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BASF India Ltd.

BSE: 500042 Sector: Industrials
NSE: BASF ISIN Code: INE373A01013
BSE 10:43 | 29 Jun 2620.00 1.30
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NSE 10:34 | 29 Jun 2626.95 -3.45
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OPEN 2602.00
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VOLUME 471
52-Week high 3926.95
52-Week low 2330.70
P/E 19.39
Mkt Cap.(Rs cr) 11,342
Buy Price 2620.30
Buy Qty 2.00
Sell Price 2625.65
Sell Qty 5.00
OPEN 2602.00
CLOSE 2618.70
VOLUME 471
52-Week high 3926.95
52-Week low 2330.70
P/E 19.39
Mkt Cap.(Rs cr) 11,342
Buy Price 2620.30
Buy Qty 2.00
Sell Price 2625.65
Sell Qty 5.00

BASF India Ltd. (BASF) - Director Report

Company director report

Your Directors have pleasure in presenting their Report for the financial year ended 31stMarch 2021.

Financial Results

(Rs. in million)

Description Year ended 31.3.2021 Year ended 31.3.2020
Revenue from operations 95583.4 75945.6
Profit before tax and exceptional items 4378.7 423.6
Exceptional items 4020.9 (324.6)
Profit before tax 8399.6 99.0
Tax expense/(credit) 2873.5 (129.7)
Profit after tax 5526.1 228.7
Dividend 432.9 129.9

* The results for the financial year ended 31st March 2020 include resultsof erstwhile BASF Performance Polyamides India Private Limited (‘BPPIPL’) from 1stFebruary 2020 (i.e. the common control acquisition date) and are therefore strictly notcomparable.

Performance

Revenue from operations at Rs. 95583.4 million represents an increase of 26% over theprevious year mainly due to robust volume growth in merchandise business and improvedprice realisation. Your Company reported a Profit before tax and exceptional items of Rs.4378.7 million for the year ended 31st March 2021 as compared to Profit beforetax and exceptional items of Rs. 423.6 million in the previous year. Further your Companyreported a substantial increase in profit after tax of Rs. 5526.1 million for thefinancial year ended 31st March 2021 as compared to profit after tax of Rs.228.7 million in the previous year. The Agricultural Solutions business of your Companyregistered good growth in sales during the financial year as compared to the previousyear mainly due to normal monsoon increased sales from products for crops like corn andcotton strong rabi season leading to improved performance in fungicides and overallpositive market sentiments driving revenue growth. The margins improvedsignificantly mainly due to volume growth price increase and lower input material costs.

The Industrial Solutions segment of your Company comprising of the Dispersions ResinsAdditives & Performance Chemicals businesses registered increase in sales due togrowth in volumes arising out of supply constraints in market improved sellingprice and higher merchandise volumes from sales of plastic additives. The margins alsosignificantly improved due to increased volumes higher selling prices and lower inputcost.

The Materials segment of your Company comprising of the Performance Materials &Monomers businesses registered good growth in sales during the year under review ascompared to the previous year. This was mainly due to sustained volumes despite slowdownin the first half of the financial year 2020-21 rebound observed in transportationappliances & industrial segments acquisition of Performance Polyamides business andhigher merchandise sales in packaging mattresses and footwear industry. The marginsimproved due to considerably high price realisation arising out of supply constraints forCrude MDI higher volumes and lower input costs.

The Surface Technologies segment of your Company comprising of the Catalysts Coatings& Construction Chemicals businesses registered lower sales due to the impact oflockdown followed by sluggish demand. Although the margins of the Coatings Solutionsbusiness were impacted the gross margins improved from lower input prices. The Catalystsbusiness registered higher merchandise volumes but its margins were impacted due to lowerprice realisation as compared to the input costs. As a part of BASF’s globalportfolio optimization the Construction Chemicals business of the Company was transferredto Master Builders Solutions India Pvt Ltd on 1st July 2020.

The Nutrition & Care segment of your Company comprising of the Care ChemicalsNutrition & Health Care businesses registered a significant increase in sales duringthe year under review as compared to the previous year mainly due to strong growth insales of products used for vitamins & nutritional supplements supported by betterpricing strategy & improved margins. During the year under review the sales &profits of the Chemicals segment of your Company comprising of the Petrochemicals &Intermediates businesses increased substantially due to high revenue growth of productssupplied to to agro pharma fragrance & speciality ingredients segments. Export salesstood at Rs. 2396.9 million during the year under review.

