Mar 31, 2023
Your Directors have pleasure in presenting their Report for the financial year ended 31st March, 2023. Financial Results
(Rs. in million) |
||
Description |
Year ended 31.3.2023 |
Year ended 31.3.2022 |
Revenue from operations |
136,447.7 |
130,997.3 |
Profit before exceptional items and tax |
5,280.9 |
7,473.6 |
Exceptional items |
153.1 |
125.6 |
Profit before tax |
5,434.0 |
7,599.2 |
Tax expense / (credit) |
1,405.1 |
1,650.8 |
Profit after tax |
4,028.9 |
5,948.4 |
Dividend |
346.3 |
259.7 |
Performance
Despite stabilization of demand and softening of the market prices, the revenue from operations at Rs. 136,447.7 million, represents an increase of 4.2% over the previous year. Your Company reported a Profit Before Tax (before exceptional items) of Rs. 5,280.9 million for the year ended 31st March, 2023 as compared to Rs. 7,473.6 million in the previous year.
The Agricultural Solutions business of your Company registered good growth in revenues during the year under review as compared to the previous year. The growth in the Agricultural Solutions business was led by latest innovations viz. Exponus® in the insecticides segment, Priaxor® in the fungicides segment, Vesnit® and Tynzer® in the herbicides segment. The improved profitability of the Agricultural Solutions business was mainly on account of better price realisation coupled with higher volumes and lower input costs.
The Industrial Solutions segment of your Company comprising of the Dispersions, Resins, Additives & Performance Chemicals businesses, registered flat revenue growth during the period under review. The revenue of the Dispersions business was slightly higher as compared to the previous year. In case of the Performance Chemicals business, there were higher revenues from the sale of lubricants & automotive fluids to key customers due to better price realisation. The margins of the Industrial Solutions segment were impacted mainly on account of higher fixed costs and lower sales prices.
The Materials segment of your Company comprising of the Performance Materials & Monomers businesses registered modest growth in revenue during the year under review as compared to the previous year. Although the Performance Materials business of the Company registered strong volume growth across segments like Transportation, Appliances, Footwear, margins were mainly impacted due to lower price realisation. The Monomers business of your Company registered lower volumes due to reduced demand on account of market sentiments. The profitability of the Materials Segment was significantly impacted due to decline in volumes and increased input costs.
The Surface Technologies segment of your Company comprising of the Coatings & Catalysts businesses registered good growth in sales due to strong volumes and increased prices. The margins of the Surface Technologies segment improved significantly during the year under review as compared to the previous year due to better price realisation.
The Nutrition & Care segment of your Company comprises of the Care Chemicals and Nutrition & Health businesses. The Care Chemicals business of your Company registered higher sales during the year under review as compared to the previous year driven mainly by the increased selling prices. However, the margins of the Care Chemicals business were impacted due to high feed stock prices and changes in the product mix. The Nutrition & Health business of the Company registered good growth and margins due to increased selling prices and higher price realisation.
During the year under review, the revenues & margins of the Chemicals segment of your Company comprising of the Petrochemicals & Intermediates businesses was impacted mainly due to lower volumes and higher input costs.
Export sales stood at Rs. 3,072.3 million during the year under review.
Divestiture of Kaolin Minerals Business
During the previous financial year 2021-22, your Company was informed by BASF SE, Germany (Ultimate Holding Company) about the global divestiture of Kaolin Minerals Business to KaMin LLC / CADAM S.A. (KaMin), a global performance minerals company headquartered in Macon, Georgia, United States.
On 30th September 2022, your Company was informed by BASF SE, Germany that BASF had successfully completed the divestiture of its Kaolin Minerals business to KaMin LLC after fulfilment of the necessary conditions.
Transfer to Reserves
The Company has not transferred any amount to the Reserves for the financial year ended 31st March, 2023.
Share Capital
During the year under review, there has been no change in the share capital of the Company. The authorised share capital of the Company, as on 31st March, 2023 is Rs. 715,597,150/-, which is divided into 71,559,715 equity shares of Rs. 10/- each., whereas the issued share capital of the Company comprises of 43,285,640 equity shares of Rs. 10/-each aggregating to Rs. 432,856,400/-.
Removal of Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) name from the list of Promoter Group Shareholders of the Company
During the previous financial year 2021-22, your Company had received a request from Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) holding NIL equity shares in the Company to remove their name from the list of Promoter Group Shareholders of the Company.
Accordingly, the Board of Directors of your Company, at its Meeting held on 30th March, 2022 had approved their request for removal of their name from the list of Promoter Group Shareholders of the Company and necessary applications were filed with BSE Ltd and National Stock Exchange of India Ltd.
On 22nd February, 2023, your Company has received approval from BSE Ltd and National Stock Exchange of India Limited for removal of the name of Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) from the list of Promoter Group Shareholders, pursuant to the provisions of Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Dividend
The Board of Directors of your Company have recommended a Dividend of Rs. 8/- per equity share i.e., 80% for the financial year ended 31st March, 2023. The Dividend would be paid, subject to the approval of the Members at the forthcoming Annual General Meeting on 4th August, 2023.
Further, as per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), the top 1000 listed entities based on market capitalization are required to formulate a Dividend Distribution Policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Companyâs website at https://bit.lv/basfdividenddistributionpolicv.
Changes in Directors
Mr. Narayan Krishnamohan resigned as the Managing Director of the Company, with effect from the close of business hours on 31st December, 2022 to pursue his interest and opportunity outside BASF. The Board of Directors of your Company place on record its sincere appreciation for the valuable contributions made by Mr. Narayan Krishnamohan during his tenure as the Managing Director of the Company.
The Board of Directors of the Company at its Meeting held on 22nd November, 2022 appointed Mr. Alexander Gerding as the Managing Director of the Company for a term of 5 years, effective 1st January, 2023, subject to the approval of the Members of the Company and the Ministry of Corporate Affairs (Central Government), as may be required. Mr. Alexander Gerding has also been appointed as the Chairman of the Risk Management Committee and Member of the Stakeholdersâ Relationship Committee, effective 1st January, 2023, in place of Mr. Narayan Krishnamohan.
Mr. Alexander Gerding was born in Bremen, Germany in 1979. He joined BASF in 2000 in a dual study program and obtained his Master of Business Administration at UNCG, North Carolina, United States, in 2005. He has been with BASF for more than 22 years, having handled various leadership responsibilities in Germany, United States and Argentina among other countries. At the time of his appointment, Mr. Alexander Gerding was the Vice President-Business Management for Agricultural Solutions EMEA East. Mr. Alexander Gerding has valuable experience of 20 years in the Agricultural Solutions business.
Mr. Rajesh Naik resigned as the Manufacturing Head & Whole-time Director of the Company, with effect from the close of business hours on 31st December, 2022, to pursue a regional role within BASF. The Board of Directors of your Company place on record its sincere appreciation for the valuable contributions made by Mr. Rajesh Naik during his tenure as the Manufacturing Head & Whole-time Director of the Company.
The Board of Directors of the Company at its Meeting held on 22nd November, 2022 appointed Mr. Anil Choudhary as the Manufacturing Head & Whole-time Director of the Company for a term of 5 years, effective 1st January, 2023, subject to the approval of the Members of the Company. Mr. Anil Choudhary has also been appointed as a Member of Corporate Social Responsibility Committee and Stakeholdersâ Relationship Committee, effective 1st January, 2023, in place of Mr. Rajesh Naik.
Mr. Anil Choudhary has completed his Bachelorsâ in Mechanical Engineering and Post-Graduation in Marketing Management. He has been with BASF since 2004 and has held various leadership positions in BASF. He was earlier the Managing Director of BASF Catalysts India Private Limited. At the time of his appointment, Mr. Anil Choudhary was the Business Director of the Performance Materials business of the Company. Effective 1st January 2023, Mr. Anil Choudhary is responsible for the Materials, Industrial Solutions & Surface Technologies Business Segments of the Company. He is also responsible for all the manufacturing sites of the Company and has been appointed as an Occupier under the Factories Act, 1948 and the person responsible under the Legal Metrology Act, 2009.
The Membersâ approval for the appointment of Mr. Alexander Gerding as the Managing Director and Mr. Anil Choudhary as the Manufacturing Head & Whole-time Director of the Company for a term of 5 years, respectively, effective 1st January, 2023 was obtained by way of Postal Ballot on 30th December, 2022.
Further, based on the recommendation of the Nomination & Remuneration Committee, the Board of Directors of the Company at their meeting held on 10th May, 2023, have recommended the re-appointment of Mrs. Shyamala Gopinath as Independent Director of the Company for a second term of five years from 23rd January 2024 to 22nd January 2029, subject to the approval of the Members of the Company, pursuant to the provisions of Sections 149, 150, 152 and all other applicable provisions of Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 [including any amendment(s), statutory modification(s) or re-enactment(s) thereof for the time being in force] read with Schedule IV of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.
In accordance with the provisions of Section 152 (6) of the Companies Act, 2013, Dr. Carola Richter being eligible, offers herself for re-appointment as Director of the Company at the 79th Annual General Meeting of the Company to be held on 4th August, 2023.
As required under the SEBI Listing Regulations, the details of the Director(s) seeking re-appointment at the ensuing Annual General Meeting are provided on page no. 79 the Corporate Governance Report, forming part of this Annual Report.
Finance & Accounts
Your Company continued to optimize borrowing during the year by focusing on cash flows from operations and working capital management. Your Company had NIL borrowings as at the end of financial year 2022-2023.
Your Company continued to focus on managing cash efficiently and ensured that it had adequate credit lines from Company''s bankers. Your Companyâs debt equity ratio was Nil as at 31st March, 2023.
Capital Expenditure
Capital expenditure incurred during the year aggregated to Rs. 968.9 million.
Credit Rating
During the year, CRISIL Ltd re-affirmed the credit rating of âCRISIL AAA/Stableâ for the long term debt programme of your Company. The ratings on the Fixed Deposits and Commercial Paper have been re-affirmed at âFAAA/Stableâ and âCRISIL A1 â, respectively.
Further, India Ratings and Research Private Limited has also maintained a credit rating of âIND A1 â for Commercial Paper Programme of Rs. 7,500 million of your Company.
Instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations & carry lower credit risk.
Fixed Deposits
During the year, your Company has not invited, accepted, or renewed any fixed deposits from the public and accordingly, there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of the SEBI Listing Regulations, the Management Discussion and Analysis Report is appended to this Annual Report.
Corporate Governance
Your Company is committed to maintain the highest standards of Corporate Governance and has complied with the Corporate Governance requirements as per the SEBI Listing Regulations.
A separate report on Corporate Governance as stipulated under the SEBI Listing Regulations along with a Certificate of Compliance from the Statutory Auditors, forms part of this Annual Report.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board of Directors of your Company have constituted a Corporate Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. Arun Bewoor, Mr. R. A. Shah, Independent Non-Executive Directors and Mr. Anil Choudhary, Manufacturing Head & Whole-time Director (effective 1st January, 2023) are presently the members of the CSR Committee.
Mr. Manohar Kamath, Director - Legal, General Counsel (India) & Company Secretary of the Company acts as the Secretary of the CSR Committee, effective 1st March, 2022.
The CSR Committee has formulated the CSR Policy and has recommended the activities to be undertaken by the Company as specified under Schedule VII of the Companies Act, 2013.
During the year under review, two meetings of the CSR Committee were held on 3rd August, 2022 and 31st January, 2023 respectively to review and recommend to the Board of Directors, the CSR activities to be undertaken by the Company during the financial year 2022-2023.
Your Company was required to spend an amount of Rs. 86.0 million (Gross Amount) during the financial year 2022-2023 out of which an amount of Rs. 1.7 million was set-off i.e., excess amount spent towards CSR activities during the previous financial year 2021-2022. The net amount required to be spent / allocated towards CSR projects / activities during the financial year 2022-23 was Rs. 84.3 million.
The details of the ongoing CSR projects initiated by the Company mainly in the areas of Education, Water, Hygiene and Sanitation, are provided in Annexure I of this Report.
Business Responsibility & Sustainability Report
Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides that the Annual Report of the top 1000 listed entities based on market capitalization, should mandatorily include a Business Responsibility & Sustainability Report (âBRSRâ) from financial year 2022-23 onwards.
Although the top 1000 listed entities were mandatorily required to publish BRSR from financial year 2022-23 onwards, your Company had published the said Report on a voluntary basis during the financial year 2021-2022.
In line with the SEBI listing requirements, your Company has included BRSR as part of this Report for the financial year 2022-23, as Annexure II, describing the initiatives taken by the Company from an environmental, social and governance perspective.
The BRSR for the financial year 2022-2023 has also been hosted on the Companyâs website, which can be accessed at www.basf.com/in
Vigil Mechanism
Your Company has established a Whistle Blower Policy for employees, Directors and third parties to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. This policy is available on the Companyâs website and can be accessed at: https://bit.ly/basfwhistleblowerpolicy.
Directorsâ Responsibility Statement
Your Directors confirm that:
(i) i n the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2023 and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) t hey have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and
(vi) t hey have devised proper systems to ensure compliance with the provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report as Annexure III.
Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, your Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Directors, Key Managerial Personnel, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Boardâs functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, and governance. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report, forming part of this Annual Report.
The Board of Directors of your Company expressed satisfaction about the transparency of disclosures, maintenance of higher governance standards and updation of the Independent Directors on key topics impacting the Company.
Policy on Directorsâ appointment and remuneration
The policy on Directorsâ appointment and remuneration including determination of the qualifications, positive attributes, independence of a Director and other matters provided 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 Companyâs website and can be accessed at: https://bit.lv/basfnrc
Statutory Auditors
M/s. Price Waterhouse Chartered Accountants LLP (Registration No. 012754N/N500016), Mumbai, have been re-appointed as Statutory Auditors of the Company for a further period of 5 years i.e., from the conclusion of the Annual General Meeting of the Company held on 3rd August, 2022 upto the conclusion of the Annual General Meeting to be held in the calendar year 2027. They have confirmed to the Company that they are not disqualified from continuing to act as Statutory Auditors of the Company.
Further, the provision with respect to annual ratification of appointment of Statutory Auditors has been removed by the Companies Amendment Act, 2017 and also from Companies (Audit and Auditors) Rules, 2014.
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 had appointed M/s. HSPN & Associates, LLP, Practicing Company Secretaries, Mumbai (C.P. 1483), to conduct the Secretarial Audit of the Company for the financial year 2022-2023 and to furnish their report to the Board. The Secretarial Audit Report dated 10th May, 2023 forms part of this Report as Annexure IV.
Qualifications/Reservations in the Auditorsâ Report & Secretarial Audit Report
There are no qualifications/reservations placed by the Statutory Auditors and the Secretarial Auditor in their respective Reports for the financial year ended 31st March, 2023.
Compliance with Secretarial Standards
Your Company has duly complied with the applicable Secretarial Standards (âSSâ) issued by the Institute of Company Secretaries of India relating to Meetings of the Board and its Committees (''SS1'') and General Meetings (''SS2''), respectively, during the year under review.
Reporting of Frauds by Auditors
During the year under review, there have been no instances of fraud committed against the Company by its officers or employees, which were required to be reported to the Audit Committee / Board of Directors of the Company, by the Statutory Auditors or the Secretarial Auditor under Section 143(12) of the Companies Act, 2013.
Cost Audit
The Board of Directors, in pursuance of Section 148 of the Companies Act, 2013, have appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having Registration No. 000010, for conducting the audit of the cost accounting records maintained by the Company for the financial year 2023-2024. The Cost Auditors have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from acting as the Cost Auditors of the Company.
Composition of the Audit Committee
As required by Section 177(8) read with Section 134(3) of the Companies Act, 2013 and the Rules framed thereunder, the composition of the Audit Committee is in line with the provisions of the Companies Act, 2013 and the SEBI Listing Regulations, details of which are provided in the Corporate Governance Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company during the financial year were on armsâ length basis. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other Related Parties, which may have a potential conflict with the 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 are repetitive in nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a
quarterly basis. The policy on Related Party Transactions, as approved by the Board, is available on the Companyâs website and can be accessed at: https://bit.ly/basfrptpolicy. The Company has updated the policy on Related Party Transactions in line with the recent provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations.
Your Directors draw the attention of the Members to Note No. 49 of the Financial Statements, 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, 2013 in Form AOC-2, form part of this Report, as Annexure V.
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013
During the financial year 2022-2023, your Company has placed Inter-Corporate Deposits with the following BASF Group Companies: -
i) BASF Chemicals India Private Limited - Rs. 450 million (outstanding Nil as on 31st March 2023)
ii) BASF Catalysts India Private Limited - Rs. 1,500 million (outstanding Rs. 1,500.9 million as on 31st March 2023)
Your Directors draw the attention of the Members to Note No. 49 of the Financial Statements, which sets out the disclosures under the Indian Accounting Standards (IND AS).
Weblink of Annual Return
The Annual Return of the Company for the financial year ended 31st March, 2023 in Form MGT-7 is available on the Companyâs website and can be updated for FY 22-23 at: https://bit.ly/basfannualreturn22-23
Particulars of Employees
The particulars of employees required to be furnished pursuant to Section 197(12) 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 as amended, forms part of this Report as Annexure VI. However, as per the provisions of Section 136 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 Annual Report excluding the statement of particulars of employees, is being sent to all the Members of the Company. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at [email protected] and / or at the Registered Office address of the Company.
Prevention of Sexual Harassment at the Workplace
Your Company gives prime importance to the dignity and respect of its employees irrespective of their gender or hierarchy and expects responsible conduct and behaviour on the part of employees at all levels. Providing a safe and congenial work environment for all employees is an integral part of the Company''s Code of Conduct.
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has adopted a Policy for Prevention of Sexual Harassment at Workplace and has constituted an Internal Committee (IC). The names of the IC Members are displayed on the notice board in each office and manufacturing site. All employees as well as contract staff and trainees are covered by this policy. Allegations of sexual harassment reported are expeditiously and discreetly investigated and disciplinary action, if required, is taken in accordance with the policy.
There was no complaint of sexual harassment received during the financial year 2022-2023.
Training programs on prevention of sexual harassment at the workplace are also conducted at regular intervals. During the year under report, your Company conducted awareness programmes on the policy for its employees. Your Company had also rolled out an e-learning module to sensitize & create awareness amongst the employees of the Company on prevention of sexual harassment.
Risk Management
Your Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risks are identified and controlled by means of a properly defined framework. In the Boardâs view, there are no material risks, which may threaten the existence of the Company. The Board also reviewed the implications of the recent geo-political crisis and the effects associated thereof on the Company.
Internal Financial Control Systems and their adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Additional details on Internal Financial Controls and their adequacy are provided in the Management 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 Contingent Liabilities in Note no. 39 of the Notes to the financial statements for the financial year ended 31st March, 2023. There are no significant and material orders passed by the Regulators / Courts, which would impact the going concern status of the Company and its future operations.
Material changes and commitments affecting the financial position of the Company
While the COVID-19 pandemic has been left behind, the global crisis has escalated due to the ongoing geo-political crisis. Upon evaluation, there have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the f nancial year of the Company to which the f nancial statements relate and the date of this Report.
Board Meetings
Six (6) Board Meetings were held during the financial year 2022-2023 on the following dates:
(1) 9th May, 2022 (2) 3rd August, 2022
(3) 10th November, 2022 (4) 22nd November, 2022
(5) 31st January, 2023 (6) 27th March, 2023
Declaration of Independence
The Company has received declarations from all the Independent Non-Executive Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and the SEBI Listing Regulations as amended.
Other Disclosures
⢠The Company has not issued any shares with differential voting rights/ sweat equity shares.
⢠There was no revision in the Financial Statements for the financial year ended 31st March, 2022.
⢠There has been no change in the nature of business of the Company as on the date of this report.
⢠There are no proceedings fled against the Company under the Insolvency and Bankruptcy Code, 2016 during the financial year 2022-2023. Your Company has initiated action against few customers under the Insolvency and Bankruptcy Code, 2016.
Employee Relations
Your Directors place on record their sincere appreciation of the contribution made by the employees at all levels to the growth of the Company. Industrial Relations at all our manufacturing sites remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, Germany and all other stakeholders including customers, suppliers, bankers, business partners/associates, Central and State Governments, regulatory authorities and the society at large for their consistent support and co-operation to the Company. Your Directors thank the Members and investors for their confidence in the Company.
On behalf of the Board of Directors For BASF India Limited
PRADIP P. SHAH ALEXANDER GERDING
Chairman Managing Director
(DIN: 00066242) (DIN: 09797186)
Mumbai
Dated: 10th May, 2023
Mar 31, 2022
Your Directors have pleasure in presenting their Report for the financial year ended 31st March, 2022. Financial Results
(Rs. in million) |
||
Description |
Year ended 31.3.2022 |
Year ended 31.3.2021 |
Revenue from operations |
130,997.3 |
95,583.4 |
Profit before exceptional items and tax |
7,473.6 |
4,378.7 |
Exceptional items |
125.6 |
4,020.9 |
Profit before tax |
7,599.2 |
8,399.6 |
Tax expense / (credit) |
1,650.8 |
2,873.5 |
Profit after tax |
5,948.4 |
5,526.1 |
Dividend |
259.7 |
432.9 |
Revenue from operations at Rs. 130,997.3 million, represents an increase of 37% over the previous year mainly due to volume growth and improved price realisation. Your Company reported a Profit before exceptional items and tax of Rs. 7,473.6 million for the year ended 31st March, 2022 as compared to Rs. 4,378.7 million in the previous year.
