetings of the Company are also placed at
the Board meeting of the holding company.
The Company, based on the recommendation of Bayer CropScience Limited, has also
formulated Code of Conduct for Directors, Code of Business Conduct for its employees,
Whistle Blowing Policy and a Sexual Harassment Policy. The above policies have been
disseminated to all concerned.
Directors’ Responsibility Statement:

Annexure to the Directors’ Report
The Directors confirm that:
(Annexure I)
• in the preparation of the annual accounts, the applicable accounting standards have
been followed; Information as per Section 217(1)(e) read with Companies (Disclosure of
Particulars in the Report of the Board of Directors) Rules, 1988 and forming part
• they have selected such accounting policies and applied them consistently and made
of the Directors’ Report for the period ended 31st December, 2005.
judgements and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company as on 31st December, 2005 and of the I. CONSERVATION OF ENERGY — NOT APPLICABLE
profit or loss of the Company for the year ended 31st December, 2005;
II. TECHNOLOGY ABSORPTION : Not Applicable
• proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 1956, for III. Foreign Exchange Earnings and Outgo:
safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; Foreign Exchange Earnings : Rs. 22.32 Million
• the annual accounts are prepared on a going concern basis. Foreign Exchange Outgo : Rs. 21.01 Million
73
Bayer Polychem (India) Limited
Auditors’ Report to the Members of Bayer Polychem (India) Limited

1. We have audited the attached Balance Sheet of Bayer Polychem (India) Limited (the Company) as at December 31, 2005, and the related Profit and Loss Account and Cash Flow
Statement for the year ended on that date annexed thereto, which we have signed under reference to this report. These financial statements are the responsibility of the Company’s
Management. Our responsibility is to express an opinion on these financial statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003, as amended by Companies (Auditor’s Report) (Amendment) Order, 2004, issued by the Central Government of India in
terms of sub-section (4A) of Section 227 of the Companies Act, 1956, of India (the Act) and on the basis of such checks of books and records of the Company as we considered
appropriate and according to the information and explanations given to us, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in Paragraph 3 above, we report that:
(a) We have obtained all the information and explanations, which to the best of 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 the Company so far as appears from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C)
of Section 211 of the Act;
(e) On the basis of written representations received from the Directors, as on December 31, 2005 and taken on record by the Board of Directors, none of the Directors is disqualified
as on December 31, 2005 from being appointed as a Director in terms of clause (g) of sub-section (1) of Section 274 of the Act;
(f) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements together with the notes thereon and attached thereto,
give in the prescribed manner the information required by the Act and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at December 31, 2005;
(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Natraj Ramkrishna
Partner
Membership No. F-32815
Price Waterhouse
Place : Mumbai Chartered Accountants
Date : March 22, 2006
74
Annual Report 2005
Annexure to the Auditors’ Report

(Referred to in Paragraph 3 of the Auditors' Report of even date to the members of Bayer Polychem (India) Limited on the financial statements for the year ended December 31, 2005)
(i) (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The fixed assets of the Company have been physically verified by the Management during the year and no material discrepancies between the book records and the physical
inventory have been noticed. In our opinion, the frequency of verification is reasonable.
(c) In our opinion, and according to the information and explanations given to us, a substantial part of fixed assets has not been disposed of by the Company during the year.
(ii) (a) The inventory (excluding stocks with third parties) has been physically verified by the Management during the year. In respect of inventory lying with the third parties, these have
been confirmed by them. In our opinion, the frequency of verification is reasonable.
(b) In our opinion, the procedures of physical verification of inventory followed by the Management are reasonable and adequate in relation to the size of the Company and the
nature of its business.
(c) On the basis of our examination of the inventory records, in our opinion, the Company is maintaining proper records of inventory. The discrepancies noticed on physical
verification of inventory as compared to the book records were not material.
(iii) (a) The Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 301 of the Act.
(b) The Company has taken an unsecured loan from a company covered in the register maintained under Section 301 of the Act. The maximum amount involved during the year and
the year-end balance of such loan aggregates Rs. 15,000 (‘000) and Rs. Nil, respectively.
(c) In our opinion, the rate of interest and other terms and conditions of the aforesaid unsecured loan taken by the Company are not prima facie prejudicial to the interest of the
Company.
(d) In respect of the aforesaid unsecured loan taken by the Company, the Company is regular in repaying the principal amounts as stipulated and is also regular in payment of
interest.
(iv) In our opinion and according to the information and explanations given to us, having regard to the explanation that certain items purchased are of special nature for which suitable
alternative sources do not exist for obtaining comparative quotations , there is an adequate internal control system commensurate with the size of the Company and the nature of its
business for the purchase of inventory, fixed assets and for the sale of goods and services. Further, on the basis of our examination of the books and records of the Company, and
according to the information and explanations given to us, we have neither come across nor have been informed of any continuing failure to correct major weaknesses in the
aforesaid internal control system.
(v) (a) In our opinion and according to the information and explanations given to us, the particulars of contracts or arrangements referred to in Section 301 of the Act have been entered
in the register required to be maintained under that section.
(b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of contracts or arrangements entered into the register in
pursuance of Section 301 of the Act and exceeding the value of Rupees Five Lakhs, in respect of any party during the year, no comparison of prices could be made as the
transactions of purchase and sale of services, according to Management, were of special nature.
(vi) The Company has not accepted any deposits from the public within the meaning of Sections 58A and 58AA of the Act and the rules framed thereunder.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.
(viii) We have broadly reviewed the books of account maintained by the Company in respect of products where, pursuant to the Rules made by the Central Government of India, the
maintenance of cost records has been prescribed under clause (d) of sub-section (1) of Section 209 of the Act and are of the opinion that prima facie, the prescribed accounts and
records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.
(ix) (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is regular in depositing the undisputed
statutory dues including provident fund, income-tax, sales tax, service tax, customs duty, excise duty, cess and other material statutory dues, as applicable, with the appropriate
authorities in India.
(b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of income tax, sales tax, wealth tax, service tax,
customs duty, excise duty and cess which have not been deposited on account of any dispute.
(x) According to the records of the Company examined by us and the information and explanations given to us, the Company has not defaulted in repayment of dues to any banks as
at the Balance Sheet date. Further, there were no dues payable to financial institution or debenture holders as at the Balance Sheet date.
(xi) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.
(xii) In our opinion, and according to the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions
during the year.
(xiii) The Company has not obtained any term loans.
(xiv) On the basis of an overall examination of the Balance Sheet of the Company, in our opinion and according to the information and explanations given to us, there are no funds raised
on a short term basis which have been used for long term investment.
(xv) The Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act during the year.
(xvi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to
the information and explanations given to us, we have neither come across any instance of fraud on or by the Company, noticed or reported during the year, nor have we been
informed of such case by the Management.
(xvii) The clauses (iii)(b), (iii)(c), (iii)(d), (x), (xiii), (xiv), (xix) and (xx) of paragraph 4 of the Companies (Auditor’s Report) Order 2003, as amended by Companies (Auditor’s Report)
(Amendment) Order, 2004, are not applicable in the case of the Company for the current year, since in our opinion there is no matter which arises to be reported in the aforesaid
order.
Natraj Ramkrishna
Partner
Membership No. F-32815
Price Waterhouse
Place : Mumbai Chartered Accountants
75
Balance Sheet as at December 31, 2005 Profit and Loss Account for the year ended December 31, 2005
Rupees ’000s Rupees ’000s
Schedule As at As at Schedule For the year For the year

December 31, December 31, ended ended
2005 2004 December 31, December 31,
SOURCES OF FUNDS 2005 2004
INCOME
Sales 86,321 863,203
Share Capital 1 500 500
Less: Excise Duty (12,611) (46,217)
Reserves and Surplus 2 38,043 26,040 Net Sales 73,710 816,986
LOAN FUNDS Other Operating Income 12 33,870 99,371
Unsecured Loans 3 44,000 22,450 Other Income 13 2,869 2,339
DEFERRED TAX LIABILITY (NET) 8,008 7,675 110,449 918,696
(Refer Note 10 on Schedule 20)
Total 90,551 56,665
EXPENDITURE
Materials Consumed 14 43,815 327,314
Increase in Stocks 16 (2,701) (10,423)
Employee Costs 17 17,581 69,851
Other Expenses 18 19,420 211,864

FIXED ASSETS 4
Gross Block 72,750 71,318
90,415 866,766
Less: Depreciation 18,792 12,310
PROFIT BEFORE EXTRAORDINARY
Net Block 53,958 59,008 ITEM AND TAXATION 20,034 51,930
Capital Work-In-Progress — 45 Add : Extraordinary Item

(Profit on sale of businesses) — 30,808
53,958 59,053
PROFIT BEFORE TAXATION 20,034 82,738
INVESTMENTS 5 — 7,500 Provision For Taxation
CURRENT ASSETS, LOANS AND — Current Tax [Including charge for

ADVANCES prior year Rs. Nil (Previous Year
Rs. 3,533)] 7,400 53,533
Inventories 6 17,600 17,821 — Deferred Tax Charge/ (Credit)
[Including charge/ (Credit) for
Sundry Debtors 7 18,640 35,889 prior year Rs. 1,596
(Previous Year Rs. (15,895))] 333 (21,723)
Cash and Bank Balances 8 5,468 31 (Refer Note 2 G and 10 on
Schedule 20)
Fringe Benefit Tax 298 —
8,031 31,810
65,602 69,985
PROFIT AFTER TAXATION 12,003 50,928
Less: Profit and Loss Account balance brought
CURRENT LIABILITIES AND PROVISIONS forward from Previous Year 26,040 (24,888)
PROFIT AND LOSS ACCOUNT BALANCE
Current Liabilities 10 23,864 61,303 CARRIED TO BALANCE SHEET 38,043 26,040
Provisions 11 5,145 18,570 Earning per share before

29,009 79,873 Extraordinary item 240 935
(Basic and Diluted) (Rs.) (Net of Tax)
Earning per share after
NET CURRENT ASSETS 36,593 (9,888) Extraordinary item 240 1,019
Total 90,551 56,665 (Basic and Diluted) (Rs.) (Net of Tax)
(Refer Note 14 on Schedule 20)
Notes to Accounts 20 Notes to Accounts 20
The Schedules referred to herein form integral part of the Balance Sheet. The Schedules referred to herein form integral part of the Profit and Loss Account.
This is the Balance Sheet referred to in our report of even date. This is the Profit and Loss Account referred to in our report of even date.
For and on behalf of the Board For and on behalf of the Board
Natraj Ramkrishna Stephan Gerlich Natraj Ramkrishna Stephan Gerlich
Partner Chairman Partner Chairman
Membership No.: F-32815 Membership No.: F-32815
For and on behalf of For and on behalf of
Price Waterhouse D. C. Shroff Price Waterhouse D. C. Shroff
Chartered Accountants Director Chartered Accountants Director
Place : Mumbai Place : Mumbai Place : Mumbai Place : Mumbai

Date : March 22, 2006 Date : March 22, 2006 Date : March 22, 2006 Date : March 22, 2006
76
Annual Report 2005
Schedules forming part of the Balance Sheet as at December 31, 2005

As at As at As at As at
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
SCHEDULE 1 SCHEDULE 2
SHARE CAPITAL RESERVES AND SURPLUS
Authorised: Profit and Loss Account 38,043 26,040

50,000 (Previous Year 50,000) 38,043 26,040
Equity Shares of Rs.10 each 500 500
Issued, Subscribed and Paid up:

50,000 (Previous Year 50,000) As at As at
Equity Shares of Rs.10 each 500 500 December 31, December 31,
2005 2004
500 500 SCHEDULE 3
Of the above 50,000 UNSECURED LOANS

