[Ed. Note – This article does not meet our new editorial guidelines, nor does the company profiled meet our investment criteria. It will be removed from the site in the future.]
BASF India Limited (BSE:500042) a diversified midcap chemical company (market cap Rs 25830 million), has been upgrading existing manufacturing facilities and building additional capacity at Dahej, and using synergies of amalgamated entities like BASF Construction Chemicals India PLtd, Cognis Holdings GmbH, Ciba Research India P ltd, Diamond Dyechem Ltd, Ciba India Ltd, etc; adopting better inventory management and cost discipline and focusing on developing innovative solutions sought by customers, to sustain market leadership and profitability even during recessionary economic conditions. BASF India is the Indian arm of BASF SE, (London: BFA, Frankfurt: BAS, Zurich: AN), a German global leader in chemicals. “We create chemistry” is its new global strategy. It is now focusing on Asia and the emerging markets for sustaining growth.
Progress of Dahej Chemical Project
BASF India has reported that major part of the construction work at its future chemical production site in Dahej, Gujarat has been completed. The INR 10000 million project marks BASF’s single largest investment in India. It will strengthen the company’s offerings to key customer industries such as appliances, footwear, automotive, construction, architectural coatings and personal care, as well as paper. It is likely to start production in early part of 2014.
Speaking about the project, Mr. Prasad Chandran, Chairman, BASF Companies in India & Head South Asia, said, “We are committed to ensuring that this project contributes to the growth and development of the local industry, while maintaining BASF’s excellent global standards. The new site will strengthen our position in important northern and western markets and also complement the existing manufacturing set up in Mangalore, Ankleshwar and Thane.”
The press release of the company says, “Earthworks and foundation work have now been completed at the site. Infrastructure project and plant structures including the administration building, underground pipelines, warehouses, water tanks and plant buildings are taking shape. Utilities like steam, water and electricity will be installed step-by-step. This also includes waste water, thermal oxidizer and other amenities.”
The site’s advanced design process takes advantage of the latest state of the art technologies from global BASF facilities.BASF has been successful in maintaining a zero lost-time Injury record at the site.
Improvements in Q4
For the Q4 ended March 31, 2013, the company registered sales revenue of Rs. 8209 million as compared to Rs. 7640.5 million in the corresponding period of the previous year, showing a rise of 7.4%. Profit before tax stood at Rs. 197.7 million for the quarter ended March 31, 2013 as compared to Rs. 118.5 million in previous year, showing a rise of 42%. Profit after tax was recorded at Rs.133.1 million as compared to Rs. 79.8 million in the corresponding period of the previous year, recording a rise of 66%.
Annual Profit Figures
For the fiscal year 2012-13, profit before tax stood at Rs. 1690 million as compared to Rs. 1497 million; an increase of 12.9%. Profit after tax rose to Rs. 1141 million as compared to Rs. 1009 million in the previous year, representing an increase of 13.1%.Export sales of Rs. 2746 million were recorded in the current fiscal year as compared to Rs. 2284 million in the previous year showing a rise of 20%.
BASF India Ltd has been making improvements continuously in its business processes. It has recently launched a new brand, Master Builder Solutions for construction segment. In Sept 2012, the company had closed down the EPS (expandable polystyrene) business, as it was uneconomical to operate it.
BASF’s predominant product range includes plastics and chemicals, catalysts, coatings, crop protection technology, and exploration of oil and gas. It’s newly launched brand, Master Builders Solutions, is a new portfolio of product solutions and services, including solutions for new construction processes, maintenance processes and renovation of old structures; such as new concrete admixtures, chemical cement additives, chemical application solutions for mining and tunneling, rooftop waterproofing, concrete repair and protection products, solutions for grouts and new high-performance flooring.
Mr. Prasad Chandran, Chairman, BASF Companies in India, explained, “A powerful brand builds trust and confidence. The launch of Master Builders Solutions is in line with BASF’s latest “We create chemistry” strategy. By bringing all the specialty brands together, we are building up our business spirit and investing for future profitable growth. It will facilitate better access to the market and strengthen the awareness of the construction industry on our existing range of products and offerings.”
“Master Builders Solutions embodies our ability, to collaborate across technologies and functions on a global scale. That way we create solutions geared to meet the individual construction chemical challenges of our customers, “said Dr. Tillman Krauch, President of BASF’s Construction Chemicals division.
BASF now adopts a globalized naming system for products and services, under a brand, enabling BASF to support the customers and partners with a promise of high quality and consistency, in global products and services. TheBASF India’s Construction Chemicals division at present has production sites in Turbhe, Mangalore, Nalagarh, Kolkatta and Bangalore. To strengthen the customer relationship and to be able to develop and offer the innovative customer-friendly solutions to the industry clients, the parent company announced the opening of an additional Construction Technology Center in Mumbai. The new center would support collaboration with customers in joint development of new applications and formulations, thus providing support for the enterprises in the sub-regions to adopt and nurture world-class innovation and cutting-edge technologies in partnership with BASF’s technical experts.
BASF India has successfully collaborated and partnered India’s technical progress, while simultaneously also maintaining excellent performance in environment protection, health and safety, in line with internationally accepted standards.
Construction Chemicals division
BASF India’s Construction Chemicals division offers one stop solutions for builders, architects and contractors in construction business. To solve the client’s specific challenges, from conception to the completion stage of a project, the company combines its know-how across domain areas of expertise and regions and draw on the knowledge and experience gained in construction projects worldwide. It leverages global BASF technological knowledge, as well as the in-depth understanding of local construction needs, to develop innovations which ensure the customers’ sustainable technical advantage and success.
BASF as a market leader, combines economic and technological success with environmental protection and social concern. Through research and innovation, the company enables the clients in every industry to meet the current and perceived future needs and requirements. The new products and solutions try to conserve resources, ensure better nutrition and improved quality of life. “We create chemistry for a sustainable future” says the company. The BASF Group consists of subsidiaries and joint ventures in more than 80 countries have customers in wide variety of industries worldwide. The company is continuously expanding its activities with a specific Asia focus. The company invested substantially, for example in sites near Nanjing and Shanghai of China and Mangalore site in India.
The Investor Perspective
BASF India ltd appears to be a good long term investment. After the report of good performance, the scrip has been looking up. Current market price is Rupees 607(Face value Rs 10).
EPS: 26.3, PE: 23.4, Industry PE: 28 (52 week high: 769 Low: 543):
Equity Rs 432.9 million, book value: Rs 242.3(2011-12)
Earnings per share is as follows: (Rupees)FY 2012-13:
Q4:3.08, Q3:0.23, Q2: 6.49, Q1:16.56
Net Profits: (Million rupees)
FY2012-13: 1140, FY 2011-2012:1008, FY 2010-11:1178, FY 2009-10: 968
FY2012-13:26.3, FY2011-2012:23.3, FY 2010-11:27.2
(These figures are not strictly comparable as carry forward losses of amalgamating companies has changed the picture marginally)
Looking at the prospects of improved earnings due to expansion and upgrading of existing facilities, the shares can be held at current price for long term gains. Shares can be bought on dips around the prices of 580-585 and accumulated for long term. Considering the leadership position the company enjoys, the shares are a good investment.
(Sources: www.bseindia.com and press releases of BASF India, www.india.basf.com)