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BASF India Ltd.

BSE: 500042 Sector: Industrials
NSE: BASF ISIN Code: INE373A01013
BSE 11:53 | 01 Jun 1093.00 13.55
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NSE 11:49 | 01 Jun 1095.55 8.80
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OPEN 1099.05
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VOLUME 982
52-Week high 1469.50
52-Week low 795.00
P/E 92.86
Mkt Cap.(Rs cr) 4,732
Buy Price 1093.40
Buy Qty 10.00
Sell Price 1095.70
Sell Qty 1.00
OPEN 1099.05
CLOSE 1079.45
VOLUME 982
52-Week high 1469.50
52-Week low 795.00
P/E 92.86
Mkt Cap.(Rs cr) 4,732
Buy Price 1093.40
Buy Qty 10.00
Sell Price 1095.70
Sell Qty 1.00

BASF India Ltd. (BASF) - Director Report

Company director report

Your Directors have pleasure in presenting their Report for the financial year ended 31stMarch 2019.

Financial Results

(Rs. in million)
Description Year ended 31.3.2019 Year ended 31.3.2018
Revenue from operations (Net of GST / Excise duty) 60256.7 55834.0
(Loss) /Profit before tax and exceptional items (542.0) 1024.6
Exceptional items 1260.6 1585.7
Profit before tax 718.6 2610.3
Tax expense/ (credit) (98.6) 145.3
Profit after tax 817.2 2465.0
Dividend 216.4 129.9
Dividend distribution tax 44.5 26.7

Note: As per Indian Accounting Standard 115/Indian Accounting Standard 18 on Revenueand Schedule III of the Companies Act 2013 Revenue from Operations for the period endedafter June 30 2017 does not include Goods and Services Tax (GST) however Revenue fromOperations till the period ended June 30 2017 included Excise duty.

Performance

Revenue from Operations (net of GST / Excise duty) at Rs. 60256.7 million representsan increase of 8% over the previous year. Your Company reported a profit after tax of Rs.817.2 million for the year ended 31st March 2019 as compared to profit aftertax of Rs. 2465.0 million in the previous year. The profitability was mainly impacted dueto higher input cost.

The business segments of your Company have been reorganized effective 1stJanuary 2019. The new segment structure will enable an even more differentiated steeringof the business taking into account market-specific requirements and thecompetitive environment. It will further increase the transparency of the segment results.The new segments are as under:

a) Agricultural Solutions – The Agricultural Solutions segment consists of theCrop Protection business.

b) Materials – The Materials segment comprises of Performance Materials and theMonomers businesses.

c) Industrial Solutions – The Industrial Solutions segment consists of theDispersions & Pigments and Performance Chemicals businesses.

d) Surface Technologies – The Surface Technologies segment comprises of theCatalysts Coatings and Construction Chemicals businesses.

e) Nutrition & Care – The Nutrition & Care segment consists of the CareChemicals and Nutrition & Health businesses.

f) Chemicals – The Chemicals segment consists of the Petrochemicals andIntermediates businesses.

g) Others – Others include activities that are not allocated to any of thecontinued operating divisions. These include remaining activities after divestiture ofcertain businesses including leather and textile chemicals business paper wet-end andwater chemicals business technical and service charges other than those specificallyidentifiable to the above segments.

The Agricultural Solutions segment of your Company registered good growth in sales andprofits during the year as compared to the previous year mainly due to increased salesfrom launch of new products for crops like cotton corn rice and coupled withgrowth in volumes.

The Materials segment registered modest growth in sales during the year under review ascompared to the previous year. However its margins significantly dropped due to volatileCrude MDI (Methylene diphenyl di-isocyanate) prices.

The Industrial Solutions segment registered increase in sales & profits mainly dueto right product mix collaborative engagement with key customers tapping of new marketopportunities strong domestic demand driven by increase in prices and favourable exchangerates from exports.