Despite deficit monsoon and long dry spells, the Agricultural Solutions business of your Company registered good growth in sales during the year under review as compared to the previous year. The excellent growth in the fungicides product segment viz., Merivon®, Acrobat®, Cabrio Top® (Fruits & Vegetables) & Priaxor® (Cotton), was partly offset by slow season for Herbicides (for Corn) & Insecticides. Margins were mainly impacted due to higher input costs.
The Industrial Solutions segment of your Company comprising of the Dispersions, Resins, Additives & Performance Chemicals businesses, registered good revenue growth due to higher sales volumes from key customers coupled with improved selling prices. The margins improved significantly due to higher selling prices and lower input cost.
The Materials segment of your Company comprising of the Performance Materials & Monomers businesses registered strong volume growth in sales during the year under review as compared to the previous year. This was mainly due to higher sales & strong volumes across verticals like Transportation, Appliances, Footwear & flexible packaging industries. The margins of the Performance Materials business also improved due to significantly higher price realization. However, higher input costs impacted the margins of the merchandise products of your Company''s Monomers business.
The Surface Technologies segment of your Company comprising of the Coatings & Catalysts businesses registered good growth in sales despite market challenges. Although the margins of the Coatings Solutions business were under pressure due to high raw material cost, the Catalysts business recorded improved results with increased volumes.
The Nutrition & Care segment of your Company comprises of the Care Chemicals and Nutrition & Health Care businesses. The Care Chemicals business of your Company registered higher sales during the year under review as compared to the previous year mainly driven by the increased selling prices from sales to major customers. However, the margins of the Care Chemicals business were impacted due to high feed stock prices and changes in the product mix. The Nutrition & Health business of the Company registered lower growth due to supply chain constraints & product availability issues.
During the year under review, the sales & profits of the Chemicals segment of your Company comprising of the Petrochemicals & Intermediates businesses increased due to higher selling prices. However, the volumes of the Intermediates business were impacted due to product availability constraints.
Export sales stood at Rs. 3,221.5 million during the year under review.
The Company has not transferred any amount to the Reserves for the financial year ended 31st March, 2022.
Sale of Kaolin Minerals Business & divestiture of Attapulgite business
During the year under review, your Company was informed by BASF SE, Germany (Ultimate Holding Company) regarding the following global divestitures: -
i) Sale of Kaolin Minerals Business to KaMin LLC / CADAM S.A. (KaMin), a global performance minerals company headquartered in Macon, Georgia, United States.
The Kaolin Minerals business, forms part of the Performance Chemicals Division of the Industrial Solutions Segment of your Company and had generated net sales of approx. Rs. 85 million for the financial year ended 31st March, 2021. Closing of the transaction globally is expected in the second half of 2022, subject to receipt of requisite approvals from relevant Competition Commission / Anti-Trust authorities, as applicable.
ii) Divestiture of the manufacturing site of BASF Corporation in Quincy, Florida, USA and the associated Attapulgite business for a purchase price of USD 60 million to Clariant Corporation USA.
The Attapulgite business, forms part of the Dispersions & Resins Division of the Industrial Solutions Segment of your Company and has generated net sales of approx. Rs. 70.9 million for the financial year ended 31st March, 2021. The transaction is expected to close in 2022 globally, subject to the approval of the relevant Competition Commission/ Anti-trust Authorities. As part of the divestiture, BASF would also enter into a long-term supply agreement for Attapulgite business with Clariant globally, that will allow your Company to continue to supply and support the growth of this business with the customers in the paints, coatings, and construction markets.
During the year under review, there has been no change in the Share Capital of the Company. The authorised share capital of the Company, as on 31st March, 2022 aggregates Rs. 715,597,150/- which is divided into 71,559,715 equity shares of Rs. 10/- each., whereas the issued share capital of the Company comprises of 43,285,640 equity shares of Rs. 10/- each aggregating to Rs. 432,856,400/-.
Removal of Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) name from the list of Promoter Group Shareholders of the Company
During the year under review, your Company had received a request from Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) holding NIL equity shares in the Company to remove their name from the list of Promoter Group Shareholders of the Company.
The Board of Directors of your Company, at its Meeting held on 30th March, 2022 has approved the request of Master Builders Solutions Deutschland GmbH (formerly known as BASF Construction Solutions GmbH) to remove their name from the list of Promoter Group Shareholders of the Company, subject to the approval of BSE Ltd and National Stock Exchange of India Ltd. Your Company has made the necessary applications to the above-mentioned stock exchanges, which are pending for their approval.
The Board of Directors of your Company have recommended a Dividend of Rs. 6/- per equity share i.e., 60% for the financial year ended 31st March, 2022. The Dividend would be paid, subject to the approval of the Members at the forthcoming Annual General Meeting on 3rd August, 2022.
Further, as per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), the top 1000 listed entities based on market capitalization are required to formulate a Dividend Distribution Policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Company''s website at http://bit.do/basfdividenddistributionpolicy.
Changes in Directors & Key Managerial Personnel
Mr. Dirk Bremm resigned as a Director of the Company, effective close of business hours on 5th August, 2021 and Dr. Carola Richter (DIN: 0009197435) was appointed as a Director of the Company in his place, effective 6th August, 2021. The Board of Directors of your Company place on record its sincere appreciation of the valuable contribution made by Mr. Dirk Bremm during his tenure as the Director of the Company. Mr. Narendranath J. Baliga was an Alternate Director to Mr. Dirk Bremm until 5th August, 2021 and was appointed as Alternate Director to Dr. Carola Richter, effective 6th August, 2021.
Further, in accordance with the provisions of Section 161 of the Companies Act, 2013, the Members of the Company, by way of Postal Ballot on 18th December, 2021, have approved the appointment of Dr. Carola Richter as a Director of the Company with effect from 6th August, 2021 in the casual vacancy caused by the resignation of Mr. Dirk Bremm. Dr. Carola Richter is the President, South & East Asia, ASEAN, Australia and New Zealand and based in Singapore.
During the year under review, Mr. Rajesh Naik, Manufacturing Head and having DIN:06935998, was re-appointed as a Whole-time Director of the Company for a period of 5 years i.e., from 1st April, 2022 to 31st March, 2027. His re-appointment was approved by the Members of the Company, by way of Postal Ballot on 18th December, 2021, based on the recommendation of the Nomination & Remuneration Committee and approval of the Board of Directors of the Company at their meeting held on 2nd November, 2021.
Mr. Pradeep Chandan superannuated from the services of the Company from the close of business hours of 28th February, 2022, and thereby ceased to be the Company Secretary & Compliance Officer of the Company and also resigned as an Alternate Director to Dr. Ramkumar Dhruva, effective the said date. The Board of Directors of your Company place on record its sincere appreciation of the valuable contribution made by Mr. Pradeep Chandan during his tenure as the Company Secretary & Compliance Officer of the Company.
Mr. Manohar Kamath was appointed as Director - Legal, General Counsel (India) & Company Secretary of the Company, effective 1st March, 2022. He was also appointed as the Compliance Officer and Secretary to the Board Committees, effective 1st March, 2022. Mr. Manohar Kamath, presently 42 years of age, is a Commerce & Law Graduate. He is also a qualified Company Secretary and an Associate Member of the Institute of Company Secretaries of India, New Delhi. He has also done his Diploma in Finance Management from Wellingkar Institute of Management Studies. He is associated with BASF India Limited since December, 2007. He has over 15 years of post-qualification experience in Company Secretarial function and has gained experience in Legal, Compliance, Intellectual Property Rights, Real Estate including Corporate Governance as part of the various roles performed in BASF.
In accordance with the provisions of Section 152 (6) of the Companies Act, 2013, Dr. Ramkumar Dhruva being eligible, offers himself for re-appointment as a Director of the Company at the 78th Annual General Meeting of the Company to be held on 3rd August, 2022.
As required under the SEBI Listing Regulations, the details of Director(s) seeking re-appointment at the ensuing Annual General Meeting is provided on page no. 75 of the Corporate Governance Report, forming part of this Annual Report.
Your Company continued to optimize borrowing during the year by focusing on cash flows from operations and working capital management. Your Company has repaid the external commercial borrowing outstanding as at the beginning of the year aggregating Rs. 1,517.7 million (Euro 17.3 million) on 1st June, 2021 and had NIL borrowings as at the end of financial year 2021-2022.
Your Company continued to focus on managing cash efficiently and ensured that it had adequate credit lines from Company''s bankers. Your Company''s debt equity ratio was Nil as at 31st March, 2022.
Capital expenditure incurred during the year aggregated to Rs. 1,316.4 million.
During the year, CRISIL Ltd re-affirmed the credit rating of âCRISIL AAA/Stable'' for the long term debt programme of your Company. The ratings on the Fixed Deposits and Commercial Paper have been re-affirmed at âFAAA/Stable'' and âCRISIL A1 '', respectively.
Further, India Ratings and Research Private Limited has also maintained a credit rating of âIND A1 '' for Commercial Paper Programme of Rs. 7,500 million of your Company.
Instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations & carry lower credit risk.
During the year, your Company has not invited, accepted, or renewed any fixed deposits from the public and accordingly, there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI Listing Regulations, the Management Discussion and Analysis Report is appended to this Annual Report.
Your Company is committed to maintain the highest standards of Corporate Governance and has complied with the Corporate Governance requirements as per SEBI Listing Regulations.
A separate report on Corporate Governance as stipulated under SEBI Listing Regulations along with a Certificate of Compliance from the Statutory Auditors, forms part of this Annual Report.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board of Directors of your Company have constituted a Corporate Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. Arun Bewoor, Mr. R. A. Shah, Independent Non-Executive Directors and Mr. Rajesh Naik, Manufacturing Head & Whole-time Director are presently the members of the CSR Committee.
Mr. Pradeep Chandan superannuated from the services of the Company and ceased to be Secretary of the CSR Committee, effective 28th February, 2022. Mr. Manohar Kamath, Director - Legal, General Counsel (India) & Company Secretary of the Company was appointed as the Secretary of the CSR Committee, effective 1st March, 2022.
The CSR Committee has formulated the CSR Policy and has recommended the activities to be undertaken by the Company as specified under Schedule VII of the Companies Act, 2013.
During the year, one meeting of the CSR Committee was held on 6th August, 2021 to recommend the CSR activities to be undertaken by the Company during the financial year 2021-2022. Your Company was required to spend an amount of Rs. 29.0 million during the financial year 2021-2022, whereas your Company has actually spent Rs. 30.7 million on CSR activities during the financial year 2021-2022 i.e., excess amount of Rs. 1.7 million spent towards CSR activities during the financial year 2021-2022. The excess amount of Rs. 1.7 million would be carried forward and set-off against the amount required to be spent during the financial year 2022-2023. Your Company undertook CSR activities mainly in the areas of COVID-19 relief measures, details of which are provided in Annexure I of this Report.
Business Responsibility & Sustainability Report
Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides that the Annual Report of the top 1000 listed entities based on market capitalization, should mandatorily include a Business Responsibility & Sustainability Report (âBRSRâ) from financial year 2022-23 onwards. However, your Company has included BRSR as part of this Report for the financial year 2021-22, on voluntary basis, as Annexure II, describing the initiatives taken by the Company from an environmental, social and governance perspective.
The BRSR for the financial year 2021-2022 has also been hosted on the Company''s website, which can be accessed at www.basf.com/in
Your Company has established a Whistle Blower Policy for employees, Directors and third parties to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. This policy is available on the Company''s website and can be accessed at: http://bit.do/basfwhistleblowerpolicy.
Directorsâ Responsibility Statement
Your Directors confirm that:
(i) i n the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2022 and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) t hey have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report as Annexure III.
Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, your Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Non-Executive Directors, Key Managerial Personnel, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Board''s functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, and governance. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report, forming part of this Annual Report.
The Board of Directors of your Company expressed satisfaction about the transparency in terms of disclosures, maintaining higher governance standards and updating the Independent Directors on key topics impacting the Company.
Policy on Directorsâ appointment and remuneration
The policy on Directors'' appointment and remuneration including determination of the qualifications, positive attributes, independence of a Director and other matters provided 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''s website and can be accessed at: http://bit.do/basfnrc
Based on the recommendation of the Audit Committee, the Board of Directors of your Company at its Meeting held on 9th May, 2022 has recommended to the Members of the Company, the re-appointment of M/s. Price Waterhouse Chartered Accountants LLP (Registration No. 012754N/N500016), Mumbai, as the Statutory Auditors of the Company for a further period of 5 years i.e., from the conclusion of the Annual General Meeting of the Company to be held on 3rd August, 2022 upto the conclusion of the Annual General Meeting to be held in the calendar year 2027.
M/s. Price Waterhouse Chartered Accountants LLP have confirmed to the Company that their appointment, if made at the 78th Annual General Meeting, would be within the limits prescribed under Section 141 of the Companies Act, 2013 and that they are not disqualified from re-appointment within the meaning of the said Act.
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 had appointed M/s. HSPN & Associates, LLP, Practicing Company Secretaries, Mumbai (C.P. 1483), to conduct the Secretarial Audit of the Company for the financial year 2021-2022 and to furnish their report to the Board. The Secretarial Audit Report dated 9th May, 2022 forms part of this Report as Annexure IV.
Qualifications/Reservations in the Auditorsâ Report & Secretarial Audit Report
There are no qualifications/reservations placed by the Statutory Auditors and the Secretarial Auditor in their respective Reports for the financial year ended 31st March, 2022.
Compliance with Secretarial Standards
Your Company has duly complied with the applicable Secretarial Standards (âSS'') issued by the Institute of Company Secretaries of India relating to Meetings of the Board and its Committees (''SS1'') and its Committees and General Meetings (''SS2''), respectively, during the year under review.
Reporting of Frauds by Auditors
During the year under review, there have been no instances of fraud committed against the Company by its officers or employees, which were required to be reported to the Audit Committee / Board of Directors of the Company, by the Statutory Auditors or the Secretarial Auditor under Section 143(12) of the Companies Act, 2013.
The Board of Directors, in pursuance of Section 148 of the Companies Act, 2013, have appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having Registration No. 000010, for conducting the audit of the cost accounting records maintained by the Company for the financial year 2022-2023. The Cost Auditors have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from acting as Cost Auditors.
Composition of the Audit Committee
As required under Section 177(8) read with Section 134(3) of the Companies Act, 2013 and the Rules framed thereunder, the composition of the Audit Committee is in line with the provisions of the Companies Act, 2013 and SEBI Listing Regulations, details of which are provided in the Corporate Governance Report, forming part of this Annual Report.
All related party transactions that were entered into by the Company during the financial year were on arms'' length basis. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other Related Parties, which may have a potential conflict with the 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 are repetitive in nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions, as approved by the Board, is available on the Company''s website and can be accessed at: http://bit.do/basfrptpolicy. The Company has updated the policy on Related Party Transactions in line with the recent provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations.
Your Directors draw the attention of the Members to Note No. 50 of the Financial Statements, 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, 2013 in Form AOC-2, form part of this Report, as Annexure V.
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013
During the financial year 2021-2022, the Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any body corporate pursuant to Section 186 of the Companies Act, 2013.
The Annual Return of the Company for the financial year ended 31st March, 2022 in Form MGT-7 is available on the Company''s website and can be accessed at: http://bit.do/basfannualreturn2021-22
The particulars of employees required to be furnished pursuant to Section 197(12) 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 as amended, forms part of this Report as Annexure VI. However, as per the provisions of Section 136 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 Annual Report excluding the statement of particulars of employees, is being sent to all the shareholders of the Company. Any Shareholder interested in obtaining a copy of the said statement may write to the Company Secretary at [email protected] and / or at the Registered Office address of the Company.
Prevention of sexual harassment at the Workplace
Your Company gives prime importance to the dignity and respect of its employees irrespective of their gender or hierarchy and expects responsible conduct and behaviour on the part of employees at all levels. Providing a safe and congenial work environment for all employees is an integral part of the Company''s Code of Conduct.
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has adopted a Policy for Prevention of Sexual Harassment at Workplace and has constituted an Internal Committee (IC). The names of the IC Members are displayed on the notice board in each office and manufacturing site. All employees as well as contract staff and trainees are covered by this policy. Allegations of sexual harassment reported are expeditiously and discreetly investigated and disciplinary action, if required, is taken in accordance with the policy.
There was no complaint of sexual harassment received during the financial year 2021-2022.
Training programs on prevention of sexual harassment at the workplace are also conducted at regular intervals. During the year under report, your Company conducted awareness programmes on the policy for its employees. Your Company had also rolled out an e-learning module to sensitize & create awareness amongst the employees of the Company on prevention of sexual harassment.
Your Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risks are identified and controlled by means of a properly defined framework. In the Board''s view, there are no material risks, which may threaten the existence of the Company. The Board also reviewed the implications of the recent geo-political crisis and its effects associated therewith on the Company.
Internal Financial Control Systems and their adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Additional details on Internal Financial Controls and their adequacy are provided in the Management 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 Contingent Liabilities in note no. 40 of the Notes to the financial statements for the financial year ended 31st March, 2022. There are no other significant and material orders passed by the Regulators / Courts, which would impact the going concern status of the Company and its future operations.
Material changes and commitments affecting the financial position of the Company
While the worst of the COVID-19 pandemic was left behind, the global crisis escalated due to the ongoing geo-political crisis. Upon evaluation, there have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.
Five Board Meetings were held during the financial year 2021-2022 on the following dates:
(1) 11th May, 2021 (2) 6th August, 2021
(3) 2nd November, 2021 (4) 9th February, 2022
(5) 30th March, 2022
The Company has received declarations from all the Independent Non-Executive Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and the SEBI Listing Regulations as amended.
⢠The Company has not issued any shares with differential voting rights/ sweat equity shares.
⢠There was no revision in the Financial Statements for the financial year ended 31st March, 2021.
⢠There has been no change in the nature of business of the Company as on the date of this report.
⢠There are no proceedings filed against the Company under the Insolvency and Bankruptcy Code, 2016 during the financial year 2021-2022. Your Company has initiated action against few customers under the Insolvency and Bankruptcy Code, 2016.
Your Directors place on record their sincere appreciation of the contribution made by the employees at all levels to the growth of the Company. Industrial Relations at all our manufacturing sites remained cordial.
The Board of Directors take this opportunity to thank BASF SE, Germany and all other stakeholders including customers, suppliers, bankers, business partners/associates, Central and State Governments, Regulatory Authorities and the society at large for their consistent support and co-operation to the Company. Your Directors thank the shareholders and 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 : 9th May 2022
Mar 31, 2019
Directorsâ Report
The Directors have pleasure in presenting their Report for the financial year ended 31st March, 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) |
60,256.7 |
55,834.0 |
(Loss) / Profit before tax and exceptional items |
(542.0) |
1,024.6 |
Exceptional items |
1,260.6 |
1,585.7 |
Profit before tax |
718.6 |
2,610.3 |
Tax expense / (credit) |
(98.6) |
145.3 |
Profit after tax |
817.2 |
2,465.0 |
Dividend |
216.4 |
129.9 |
Dividend distribution tax |
44.5 |
26.7 |
Note: As per Indian Accounting Standard 115/Indian Accounting Standard 18 on Revenue and Schedule III of the Companies Act, 2013, Revenue from Operations for the period ended after June 30, 2017 does not include Goods and Services Tax (GST), however Revenue from Operations till the period ended June 30, 2017 included Excise duty.
Performance
Revenue from Operations (net of GST / Excise duty) at Rs. 60,256.7 million, represents an 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 after tax of Rs. 2,465.0 million in the previous year. The profitability was mainly impacted due to higher input cost.
The business segments of your Company have been reorganized effective 1st January, 2019. The new segment structure will enable an even more differentiated steering of the business, taking into account market-specific requirements and the competitive 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 the Crop Protection business.
b) Materials - The Materials segment comprises of Performance Materials and the Monomers businesses.
c) I ndustrial Solutions - The Industrial Solutions segment consists of the Dispersions & Pigments and Performance Chemicals businesses.
d) Surface Technologies - The Surface Technologies segment comprises of the Catalysts, Coatings and Construction Chemicals businesses.
e) Nutrition & Care - The Nutrition & Care segment consists of the Care Chemicals and Nutrition & Health businesses.
f) Chemicals - The Chemicals segment consists of the Petrochemicals and Intermediates businesses.
g) Others - Others include activities that are not allocated to any of the continued operating divisions. These include remaining activities after divestiture of certain businesses including leather and textile chemicals business, paper wet-end and water chemicals business, technical and service charges other than those specifically identifiable to the above segments.
The Agricultural Solutions segment of your Company registered good growth in sales and profits during the year as compared to the previous year mainly due to increased sales from launch of new products for crops like cotton, corn, rice and coupled with growth in volumes.
The Materials segment registered modest growth in sales during the year under review as compared to the previous year. However, its margins significantly dropped due to volatile Crude MDI (Methylene diphenyl di-isocyanate) prices.
