AUDITORS’ REPORT

1. We have audited the attached Balance Sheet of Monsanto India Limited (the Company), as at 31st March, 2006 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. 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 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 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, issued by the Central Government in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, 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 above 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 Companies Act, 1956;
e) On the basis of written representations received from the directors of the Company as at 31st March, 2006 and taken on record by the Board of Directors, we report that none of these directors are disqualified as at 31st March, 2006 from being appointed as directors in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;
f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts, read together with the notes thereon, give the information required by Companies Act, 1956, in the manner so required 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 31st March, 2006;
(ii) in the case of the Profit and Loss Account, of the profit of the Company for the year ended on that date; and
(iii) in the case of the Cash Flow statement, of the cash flows of the Company for the year ended on that date.

For Deloitte Haskins & Sells
Chartered Accountants

P. B. PARDIWALLA
Partner
(Membership No. 40005)

Mumbai: 25th May, 2006

ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in paragraph 3 of our report of even date)

1. The nature of the Company’s business/activities during the year is such that clauses (i-c), (iii), (vi), (x), (xi), (xii), (xiii), (xiv), (xv), (xvi), (xviii), (xix) and (xx) of the Order are not applicable to the Company:

2. In respect of its fixed assets:

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

b) Some of the fixed assets were physically verified by the management during the year in accordance with a programme of verification which, in our opinion provides for physical verification of all its fixed assets at reasonable intervals. According to the information and explanations given to us, no material discrepancies were noticed on such verification.

3. In respect of its inventories:

a) As explained to us, inventories were physically verified during the year by the management at reasonable intervals.

b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business.

c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification.

4. In our opinion and according to the information and explanations given to us, there are adequate internal control systems commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. We have not observed any continuing failure to correct major weakness in such internal control system.

5. In respect of contracts or arrangements required to be entered in the register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us:

a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered into the register maintained under the said section have been so entered.

b) Where each of such transactions is in excess of Rs.5 Lakhs in respect of any party, the transaction where we were informed that there are no alternate acceptable sources of information since similar transactions with other parties had not been made, no comparisons of price was possible.

6. In our opinion, the Company has an adequate internal audit system, commensurate with its size and the nature of its business.

7. We have broadly reviewed the accounts maintained by the Company for its Herbicides business pursuant to the rules made by the Central Government for the maintenance of cost records under Section 209(1)(d) of the Companies Act, 1956, and are of the opinion that prima facie, the prescribed accounts and records have been made and maintained. We have however, not made a detailed examination of the records with a view to determining whether they are accurate or complete. To the best of our knowledge and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records for any other product of the Company.

8. In respect of statutory dues according to the information and explanations given to us:

a) Undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales- Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues have generally been regularly deposited by the Company with the appropriate authorities during the year.

b) The details of disputed statutory dues namely Income Tax, Sales Tax and Excise Duty which have not been deposited as at 31st March, 2006 are given in Annexure A.

9. According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, no short term funds have been raised during the year by the Company.

10. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year, except that the Company has lodged a complaint with the police for theft of inventory of approximately Rs.26 Lacs at its Guwahati location.

For Deloitte Haskins & Sells
Chartered Accountants

P. B. PARDIWALLA
Partner
(Membership No. 40005)

Mumbai: 25th May, 2006

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