The Surface Technologies segment registered marginal growth in sales during the yearunder review as compared to the previous year. The improved profitability of theConstruction Chemicals business was offset by a weak Coating Chemicals business due toslowdown in the auto industry.

The Nutrition & Care segment recorded modest growth in sales and incurred lossesdue to force majeure declared in BASF SE Plant in Germany and fluctuations in fattyalcohol prices. The pressure on margins continued due to higher input cost.

During the year under review the sales & profits of the Chemicals segment werelower as compared to the previous year on account of shortage of materials &volatility in prices.

Exports of goods & services stood at Rs. 7811.1 million during the year underreview.

Change of Business Model from Agency to Merchandise

Pursuant to the new rules framed by Organisation for Economic Cooperation andDevelopment (OECD) BASF has decided to phase out the agency business globally.

Accordingly the Board of Directors of your Company approved the proposal to replacethe agency business of your Company with the merchandise model effective financialyear 2019-2020.

BASF to evaluate strategic options for Construction Chemicals business

As a part of its active portfolio management BASF SE Germany continuously evaluatesits businesses. Accordingly in October 2018 BASF SE decided to evaluate strategicoptions for its Construction Chemicals business. BASF SE could consider a merger of thisbusiness with a strong partner as well as a divestiture subject to such approvals as maybe necessary. The Construction Chemicals business comprises of the Admixture and theConstruction Systems and forms part of the Surface Technologies segment.

Transfer of Pigments business to BASF Colors & Effects India Private Limited

In order to further develop the Pigments business and to fully leverage its growthpotential arising out of the emerging Asian region the Board of Directors of your Companyhad approved the transfer of the Pigments business of your Company to BASF Colors &Effects India Private Limited a 100% subsidiary of BASF Colors & Effects GmbHGermany at a consideration to be determined by an independent valuer (on an arm's lengthbasis).

Accordingly the Pigments business of your Company was transferred to BASF Colors &Effects India Private Limited with effect from 1st January 2019 for aconsideration of Rs. 190.0 million based on the valuation of an Independent Valuer.

Transfer of the Company's Paper Wet-end & Water Chemicals businesses to SolenisChemicals India Private Limited

Pursuant to the global combination of BASF's Paper wet-end & Water Chemicalsbusinesses with Solenis your Company's Paper wet-end and Water Chemicals businesses weretransferred to Solenis Chemicals India Private Limited with effect from 1stFebruary 2019 for a consideration of Rs. 2520.0 million (based on an IndependentValuation Report) subject to working capital adjustments.

Dividend

In view of the 75th anniversary milestone the Board of Directors of yourCompany have recommended a special dividend of Rs. 2/- per equity share of Rs. 10 eachi.e. 20% in addition to a final dividend of Rs. 3/- per equity share of Rs. 10 eachi.e. 30% for the financial year ended 31st March 2019 aggregating to 50% i.e.Rs. 5/- per equity share of Rs. 10 each subject to the approval of theshareholders at the 75th Annual General Meeting of the Company to be held on 19thJuly 2019. The aggregate dividend will absorb Rs. 216.4 million and the dividenddistribution tax to be borne by the Company would amount to Rs. 44.5 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://bit.do/basfdividenddistributionpolicy

Directors

Dr. Andrea Frenzel resigned as Director of your Company on 31st July 2018and Dr. Ramkumar Dhruva was appointed as Director of the Company with effect from 10thAugust 2018 in place of Dr. Andrea Frenzel. The Board of Directors of your Company placeon record its sincere appreciation of the valuable contributions made by Dr. AndreaFrenzel during her tenure as Director of the Company.

In accordance with the provisions of Section 161(4) of the Companies Act 2013 Dr.Ramkumar Dhruva being eligible offers himself for re-appointment.

Dr. Raman Ramachandran superannuated as the Chairman & Managing Director of theCompany with effect from the close of business hours as on 31st March 2019.The Board of Directors of your Company place on record its sincere appreciation of thevaluable contributions made by Dr. Raman Ramachandran in the growth of the Company duringhis tenure as the Chairman & Managing Director of the Company.