(Previous Year 50,000)
Equity Shares are held by Overdraft from Banks — 22,450
Bayer CropScience Limited, Inter Corporate Deposits from a
the Holding Company and Group Company 44,000 —
its nominees. [Repayable within one year Rs. 44,000
(Previous Year Nil)]
44,000 22,450
SCHEDULE 4
FIXED ASSETS
(Refer Note 2A and 2 I on Schedule 20) Rupees ’000s
Assets Cost Depreciation Net Book Value
As at Deductions/ As at As at For On As at As at As at
01.01.2005 Additions Adjustments 31.12.2005 01.01.2005 the year Deductions 31.12.2005 31.12.2005 31.12.2004
Plant &
Machinery 59,524 2,632 27 62,129 8,001 6,157 4 14,154 47,975 51,523
Office Equipment 3,810 252 939 3,123 838 436 441 833 2,290 2,972
Computers 767 55 17 805 396 198 17 577 228 371
Furniture &
Fixtures 7,197 — 524 6,673 3,071 502 352 3,221 3,452 4,126
Vehicles 20 — — 20 4 3 — 7 13 16
Total 71,318 2,939 1,507 72,750 12,310 7,296 814 18,792 53,958 59,008
Previous Year 227,485 6,254 *162,421 71,318 12,002 23,785 23,477 12,310
Capital Work-in-Progress — 45
Total 53,958 59,053
* Includes fixed assets transferred to Bayer Rubber Chemicals Private Limited (now Lanxess India Private Limited) and Bayer MaterialScience Private Limited on account of Sale of
Businesses.
As at As at As at As at
December 31, December 31, December 31, December 31,
2005 2004 2005 2004
SCHEDULE 5 SCHEDULE 6
INVENTORIES
INVESTMENTS (At Cost)
(Refer Note 2 C on Schedule 20)
(Current, Non-trade and Quoted) — —
(Refer Note 2 B and 4 on Schedule 20)
Tata Mutual Fund — Liquid Fund — 7.500
[Nil (Previous Year 677,970 units of Traded Goods 717 103
Rs. 10 each, Market Value Rs. 7,555)] Goods-in-Transit 519 2,704
— 7,500 17,600 17,821
77
Schedules forming part of the Balance Sheet as at Schedules forming part of the Profit and Loss Account for
December 31, 2005 the year ended December 31, 2005
As at As at For the year For the year

December 31, December 31, ended ended
2005 2004 December 31, December 31,
SCHEDULE 7 2005 2004
SUNDRY DEBTORS SCHEDULE 12
Debts outstanding for a period exceeding OTHER OPERATING INCOME

six months
Commission — Indenting Business — 66,750
— Considered Good — 3,360
— Considered Doubtful — — Manufacturing Services rendered 33,870 32,621
— 3,360 33,870 99,371
Other Debts
— Considered Good * 18,640 32,529
18,640 35,889
SCHEDULE 13
*Includes Rs. 2,284 (Previous Year
Rs. 175) due from a private company OTHER INCOME
in which a director of the Company is
a director. Interest Income 25 533
[Tax deducted at Source: Rs. Nil
Of the above: (Previous Year Rs. 93)]
— Secured — —
— Unsecured 18,640 35,889 Dividend on Investments 86 638
18,640 35,889 Profit on Sale of Investments — 87
Insurance Claims 1,632 —

SCHEDULE 8
Scrap Sales — 343
Miscellaneous 1,126 738
Cash on Hand 67 6
2,869 2,339
Cheques on Hand — 15
Balance with Scheduled Banks :
— Current Account 129 10
— Cash Credit Account 5,272 —
5,468 31 SCHEDULE 14
MATERIALS CONSUMED
SCHEDULE 9
Raw Materials:
LOANS AND ADVANCES
(Unsecured — considered good unless Opening Stock 6,989 41,516
otherwise stated)
Advances Recoverable in cash or in kind or
42,648 368,066
for value to be received 15,498 8,760
Less: Adjustment on account of transfer of
Deposits 417 5,163 business to Bayer Rubber Chemicals
Balance with Excise and Customs Authorities 412 2,321 Private Limited (now Lanxess India
Advance Tax 7,567 — Private Limited) (Stock as on
June 30, 2004) — 46,621
[Net of Provision for Taxation Rs. 63,853
(Previous Year Rs. Nil)] Less: Closing Stock 6,086 6,989
23,894 16,244 36,562 314,456
Packing Materials Consumed 7,253 12,858

SCHEDULE 10
43,815 327,314
CURRENT LIABILITIES
Sundry Creditors
— Due to Small Scale Industrial Undertakings 1,267 67

(Refer Note 11 on Schedule 20) SCHEDULE 15
— Others 20,091 44,229 COST OF TRADED GOODS SOLD

21,358 44,296
Opening Stock 103 34,762
Due to Holding Company 803 15,313 Add: Purchases 3,830 239,615
3,933 274,377
23,864 61,303
Less: Adjustment on account of transfer of
business to Bayer Rubber Chemicals
SCHEDULE 11 Private Limited (now Lanxess India
PROVISIONS Private Limited) (Stock as on
June 30, 2004) — 24,861
Income Tax [Net of Advance Tax and
Tax Deducted at Source Rs. Nil Less: Adjustment on account of transfer
(Previous Year Rs. 42,141)] — 14,312 of business to Bayer MaterialScience
Fringe Benefit Tax [Net of Advance Tax Rs. 161 Private Limited (Stock as on
(Previous Year Rs. Nil)] 137 — October 1, 2004) — 7,535
Leave Encashment 5,008 4,258 Less: Closing Stock 717 103

5,145 18,570 3,216 241,878
78
Annual Report 2005
Schedules forming part of the Profit and Loss Account for Schedules forming part of the Balance Sheet
the year ended December 31, 2005 as at December 31, 2005 and Profit and Loss Account
Rupees ’000s for the year ended on that date
For the year For the year SCHEDULE 20
ended ended
December 31, December 31, NOTES TO ACCOUNTS
2005 2004
SCHEDULE 16 1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
These financial statements have been prepared under historical cost convention
INCREASE IN STOCKS
from the books of account maintained on accrual basis in conformity with
Opening Stock accounting principles generally accepted in India and comply with the
— Semi-Finished — 12,189 Accounting Standards issued by The Institute of Chartered Accountants of India
— Finished 5,847 83,888 and referred to in Section 211(3C) of the Companies Act, 1956 of India (the ‘Act’)
5,847 96,077
Less: Adjustment on account of
transfer of business to Bayer A. Fixed Assets and Depreciation
Rubber Chemicals Private Limited (i) Fixed Assets are stated at cost less depreciation. Cost comprises of
(now Lanxess India Private Limited)
cost of acquisition, cost of improvements and any attributable cost of
(Stock as on June 30, 2004)
bringing the asset to its working condition for intended use.
— Semi-Finished — 9,308
— Finished — — 91,345 (ii) Depreciation on Fixed Assets has been provided on Straight Line
Method at the following rates which are higher than or equal to the rates
5,847 (4,576)
prescribed under Schedule XIV of the Act.
Less: Closing Stock
— Semi-Finished — — Asset Category % p.a.
— Finished 8,548 5,847 Plant and Machinery 8.33/10.34
8,548 5,847 Office Equipment 10.00
Computers 20.00
(2,701) (10,423)
Furniture and Fixtures 10.00
Vehicles 12.50
SCHEDULE 17
B. Investments
EMPLOYEE COSTS
Current Investments are valued at lower of cost or market value/ net asset
Salaries, Wages, Bonus and Allowances 15,711 57,022 value.
Contribution to Provident and Other Funds 1,803 11,479
Staff Welfare Expenses 67 1,350 C. Inventories
17,581 69,851 (i) Inventories are valued at lower of cost or net realisable value.
(ii) Cost of raw materials, packing materials and traded goods are
SCHEDULE 18 determined on weighted average method.
(iii) Cost of finished goods and semi-finished goods include cost of raw
OTHER EXPENSES
materials and packing materials, cost of conversion and other costs
Stores and Spares consumed 640 1,510 incurred in bringing the inventories to the present location and condition.
Power, Fuel and Water — 14,687
Cost Sharing Expenses 4,423 11,506 D. Revenue Recognition
Freight and Clearing Charges 1,167 22,308 Sales are accounted for, inclusive of Excise Duty but excluding Sales Tax.
Rent 469 4,627
Revenue is recognised when the property and all the significant risks and
Rates and Taxes 549 637
rewards of ownership are transferred to the buyer or no significant
Excise duty 1,070 (9,982)
uncertainty exists regarding the amount of consideration that is derived from
Processing Charges 2,175 98,916
the sale of goods.
Insurance 202 2,353
Repairs and Maintenance : Interest income is accounted on an accrual basis and Dividend income is
— Machinery 54 2,638 accounted when right to receive payment is established.
— Others 261 1,080
E. Foreign Currency Transactions
315 3,718
Travelling and Conveyance 2,468 7,312 Foreign currency transactions are accounted at the exchange rates
Communication 359 1,859 prevailing on the date of transactions. Gains and losses, if any, at the year-
Printing and Stationery 104 529 end in respect of foreign currency assets and liabilities, are recognised in the
Directors’ Sitting Fees 60 30 Profit and Loss Account. Exchange differences arising on repayment of
Auditors’ Remuneration 1,154 1,019 liabilities incurred for the purpose of acquiring fixed assets are adjusted with
(Refer Note 5 on Schedule 20) the carrying amount of respective fixed assets.
Advertisement and Publicity 99 1,636
F. Retirement Benefits
Rebates and Discounts — 17,301
Commission 292 13,284 (i) The Company has created an Employees Group Gratuity Fund which has
Donations 36 37 taken a Group Gratuity - Cum - Life Insurance Policy from the Life
Bad Debts — 6,275 Insurance Corporation of India (LIC). Gratuity is provided on the basis of
Less: Provision for Doubtful Debts — (5,592) premium paid on the above policy as intimated by LIC. The adequacy of
accumulated fund balance available with LIC has been compared with
— 683
actuarial valuation obtained at the year-end and shortfall/ excess, if any,
Provision for Doubtful Debts — 3,309
has been provided for/ considered as prepaid.
Legal and Professional fees 2,175 11,680
Foreign Exchange Loss (Net) 63 145 (ii) Contribution to Company’s Provident fund and Superannuation fund are
Loss on assets sold/ discarded 683 242 accounted on actual liability basis and is charged to Profit and Loss
Miscellaneous Expenses 917 2,518 Account.
19,420 211,864 (iii) Provision for leave encashment on retirement is determined and accrued
on the basis of actuarial valuation.
SCHEDULE 19 G. Deferred Tax

FINANCE CHARGES Deferred tax is recognised, subject to consideration of prudence, on timing
Interest on differences, being the difference between the taxable income and accounting
— Inter Corporate Deposits 1,603 218 income that originate in one period and are capable of reversal in one or
— Others 24 583 more subsequent periods. Deferred tax asset is not recognised unless there
Finance Charges 161 1,696 are timing differences, the reversal of which will result in sufficient income or
1,788 2,497 there is virtual certainty that sufficient future taxable income will be available
against which such deferred tax assets can be realised.
79
Schedules forming part of the Balance Sheet as at December 31, 2005 and Profit and Loss Account for the year ended on that date
H. Provisions and Contingent Liabilities (b) (i) Consumption of Raw Materials :

Provisions are recognised when the Company has a legal and constructive Raw Materials Unit of Quantity Value
obligation as a result of a past event, for which it is probable that a cash Measurement Rupees in ’000s
outflow will be required and a reliable estimate can be made of the amount of
Drontal Plus Tab – Bulk ’000 Nos. 724 5,514
the obligation.
(820) (5,154)
Contingent liabilities are disclosed when the Company has a possible
Enrofloxacin 100% Kg. 7,341 9,838
obligation or a present obligation and it is probable that a cash outflow will
(5,426) (6,127)
not be required to settle the obligation.
Flumetherin Kg. 338 7,451
I. Impairment of Assets (288) (6,293)
The Company assesses at each Balance Sheet date whether there is any Toltrazuril Kg. 139 4,814
indication that an asset may be impaired. If any such indication exists, the (80) (3,349)
Company estimates the recoverable amount of the asset. If such recoverable Aromatic Amines Tons — —
amount of the asset or recoverable amount of the cash generating unit to (1,946) (109,928)
which the asset belongs is less than its carrying amount, the carrying amount
Ketones Tons — —
is reduced to its recoverable amount. The reduction is treated as an
(1,231) (60,737)
impairment loss and is recognised in the Profit and Loss Account. If at the
Balance Sheet date there is an indication that a previously assessed Others 8,945
impairment loss no longer exists, the recoverable amount is reassessed and (122,868)
the asset is reflected at the recoverable amount. Total 36,562
(314,456)
3. The provision for taxation for the year has been computed on the basis of the
Notes:
results for the year ended December 31, 2005 although the ultimate tax liability
will be determined on the basis of the results for the year ending on March 31, (a) The values of consumption of raw materials have been arrived at on
2006 relevant to the assessment year 2006-2007. the basis of opening stock plus purchases less closing stock. The
consumption therefore includes nominal adjustment for write offs
4. Current Investments bought and sold during the year: and the effects of reduction of stock items to realisable value.
No. of Units (b) Figures shown in brackets are in respect of previous year.
ING Vysya Mutual Fund 928,237 (b) (ii) Value of Imported and Indigenous Raw materials consumed :
Total 928,237
For the year ended For the year ended
December 31, 2005 December 31, 2004
5. Auditors’ Remuneration:
For the year ended For the year ended Value % Value %
December 31, 2005 December 31, 2004 Rupees in ’000s Rupees in ’000s
Rupees in ’000s Rupees in ’000s
Imported 22,947 63 127,144 40
Audit Fees 400 400 Indigenous 13,615 37 187,312 60
Tax Accounts and Tax Audit 425 319
Total 36,562 100 314,456 100
Other Services 300 300
Reimbursement of out-of-pocket expenses 29 — (c) Opening and Closing stock of goods produced/ purchased :
Total 1,154 1,019 Class of Goods Unit of As at As at