Divestiture of Company’s Construction Chemicals business to Master BuildersSolutions India Pvt Ltd

The Board of Directors of your Company at their meeting held on 11thFebruary 2020 had approved the divestiture of its Construction Chemicals businessto Master Builders Solutions India Private Limited for a consideration of Rs.5951.6 million subject to the approval of the Shareholders of the Company and such otherapprovals as may be required. For this purpose the Board had also taken intoconsideration the independent valuation report of Deloitte Touche Tohmatsu IndiaLLP.

The Shareholders of the Company approved the said divestiture by way of Postal Balloton 21st April 2020 and accordingly your Company’s construction chemicalsbusiness was transferred to Master Builders Solutions India Private Limited with effectfrom 1st July 2020 after the receipt of consideration of Rs. 5951.6 million.

Merger of BASF Performance Polyamides India Pvt Ltd with BASF India Ltd

BASF Performance Polyamides India Pvt Ltd was originally incorporated as RhodiaPolymers & Specialties India Pvt Ltd on 31st January 2011 and carried onthe business of manufacture/trading of performance polyamides with a manufacturing site atPanoli Gujarat. It has a wide range of engineering plastics (major brand: Technyl) andserves the automobiles electrical and consumer goods segments.

Pursuant to the approval of the Shareholders of the Company at the 76thAnnual General Meeting held on 6th August 2020 the Company had on 18thAugust 2020 acquired 100% stake in BASF Performance Polyamides India Pvt Ltd for aconsideration of Rs. 3029.0 million thereby making it your Company’s wholly ownedsubsidiary. The Board of Directors of your Company at their meeting held on 27thAugust 2020 had approved the Scheme of Merger by way of absorption of BASF PerformancePolyamides India Pvt Ltd. with the Company subject to the necessary statutory &regulatory approvals including the approval of the Hon’ble National Company LawTribunal Mumbai. The merger of BASF Performance Polyamides India Pvt Ltd. with theCompany strengthens the Company’s position as a solution provider for key industries& would enhance market access to key growth markets. It would also help the Company inexpanding its existing ‘Materials’ segment and extend value chain throughbackward integration into key raw materials. The Performance Polyamides business also hasoperational synergies with the Engineering Plastics business of your Company and mergingBASF Performance Polyamides India Pvt Ltd. with the Company ensures focused managementthereby resulting in efficiency of management and maximizing value to the Shareholders.

As BASF Performance Polyamides India Pvt Ltd. was a wholly owned subsidiary of theCompany no consideration was paid by your Company pursuant to the said merger and theinvestment of your Company in the equity shares of BASF Performance Polyamides India PvtLtd. stands cancelled. Further there was no change in the shareholding of the Companypursuant to the said merger. The Hon’ble National Company Law Tribunal Mumbai videits Order dated 6th January 2021 sanctioned the Scheme of Merger effective 1stFebruary 2021 (being the Appointed & Effective Date) and accordingly BASF PerformancePolyamides India Pvt Ltd stands merged with the Company.

Share Capital

Pursuant to the above mentioned Scheme of Merger by way of absorption of BASFPerformance Polyamides India Pvt Limited with the Company as sanctioned by theHon’ble National Company Law Tribunal Mumbai vide its Order dated 6thJanuary 2021 there is an increase in the authorised share capital of the Company to theextent of authorised share capital of BASF Performance Polyamides India Pvt Ltd.Consequently the revised authorised share capital of the Company as on 31stMarch 2021 aggregates Rs. 715597150/- which is divided into 71559715 equity shares ofRs. 10/- each.

Dividend

The Board of Directors of your Company have recommended a special dividend of Rs. 5/-per equity share i.e. 50% due to the portfolio restructuring measures. This is in additionto a final dividend of Rs. 5/- per equity share i.e. 50% for the financial year ended 31stMarch 2021. The aggregate dividend would be Rs. 10/- per equity share i.e. 100% which issubject to the approval of the Shareholders at the forthcoming Annual General Meeting on 6thAugust 2021. Further as per Regulation 43A of the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the top 1000 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’swebsite at http://bit.do/basfdividenddistributionpolicy

Directors

In accordance with the provisions of Section 152 (6) of the Companies Act 2013 Mr.Rajesh Naik being eligible offers himself for re-appointment as a Director of the Companyat the 77th Annual General Meeting of the Company to be held on 6thAugust 2021.

