BASF’s association with India started way back in 1961, when it acquired shares of R. A. Cole Private Limited, which was engaged in the manufacture of Expanded Polystyrene from imported Styropor®. The name of this company was changed to Indoplast Limited in January 1963 and thereafter to BASF India Limited in September 1967. Today, the BASF Group in India employs more than 1400 people and has 7 production sites five in the Western region (Thane, Bhandup, Pune, Dahej & Dadra) and two in the Southern region of India (Mangalore, Bangalore).

Products & services:

BASF in India is engaged in the business of manufacturing and marketing of Styropor®, tanning agents, leather chemicals & auxiliaries, textile chemicals, dispersions and speciality chemicals, plastics, crop protection chemicals, automotive and hydro coatings, printing inks and more recently polystyrene. BASF is also involved in the marketing of chemicals and providing technical services to various industries. The demand for chemicals used in the manufacture of paper is expected to go up on the expectations of the paper industry performing well.

The company has formed a wholly owned subsidiary BASF Polyurethanes India Ltd to manufacture and market Polyurethane Systems products. With a view to impact greater focus to the Polyurethane business.

BASF has rationalized its product portfolio of agricultural products by eliminating low margin generic products, outsourcing, organizational restructuring and shifting of resources from cotton to segments like soyabeans, fruits and vegetables, which would help improve volumes going forward. Company is planning to set up compounding plant at Thane site for the engineering plastics (KT) business. The cost of the said compounding plant for the KT business is estimated at Euro 2.9 million (Rs 172 million) and will be financed by internal accruals and borrowings. The plant capacity would be 9,000 TPA.

Valuation:

At current market price, stock is trading at 11.14 P/E multiple of its FY2010 estimated earnings. We recommend investors to buy “BASF India Limited” with medium to long term investment horizon.