Measure- December 31, 2005 December 31, 2004
6. Information given under Clause 3(i)(a), 3(ii), 4-C, 4-D(c), of part II of Schedule VI ment
to the Act. Qty. Value Qty. Value
Rupees Rupees
(a) Turnover of goods produced/ purchased in '000s in '000s
Class of Goods Unit of For the year ended For the year ended
Health Care:
Measure- December 31, December 31,
ment 2005 2004 – Tablets ‘000 Nos. 286 1,181 312 1,378
– Liquids Litres 11,915 6,222 7,495 2,613
Quantity Value Quantity Value
– Injectables Litres 689 929 353 1,464
Rupees Rupees
– Powder Kg. 3,135 844 2,064 416
in ’000s in’000s
– Collars Nos. 698 89 410 79
Rubber Chemicals
Total 9,265 5,950
and Intermediates Tons — — 6,304 669,540
Chemicals Tons — — 1,531 108,296 Note:
Material Science Tons — — 561 144,904 The closing stocks stated above are after adjustments for breakages/
Health Care: damages and date expired goods. The difference in closing stock figures if
derived from opening stock, production and sales would be due to above
– Tablets ‘000 Nos. 1,086 12,786 1,155 10,903
factors.
– Liquids Litres 100,015 45,198 68,470 30,982
– Injectables Litres 5,987 11,712 4,764 7,705 (d) Purchases of Traded goods :
– Powder Kg. 29,363 14,334 19,746 9,257 Class of Goods Unit of For the year For the year
Measure- ended ended
– Collars Nos. 9,724 2,291 7,626 1,998
ment December 31, 2005 December 31, 2004
– Spray Litres — — 702 323
Others — — — 3,036 Qty. Value Qty. Value
Rupees Rupees
Total 86,321 986,944
in ’000s in ’000s
Notes: Rubber Chemicals

– The previous year information of quantities sold includes quantities of and Intermediates Tons — — 335 46,368
finished goods transferred to Lanxess India Private Limited and Bayer Chemicals Tons — — 1,412 86,294
MaterialScience Private Limited (formerly Bayer Industries Private Material Science Tons — — 533 105,772
Limited) on account of sale of business. The sales value of the previous
Health Care:
year includes value of finished goods transferred to Lanxess India
– Tablets ’000 Nos. 3 1,130 — —
Private Limited and Bayer MaterialScience Private Limited (formerly
Bayer Industries Private Limited) aggregating Rs. 123,741 (’000s). – Collars Nos. 14,050 2,700 5,801 1,181
– Sales figures include issue of free goods. Total 3,830 239,615
80
Annual Report 2005
(e) Installed Capacity and Actual Production: 10. The Company has recognised the following Deferred Tax Assets/ Liabilities:
Class of Goods Unit of Installed Actual Particulars As at December 31, As at December 31,
Measurement Capacity Production 2005 2004
Refer Note (d) Refer Note (f)
Rupees in ’000s Rupees in ’000s
below below
Deferred Tax Assets
Rubber Chemicals Disallowances u/s 43B 1,686 1,543
and Intermediates Tons — —
(—) (5,287) Others 5 —
Health Care Total 1,691 1,543
– Formulation
(i) Tablets ‘000 Nos. 300,000 1,349 Depreciation 9,699 9,218
(Refer Note (e) below) (225,000) (1,350)
Total 9,699 9,218
(ii) Creams/Orals/Ointments ‘000 Nos. 4,000 — Net Deferred Tax Liability 8,008 7,675
(Refer Note (e) below) (4,000) (—)
11. The names of small-scale industrial undertakings (as identified by the
Notes:
Management) to whom the Company owes for a period exceeding 30 days as at
(a) Installed capacity figures are given for single shift working basis. the Balance Sheet date are given below:
(b) Installed capacity is as per the certificate given by the Management of – Flex Art
the Company on which the Auditors have relied. – H I Tech Plastics
– Mumbai Co-operative Industries Limited
(c) Figures shown in brackets are in respect of Previous Year.
– Ravira Polyplast Industries
(d) The rubber chemicals, fibres and chemical business of the Company has – Shree Rubber Plast Company Private Limited
been sold to Bayer Rubber Chemicals Private Limited (now Lanxess – The Ideal Printers Private Limited
India Private Limited), with effect from the closing hours of June 30,
2004, and accordingly, there is no installed capacity in respect of the 12. Related Party Disclosures (as identified by the Management):
Rubber Chemicals and Intermediates Division.
(i) Where Control Exists
(e) The actual production figure does not include the following items Bayer AG, Germany – Ultimate Holding Company
manufactured on job work basis for other parties:
Bayer CropScience Limited – Holding Company
Product Name Unit of Quantity (ii) Parties under Common Control

Measurement
Bayer Diagnostics India Limited
Tablets ‘000 Nos 225,475 Bayer MaterialScience Private Limited
(200,771)
Bayer Pharmaceuticals Private Limited
Creams/ Orals/ Ointments ‘000 Nos 2,720 Bayer (Malaysia) Sdn. Bhd., Malaysia
(3,364) Bayer (Pty) Limited, South Africa
Bayer South East Asia Pte. Limited, Singapore
(f) The actual production figure does not include the following items Bayer Antwerpen N.V., Belgium
manufactured by other parties on a job work basis for the Company: Bayer Limited, Japan
Bayer MaterialScience AG, Germany
Product Name Unit of Quantity Bayer MaterialScience LLC, U.S.A.
Measurement Bayer Philippines Inc., Philippines
Bayer Chemicals AG, Germany
– Liquids Litres 104,435
(75,080) Bayer Chemicals Corporation, U.S.A.
Bayer (China) Limited, China
– Injectables Litres 6,323
Bayer Faser GmbH, Germany
(4,615)
Bayer Healthcare AG, Germany
– Powder Kg. 30,893 Bayer Iranchemie AG, Iran
(22,459) Bayer International SA, Schweiz
Bayer SA, Brazil
Bayer Shanghai Pigment Company Limited, Shanghai
For the year ended For the year ended
Bayer Taiwan Company Limited, Taiwan
December 31, 2005 December 31, 2004
Rupees in ’000s Rupees in ’000s Bayer Thai Company Limited, Thailand
Bayer Vietnam Limited, Vietnam
7. Value of imports calculated
on CIF basis Bayer MaterialScience Limited, Hongkong
Hybrid Rice International Private Limited
Raw Materials 17,840 58,482 Lanxess ABS Limited (Up to 31st January, 2005)
Traded Goods 2,642 136,302 Lanxess India Private Limited (Up to 31st January, 2005)
Lanxess International Trading Shanghai Company Limited, China (Up to 31st
Stores, Spares & Components 106 67 January, 2005)
Lanxess Distribution GmbH, Germany (Up to 31st January, 2005)
8. Expenditure in foreign currency Proagro Seed Company Private Limited
Borchers GmbH, Germany
Travelling and Conveyance 426 1,340
H.C. Starck GmbH, Germany
Hennecke, Sank Augustin, Germany
9. Earnings in foreign currency PT Bayer Urethanes, Indonesia
Exports of goods calculated PT Bayer Kimia Farmasindo, Indonesia
on FOB basis 19,940 306,427 Rhein Chemie Rheinau GmbH, Germany
Indenting Commission — 66,364 Sumika Bayer Urethane Company Limited, Japan
Reimbursement of expenses 2,382 1,115 Wolff Cellulosics, Germany
81
(iii) The following transactions were carried out with related parties during the current year:
Rupees in ’000s
Particulars Parties referred Parties referred Total
to in (i) above to in (ii) above
2005 2004 2005 2004 2005 2004
Purchase of Goods/ Materials
Bayer HealthCare AG — — 18,100 14,377 18,100 14,377
Bayer Taiwan Company Limited — — 1,920 8,313 1,920 8,313
Bayer Antwerpen N.V. — — — 21,596 — 21,596
Bayer MaterialScience AG — — — 91,547 — 91,547
Others — — — 57,140 — 57,140
Total — — 20,020 192,973 20,020 192,973
Sale of Finished Goods
Others — — — 17,250 — 17,250
Total — — — 121,389 — 121,389
Sale of Services
Bayer CropScience Limited (Exclusive of
Service Tax Rs. 860 (Previous Year Nil)) 33,870 32,621 — — 33,870 32,621
Total 33,870 32,621 — — 33,870 32,621
Purchase of Services
Bayer CropScience Limited — 63,109 — — — 63,109
Total — 63,109 — — — 63,109
Interest Income
Proagro Seed Company Private Limited — — — 92 — 92
Total — — — 92 — 92
Interest Expenses
Bayer CropScience Limited 212 48 — — 212 48
Hybrid Rice International Private Limited — — 1,391 — 1,391 —
Bayer MaterialScience Private Limited — — — 143 — 143
Total 212 48 1,391 170 1,603 218
Commission Income
Bayer AG — 18,294 — — — 18,294
Lanxess Distribution GmbH — — — 21,953 — 21,953
Bayer International SA — — — 9,776 — 9,776
Others — — — 12,820 — 12,820
Total — 18,294 — 44,549 — 62,843
Commission Expense
Bayer (Malaysia) Sdn. Bhd. — — — 364 — 364
Bayer SA — — — 1,340 — 1,340
Bayer Thai Company Limited — — — 257 — 257
Bayer (China) Limited — — — 303 — 303
Others — — — 212 — 212
Total — — — 2,476 — 2,476
Other Income
Total — — — 128 — 128
Lease Rental Expense
Bayer CropScience Limited 249 — — — 249 —
Total 249 — — — 249 —
Inter Corporate Deposit Given
Proagro Seed Company Private Limited — — — 82,000 — 82,000
Total — — — 82,000 — 82,000
Inter Corporate Deposit Taken
Bayer CropScience Limited 18,500 5,000 — — 18,500 5,000
Bayer MaterialScience Private Limited — — — 45,000 — 45,000
Total 18,500 5,000 82,000 53,000 100,500 58,000
Cost Sharing recoveries/ Expenses Reimbursed by other Companies
Bayer CropScience Limited — 19,329 — — — 19,329
Bayer MaterialScience Private Limited — — 116 5,023 116 5,023
Bayer Healthcare AG — — 2,382 736 2,382 736
Lanxess ABS Limited — — — 2,354 — 2,354
Others — — — 1,148 — 1,148
Total — 19,329 2,498 9,261 2,498 28,590
Cost Sharing Payments/ Expenses Reimbursed to other Companies
Bayer Pharmaceuticals Private Limited — — 2,229 1,312 2,229 1,312
Others — — 445 6,799 445 6,799
Total 3,677 45,380 2,674 23,697 6,351 69,077
Sale of Business
Lanxess India Private Limited — — — 665,000 — 665,000
Total — — — 713,858 — 713,858
Outstanding Receivable net of Payable
Bayer MaterialScience Private Limited — — 2,284 — 2,284 —
Total 10,885 14,007 2,284 — 13,169 14,007
Outstanding Payable net of Receivable
Bayer Healthcare AG — — 3,079 4,584 3,079 4,584
Bayer Pharmaceuticals Private Limited — — 564 661 564 661
Others — — — 626 — 626
Total — — 3,643 19,517 3,643 19,517
Inter Corporate Deposit Payable
Total — — 44,000 — 44,000 —
82
Annual Report 2005
13. Segment Reporting: Rupees in ’000s

