Analyst Meet / AGM - Analyst Meet
Optimizing its business portfolio through divestment and acquisitions
BASF India held its analyst meet 2 August 2018 to discuss its performance for FY 2018 and quarter ended June 2018.
Highlights of the call:
The company has 4 BU. They are Performance Products, Functional Material and Solutions, Chemicals and Agriculture solutions.
The company's products cater to automotive, agriculture, pharmaceuticals, construction, consumer care, consumer durables, paper and paints.
A good monsoon leads to sales and profit growth in its agricultural business segment.
Despite uneven monsoon in different parts of the country, the company was able to grow its agriculture business due to introduction of new products.
Crude oil and exchange rate volatility impacted margins in certain business divisions.
It sees rising inflationary pressures and liquidity as concerns for the economy in general.
It aims to continue profitable growth by implementing measures for resource optimization, portfolio management and operational efficiency.
Agricultural Solutions business includes products for crop protection like insecticides, herbicides, fungicides and plant growth regulators.
Its FMCG business saw revival in consumption, backed by rural growth.
The company has 11 manufacturing sites. Better efficiency and resource management led to increase in volumes of many manufacturing sites.
The company will ramp up production of Cellasto which is used in the suspension system of automobiles. This product is manufactured at its Dahej plant. The expansion is done to cater to the growing two-wheeler and four-wheeler vehicles market in India.
It is optimizing its business portfolio through divestment and acquisitions.
In the second half of FY 2018 the company completed disinvestment of the Leather Chemicals business to Stahl Group for Rs197.63 crore.
In the recent past the company initiated it transfer of paper wet-end and water chemicals business to Solenis in India.
There was global acquisition of selected assets from Bayer CropScience
In recent past the company launched new and innovative products: In Construction Chemicals, it launched MasterSeal 7000 CCR for extreme wastewater challenges. In Crop Protection its new products for rice (Basagran, Adexar, Seltima) got established. In Dispersions & Resins it launched Acronal S728 fornext-generation decorativepaints and in Health and Nutrition it launched Algal DHA for infant nutrition.
Venturing into new crops like rice & corn will help the company going forward.
Capex in FY 2018 was Rs 67.94 core.
In FY 2018 volumes grew 6%+. Borrowings reduced by Rs 400 crore and Debt-Equity ratio fell to 0.6 from 1.2.
BIL capacity utilisation stands at 73% against 67%.
Pressure from generics continues on traditional portfolio.
Performance Products BU saw improved volumes as a result of enhanced foot print.
Care Chemicals faced headwinds from demonetisation, GST & volatile feedstock.
Improved profitability from Dispersions / Contract renegotiations improved profitability for care chemicals.
Functional Materials & Solutions saw better margins in Performance Materials due to increased capacity utilisation at Dahej.
In the passenger vehicle segment the company caters to the interior, exterior, under bonnet and vehicle suspension related applications. These
The company is facing stiff competition in Construction industry chemicals.
The management is cautiously optimistic of the Performance Materials business.
In Chemicals business, monomers saw strong market conditions in construction, footwear, packaging etc and intermediates saw better realisation due to market shortages. Due to the shortage the company availed of price increase from key customers in Intermediates.
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