The Industrial Solutions segment registered increase in sales & profits mainly due to right product mix, collaborative engagement with key customers, tapping of new market opportunities, strong domestic demand driven by increase in prices and favourable exchange rates from exports.
The Surface Technologies segment registered marginal growth in sales during the year under review as compared to the previous year. The improved profitability of the Construction Chemicals business was offset by a weak Coating Chemicals business due to slowdown in the auto industry.
The Nutrition & Care segment recorded modest growth in sales and incurred losses due to force majeure declared in BASF SE Plant in Germany and fluctuations in fatty alcohol prices. The pressure on margins continued due to higher input cost.
During the year under review, the sales & profits of the Chemicals segment were lower as compared to the previous year on account of shortage of materials & volatility in prices.
Exports of goods & services stood at Rs. 7,811.1 million during the year under review.
Change of Business Model from Agency to Merchandise
Pursuant to the new rules framed by Organisation for Economic Cooperation and Development (OECD), BASF has decided to phase out the agency business globally.
Accordingly, the Board of Directors of your Company approved the proposal to replace the agency business of your Company with the merchandise model effective financial year 2019-2020.
BASF to evaluate strategic options for Construction Chemicals business
As a part of its active portfolio management, BASF SE, Germany, continuously evaluates its businesses. Accordingly, in October 2018, BASF SE decided to evaluate strategic options for its Construction Chemicals business. BASF SE could consider a merger of this business with a strong partner as well as a divestiture, subject to such approvals, as may be necessary. The Construction Chemicals business comprises of the Admixture and the Construction 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 growth potential arising out of the emerging Asian region, the Board of Directors of your Company had approved the transfer of the Pigments business of your Company, to BASF Colors & Effects India Private Limited, a 100% subsidiary of BASF Colors & Effects GmbH, Germany at a consideration to be determined by an independent valuer (on an arm''s length basis).
Accordingly, the Pigments business of your Company was transferred to BASF Colors & Effects India Private Limited with effect from 1st January, 2019 for a consideration of Rs. 190.0 million based on the valuation of an Independent Valuer.
Transfer of the Companyâs Paper Wet-end & Water Chemicals businesses to Solenis Chemicals India Private Limited
Pursuant to the global combination of BASF''s Paper wet-end & Water Chemicals businesses with Solenis, your Company''s Paper wet-end and Water Chemicals businesses were transferred to Solenis Chemicals India Private Limited with effect from 1st February, 2019 for a consideration of Rs. 2,520.0 million (based on an Independent Valuation Report), subject to working capital adjustments.
Dividend
In view of the 75th anniversary milestone, the Board of Directors of your Company have recommended a special dividend of Rs. 2/- per equity share of Rs. 10 each i.e. 20% in addition to a final dividend of Rs. 3/- per equity share of Rs. 10 each i.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 the shareholders at the 75th Annual General Meeting of the Company to be held on 19th July, 2019. The aggregate dividend will absorb Rs. 216.4 million and the dividend distribution 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 (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), the top 500 listed entities based on market capitalization are required to formulate a Dividend Distribution Policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Company''s website at http://bit.do/basfdividenddistributionpolicy
Directors
Dr. Andrea Frenzel resigned as Director of your Company on 31st July, 2018 and Dr. Ramkumar Dhruva was appointed as Director of the Company with effect from 10th August, 2018 in place of Dr. Andrea Frenzel. The Board of Directors of your Company place on record its sincere appreciation of the valuable contributions made by Dr. Andrea Frenzel 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 the Company 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 the valuable contributions made by Dr. Raman Ramachandran in the growth of the Company during his tenure as the Chairman & Managing Director of the Company.
The Board of Directors of the Company at their Meeting held on 23rd January, 2019 appointed Mr. Narayan Krishnamohan as the Managing Director of the Company with effect from 1st April, 2019, subject to the approval of the Ministry of Corporate Affairs (Central Government). His appointment has been duly approved by the shareholders of the Company by way of Postal Ballot on 26th March, 2019.
Mr. Narayan Krishnamohan has completed his Bachelors in Chemical Engineering from Laxminarayan Institute of Technology, Nagpur. Having joined the Company in January, 1995, Mr. Narayan Krishnamohan has been with BASF for more than 24 years. He has held various regional and global leadership roles in Singapore, Germany and Hong Kong. His leadership experience cuts across multiple operating divisions like Leather Chemicals, Specialty Chemicals, Petrochemicals, Acrylics & Dispersions, Paper Chemicals, Human Nutrition and Chemical Intermediates.
Mr. Pradip P. Shah was re-appointed as Independent Non-Executive Director of the Company by the shareholders of the Company on 26th March, 2019 by way of Postal Ballot for a second term of five years with effect from 1st April, 2019 to 31st March, 2024. He was also appointed as the Chairman of the Company with effect from 1st April, 2019 by the Board of Directors of the Company at their Meeting held on 23rd January, 2019.
Mr. R. A. Shah and Mr. Arun Bewoor were re-appointed as Independent Non-Executive Directors of the Company by the shareholders of the Company on 26th March, 2019 by way of Postal Ballot for a second term of five years with effect from 1st April, 2019 to 31st March, 2024.
SEBI vide its notification dated 9th May, 2018 has amended the SEBI Listing Regulations requiring the top 500 listed entities based on market capitalization, to appoint an Independent Woman Director by 1st April, 2019. Accordingly, Mrs. Shyamala Gopinath was appointed as Independent Woman Director of the Company for a period of five years with effect from 23rd January, 2019 to 22nd January, 2024 by the shareholders of the Company on 26th March, 2019 by way of Postal Ballot.
Mrs. Shyamala Gopinath is the Non-Executive Chairperson of HDFC Bank Limited. As Deputy Governor of the Reserve Bank of India (RBI) for seven years and member of the RBI''s Board of Directors, she guided and influenced national policies in diverse areas of financial sector regulation and supervision, the development and regulation of financial markets, capital account management, management of government borrowings, foreign exchange reserves management and payment and settlement systems. She has served on several Committees of RBI. During 2001 to 2003, she worked as senior financial sector expert in the Monetary Affairs and Exchange Department of the International Monetary Fund (Financial Institutions Division). She has served as Chairperson of the Advisory Board on Bank, Commercial and Financial Frauds for two years from 2012 to 2014. She was an Independent Director on the Boards of Clearing Corporation of India, Indian Oil Corporation Limited, GAIL India Limited and an Independent Non-Executive Director on the Global Governance Council of Ernst and Young. She was also the Chairperson of the Board of Corporate Bonds and Securitisation Advisory Committee of Securities & Exchange Board of India. Apart from HDFC Bank, she is an Independent Non-Executive Director on the Boards of Colgate-Palmolive (India) Limited, Tata Elxsi Limited and other companies, including not for profit entities. Mrs. Shyamala Gopinath is also Chairperson of the Board of Governors 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 Independent Non-Executive Director of the Company with effect from the close of business hours as on 31st March, 2019. Your Directors place on record their sincere appreciation of the invaluable contribution made by Mr. R. R. Nair in the growth of the Company during his long years of association with the Company.
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. Your Directors place on record their sincere appreciation of the contribution made by Dr. Lakshmi Nadkarni 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 and being in the whole-time employment of the Company, also as a Whole-time Director of the Company for a period of three years from 1st April, 2019 to 31st March, 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 period of three years from 1st April, 2019 to 31st March, 2022 by the shareholders of the Company on 26th March, 2019 by way of Postal Ballot.
As required under the SEBI Listing Regulations, the profiles of Directors seeking re-appointment at the ensuing Annual General Meeting is provided on page no. 53 in the Corporate Governance Report, forming part of this Annual Report.
Finance & Accounts
Your Company continued to optimize borrowings during the year by focusing on cash flows and working capital management. Your Company availed of alternative funding options such as Commercial Papers, Trade Financing, Inter-Corporate Deposits from BASF Group Companies, etc., to ensure efficiency in its borrowing costs.
Your Company follows a prudent financing policy and aims to maintain optimum financial gearing at all times. Your Company''s debt equity ratio was 0.6 as at 31st March, 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 âCRISIL AAA/Stable'' for long term debt programs and âCRISIL A1 '' for Commercial Paper Programme of Rs. 7,500.0 million. Further, India Ratings and Research Private Limited has also maintained a credit rating of âIND A1 '' for Commercial Paper Programme of Rs. 7,500.0 million.
Instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations & carry lower credit risk.
Fixed Deposits
During the year, your Company has not invited, accepted or renewed any fixed deposits from the public and accordingly, there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI Listing Regulations, the Management Discussion and Analysis Report is appended to this Report.
Corporate Governance
Your Company is committed to maintain the highest standards of Corporate Governance and has complied with the Corporate Governance requirements as per SEBI Listing Regulations.
A separate report on Corporate Governance as stipulated under SEBI Listing Regulations along with a Certificate of Compliance from the Statutory Auditors, forms part of this Annual Report.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board of Directors of your Company constituted a Corporate Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. Arun Bewoor, Mr. R. A. Shah, Independent Non-Executive Directors and Mr. Rajesh Naik, Whole-time Director are presently the members of the CSR Committee.
Mr. Pradeep Chandan, Director - Legal, General Counsel (South Asia) & Company Secretary is the Secretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the activities to be 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 not required to spend any amount on CSR activities. However, in order to maintain project sustainability, 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 and Hygiene (WASH) & Education including conduct of various behavioural change programs, details 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 Annual Report of the top 500 listed entities based on market capitalization, should include a Business Responsibility Report (âBRRâ).
Your Company, being among the top 500 listed entities, has included BRR, as part of this Report as Annexure II, describing the initiatives taken by the Company from an environmental, social and governance perspective.
The BRR for the financial year 2018-2019 has also been hosted on the Company''s website, which can be accessed at www.basf.com/in
Vigil Mechanism
Your Company has established a Whistle Blower Policy for employees, Directors and third parties to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. This policy is available on the Company''s website and can be accessed at: http://bit.do/basfwhistleblowerpolicy
Directorsâ Responsibility Statement
Your Directors confirm that:
(i) I n the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2019 and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) t hey have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report as Annexure III.
Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Non-Executive Directors, Key Managerial Personnel, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Board''s functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The manner in which the evaluation has been carried out is explained on page no. 48 in the Corporate Governance Report, forming part of this Annual Report.
Policy on Directorsâ appointment and remuneration
The policy on Directors'' appointment and remuneration including the criteria for determining the qualifications, positive attributes, independence of a Director and other matters provided 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''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 General Meeting held on 28th September, 2017. They have confirmed to the Company that they 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 had appointed M/s. HS Associates, Practising Company Secretaries, Mumbai (C.P. 1483), to conduct the Secretarial Audit of the Company for the financial year 2018-2019 and to furnish the report to the Board. The Secretarial Audit Report dated 30th April, 2019 forms part of this Report as Annexure IV.
Auditorsâ Report & Secretarial Audit Report
There are no qualifications/reservations/emphasis of matter placed by the Statutory Auditors and the Secretarial Auditors in their respective Reports for the financial year ended 31st March, 2019.
Cost Audit
The Board of Directors, in pursuance of Section 148 of the Companies Act, 2013, has appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having Registration No. 000010, for conducting the audit of the cost accounting records maintained by the Company for the financial year 2019-2020. They have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from 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 and the Rules framed thereunder, the composition of the Audit Committee is in line with the provisions of the Companies Act, 2013 and SEBI Listing Regulations, details of which are provided on page nos. 46 and 47 of the Corporate Governance Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company during the financial year were on arms'' length basis. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other Related Parties, which may have a potential conflict with the 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 are repetitive in nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions, as approved by the Board, is available 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 Financial Statements, 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, 2013 in Form AOC-2, form part of this Report, as Annexure V
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013
The Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any body corporate pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary to some employees in terms of the applicable policies of the Company.
Extract of Annual Return
The extract of the Annual Return in Form MGT-9 is available on the Company''s website and can be accessed at: www.basf.com/in
Particulars of Employees
The particulars of employees required to be furnished pursuant to Section 197(12) 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 as amended, forms part of this Report as Annexure VI. However, as per the provisions of Section 136 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 Annual Report excluding the statement of particulars of employees, is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said statement 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 employees irrespective of their gender or hierarchy and expects responsible conduct and behaviour on the part of employees at all levels. Providing a safe and congenial work environment for all 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, your Company has adopted a policy for Prevention of Sexual Harassment at the Workplace and has constituted an Internal Committee (IC). The names of the Committee Members are displayed on the notice board in each establishment. All employees as well as contract staff and trainees are covered by this policy. Allegations of sexual harassment reported are expeditiously and discreetly investigated and disciplinary action, if required, is taken in accordance with the policy.
There was no complaint of sexual harassment received during the financial year 2018-2019.
Training programs on prevention of sexual harassment at the workplace are also conducted at regular intervals. During the year under report, your Company conducted e-workshops/awareness programmes on the policy for the employees. Your Company also rolled out an e-learning module to sensitize & create awareness amongst the employees of the Company on prevention of sexual harassment.
Risk Management
Your Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risks are identified and mitigated by means of a properly defined framework. In the Board''s view, there are no material risks, which may threaten the existence of the Company.
SEBI vide its notification dated 9th May, 2018 had amended the SEBI Listing Regulations which mandates top 500 listed entities based on market capitalization, to constitute a Risk Management Committee, comprising of majority of the members of the Board of 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 of Directors of the Company at their Meeting held on 28th March, 2019 constituted the Risk Management Committee of the Company with effect from 1st April, 2019. The details about the Risk Management Committee have been provided in the Corporate Governance section of the Annual Report.
Internal Financial Control Systems and their adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Additional details on Internal Financial Controls and their adequacy are provided in the Management 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 Contingent Liabilities in note no. 35 of the notes to the financial statements for the year ended 31st March, 2019. There are no significant and material orders passed by the Regulators/Courts, which would impact the going concern status of the Company and its future operations.
Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which 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 following dates:
(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 Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 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 by the employees at all levels to the growth of the Company. Industrial Relations at all our manufacturing sites remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, Germany and all other stakeholders including customers, suppliers, bankers, business partners/associates, Central and State Governments, Regulatory Authorities and the society at large for their consistent support and co-operation to the Company. Your Directors thank the shareholders and 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
Mar 31, 2018
The Directors have pleasure in presenting their Report for the financial year ended 31st March, 2018.
Financial Results
(Rs. in million)
Description |
Year ended 31.3.2018 |
Year ended 31.3.2017 |
Revenue from operations (Net of GST / Excise) |
55,834.0 |
50,782.2 |
Profit / (Loss) before tax and exceptional items |
1,024.6 |
(294.8) |
Exceptional items |
1,585.7 |
170.1 |
Profit / (Loss) before tax after exceptional items |
2,610.3 |
(124.7) |
Tax |
145.3 |
16.6 |
Profit / (Loss) after tax |
2,465.0 |
(141.3) |
Dividend |
129.9 |
43.3 |
Corporate Tax on Dividend |
26.7 |
8.8 |
Note: As per Indian Accounting Standard 18 on Revenue and Schedule III of the Companies Act, 2013, Revenue from Operations for the period July 1, 2017 to March 31, 2018 does not include Goods and Services Tax (GST), however Revenue from Operations till the period ended June 30, 2017 and other comparative periods includes Excise Duty.
Performance
Revenue from operations (net of GST/ Excise) at Rs. 55,834 million, represents an increase of 10% over the previous year. Your Company reported a profit after tax (after exceptional items) of Rs. 2,465 million for the year ended 31st March, 2018 as compared to loss after tax (after exceptional items) of Rs. 141.3 million in the previous year due to good performance in all business segments.
The Agricultural Solutions business of your Company registered good growth in sales and profits during the year as compared to the previous year mainly due to increased sales realised from successful launch of new products as well as diversification into new crops like rice & corn.
The Chemicals segment of your Company comprising of the Intermediates, Petrochemicals & Monomers businesses registered substantial increase in sales & profits during the year mainly due to better realisation coupled with strong domestic demand driven by increase in prices of Monomers and Amine related products.
The Functional Materials & Solutions segment of your Company which comprises of the Performance Materials, Coatings, Construction Chemicals and Process Catalysts Technologies business registered modest growth in sales during the year under review as compared to the previous year. However, it registered good growth in profits on account of better margins in performance materials business, driven by good performance in transportation segment.
The Performance Products segment, which includes Performance Chemicals, Dispersions & Pigments, Care Chemicals, Nutrition & Health products and Paper Chemicals businesses registered higher sales & margins during the year under review as compared to the previous year owing to increase in volumes from Dahej Plant & improved profitability of the Dispersions business.
Export sales stood at Rs. 6,847.5 million during the year under review.
Acquisition of Solvayâs global polyamide business
In September 2017, BASF SE, Germany signed an agreement to acquire Solvayâs integrated polyamide business globally. The acquisition would complement BASFâs engineering plastics portfolio and expand BASFâs position as a solution provider for the transportation, construction, industrial applications and consumer industries.
Acquisition of significant parts of Bayerâs global seeds & non-selective herbicide businesses and additional crop protection businesses & assets
In October 2017, BASF SE, Germany, signed an agreement to acquire significant parts of Bayerâs seed and non-selective herbicide businesses. Further, in April 2018, BASF SE signed an agreement to acquire, inter-alia, Bayerâs entire vegetable seeds business, operating under the global trademark Nunhems®, Research & Development platform for hybrid wheat and complete state-of-the-art digital farming platform xarvioâ¢, which it has offered to divest in the context of its planned acquisition of Monsanto.
Both the transactions complement BASFâs crop protection business and biotechnology activities, adding new capabilities and opportunities for profitable growth and innovation.
BASF and Solenis join forces by combining paper wet-end and water chemicals businesses globally
In May 2018, BASF SE, Germany signed, an agreement with Solenis, USA to globally combine BASFâs Paper wet-end & water chemicals business with Solenis. Consequently, your Companyâs paper wet-end and water chemicals business would be transferred to Solenis in India, subject to requisite approvals. Presently, the paper wet-end and water chemicals business of the Company forms part of the Performance Products segment of the Company.
Expansion of manufacturing capacity of Cellasto® and cessation of Thermoplastic Polyurethane (TPU) manufacturing at Dahej Plant, Gujarat
Your Company is in the process of expanding its manufacturing capacity for Cellasto®, which is used in the suspension system of automobiles to reduce noise, vibration and harshness. The expansion at the Dahej Plant will serve Indiaâs growing automotive market for both two wheeler and four wheeler vehicles.
Further, in line with the changing customer needs in the South Asian region, your Company has discontinued TPU manufacturing at the Dahej Plant. However, your Company will continue supplying South Asian markets from its global network, which would ensure seamless supply to customers.
Update on divestment of Leather Chemicals business to Stahl
Pursuant to the global sale of BASFâs Leather Chemicals business to Stahl Group, the Leather Chemicals business of your Company has been transferred to Stahl India Private Limited with effect from 30th September, 2017. Your Company has received an aggregate sum of Rs. 1,976.3 million (including GST) from Stahl India Private Limited as the consideration for the sale of the business.
Dividend
In view of the improvement in the operational and financial performance of the Company, your Directors have recommended a dividend of Rs. 3/- per equity share of Rs. 10/- each (i.e. 30%) for the financial year ended 31st March, 2018, subject to the approval of the members at the 74th Annual General Meeting of the Company to be held on 10th August, 2018. The dividend will absorb Rs. 129.9 million and the dividend distribution tax to be borne by the Company would amount to Rs. 26.7 million.
Further, as per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âSEBI Listing Regulationsâ), the top 500 listed entities based on market capitalization are required to formulate a Dividend Distribution policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Companyâs website at http://on.basf.com/dividend-policy
Change of Registered Office of the Company
The Registered Office of your Company has been shifted from Plot No. 37, Chandivali Farm Road, Chandivali, Andheri (East), Mumbai-400 072 to The Capital, âAâ Wing, 1204-C, 12th Floor, Plot No. C-70, âGâ - Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051 with effect from 1st December, 2017.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board of Directors of your Company constituted a Corporate Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. R. R. Nair, Mr. Arun Bewoor, Independent Directors and Mr. Rajesh Naik, Whole-time Director are presently the members of the CSR Committee.
Mr. Pradeep M. Chandan, Director - Legal, General Counsel (South Asia) & Company Secretary is the Secretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the activities to be 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 not required to spend any amount on CSR activities. However, in order to maintain project sustainability, 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 and Hygiene (WASH) & Education including conduct of various behavioural change programs, details of which are provided in Annexure I of this Report.
Finance & Accounts
Your Company continued to optimise borrowings during the year by focusing on cash flows and working capital management. Your Company availed of alternative funding options such as Commercial Papers, Trade Financing etc., to ensure efficiency in its borrowing costs.
Your Company follows a prudent financing policy and aims to maintain optimum financial gearing at all times. Your Companyâs debt equity ratio was 0.6 as at 31st March, 2018.
Capital Expenditure
Capital expenditure incurred during the year aggregated to Rs. 679.4 million.
Credit Rating
During the year, CRISIL revised its outlook on the Non-Convertible Debenture programme of your Company to âStableâ from âNegativeâ while reaffirming the rating at âCRISIL AAAâ. The ratings of the Fixed Deposits and Commercial Paper were also reaffirmed at âFAAA / Stableâ and âCRISIL A1 â, respectively.