The Board of Directors of the Company at their Meeting held on 23rd January2019 appointed Mr. Narayan Krishnamohan as the Managing Director of the Companywith effect from 1st April 2019 subject to the approval of the Ministry ofCorporate Affairs (Central Government). His appointment has been duly approved by theshareholders of the Company by way of Postal Ballot on 26th March 2019.

Mr. Narayan Krishnamohan has completed his Bachelors in Chemical Engineering fromLaxminarayan Institute of Technology Nagpur. Having joined the Company in January 1995Mr. Narayan Krishnamohan has been with BASF for more than 24 years. He has held variousregional and global leadership roles in Singapore Germany and Hong Kong. His leadershipexperience cuts across multiple operating divisions like Leather Chemicals SpecialtyChemicals Petrochemicals Acrylics & Dispersions Paper Chemicals Human Nutritionand Chemical Intermediates.

Mr. Pradip P. Shah was re-appointed as Independent Non-Executive Director of theCompany by the shareholders of the Company on 26th March 2019 by way of PostalBallot for a second term of five years with effect from 1st April 2019 to 31stMarch 2024. He was also appointed as the Chairman of the Company with effect from 1stApril 2019 by the Board of Directors of the Company at their Meeting held on 23rdJanuary 2019.

Mr. R. A. Shah and Mr. Arun Bewoor were re-appointed as Independent Non-ExecutiveDirectors of the Company by the shareholders of the Company on 26th March 2019by way of Postal Ballot for a second term of five years with effect from 1stApril 2019 to 31st March 2024.

SEBI vide its notification dated 9th May 2018 has amended the SEBI ListingRegulations requiring the top 500 listed entities based on market capitalization toappoint an Independent Woman Director by 1st April 2019. Accordingly Mrs.Shyamala Gopinath was appointed as Independent Woman Director of the Company for a periodof five years with effect from 23rd January 2019 to 22nd January2024 by the shareholders of the Company on 26th March 2019 by way of PostalBallot.

Mrs. Shyamala Gopinath is the Non-Executive Chairperson of HDFC Bank Limited. As DeputyGovernor of the Reserve Bank of India (RBI) for seven years and member of the RBI'sBoard of Directors she guided and influenced national policies in diverse areas offinancial sector regulation and supervision the development and regulation of financialmarkets capital account management management of government borrowings foreign exchangereserves management and payment and settlement systems. She has served on severalCommittees of RBI. During 2001 to 2003 she worked as senior financial sector expert inthe Monetary Affairs and Exchange Department of the International Monetary Fund(Financial Institutions Division). She has served as Chairperson of the Advisory Board onBank Commercial and Financial Frauds for two years from 2012 to 2014. She was anIndependent Director on the Boards of Clearing Corporation of India Indian OilCorporation Limited GAIL India Limited and an Independent Non-Executive Director on theGlobal Governance Council of Ernst and Young. She was also the Chairperson of the Board ofCorporate Bonds and Securitisation Advisory Committee of Securities & Exchange Boardof India. Apart from HDFC Bank she is an Independent Non-Executive Director on the Boardsof Colgate-Palmolive (India) Limited Tata Elxsi Limited and other companies includingnot for profit entities. Mrs. Shyamala Gopinath is also Chairperson of the Board ofGovernors of Indian Institute of Management Raipur.

Pursuant to expiry of his first term as Independent Non-Executive Director Mr. R. R.Nair did not seek re-appointment for a second term. Hence he ceased to be an IndependentNon-Executive Director of the Company with effect from the close of business hours as on31st March 2019. Your Directors place on record their sincere appreciation ofthe invaluable contribution made by Mr. R. R. Nair in the growth of the Company during hislong years of association with the Company.

Dr. Lakshmi Nadkarni ceased as an Alternate Director to Dr. Ramkumar Dhruva with effectfrom the close of business hours as on 31st March 2019. Your Directors placeon record their sincere appreciation of the contribution made by Dr. LakshmiNadkarni in the growth of the Company during her tenure as Director of the Company.

