CRISIL COMPANY REPORT | 1

BASF India Ltd

GICS Industry: Chemicals l Sub Industry: Diversified Chemicals l Website: www.basf-india.com

NSE Ticker: BASF

Bloomberg Ticker: BASF: IN

Face value / Share: 10.0

Div. Yield (%): 1.6

CMP (as on 11 Feb 2011—Rs/share): 499.5

52-week range up to 11 Feb 2011 (Rs) (H/L): 717.85/354.00

Market Cap as on 11 Feb 2011 (Rs mn): 20,363

Enterprise Value as on 11 Feb 2011 (Rs mn): 18,663

Div. Yield (%): 0.0

Shares outstanding (mn): 40.8

Free Float (%): 28.3

Average daily volumes (12 months): 46,947

Beta (2 year): 0.8

Key Stock Indicators

Incorporated in 1943, BASF India Limited (BIL) is the flagship company of the Germany-based BASF

group’s India operations. It manufactures and markets expandable polystyrene, tanning agents,

leather chemicals and auxiliaries in India and internationally. It is also involved in the trading of

chemicals including dyestuffs and related textile auxiliaries and renders technical services to

various industries.

KEY HIGHLIGHTS

Diversified revenue profile

BIL’s business segments comprise performance products (leather, textile, speciality and dispersion

chemicals), agrochemicals and plastics. Furthermore, the business is spread across various

customer segments/ industries viz footwear, textile, paper, construction, paint, detergent,

agriculture, petrochemical and refining. The amalgamation of Ciba group of companies with BIL has

further added to revenue diversity. In FY10, performance products contributed ~40% of total

revenue, agricultural solutions contributed ~30%, while plastics and others contributed ~26% and

~4%, respectively. During FY10, exports contributed ~9% of the total revenue of the company. The

diversity in revenue cushions BIL from the impact of a downturn in any one particular segment.

Amalgamation with Ciba group enhanced business portfolio

Ciba group of companies viz Ciba India Ltd (CIL), Ciba Research India Pvt Ltd (CRIPL) and Diamond

Dye-Chem Ltd (DDL) merged with BIL in February 2010. The speciality chemical business of Ciba

was integrated into BIL’s performance products segment (performance chemicals and functional

polymers). The complementary business portfolio will create business opportunities for BIL in

paper chemicals, care chemicals and performance chemicals. In addition, Ciba’s manufacturing

facility at Ankleswar (Gujarat) and technical lab in Mumbai will add value to the company.

New products introduced in FY10

The company has successfully launched 3 new prosperity products, namely “Verismo” in insecticide

segment, “Cabrio Top” in fungicide segment and “Stomp Xtra” in the herbicide segment. The

company also strengthened its product portfolio by addition of the polymers business of the Ciba

group. Introduction of new products will help BIL strengthen its product portfolio and enable

growth as well as increase market share in its niche business segments.

KEY RISKS

• Fortunes of agrochemical business depend on the monsoon, which is erratic

• Intense competition

• Volatility in prices of raw materials such as monomer, vegetable oil, naphthalene etc

YTD 1-m 3-m 12-m

BASF 36 -17 -30 33

NIFTY 0 -8 -14 10

Returns (%)

Note:

1) YTD returns are since April 1, 2010 to Feb 11, 2011.

2) 1-m, 3-m and 12-m returns are up to Feb 11, 2011.

Mar-08 Mar-09 Mar-10

Revenue (Rs mn) 10,548.9 13,218.6 16,290.9

EBITDA margins (%) 10.4 8.3 10.7

PAT (Rs mn) 574.6 486.1 960.7

PAT margins(%) 5.4 3.7 5.9

Gearing (x) 0.1 0.1 -

EPS (Rs/share) 20.4 17.2 23.6

PE (x) 9.5 10.4 21.2

P/BV (x) 1.6 1.4 2.4

RoCE (%) 27.3 25.3 25.0

RoE (%) 17.9 13.9 15.9

EV/EBITDA (x) 5.2 4.6 10.7 n.m. : Not meaningful

Promoter

72%

FII

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DII

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Indexed price chart

Shareholding (As on December 31, 2010)

Key Financial Indicators

Stock Performances vis-à-vis market

CRISIL COMPANY REPORT | 2

BASF India Ltd

BACKGROUND

BIL is a subsidiary of BASF, Germany; the parent holds 71.18% stake. BIL manufactures and markets expandable polystyrene, tanning agents, leather chemicals and

auxiliaries including specialised metal complex dyes, leather dyes, textile chemicals, dispersions and speciality chemicals like acrylic polymers in primary forms and crop

protection chemicals. BIL is also involved in the trading of chemicals including dyestuffs and related textile auxiliaries and renders technical services to various industries.