Further, India Ratings and Research Private Limited awarded a credit rating of âIND A1 â for the Commercial Paper programme of Rs. 750 crore.
Instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations & carry lowest credit risk.
Fixed Deposits
During the year, your Company has not invited, accepted or renewed any fixed deposits from the public and accordingly, there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI Listing Regulations, the Management Discussion and Analysis Report is appended to this Report.
Corporate Governance
Your Company is committed to maintain the highest standards of Corporate Governance and has complied with the Corporate Governance requirements as per SEBI Listing Regulations.
A separate report on Corporate Governance as stipulated under SEBI Listing Regulations along with a Certificate of Compliance from the Statutory Auditors, forms part of this Annual Report.
Business Responsibility Report
Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides that the Annual Report of the top 500 listed entities based on market capitalization, should include a Business Responsibility Report (âBRRâ).
Your Company, being among the top 500 listed entities, has included BRR, as part of this Report as Annexure II, describing the initiatives taken by the Company from an environmental, social and governance perspective.
The BRR for the financial year 2017-18 has also been hosted on the Companyâs website, which can be accessed at www.basf.com/in
Vigil Mechanism
Your Company has established a Whistle Blower Policy for employees, Directors and third parties to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. This policy is available on the Companyâs website and can be accessed at: http://on.basf.com/whistle-blower
Directorsâ Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2018 and of the profit of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) t hey have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report as Annexure III.
Directors
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Rajesh Naik retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
Dr. Raman Ramachandran was re-appointed as Chairman & Managing Director of the Company for a term of one year from 1st April, 2018 to 31st March, 2019, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company.
Mr. Raimar Jahn was appointed as Director of your Company in place of Dr. Rainer Diercks with effect from 1st April, 2017 in terms of Article 134 of the Articles of Association and the provisions of Section 161 of the Companies Act, 2013. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, the appointment of Mr. Raimar Jahn would be considered at the ensuing Annual General Meeting as Dr. Rainer Diercks was liable to retire by rotation at the ensuing Annual General Meeting, had he continued as the Director of the Company.
As required under the SEBI Listing Regulations, the details of the Directors seeking appointment / re-appointment at the ensuing Annual General Meeting are provided on page no. 56 in the Corporate Governance Report, forming part of this Annual Report.
Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Directors, Key Managerial Personnel, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Boardâs functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The manner in which the evaluation has been carried out is explained on page no. 53 in the Corporate Governance Report, forming part of this Annual Report.
Policy on Directorsâ appointment and remuneration
The policy on Directorsâ appointment and remuneration including the criteria for determining the qualifications, positive attributes, independence of a Director and other matters provided 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 Companyâs website and can be accessed at: http://on.basf.com/nom-rem-committee
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 General Meeting held on 28th September, 2017. They have confirmed to the Company that they are not disqualified from continuing to act as Statutory Auditors for the financial year 2018-2019.
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 had appointed M/s. H S Associates, Practising Company Secretaries, Mumbai (C.P 1483), to conduct the Secretarial Audit of the Company for the financial year 2017-18 and to furnish the report to the Board. The Secretarial Audit Report dated 4th May, 2018 forms part of this Report as Annexure IV.
Auditorsâ Report & Secretarial Audit Report
There are no qualifications/reservations/emphasis of matter placed by the Statutory Auditor and the Secretarial Auditor in their respective Reports for the financial year ended 31st March, 2018.
Cost Audit
The Board of Directors, in pursuance of Section 148 of the Companies Act, 2013, have appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having Registration No. 000010, for conducting the audit of the cost accounting records maintained by the Company for the financial year 2018-19. They have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from 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 and the Rules framed thereunder, the composition of the Audit Committee is in line with the provisions of the Companies Act, 2013 and SEBI Listing Regulations, details of which are provided on page nos. 51 and 52 of the Corporate Governance Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company during the financial year were on armsâ length basis. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other Related Parties, which may have a potential conflict with the 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 the transactions, which are repetitive in nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions, as approved by the Board, is available on the Companyâs website and can be accessed at: http://on.basf.com/related-party
Your Directors draw the attention of the members to Note No. 44 of the Financial Statements which sets out related party disclosures under Indian Accounting Standards (IND AS).
Further, the disclosures as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2, form part of this Report, as Annexure V.
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013
The Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any body corporate pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary to some employees in terms of the applicable policies of the Company.
Extract of Annual Return
The extract of the Annual Return in Form MGT-9 forms part of this Report as Annexure VI.
Particulars of Employees
The particulars of employees required to be furnished pursuant to Section 197(12) 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 as amended, forms part of this Report as Annexure VII. However, as per the provisions of Section 136 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 Annual Report excluding the statement of particulars of employees, is being sent to all the members of the Company. Any member interested in obtaining a copy of the said statement 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 employees irrespective of their gender or hierarchy and expects responsible conduct and behaviour on the part of employees at all levels. Providing a safe and congenial work environment for all employees is an integral part of the Companyâs Code of Conduct.
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has adopted a Policy for Prevention of sexual harassment at Workplace and has constituted an Internal Committee (IC) and the names of the Committee members are displayed on the notice board in each office. All employees (permanent, contractual, temporary, trainees) are covered by this policy. Allegations of sexual harassment reported are expeditiously and discreetly investigated and disciplinary action, if required, is taken in accordance with the policy.
There were no complaints of sexual harassment received during the financial year 2017-18.
Training programs on the policy are also conducted at regular intervals. During the year under report, your Company conducted 2 workshops / awareness programmes on the policy for the employees. Your Company also rolled out an e-learning module to sensitize & create awareness amongst the employees of the Company on prevention of sexual harassment.
Risk Management
Your Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risks are identified and controlled by means of a properly defined framework. In the Boardâs view, there are no material risks, which may threaten the existence of the Company.
Internal Financial Control Systems and their adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Additional details on Internal Financial Controls and their adequacy is covered under the Management Discussion and Analysis Report, forming part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
The relevant pending litigations with Regulators or Courts have been disclosed as Contingent Liabilities in note no. 34 of the notes to the financial statements for the year ended 31st March, 2018. There are no significant and material orders passed by the Regulators / Courts, which would impact the going concern status of the Company and its future operations.
Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.
Board Meetings
Six Board Meetings were held during the financial year 2017-18 on the following dates:
(1) 4th May, 2017 (2) 31st July, 2017
(3) 28th September, 2017 (4) 14th November, 2017
(5) 5th February, 2018 (6) 27th March, 2018
Declaration of Independence
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and the SEBI Listing Regulations.
Personnel and Welfare
Your Directors place on record their sincere appreciation of the contribution made by the employees at all levels to the significant improvement in the performance of the Company. Industrial Relations at all our manufacturing sites remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, Germany and all other stakeholders including customers, suppliers, bankers, business partners / associates, Central and State Governments, Regulatory Authorities and the society at large for their consistent support and co-operation to the Company. Your Directors thank the members and investors for their confidence in the Company.
On behalf of the Board of Directors
RAMAN RAMACHANDRAN, Ph.D.
Chairman & Managing Director
(DIN: 00200297)
Mumbai
Dated : 4th May, 2018
Mar 31, 2017
The Directors have pleasure in presenting their Report for the financial year ended 31st March, 2017.
Financial Results
(Rs. in million)
Description |
Year ended 31.3.2017 |
Year ended 31.3.2016 |
Revenue from operations (Gross of excise) |
55,257.9 |
51,568.2 |
Loss before tax and exceptional items |
(294.8) |
(2,024.8) |
Exceptional items |
170.1 |
1,721.1 |
Loss before tax after exceptional items |
(124.7) |
(303.7) |
Tax |
16.6 |
â |
Loss after tax |
(141.3) |
(303.7) |
Dividend |
43.3 |
43.3 |
Corporate Tax on Dividend |
8.8 |
8.8 |
Note: The financial results for the year ended 31st March, 2017 are in compliance with the Indian Accounting Standards (IND AS) and accordingly the results for the previous year ended 31st March, 2016 have been restated.
Performance
Revenue from operations (Gross of excise) at Rs. 55,257.9 million, represents an increase of 7% over the previous year. Your Company reported a loss after tax (after exceptional items) of Rs. 141.3 million for the year ended 31st March, 2017 as compared to loss after tax (after exceptional items) of Rs. 303.7 million in the previous year. The recovery is mainly due to effective utilization of the production capacity at the Dahej plant and improved performance of the Functional Materials & Solutions and Performance Products segments.
Although the Agricultural Solutions business recorded modest growth in sales during the year as compared to the previous year, its profitability was impacted due to generic competition resulting in lower realisations.
The Functional Materials & Solutions segment of your Company which comprises of the coatings, construction chemicals, performance materials and process catalysts technologies business recorded good growth in sales and profits as compared to the previous year.
The Performance Products segment, which includes performance chemicals, dispersions & pigments, care chemicals, nutrition & health products and paper chemicals business registered good growth both in terms of sales and margins during the year under review.
The Chemicals segment of your Company comprises of intermediates, petrochemicals & monomers businesses. During the year, the sales of the Chemicals segment were lower as compared to the previous year on account of lower feedstock prices as well as limited volume availability on certain product lines. Moreover, Chemicals segment results are not comparable due to internal transfer of certain manufacturing assets from the Chemicals segment to Functional Materials & Solutions segment during the year.
Export sales stood at Rs. 5,250.7 million during the year under review.
BASF enters India Crop protection market for Rice
In January, 2017, your Company entered the crop protection market for rice in India and would be offering a range of new solutions to boost yields in India by managing rice diseases, weeds and pests. With the launch of products i.e. Seltima®, Adexai® and Basagran®, your Company will provide comprehensive solutions that effectively meet consumersâ expectations for healthy, high quality food.
Restructuring of businesses
Sale of Industrial Coatings business to AkzoNobel
Pursuant to the sale of global industrial coatings business by BASF SE, Germany to AkzoNobel, the industrial coatings business of your Company was transferred to Akzo Nobel India Limited with effect from 14th December, 2016. With this divestiture, your Company would continue to emphasize on core automotive OEM & decorative paints business.
Divestment of Leather Chemicals business
In March, 2017, BASF SE, Germany and Stahl Group announced the sale of BASFâs leather chemicals business to the Stahl Group. Consequently, your Companyâs leather chemicals business will be transferred to Stahl Group, subject to receipt of requisite approvals. The transaction is expected to close in fourth quarter of 2017. Under the arrangement, your Company would supply leather chemical products from its manufacturing facilities to Stahl Group under mid to long-term supply agreements. Presently, the leather chemicals business forms part of the Performance Products segment of the Company.
Dividend
In view of the improvement in the operational and financial performance of your Company during the year, your Directors have recommended to maintain a dividend of Re. 1/- per equity share of Rs. 10/- each (i.e. 10%) for the financial year ended 31st March, 2017, subject to the approval of the members at the 73rd Annual General Meeting of the Company to be held on 28th September, 2017. The dividend will absorb Rs. 43.3 million and the dividend distribution tax to be borne by the Company would amount to Rs. 8.8 million. The amount towards payment of dividend and dividend distribution tax will be distributed from the General Reserve, in compliance with the provisions of the Companies Act, 2013.
Further, as per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âLODRâ), the top 500 listed entities based on market capitalization are required to formulate Dividend Distribution Policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Companyâs website at http://on.basf.com/dividend-policy
Change in the Registrar & Share Transfer Agent
During the year, your Company appointed TSR Darashaw Limited (SEBI Registration No. INR000004009) having its registered office at 6-10, H. M. Patrawala Industrial Estate, Near Famous Studio, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai - 400011, as the new Registrar and Share Transfer Agent of the Company in place of Sharepro Services (India) Private Limited with effect from 15th June, 2016.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board of Directors of the Company constituted a Corporate Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. R. R. Nair and Mr. Arun Bewoor, Independent Directors along with Mr. Narendranath J. Baliga are members of the CSR Committee.
Mr. Pradeep Chandan, Director - Legal, General Counsel & Company Secretary is the Secretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the activities to be undertaken by the Company as specified under the revised Schedule VII of the Companies Act, 2013.
During the year under review, due to impact on profitability, your Company was not required to spend any amount on CSR activities. However in order to maintain project sustainability, the Board of Directors of your Company decided to spend an amount of Rs. 1.5 million towards CSR projects/activities.
Your Company continued its efforts to drive sustainability and focused on activities of water, health, education, environment and resource efficiency.
Based on the above, your Company undertook CSR projects mainly in the area of community drinking water supply, waste management, sanitation facilities, education and hygiene and has spent an amount of Rs. 1.34 million as direct expenditure for projects & programs and Rs. 0.09 million on overheads aggregating to Rs. 1.43 million in the financial year 2016-2017, details of which are provided in Annexure I of this Report.
Finance & Accounts
Your Company continued to optimise bank borrowings during the year by focusing on cash flows and working capital management. Your Company availed of alternative funding options such as Commercial Papers, Trade Financing etc., to ensure efficiency in its borrowing costs.
Your Company follows a prudent financing policy and aims to maintain optimum financial gearing at all times. Your Companyâs debt equity ratio was 1.2 as at 31st March, 2017.
Capital Expenditure
Capital expenditure incurred during the year aggregated to Rs. 834.4 million.
Credit Rating
The credit rating awarded to the Company by CRISIL on its long term & short term debt programs is âAAA/ Negative/ A1 â.
Fixed Deposits
During the year, your Company has not invited, accepted or renewed any fixed deposits from the public and accordingly, there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is appended to this Report.
Corporate Governance
Your Company is committed to maintain the highest standards of Corporate Governance and has complied with the Corporate Governance requirements as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
A separate report on Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a Certificate of Compliance from the Statutory Auditors, forms part of this Report.
Business Responsibility Report Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, inter alia, provides that the Annual Report of the top 500 listed entities based on market capitalization, should include a Business Responsibility Report (âBRRâ).
Your Company, being among the top 500 listed entities, has included BRR, as part of this Report as Annexure II, describing the initiatives taken by the Company from an environmental, social and governance perspective.
The BRR for the financial year 2016-17 has also been hosted on the Companyâs website, which can be accessed at www.basf.com/in
Vigil Mechanism
Your Company has established a vigil mechanism for employees, Directors and third parties to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report. This policy is available on the Companyâs website and can be accessed at: http://on.basf.com/whistle-blower
Directorsâ Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2017 and of the loss of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(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 and such internal financial controls are adequate and operating effectively; and
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules, 2014, forms part of this Report as Annexure III.
Directors
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Dr. Andrea Frenzel retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.
During the year, Dr. Rainer Diercks and Mr. Gops Pillay resigned from the Board of your Company with effect from the close of business hours as on 31st March, 2017. Your Directors place on record their sincere appreciation of the invaluable contributions made by Dr. Rainer Diercks and Mr. Gops Pillay in the growth and performance of the Company.
Mr. Raimar Jahn was appointed as Director of your Company in place of Dr. Rainer Diercks with effect from 1st April, 2017 in terms of Article 134 of the Articles of Association and the provisions of Section 161 of the Companies Act, 2013. Further, Mr. Narendranath J. Baliga resigned as Alternate Director to Dr. Andrea Frenzel with effect from the close of business hours on 31st March, 2017 and was appointed as Alternate Director to Mr. Raimar Jahn with effect from 1st April, 2017.
Mr. Rajesh Naik ceased to act as an Alternate Director to Dr. Rainer Diercks with effect from the close of business hours on 31st March, 2017 and was appointed as a Whole-time Director of your Company for a period of 2 years from 1st April, 2017 to 31st March, 2019.
Dr. Lakshmi Nadkarni was appointed as an Alternate Director to Dr. Andrea Frenzel with effect from 1st April, 2017.
As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of the Directors seeking appointment/re-appointment at the ensuing Annual General Meeting are provided on page no. 53 in the Corporate Governance Report forming part of this Annual Report.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Directors, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Boardâs functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. The manner in which the evaluation has been carried out has been explained on page no. 50 in the Corporate Governance Report, forming part of this Annual Report.
Policy on Directorsâ appointment and remuneration
The policy on Directorsâ appointment and remuneration including the criteria for determining the qualifications, positive attributes, independence of a Director and other matters provided 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 Companyâs website and can be accessed at: http://on.basf.com/nom-rem-committee
Auditors
The term of B S R & Co. LLP, Chartered Accountants (Registration No. 101248W/W-100022) as Statutory Auditors of the Company is upto the conclusion of the 73rd Annual General Meeting to be held on 28th September, 2017. As per the provisions of Section 139 of the Companies Act, 2013 and the Rules made thereunder, they shall not be eligible for re-appointment.
Based on the recommendation of the Audit Committee, the Board of Directors of your Company at its meeting held on 10th November, 2016 have recommended to the Shareholders, the appointment of M/s. Price Waterhouse Chartered Accountants LLP (Registration No. 012754N/N500016) as the new Statutory Auditors of your Company for a period of 5 years from the conclusion of the 73rd Annual General Meeting till the conclusion of the Annual General Meeting of the Company to be held in the year 2022 (subject to ratification of the appointment by the members at every Annual General Meeting held after this Annual General Meeting till the expiry of their term). M/s. Price Waterhouse Chartered Accountants LLP have confirmed to the Company that their appointment, if made at the 73rd Annual General Meeting, would be within the limits prescribed under Section 141 of the Companies Act, 2013 and that they are not disqualified from appointment within the meaning of the said Act.
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 had appointed M/s. H. S. Associates, Practising Company Secretaries, Mumbai (C.P 1483), to conduct the Secretarial Audit of the Company for the financial year 2016-17 and to furnish the report to the Board. The Secretarial Audit Report dated 4th May, 2017 forms part of this Report as Annexure IV.
Auditorsâ Report & Secretarial Audit Report
There are no qualifications/reservations/emphasis of matter placed by the Statutory Auditors and the Secretarial Auditors in their respective Reports for the financial year ended 31st March, 2017.
Cost Audit
The Board of Directors, in pursuance of Section 148 of the Companies Act, 2013, have appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having Registration No. 000010, for conducting the audit of the cost accounting records maintained by the Company for the financial year 2017-18. The Cost Auditors have certified that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment within the meaning of the said Act.
Composition of the Audit Committee
As required by Section 177(8) read with Section 134(3) of the Companies Act, 2013 and the Rules framed thereunder, the composition of the Audit Committee is in line with the provisions of the Companies Act, 2013, details of which are provided on page nos. 48 and 49 of the Corporate Governance Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company during the financial year were on armsâ length basis. There are no materially significant related party transactions entered into by the Company with its Promoters, Directors, Key Managerial Personnel or other Related Parties, which may have a potential conflict with the 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 the transactions, which are repetitive in nature. Such transactions are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions, as approved by the Board, is available on the Companyâs website and can be accessed at: http://on.basf.com/related-party
The Company does not have contracts or arrangements with its Related Parties under Section 188(1) of the Companies Act, 2013, which are not on armsâ length basis and hence the details are not disclosed in Form AOC-2 as prescribed under the Companies Act, 2013 and the Rules framed thereunder.
The Company has entered into material transactions with related parties viz., BASF SE, BASF South East Asia Pte. Ltd., BASF Belgium Co-ordination Centre on armsâ length basis under Regulation 23 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the same are within the maximum limits approved by the shareholders at the 71st Annual General Meeting of the Company. The shareholders at the 72nd Annual General Meeting have also approved the materials transactions with BASF Hong Kong Limited. Your Directors draw the attention of the members to Note No. 44 of the Financial Statements which sets out related party disclosures under Indian Accounting Standards (IND AS).
Particulars of loans, guarantees or investments under Section 186 of the Companies Act, 2013
The Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any body corporate pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary to some employees in terms of the applicable policies of the Company.
Particulars of Employees
The particulars of employees required to be furnished pursuant to Section 197(12) 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 as amended, forms part of this Report. However, as per the provisions of Section 136 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 Annual Report excluding the statement of particulars of employees, is being sent to all the members of the Company. Any member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.
Prevention of Sexual Harassment at Workplace
Your Company gives prime importance to the dignity and respect of its employees irrespective of their gender or hierarchy and expects responsible conduct and behaviour on the part of employees at all levels. Providing a safe and congenial work environment for all employees is an integral part of the Companyâs Code of Conduct.
As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder, your Company has adopted a Policy for prevention of Sexual Harassment at Workplace and has constituted an Internal Complaints Committee (ICC) and the names of the Committee members are displayed on the notice board in each office. All employees (permanent, contractual, temporary, trainees) are covered by this policy. Allegations of sexual harassment reported shall be expeditiously and discreetly investigated and disciplinary action, if required, would be taken in accordance with the policy.
There were no complaints of sexual harassment received during the financial year 2016-17.
Training programs on the policy are also conducted at regular intervals. During the year under report, your Company conducted 3 workshops/awareness programmes on the policy for the employees.
Risk Management
Your Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risks are identified and controlled by means of a properly defined framework. In the Boardâs view, there are no material risks, which may threaten the existence of the Company.
Internal Financial Control Systems and their adequacy
Your Company has policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companyâs policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. Additional details on Internal Financial Controls and their adequacy is covered under the Management Discussion and Analysis Report forming part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
The relevant pending litigations with regulators or courts have been disclosed as Contingent Liabilities in note no. 34 of the notes to the financial statements for the year ended 31st March, 2017. There are no significant and material orders passed by the Regulators/Courts, which would impact the going concern status of the Company and its future operations.