Mr. Pradeep Chandan was appointed as an Alternate Director to Dr. Ramkumar Dhruva andbeing in the whole-time employment of the Company also as a Whole-time Director of theCompany for a period of three years from 1st April 2019 to 31stMarch 2022. The shareholders of the Company have also approved the appointment of Mr.Pradeep Chandan on 26th March 2019 by way of Postal Ballot.

Mr. Rajesh Naik was re-appointed as a Whole-time Director of the Company for a periodof three years from 1st April 2019 to 31st March 2022 bythe shareholders of the Company on 26th March 2019 by way of Postal Ballot.

As required under the SEBI Listing Regulations the profiles of Directors seekingre-appointment at the ensuing Annual General Meeting is provided on page no. 53 in 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 0.6 as at 31stMarch 2019.

Capital Expenditure

Capital expenditure incurred during the year aggregated to Rs. 674.5 million.

Credit Rating

During the year CRISIL reaffirmed credit rating of ‘CRISIL AAA/Stable' for longterm debt programs and ‘CRISIL A1+' for Commercial Paper Programme of Rs. 7500.0million. Further India Ratings and Research Private Limited has also maintained a creditrating of ‘IND A1+' for Commercial Paper Programme of Rs. 7500.0 million.

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 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 Non-Executive Directors and Mr. RajeshNaik Whole-time Director are presently the members of the CSR Committee.

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 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.

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 2018-2019 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://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 2019 and of the profit of the Company for that period; (iii) they have taken properand sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Companies Act 2013 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; (iv) they have prepared theannual accounts on a going concern basis; (v) they have laid down internal financialcontrols to be followed by the Company and such internal financial controls are adequateand operating effectively; and (vi) they have devised proper systems to ensure compliancewith the provisions of all applicable laws and such systems are adequate and operatingeffectively.

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 of theExecutive Non-Executive and Independent Non-Executive Directors Key ManagerialPersonnel Board and its Committees based on the recommendation of the Nomination &Remuneration Committee. Feedback was sought by way of a structured questionnaire coveringvarious aspects of the Board's functioning such as adequacy of the composition of theBoard and its Committees Board culture execution and performance of specific dutiesobligations and governance. The manner in which the evaluation has been carried out isexplained on page no. 48 in the Corporate Governance Report forming part of this AnnualReport.

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://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 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 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. HS Associates Practising Company Secretaries Mumbai (C.P. 1483) toconduct the Secretarial Audit of the Company for the financial year 2018-2019 andto furnish the report to the Board. The Secretarial Audit Report dated 30thApril 2019 forms part of this Report as Annexure IV.

Auditors' Report & Secretarial Audit Report

There are no qualifications/reservations/emphasis of matter placed by the StatutoryAuditors and the Secretarial Auditors in their respective Reports for the financial yearended 31st March 2019.

Cost Audit

The Board of Directors in pursuance of Section 148 of the Companies Act 2013 hasappointed 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 2019-2020. 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. 46 and 47 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 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/basffrptpolicy

Your 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

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 is available on the Company's websiteand can be accessed at: www.basf.com/in

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 amendedforms part of this Report as Annexure VI. However as per the provisions of Section136 of the 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 AnnualReport excluding the statement of particulars of employees is being sent to all theshareholders of the Company. Any shareholder interested in obtaining a copy of the saidstatement may write to the 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.

In compliance with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules made thereunder yourCompany has adopted a policy for Prevention of Sexual Harassment at the Workplace and hasconstituted an Internal Committee (IC). The names of the Committee Members are displayedon the notice board in each establishment. 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 is takenin accordance with the policy.

There was no complaint of sexual harassment received during the financial year2018-2019.

Training programs on prevention of sexual harassment at the workplace are alsoconducted at regular intervals. During the year under report your Company conductede-workshops/awareness programmes on the policy for the employees. Your Company also rolledout an e-learning module to sensitize & create awareness amongst the employees of theCompany 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 mitigated by means of a properly defined framework. In theBoard's view there are no material risks which may threaten the existence of theCompany.