The agricultural solution segment is engaged in agri-chemicals like pesticides and herbicides. The products manufactured by the company serve many end-user industries,

including agriculture, paper, pharmaceuticals, consumer durables, electronics, automobiles, construction, leather and textiles. The company has 4 manufacturing units, 1

each in Maharashtra and Karnataka and 2 in Gujarat. As on March 2010, the company has an installed capacity of manufacturing 30,000 tonnes of expandable polystyrene,

9,000 tonnes of engineering plastics, 15,000 tonnes of leather auxiliaries (organic chemicals), 7,350 tonnes of leather auxiliaries, finishing agents and pigments. It also has

capacity to manufacture 67,225 tonnes of leather chemicals and auxiliaries including metal complex dyes and acrylic polymers and carboxylated styrene butadiene lattices,

6,700 tonnes of optical brightening agents and 905 tonnes of thermal developers and colour former.

COMPETITIVE POSITION

Peer Comparison

BASF India Ltd Atul Ltd.

Clariant

Chemicals (India) Ltd

Pidilite

Industries Ltd

Mar-10 Mar-10 Dec-09 Mar-10

Revenue (Rs mn) 16,290.9 12,211.3 9,532.2 22,194.4

EBITDA margins (%) 10.7 10.8 21.2 18.9

PAT (Rs mn) 960.7 555.9 1,076.1 2,770.1

PAT margins(%) 5.9 4.6 11.3 12.5

Gearing (x) - 0.8 - 0.6

EPS (Rs/sha re) 23.6 21.0 40.4 5.5

PE (x) 21.2 8.2 17.5 23.2

P/BV (x) 2.4 1.2 5.5 8.3

RoCE (%) 25.0 12.8 48.7 29.1

RoE (%) 15.9 15.1 32.6 41.5

EV/EBITDA (x) 10.7 5.8 9.2 16.4 n.m: Not meaningful

FINANCIAL PROFILE

Strong top-line growth, net profit doubles in FY10

In FY10, BIL registered a growth of ~23.2% in revenue from core operations. This

growth was largely driven by higher realisations and increase in volumes in

agricultural solutions, performance products and plastics business. Exports grew by

7% during FY10.

Operating margin improved by ~240 basis points to 10.7% in FY10, from 8.3% in

FY09, mainly on account of higher capacity utilisation and decrease in raw material

costs and employee costs as a percentage of sales. Consequently, net margin

witnessed an increase to 5.9% in FY10, from 3.7% in FY09.

Net profit almost doubled, largely on account of increase in operating profit and

higher capacity utilisation. Decrease in interest costs and increase in other income

also contributed to PAT growth.

Units Mar-08 Mar-09 Mar-10

Revenue Rs mi l l ion 10,548.9 13,218.6 16,290.9

EBITDA margins Per cent 10.4 8.3 10.7

PAT Rs mi l l ion 574.6 486.1 960.7

PAT margins Per cent 5.4 3.7 5.9

Revenue growth Per cent 24.3 25.3 23.2

EBITDA growth Per cent 15.7 -0.1 60.0

PAT growth Per cent 14.8 -15.4 97.6

Gearing Times 0.1 0.1 0.0

RoCE Per cent 27.3 25.3 25.0

RoE Per cent 17.9 13.9 15.9

Key Financial Indicators

INDUSTRY PROFILE Dyes and pigments

The dyestuff industry has three sub-segments - dyes, pigments and intermediates. Dyes are soluble and essentially used in textile products. Pigments, on the other hand,

are insoluble and are important inputs for products like paints. Based on product variation, the industry is divided further into basic dyes, disperse dyes, reactive dyes,

sulphur dyes, vat dyes, naphthols, optical brighteners, fast colour bases and azoacids amongst others.The industry has nearly 1,000 small-scale units and 50 large units for

manufacturing dyes, pigments and intermediates. Total capacity of the Indian dyes and pigments industry is around 4, 55,000 tonnes per annum (tpa). Maharashtra and

Gujarat account for around 90 per cent of the country`s total dyestuff production.The dyestuff industry has forward and backward linkages with a number of industries.