Material changes and commitments affecting the financial position of the Company
There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.
Board Meetings
Six Board Meetings were held during the financial year 2016-17 on the following dates:
(1) 3rd May, 2016 (2) 4th August, 2016
(3) 11th August, 2016 (4) 10th November, 2016
(5) 1st February, 2017 (6) 23rd March, 2017
Declaration of Independence
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Extract of Annual Return
The extract of the Annual Return in Form MGT-9 forms part of this Report as Annexure V.
Personnel and Welfare
Your Directors place on record their sincere appreciation of the contribution made by the employees at all levels to the significant improvement on the operations of the Company. Industrial Relations at all our manufacturing sites remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, Germany and all other stakeholders including customers, suppliers, bankers, business partners/associates, Central and State Governments, regulatory authorities and the society at large for their consistent support and co-operation to the Company. Your Directors thank the members and investors for their confidence in the Company.
On behalf of the Board of Directors
RAMAN RAMACHANDRAN, Ph.D.
Chairman & Managing Director
(DIN: 00200297)
Mumbai
Dated : 4th May,, 2017
Mar 31, 2016
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2016.
Financial Results
(Rs. in million)
Description Year ended Year ended
31.3.2016 31.3.2015
Revenue from operations (Net of excise) 47,517.3 47,057.6
Loss before tax and exceptional items (1,676.6) (950.5)
Exceptional items 1,721.1 291.9
Profit / (loss) before tax after exceptional 44.5 (658.6)
items
Tax - 10.4
Profit / (loss) after tax 44.5 (669.0)
Balance brought forward 122.6 1,000.0
Available for appropriation 167.1 331.0
This has been appropriated as follows:
Proposed Dividend 43.3 173.1
Corporate Tax on Dividend 8.8 35.3
Balance carried forward 115.0 122.6
Performance
Revenue from operations (net of excise) at Rs. 47,517.3 million,
represents a marginal increase of 1% over the previous year. Despite
the challenging year, your Company reported a profit after tax (after
exceptional items) of Rs. 44.5 million for the year ended 31st March,
2016 as compared to a loss after tax (after exceptional items) of Rs.
669 million in the previous year.
The performance of the Agricultural Solutions business of your Company
was affected on account of advent of the second El Nino which resulted
in a drought across significant parts of the country.
The Performance Products segment which includes the performance
chemicals, dispersion & pigments, care chemicals, nutrition & health
products and paper chemicals businesses recorded good growth in sales
during the year under review.
The Chemicals segment of your Company comprising of the intermediates,
petrochemicals & monomers businesses registered substantial increase in
sales during the year mainly due to sales of monomer products
manufactured at Dahej site.
The Functional Material & Solutions segment of your Company which
comprises of the coatings, construction chemicals, performance
materials and process catalysts technologies businesses registered
growth in sales in volume terms during the year as compared to the
previous year.
Exports sales (including sales to Nepal & Bhutan) stood at Rs. 5,595
million during the year under report.
Restructuring of businesses
Divestment of the textile chemicals business to Archroma
In July, 2015, your Company sold its textile chemicals business to
Archroma India Private Limited pursuant to the global divestment of the
said business by BASF SE, after receipt of the requisite approvals.
Effective 1st July, 2015, your Company has entered into a long-term
supply agreement with Archroma India Private Limited to manufacture &
supply textile chemicals products in India.
Setting up of a new Global Business unit for all pigments businesses
In July, 2015, BASF SE, Germany announced the setting up of the new
global business unit combining all its pigments activities effective
January, 2016. The new unit would fully concentrate on the pigments
business and help to further strengthen the support to its customers
worldwide. The Pigments business of the Company belongs to the
operating division Dispersions & Pigments, which forms part of the
Performance Products segment. The Pigments business serves a variety of
industries including paints & coatings, printing & packaging and
plastics.
Sale of Industrial Coatings business to AkzoNobel
Globally, BASF and AkzoNobel reached a general agreement for sale of
its industrial coatings business, subject to receipt of the requisite
approvals. In India, your Company''s industrial coatings business forms
part of the Functional Materials & Solutions segment and mainly caters
to coatings for the wind energy segment. With the divestiture of this
business by end of 2016, your Company will continue to emphasize on
core automotive OEM, automotive refinish coatings and decorative paints
businesses.
Restructuring of Plant Biotechnology Research
BASF SE, Germany has decided to refocus its global plant biotechnology
research portfolio and restructure the global operations of its Plant
Science subsidiary. In India, the Company has been engaged in a project
to develop yield enhancing traits in rice on behalf of BASF Plant
Science Company, GmbH, Germany. Consequent upon the global
restructuring, the yield enhancement project in rice will be
discontinued and the field testing sites in India will be closed by end
of the year 2016, subject to receipt of requisite approvals.
Divestment of Polyolefin Catalysts Business to W. R. Grace & Co.
Globally, BASF SE, Germany announced the sale of its Polyolefin
Catalysts business, to W.R. Grace & Co., subject to receipt of
regulatory approvals. The Polyolefin Catalysts is part of the Process
Catalysts business, which forms part of the Functional Materials &
Solutions segment of the Company and caters to the petroleum refining,
petrochemicals and downstream base and fine chemicals industries. With
the divestment of this business by the second quarter of 2016, your
Company will re-focus on key growth areas including its Chemical &
Refinery Catalysts businesses.
Inauguration of the new Agricultural Research Station in Pune
In May, 2015, your Company inaugurated the new Agricultural Research
Station in Pune. This new research & development center will focus on
undertaking global research in the area of crop protection.
Alteration of Memorandum & Articles of Association of the Company
During the year, your Company adopted new Articles of Association,
which are in conformity with the provisions of the Companies Act, 2013
and the Rules framed thereunder.
The Company also modified the existing objects in the Memorandum of
Association of the Company to align the same with the present business
scenario and included new objects in line with your Company''s long-term
business strategy.
Change of Registered Office of the Company
The Registered Office of your Company is shifted from 3rd Floor,
VIBGYOR Towers, Plot No. C-62, ''G''-Block, Bandra Kurla Complex,
Mumbai-400 098 to Plot No. 37, Chandivali Farm Road, Chandivali,
Andheri (East), Mumbai-400 072, with effect from 1st April, 2016.
Corporate Social Responsibility
As required under the provisions of the Companies Act, 2013, the Board
of Directors of the Company constituted a Corporate Social
Responsibility (CSR) Committee on 30th April, 2013.
Mr. R. R. Nair and Mr. Arun Bewoor, Independent Directors along with
Mr. N. J. Baliga are members of the CSR Committee.
Mr. Pradeep Chandan, Director  Legal, General Counsel & Company
Secretary is the Secretary of the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the
activities to be undertaken by the Company as specified under the
revised Schedule VII of the Companies Act, 2013.
On account of the challenging year, which impacted the overall
performance of the Company, the Board of Directors of the Company
approved an amount of Rs. 6.5 million towards CSR activities under the
provisions of the Companies Act, 2013 and the Rules framed thereunder.
Your Company continued its efforts to drive sustainability and focused
on activities of water, health, education, environment and resource
efficiency.
Based on the above, your Company undertook CSR projects mainly in the
area of community drinking water supply, waste management, sanitation
facilities, education and hygiene and has spent an amount of Rs. 6.2
million as direct expenditure for projects or programs and Rs. 0.4
million on overheads aggregating to Rs. 6.6 million in the financial
year 2015-2016, details of which are provided in the prescribed format
forming part of this Report in Annexure I.
Dividend
In view of the difficult year which impacted the overall performance of
the Company, your Directors have recommended a dividend of Re. 1/- per
equity share of Rs. 10/- each (i.e 10%) for the financial year ended
31st March, 2016, subject to the approval of the Members at the
forthcoming 72nd Annual General Meeting of the Company to be held on
11th August, 2016. The dividend will absorb Rs. 43.3 million. The
dividend distribution tax to be borne by the Company would amount to
Rs. 8.8 million.
Finance & Accounts
Your Company continued to optimise borrowings during the year by
focusing on cash flows and working capital management. By availing of
alternate funding options such as Commercial Papers, efficiency in
borrowing costs was ensured.
Your Company follows a prudent financing policy and aims to maintain
optimum financial gearing at all times. Your Company''s debt equity
ratio was 1.16 as at 31st March, 2016.
Capital Expenditure
Capital expenditure incurred during the year aggregated to Rs. 1,655.8
million.
Credit Rating
Your Company''s credit rating is "AAA/ Negative/ A1 " as awarded by
CRISIL on its long term & short term programs respectively.
Fixed Deposits
During the year, your Company has not invited, accepted or renewed any
fixed deposits from the public as at 31st March, 2016 and accordingly,
there is no principal or interest outstanding in respect thereof.
Management Discussion and Analysis Report
In terms of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the Management Discussion and Analysis Report is
appended to this Report.
Corporate Governance
Your Company is committed to maintaining the highest standards of
Corporate Governance and has complied with the Corporate Governance
requirements as per SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
A separate report on Corporate Governance as stipulated under SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015
along with a Certificate of Compliance from the Statutory Auditors,
forms part of this report.
Vigil Mechanism
The Company has established a vigil mechanism for Directors, employees
and third parties to report their genuine concerns, details of which
have been given in the Corporate Governance Report annexed to this
Report. This policy is available on the Company''s website and can be
accessed at: http://on.basf.com/28LPlls
Directors'' Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year ended 31st March, 2016 and
of the profit of the Company for that period; and
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 2013, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities; and
(iv) they have prepared the annual accounts on a going concern basis;
and
(v) they have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and
operating effectively; and
(vi) they have devised proper systems to ensure compliance with the
provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules 2014,
forms part of this Report as Annexure II.
Directors
In accordance with the provisions of the Companies Act, 2013 and the
Articles of Association of the Company, Dr. Rainer Diercks retires by
rotation at the ensuing Annual General Meeting and being eligible,
offers himself for re-appointment. As required under SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the details
of the Director seeking re-appointment at the ensuing Annual General
Meeting is provided on page no 44 in the Corporate Governance Report,
forming part of this Annual Report.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the Company
has devised a policy containing criteria for evaluating the performance
of the Executive, Non-Executive and Independent Directors, Board and
its Committees based on the recommendation of the Nomination &
Remuneration Committee. Feedback was sought by way of a structured
questionnaire covering various aspects of the Board''s functioning, such
as adequacy of the composition of the Board and its Committees, Board
culture, execution and performance of specific duties, obligations and
governance. The manner in which the evaluation has been carried out has
been explained on page no. 41 in the Corporate Governance Report,
forming part of this Annual Report.
Policy on Directors'' appointment and remuneration
The policy on Directors'' appointment and remuneration including the
criteria for determining the qualifications, positive attributes,
independence of a Director and other matters provided under Section
178(3) of the Companies Act, 2013, forms part of the Nomination &
Remuneration Committee policy of the Company. This policy is available
on the Company''s website and can be accessed at:
http://on.basf.com/28MYFX6
Auditors
M/s. B S R & Co. LLP, Chartered Accountants (Registration No.
101248W/W-100022), Mumbai, hold office until the conclusion of the
Annual General Meeting to be held for the financial year 2016-17,
subject to ratification of their appointment by the members at every
Annual General Meeting. They have confirmed to the Company that their
appointment, if ratified by the members at the ensuing 72nd Annual
General Meeting, would be within the limits prescribed under Section
141 of the Companies Act, 2013 and that they are not disqualified from
appointment within the meaning of the said Act.
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 had appointed Mr. Hemant S. Shetye
of M/s. H. S. Associates, Practising Company Secretaries, Mumbai,
having CP No. 1483, to conduct the Secretarial Audit of the Company for
the financial year 2015-16 and to furnish the report to the Board. The
Secretarial Audit Report dated 3rd May, 2016 forms part of this Report
as Annexure III.
Auditors'' Report & Secretarial Audit Report
There are no qualifications/reservations/emphasis of matter placed by
the Statutory Auditors and the Secretarial Auditors in their respective
reports for the financial year ended 31st March, 2016.
Cost Audit
The Board of Directors, in pursuance to the Orders issued by the
Central Government under Section 148 of the Companies Act, 2013, have
appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, having
Registration No. 000010, for conducting the audit of the cost
accounting records maintained by the Company for the financial year
2016-17. The Cost Auditors have certified that their appointment is
within the limits of Section 141(3)(g) of the Companies Act, 2013 and
that they are not disqualified from appointment within the meaning of
the said Act.
Composition of the Audit Committee
As required under Section 177(8) read with Section 134(3) of the
Companies Act, 2013 and the Rules framed thereunder, the composition of
the Audit Committee is in line with the provisions of the Companies
Act, 2013, details of which are provided on page nos. 38 and 39 in the
Corporate Governance Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company
during the financial year were on arms'' length basis. There are no
materially significant related party transactions entered into by the
Company with its Promoters, Directors, Key Managerial Personnel or
other designated persons, which may have a potential conflict with the
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 the transactions which are repetitive in nature. Such
transactions are audited and a statement giving details of all related
party transactions is placed before the Audit Committee and the Board
of Directors for their approval on a quarterly basis. The policy on
Related Party Transactions, as approved by the Board, is available on
the Company''s website and can be accessed at:
http://on.basf.com/28LPrte
The Company does not have contracts or arrangements with its related
parties under Section 188(1) of the Companies Act, 2013, which are not
on arms'' length basis and hence the details are not disclosed in Form
AOC-2 as prescribed under the Companies Act, 2013 and the rules framed
thereunder.
The Company has entered into material transactions with related parties
viz., BASF SE, BASF South East Asia Pte Ltd & BASF Belgium
Co-ordination Centre, on arms'' length basis under Regulation 23 of the
SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015
and the same are within the maximum limits approved by the shareholders
at the last Annual General Meeting of the Company. Your Directors draw
the attention of the members to Note No. 25(17) of the financial
statement which sets out related party disclosures under Accounting
Standard 18.
Particulars of loans, guarantees or investments under Section 186 of
the Companies Act, 2013
The Company has not provided any loan to any person or body corporate
or given any guarantee or provided security in connection with such
loan or made any investment in the securities of any body corporate
pursuant to Section 186 of the Companies Act, 2013. The Company has
given advance against salary to some employees in terms of the
applicable policies of the Company.
Particulars of Employees
The particulars of employees required to be furnished pursuant to
Section 197(12) 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, forms part of this Report. However, as per the
provisions of Section 136 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 Annual Report
excluding the statement of particulars of employees, is being sent to
all members of the Company. Any member interested in obtaining a copy
of the said statement may write to the Company Secretary at the
Registered Office of the Company.
Prevention of Sexual Harassment at Workplace
Your Company gives prime importance to the dignity and respect of its
employees irrespective of their gender or hierarchy and expects
responsible conduct and behaviour on the part of all the employees at
all levels. Providing for a safe and congenial work environment to all
employees is an integral part of the Company''s Code of Conduct.
The Company has an anti-Sexual Harassment Policy in line with the
requirements of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. Your Company has
also constituted an Internal Complaints Committee (ICC) and the names
of the Committee members are displayed on the notice board in each
office. All employees (permanent, contractual, temporary, trainees)
are covered under this Policy. Allegations of sexual harassment
reported are expeditiously and discreetly investigated and disciplinary
action, if required, is taken in accordance with the policy.
The following is a summary of sexual harassment complaints received and
disposed of during the year 2015-16:
(a) Number of complaints of sexual harassment received during the year
 NIL
(b) Number of complaints disposed of during the year  NIL
(c) Number of cases pending for more than 90 days  NIL
Training programs on the policy are also conducted at regular
intervals. During the year under report, your Company conducted 3
workshops/awareness programmes on the Policy for the employees.
Risk Management
The Company has in place a mechanism to inform the Board about the risk
assessment and minimization procedures and periodical review to ensure
that risk is controlled by means of a properly defined framework. In
the Board''s view, there are no material risks, which may threaten the
existence of the Company.
Internal Financial Control Systems and their Adequacy
Your Company has policies and procedures for ensuring the orderly and
efficient conduct of its business, including adherence to Company''s
policies, the safeguarding of its assets, the prevention and detection
of frauds and errors, the accuracy and completeness of the accounting
records, and the timely preparation of reliable financial information.
For more details, please refer to the Management Discussion and
Analysis Report forming part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
The relevant pending litigations with regulators or courts have been
disclosed as Contingent Liabilities in note no. 25(10) of the notes to
the financial statements for the year ended 31st March, 2016. Besides
this, there are no significant material orders passed by the
Regulators/Courts which would impact the going concern status of the
Company and its future operations.
Material changes and commitments affecting the financial position of
the Company
There have been no material changes and commitments affecting the
financial position of the Company which have occurred between the end
of the financial year of the Company to which the financial statements
relate and the date of this report.
Board Meetings
Seven Board Meetings were held during the financial year 2015-16 on the
following dates:-
(1) 6th April, 2015 (2) 7th May, 2015
(3) 28th July, 2015 (4) 20th August, 2015
(5) 20th October, 2015 (6) 19th January, 2016
(7) 30th March, 2016
Declaration of Independence
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed under Section 149(6) of the Companies Act,
2013 and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
Extract of Annual Return
The details forming part of the extract of Annual Return in Form MGT-9
forms part of this Report as Annexure IV.
Personnel and Welfare
Your Directors place on record their sincere appreciation to the
employees at all levels for their hard work, dedication and commitment.
Industrial Relations at all our factories remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, Germany,
customers, suppliers, bankers, business partners/associates, Central
and State Governments, regulatory authorities and the society at large
for their consistent support and co-operation to the Company. Your
Directors thank the members and investors for their confidence in the
Company.
On behalf of the Board of Directors
RAMAN RAMACHANDRAN, Ph.D.
Chairman & Managing Director
(DIN: 00200297)
Mumbai Dated : 3rd May, 2016
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2015.
Financial Results
(Rs. in Million)
Description Year ended Year ended
31.3.2015 31.3.2014
Sales (Net of excise) 47057.6 44299.0
Profit before tax (658.6) 1943.7
Tax 10.4 664.9
Profit after tax (669.0) 1278.8
Balance brought forward 1000.0 810.0
Available for appropriation 331.0 2088.7
This has been appropriated as follows:
Proposed Dividend 173.1 173.1
Corporate Tax on Dividend 35.3 29.4
General Reserve  886.2
Balance carried forward 122.6 1000.0
Performance
Sales net of excise at Rs. 47,057.6 million, represents an increase of
6.2% over the previous year.
The new chemical production site at Dahej, Gujarat involving an
investment of Rs. 1,000 crores commenced commercial production during
the year. Due to additional interest, depreciation, pre-marketing
expenses and start-up related costs on account of Dahej site, your
Company reported a loss for the financial year ended 31st March, 2015.
Consequently, profitability of certain business units connected with
Dahej viz., Performance Materials, Dispersion & Pigments, Care
Chemicals and Monomers businesses, was also impacted. Delayed and
irregular monsoon adversely affected the performance of the
Agricultural Solutions business of the Company during the year.
The Performance Products segment includes performance chemicals,
dispersions & pigments, care chemicals, nutrition & health products and
paper chemicals.
The Chemicals segment of your Company comprising of intermediates,
petrochemicals & monomers businesses registered a significant increase
in sales during the year under review.
Sales of the Functional Materials & Solutions segment of your Company,
which comprises of coatings, construction chemicals, performance
materials and process catalyst technologies businesses, registered good
growth as compared to the previous year.
Exports sales stood at Rs. 3,659.4 million during the year under
report.
"We create chemistry" in BASF Logo
During the year, BASF introduced a new tagline "We create
chemistry" in its logo. This change highlights how BASF collaborates
and innovates with customers and partners to contribute to a
sustainable future. It also depicts BASF's increased focus on offering
its customers functionalized products and solutions based on chemistry.
The new tagline refers not only to science but also to the chemistry
between people, which is at the core of BASF and its brand.
150th Anniversary Celebration
BASF SE turned 150 in 2015. Your Company celebrated BASF SE's 150th
Anniversary with its partners. A global co-creation program was
prepared on the topics of energy, food and urban living. As part of the
global co-creation program, called CREATOR SPACEÂ, customers,
scientists, BASF experts & members of the public were invited to
exchange thoughts and share ideas in accordance with its "We create
chemistry" strategy.
Inauguration of the new chemical production site at Dahej, Gujarat
Your Company inaugurated its new chemical production site at Dahej in
Gujarat on 7th October, 2014. The site was jointly inaugurated by Smt.
Anandiben Patel, Hon'ble Chief Minister of Gujarat and Mr. Michael
Heinz, Member of the Board of Executive Directors, BASF SE.
With a project cost of Rs. 1,000 crores, this site represents BASF's
single largest investment in India. The site includes an integrated hub
for polyurethane manufacturing and production facilities for care
chemicals and polymer dispersions.
The site currently employs around 200 people directly and 300 people
indirectly. Equipped with state-of-the-art environment, health and
safety facilities, the site recorded zero lost-time injuries during
construction.
Transfer of Textile Chemicals business to Archroma
In October, 2014, BASF and Archroma announced the sale of BASF's
Textile Chemicals business globally to Archroma, a supplier of
specialty chemicals to the textile, paper and emulsions industries.