In the previous year, the following segments were identified considering the
Particulars 2005 2004
nature of the products/ services, deferring risks and returns and the internal
financial reporting systems: GEOGRAPHICAL SEGMENTS
• Rubber Revenue
• Chemicals India 87,350 631,419
• MaterialScience Outside India 20,230 284,938
• Healthcare
Total Revenue 107,580 916,357
During previous year, the Company had sold its rubber chemicals, fibres and
chemical business to Bayer Rubber Chemicals Private Limited (now Lanxess Assets
India Private Limited) with effect from July 1, 2004 and its material science India 118,381 136,538
business to Bayer MaterialScience Private Limited (formerly Bayer Industries
Private Limited) with effect from October 1, 2004. Accordingly ‘Healthcare’ Outside India 1,179 —
segment has been considered as the primary segment for disclosure.
Total Assets 119,560 136,538
Rupees in ’000s
14. Disclosure of Earnings per share
Particulars Rubber Chemicals Material Health Total
Science Care
ended ended
Revenue December 31, 2005 December 31,2004
Segment Revenue — — — 107,580 107,580 Profit for the year

(542,353) (121,614) (162,944) (89,446) (916,357) before Extraordinary
Items, after Tax (Rs. ’000s) 12,003 46,743
I nter-segment Revenue — — — — —
Profit for the year
after Extraordinary
External Revenue — — — 107,580 107,580
Items, after Tax (Rs. ’000s) 12,003 50,928
(542,353) (121,614) (162,944) (89,446) (916,357)
Number of Equity Shares 50,000 50,000
Segment Results — — — 21,711 21,711
(19,182) (12,292) (7,162) (14,547) (53,183)
Nominal value of an equity share (Rs.) 10 10
Earning per share before Extraordinary

Less: Items, after Tax (Rs.) 240 935
Interest and Financial Charges — — — — 1,788
— — — — (2,497) Earning per share after Extraordinary
Items, after Tax (Rs.) 240 1,019
Add:
Interest and Dividend Income — — — — 111
15. Refer annexure for additional information pursuant to part IV of Schedule VI of the
— — — — (1,171)
Act.
Add:
Unallocable Income (net of — — — — — 16. In view of sale of polymer businesses comprising of Rubber Chemicals, Fibres &
unallocable expenses) — — — — (73) Chemicals and Material Science businesses in previous year, the figures of the
current year are not comparable with that of the previous year.
Profit Before Taxation and — — — — 20,034
Extraordinary Item — — — — (51,930) 17. Previous year figures have been re-grouped/ re-classified to conform with the
current year’s presentation.
Other Information
Segment Assets — — — 119,560 119,560 The Schedules 1 to 20 referred to herein above form an integral part of the financial
— — — (136,538) (136,538) statements.
Segment Liabilities — — — 73,009 73,009

(excluding Deferred — — — (102,323) (102,323)
Tax Liabilities)
Segment Capital Expenditure — — — 2,894 2,894 Natraj Ramkrishna Stephan Gerlich

(3,230) (93) (2,676) (255) (6,254) Partner Chairman
Membership No: F-32815
Segment Depreciation — — — 7,296 7,296
Price Waterhouse D. C. Shroff
(16,227) (110) (704) (6,744) (23,785)
Chartered Accountants Director
Note: Place : Mumbai Place : Mumbai

Figures in bracket relate to previous year. Date : March 22, 2006 Date : March 22, 2006
83
Additional Information pursuant to Part IV of Schedule VI to Cash Flow Statement for the year ended December 31, 2005
the Companies Act, 1956, of India.
Rupees ’000s
Balance Sheet Abstract and Company’s General Business Profile: For the For the
I. Registration Details Year Ended Year Ended
Registration No. : 142216 2005 2004
State Code : 11 A. Cash flow from Operating activities:
Net Profit before Extraordinary
Balance Sheet Date, Month, Year : 31.12.2005 Item and Taxation 20,034 51,930
Adjustment for:
II. Capital Raised during the year (Amount in Rs. Thousands) Loss on sale of Fixed Assets 683 242
Unrealised Foreign Exchange Gain (30) (4,305)
Public issue : Nil Profit on sale of Investments — (87)
Dividend Income (86) (638)
Right issue : Nil
Interest Income (25) (533)
Bonus issue : Nil Interest Expense 1,627 801
Provision for Doubtful Debts — 3,309
Private Placement : Nil Bad Debts — 683
Provision for Leave Encashment 750 4,223
10,215 27,480
III. Position of Mobilisation and Deployment (Amount in Rs. Thousands) Operating Profit before Working
of Funds Capital changes 30,249 79,410
Total Liabilities (including Shareholder’s Funds) : 90,551 Adjustments for Changes in
Working Capital:
Total Assets : 90,551 (Increase)/ Decrease in
Sundry Debtors 17,247 368,455
Sources of Funds (Increase)/ Decrease in
Other Receivables (83) 39,282
Paid Up Capital : 500
(Increase)/ Decrease in
Reserves & Surplus : 38,043 Inventories 221 185,463
(Increase)/ Decrease in
Secured Loans : Nil Trade Payables and
Other Liabilities (37,406) (848,545)
Unsecured Loans : 44,000
(20,021) (255,345)
Application of Funds Cash Generated from Operations 10,228 (175,935)

Direct taxes (paid)/ received (29,441) (33,692)
Net Fixed Assets : 53,958 Profit on Sale of Businesses — 30,808
Net Cash used in Operating activities (19,213) (178,819)
Investments : Nil
B. Cash flow from Investing activities:
+/– Net Current Assets* : 36,593 Purchase of Investments (10,000) (327,500)
Miscellaneous Expenditure : Nil Sale of Investments 17,500 320,087
Short term deposits received — 140,000
Accumulated Losses : Nil Short term deposits repaid — (140,000)
Purchase of Fixed assets (2,894) (6,254)
* Excluding Deferred Tax Liability Rs. 8,008 (000’s) Sale of Fixed assets 10 155,361
Interest received 25 533
Dividend received 86 638
IV. Performance of the Company (Amount in Rs. Thousands) Net Cash from Investing activities 4,727 142,865
Total Income : 110,449 C. Cash flow from Financing activities:

Proceeds from Short Term Borrowing 21,550 22,450
Total Expenditure : 90,415 Interest paid (1,627) (801)
+/– Profit/ Loss Before Tax : 20,034 Net Cash from Financing activities 19,923 21,649
+/– Profit/ Loss After Tax : 12,003 Net Increase/ (Decrease) in Cash
Earning Per Share in Rs. : 240 & Cash Equivalents 5,437 (14,305)
Cash & Cash Equivalents –
Dividend % : Nil
Opening Balance 31 14,336
Cash & Cash Equivalents –
Closing Balance 5,468 31
V. Generic Names of Principal Product(s)/
Cash & Cash Equivalents Comprise
Service(s) of Company
Cash 67 6
(as per Monetary terms) Cheques on hand — 15
Item Code No. (ITC Code) : 300490.21 Balance with Scheduled Banks 5,401 10
5,468 31
Product Description : DRONTAL PLUS TAB
Notes:
Item Code No. (ITC Code) : 294190.90 (1) The above cash flow statement has been prepared under the “Indirect Method” as set
Product Description : FLUMETHERIN out in the Accounting Standard – 3 on Cash Flow Statements issued by The Institute
of Chartered Accountants of India.
Item Code No. (ITC Code) : 294190.90 (2) Figures in brackets indicate cash outgo.
Product Description : TOLTRAZURIL (3) Previous year figures have been reclassified to conform to the current years
presentation.
For and on behalf of the Board of Directors This is the Cash Flow Statement referred to in our report of even date
Stephan Gerlich For and on behalf of the Board

Chairman Natraj Ramkrishna Stephan Gerlich
Partner Chairman
D. C. Shroff Membership No.: F-32815
Director For and on behalf of
Price Waterhouse D. C. Shroff
Place : Mumbai Chartered Accountants Director
Place : Mumbai Place : Mumbai
84
Bayer CropScience Limited [Formerly Bayer (India) Limited]
AUDITOR’S REPORT TO THE BOARD OF DIRECTORS OF BAYER CROPSCIENCE

LIMITED (FORMERLY BAYER (INDIA) LIMITED) ON THE CONSOLIDATED FINANCIAL
STATEMENTS OF BAYER CROPSCIENCE LIMITED AND ITS SUBSIDIARY
1. We have audited the attached Consolidated Balance Sheet of Bayer CropScience Limited (formerly Bayer (India)
Limited) (the Company) and Bayer Polychem (India) Limited (the subsidiary) as at December 31, 2005, the
Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that
date annexed thereto, which we have signed under reference to this report. These Consolidated Financial
Statements are the responsibility of the Company’s Management. Our responsibility is to express an opinion on
these Consolidated Financial Statements based on our audit.
2. We have conducted our audit in accordance with auditing standards generally accepted in India. Those
Standards require that we plan and perform the audit to obtain reasonable assurance about whether the
Financial Statements are prepared, in all material respects, in accordance with an identified financial reporting
framework and are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Financial Statements. An audit also includes assessing the
accounting principles used and significant estimates made by the Management, as well as evaluating the overall
Financial Statement Presentation. We believe that our audit provides a reasonable basis for our opinion.
3. We report that Consolidated Financial Statements have been prepared by the Company in accordance with the
requirements of Accounting Standard 21, Consolidated Financial Statements, issued by The Institute of
Chartered Accountants of India and on the basis of the separate audited Financial Statements of the Company
and its subsidiary included in the Consolidated Financial Statements.
4. On the basis of the information and explanations given to us and on consideration of the separate audit reports
on individual audited Financial Statements of the Company and its aforesaid subsidiary, in our opinion, the
Consolidated Financial Statements give a true and fair view in conformity with the accounting principles
generally accepted in India:
(i) in the case of the Consolidated Balance Sheet, of the consolidated state of affairs of the Company and its
subsidiary as at December 31, 2005;
(ii) in the case of the Consolidated Profit and Loss Account, of the consolidated results of operations of the
Company and its subsidiary for the year ended on that date; and
(iii) in the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Company and
its subsidiary for the year ended on that date.
Natraj Ramkrishna
Partner
Membership Number: F–32815
Price Waterhouse
Chartered Accountants
Place : Mumbai
85
Balance Sheet as at December 31, 2005 (Consolidated) Rupees ’000s
Schedule As at As at
31.12.2005 31.12.2004
SOURCES OF FUNDS
Share Capital 1 394,987 394,987
Reserves and Surplus 2 2,499,693 2,215,305
2,894,680 2,610,292
LOAN FUNDS
Secured Loans 3 195,798 173,789
Unsecured Loans 4 1,008,760 624,750
1,204,558 798,539
4,099,238 3,408,831
FIXED ASSETS 5
Gross Block 3,338,677 2,965,059
Less: Depreciation/ Amortisation 1,731,013 1,555,946
Net Block 1,607,664 1,409,113
Capital Work-In-Progress 79,546 88,016
1,687,210 1,497,129
INVESTMENTS 6 39,543 127,131
DEFERRED TAX ASSET (NET) 7,033 57,595
CURRENT ASSETS, LOANS AND ADVANCES
Inventories 7 1,778,248 1,357,137
Sundry Debtors 8 1,693,335 1,498,455
Cash and Bank Balances 9 315,179 525,949
Other Current Assets 10 34,550 5,940
4,458,911 4,005,345
Less: CURRENT LIABILITIES AND PROVISIONS

Current Liabilities 12 1,805,845 1,887,511
Provisions 13 287,614 390,858
2,093,459 2,278,369
NET CURRENT ASSETS 2,365,452 1,726,976
4,099,238 3,408,831
Schedules referred to above form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in our report of even date. For and on behalf of the Board
Natraj Ramkrishna
Partner Managing Director Stephan Gerlich
Price Waterhouse Head – Legal & Raj Kaul
86
Profit and Loss Account for the year ended December 31, 2005 (Consolidated) Rupees ’000s

