Your Directors have pleasure in presenting their Report for the financial year ended 31stMarch 2017.
| || ||(Rs. in million) |
|Description ||Year ended ||Year ended |
| ||31.3.2017 ||31.3.2016 |
|Revenue from operations (Gross of excise) ||55257.9 ||51568.2 |
|Loss before tax and exceptional items ||(294.8) ||(2024.8) |
|Exceptional items ||170.1 ||1721.1 |
|Loss before tax after exceptional items ||(124.7) ||(303.7) |
|Tax ||16.6 || |
|Loss after tax ||(141.3) ||(303.7) |
|Dividend ||43.3 ||43.3 |
|Corporate Tax on Dividend ||8.8 ||8.8 |
Note: The financial results for the year ended 31st March 2017 are incompliance with the Indian Accounting Standards (IND AS) and accordingly the results forthe previous year ended 31st March 2016 have been restated.
Revenue from operations (Gross of excise) at Rs. 55257.9 million represents anincrease of 7% over the previous year. Your Company reported a loss after tax (afterexceptional items) of Rs. 141.3 million for the year ended 31st March 2017 ascompared to loss after tax (after exceptional items) of Rs. 303.7 million in the previousyear. The recovery is mainly due to effective utilization of the production capacity atthe Dahej plant and improved performance of the Functional Materials & Solutions andPerformance Products segments.
Although the Agricultural Solutions business recorded modest growth in sales during theyear as compared to the previous year its profitability was impacted due to genericcompetition resulting in lower realisations.
The Functional Materials & Solutions segment of your Company which comprises of thecoatings construction chemicals performance materials and process catalysts technologiesbusiness recorded good growth in sales and profits as compared to the previous year.
The Performance Products segment which includes performance chemicals dispersions& pigments care chemicals nutrition & health products and paper chemicalsbusiness registered good growth both in terms of sales and margins during the year underreview.
The Chemicals segment of your Company comprises of intermediates petrochemicals &monomers businesses. During the year the sales of the Chemicals segment were lower ascompared to the previous year on account of lower feedstock prices as well as limitedvolume availability on certain product lines. Moreover Chemicals segment results are notcomparable due to internal transfer of certain manufacturing assets from the Chemicalssegment to Functional Materials & Solutions segment during the year.
Export sales stood at Rs. 5250.7 million during the year under review.
BASF enters India Crop protection market for Rice
In January 2017 your Company entered the crop protection market for rice in India andwould be offering a range of new solutions to boost yields in India by managing ricediseases weeds and pests. With the launch of products i.e. SeltimaAdexar and Basagran your Company will provide comprehensivesolutions that effectively meet consumers' expectations for healthy high quality food.
Restructuring of businesses
Sale of Industrial Coatings business to AkzoNobel
Pursuant to the sale of global industrial coatings business by BASF SE Germany toAkzoNobel the industrial coatings business of your Company was transferred to Akzo NobelIndia Limited with effect from 14th December 2016. With this divestiture yourCompany would continue to emphasize on core automotive OEM & decorative paintsbusiness.
Divestment of Leather Chemicals business
In March 2017 BASF SE Germany and Stahl Group announced the sale of BASF's leatherchemicals business to the Stahl Group. Consequently your Company's leather chemicalsbusiness will be transferred to Stahl Group subject to receipt of requisite approvals.The transaction is expected to close in fourth quarter of 2017. Under the arrangementyour Company would supply leather chemical products from its manufacturing facilities toStahl Group under mid to long-term supply agreements. Presently the leather chemicalsbusiness forms part of the Performance Products segment of the Company.
In view of the improvement in the operational and financial performance of your Companyduring the year your Directors have recommended to maintain a dividend of Re. 1/- perequity share of Rs. 10/- each (i.e. 10%) for the financial year ended 31stMarch 2017 subject to the approval of the members at the 73rd Annual GeneralMeeting of the Company to be held on 28th September 2017. The dividendwill absorb Rs. 43.3 million and the dividend distribution tax to be borne by theCompany would amount to Rs. 8.8 million. The amount towards payment of dividend anddividend distribution tax will be distributed from the General Reserve in compliance withthe provisions of the Companies Act 2013.
Further as per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("LODR") the top 500listed entities based on market capitalization are required to formulate DividendDistribution Policy. Accordingly your Company has formulated its Dividend DistributionPolicy which is available on the Company's website at http://on.basf.com/dividend-policy
Change in the Registrar & Share Transfer Agent
During the year your Company appointed TSR Darashaw Limited (SEBI Registration No.INR000004009) having its registered office at 6-10 H. M. Patrawala Industrial EstateNear Famous Studio 20 Dr. E. Moses Road Mahalaxmi Mumbai 400011 as the newRegistrar and Share Transfer Agent of the Company in place of Sharepro Services (India)Private Limited with effect from 15th June 2016.
Corporate Social Responsibility
As required under the provisions of the Companies Act 2013 the Board of Directors ofthe Company constituted a Corporate Social Responsibility (CSR) Committee on 30thApril 2013.
Mr. R. R. Nair and Mr. Arun Bewoor Independent Directors along with Mr. NarendranathJ. Baliga are members of the CSR Committee.
Mr. Pradeep Chandan Director Legal General Counsel & Company Secretary isthe Secretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the activities tobe undertaken by the Company as specified under the revised Schedule VII of the CompaniesAct 2013.
During the year under review due to impact on profitability your Company was notrequired to spend any amount on CSR activities. However in order to maintain projectsustainability the Board of Directors of your Company decided to spend an amount of Rs.1.5 million towards CSR projects/activities.
Your Company continued its efforts to drive sustainability and focused on activities ofwater health education environment and resource efficiency.
Based on the above your Company undertook CSR projects mainly in the area of communitydrinking water supply waste management sanitation facilities education and hygiene andhas spent an amount of Rs. 1.34 million as direct expenditure for projects & programsand Rs. 0.09 million on overheads aggregating to Rs. 1.43 million in the financial year2016-2017 details of which are provided in Annexure I of this Report.
Finance & Accounts
Your Company continued to optimise bank borrowings during the year by focusing on cashflows and working capital management. Your Company availed of alternative funding optionssuch as Commercial Papers Trade Financing etc. to ensure efficiency in its borrowingcosts.
Your Company follows a prudent financing policy and aims to maintain optimum financialgearing at all times. Your Company's debt equity ratio was 1.2 as at 31stMarch 2017.
Capital expenditure incurred during the year aggregated to Rs. 834.4 million.
The credit rating awarded to the Company by CRISIL on its long term & short termdebt programs is AAA/ Negative/ A1+'.
During the year your Company has not invited accepted or renewed any fixed depositsfrom the public and accordingly there is no principal or interest outstanding in respectthereof.