Consequently, your Company's Textile Chemicals business will be
transferred to Archroma India Pvt. Ltd., subject to receipt of the
requisite approvals. Presently, the Textile Chemicals business is part
of your Company's Performance Products segment. This step is in line
with BASF's strategy of actively managing its portfolio and it will
further sharpen the focus of the Performance Products segment on
growth-driven customer industries.
Transfer of Automotive Refinish Coatings business to Wurth India
Private Limited ("Wurth")
Your Company transferred the import, distribution and technical service
of GLASURIT®, a BASF automotive refinish paint brand to Wurth with
effect from 1st February, 2015. This will ensure that the high-quality
service to our customers remains uninterrupted.
Change of Registered Office of the Company
The Registered Office of your Company was shifted from 1st Floor,
VIBGYOR Towers, Plot No. C-62, 'G'-Block, Bandra Kurla Complex,
Mumbai-400 051 to the 3rd floor of the same building with effect from
1st March, 2015.
Corporate Social Responsibility
As required under the provisions of the new Companies Act, 2013, the
Board of Directors of the Company constituted a Corporate Social
Responsibility (CSR) Committee on 30th April, 2013.
Mr. R. R. Nair and Mr. Arun Bewoor, Independent Directors along with
Mr. N. J. Baliga are members of the CSR Committee.
Mr. Pradeep Chandan, Director - Legal, General Counsel & Company
Secretary is the Secretary to the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the
activities to be undertaken by the Company as specified under the
revised Schedule VII of the Companies Act, 2013.
The Company has made Sustainability as the mainstay of its existence
and undertakes to focus on issues which are relevant for the betterment
of the communities in which it operates while also contributing to the
country's progress at large. This year your Company's focus has been to
develop the internal capacity of the CSR team and set up the
appropriate framework for selection of suitable & sustainable CSR
projects, which will meet the local needs of the communities as well as
global sustainability criteria of BASF.
This framework involves:
- Defining proper internal governance structures
- Implementing country-level and district-level materiality
investigation
- Selecting and assessing potential partners based on standardized
criteria covering the three dimensions of sustainability
- Ideation and concept generation
- Objective project design and pre-testing
Based on the above framework, your Company undertook CSR projects
mainly in the area of community drinking water supply, waste
management, sanitation facilities and education and has spent an amount
of Rs. 12.6 million in the financial year 2014-2015, details of which
are provided in the prescribed format forming part of this Report in
Annexure I. Your Company will further take up additional projects in
the coming years in line with the CSR policy.
Dividend
During the year, your Company's performance was impacted mainly due to
the additional expenses and start up related costs incurred in relation
to commissioning of certain plants at Dahej. Despite this impact, your
Directors recommend a dividend of Rs. 4/- per equity share of Rs. 10/-
each (i.e. 40%) for the financial year ended 31st March, 2015 and the
same will be paid out of the accumulated surplus of the Company in
accordance with the Companies (Declaration and Payment of Dividend)
Rules, 2014, subject to the approval of the members at the forthcoming
71st Annual General Meeting of the Company to be held on 20th August,
2015. The dividend will absorb Rs. 173.1 million. The dividend
distribution tax to be borne by the Company would amount to Rs. 35.3
million.
Finance & Accounts
Your Company continued to optimize bank borrowings during the year by
focusing on cash flows and working capital management. By availing of
alternate funding options like issuance of Commercial Papers, your
Company ensured efficiency in its borrowing costs.
Your Company follows a prudent financing policy and aims to maintain
optimum financial gearing at all times. Your Company's total debt to
equity ratio was 1.38 as at 31st March, 2015.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 2,560.9
million.
Credit Rating
Your Company continued to maintain the highest rating of
'AAA/Stable/A1 ' awarded by CRISIL on its long term & short term debt
programs.
Fixed Deposits
Your Company has not invited, accepted or renewed any fixed deposits
from the public as at 31st March, 2015 and accordingly there is no
principal or interest outstanding in respect thereof.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreements with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Corporate Governance
Your Company is committed to maintaining the highest standards of
Corporate Governance. Your Company has complied with the Corporate
Governance requirements as per Clause 49 of the Listing Agreements with
the Stock Exchanges.
A separate report on Corporate Governance as stipulated under Clause 49
of the Listing Agreements along with a Certificate of Compliance from
the Statutory Auditors, forms part of this report.
Vigil Mechanism
The Company has established a vigil mechanism for Directors and
employees to report their genuine concerns, details of which have been
given in the Corporate Governance Report annexed to this Report. The
policy can be accessed on the Company's website at:
http://www.india.basf.com/apex/India/en/function/conversions:/publish/content/
investorRelations/Whistleblower Policy.pdf
Directors' Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year ended 31st March, 2015 and
of the loss of the Company for that period;
(iii) t hey have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 2013, for safeguarding the assets of the Company and for
preventing & detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis;
(v) t hey have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and
operating effectively;
(vi) they have devised proper systems to ensure compliance with the
provisions of all applicable 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-rule 3 of Rule 8 of the Companies (Accounts) Rules 2014,
forms part of this Report as Annexure II.
Directors
In accordance with the provisions of the Companies Act, 2013 and the
Articles of Association of the Company, Mr. Gops Pillay retires by
rotation at the ensuing Annual General Meeting and being eligible,
offers himself for re-appointment.
During the year, Mr. Thilo Bischoff resigned as Whole-time Director and
as Alternate Director to Mr. Gops Pillay with effect from 30th April,
2014. Your Directors placed on record their sincere appreciation of the
invaluable contribution made by Mr. Thilo Bischoff in the growth and
performance of the Company.
Dr. G. Ramaseshan superannuated from the services of the Company and
consequently, resigned as Whole-time Director of the Company and as
Alternate Director to Dr. Rainer Diercks with effect from 31st July,
2014.
Your Directors placed on record their sincere appreciation of the
invaluable contribution made by Dr. G. Ramaseshan in the growth and
performance of the Company during his long years of association with
the Company.
Mr. Rajesh Naik was appointed as Whole-time Director of the Company and
as Alternate Director to Dr. Rainer Diercks with effect from 1st
August, 2014.
Mr. Andrew Postlethwaite resigned from the Board of your Company with
effect from 31st December, 2014. Your Directors placed on record their
sincere appreciation of the invaluable contribution made by Mr. Andrew
Postlethwaite in the growth and performance of the Company.
Dr. Andrea Frenzel was appointed as Director of your Company in the
casual vacancy caused by the resignation of Mr. Andrew Postlethwaite in
terms of Article 108 of the Articles of Association and Section 161 of
the Companies Act, 2013 with effect from 1st January, 2015.
The tenure of Mr. S. Regunathan as Whole-time Director of the Company
was extended for a period of 6 months' from 1st June, 2014 to 31st
December, 2014 which was approved by the Board and members of the
Company. On 31st December, 2014, Mr. S. Regunathan resigned as
Whole-time Director of the Company and as Alternate Director to Mr.
Andrew Postlethwaite.
Your Directors placed on record the association of Mr. S. Regunathan
with the Company since 1982 and their sincere appreciation of the
valuable contribution made by Mr. S. Regunathan in the growth and
performance of the Company.
Mr. N. J. Baliga was appointed as Whole-time Director and Chief
Financial Officer of your Company and also as an Alternate Director to
Dr. Andrea Frenzel with effect from 1st January, 2015. The appointment
of Mr. N. J. Baliga as Whole-time Director of the Company shall be
subject to the approval of the shareholders of the Company and the
Central Government.
As required under Clause 49 of the Listing Agreements with the Stock
Exchanges, the details of the Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual Report.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Company has devised a policy containing
criteria for evaluating the performance of the Independent,
Non-Executive and Executive Directors, Board and Committees. Feedback
was sought by way of a structured questionnaire covering various
aspects of the Board's functioning, such as adequacy of the composition
of the Board and its Committees, Board culture, execution and
performance of specific duties, obligations and governance. The manner
in which the evaluation has been carried out has been explained in the
Corporate Governance Report, forming part of this Annual Report.
Policy on Directors' appointment and remuneration
The policy on Directors' appointment and remuneration including the
criteria for determining the qualifications, positive attributes,
independence of a Director and other matters provided under Section
178(3) of the Companies Act, 2013 form part of the Nomination &
Remuneration Committee policy of the Company, which is appended as
Annexure III to this Report.
Auditors
M/s. B S R & Co. LLP, Chartered Accountants (Registration No.
101248W/W-100022), Mumbai, hold office until the conclusion of the
Annual General Meeting to be held for the financial year 2016-17,
subject to ratification of their appointment by the members at every
Annual General Meeting. They have confirmed to the Company that their
appointment, if ratified by the members at the ensuing 71st Annual
General Meeting, would be within the limits prescribed under Section
141 of the Companies Act, 2013 and that they are not disqualified from
appointment within the meaning of the said Act.
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 had appointed Practising Company
Secretary, Mr. Hemant S. Shetye having CP No. 1483, Partner of HS
Associates, Mumbai to conduct the Secretarial Audit of the Company for
the financial year 2014-15 and to furnish his report to the Board. The
Secretarial Audit Report dated 7th May, 2015 forms part of this Report
as Annexure IV.
Auditors' Report & Secretarial Audit
Emphasis of matter is placed by the Statutory Auditors in their
Independent Audit Report dated 7th May, 2015 and attention is drawn to
Note 26(17) of the audited financial statements for the financial year
ended 31st March, 2015 in respect of the managerial remuneration
amounting to Rs. 19.8 million for which the Company has made
applications to the Central Government pursuant to the provisions of
Section 197 read with Schedule V of the Companies Act, 2013, which are
pending approval.
Your Board of Directors is of the view that the said managerial
remuneration is in line with the provisions of the Companies Act, 2013
and the rules framed therein and appropriate measures will be taken
once the approval(s) of Central Government are obtained. The Audit
Report issued by the Statutory Auditors mentions that their audit
opinion is not qualified in the above matter.
The above justification shall also be applicable to the similar
observation made in the Secretarial Audit report dated 7th May, 2015
for the financial year ended 31st March, 2015.
Cost Audit
The Board of Directors, in pursuance to the Orders issued by the
Central Government under Section 148 of the Companies Act, 2013, have
appointed M/s. R. Nanabhoy & Co., Cost Accountants (Registration No.
000010), Mumbai, for conducting the audit of the cost accounting
records maintained by the Company for the financial year 2015-16. The
Cost Auditors have certified that their appointment was within the
limits of Section 141(3)(g) of the Companies Act, 2013 and that they
are not disqualified from appointment within the meaning of the said
Act.
Composition of the Audit Committee
As required under Section 177(8) read with Section 134(3) of the
Companies Act, 2013 and the rules framed thereunder, the composition of
the Audit Committee is in line with the provisions of the Companies
Act, 2013, details of which are provided in the Corporate Governance
Report, forming part of this Annual Report.
Related Party Transactions
All related party transactions that were entered into by the Company
during the financial year were in the ordinary course of business and
on arms' length basis. There are no materially significant related
party transactions entered into by the Company with its Promoters,
Directors, Key Managerial Personnel or other designated persons, which
may have a potential conflict with the interest of the Company at
large. The approval of the unrelated shareholders on material related
party transactions of the Company with its Group Companies in terms of
Clause 49 of the Listing Agreement is being sought under item no. 9 of
the Notice convening the 71st Annual General Meeting of the Company.
All Related Party Transactions are placed before the Audit Committee
for its approval. Prior omnibus approval of the Audit Committee is
obtained for the transactions which are repetitive in nature. Such
transactions are audited and a statement giving details of all related
party transactions is placed before the Audit Committee and the Board
of Directors for their approval on a quarterly basis. The policy on
Related Party Transactions as approved by the Board can be accessed on
the Company's website viz., www.india.basf.com at:
http://www.india.basf.com/apex/India/en/
function/conversions:/publish/content/investorRelations/Related Party
Transactions Policy.pdf
The Company does not have contracts or arrangements with its related
parties under Section 188(1) of the Companies Act, 2013, which are not
on arms' length basis or material in nature. Hence the details of such
contracts or arrangements with its related parties are not disclosed in
Form AOC-2 as prescribed under the Companies Act, 2013 and the rules
framed thereunder. Your Directors draw attention of the shareholders to
Note No. 26(17) of the financial statement which sets out related party
disclosures.
Particulars of loans, guarantees or investments under Section 186
The Company has not provided any loan to any person or body corporate
or given any guarantee or provided security in connection with such
loan or made any investment in the securities of any body corporate
pursuant to Section 186 of the Companies Act, 2013. The Company has
given advance against salary to some employees in terms of the
applicable policies of the Company.
Particulars of Employees
The particulars of employees required to be furnished pursuant to
Section 197(12) 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, forms part of this Report. However, as per the
provisions of Section 136 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 Annual Report
excluding the statement of particulars of employees, is being sent to
all members of the Company. Any member interested in obtaining a copy
of the said statement may write to the Company Secretary at the
Registered Office of the Company.
Prevention of Sexual Harassment at Workplace
The Company has in place an Anti-Sexual Harassment Policy in line with
the requirements of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints
Committee has been set up to redress complaints received regarding
sexual harassment. All employees (permanent, contractual, temporary,
trainees) are covered under this Policy.
The following is a summary of sexual harassment complaints received and
disposed of during the year 2014-15:
(a) Number of complaints of sexual harassment received during the year
- 1
(b) Number of complaints disposed off during the year - 1
(c) Number of cases pending for more than 90 days - Nil
(d) Number of workshops/awareness programmes on sexual harassment - 5
Risk Management
The Company has in place a mechanism to inform the Board about the risk
assessment and minimization procedures and periodical review to ensure
that risk is controlled by means of a properly defined framework. In
the Board's view, there are no material risks, which may threaten the
existence of the Company.
Adequacy of Internal financial controls
Your Company has established adequate internal financial control
systems to ensure reliable financial reporting and compliance with laws
and regulations. All resources are put to optimal use and adequately
protected against any loss. All transactions are authorized, recorded
and reported correctly. Policies and guidelines of your Company are
being adhered to and improvements in process efficiencies and
effectiveness are being carried out on an ongoing basis. For more
details, please refer to the Management Discussion & Analysis Report
forming part of this Annual Report.
Significant and material orders passed by the Regulators or Courts
The relevant pending litigation with regulators or courts has been
disclosed as Contingent Liabilities in note no. 26(10) of the notes to
the financial statements for the year ended 31st March, 2015. There are
no significant material orders passed by the Regulators/Courts which
would impact the going concern status of the Company and its future
operations.
Material changes and commitments affecting the financial position of
the Company
There have been no material changes and commitments affecting the
financial position of the Company which have occurred between the end
of the financial year of the Company to which the financial statements
relate and the date of the report.
Board Meetings
Five Board Meetings were held during the financial year 2014-15 on the
following dates:-
(1) 29th April, 2014.
(2) 31st July, 2014.
(3) 27th August, 2014.
(4) 21st October, 2014.
(5) 20th January, 2015.
Declaration of Independence
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed under Section 149(6) of the Companies Act,
2013 and revised Clause 49 of the Listing Agreements with Stock
Exchanges.
Extract of Annual Return
The details forming part of the extract of Annual Return in Form MGT 9
forms part of this Report as Annexure V. Personnel and Welfare
Your Directors place on record their sincere appreciation to the
employees at all levels for their hard work, dedication and commitment.
Industrial Relations at all our factories remained cordial.
Acknowledgments
The Board of Directors take this opportunity to thank BASF SE, the
parent company, customers, suppliers, bankers, business
partners/associates, Central and State Governments, regulatory
authorities and the society at large for their consistent support and
co-operation to the Company. Your Directors thank the shareholders and
investors for their confidence in the Company.
On behalf of the Board of Directors
RAMAN RAMACHANDRAN, Ph.D.
Chairman & Managing Director
(DIN: 00200297)
Mumbai
Dated : 7th May,, 2015
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2014.
Financial Results
(Rs. in Million)
Description Year ended Year ended
31.3.2014 31.3.2013
Sales (net of excise) 44298.9 39406.3
Profit before tax 1943.6 1690.3
Tax 664.9 549.5
Profit after tax 1278.7 1140.8
Balance brought forward 810.0 808.0
Available for appropriation 2088.7 1948.8
This has been appropriated as
follows:
Proposed Dividend 173.1 173.1
Corporate Tax on Dividend 29.4 29.4
General Reserve 886.2 936.3
Balance carried forward 1000.0 810.0
Activities
Despite the challenging economic scenario, the sales of your Company
during the year under report registered good growth over the previous
year. Sales, net of excise at Rs. 44,298.9 million, represent an
increase of 12.4%, over the previous year. Profit before tax for the
year ended 31st March, 2014 stood at Rs. 1,943.6 million as compared to
Rs. 1,690.3 million for the previous year which represents an increase
of 15.0%.
Profit after tax at Rs. 1,278.7 million during the year ended 31st
March, 2014 was higher by 12.1% compared to the previous year.
The Agricultural Solutions Segment has shown good growth in sales and
significant increase in profits during the year ended 31st March, 2014
mainly on account of introduction of new products and adoption of
innovative marketing initiatives.
Financial Ratios
2013-14 2012-13
Equity vs Total Assets (%) 30.99 40.72
Return on Capital Employed (%) 10.99 13.50
before interest and taxes
Current Ratio 1.34 1.36
current assets:
short term liabilities and provisions
Acid Test Ratio 0.70 0.69
short term receivables plus
cash and cash items:
short term liabilities and provisions
The Performance Products Segment which includes textile chemicals,
leather chemicals, paper chemicals and nutrition & health businesses
registered an increase in sales and profits during the year under
review. However, margins were under pressure for care chemicals,
performance chemicals and dispersion & pigments businesses.
The Chemicals Segment of your Company comprises of intermediates,
petrochemicals & monomers businesses. The sales and profits of the
Chemicals Segment were lower as compared to the previous year. This was
mainly on account of marginal growth in sales of intermediates and
petrochemicals businesses.
The Functional Materials & Solutions Segment of your Company comprises
of coatings, construction chemicals, performance materials and process
catalyst technologies businesses. The sales of the Functional Materials
& Solutions Segment registered growth during the year under review.
However, margins were impacted mainly on account of slowdown in the
automotive & construction industries and infrastructure investment,
rising interest rates, liquidity crunch and weakening of the dollar
against the rupee.
Exports sales stood at Rs. 4,026.1 million during the year under report
and represented an increase of 50% over the previous year. This was
mainly on account of higher exports of fluorescent whitening agents and
paper dyes.
Re-alignment of the Business Segments
Your Company has adopted the new segment structure with effect from 1st
April, 2013. Accordingly, your Company has reduced the number of
Business Segments from five to four in order to serve its customers
more effectively and to enhance its operational and technological
excellence. With effect from 1st April, 2013, the new Business Segment
structure consists of Agricultural Solutions, Performance Products,
Chemicals and Functional Materials & Solutions.
Status of new chemical production site at Dahej, Gujarat
Your Company is in the process of constructing a new chemical
production site at Dahej, Gujarat. The project, involving an investment
of Rs. 1,000 crore was inaugurated in April 2012 and marks your
Company''s single largest investment in India so far. The new Dahej Site
will be an integrated hub for Polyurethanes manufacturing and will also
house production facilities for Care Chemicals and Polymer Dispersions
for the Coatings and Paper businesses. It will strengthen your
Company''s support to key industries such as appliances, footwear,
automotive, construction, architectural coatings and personal care, as
well as paper.
Construction work at Dahej site is nearing completion. Mechanical
completion of some plants has already been achieved and the balance is
expected to be completed by June 2014. Commercial production in the
said plants is expected to commence by July/August 2014.
Setting up of precious metal catalyst plant at Mangalore
Your Company has set up a precious metal catalyst plant and product
development laboratory at its Mangalore site. The project was financed
through internal accruals. The catalysts manufactured at this plant
will allow customers to produce fine chemicals including Active
Pharmaceutical Ingredients (API), agrochemicals and flavors and
fragrances. Production of precious metal catalysts at the Mangalore
site has already commenced in the first quarter of 2014
Setting up of Agricultural Research Station (ARS) at Pune
Your Company has taken on lease approximately 30 acres of agricultural
land at Lonikand near Pune for a period of 20 years to set up an
Agricultural Research Station for testing new agro chemical compounds
on agricultural crops and to examine their efficacy under local
climatic conditions. Your Company will conduct field trials in all
major crops such as corn, soybean, rice, cereals, fruits and
vegetables. The Agricultural Research Station in Pune will be designed
and operated as a state-of-the-art facility.
Cessation of manufacturing operations at the Automotive Coatings
Blending plant at Khuskhera in Rajasthan
Your Company has ceased manufacturing operations at the Automotive
Coatings Blending plant at Khuskhera in Rajasthan due to high safety
risks, which had made the continuance of manufacturing operations at
the said plant difficult. There is no material impact on the
performance of the Company due to cessation of manufacturing operations
at Khuskhera as the products are now being supplied from the Company''s
Mangalore plant.
Corporate Social Responsibility
As a successful corporate, your Company has a moral and ethical
responsibility to work towards supporting the society within which it
functions. As required by the provisions of the new Companies Act,
2013, the Board of Directors of your Company constituted a Corporate
Social Responsibility (CSR) Committee on 30th April, 2013.