SEBI vide its notification dated 9th May 2018 had amended the SEBI ListingRegulations which mandates top 500 listed entities based on market capitalization toconstitute a Risk Management Committee comprising of majority of the members of the Boardof Directors of the Company with effect from 1st April 2019.

In view of the above and being one of the top 500 listed entities the Board ofDirectors of the Company at their Meeting held on 28th March 2019 constitutedthe Risk Management Committee of the Company with effect from 1st April 2019.The details about the Risk Management Committee have been provided in the CorporateGovernance section of the Annual Report.

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 the 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 year ended 31stMarch 2019. There are no significant and material orders passed by the Regulators/Courtswhich would impact the going concern status of the Company and its futureoperations.

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

Eight Board Meetings were held during the financial year 2018-2019 on the followingdates:

(1) 3rd May 2018 (2) 4th May 2018
(3) 31st July 2018 (4) 10th August 2018
(5) 3rd October 2018 (6) 30th October 2018
(7) 23rd January 2019 (8) 28th March 2019

Declaration of Independence

The Company has received declarations from all the Independent Non-Executive Directorsof the Company confirming that they meet the criteria of independence as prescribed underSection 149(6) of the Companies Act 2013 and the SEBI Listing Regulations as amended.

Personnel and Welfare

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 : 30th April 2019

Annexure III

Statement containing particulars pursuant to Section 136(3)(m) of the Companies Act2013 and Rule 8 of the Companies (Accounts) Rules 2014 and forming part of the Directors'Report.

A. CONSERVATION OF ENERGY

The Company continued its policy of giving priority to energy conservation measuresincluding regular review of energy generation distribution consumption and effectivecontrol on utilization of energy in its manufacturing facilities at Navi Mumbai(Maharashtra) Mangalore (Karnataka) Ankleshwar & Dahej (Gujarat) Kharagpur (WestBengal) Nellore (Andhra Pradesh) and Nalagarh (Himachal Pradesh).

During the year under report the following energy saving measures were implemented atthe Company's manufacturing sites:

Replacing the sodium vapour/ CFL bulbs/ illumination lamp/ conventionallights with energy efficient LED lamps/lights.

Replacement of old motor with energy efficient motor.

Generation of steam using Briquette fired boiler.

Process optimization in various production plants.

Installing Orifice on air inlet line of Filter press to reduce air consumption.

Providing timer for air diffuser and agitator to reduce electricity consumption.

Installation of Variable Frequency Drive and mechanical seals in various pumps forpower saving.

Reduction in electricity demand for lower fixed cost charges.

New technology air dryer installed (HOC type against heatless type) which resulted inpower saving.

Downsizing of various pumps.

Purchase of electricity from private players through open access resulting in reductionof electricity costs.

Replacement of old chilling unit with new energy efficient units.

Replacement of old agitator with new energy efficient agitator.

Replacement of old N2 compressor with new energy efficient unit.

Purchase of solar power from external solar park.

Usage of Bio fuel for generation of steam instead of Furnace Oil resulting in lowercarbon dioxide emission.

Reduction in process water consumption in plants was achieved by:

Reduction of effluent water load from plants to Effluent Treatment Plant (ETP).

Recycling of waste water inside the plants.

Use of ETP recycle water for cooling tower and gardening.

Rain water harvesting system.

Condensation recovery.

Drip irrigation and sprinkler system for tree plantation and gardening.

In addition the Company is actively considering the following energy conservationmeasures:

Initiating employee engagement program to identify & develop energy savingmeasures operation excellence.

Carrying out steam & energy audit.

Creating awareness on energy conservation among employees.

Optimising utility energy consumption in the plant through resource conservation.

Change in operation philosophy.

Reduction in energy consumption of chillers by descaling.

Automation of central utility air compressors.

Recycling of RO reject and cooling tower blowdown water.