Schedule 31.12.2005 31.12.2004
INCOME
Sales 7,647,654 8,280,546
Less: Excise Duty 885,437 913,746
6,762,217 7,366,800
Other Operating Income 14 103,271 150,297
Other Income 15 393,863 263,514
7,259,351 7,780,611
EXPENDITURE
Materials Consumed 16 3,229,860 3,478,703
Employee Cost 18 589,691 725,220
Other Expenses 19 1,882,742 2,130,225
6,524,718 7,607,729
Less: Recoveries from Group Companies 162,355 218,274
6,362,363 7,389,455
Add/ (Less): (Increase)/ Decrease in Stock 21 60,987 (174,040)
6,423,350 7,215,415
PROFIT BEFORE PRIOR PERIOD, EXCEPTIONAL/ EXTRAORDINARY 836,001 565,196
ITEMS AND TAXATION
Add : Prior Period Item — 18,748
Less: Exceptional/ Extraordinary Item 22 69,128 (22,829)
PROFIT FOR THE YEAR BEFORE TAXATION 766,873 606,773
Taxation
— Current Tax (Refer Note 4 of Schedule 23) 303,252 284,533
— Deferred Tax (Refer Note 5 of Schedule 23) 50,562 7,708
— Fringe Benefit Tax 29,586 383,400 —
PROFIT AFTER TAX 383,473 314,532
Add: Balance brought forward 1,409,223 1,220,136
AMOUNT AVAILABLE FOR APPROPRIATION 1,792,696 1,534,668
APPROPRIATION
Provision For Tax on Proposed Dividend 12,188 12,188
Transfer to General Reserve 37,147 26,360
Balance carried to Balance Sheet 1,656,464 1,409,223
1,792,696 1,534,668
Earnings Per Share before Prior Period and Exceptional/ Extraordinary Item
after Taxation – Basic and Diluted (Net of Tax) 10.87 7.66
Earnings Per Share after Prior Period and Exceptional/ Extraordinary Item
after Taxation – Basic and Diluted (Net of Tax)
(Refer Note 16 of Schedule 23) 9.71 7.96
Schedules referred to above form an integral part of the Profit and Loss Account.
This is the Profit and Loss Account referred to in our report of even date. For and on behalf of the Board
Natraj Ramkrishna
Partner
For and on behalf of Shirin V. Balsara Raj Kaul
87
Schedules forming part of the Balance Sheet as at December 31, 2005 (Consolidated) Rupees ’000s
As at As at
31.12.2005 31.12.2004
SCHEDULE 1
SHARE CAPITAL
Authorised:
46,300,000 (Previous Year 46,300,000) Equity Shares of Rs. 10 each 463,000 463,000
Issued, Subscribed and Paid-up :

39,498,747 (Previous Year 39,498,747) Equity Shares of Rs. 10 each, fully
paid-up 394,987 394,987
Notes:
(a) Of the above, 12,632,500 (Previous Year 12,632,500) Equity Shares of Rs. 10
each are allotted as fully paid-up Bonus Shares by way of capitalisation of Capital
Reserve, Premium received on Shares and General Reserve.
(b) 28,086,662 (Previous Year 28,086,662) Equity Shares of Rs. 10 each are held by
Bayer AG, Germany, the Ultimate Holding Company and its Subsidiaries.
(c) Pursuant to the Scheme of Amalgamation of erstwhile Bayer CropScience India

Limited with the Company, 23,278,747 Equity Shares of Rs. 10 each have been
issued and allotted as fully paid-up to the Shareholders of erstwhile Bayer
CropScience India Limited without payment being received in cash.
SCHEDULE 2
RESERVES AND SURPLUS
General Reserve
As per last Balance Sheet 801,964 775,604
Add: Transfer from Profit and Loss Account 37,147 26,360
839,111 801,964
Investment Allowance Utilised Reserve 4,118 4,118
Profit and Loss Account 1,656,464 1,409,223

2,499,693 2,215,305
SCHEDULE 3
SECURED LOANS
(Secured by Pari Passu charge by hypothecation of Stocks and Book Debts)
Lease Liability 798 11,561
(Secured on the underlying leased assets)
[Due within a year Rs. 798 (Previous Year Rs. 10,677)]
195,798 173,789
88
As at As at
31.12.2005 31.12.2004
SCHEDULE 4
UNSECURED LOANS
[Includes interest accrued and due Rs. 2,709 (Previous Year: Rs. Nil)]
Inter Corporate Deposits 214,000 190,500
Loan from Others 11,800 11,800
1,008,760 624,750
SCHEDULE 5
FIXED ASSETS
Rupees ‘000s
Cost Depreciation/Amortisation
Assets (Refer Notes 1 and 2 below) (Refer Notes 2 and 3 below) Net Book Value
As at Additions/ Deletions/ As at As at For the year/ Deletions/ As at Net Block Net Block
01.01.2005 Adjustments Adjustments 31.12.2005 01.01.2005 Adjustments Adjustments 31.12.2005 31.12.2005 31.12.2004
Owned Assets
Intangibles
Goodwill 93,256 — — 93,256 62,217 31,039 — 93,256 — 31,039
Technical Know-how 15,633 — — 15,633 15,633 — — 15,633 — —
Sub-total 108,889 — — 108,889 77,850 31,039 — 108,889 — 31,039
Tangibles
Freehold Land 5,789 3,236 — 9,025 — — — — 9,025 5,789
Leasehold Land 9,100 — — 9,100 2,266 121 — 2,387 6,713 6,834
Buildings 835,126 43,724 44,259 834,591 207,459 32,138 9,709 229,888 604,703 627,667
Plant and Machinery 1,385,685 364,097 30,784 1,718,998 940,720 128,056 25,927 1,042,849 676,149 444,965
Office Equipment & 400,826 56,026 91,736 365,116 207,948 54,716 46,015 216,649 148,467 192,878
Computers
Furniture & Fixtures 87,841 41,066 3,007 125,900 60,129 9,732 2,593 67,268 58,632 27,712
Vehicles 78,528 66,387 14,258 130,657 30,960 13,126 8,978 35,108 95,549 47,568
Sub-total 2,802,895 574,536 184,044 3,193,387 1,449,482 237,889 93,222 1,594,149 1,599,238 1,353,413
Total 2,911,784 574,536 184,044 3,302,276 1,527,332 268,928 93,222 1,703,038 1,599,238 1,384,452
Leased Assets
Computers 53,275 — 16,874 36,401 28,614 12,330 12,969 27,975 8,426 24,661
Total 53,275 — 16,874 36,401 28,614 12,330 12,969 27,975 8,426 24,661
Capital Work-in-Progress includes Capital Advances. 79,546 88,016
Grand Total 2,965,059 574,536 200,918 3,338,677 1,555,946 281,258 106,191 1,731,013 1,687,210 1,497,129
Previous Year 3,143,964 328,681 *507,586 2,965,059 1,399,244 300,250 143,548 1,555,946 — —
Notes:
1 The Company has agreed to transfer certain portion of the land (book value Rs. 1,153) and Building (written down value Rs. 103,047) located at Kolshet,
Thane, Maharashtra to Lanxess India Private Limited vide Memorandum Of Understanding dated November 18, 2004, consequent to the divestment of
chemical business, globally. This transfer has not been effected as at the year-end pending approval from the Collector of Thane.
2 Additions/ Deletions to fixed assets and Depreciation for the year/ on deletions includes adjustments on account of reclassification within the above categories
of Fixed Assets aggregating Rs.94,443 and Rs.48,219 respectively.
3 Depreciation on Leased assets for the year includes depreciation for earlier years Rs. Nil (Previous Year Rs. 16,284).
* Includes fixed assets transferred to Bayer Rubber Chemicals Private Limited (now Lanxess India Private Limited) and Bayer MaterialScience Private Limited on
account of sale of businesses.
89
As at As at
31.12.2005 31.12.2004
SCHEDULE 6
INVESTMENTS
LONG TERM, AT COST
NON TRADE:
UNQUOTED
4,900 (Previous Year 4,900) Equity Shares in Bharuch Enviro 49 49
Infrastructure Limited of Rs. 10 each, fully paid-up
209,880 (Previous Year 190,800) Equity Shares in Bharuch Eco Acqua 2,099 1,908
Infrastructure Limited of Rs. 10 each, fully paid-up
QUOTED
287,350 (Previous Year 287,350) Equity Shares in Bayer Diagnostics 25,330 25,330
India Limited of Rs. 10 each fully paid-up
Market value Rs. 154,953 (Previous Year Rs. 106,032)
120,646 (Previous Year 120,646) 6.75% Tax Free US64 Bonds of
Rs. 100 each
CURRENT
Nil (Previous Year 1,024,054) units of Rs. 10 each in HSBC Mutual — 10,254
Fund – Floating rate fund
Market value Rs. Nil (Previous Year Rs. 10,254)
Nil (Previous Year 4,331,713) units of Rs. 10 each in Birla Sun Life Mutual — 45,000
Fund – Dividend reinvestment
Nil (Previous Year 677,970) units of Tata Mutual Fund – Liquid Fund of — 7,500
Rs. 10 each
Nil (Previous Year 2,498,487) units of Rs. 10 each in J. M. Financial — 25,025
Mutual Fund – Daily Dividend
39,543 127,131
Note: Aggregate Market value of Quoted Investments Rs. 167,507

(Previous Year Rs. 118,097)
SCHEDULE 7
INVENTORIES
Stores and Spares 47,336 20,269

Stock-in-Trade:
Semi-Finished Goods 197,251 107,503
Goods in Transit 82,420 59,327
1,778,248 1,357,137
90
As at As at
31.12.2005 31.12.2004
SCHEDULE 8
SUNDRY DEBTORS
Debts outstanding for a period exceeding six months
310,571 536,072
Less: Provision for Doubtful Debts 275,058 352,572
35,513 183,500
Other Debts:
Considered Good* 1,657,822 1,314,955
1,693,335 1,498,455
* Includes Rs. 2,284 (Previous Year Rs. 175) due from a private
company in which a director of the Company is a director
Sundry Debtors
Secured 94,082 129,512
Unsecured 1,599,253 1,368,943
1,693,335 1,498,455
SCHEDULE 9

Cash on Hand 558 959
Cheques on Hand — 15
With Scheduled Banks:
In Current Accounts 183,199 57,820
In Deposit Accounts* 6,807 6,807
In Unclaimed Dividend Accounts 2,563 2,507
In Cash Credit Accounts 122,052 457,841
* Deposits with bank aggregating Rs. 4,807 (Previous Year Rs. 4,807)
taken for the purpose of Earnest Money Deposits.
315,179 525,949
SCHEDULE 10
OTHER CURRENT ASSETS

Fixed Assets held for sale (Valued at Cost or Net Realisable Value
whichever is lower) 34,550 5,940
34,550 5,940
91
As at As at
31.12.2005 31.12.2004
SCHEDULE 11
LOANS AND ADVANCES

(Unsecured – considered good unless stated otherwise)
Advances recoverable in cash or in kind or for value to be received
Considered Good [Includes due from a Company in which Directors are
interested Rs. 6,341 (Previous Year Rs. 4,567)] 218,785 261,192
234,228 263,750
Less: Provision for Doubtful Advances 15,443 2,558
218,785 261,192
Deposits
121,967 127,325
Less: Provision for Doubtful Deposits 9,925 9,454
112,042 117,871
Balance with Excise, Customs and Port Authorities 117,016 26,114
Advance payment of Income-tax 189,756 212,687
[Net of Provision for Taxation Rs. 2,131,326 (Previous Year Rs. 1,771,621)]
637,599 617,864
SCHEDULE 12
CURRENT LIABILITIES
Sundry Creditors
Due to Small Scale Industrial Undertakings 11,380 13,587
Due to Creditors other than Small Scale Industrial Undertakings 1,587,899 1,660,035
Interest accrued but not due 3,997 2,629
Investor Education and Protection Fund shall be credited by the following
amounts:
Unclaimed Dividends* 2,563 2,507
Unclaimed Public Deposits* 855 975
Deposits from Agents, Dealers and Customers 78,423 129,512
1,805,845 1,887,511
* There are no amounts as at year end which are due to be credited to