Mr. R. R. Nair and Mr. Arun Bewoor, Independent Directors along with
Mr. S. Regunathan are members of the CSR Committee.
Mr. Pradeep Chandan, Chief Executive-Legal, Compliance & Company
Secretary was appointed as Secretary to the CSR Committee.
The CSR Committee has formulated the CSR Policy and has recommended the
activities to be undertaken by the Company as specified under the
revised Schedule VII of the Companies Act, 2013. This Policy
encompasses the Company''s Strategy of "We create chemistry for a
sustainable future" and lays down the guidelines and mechanism for
undertaking socially useful programmes for welfare & sustainable
development of the community at large, especially the deprived,
under-privileged and differently abled persons.
Projects to be implemented under CSR for the financial year 2014-2015
shall be reviewed by the CSR Committee from time to time and thereafter
recommended to the Board of Directors of your Company for their
approval.
Dividend
Considering the investment of Rs. 1,000 crores for setting up of a new
chemicals production site at Dahej, your Directors recommend a dividend
of Rs. 4/- per equity share of Rs. 10/- each (i.e. 40%) for the
financial year ended 31st March, 2014, subject to the approval of the
shareholders at the forthcoming 70th Annual General Meeting of the
Company to be held on 27th August, 2014. The dividend will absorb Rs.
173.1 million. The dividend distribution tax borne by the Company would
amount to Rs. 29.4 million.
Finance & Accounts
Your Company continued to optimise bank borrowings during the year by
focusing on cash flows and working capital management. By availing of
alternate funding options like issuance of Commercial Papers, it
ensured efficiency in its borrowing costs.
Your Company follows a prudent financing policy and aims to maintain
optimum financial gearing at all times. Your Company''s total debt to
equity ratio was 0.84 as at 31st March, 2014.
Your Company secured External Commercial Borrowings (ECB) loan for the
Dahej Project on competitive terms.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 6,172.8
million.
Fixed Deposits
Your Company continued to maintain the highest rating of
''AAA/Stable/A1 '' awarded by CRISIL on its short term & long term debt
programs.
Your Company did not accept any fixed deposits during the year under
report. There were no deposits, except unclaimed interest on deposits
of Rs. 0.14 million as at 31st March, 2014.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreements with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Corporate Governance
Your Company is committed to maintaining the highest standards of
Corporate Governance. Your Company has complied with the Corporate
Governance requirements as per Clause 49 of the Listing Agreements with
the Stock Exchanges.
A separate report on Corporate Governance as stipulated under Clause 49
of the Listing Agreements along with a Certificate of Compliance from
the Statutory Auditors, forms part of this Report.
Directors'' Responsibility Statement
Your Directors confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year ended 31st March, 2014 and
of the profits of the Company for that period;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing & detecting fraud and other irregularities;
(iv) they have prepared the annual accounts on a going concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
Information pursuant to Section 217(1 )(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is given in the annexure to this
Report.
Directors
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Dr. Rainer Diercks and Mr.
Andrew Postlethwaite retire by rotation at the ensuing Annual General
Meeting and being eligible, offer themselves for re-appointment.
During the year, Mr. Prasad Chandran relinquished his position as
Chairman & Managing Director of your Company with effect from 30th
September, 2013. The Board of Directors of your Company placed on
record its sincere appreciation of the invaluable contribution made by
Mr. Chandran in the growth of the Company during his 17 years of
distinguished service including 13 years as the Chairman & Managing
Director.
Dr. Raman Ramachandran was appointed as the Chairman & Managing
Director of your Company with effect from 1st October, 2013, subject to
the approval of shareholders of the Company and the Central Government.
Dr. Ramachandran has completed his Bachelors'' and Masters'' degree in
Science (Agriculture) from Tamilnadu Agricultural University,
Coimbatore and Indian Agricultural Research Institute, New Delhi,
respectively. Dr. Ramachandran holds a doctorate degree from the
University of Adelaide, Australia. Dr. Ramachandran has valuable
experience of over 25 years in the area of Crop Protection and has been
associated with BASF since 2000.
The tenure of appointment of Mr. S. Regunathan as Wholetime Director of
the Company was extended for a period from 1st June, 2014 to 31st
December, 2014, subject to the approval of the shareholders of the
Company at the forthcoming Annual General Meeting scheduled on 27th
August, 2014.
As required under Clause 49 of the Listing Agreements with the Stock
Exchanges, the details of Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual report.
Auditors
M/s. B S R & Co. LLP, Chartered Accountants, the Statutory Auditors of
the Company, hold office until the conclusion of the ensuing Annual
General Meeting and are eligible for re-appointment. They have
confirmed to the Company that their re-appointment, if made, would be
within the prescribed limits under Section 141 of the Companies Act,
2013 and that they are not disqualified from re-appointment within the
meaning of the said Act.
Cost Audit
The Board of Directors, in pursuance to the Orders issued by the
Central Government under Section 148 of the Companies Act, 2013, have
appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, for
conducting the audit of the cost accounting records maintained by the
Company for its products for the financial year 2014-2015. The Cost
Auditors have certified that their appointment was within the limits of
Section 141 (3)(g) of the Companies Act, 2013 and that they are not
disqualified from appointment within the meaning of the said Act.
Particulars of Employees
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, as amended, forms part of this
Report. However, as per the provisions of Section 219(1 )(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the Statement of
Particulars of Employees, is being sent to all shareholders of the
Company. Any shareholder interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office
of the Company.
Personnel and Welfare
Your Directors place on record their sincere appreciation for the
contribution made by the employees of the Company at all levels.
Industrial Relations at all our factories remained cordial.
Acknowledgements
The Board of Directors take this opportunity to thank BASF SE, the
parent Company, customers, suppliers, bankers, financial institutions,
business partners/associates, Central and State Governments, regulatory
authorities and the society at large for their consistent support and
co-operation to the Company. Your Directors thank the shareholders and
investors for their confidence in the Company.
On behalf of the Board of Directors
RAMAN RAMACHANDRAN
Chairman & Managing Director
Mumbai
Dated : 29th April, 2014
Mar 31, 2013
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2013.
Financial Results
(Rs. in Million)
Year ended Year ended
31.3.2013 31.3.2012
Sales (net of excise) 39406.3 35159.4
Profit before tax 1690.3 1497.2
Tax 549.5 488.6
Profit after tax 1140.8 1008.6
Balance brought forward 808.0 808.0
Available for appropriation 1948.8 1816.6
This has been appropriated as follows:
Proposed Dividend 173.1 173.1
Corporate Tax on Dividend 29.4 28.1
General Reserve 936.3 807.4
Balance carried forward 810.0 808.0
Activities
Given the challenging economic scenario, the sales of your Company
during the year under report registered good growth over the previous
year. Sales, net of excise at Rs. 39,406.3 million, represent an
increase of 12%, over the previous year. Profit before tax for the year
ended 31st March, 2013 stood at Rs. 1,690.3 million as compared to Rs.
1,497.2 million for the previous year which represents an increase of
12.9%.
Profit after tax at Rs. 1,140.8 million during the year ended 31st
March, 2013 was higher by 13.1% compared to the previous year.
The Agricultural Solutions business has shown healthy topline growth
during the year on account of introduction of new products, adoption of
innovative marketing initiatives and extension of products to new crop
geographies.
The Coatings and Process Catalysts businesses, part of the Functional
Solutions segment of the Company, recorded higher turnover & profits
during the year. Although the Construction Chemicals business recorded
moderate growth in sales, its profitability was impacted on account of
the competitive market environment coupled with a slowdown in
construction activities.
Financial Ratios
2012-13 2011-12
Equity vs Total Assets (%) 40.72 47.81
Return on Capital Employed (%) 13.50 13.60
before interest and taxes
Current Ratio 1.36 1.51
current assets:
short term liabilities and provisions
Acid Test Ratio 0.69 0.80
short term receivables plus
cash and cash items:
short term liabilities and provisions
The Performance Products segment which includes Leather, Textile,
Dispersions & Pigments and Care Chemicals & Nutrition businesses,
registered an increase in sales and profits during the year under
review. However, the Paper Chemicals business in this segment showed
marginal increase in sales and lower profit compared to the previous
year, mainly due to increase in cost of raw materials which could not
be passed on to customers.
The Polyurethanes business, part of the Plastics segment, registered
good growth in sales and profits, while the Engineering Plastics
business achieved higher capacity utilization.
The Chemicals segment improved its performance in terms of sales and
profits as compared to the previous year.
Exports sales stood at Rs. 2,676.8 million during the year under review
as compared to Rs. 2,230.1 million for the previous year.
Re-alignment of the Business Segments
Your Company has reduced the number of Business Segments from five to
four in order to serve its customers more effectively and to enhance
its operational and technological excellence. A new division known as
"Performance Materials" has been created in the current Functional
Solutions segment, which has been re-named as "Functional Materials &
Solutions". The Performance Materials business bundles BASF''s
innovative, downstream plastics from the current Performance Polymers
and Polyurethanes divisions, which were earlier part of the Plastics
segment. The Plastics segment will now cease to exist. Similarly, a new
Division known as ''Monomers'' has been created under the Chemicals
segment, which includes majority of the product groups from the current
inorganics chemicals business and basic polymers from the current
Performance Polymers and Polyurethanes businesses. Consequently, the
Chemicals Division will now comprise of Intermediates, Monomers and
Petrochemicals businesses. Your Company has adopted the new segment
structure with effect from 1st April, 2013.
Investment in a new chemical production site at Dahej, Gujarat
Your Company is in the process of constructing a new chemical
production site at Dahej, Gujarat. The project, involving an investment
of Rs. 1,000 crore was inaugurated one year ago and marks your
Company''s single largest investment in India so far. The new Dahej Site
will be an integrated hub for Polyurethanes manufacturing and will also
house production facilities for Care Chemicals and Polymer Dispersions
for the Coatings and Paper businesses. It will strengthen your
Company''s support to key industries such as appliances, footwear,
automotive, construction, architectural coatings and personal care, as
well as paper.
Production at the Dahej site is expected to commence in the first
quarter of 2014.
Shutdown of the Expandable Polystyrene (EPS) business
On account of continuous pressure on the EPS business due to strong
competition coupled with high overcapacities and low margins, the Board
of Directors of your Company approved the proposal to shut down the EPS
business, forming part of Plastics segment, including the Company''s
STYROPOR® production facility at Thane, subject to receipt of the
requisite approval(s). The contribution of this business to the total
turnover was marginal; hence there will be no material impact on the
Company''s growth strategy.
German Year in India
The German Year in India was celebrated during the year to commemorate
the completion of 60 years of successful bilateral ties in various
fields. Under the theme, "Infinite Opportunities", the event
brought together science and education, research, politics, business
and culture on one platform. Your Company is proud to be the official
partner of the German Year in India. The highlight of the celebration
was the "Indo German Urban Mela", a unique pavilion concept that
traveled through five cities across India - Mumbai, Bangalore, Chennai,
New Delhi and Pune. Your Company''s pavilion showcased how chemistry
shapes daily life and plays a critical role in solving future
challenges. It also featured our innovative and technologically
advanced solutions in the areas of Mobility, Housing & Construction and
Health & Nutrition. BASF''s Kids'' Lab, which provides a hands-on lab
experience to children/students about Chemistry was an integral part of
the programme.
Corporate Social Responsibility (CSR) activities
Under its strategy, "We create chemistry for a sustainable future",
your Company drives sustainable solutions and takes on social
responsibility. As a successful corporate, your Company has a moral and
ethical responsibility to work towards supporting the society within
which it functions.
Among other initiatives supported by your Company are Projects like
''Sadbhavana (empathy)'', which focuses on education-led activities,
empowerment of women, disaster relief and rehabilitation and community
development initiatives as well as the ''Million Minds'' project, which
is a unique program that aims to improve governance standards.
A separate section on your Company''s CSR activities forms part of this
Annual Report.
Dividend
Your Directors recommend a dividend of Rs. 4/- per equity share of Rs.
10/- each (i.e. 40%) for the financial year ended 31st March, 2013,
subject to the approval of the shareholders at the forthcoming 69th
Annual General Meeting of the Company to be held on 30th August, 2013.
The dividend will absorb Rs. 173.1 million. The dividend distribution
tax borne by the Company would amount to Rs. 29.4 million.
Finance & Accounts
Your Company continued to minimize bank borrowings during the year by
focusing on cash flows and working capital management. Internal cash
accruals were effectively used for funding working capital needs and
capital expenditure requirements of the Company.
Your Company follows a prudent financing policy and aims to maintain
optimum financial gearing at all times. Your Company''s total debt to
equity ratio was 0.32 as at 31st March, 2013.
Your Company secured External Commercial Borrowings (ECB) loan for the
Dahej Project on competitive terms.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 3903.6
million. Fixed Deposits
Your Company continued to maintain the highest rating of
''AAA/Stable/P1 '' awarded by CRISIL on its short term & long term debt
programs.
Your Company did not accept any fixed deposits during the year under
report. There were no deposits, except unclaimed interest on deposits
of Rs. 0.14 million as at 31st March, 2013.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Corporate Governance
Your Company is committed to maintaining the highest standards of
Corporate Governance. Your Company has complied with the Corporate
Governance requirements as per Clause 49 of the Listing Agreement with
the Stock Exchanges.
A separate report on Corporate Governance as stipulated under Clause 49
of the Listing Agreement along with a Certificate of Compliance from
the Statutory Auditors, forms part of this report.
Directors'' Responsibility Statement
Your Directors confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of your Company at the end of the financial year ended 31st
March, 2013 and of the profits of your Company for that year;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your Company and for preventing & detecting fraud and other
irregularities;
(iv) that the Directors have prepared the annual accounts on a going
concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
Information pursuant to Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is given in the annexure to this
Report.
Directors
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. Arun Bewoor and Mr. R. A.
Shah retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
Ms. Saori Dubourg resigned from the Board of the Company w.e.f. 30th
April, 2013. Your Directors wish to place on record their sincere
appreciation of the guidance and valuable contribution made by Ms.
Saori Dubourg in the growth and performance of the Company during her
tenure as Director. Mr. Gops Pillay was appointed as Director of the
Company in the casual vacancy caused by the resignation of Ms. Saori
Dubourg in terms of Article 108 of the Articles of Association of your
Company and Section 262 of the Companies Act, 1956. Mr. Thilo Bischoff
was appointed as an Alternate Director to Mr. Gops Pillay, effective
30th April, 2013.
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the details of Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual report.
Auditors
M/s. B S R & Co., Chartered Accountants, Mumbai retire at the
forthcoming Annual General Meeting and are eligible for re-appointment.
A certificate has been received from them to the effect that their
re-appointment, if made, would be within the limits prescribed under
Section 224(1B) of the Companies Act, 1956
Cost Audit
The Board of Directors in pursuance to the Orders issued by the Central
Government under Section 233B of the Companies Act, 1956, have
appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, for
conducting the audit of the cost accounting records maintained by the
Company for the products "Insecticides, Dyes, Paints, Varnishes and
Chemicals" for the financial year 2013-2014.
Particulars of Employees
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, as amended, forms part of this
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the Statement of
Particulars of Employees, is being sent to all shareholders of the
Company. Any shareholder interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office
of the Company.
Personnel and Welfare
Your Directors place on record their sincere appreciation to the
employees at all levels for their hard work, dedication and commitment.
Industrial Relations at all our factories remained cordial.
Acknowledgements
The Board of Directors take this opportunity to thank BASF SE, the
parent Company, customers, suppliers, bankers, business
partners/associates, Central and State Governments for their consistent
support and co-operation to the Company. Your Directors thank the
shareholders and investors for their confidence in the Company.
On behalf of the Board of Directors
PRASAD CHANDRAN
Chairman & Managing Director
Mumbai
Dated : 30th April, 2013.
Mar 31, 2012
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2012.
Financial Results
(Rs. in Million)
Year ended Year ended
31.3.2012 31.3.2011
Sales (net of excise) 35159.4 30638.8
Profit before tax 1497.2 1505.0
Tax 488.6 326.7
Profit after tax 1008.6 1178.3
Balance brought forward 808.0 761.0
Addition on account of amalgamation à (194.5)
Available for appropriation 1816.6 1744.8
This has been appropriated as follows:
Proposed Dividend 173.1 346.3
Corporate Tax on Dividend 28.1 57.5
General Reserve 807.4 533.0
Balance carried forward 808.0 808.0
* Due to change in the format of Schedule VI, previous years' figures
have been re-grouped.
Activities
The sales of your Company during the year under report registered good
growth over the previous year. Sales, net of excise at Rs. 35,159.4
million, represent an increase of 14.8%, over the previous year.
However, profit before tax remained constant at Rs. 1,497.2 million
during the year ended 31st March 2012 as compared to Rs. 1,505 million
for the previous year.
Profit after tax at Rs. 1,008.6 million during the year ended 31st
March, 2012 was lower by 14.4% as compared to the previous year mainly
due to benefit of carry forward tax losses of merged entities which was
available in the previous year.
The Agricultural Solutions business has shown substantial growth in
sales and profits during the year ended 31st March 2012 on account of
introduction of new products, adoption of innovative marketing
initiatives and extension to new crop geographies.
The Construction Chemicals & Coatings businesses, part of the
Functional Solutions business of the Company consequent to the
integration, recorded higher turnover & profits, during the year.
Financial Ratios
2011-12 2010-11
Equity vs Total Assets (%) 47.81 53.95
Return on Capital Employed (%) 13.60 16.29
before interest and taxes
Current Ratio 1.51 1.83
current assets :
short term liabilities
and provisions
Acid Test Ratio 0.80 0.97
short term receivables plus
cash and cash items:
short term liabilities and provisions
Paper Chemicals and Dispersions & Pigments businesses, part of the
Performance Products segment, registered an increase in sales and
profits, during the year under review.
Plastics segment, which comprises of Styropor, Engineering Plastics and
Polyurethanes businesses, registered good growth in sales, both in
volume and value terms.
The sales of the Chemicals business during the year under review were
lower compared to the previous year mainly on account of weak global
outlook coupled with reduced price realization in certain segments and
exchange rate fluctuations.
Exports sales stood at Rs. 2,230 million during the year under report
as compared to Rs. 2,262 million for the previous year.
Acquisition of business of Cognis in India
Consequent upon the world wide acquisition of Cognis Holding GmbH by
BASF SE in December, 2010, your Company acquired the business of Cognis
Specialty Chemicals Pvt. Ltd ("Cognis") in India for a lumpsum
consideration of Rs. 134 million. The business of Cognis was integrated
with your Company with effect from 1st July, 2011. Your Company's
product portfolio was strengthened with the addition of Cognis
products, which were complementary to your Company's existing
products. This has provided the customers with a better value
proposition.
Investment in a new chemical production site in Dahej, India
Your Company will invest Rs. 1,000 crores (Euro 150 million) to set up
a new chemical production site at the Dahej Petroleum, Chemicals and
Petrochemicals Investment Region, located in Gujarat. The new site will
be an integrated hub for polyurethane manufacturing and will also house
production facilities for care chemicals and polymer dispersions for
coatings and paper. Commencement of production is scheduled during the
year 2014 and the project will be financed by the Company through
internal accruals and loans.
Dividend
Considering the proposed investment of Rs. 1,000 crores for setting up
of a new chemicals production site at Dahej and to augment the future
capital requirements of the Company, your Directors recommend a
dividend of Rs. 4/- per equity share of Rs. 10/- each (i.e. 40%) for
the financial year ended 31st March 2012, subject to the approval of
the shareholders at the forthcoming 68th Annual General Meeting of the
Company to be held on 24th August, 2012. The dividend will absorb Rs.
173.1 million. The dividend distribution tax borne by the Company would
amount to Rs. 28.1 million.
Finance & Accounts
Your Company continued to minimize bank borrowings during the year by
focusing on cash flows and working capital management. Internal cash
accruals were effectively used for funding working capital needs and
capital expenditure requirements of the Company.
Your Company follows a prudent financing policy & aims to maintain
optimum financial gearing at all times. Your Company's total debt to
equity ratio was 0.18 as at 31st March, 2012.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 1,798.3
million.
Fixed Deposits
Your Company continued to maintain the highest rating of
'AAA/Stable/P1 ' awarded by CRISIL on its short term & long term
debt programs.
Your Company did not accept any fixed deposits during the year under
report. There were no deposits except unclaimed interest on deposits
of Rs. 0.26 million as at 31st March 2012.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Corporate Governance
Your Company is committed to maintaining the highest standards of
Corporate Governance. Your Company has complied with the Corporate
Governance requirements as per Clause 49 of the Listing Agreements with
the Stock Exchanges.
A separate report on Corporate Governance as stipulated under Clause 49
of the Listing Agreement along with a Certificate of Compliance from
the Auditors, forms part of this report.
Directors' Responsibility Statement
Your Directors confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of your Company at the end of the financial year ended 31st
March 2012 and of the profits of your Company for that year;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your Company and for preventing and detecting fraud and other
irregularities;
(iv) that the Directors have prepared the annual accounts on a going
concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
Information pursuant to Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is given in the annexure to this
Report.
Directors
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. Pradip P. Shah and Dr.
Rainer Direcks retire by rotation at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment.