Requisite data in respect of Energy Consumption is given below:

Current Year Previous Year
1.4.2018 to 1.4.2017 to
31.3.2019 31.3.2018
Power & Fuel Consumption
1. Electricity
(a) Purchased
Units (in '000 kwh) 63780.0 64258.4
Total amount (Rs. in million) 472.1 447.9
Rate per unit (Rs.) 7.6 7.2
(b) Own generation
Through diesel generator
Units (in '000 kwh) 687.9 760.8
Units per litre of oil 3.6 3.6
Cost per unit (Rs.) 16.3 15.4
2. Furnace oil/ fuels
Qty. (k. litre) 476.7 506.4
Total Amount (Rs. in million) 16.1 16.4
Average rate (Rs./ litre) 32.1 42.0
3. Natural Gas
Qty (kNcm) 11566.8 13083.9
Total cost (Rs. in million) 427.2 408.5
Average rate 34.0 30.4

B. TECHNOLOGY ABSORPTION Research & Development (R&D):

1. Specific areas in which R&D was carried out by the Company.

During the year the R&D Centre of the Company was engaged in supporting all thebusinesses through innovations and undertook multifold research activities including:

Further upgradation and improvement of safety instruments/ aspects.

Basic research in enhancing quality of life with sustainable solutions.

Introduction of new products in existing production lines.

Development of new products/ formulations including water based dye solutions.

Development of new analytical methods.

Testing of new research compounds and formulations in greenhouse & fields forefficacy and safety against agricultural pests and diseases.

Work on Global Research projects include:

Collaborative research with BASF SE and its Group Companies in the areas of PerformanceChemicals

Intermediates Agrochemicals and other organic materials.

organic chemical intermediates for specific applications. New absorbers. UV

Isolation of potential pesticides from natural sources.

Your Company's technical support laboratory at Mangalore is actively involved in thearea of developing new coatings technologies and testing services for global customers.This laboratory was a part of developing two new clearcoat technologies with improvedenvironmental resistance better appearance and better scratch resistance.

Your Company has a Pharma laboratory at its Navi Mumbai site which provides support tocustomer driven local innovation topics and also various global projects. This laboratoryhas been instrumental in launching new innovative products during the year under report.The technical and R&D team has been able to provide hands-on experience on variousfunctionality and dosage forms using various excipients. This laboratory is also activelyinvolved in conducting various workshops & training programs to educate & updatepotential customers on emerging technologies.

Your Company's Agricultural Research Station at Pune is recognized by Department ofScientific and Industrial Research Ministry of Science and Technology. Testing ofinnovative research compounds is done in greenhouses and fields for efficacy and safetyagainst economically important pests weeds and diseases. Baseline monitoring andresistance monitoring tests were carried out for insecticides and herbicides enabling thebusiness to take right decisions for new product introduction in the market.

2. Benefits derived as a result of the above R&D:

In its endeavor to create chemistry for a sustainable future for the benefit ofcustomers the R&D Centre developed new products during the year. Some of these newproducts were introduced in the market. Production processes have been improved withrespect to their safety efficiency quality quantity and sustainability. The Pharmalaboratory team together with reputed Institutes have created awareness and encouragedtechnologies which help in improving the bio availability of the drugs and deliversolutions for life threatening diseases such as retroviral diabetes and cardiovasculardiseases.

3. Expenditure on R&D: Rs. 82.8 million.

TECHNOLOGY ABSORPTION ADAPTATION AND INNOVATION:

1. Efforts in brief towards technology absorption adaptation and innovation:

The R&D Centre of the Company is recognized by the Ministry of Science andTechnology Government of India. The Centre undertakes research in several areasincluding:

Organic Chemical Intermediates for various applications. New Process Development andscale-up.

Agricultural Solutions.

Other Specialty Chemicals.

The Centre is also engaged in developmental activities including new cost-effectivetechnologies for existing and new products reduction in batch cycle time etc. as alsoresearch activities pertaining to the adaptation of process technologies received fromBASF SE Germany.

