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BASF India Ltd.

BSE: 500042 Sector: Industrials
NSE: BASF ISIN Code: INE373A01013
BSE 00:00 | 20 Mar 1353.60 -14.20
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NSE 00:00 | 20 Mar 1350.65 -13.70
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OPEN 1362.60
PREVIOUS CLOSE 1367.80
VOLUME 760
52-Week high 2204.90
52-Week low 1180.05
P/E 159.06
Mkt Cap.(Rs cr) 5,860
Buy Price 1353.60
Buy Qty 24.00
Sell Price 1360.00
Sell Qty 10.00
OPEN 1362.60
CLOSE 1367.80
VOLUME 760
52-Week high 2204.90
52-Week low 1180.05
P/E 159.06
Mkt Cap.(Rs cr) 5,860
Buy Price 1353.60
Buy Qty 24.00
Sell Price 1360.00
Sell Qty 10.00

BASF India Ltd. (BASF) - Director Report

Company director report

Your Directors have pleasure in presenting their Report for the financial year ended 31stMarch 2018.

Financial Results

(Rs. in million)
Description Year ended 31.3.2018 Year ended 31.3.2017
Revenue from operations (Net of GST / Excise) 55834.0 50782.2
Profit / (Loss) before tax and exceptional items 1024.6 (294.8)
Exceptional items 1585.7 170.1
Profit /(Loss) before tax after exceptional items 2610.3 (124.7)
Tax 145.3 16.6
Profit /(Loss) after tax 2465.0 (141.3)
Dividend 129.9 43.3
Corporate Tax on Dividend 26.7 8.8

Note: As per Indian Accounting Standard 18 on Revenue and Schedule III of the CompaniesAct 2013 Revenue from Operations for the period July 1 2017 to March 31 2018 does notinclude Goods and Services Tax (GST) however Revenue from Operations till the periodended June 30 2017 and other comparative periods includes Excise Duty.

Performance

Revenue from operations (net of GST / Excise) at Rs. 55834 million represents anincrease of 10% over the previous year. Your Company reported a profit after tax (afterexceptional items) of Rs. 2465 million for the year ended 31st March2018 as compared to loss after tax (after exceptional items) of Rs. 141.3 million in theprevious year due to good performance in all business segments.

The Agricultural Solutions business of your Company registered good growth in sales andprofits during the year as compared to the previous year mainly due to increased salesrealised from successful launch of new products as well as diversification into new cropslike rice & corn.

The Chemicals segment of your Company comprising of the Intermediates Petrochemicals& Monomers businesses registered substantial increase in sales & profits duringthe year mainly due to better realisation coupled with strong domestic demand driven byincrease in prices of Monomers and Amine related products.

The Functional Materials & Solutions segment of your Company which comprises of thePerformance Materials Coatings Construction Chemicals and Process Catalysts Technologiesbusiness registered modest growth in sales during the year under review as compared to theprevious year. However it registered good growth in profits on account of better marginsin performance materials business driven by good performance in transportation segment.

The Performance Products segment which includes Performance Chemicals Dispersions& Pigments Care Chemicals Nutrition & Health products and Paper Chemicalsbusinesses registered higher sales & margins during the year under review as comparedto the previous year owing to increase in volumes from Dahej Plant & improvedprofitability of the Dispersions business.

Export sales stood at Rs. 6847.5 million during the year under review.

Acquisition of Solvay's global polyamide business

In September 2017 BASF SE Germany signed an agreement to acquire Solvay's integratedpolyamide business globally.

The acquisition would complement BASF's engineering plastics portfolio and expandBASF's position as a solution provider for the transportation construction industrialapplications and consumer industries.

Acquisition of significant parts of Bayer's global seeds & non-selective herbicidebusinesses and additional crop protection businesses & assets

In October 2017 BASF SE Germany signed an agreement to acquire significant parts ofBayer's seed and non- selective herbicide businesses. Further in April 2018 BASF SEsigned an agreement to acquire inter-alia Bayer's entire vegetable seeds businessoperating under the global trademark Nunhems Research & Developmentplatform for hybrid wheat and complete state-of-the-art digital farming platform xarvioTMwhich it has offered to divest in the context of its planned acquisition of Monsanto.

Both the transactions complement BASF's crop protection business and biotechnologyactivities adding new capabilities and opportunities for profitable growth andinnovation.

BASF and Solenis join forces by combining paper wet-end and water chemicals businessesglobally

In May 2018 BASF SE Germany signed an agreement with Solenis USA to globallycombine BASF's Paper wet-end & water chemicals business with Solenis. Consequentlyyour Company's paper wet-end and water chemicals business would be transferred to Solenisin India subject to requisite approvals. Presently the paper wet-end and water chemicalsbusiness of the Company forms part of the Performance Products segment of the Company.