As required under the SEBI Listing Regulations the details of Director(s) seekingre-appointment at the ensuing Annual General Meeting is provided on page no. 56 of theCorporate Governance Report forming part of this Annual Report.

Finance & Accounts

Your Company continued to optimize borrowings during the year by focusing on cash flowsand working capital management. Your Company availed of alternative funding options suchas Commercial Papers Trade Financing Inter-Corporate Deposits from BASF GroupCompanies 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 0.1 as at 31stMarch 2021.

Capital Expenditure

Capital expenditure incurred during the year aggregated to Rs. 647.4 million.

Credit Rating

During the year CRISIL Ltd re-affirmed a credit rating of ‘CRISIL AAA’ andassigned a ‘Negative’ outlook for long term debt programme of your Company. Theratings on the Fixed Deposits and Commercial Paper have been re-affirmed at‘FAAA/Stable’ and ‘CRISIL A1+’ respectively. Further India Ratingsand Research Private Limited has also maintained a credit rating of ‘IND A1+’for Commercial Paper Programme of Rs. 7500.0 million of your Company.

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

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. Arun Bewoor Mr. R. A. Shah Independent Directors and Mr. Rajesh NaikManufacturing Head & Whole-time Director are presently the members of the CSRCommittee.

Mr. Pradeep Chandan Director – Legal General Counsel (South Asia) & CompanySecretary 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 1 meeting of CSR Committee was held on 6th August 2020 torecommend the CSR activities to be undertaken by the Company during the financial year2020-2021. Your Company was required to spend an amount of Rs. 5.37 million on CSRactivities during the financial year 2020-2021. Your Company undertook CSR activitiesmainly in the areas of COVID-19 relief measures viz. distribution of food supplies aroundDahej Production Site donation of ventilators to hospitals support the launch of 3state-of-the-art Mobile Acute Care units in Mumbai and other CSR activities underyour Company’s Water Sanitation and Hygiene (WASH) & Education theme details ofwhich are provided in Annexure I of this Report.

Further erstwhile BASF Performance Polyamides India Pvt Ltd wholly owned subsidiarywhich has merged with the Company effective 1st February 2021 (being theAppointed Date) has also spent an amount of Rs. 5.91 million mainly towards Covid-19related CSR activities.

Business Responsibility Report

Regulation 34(2) of the SEBI Listing Regulations inter alia provides that theAnnual Report of the top 1000 listed entities based on market capitalization shouldinclude a Business Responsibility Report ("BRR").

Your Company has included BRR as part of this Report as Annexure II describingthe initiatives taken by the Company from an environmental social and governanceperspective.

The BRR for the financial year 2020-2021 has also been hosted on the Company’swebsite which 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://bit.do/basfwhistleblowerpolicy

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 2021 and of the profit of the Company for that period;

(iii) the y 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.

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 ofthe Executive Non-Executive and Independent Directors Key Managerial PersonnelBoard and its Committees. Feedback was sought by way of a structured questionnairecovering various aspects of the Board’s functioning such as adequacy of thecomposition of the Board and its Committees Board culture execution andperformance of specific duties obligations and governance. The manner in which theevaluation has been carried out is explained on page no. 52 of the Corporate GovernanceReport forming part of this Annual Report.

Policy on Directors’ appointment and remuneration

The policy on Directors’ appointment and remuneration including determination ofthe qualifications positive attributes independence of a Director and other mattersprovided under Section 178(3) of the Companies Act 2013 forms part of the Nomination& Remuneration Policy of the Company. This policy is available on the Company’swebsite and can be accessed at: http://bit.do/basfnrc

Auditors

M/s. Price Waterhouse Chartered Accountants LLP (Registration No. 012754N/N500016)Mumbai have been appointed as Statutory Auditors of the Company for a period of 5years at the Annual General Meeting held on 28th September 2017 i.e.upto the conclusion of the Annual General Meeting to be held in the calendar year 2022.They have confirmed to the Company that they are not disqualified from continuing toact as the Statutory Auditors of the Company.

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 Practicing Company Secretaries Mumbai (C.P. 1483) toconduct the Secretarial Audit of the Company for the financial year 2020-2021 andto furnish the report to the Board. The Secretarial Audit Report dated 11th May2021 forms part of this Report as Annexure IV.