2. Benefits derived and the results of the above efforts:

New products were developed and commercialized during the year. Efforts in processoptimization led to cost reduction. This helped the businesses to remain cost competitive.Batch sizes and cycle times were optimized for better efficiency and manufacturingequipments were modified for overall improved productivity.

3. Imported Technology:

The Company has entered into the agreements with BASF SE and / or its Group Companiesfor sourcing the technical know-how in the following businesses:

a) Performance Materials and Care Chemicals.

b) Construction Products and Coatings.

The Company has excellent relationship with BASF SE Germany and other BASF GroupCompanies and receives valuable technical information and support on an ongoing basis. Asa result the Company has introduced a range of new products in different businesssegments.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign exchange earnings during the year: Rs. 7811.1 million. Foreign exchangeexpenses during the year: Rs. 2404.2 million.

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 : 30th April 2019

Annexure – 1

SECTOR SPECIFIC LAWS AS APPLICABLE TO THE COMPANY BEING IN CHEMICAL INDUSTRY

1. Factories Act 1948

2. The Contract Labour (Regulation & Abolition) Act 1970

3. Air & Water (Prevention and Control of Pollution) Acts

4. The Air (Prevention and Control of Pollution) Act 1981 and the Rules madethereunder

5. The Water (Prevention and Control of Pollution) Cess Act and Rules.

6. Environment Protection Act 1986 read with Environment (Protection) Rules 1986

7. The Manufacture Storage and Import of Hazardous Chemicals Rules 1989

8. Indian Boilers Act 1923

9. GIDC/ MIDC / KIADB Act and Rules 10. Chemical Weapons Convention Act 2000

11. The Narcotics Drugs and Psychotropic Substances Act 1985

12. The Explosives Act 1884

13. The Inflammable Substances Act 1952

14. Insecticides Act 1968 and Rules 1971

15. Legal Metrology (Packaged Commodities) Rules 2011

16. Fertilizer (Control) Order 1985

17. Solvent Raffinate & Slop (Licensing) Order 2007

18. Drugs and Cosmetics Act 1940

Mumbai For HS Associates
Dated : 30th April 2019 Company Secretaries
Hemant S. Shetye
Partner
FCS No.: 2827
CP No.: 1483

Annexure – 2

To

The Members BASF INDIA LIMITED

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these Secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected inSecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness appropriateness of financial records and booksof accounts of the Company.

4. The compliance of the provisions of corporate and other applicable laws rulesregulations standards is the responsibility of the management. Our examination waslimited to the verification of procedures on test basis.

5. The Secretarial audit report is neither an assurance as to the future viability ofthe Company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the Company.

Mumbai For HS Associates
Dated : 30th April 2019 Company Secretaries
Hemant S. Shetye
Partner
FCS No.: 2827
CP No.: 1483

Annexure V

FORM NO. AOC – 2

{Pursuant to clause (h) of sub-section (3) of Section 134 of the Companies Act 2013and Rule 8(2) of the Companies (Accounts) Rules 2014}

Form for Disclosure of particulars of contracts/arrangements entered into by theCompany with related parties referred to in sub section (1) of Section 188 of theCompanies Act 2013 including certain arms' length transactions under third provisothereto.

1. Details of contracts or arrangements or transactions not at Arm's lengthbasis:

There were no contracts or arrangements or transactions of the Company during the yearended 31st March 2019 which were not at arm's length basis.