Expansion of manufacturing capacity of Cellasto and cessation ofThermoplastic Polyurethane (TPU) manufacturing at Dahej Plant Gujarat

Your Company is in the process of expanding its manufacturing capacity for Cellastowhich is used in the suspension system of automobiles to reduce noise vibration andharshness. The expansion at the Dahej Plant will serve India's growing automotive marketfor both two wheeler and four wheeler vehicles.

Further in line with the changing customer needs in the South Asian region yourCompany has discontinued TPU manufacturing at the Dahej Plant. However your Company willcontinue supplying South Asian markets from its global network which would ensureseamless supply to customers.

Update on divestment of Leather Chemicals business to Stahl

Pursuant to the global sale of BASF's Leather Chemicals business to Stahl Group theLeather Chemicals business of your Company has been transferred to Stahl India PrivateLimited with effect from 30th September 2017. Your Company has received anaggregate sum of Rs. 1976.3 million (including GST) from Stahl India Private Limited asthe consideration for the sale of the business.

Dividend

In view of the improvement in the operational and financial performance of the Companyyour Directors have recommended a dividend of Rs. 3/- per equity share of Rs. 10/- each(i.e. 30%) for the financial year ended 31st March 2018 subject to theapproval of the members at the 74th Annual General Meeting of the Company to beheld on 10th August 2018. The dividend will absorb Rs. 129.9 million and thedividend distribution tax to be borne by the Company would amount to Rs. 26.7 million.

Further as per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the top 500 listed entities based on market capitalization arerequired to formulate a Dividend Distribution policy. Accordingly your Company hasformulated its Dividend Distribution Policy which is available on the Company's websiteat http://on.basf.com/dividend-policy

Change of Registered Office of the Company

The Registered Office of your Company has been shifted from Plot No. 37 ChandivaliFarm Road Chandivali Andheri (East) Mumbai-400 072 to The Capital ‘A' Wing1204-C 12th Floor Plot No. C-70 ‘G' – Block Bandra Kurla ComplexBandra (East) Mumbai-400051 with effect from 1st December 2017.

Corporate Social Responsibility

As required under the provisions of the Companies Act 2013 the Board of Directors ofyour Company constituted a Corporate Social Responsibility (CSR) Committee on 30thApril 2013.

Mr. R. R. Nair Mr. Arun Bewoor Independent Directors and Mr. Rajesh Naik Whole-timeDirector are presently the members of the CSR Committee.

Mr. Pradeep M. Chandan Director – Legal General Counsel (South Asia) &Company Secretary is the 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 Schedule VII of the Companies Act 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 activities.

Your Company undertook CSR activities mainly in the areas of Water Sanitation andHygiene (WASH) & Education including conduct of various behavioural change programsdetails of which are provided in Annexure I of this Report.

Finance & Accounts

Your Company continued to optimise borrowings during the year by focusing on cash flowsand working capital management. Your Company availed of alternative funding options suchas Commercial Papers Trade Financing etc. to ensure efficiency in its borrowing costs.

Your Company follows a prudent financing policy and aims to maintain optimum financialgearing at all times. Your Company's debt equity ratio was 0.6 as at 31stMarch 2018.

Capital Expenditure

Capital expenditure incurred during the year aggregated to Rs. 679.4 million.

Credit Rating

During the year CRISIL revised its outlook on the Non-Convertible Debenture programmeof your Company to ‘Stable' from ‘Negative' while reaffirming the rating at‘CRISIL AAA'. The ratings of the Fixed Deposits and Commercial Paper were alsoreaffirmed at 'FAAA / Stable' and ‘CRISIL A1+' respectively.

programme of Rs. 750 crore.

Further India Ratings and Research Private Limited awarded a credit rating of"IND A1+" for the Commercial Paper

Instruments with these ratings are considered to have the highest degree of safetyregarding timely servicing of financial obligations & carry lowest credit risk.

Fixed Deposits

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.

Management Discussion and Analysis Report

In terms of SEBI Listing Regulations the Management Discussion and Analysis Report isappended to this Report.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance andhas complied with the Corporate Governance requirements as per SEBI Listing Regulations.

A separate report on Corporate Governance as stipulated under SEBI Listing Regulationsalong with a Certificate of Compliance from the Statutory Auditors forms part of thisAnnual Report.

Business Responsibility Report

Regulation 34(2) of the SEBI Listing Regulations inter alia provides that the AnnualReport of the top 500 listed entities based on market capitalization should include aBusiness Responsibility Report ("BRR").

Your Company being among the top 500 listed entities has included BRR as part ofthis Report as Annexure II describing the initiatives taken by the Company from anenvironmental social and governance perspective.