Investor Education and Protection Fund.
SCHEDULE 13
PROVISIONS
Income Tax [Net of Advance Tax Rs. Nil (Previous Year Rs. 42,141)] — 14,312
Tax on Proposed Dividend 12,188 12,188
Leave Encashment 55,031 67,535
Gratuity 25,493 38,664
Pension 8,181 6,854
Fringe Benefit Tax [Net of Advance Tax Rs. 10,891 (Previous Year Rs. Nil)] 18,695 —
Direct Tax Matters (Refer Note 15 of Schedule 23) 48,558 107,371
[Net of Advance Tax Rs. 104,775 (Previous Year Rs. 45,962)]
Indirect Tax Matters (Refer Note 15 of Schedule 23) 25,700 50,166
Commercial and Other Matters (Refer Note 15 of Schedule 23) 6,871 6,871
287,614 390,858
92
Schedules forming part of the Profit and Loss Account for the year ended December 31, 2005 (Consolidated) Rupees ’000s

31.12.2005 31.12.2004
SCHEDULE 14
OTHER OPERATING INCOME

Commission — Indenting Business and others 14,315 69,687
(Tax deducted at source Rs. 269 — Previous Year Rs. 56)
Manufacturing Services rendered 71,500 72,354
(Tax deducted at source Rs. 1,581 — Previous Year Rs. 2,735)
Export Incentives 17,456 8,256
103,271 150,297
SCHEDULE 15
OTHER INCOME
Interest Received (Tax deducted at source Rs. 63 — Previous Year Rs. 532) 1,978 1,620
Dividend Income
Long-term 2,299 2,155
Current 3,907 2,756
6,206 4,911
Profit on Assets sold/ discarded (Net) — 58,399
Profit on sale of Investments 251 2,452
Rent Income (Tax deducted at source Rs. 1,784 — Previous Year Rs. 1,632) 8,088 8,088
Insurance Claims 2,759 563
Bad Debts recovered 1,010 2,185
Foreign Exchange Fluctuations (Net) — 3,285
Provisions no Longer Required written back 197,975 136,301
Common Facility Charges 127,649 —
(Tax deducted at source Rs. 3,507 — Previous Year Rs. Nil)
Scrap Sales — 343
Miscellaneous (Tax deducted at source Rs. 3,946 — Previous Year Rs. 1,181) 47,947 45,367
393,863 263,514
SCHEDULE 16
MATERIALS CONSUMED*
Raw Materials:
Add: Purchases 3,123,154 3,153,531
3,325,487 3,416,576
Less: Adjustment on account of transfer of business to Bayer Rubber
Chemicals Private Limited (Now Lanxess India Private Limited)
(Stock as on June 30, 2004) — 46,621
2,906,164 3,167,622
3,229,860 3,478,703
* Includes Rs. 21,914 (Previous Year Rs. 14,965) on account of Write off/
write downs in carrying values of Raw Materials and Packing Materials.
93

31.12.2005 31.12.2004
SCHEDULE 17
COST OF TRADED GOODS SOLD*
789,071 976,325
Chemicals Private Limited (Now Lanxess India Private Limited) — 24,861
Less: Adjustment on account of transfer of business to Bayer Material
Science Private Limited (Formerly Bayer Industries Private Limited)
(Stock as on October 1, 2004) — 7,535
513,458 875,549
* Includes Rs. 1,891 (Previous Year Rs. 54,447) on account of Write Off/
write downs in carrying values of Traded Goods.
SCHEDULE 18
EMPLOYEE COST
Payments to and Provisions for:
Salaries, Wages, Bonus and Allowances 489,962 572,918
Contribution to Provident, Gratuity, Superannuation and Other Funds 66,455 116,641
Staff Welfare Expenses 33,274 35,661
589,691 725,220
SCHEDULE 19
OTHER EXPENSES
Stores and Spares consumed 28,882 32,581
Power, Fuel and Water charges 173,330 175,769
Cost Sharing Expenses 1,424 11,506
Freight and Clearing charges 249,039 207,005
Rent 71,265 77,707
Rates and Taxes 30,201 18,496
Job work charges 99,658 92,109
Insurance 17,349 24,236
Excise Duty 2,370 62,881
Repairs and Maintenance:
Plant and Machinery 18,427 27,092
Buildings 34,441 8,913
Others 29,563 111,044
82,431 147,049
Travelling and Conveyance 146,030 136,742
Communication 81,502 72,675
Printing and Stationery 11,025 12,864
Directors’ Sitting Fees 610 640
Auditors’ Remuneration (Refer Note 6 of Schedule 23) 4,567 4,013
Advertisement and Publicity 322,648 232,667
Legal and Professional Fees 118,212 139,234
Discounts 175,397 219,662
Commission: Others 40,578 47,360
Donations 243 11,037
Bad Debts/ Advances Written Off 116,199 16,018
Less: Withdrawn from Provision for Doubtful debts 115,389 9,306
810 6,712
Compensation Expenses 29,600 —
Provision for Doubtful Debts/ Advances 51,231 193,533
Loss on assets sold/ discarded 514 —
Foreign Exchange Fluctuations (Net) 500 —
Miscellaneous 143,326 155,198
1,882,742 2,130,225
94

31.12.2005 31.12.2004
SCHEDULE 20
FINANCE CHARGES
Interest on
Debentures — 1,644
Others 17,974 29,775
Bank Charges 17,228 26,436
75,928 114,066
SCHEDULE 21
DECREASE/ (INCREASE) IN STOCKS*

Opening Stock
– Semi-Finished 107,503 93,547
– Finished 836,415 776,984
943,918 870,531
Chemicals Private Limited (Now Lanxess India Private Limited)
– Semi-Finished — 9,308
– Finished — 91,345
943,918 769,878
Closing Stock
– Semi-Finished 197,251 107,503
– Finished 685,680 836,415
882,931 943,918
60,987 (174,040)
* Includes Rs. 25,584 (Previous Year Rs. 123,623) on account of Write off/ write
downs in carrying values of Finished Goods.
SCHEDULE 22
EXCEPTIONAL/ EXTRAORDINARY ITEMS

Profit on sale of business — (30,808)
Voluntary Retirement Schemes 69,128 7,979
69,128 (22,829)
95
Schedules Annexed to the Consolidated Balance Sheet as at December 31, 2005 and Consolidated Profit and Loss
Account for the year ended on that date.
SCHEDULE 23 — NOTES TO ACCOUNTS
(a) Basis of Accounting
These financial statements have been prepared under historical cost convention from the books of account maintained on an
accrual basis in conformity with accounting principles generally accepted in India and comply with the Accounting Standards
issued by The Institute of Chartered Accountants of India and referred to in Section 211(3C) of the Companies Act, 1956, of
India (the Act).
(b) Basis of Consolidation:
(i) The Consolidated Financial Statements include Financial Statements of Bayer CropScience Limited [formerly Bayer
(India) Limited] ('the Company') for the year ended December 31, 2005 and the Financial Statements of Bayer Polychem
(India) Limited for the year ended December 31, 2005. The Consolidated Financial Statements have been prepared on
the following basis:
The Financial Statements of the Company and its Subsidiary Company have been combined on a line-by-line basis
by adding together the book values of the like items of assets, liabilities, income and expenses, after fully eliminating
intra-group balances and the intra-group transactions resulting in unrealised profits or losses.
The Consolidated Financial Statements have been prepared using uniform accounting policies for like transactions and
other events in similar circumstances and are presented to the extent possible, in the same manner as the Company's
separate Financial Statements.
(ii) Subsidiary Company considered in the Consolidated Financial Statements is:
Name of the Company Country of % voting % voting
Incorporation power held as power held
at 31st Dec, 2005 as at 31st Dec, 2004
Bayer Polychem (India) Limited India 100% 100%
(c) Other significant Accounting Policies:

These are set out in the Notes to Accounts under 'Significant Accounting Policies' of the respective Financial Statements of the
Company and the Subsidiary Company.
2. Estimated amount of contracts net of advances remaining to be executed on capital account and not provided for Rs. 10,560 ('000)
[Previous Year Rs. 60,952 ('000)].
3. Contingent Liabilities not provided for:
Rupees in '000s
Particulars As at As at Remark
2005 2004
(a) In respect of Bank Guarantees 20,407 49,496 Pertains to guarantees issued in favour
of various statutory bodies and custom
authorities. The Company does not
(b) Counter Guarantee by the Company 2,967 2,967 Pertains to guarantees issued in favour
of Gujarat Industrial Development
Corporation. The Company does not
(c) Claims against the Company not 7,832 11,168 Pertains to litigation/ claims against the
acknowledged as debts Company by customers/ vendors/ labour.
(to the extent ascertainable) The Company has strong grounds of
appeal and does not foresee any
(d) In respect of non fulfillment of 63,995 — Represents export obligation against
Export obligation advance licenses acquired by the
Company and the Company does not
(e) In respect of Excise and Custom matters 43,998 299,714 Pertains to litigations/ disputes with
(f) In respect of Sales tax matters 100,838 17,352 various tax/ custom and excise
authorities. The Company has filed
(g) In respect of Income-tax matters* 110,951 161,289 appeal against the demand. The
Company does not expect any
(h) Demand raised by Ministry of Chemicals 27,581 27,581 Demand dated October 25, 1990, for
and Fertilisers, Department of Chemicals payment to the credit of the Drug Prices
and Petro-Chemicals. The Company has Equalisation Account, being the
filed a writ petition in the Hon’able High difference between the pooled price
Court of Mumbai, challenging this and the retention price on the
demand. production of Chloroquine Phosphate
from 1979-1980 upto December 14,
1988. The Company does not
*As at December 31, 2005, Advance Income Tax of Rs. 83,523 ('000), attributed towards this is included under the head ‘Advance
payment of Income Tax’ in Schedule 11 ‘Loans & Advances.’
96
SCHEDULE 23 — NOTES TO ACCOUNTS (Contd.)
4. Having regard to the requirement of uniform accounting year end for taxation purposes, the ultimate taxation liability, if any, of the
Company can be determined only on the basis of the taxable income for the year ending on March 31, 2006.
5. Deferred Tax
During the year, the Company has accounted for Deferred Tax in accordance with the Accounting Standard 22 – "Accounting for
Taxes on Income" issued by the Council of The Institute of Chartered Accountants of India.
The Deferred tax balances are set out below:
Rupees in '000s
Particulars As at As at
2005 2004
Deferred Tax Assets
Provision for Doubtful Debts/ Advances/ Deposits 101,123 129,015
VRS Expenses 83,336 96,794
Disallowances u/s 43B 35,366 49,166
Others 4,764 40,891
224,589 315,866

Others 2,619 55
217,556 258,271
Net Deferred Tax Assets 7,033 57,595
6. Auditors' Remuneration:
Rupees in '000s
For the For the

Particulars year ended year ended
2005 2004
(a) Audit Fees
– for statutory audit 1,600 1,600
– for limited review 600 400
(b) Tax Accounts and Tax Audit 1,250 938
(c) Other Services 900 1,075
(d) Reimbursement of out-of-pocket expenses 217 —
Total 4,567 4,013
7. Research and Development Expense
Research and Development Revenue Expenses 56,913 38,963
8. Managerial Remuneration:
Particulars
(a) Directors' Sitting Fees 610 640

(b) Salaries and Allowances 28,449 28,284
Total 29,059 28,924
Note:
The Computation of profits under Section 309(5) of the Companies Act, 1956 is not required to be given, as no commission is
payable to the Directors.
9. Non-Convertible Debentures issued and redeemed during the year Rs. Nil [Previous Year Rs. 650,000 ('000)].
97
10. Finance Lease

The Company has acquired Computers under finance lease. Minimum Lease payment outstanding as at December 31, 2005 in
respect of these assets are as under:
Rupees in '000s
Minimum Future Lease Rentals
Particulars Less than Between More than Total

1 Year 1 to 5 Years 5 Years
Total Minimum lease payments outstanding as at
December 31, 2005 823 — — 823
Interest not due 25 — — 25
Present Value of Minimum Lease Payments * 798 — — 798