2. Details of material contracts or arrangements or transactions at arms' lengthbasis:

Name(s) of the related party & nature of relationship Nature of contract/arrangement / transaction Duration of contract / arrangement/ transaction Salient terms of the contracts/ arrangements/ transactions Amount
(Rs. in million)
BASF Societas Europaea (BASF SE) (a) Sale and / or purchase of goods. (a) 6768.8
Parent Company (b) Availing or rendering of services. (b) 1107.4
(c) Payment of Royalty for Technical As per Inter Company (c) 17.3
Collaboration / Assistance. On-going transactions
BASF Hong Kong Limited Affiliate (a) Sale and / or purchase of goods. Transfer (a) 9176.9
Pricing (ICTP) (b) 793.8
Company BASF Company Ltd. Affiliate Company (b) Availing or rendering of services. Guidelines
(a) Sale and / or purchase of goods. (a) 6044.1
(b) Availing or rendering of services. (b) 36.1

 

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 : 30th April 2019

Annexure VI

REMUNERATION DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013 READ WITHRULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014AS AMENDED.

1. The ratio of the remuneration (paid / payable) of each Director to the medianremuneration of the employees of the Company for the financial year 2018-2019:

(Amount in Rupees)

Sr. No. Name of Director Remuneration Median Remuneration of Employees Ratio
1. Dr. Raman Ramachandran (Chairman & Managing Director)# 64008824 1145244 55.89
2. *Mr. Narendranath J. Baliga (Chief Financial Officer & Alternate Director) 20266933 1145244 17.70
3. **Dr. Lakshmi Nadkarni (Alternate Director) 17719462 1145244 15.47
4. ***Mr. Rajesh Naik (Whole-time Director) 14499594 1145244 12.66

 

# Dr. Raman Ramachandran superannuated as the Chairman & Managing Director of the Company with effect from the close of business hours as on 31st March 2019. His remuneration includes leave encashment payable to him during the FY 2019-2020. Mr. Narayan Krishnamohan is the Managing Director of the Company with effect from 1st April 2019.
* Mr. Narendranath J. Baliga has been appointed as the Chief Financial Officer & Alternate Director. Being in the whole-time employment of the Company he is also deemed to be Whole-time Director.
** Dr. Lakshmi Nadkarni ceased as an Alternate Director to Dr. Ramkumar Dhruva with effect from the close of business hours as on 31st March 2019.
*** Mr. Rajesh Naik has been re-appointed as the Whole-time Director of the Company with effect from 1st April 2019.

2. Percentage increase in remuneration of each Director Chief Financial OfficerCompany Secretary in the financial year 2018-2019 (compared to the financial year2017-2018):

Sr. No. Name Designation Percentage increase in remuneration
1. Dr. Raman Ramachandran Chairman & Managing Director 9.52
2. Mr. Narendranath J. Baliga Chief Financial Officer & Alternate Director 10.10
3. Dr. Lakshmi Nadkarni Alternate Director 10.11
4. Mr. Rajesh Naik Whole-time Director 8.16
5. Mr. Pradeep Chandan* Company Secretary 10.70

* Mr. Pradeep Chandan is appointed as an Alternate Director to Dr. Ramkumar Dhruva andbeing in the whole-time employment of the Company also deemed to be Whole-time Directorfor a period of three years from 1st April 2019 to 31stMarch 2022.

3. Percentage increase in the median remuneration of employees in the financialyear 2018-2019 is 10.94%.

4. The number of permanent employees on the rolls of the Company as on 31stMarch 2019 are 1673.

5. Average percentile increase already made in the salaries of employees otherthan the managerial personnel in the last financial year and its comparison with thepercentile increase in the managerial remuneration and justification thereof and point outif there are any exceptional circumstances for increase in the managerial remuneration:

Average percentile increase for Managerial Personnel is 9.72% and for other employeesis 10.94%.

In line with the Company's compensation philosophy merit increases and annual bonuspay-out to its employees including Key Managerial Personnel are directly linked toindividual performance as well as that of BASF's business globally.

6. Key parameters for any variable component of remuneration of the ExecutiveDirectors:

The key parameters for the variable component of remuneration availed by the Directorsare considered by the Board of Directors based on the recommendations of the Nominationand Remuneration Committee as per the Policy for Remuneration of the Directors KeyManagerial Personnel and other Employees.

7. It is hereby affirmed that the remuneration paid/payable during the year is asper the Remuneration Policy of 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 : 30th April 2019