The BRR for the financial year 2017-18 has also been hosted on the Company's websitewhich can be accessed at www.basf.com/in

Vigil Mechanism

Your Company has established a Whistle Blower Policy for employees Directors and thirdparties to report their genuine concerns details of which have been given in theCorporate Governance Report annexed to this Report. This policy is available on theCompany's website and can be accessed at: http://on.basf.com/whistle-blower

Directors' Responsibility Statement

Your Directors confirm that:

(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed;

(ii) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year ended 31stMarch 2018 and of the profit of the Company for that period;

(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively; and

(vi) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Information pursuant to Section 134(3)(m) of the Companies Act 2013 read with sub-rule3 of Rule 8 of the Companies (Accounts) Rules 2014 forms part of this Report as AnnexureIII.

Directors

In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Rajesh Naik retires by rotation at the ensuingAnnual General Meeting and being eligible offers himself for re-appointment.

Dr. Raman Ramachandran was re-appointed as Chairman & Managing Director of theCompany for a term of one year from 1st April 2018 to 31st March2019 subject to the approval of the shareholders at the ensuing Annual General Meeting ofthe Company.

Mr. Raimar Jahn was appointed as Director of your Company in place of Dr. RainerDiercks with effect from 1st April 2017 in terms of Article 134 of theArticles of Association and the provisions of Section 161 of the Companies Act 2013. Inaccordance with the provisions of the Companies Act 2013 and the Articles of Associationof the Company the appointment of Mr. Raimar Jahn would be considered at theensuing Annual General Meeting as Dr. Rainer Diercks was liable to retire by rotation atthe ensuing Annual General Meeting had he continued as the Director of the Company.

As required under the SEBI Listing Regulations the details of the Directors seekingappointment / re-appointment at the ensuing Annual General Meeting are provided on pageno. 56 in the Corporate Governance Report forming part of this Annual Report.

Performance Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theCompany has devised a policy containing criteria for evaluating the performance of theExecutive Non-Executive and Independent Directors Key Managerial Personnel Boardand its Committees based on the recommendation of the Nomination & RemunerationCommittee. Feedback was sought by way of a structured questionnaire covering variousaspects of the Board's functioning such as adequacy of the composition of the Board andits Committees Board culture execution and performance of specific duties obligationsand governance. The manner in which the evaluation has been carried out is explained onpage no. 53 in the Corporate Governance Report forming part of this Annual Report.

Policy on Directors' appointment and remuneration

The policy on Directors' appointment and remuneration including the criteria fordetermining the qualifications positive attributes independence of a Director and othermatters provided under Section 178(3) of the Companies Act 2013 forms part of theNomination & Remuneration policy of the Company. This policy is available on theCompany's website and can be accessed at: http://on.basf.com/nom-rem-committee

Auditors

M/s. Price Waterhouse Chartered Accountants LLP (Registration No. 012754N/N500016)Mumbai have been appointed as Statutory Auditors of the Company at the Annual GeneralMeeting held on 28th September 2017. They have confirmed to the Company thatthey are not disqualified from continuing to act as Statutory Auditors for the financialyear 2018-2019.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. H S Associates Practising Company Secretaries Mumbai (C.P. 1483) toconduct the Secretarial Audit of the Company for the financial year 2017-18 and to furnishthe report to the Board. The Secretarial Audit Report dated 4th May 2018 formspart of this Report as Annexure IV.

Auditors' Report & Secretarial Audit Report

There are no qualifications/reservations/emphasis of matter placed by the StatutoryAuditor and the Secretarial Auditor in their respective Reports for the financial yearended 31st March 2018.

Cost Audit

The Board of Directors in pursuance of Section 148 of the Companies Act 2013 haveappointed M/s. R. Nanabhoy & Co. Cost Accountants Mumbai having Registration No.000010 for conducting the audit of the cost accounting records maintained by the Companyfor the financial year 2018-19. They have confirmed that their appointment is within thelimits of Section 141(3)(g) of the Companies Act 2013 and that they are not disqualifiedfrom acting as Cost Auditors.

Composition of the Audit Committee

As required by Section 177(8) read with Section 134(3) of the Companies Act 2013 andthe Rules framed thereunder the composition of the Audit Committee is in line with theprovisions of the Companies Act 2013 and SEBI Listing Regulations details of which areprovided on page nos. 51 and 52 of the Corporate Governance Report forming part of thisAnnual Report.

Related Party Transactions

All related party transactions that were entered into by the Company during thefinancial year were on arms' length basis. There are no materially significant relatedparty transactions entered into by the Company with its Promoters Directors KeyManagerial Personnel or other Related Parties which may have a potential conflict withthe interest of the Company at large.

