Captain Speaks     

Published: december 31, 2023
Updated: december 31, 2023

BASF India

Upbeat on long term growth despite current headwinds

Citing both domestic and global factors that lend confidence for future growth, he said that “on the economic front, there is resilience shown by the economy shows signs of peaking. If one compares that with most other large countries, I think India’s growth is very solid.” According to him, the purchasing managers’ index (PMI) hovering around 50 indicates continued economic expansion and higher consumer confidence levels, especially during the festive season. He said the healthy automotive demand during the festivals, strong construction activity, and recovery in rural demand for fast-moving consumer goods make him hopeful. While noting continuing margin pressures in the global chemical segment, he said demand is starting to pick up in China. This could ease some pricing pressure in months ahead, he added.

The global context for the chemical industry has not fundamentally changed. The war in Ukraine and Russia is still ongoing, and there is still very soft demand globally in Asia, Europe and North America. This put a lot of pressure on the chemical industry, and now from October there is a new crisis in the Middle East. So that’s certainly not helping global geopolitical and macroeconomic stability, Mr Gerding averred. But India is doing quite well and although it is not fully insulated from these global and regional developments, the management thinks India has a very resilient GDP growth. Inflation at around 5% and interest rates of about 6.5% have been stabilizing, he noted.

FINE FINANCIALS

The company has going from strength to strength on the financial front, despite global headwinds. During the last 12 years, its sales turnover has expanded from Rs 3,516 crore in fiscal 2012 to Rs 13,545 crore in fiscal 2023, with operating profit rising from Rs 210 crore to Rs 687 crore and the profit at net level moving up from Rs 101 crore to Rs 595 crore in fiscal 2022 before reacting to Rs 403 crore in fiscal 2023.

Referring to the company’s performance in Q2 of fiscal 2024, Mr Gerding pointed out that the second quarter saw strong volume growth of 16% which is also good in the overall context. Standalone net sales (including other operating income) of BASF India has increased 3.48% to Rs 3,706.60 crore. Sales of the Agricultural Solutions segment was up 21% to Rs 684.77 crore (accounting for 18% of total sales). Sales of the Materials segment increased 5% to Rs 1048.82 crore (accounting for 28% of total sales). Sales of the Industrial Solutions segment fell 19% to Rs 509.2 crore (accounting for 509.2% of total sales). Sales of the Surface

Technologies segment has gone up 46% to Rs 231.85 crore (accounting for 6% of total sales). Sales of the Nutrition & Care segment rose 6% to Rs 763.5 crore (accounting for 21% of total sales). Sales of the Chemicals segment has gone down 11% to Rs 430.21 crore (accounting for 12% of total sales). Sales of the Others segment was up 39% to Rs 38.25 crore (accounting for 1% of total sales).

Profit before interest, tax and other unallocable items (PBIT) rose 35% to Rs 221.09 crore. PBIT of the Agricultural Solutions segment rose 129% to Rs 169.82 crore (accounting for 77% of total PBIT). PBIT of the Materials segment fell 204% to Rs 17.53 crore (accounting for 8% of total PBIT). PBIT of the Industrial Solutions segment rose 18% to Rs 48.15 crore (accounting for 22% of total PBIT). PBIT of the Surface Technologies segment reported a profit of Rs 1.35 crore (accounting for 1% of total PBIT).

The PBIT of the Nutrition & Care segment reported a loss of Rs 13.61 crore. The PBIT of the Chemicals segment reported a loss of Rs 9.66 crore compared to a profit of Rs 11.26 crore. PBIT of the Others segment rose 29% to Rs 7.51 crore (accounting for 3% of total PBIT). The PBIT margin of the Agricultural Solutions segment rose from 13.1% to 24.8%. The PBIT margin of the Materials segment fell from 2.3% to 1.7%. The PBIT margin of the Industrial Solutions segment rose from 6.5% to 9.5%.

BASF has expanded its Automotive Coatings Application Centre at the Coatings Technology Centre in Mangalore, India. As an integral part of BASF’s existing research and development (R&D) facilities for automotive coatings solutions, the automotive coatings application centre covers over 400 square metres of floor area and is equipped with stateof-the-art equipment, such as high precision climate-controlled spray booths and electrostatic rotary bell applicators, and advanced quick connection system for electrostatic applications. The facility is meticulously designed to enable customer-oriented R&D activities coupled by accurate simulation of OEM paint shops.

“The expansion of the application centre is an important addition to serve the Indian market with highquality coatings solutions. It symbolizes our strong commitment to supporting the automotive industry’s longterm growth in India,” said Narayan Krishnamohan, CEO of the company.