Auditors’ Report & Secretarial Audit Report

There are no qualifications/reservations placed by the Statutory Auditor and theSecretarial Auditor in their respective Reports for the financial year ended 31stMarch 2021.

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 2021-2022. 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. 50 and 51 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 significantrelated party 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 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://bit.do/basffrptpolicyYour Directors draw the attention of the Shareholders to Note No. 45 of the FinancialStatements which sets out related party disclosures under the Indian Accounting Standards(IND AS).

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

During the financial year 2020-2021 except the investment of Rs. 3029.0 million madeby the Company for acquisition of 100% stake in erstwhile BASF Performance PolyamidesIndia Pvt Ltd which got subsequently merged with the Company effective 1stFebruary 2021 the Company has not provided any loan to any person or body corporate orgiven any guarantee or provided security in connection with such loan or made anyinvestment in the securities of any body corporate pursuant to Section 186 of theCompanies Act 2013. Further the Shareholders of the Company had on 3rd April2021 by way of Postal Ballot have approved the special resolution for placement ofInter-Corporate Corporate Deposits with BASF Catalysts India Pvt Ltd BASF Chemicals IndiaPvt Ltd and / or other BASF Group Companies for an aggregate amount not exceeding Rs.7500 million.

Web-link of Annual Return

The Annual Return of the Company for the financial year ended 31st March2021 in prescribed Form MGT-7 is available on the Company's website and can be accessed athttp://tiny.cc/AnnualReturn2020-21 and the Certification of Annual Return byCompany Secretary in Practice in prescribed Form MGT-8 can be accessed at http://tiny.cc/FormMGT8.

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 VI. As per the provisions of Section 136 of theCompanies Act 2013 read with sub-rules 2 and 3 of Rule 5 of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Annual Report excluding thestatement of particulars of employees is being sent to all the shareholders of theCompany. Any shareholder interested in obtaining a copy of the said statement may write tothe Company Secretary at the Registered Office of the Company or at investor-grievance-india@basf.com.

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). The names of the Committee Members are displayed on the noticeboard in each office / manufacturing site. All employees as well as contract staff andtrainees are covered by this policy. Allegations of sexual harassment reported areexpeditiously and discreetly investigated and disciplinary action if required istaken in accordance with the policy.

There was no complaint of sexual harassment received during the financial year2020-2021.

Training programs on prevention of sexual harassment at the workplace are alsoconducted at regular intervals. During the year under report your Company conductedawareness programmes on the policy for the employees. Your Company had also rolled out ane-learning module to sensitize & create awareness amongst the employees of the Companyon 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 thatthe risks 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 are provided in theManagement Discussion and Analysis Report forming part of this Annual Report.

Significant and material orders passed by Regulators or Courts

Certain litigations pending with Regulators or Courts have been disclosed as ContingentLiabilities in note no. 35 of the notes to the financial statements for the financial yearended 31st March 2021. There are no other 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

The COVID-19 situation continues to evolve. The Company has evaluated the impact ofthis pandemic on its business operations liquidity and financial position and based onmanagement’s review of current indicators and economic conditions no additionaladjustment is required in the financial statements for the financial year ended 31stMarch 2021. Given the uncertainty associated with its nature and duration the impact maybe different from that estimated as at the date of approval of the Audited FinancialStatements for the financial year ended 31st March 2021. The Company willcontinue to monitor any material changes to future economic conditions.

Board Meetings

Six Board Meetings were held during the financial year 2020-2021 on the followingdates:

(1) 22nd May 2020 (2) 6th August 2020
(3) 27th August 2020 (4) 4th November 2020
(5) 9th February 2021 (6) 30th March 2021

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 Section149(6) of the Companies Act 2013 and the SEBI Listing Regulations.

Employee Relations

Your Directors place on record their sincere appreciation of the contribution made bythe employees at all levels to the growth of the Company. Industrial Relations at all ourmanufacturing 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 shareholdersand investors for their confidence in the Company.

On behalf of the Board of Directors

For BASF India Limited

PRADIP P. SHAH NARAYAN KRISHNAMOHAN
Chairman Managing Director
(DIN: 00066242) (DIN: 08350849)

Mumbai

Dated : 11th May 2021

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