* Included under Schedule 3 – Secured Loans.
11. Segment Reporting

Rupees in '000s
Primary Segmental Reporting
Particulars December 31, December 31,
2005 2004
1. Segment Revenue
(a) Segment – Pesticides 7,664,604 7,500,389
(b) Segment – Rubber — 542,353
(c) Segment – Healthcare 86,321 57,392
(d) Others — 330,709
Total 7,750,925 8,430,843
Less: Inter segment revenue — —
Sales and other Operating Income 7,750,925 8,430,843
2. Segment Results
(a) Segment – Pesticides 879,535 557,664
(d) Others — 19,127
Operating Profit 894,590 677,569
Add/ (Less):
I. Interest (Net) (58,589) (86,010)
II. Other Un-allocable Expense (Net) — (26,363)
Total Profit Before Prior Period and Exceptional/ Extraordinary Items 836,001 565,196
Prior Period Income — 18,748
Extraordinary Income/ (Expense) (69,128) 22,829
Profit for the Year before Taxation 766,873 606,773
3. Segment Assets
(excludes Deferred Tax Asset)
(b) Segment – Rubber — —
(d) Others — —
(e) Unallocated Corporate — —
Total Assets 6,185,664 5,629,605
4. Segment Liabilities
(b) Segment – Rubber — —
(d) Others — —
(e) Unallocated Corporate — —
Total Liabilities 3,298,017 3,076,908
98
Rupees in '000s

2005 2004
5. Capital Expenditure during the year
(c) Segment – Healthcare 2,894 255
(d) Others — 2,769
Total 471,623 275,830
6. Depreciation and Amortisation

(d) Others — 814
Total 233,039 283,966
Secondary Segmental Reporting

Secondary segment is reported based on geographical locations viz. Local and Exports
Rupees in '000s
2005 2004
1. Segmental Revenue
(a) Segment – Local 6,809,312 7,457,732
Total 7,750,925 8,430,843
2. Segmental Assets
(a) Segment – Local 5,985,550 5,386,963
Total 6,185,664 5,629,605
12. Related Party Transaction

(i) Ultimate Holding Company Bayer AG, Germany
(ii) Parties under common control:
Bayer (China) Limited, Beijing
Bayer (Malaysia) Sdn. Bhd., Shah Alam
Bayer (Proprietary) Limited, Isando
Lanxess ABS Limited (formerly Bayer ABS Limited) (upto January 31, 2005)
Bayer CropScience AG
Bayer CropScience GmbH
Bayer CropScience K.K., Tokyo
Bayer CropScience LP, Triangle Park
Bayer CropScience Pty Limited, Australia
Bayer CropScience SA, France
Bayer CropScience Limited, Bangladesh
Bayer CropScience Limited, Seoul
Bayer Diagnostics India Limited, Baroda
99
(ii) Parties under common control: (Contd.)
Lanxess Distribution Service GmbH, Leverkusen (formerly Bayer Distribution Service GmbH)
(upto January 31, 2005)
Bayer East Africa Limited, Nairobi
Bayer Environment Science SA, France
Bayer Business Services GmbH
Bayer MaterialScience Private Limited, Mumbai
Bayer Health Care Company Limited
Bayer MaterialScience AG
Bayer Pakistan (Private) Limited, Karachi
Bayer Pharmaceuticals Private Limited, Mumbai
Bayer South East Asia Pte Limited, Singapore
Bayer Thai Company Limited, Bangkok
Bayer Türk Kimya Sanayi Limited Sti., Istanbul
Bayer Vietnam Limited
Bilag Industries Private Limited, Gujarat
Hybrid Rice International Private Limited, Hyderabad
Nunhems Proagro Seeds Private Limited, Gurgaon
Proagro Seed Company Private Limited, Hyderabad
PT Bayer Urethanes Indonesia, Jakarta
Lanxess India Private Limited (upto January 31, 2005)
Bayer (Pty) Limited, South Africa
Bayer Antwerpen N.V., Belgium
Bayer Limited, Japan
Bayer MaterialScience LLC, U.S.A.
Bayer Philippines, Inc., Philippines
Bayer Chemicals AG, Germany
Bayer Chemicals Corporation, U.S.A.
Bayer Faser GmbH, Germany
Bayer Healthcare AG, Germany
Bayer Iranchemie AG, Iran
Bayer International SA, Schweiz
Bayer SA, Brazil
Bayer Shanghai Pigment Company Limited, Shanghai
Bayer Taiwan Company Limited, Taiwan
Bayer MaterialScience Limited, Hongkong
Lanxess International Trading Shanghai Company Limited, China (upto January 31, 2005)
Borchers GmbH, Germany
H.C. Sttarck GmbH, Germany
Hennecke, Sankt Augustin, Germany
Pt. Bayer Kimia Farmasindo, Indonesia
Rhein Chemie Rheinau GmbH, Germany
Sumika Bayer Urethane Company Limited, Japan
Wolff Cellulosics, Germany
(iii) Key Management Personnel

Mr. S. Gerlich (From September 14, 2004) Managing Director
Mr. P. G. L. Dupont (upto September 13, 2004) Managing Director
Mr. J. Frick (upto October 13, 2005) Whole Time Director
100
(iv) The transactions with and outstanding balances of related parties are furnished below
Rupees in ’000s
Nature of Transaction Parties referred to in Parties referred to in
(i) above (ii) above Total
2005 2004 2005 2004 2005 2004
Purchase of Goods
Bayer HealthCare AG — — 18,100 14,377 18,100 14,377
Bayer Taiwan Company Limited — — 1,920 8,313 1,920 8,313
Bayer CropScience AG — — 1,072,047 522,588 1,072,047 522,588
Bayer CropScience SA — — 44,534 414,268 44,534 414,268
Bilag Industries Private Limited — — 618,611 350,628 618,611 350,628
Others — — 70,550 154,467 70,550 154,467
Total — — 1,825,762 1,577,784 1,825,762 1,577,784
Sale of Goods
Bayer CropScience AG — — 659,664 29,705 659,664 29,705
Lanxess Distribution Services GmbH — — — 153,046 — 153,046
Others — — 109,992 94,204 109,992 94,204
Total — — 818,957 624,585 818,957 624,585
Sale of Services
Others — — — 1,749 — 1,749
Total — — 71,500 71,789 71,500 71,789
Dividend Received
Bayer Diagnostics India Limited — — 2,299 2,155 2,299 2,155
Total — — 2,299 2,155 2,299 2,155
Dividend Paid
Bayer AG 18,200 18,200 — — 18,200 18,200
Bayer CropScience GmbH — — 16,923 16,923 16,923 16,923
Bayer MaterialScience Private Limited — — 1,441 1,441 1,441 1,441
Total 18,200 18,200 43,592 43,592 61,792 61,792
Interest Income
Bayer Pharmaceuticals Private Limited — — — 93 — 93
Total — — — 185 — 185
Other Income
Total — — — 128 — 128
101
(iv) The transactions with and outstanding balances of related parties are furnished below (Contd.)
Rupees in ’000s
2005 2004 2005 2004 2005 2004
Interest Expense
Hybrid Rice International Private Limited — — 1,854 3,737 1,854 3,737
Bayer MaterialScience AG — — — 143 — 143
Bayer MaterialScience Private Limited — — 646 — 646 —
Others — — 8 290 8 290
Total — — 4,579 14,629 4,579 14,629
Commission Expense
Bayer (Malaysia) Sdn. Bhd. — — — 364 — 364
Bayer SA — — — 1,340 — 1,340
Bayer Thai Company Limited — — — 257 — 257
Bayer (China) Limited — — — 303 — 303
Bayer CropScience AG — — 3,884 — 3,884 —
Others — — — 212 — 212
Total — — 3,884 2,476 3,884 2,476
Commission Income
Bayer CropScience AG — — 4,367 — 4,367 —
Bayer AG — 18,294 — — — 18,294
Lanxess Distribution GmbH — — — 21,953 — 21,953
Bayer International S.A. — — — 9,776 — 9,776
Others — — — 12,820 — 12,820
Total — 18,294 4,367 44,549 4,367 62,843
Cost Sharing Recoveries/ Expenses
Reimbursement by other Companies
Bayer AG — 2,226 — — — 2,226
Bayer Healthcare AG — — 2,382 736 2,382 736
Lanxess ABS Limited — — 1,625 2,354 1,625 2,354
Lanxess India Private Limited — — 8,752 62,890 8,752 62,890
Proagro Seeds Company Private Limited — — 35,333 34,334 35,333 34,334
Bayer Pharamaceuticals Private Limited — — 37,413 12,740 37,413 12,740
Others — — 54,172 30,510 54,172 30,510
Total — 2,226 174,973 225,306 174,973 227,532
Cost Sharing Payments/ Expenses
Reimbursement to other Companies
Bayer AG 6,131 2,479 — — 6,131 2,479
Bayer Business Services GmbH — — 12,068 19,251 12,068 19,251
Bayer CropScience Pty Limited — — 40,286 51,025 40,286 51,025
Bayer MaterialScience Private Limited — — 438 43,298 438 43,298
Bayer South East Asia Pte Limited — — 38,468 41,712 38,468 41,712
Others — — 6,337 27,033 6,337 27,033
Total 6,131 2,479 99,826 183,631 105,957 186,110
102
(iv) The transactions with and outstanding balances of related parties are furnished below (Contd.)
Rupees in ’000s
2005 2004 2005 2004 2005 2004
Outstanding Receivables net
of Payables
Bayer Diagnostics India Limited — — 1,016 149 1,016 149
Proagro Seed Company Private Limited — — 3,029 8,358 3,029 8,358
Others — — 7,581 13,028 7,581 13,028
Total — — 42,565 165,363 42,565 165,363
Outstanding Payables net
of Receivables
Bayer Healthcare AG — — 3,079 4,584 3,079 4,584
Lanxess India Private Limited — — — — — —
Bayer South East Asia Pte Limited — — 68,841 39,471 68,841 39,471
Bilag Industries Private Limited — — 48,597 54,553 48,597 54,553
Others — — 53,010 114,419 53,010 114,419
Total — — 274,541 398,717 274,541 398,717
Sale of Fixed Assets
PT Bayer Urethanes Indonesia — — — 9,544 — 9,544
Bayer CropScience Limited, Seoul — — 4,913 — 4,913 —
Bayer Turk Kimya Sanayi Limited — — 4,074 — 4,074 —
Total — — 8,987 41,091 8,987 41,091
Inter Company Deposit Given
Total — — — 162,000 — 162,000
Inter Company Deposit Taken
Lanxess ABS Limited — — — 1,293,000 — 1,293,000
Total — — 625,000 1,431,000 625,000 1,431,000
Inter Company Payable Balances
Hybrid Rice International Private Limited — — 44,000 50,500 44,000 50,500
Bayer Diagnostics India Limited — — — 140,000 — 140,000
Total — — 214,000 190,500 214,000 190,500
Sale of Business
Total — — — 713,858 — 713,858
103
(v) Provisions/ Payment made to Directors

Rupees in ’000s
Related Party Designation Nature of Transaction 2005 2004
Mr. S. Gerlich (from September 14, 2004) Managing Director Remuneration 16,994 4,272
Mr. P. G. L. Dupont (upto September 13, 2004) Managing Director Remuneration — 7,999
Mr. J. Frick (upto October 13, 2005) Whole Time Director Remuneration 11,455 16,013
Total 28,449 28,284
13. Current Investments bought and sold during the year
Particulars No. of Units
ABN Amro Mutual Fund 4,506,773

Alliance Capital Mutual Fund 43,553,257
Birla Mutual Fund 16,451,716
Deutsche Mutual Fund 31,807,165
DSP Merill Lynch Mutual Fund 3,048,915
Grindlays Mutual Fund 5,678,935
HSBC Mutual Fund 1,034,980
J.M. Mutual Fund 2,500,126
Kotak Mahindra Mutual Fund 3,278,678
LIC Mutual Fund 17,018,681
Prudential ICICI Mutual Fund 12,247,371
Reliance Mutual Fund 26,305,658
Tata Mutual Fund 2,758,534
UTI Mutual Fund 340,696
ING Vysya Mutual Fund 928,237
14. With effect from April 5, 2004, the name of the Company has been changed from Bayer (India) Limited to Bayer CropScience Limited.
15. Disclosure of Provisions

