Sales of BASF India were higher by 61% to Rs 380.82 crore in the quarter ended June 2008 over the June 2007 quarter. Operating profit margin increased 90 basis points (bps) to 15.1%, taking up operating profit 72% to Rs 57.39 crore. Other income jumped 248% to Rs 2.92 crore and interest expense fell 5% to Rs 21 lakh. As depreciation cost rose just 8% to Rs 3.50 crore, profit before tax shot up 84% to Rs 56.60 crore. Net profit surged 84% to Rs 36.65 crore.
Revenue from agricultural products & nutrition jumped exponentially by 134% to Rs 175.90 crore. It accounted for 46% of the total sales. Profit before interest and tax (PBIT) from the segment rose 116% to Rs 43.83 crore, accounting for 67% of the total PBIT. The agricultural products business recorded higher sales and profit mainly due to the extended soya season, higher realisation, marketing initiatives and rationalisation measures undertaken in the fiscal ended March 2008 (FY 2008) and effective working capital management. The agrochem industry is witnessing good growth following the thrust on agriculture by the Union government and greater emphasis on improving agricultural productivity.
Revenue from the performance products soared 28% to Rs 150.44 crore. It accounted for 40% of the total sales. PBIT from the segment rose 8% to Rs 14.49 crore, accounting for 22% of the total PBIT. The performance chemicals business, catering to a wide spectrum of industries like textile, leather, plastics and coatings, is on a growth path due to good prospects of user industries. Demand for paper chemical is improving, with paper mills expanding capacities and introducing new products
Revenue from the plastics and fibers division spurted 21% to Rs 40.14 crore. It accounted for 11% of the total sales. PBIT from the segment fell 9% to Rs 2.69 crore accounting for 4% of the total PBIT. The plastic business comprises styropor (used for packaging and insulation) and performance polymers (engineering plastics). The major end-users in the packaging segment include consumer electronics, white goods automotive, electrical switchgear and accessories, and barrier films. In the insulation segment, the major consumers include cold storage and air-conditioning industries.
BASF India undertook a project to revamp the styropor plant for expanding its capacity from 20 kilotons (kt) to 30 kt per annum and also upgraded the process in FY 2008. The upgraded facility was commissioned in February 2008. With a view to cater to the increasing demand from the automobile industry, the company is planning to set up a compounding plant for engineering plastics with a capacity of 9,000 tonnes. This is expected to go on stream in the second half of 2009. This plant will also cater to the needs of the electrical as well as electronics industry.
Revenue from the chemical business jumped 41% to Rs 11.05 crore. It accounted for 3% of the total sales. PBIT from the segment soared 71% to Rs 3.96 crore, accounting for 6% of the total PBIT. BASF India’s products are used as intermediates in pharmaceutical products. The company also acts as indenting agent for chemicals supplied by the BASF group. The Indian pharmaceutical, agrochemical and coatings industries are on a growth path. These user industries continue to be active in supplying generic products to global pharma and agrochemical companies, which require high quality BASF chemicals.
BASF India has shown good growth despite the rise in crude oil prices — a key influencing factor for its raw materials cost. However, with crude trending down, that risk is reduced.
Recently the parent (BASF, Germany) increased its stake from 52.7% to 71.2% at Rs 300 a share. We can expect an EPS of Rs 28.2 in FY 2009. The current price of Rs 284 discounts this only 10.1 times.
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