Some major industries that use dyes are textiles, leather, paper, printing inks and food processing. In fact, the textiles and leather processing industries consume around 85

per cent of the total dyes manufactured in the country. The industry enjoys the benefits of a large market, availability of key inputs and technology and competitiveness in

the export market. However, the highly fragmented nature of the industry has given rise to intense competition. In production value terms, the unorganised sector

accounts for around 35 per cent of the market.

Plastic & Plastic Products

Plastic products are made from polymers such as polyethylene (PE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC). They are widely used in household

items, pipes, packaging films, bottles and containers, woven sacks, plastic furniture, moulded luggage, wire and cable insulations, and electronic and electrical items. Plastic

products are classified into four segments: extrusion (71 per cent), injection moulding (20 per cent), blow moulding and roto moulding (together 9 per cent). Currently,

there are about 35,000-40,000 plastic processing units in India, most of which have only 2-3 machines each. The plastic processing industry`s consumption of virgin

polymers (PE, PP, PS and PVC), in 2009-10 was estimated at 6.67 million tonnes. Domestic demand for plastic products, during 2009-10, witnessed a robust growth of 15

per cent mainly driven by strong demand from end-user industries like packaging, construction and automobiles. The government`s support in the form of tax sops, anti-

dumping duty and lower customs and excise duty on polymers has been a positive for the industry, However, laws such as the Jute Packaging Materials Act (JPMA), which

encourage the use of jute in packaging, have affected the demand for plastics.

CRISIL COMPANY REPORT | 3

BASF India Ltd

ANNUAL RESULTS

Income Statement Balance sheet

(Rs million ) Mar-08 Mar-09 Mar-10 (Rs million ) Mar-08 Mar-09 Mar-10

Net Sales 9,953.4 12,377.9 15,357.6 Equity share capital 281.9 281.9 407.7

Operating Income 10,548.9 13,218.6 16,290.9 Reserves and surplus 3,094.3 3,349.5 8,021.7

Tangible net worth 3,376.2 3,631.4 8,429.4

EBITDA 1,092.7 1,091.2 1,745.9 Deferred tax liablity:|asset| -23.6 -2.5 -85.9

EBITDA Margin 10.4 8.3 10.7 Long-term debt 0.0 0.0 0.0

Short-term-debt 272.7 219.4 0.0

Depreciation 147.3 165.3 275.4 Total debt 272.7 219.4 0.0

Interest 36.0 65.8 16.7 Current l iabilities 1,772.7 2,561.1 4,096.5

Other Income 13.3 24.2 39.6 Total provisions 339.2 349.6 550.3

Total liabilities 5,737.2 6,759.0 12,990.3

PBT 913.0 880.3 1,506.3 Gross block 3,544.9 3,787.4 6,448.1

PAT 574.6 486.1 960.7 Net fixed assets 1,323.5 1,590.7 2,641.7

Investments 29.0 0.0 0.0

PAT Margin 5.4 3.7 5.9 Current assets 4,384.7 5,168.3 10,348.6

Receivables 1,933.8 1,795.1 3,125.4

No. of shares (Mn No.) 28.2 28.2 40.8 Inventories 1,514.1 2,225.2 4,021.9

Cash 106.1 302.7 1,699.4

Earnings per share (EPS) 20.4 17.2 23.6 Total assets 5,737.2 6,759.0 12,990.3

Cash flow Ratio

(Rs million ) Mar-08 Mar-09 Mar-10 Mar-08 Mar-09 Mar-10

Pre-tax profit 922.7 884.3 1,493.4 Revenue growth (%) 24.3 25.3 23.2

Total tax paid -341.0 -373.1 -629.0 EBITDA growth(%) 15.7 -0.1 60.0

Depreciation 147.3 165.3 275.4 PAT growth(%) 14.8 -15.4 97.6

Change in working capital -89.4 211.8 -2,047.5

EBITDA margins(%) 10.4 8.3 10.7

Cash flow from operating activities 639.6 888.3 -907.7 Tax rate (%) 37.3 42.4 35.2