All related party transactions are placed before the Audit Committee for its approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which arerepetitive in nature. A statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors for their approval on aquarterly basis. The policy on Related Party Transactions as approved by the Board isavailable on the Company's website and can be accessed at: http://on.basf.com/related-party

Your Directors draw the attention of the members to Note No. 44 of the FinancialStatements which sets out related party disclosures under Indian Accounting Standards (INDAS).

Further the disclosures as required under Section 134(3)(h) of the Companies Act 2013in Form AOC–2 form part of this Report as Annexure V.

Particulars of loans guarantees or investments under Section 186 of the Companies Act2013

The Company has not provided any loan to any person or body corporate or given anyguarantee or provided security in connection with such loan or made any investment in thesecurities of any body corporate pursuant to Section 186 of the Companies Act 2013. TheCompany has given advance against salary to some employees in terms of the applicablepolicies of the Company.

Extract of Annual Return

The extract of the Annual Return in Form MGT-9 forms part of this Report as AnnexureVI.

Particulars of Employees

The particulars of employees required to be furnished pursuant to Section 197(12) ofthe Companies Act 2013 read with sub-rules 2 and 3 of Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended forms partof this Report as Annexure VII. However as per the provisions of Section 136 ofthe Companies Act 2013 read with sub-rules 2 and 3 of Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Annual Reportexcluding the statement of particulars of employees is being sent to all the members ofthe Company. Any member interested in obtaining a copy of the said statement may write tothe Company Secretary at the Registered Office of the Company.

Prevention of sexual harassment at the Workplace

Your Company gives prime importance to the dignity and respect of its employeesirrespective of their gender or hierarchy and expects responsible conduct and behaviour onthe part of employees at all levels. Providing a safe and congenial work environment forall employees is an integral part of the Company's Code of Conduct.

As per the requirements of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the Rules made thereunder your Company hasadopted a Policy for Prevention of sexual harassment at Workplace and has constituted anInternal Committee (IC) and the names of the Committee members are displayed on the noticeboard in each office. All employees (permanent contractual temporary trainees) arecovered by this policy. Allegations of sexual harassment reported are expeditiously anddiscreetly investigated and disciplinary action if required is taken in accordance withthe policy.

There were no complaints of sexual harassment received during the financial year2017-18.

Training programs on the policy are also conducted at regular intervals. During theyear under report your Company conducted 2 workshops / awareness programmes on the policyfor the employees. Your Company also rolled out an e-learning module to sensitize &create awareness amongst the employees of the Company on prevention of sexual harassment.

Risk Management

Your Company has in place a mechanism to inform the Board about the risk assessment andminimization procedures and undertakes periodical review of the same to ensure that therisks are identified and controlled by means of a properly defined framework. In theBoard's view there are no material risks which may threaten the existence of theCompany.

Internal Financial Control Systems and their adequacy

Your Company has policies and procedures for ensuring the orderly and efficient conductof its business including adherence to the Company's policies safeguarding of itsassets prevention and detection of frauds and errors the accuracy and completeness ofthe accounting records and the timely preparation of reliable financial information.Additional details on Internal Financial Controls and their adequacy is covered under theManagement Discussion and Analysis Report forming part of this Annual Report.

Significant and material orders passed by the Regulators or Courts

The relevant pending litigations with Regulators or Courts have been disclosed asContingent Liabilities in note no. 34 of the notes to the financial statements for theyear ended 31st March 2018. There are no significant and material orderspassed by the Regulators / Courts which would impact the going concern status of theCompany and its future operations.

Material changes and commitments affecting the financial position of the Company

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of this Report.

Board Meetings

Six Board Meetings were held during the financial year 2017-18 on the following dates:

(1) 4th May 2017 (2) 31st July 2017
(3) 28th September 2017 (4) 14th November 2017
(5) 5th February 2018 (6) 27th March 2018

Declaration of Independence

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed under Section 149(6)of the Companies Act 2013 and the SEBI Listing Regulations.

Personnel and Welfare

Your Directors place on record their sincere appreciation of the contribution made bythe employees at all levels to the significant improvement in the performance of theCompany. Industrial Relations at all our manufacturing sites remained cordial.

Acknowledgments

The Board of Directors take this opportunity to thank BASF SE Germany and all otherstakeholders including customers suppliers bankers business partners / associatesCentral and State Governments Regulatory Authorities and the society at large for theirconsistent support and co-operation to the Company. Your Directors thank the members andinvestors for their confidence in the Company.

On behalf of the Board of Directors
RAMAN RAMACHANDRAN Ph.D.
Mumbai Chairman & Managing Director
Dated : 4th May 2018 (DIN: 00200297)