Mr. R. Y. Vaidya resigned from the Board of the Company w.e.f 31st
August, 2011. Your Directors wish to place on record their sincere
appreciation of the guidance and valuable contribution made by Mr.
Vaidya in the growth and performance of the Company during his tenure
as a Director. Consequent to the resignation of Mr. R. Y. Vaidya from
the Board, he ceased to be an Alternate Director to Dr. Rainer Diercks
w.e.f 31st August, 2011.
Dr. G. Ramaseshan was appointed as a Director of the Company w.e.f 1st
September, 2011 in the casual vacancy caused by the resignation of Mr.
R. Y. Vaidya in terms of Article 108 of the Articles of Association of
your Company and Section 262 of the Companies Act, 1956. Dr. G.
Ramaseshan was appointed as an Alternate Director to Dr. Rainer
Diercks, effective 1st September, 2011.
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the details of Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual report.
Auditors
M/s. B S R & Co., Chartered Accountants, Mumbai retire at the
forthcoming Annual General Meeting and are eligible for re-appointment.
Cost Audit
The Board of Directors in pursuance to the Orders issued by the Central
Government under Section 233B of the Companies Act, 1956, have
appointed M/s. R. Nanabhoy & Co., Cost Accountants, Mumbai, for
conducting the audit of the cost accounting records maintained by the
Company for the products "Insecticides & Dyes", "Paints &
Varnishes" and "Chemicals" for the financial year 2012-2013.
Particulars of Employees
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, as amended, forms part of this
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the Statement of
Particulars of Employees, is being sent to all shareholders of the
Company. Any shareholder interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office
of the Company.
Personnel and Welfare
Your Directors place on record their sincere appreciation for the
contribution made by the employees of the Company at all levels.
Industrial Relations at all our factories remained cordial.
Acknowledgements
The Board of Directors take this opportunity to thank BASF SE, the
parent Company, customers, suppliers, bankers, business partners /
associates, Central and State Governments and various regulatory
authorities for their consistent support and co-operation to the
Company. Your Directors thank the shareholders for their confidence in
the Company.
On behalf of the Board of Directors
PRASAD CHANDRAN
Chairman & Managing Director
Mumbai
Dated : 25th April, 2012.
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting their Report for the
financial year ended 31st March, 2011.
Financial Results
(Rs. in Million)
Year ended Year ended
31.3.2011 31.03.2010
Sales (net of excise) 30599.1 13816.9
Profit before tax 1507.5 1513.7
Tax 329.2 545.6
Profit after tax 1178.3 968.1
Balance brought forward 761.0 264.0
Addition on account of amalgamation (194.5) 2218.3
Available for appropriation 1744.8 3450.4
This has been appropriated as follows:
Proposed Dividend 346.3 326.2
Corporate Tax on Dividend 57.5 54.2
General Reserve 533.0 2309.0
Balance carried forward 808.0 761.0
Activities
The sales performance of your Company during the year under report
registered significant growth over the previous year. Sales, net of
excise at Rs. 30,599.1 million, represents an increase of 121%, over
the previous year. These sales figures include the sales of the 3 BASF
legal entities viz., BASF Coatings (India) Private Limited (BCIN), BASF
Construction Chemicals (India) Private Limited (BCCIPL) and BASF
Polyurethanes India Limited (BPIL) aggregating to Rs. 8,574.2 million,
consequent to the merger. It also includes the sales of the full year
of operation of the erstwhile relevant Ciba businesses.
Profit before tax stood at Rs. 1507.5 million during the year ended
31s1 March, 2011 as compared to Rs. 1513.7 million for the previous
year.
Profit after tax at Rs. 1178.3 million was higher by 22% compared to
the previous year.
Paper chemicals, dispersions and fine chemicals businesses in the
Performance Chemicals segment, registered substantial increase in
sales, both in volume and value terms.
The Chemicals business segment, which includes intermediates, inorganic
chemicals, process catalysts and petrochemicals recorded significant
increase in sales, both in volume and value terms, due to healthy
growth in domestic demand from Indian manufacturers fuelled by growth
in export of downstream products.
The Construction Chemicals business, which became part of the
Functional Solutions business of the Company consequent to the
integration, recorded higher turnover & profits during the year.
The Coatings and Polyurethanes businesses have good long-term business
prospects. Currently, there is stiff competition, which has impacted
the profitability of the Company during the year.
The Agricultural Solutions business has shown growth in sales during
the year ended 31st March, 2011 mainly due to higher volumes from the
new products introduced in the market. However, the profits of the
Agricultural Solutions business declined marginally on account of
increase in sales promotion costs for launching new products as part of
the growth strategy.
Although the Plastics business recorded higher sales, the profitability
was affected on account of increase in fixed costs coupled with
under-utilization of capacities in the newly commissioned Engineering
Plastics Compounding plant at Navi Mumbai.
The export sales at Rs. 2,262 million during the year under report
represented an increase of 271% over the previous year.
Merger of BASF Coatings (India) Private Limited (BCIN), BASF
Construction Chemicals (India) Private Limited (BCCIPL) and BASF
Polyurethanes India Limited (BPIL) with the Company
The Scheme of Amalgamation of BCIN, BCCIPL and BPIL, a wholly owned
subsidiary of the Company was sanctioned by the Hon'ble High Court of
Bombay vide its Order dated 14th January, 2011. Accordingly, BCIN,
BCCIPL and BPIL were merged with your Company from the Appointed Date,
1st April, 2010. The shareholders of erstwhile BCIN and BCCIPL were
issued 1 equity share and 10 equity shares of your Company for every 60
equity shares and 13 equity shares of BCIN and BCCIPL, respectively
held by them. As a result, the subscribed and paid-up capital of your
Company increased from Rs. 407.7 million to Rs. 432.9 million. The
Authorised Share Capital of your Company increased from Rs. 450 million
to Rs. 543.6 million. Post Merger, the financial statements of your
Company for the year ended 31st March, 2011 includes the financials of
BCIN, BCCIPL and BPIL.
Dividend
Your Directors are pleased to recommend a dividend of Rs. 8/- per
equity share of Rs. 10/- each (i.e 80%) for the financial year ended
31st March, 2011. The dividend will absorb Rs. 346.3 million. The
dividend distribution tax borne by the Company would amount to Rs. 57.5
million.
Finance & Accounts
With focus on cash flows and working capital management, your Company
continued to minimize the bank borrowing during the year. Internal cash
accruals were effectively used for funding working capital needs and
capital expenditure requirements of the Company.
Your Company follows a prudent financing policy & aims to maintain
optimum financial gearing at all times. Your Company's total debt to
equity ratio was 0.11 as at 31st March, 2011.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 965.6
million.
Fixed Deposits
Your Company continued to maintain the highest rating of
'AAA/Stable/P1 ' on its short term & long term debt programs, awarded
by CRISIL. During the year CRISIL reaffirmed the credit rating of your
Company after taking into account the merger of BCIN, BCCIPL and BPIL
with your Company, with effect from 1st April, 2010.
Your Company did not accept any fixed deposits during the year under
report. There were no overdue deposits except unclaimed deposits of
Rs. 0.12 million as at 31st March, 2011.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Corporate Governance
Your Company is committed to maintain the highest standard of Corporate
Governance. Your Company has complied with the Corporate Governance
requirements as per Clause 49 of the Listing Agreements with the Stock
Exchanges.
A separate report on Corporate Governance as stipulated under Clause 49
of the Listing Agreement along with a Certificate of Compliance from
the Auditors, forms part of this report.
Directors' Responsibility Statement
Your Directors confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of your Company at the end of the financial year ended 31st
March, 2011 and of the profits of your Company for that year;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your Company and for preventing and detecting fraud and other
irregularities;
(iv) that the Directors have prepared the annual accounts on a going
concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
Information pursuant to Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is given in the annexure to this
Report.
Directors
In accordance with the provisions of the Companies Act, 1956 and the
Articles of Association of the Company, Mr. R. A. Shah and Mr. R. R.
Nair retire by rotation at the ensuing Annual General Meeting and being
eligible, offer themselves for re-appointment.
Mr. S. Ramnath resigned from the Board of the Company w.e.f. 16th July,
2010. Your Directors wish to place on record their sincere
appreciation of the guidance and valuable contribution made by Mr. S.
Ramnath in the growth and performance of the Company during his tenure
as a Director. Consequent to the resignation of Mr. S. Ramnath from the
Board, he ceased to be an Alternate Director to Mr. Hermann Althoff
w.e.f. 16"1 July, 2010.
Mr. S. Regunathan was appointed as a Director of the Company on 16th
July, 2010 in the casual vacancy caused by the resignation of Mr. S.
Ramnath in terms of Article 108 of the Articles of Association of your
Company and Section 262 of the Companies Act, 1956. Mr. S. Regunathan
was appointed as an Alternate Director to Mr. Hermann Althoff,
effective 16th July, 2010.
Mr. Deepak Thuse resigned from the Board of the Company w.e.f. 20th
October, 2010. Consequent to the resignation of Mr. Deepak Thuse from
the Board, he ceased to be an Alternate Director to Ms. Saori Dubourg
w.e.f. 20th October, 2010. Mr. Thuse continues to be the Chief
Executive of Plastics business of the Company and a Member of the
Management Committee supporting the growth and strategic development of
the Company.
Mr. Thilo Bischoff was appointed as a Director of the Company on 20th
October, 2010 in the casual vacancy caused by the resignation of Mr.
Deepak Thuse in terms of Article 108 of the Articles of Association of
your Company and Section 262 of the Companies Act, 1956. Mr. Thilo
Bischoff was appointed as an Alternate Director to Ms. Saori Dubourg,
effective 20th October, 2010.
Mr. Hermann Althoff resigned from the Board of the Company w.e.f. 28th
April, 2011 and Mr. Andrew Postlethwaite was appointed as Director of
the Company in the causal vacancy caused by the resignation of Mr.
Hermann Althoff, in terms of Article 108 of the Articles of Association
of your Company and Section 262 of the Companies Act, 1956. Your
Directors wish to place on record their sincere appreciation of the
guidance and valuable contribution made by Mr. Hermann Althoff in the
growth and performance of the Company during his tenure as a Director.
Mr. S. Regunathan was appointed as an Alternate Director to Mr. Andrew
Postlethwaite, effective 28th April, 2011.
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the details of Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual report.
Auditors
M/s. B S R & Co., Chartered Accountants, Mumbai retire at the
forthcoming Annual General Meeting and are eligible for re-appointment.
Cost Audit
The Board of Directors in pursuance to the Order issued by the Central
Government under Section 233B of the Companies Act, 1956, have
appointed Messrs. R. Nanabhoy & Co., Cost Accountants, Mumbai, for
conducting the audit of the cost accounting records maintained by the
Company for the products "Insecticides and Dyes" for the financial year
2011.
Particulars of Employees
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, as amended, forms part of this
Report. However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Annual Report excluding the Statement of
Particulars of Employees, are being sent to all shareholders of the
Company. Any shareholder interested in obtaining a copy of the said
statement may write to the Company Secretary at the Registered Office
of the Company.
Personnel and Welfare
Your Directors express their sincere appreciation for the dedicated
efforts put in by all the employees and for their continued
contribution in ensuring higher performance of the Company during the
year.
Industrial Relations at all our factories remained cordial.
Acknowledgements
The Board of Directors take this opportunity to thank BASF SE, the
parent Company, customers, suppliers, bankers, business partners and
various regulatory & government authorities for their consistent
support and co-operation to the Company. Your Directors thank the
shareholders for their confidence in the Company.
On behalf of the Board of Directors
PRASAD CHANDRAN
Chairman & Managing Director
Mumbai
Dated : 28th April, 2011.
Mar 31, 2010
Financial Results
(Rs. in Million)
year ended Year ended
31.3.2010 31.3.2009
Sales *14654.8 12381.1
Profit before tax 1513.7 1080.1
Tax 545.6 393.7
Profit after tax 968.1 686.4
Balance brought forward 264.0 264.0
Addition on account of amalgamation 2218.3 0.0
Available for appropriation 3450.4 950.4
This has been appropriated as follows:
Proposed Dividend 326.2 197.3
Corporate Tax on Dividend 54.2 33.6
General Reserve 2309.0 455.5
Balance carried forward 761.0 264.0
* Includes Sales of CIL, CRIPL & DDL for the period 1s February, 2010
to 31s1 March. 2010 aggregating to Rs. 789 million.
Activities
The performance of your Company during the year under report registered
an impressive growth over the previous year. Sales at Rs. 14655
million and Profit before tax at Rs. 1514 million during the year ended
31st March, 2010 represent an increase of 18% and 40% respectively,
over the previous year. This substantial increase in profit before tax
was mainly on account of higher capacity utilization, improved
operating results of the Agricultural Solutions, Performance Products
and Plastics businesses.
Profit after tax at Rs. 968.1 million was higher by 41% compared to the
previous year.
The Agricultural Solutions business recorded substantial increase in
sales and profits during the year ended 31st March, 2010 mainly due to
higher realizations, effective working capital management and several
marketing initiatives undertaken including introduction of new products
during the year under report.
The Performance Products segment which include care chemicals,
dispersions, textiles, specialty and leather chemical businesses
registered increase in sales, both in volume and value terms.
The Plastics business recorded higher sales and profits compared to the
previous year.
The Chemical business performance during the year under review was
lower, compared to the previous year mainly due to reduced market
uptake in certain segments and lower prices.
Overall capacity utilization was higher compared to the previous year.
The export sales at Rs. 609 million during the year under report
represented an increase of 7% over the previous year.
During the year under report, your Company has successfully
commissioned the Engineering Plastics Compounding plant at its Navi
Mumbai factory, which will cater to the requirements of the
automobiles, electrical and electronic industries.
Merger of Ciba India Limited, Ciba Research (India) Private Limited and
Diamond Dye-Chem Limited with the Company
The Scheme of Amalgamation of Ciba India Limited (CIL), Ciba Research
(India) Private Limited (CRIPL) and Diamond Dye-Chem Limited (DDL) with
the Company was sanctioned by the Honble High Court of Bombay vide its
Order dated 26th February, 2010. Accordingly, CIL, CRIPL and DDL were
merged with your Company from the Appointed Date, 1st February, 2010.
The shareholders of erstwhile CIL and CRIPL were issued 90 equity
shares and 18 equity shares of your Company for every 100 equity shares
of CIL and CRIPL, respectively held by them, as on the record date i.e.
18lh March, 2010. As a result, the subscribed and paid-up capital of
your Company increased from Rs. 281.9 million to Rs. 407.7 million. The
Authorised Share Capital of your Company increased from Rs. 300 million
to Rs. 450 million. The financial statements of your Company for the
year ended 31st March, 2010 includes the financials of CIL, CRIPL and
DDL.
Shifting of Registered Office of the Company
The Registered Office of your Company has been shifted from RBC,
Mahindra Towers, 1st Floor, AWing, Dr. G. M. Bhosale Marg, Worli,
Mumbai-400 018 to 1st Floor, VIBGYOR Towers, Plot No. C-62, G Block,
Bandra Kurla Complex, Mumbai-400 051 with effect from 26th October,
2009.
Dividend
Your Directors recommend payment of dividend on the equity shares @ 80%
(Rs. 8/- per share) for the financial year ended 31st March, 2010. The
dividend will absorb Rs. 326.2 million. The dividend distribution tax
borne by the Company would amount to Rs.54.2 million.
Finance & Accounts
With focus on cash flows and working capital management, your Company
continued to restrict the bank borrowing to absolute minimum during the
year. Internal cash accruals were effectively used for funding working
capital needs and capital expenditure requirements of the Company.
Capital Expenditure
Capital Expenditure incurred during the year aggregated to Rs. 295.6
million.
Fixed Deposits
Your Company continued to maintain the highest rating of FAAA awarded
by CRISIL. Your Company did not accept any fixed deposits during the
year under report. There were no overdue deposits except unclaimed
deposits of Rs. 0.57 million as at 31s1 March, 2010.
Management Discussion & Analysis Report
In terms of Clause 49 of the Listing Agreement with the Stock
Exchanges, the Management Discussion & Analysis Report is appended to
this Report.
Wholly owned subsidiary
BASF Polyurethanes India Limited (BPIL), the wholly owned subsidiary of
your Company, recorded sales of Rs. 2640.3 million as against Rs.
2185.4 million in the previous year, registering good growth in value &
volume terms. BPIL managed to reduce significantly its operating loss
to Rs. 7.6 million as compared to Rs. 200.6 million, which was achieved
through strict inventory and receivable control as well as strong
growth in own manufactured production, over the previous year.
Financial Ratios
2009-10 2008-09
Equity vs Total Assets (%) 68.30 59.33
Return on Capital
Employed (%) 26.46 30.21
before interest and taxes
Profitability of total
income (%) 10.30 8.77
before interest and taxes
Current Ratio 2.71 2.03
current assets :
short term liabilities and provisions
Acid Test Ratio 1.76 1.20
short term receivables plus
cash and cash items:
short term liabilities and provisions
BASF SE had the discretion to acquire the Companys holding in BPIL.
BASF SE had exercised its discretion to acquire the entire equity
shareholding in BPIL vide its letter dated 30th October, 2008 subject
to conditions detailed therein. A committee constituted by the Board is
examining the matter and would recommend further course of action.
The Audited Accounts of the subsidiary and the Auditors report thereon
form part of this Annual Report.
Corporate Governance
Your Company has always strived to incorporate appropriate standards
for good corporate governance. Your Company has complied with the
Corporate Governance requirements as per Clause 49 of the Listing
Agreements with the Stock Exchanges.
A separate report on Corporate Governance along with a Certificate of
Compliance from the Auditors, forms a part of this report.
Directors Responsibility Statement
Your Directors confirm:
(i) that in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) that the Directors have selected such accounting policies and
applied them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the state
of affairs of your Company at the end of the financial year ended 31st
March, 2010 and of the profits of your Company for that year;
(iii) that the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956, for safeguarding the assets of
your Company and for preventing and detecting fraud and other
irregularities;
(iv) that the Directors have prepared the annual accounts on a going
concern basis.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo:
Information pursuant to Section 217(1)(e) of the Companies Act, 1956,
read with the Companies (Disclosure of Particulars in the Report of
Board of Directors) Rules, 1988, is given in the annexure to this
Report.
Directors
Dr. Rainer Diercks and Mr. Hermann Althoff retire by rotation at the
ensuing Annual General Meeting and being eligible, offer themselves for
re- appointment.
Mr. K. R. Coorlawala resigned from the Board as an Independent Director
effective 21st August, 2009 after an association of over 34 years. Your
Directors wish to place on record their sincere appreciation of the
guidance and valuable advice received from Mr. Coorlawala in the
deliberations of the Board during his long tenure from 1975 to 2009 as
a Director of your Company.
Dr. Tilman Krauch resigned from the Board w.e.f. 19th January, 2010.
Your Directors wish to place on record their sincere appreciation of
the guidance and valuable contribution made by Dr. Krauch in the growth
and performance of the Company during his tenure as a Director.
Consequent to the resignation of Dr. Krauch from the Board, Mr. Deepak
Thuse ceased to be his Alternate Director effective from 19th January,
2010.
Ms. Saori Dubourg was appointed as a Director on 19th January, 2010 in
the casual vacancy caused by the resignation of Dr. Tilman Krauch in
terms of Article 108 of the Articles of Association of your Company and
Section 262 of the Companies Act, 1956.
Mr. Deepak Thuse was appointed as an Alternate Director to Ms. Saori
Dubourg, effective from 19th January, 2010.
Mr. Arun Bewoor was appointed as an Independent Director of the Company
on 19th January, 2010 in the casual vacancy caused by the resignation
of Mr. K. R. Coorlawala in terms of Article 108 of the Articles of
Association of your Company and Section 262 of the Companies Act, 1956.
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the details of Directors seeking re-appointment at the
ensuing Annual General Meeting are provided in the Corporate Governance
Report, forming part of this Annual report.
Auditors
M/s. B S R & Co., Chartered Accountants, Mumbai retire at the
forthcoming Annual General Meeting and are eligible for re-appointment.
Cost Audit
The Board of Directors in pursuance of an order under Section 233B of
the Companies Act, 1956, issued by the Government have appointed Cost
Accountants for conducting audit of the cost accounts maintained by the
Company in respect of Insecticides and Dyes for the financial year
2010-11.
Particulars of Employees
The particulars of employees required to be furnished under Section
217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, forms part of this Report.
However, as per the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Report and Accounts are being sent to all
shareholders, excluding the statement of particulars of employees. Any
shareholder interested in obtaining a copy may write to the Company
Secretary at the Registered Office of the Company and the same will be
sent by post.
Personnel and Welfare
Industrial relations in the Mangalore, Navi Mumbai and Ankleshwar
factories remained cordial.
Your Directors express their sincere appreciation for the dedicated
efforts put in by all the employees and for their continued
contribution for ensuring higher performance of the Company during the
year.
General
The Consolidated Financial Statements of your Company in this Annual
Report are inclusive of the results of its subsidiary, BASF
Polyurethanes India Limited.
On behalf of the Board of Directors
PRASAD CHANDRAN
Chairman & Managing Director
Mumbai
Dated :29th April, 2010.