Capital Expenditure -320.6 -432.5 -1,326.4 PAT margins (%) 5.4 3.7 5.9

Investments and others 0.0 29.0 0.0

Dividend payout (%) 34.3 40.6 34.0

Dividend per share (Rs) 7.0 7.0 8.0

Cash flow from investing activities -320.6 -403.5 -1,326.4 BV (Rs) 119.8 128.8 206.8

Equity raised/(repaid) 0.0 0.0 136.3 Return on Equity (%) 17.9 13.9 15.9

Debt raised/(repaid) -45.4 -53.3 -219.4 Return on capital employed (%) 27.3 25.3 25.0

Dividend (incl. tax) -230.9 -230.9 -380.4

Others (incl extraordinaries) -9.7 -4.0 4,094.3 Gearing (x) 0.1 0.1 0.0

Interest coverage (x) 30.4 16.6 104.5

Debt/EBITDA (x) 0.2 0.2 0.0

Cash flow from financing activities -286.0 -288.2 3,630.8

Change in cash position 33.0 196.6 1,396.7 Asset turnover (x) 3.0 3.6 3.2

Opening cash 73.1 106.1 302.7 Current ratio (x) 1.9 1.7 2.2

Closing cash 106.1 302.7 1,699.4 Gross current assets (days) 148 140 223

n.m : Not meaningful;

QUARTERLY RESULTS

(Rs million) Sep-10 % of Rev Sep-09 % of Rev Jun-10 % of Rev Sep-10 % of Rev Sep-09 % of Rev

No of Months 3 3 3 6 6

Revenue 6,586.6 100.0 3,683.9 100.0 6,636.1 100.0 13,222.7 100.0 7,525.4 100.0

EBITDA 783.1 11.9 550.3 14.9 826.8 12.5 1,609.9 12.2 1,252.7 16.6

Interest 4.1 0.1 2.1 0.1 1.9 0.0 6.0 0.0 4.3 0.1

Depreciation 89.0 1.4 39.7 1.1 89.4 1.3 178.4 1.3 108.4 1.4

PBT 690.0 10.5 508.5 13.8 735.5 11.1 1,425.5 10.8 1,140.0 15.1

PAT 456.5 6.9 340.2 9.2 488.6 7.4 945.1 7.1 750.7 10.0

Profit and loss account

CRISIL COMPANY REPORT | 4

BASF India Ltd

FOCUS CHARTS & TABLES

Mar 2010 Jun 2010 Sep 2010 Dec 2010

Promoter 71.7 71.7 71.7 71.7

FII 0.1 0.5 0.5 0.6

DII 7.7 7.0 6.5 6.4

Others 20.5 20.9 21.3 21.3

Shareholding Pattern (Per cent) Board of Directors

Director Name Designation

Prasad Chandran (Mr.) Executive Chairman & Managing Director

Rainer Diercks (Dr.) Promoter-Director

Rajasekharan Ramakrishna Nair

(Mr.)

Non-Executive Director

Raman Ramachandran (Dr.) Director

Pradip Panalal Shah (Mr.) Non-Executive Director

Boon Yeow Yee (Mr.) Promoter-Director

Rajendra Ambalal Shah (Mr.) Alternate Director, Non-Executive Director

Arun Bewoor (Mr.) Non-Executive Director

Thilo Bischoff (Mr.) Wholetime Director

Saori Dubourg (Ms.) Director

S. Regunathan (Mr.) Wholetime Director

Additional Disclosure

This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT).

Disclaimer

This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as

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contact 'Client Servicing' at +91-22-33423561, or via e-mail: clientservicing@crisil.com.

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