Rupees in ’000s
S. No. Particulars Income Tax Indirect Tax Commercial &

(net of advance tax) Other Matters
1 Balance as on January 1, 2005 107,371 50,166 6,871

2 Additional provision during 2005 — — —
3 Advance payment of tax 58,813 — —
4 Provision used during 2005 — 4,988 —
5 Provision reversed during 2005 — 19,478 —
6 Balance as on December 31, 2005 48,558 25,700 6,871
Direct and Indirect tax

Provisions in this category represents estimates made for probable liabilities arising out of pending disputes/ litigations with various tax
authorities. The outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law and
hence the Company is not able to reasonably ascertain the timing of the outflow.
Commercial and other matters

Provisions in this category represent estimates made for probable liabilities/ claims arising out of commercial transaction with vendors.
The outflow with regard to the said matter depends on the exhaustion of remedies available to the Company under the law and hence the
Company is not able to reasonably ascertain the timing of the outflow.
104
16. Earnings Per Share

Rupees in ’000s
2005 2004
Profit before Prior Period and Extraordinary/ Exceptional Item and after Taxation 429,333 302,615
Profit after Prior Period and Extraordinary/ Exceptional Item and after Taxation 383,473 314,532
Weighted average number of equity shares outstanding at year end 39,498,747 39,498,747
Nominal value Per Equity Share (in Rupees) 10 10
Earnings Per Share before Prior Period and Extraordinary Item 10.87 7.66
and after Taxation [Basic and Diluted] (in Rupees)
Earnings Per Share after Prior Period and Extraordinary Item 9.71 7.96
and after Taxation [Basic and Diluted] (in Rupees)
17. The figures of the current year are not comparable with that of the previous year in view of sale of Material Science business and Polymer
business (comprising of Rubber Chemicals, Fibres & Chemicals) by the Subsidiary Company in the previous year.
18. Previous Year's figures have been regrouped wherever necessary.
Signatures to the Schedules forming part of the Balance Sheet and Profit and Loss Account and to the above Notes

Natraj Ramkrishna Managing Director Stephan Gerlich
Partner
Raj Kaul

105
Cash Flow Statement For The Year Ended December 31, 2005 — Consolidated
Rupees ‘000s

31.12.2005 31.12.2004
A. Cash flow from Operating activities :

Net Profit before Prior Period, Exceptional Items
and Taxation 836,001 565,196
Adjustments for :
Interest Expense 58,700 87,630
Interest Income (1,978) (1,620)
Dividend Income (6,206) (4,911)
Loss/ (Profit) on Fixed Assets sold 514 (58,399)
Loss on Assets held for sale — 48,549
Profit on sale of Investments (Net) (251) (2,452)
Debts/ Advances Written off (Net of recovery) 115,189 8,241
Provision for Bad & Doubtful Debts/ Advances (64,158) 189,820
Liability no longer required written back (197,975) (136,301)
Provision for Gratuity, Leave Encashment & Pension (24,348) (420)
Inventories written off/ written back 49,389 193,035
Unrealised foreign exchange gain (30) (4,305)
161,885 602,833
Operating profit before Working Capital changes 997,886 1,168,029
Adjustments for changes in Working Capital:

(Increase)/ Decrease in Sundry Debtors (232,558) 703,368
(Increase)/ Decrease in Other Receivables (59,223) 775,311
(Increase)/ Decrease in Inventories (470,500) (135,195)
Increase/ (Decrease) in Trade and Other Payables/ Provisions 84,175 (869,423)
(678,106) 474,061
Cash generated from Operations 319,780 1,642,090
Taxes Paid (364,275) (304,689)
Payment under Voluntary Retirement Scheme (72,595) (4,512)
Profit on Sale of Business — 30,808
(436,870) (278,393)
Net cash from/ (used in) Operating activities (117,090) 1,363,697
B. Cash flow from Investing activities :

Purchase of Fixed Assets (461,879) (249,098)
Proceeds from Sale of Fixed Assets 19,381 299,576
Proceeds from Sale of Investments 2,310,751 4,472,453
Purchase of Investments (2,222,912) (4,557,500)
Interest Received 5,116 1,346
Dividend Received 6,206 4,632
Net cash used in Investing activities (343,337) (28,591)
C. Cash flow from Financing activities :

Proceeds from/ (Repayment) of short term borrowings 406,019 (1,465,280)
Interest Paid (57,332) (85,656)
Dividend Paid (86,842) (86,971)
Dividend Tax Paid (12,188) (11,134)
Net cash from/ (used in) Financing activities 249,657 (1,649,041)
106
Cash Flow Statement For The Year Ended December 31, 2005 — Consolidated (Contd.)
Rupees ‘000s

31.12.2005 31.12.2004
Net Decrease in Cash and Cash Equivalents (210,770) (313,935)

Cash and Cash Equivalents at the beginning
of the year 525,949 839,884
Cash and Cash Equivalents at the end of the year 315,179 525,949
Cash and Cash Equivalents comprise
Cash on hand 558 974
Balance with Scheduled Banks – in other accounts 312,058 522,468
Balance with Banks – Unclaimed dividend account 2,563 2,507
315,179 525,949
Notes:
1. The above Cash flow statement has been prepared under the “Indirect Method” set out in Accounting Standard – 3 on Cash Flow
Statements issued by The Institute of Chartered Accountants of India.
2. Figures in brackets indicate cash outgo.
3. Previous Year’s figures have been reclassified to conform to the current years presentation.
4. Taxes paid includes TDS deducted by third parties aggregating to Rs. 11,087 (Previous Year Rs. 5,604).
This is the Cash Flow Statement referred to in our report of even date.
Natraj Ramkrishna
Partner Managing Director Stephan Gerlich
Raj Kaul

107
Facts
Million Rupees 1996 1997 1998 1999 2000 2001 2002 2003+ 2004@ 2005
Sales & Other

Operating Income * 4,169.73 4,434.97 4,810.63 5,486.81 5,602.93 6,496.39 5,803.49 8,722.96 7,377.01 7,534.00
Exports (404.31) (512.82) (550.68) (513.83) (506.83) (458.42) (545.87) (845.46) (688.17) (921.38)
Pre-tax Profit 147.65 152.38 161.50 85.44 95.54 162.33 277.75 472.04 524.04 746.84
Dividend 40.55 40.55 40.55 40.55 32.44 32.44 35.68 86.90 86.90 86.90
(%) (25.00) (25.00) (25.00) (25.00) (20.00) (20.00) (22.00) (22.00) (22.00) (22.00)
Share Capital 162.20 162.20 162.20 162.20 162.20 162.20 162.20 394.99 394.99 394.99
Reserves and Surplus 529.79 583.56 638.85 653.63 690.54 604.34 718.84 2,024.75 2189.27 2,461.65
Borrowings 1,512.00 1,455.71 1,788.66 1,895.04 2,113.65 1,566.53 1,475.72 2,263.82 776.09 1,160.56
Gross Block 1,676.72 1,800.87 1,894.12 2,056.74 2,245.29 2,443.02 2,562.62 2,972.27 2981.71 3,345.48
Net Block 1,018.87 1,037.36 1,030.19 1,140.17 1,236.88 1,342.91 1,379.54 1,585.02 1438.08 1,633.25
Net Current Assets 1,147.41 1,126.41 1,521.29 1,501.46 1,670.99 1,075.75 1,051.24 2,963.97 1736.86 2,328.86
Expenditure on
Employees 352.59 371.55 428.10 496.21 570.38 579.98 591.17 653.24 658.08 572.11
Number of Employees 1,742 1,789 1,831 1,816 1,513 1,441 1,316 1,059 1,024 984
Rupees
# # # # # #
Earnings Per Share 66.83 60.65 61.83 39.27 21.96 75.28 132.00 18.17 6.48 10.57
[on the basis of profits
excluding extra-ordinary
items (net of tax)]
Book Value per Share 426.63 459.78 494.11 502.97 525.74 472.59 543.18 61.26 65.43 72.32
Share Price at Stock

Exchange — High 2,350.00 2,495.00 2,061.25 2,916.00 1,594.95 1,160.00 1,998.00 2,200.00 317.00 323.65
$
— Low 1,320.00 1,300.00 1,121.00 1,450.00 425.10 341.35 880.10 2198.30 135.35 160.00
Number of
Shareholders 11,555 11,232 11,539 13,390 12,541 11,494 10,502 20,972 20,552 20,539
* Sales for the Years 2004 and 2005 are gross of discount.
# Revised based on profits excluding extraordinary items (net of tax).

+ Includes the figures of erstwhile Bayer CropScience India Limited on account of amalgamation, with effect from April 01, 2003 and excludes
the transfer of non-cropscience business to wholly owned subsidiary Bayer Polychem (India) Limited with effect from November 01, 2003 and
the sale of consumer care division to S.C. Johnson Private Limited with effect from June 01, 2003.
$ The shares of the Company were sub-divided from a face value of Rs. 100/- per share to Rs. 10/- per share, pursuant to the Scheme of
Amalgamation between the Company and erstwhile Bayer CropScience India Limited.
@ Figures have been regrouped wherever necessary.
108

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Bayer Annual Report 2005

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Bayer CropScience Limited Annual Report 2005

Bayer CropScience Limited

Directors Dr. Vijay Mallya — Chairman

General Counsel &

Bankers Bank of America

Citibank N.A. Notice 2

Notice to Shareholders (Contd.)

Notice to Shareholders (Contd.)

By Order of the Board of Directors

By Order of the Board of Directors

Particulars 2005 2004

Sales and Other Operating Income 7,664.60 7,563.56

Total Income 8,055.98 7,825.28

Less: Provision for Taxation on Income 295.85 231.00

Profit for the Year After Tax 371.47 263.61

Add: Profit & Loss balance Brought Forward 1,383.18 1,245.02

Amount available for Appropriation 1,754.65 1,508.63

Directors Responsibility Statement:

Responsible Care and Quality:

Directors’ Report (Contd.)

Information pursuant to Section 217(2A) of the Companies Act, 1956

Bayer Mission & Values, REX II and Compliance Training

Code of Conduct & Whistle Blower Policy

Management Discussion and Analysis Report:

For and on behalf of the Board of Directors

Annexure to the Directors’ Report (Annexure I)

(a) Energy conservation measures taken

(b) Additional Investment and proposals for energy conservation

(b) Own Generation:**

(ii) Through gas turbine/generator***

B. Consumption per unit of production

* Figures are total of Thane, Himatnagar and Ankleshwar plants.

II. TECHNOLOGY ABSORPTION

III. FOREIGN EXCHANGE EARNINGS AND OUTGO

Working to Create Value

1.1 Code of Conduct for Directors

1.2 Code of Business Conduct

1.3 Whistle Blower Policy

Corporate Governance (Contd.)

1.4 Sexual Harassment Policy

1.5 Risk Management

2.1 Board of Directors

Table 1: Constitution of the Board — as on 31st December, 2005:

Sr. Name of Director Status Age Directorship Relationship with

8. Mr. Johannes Frick*+ NED 41 3 years and 2 months None

Table 2: Directorship in other companies/committee position as on 31st December, 2005:

Sr. Name of Director No. of other No. of other Committee

1. Dr. Vijay Mallya, Chairman 50 1 NIL

2. Mr. Yezdi H. Malegam 12 5 4

3. Mr. Johannes M. Dietsch 10 NIL NIL

4. Mr. A. K. Ravi Nedungadi 14 NIL 4

5. Mr. Raj Kaul 3 NIL NIL

6. Mr. Sharad M. Kulkarni (Alternate to Mr. J. M. Dietsch) 12 2 4

7. Mr. Stephan Gerlich, Managing Director 6 NIL 1

8. Mr. Johannes Frick 4 NIL NIL

Corporate Governance (Contd.)

2.2.1 Managing Director

2.2.2 Whole-time Director

2.2.3 Independent Directors

3.1 Board Procedure

3.2 Information given to the Board

Sr. Director Board Attendance Remark

4.0 DIRECTORS SEEKING APPOINTMENT/RE-APPOINTMENT

4.1 Dr. Vijay Mallya