Dahej Project will Substantially Increase BASF India’s Scale of Operations

A debt-to-equity ratio below 0.1 should help co raise funds for the . 1,000-crore facility

The stock of BASF India has gained over 23% in the past seven trading sessions on the announcement that it would invest . 1,000 crore in a greenfield chemicals complex at Dahej. Considering its history of spending close to . 30-60 crore annually on capital expenditure, this is quite significant. This mega-project will more than double its gross block by 2014, thus substantially increasing its scale of operations.
BASF India is a leading producer of specialty chemicals used in industries such as leather, crop protection, textile and construction, apart from polystyrene and polyurethane. It also markets intermediate chemicals and catalysts for chemical and downstream industries. The proposed site at Dahej will be an integrated hub for polyurethane manufacturing and will also produce care chemicals and polymer dispersions for coatings 
BASF India is a leading producer of specialty chemicals used in industries such as leather, crop protection, textile and construction, apart from polystyrene and polyurethane. It also markets intermediate chemicals and catalysts for chemical and downstream industries. The proposed site at Dahej will be an integrated hub for polyurethane manufacturing and will also produce care chemicals and polymer dispersions for coatings and paper. This new production site will enable BASF target growing industries such as appliances, footwear, automotive, construction, adhesives, architectural coatings, paper and personal care. BASF India is 73.33% owned by German parent BASF SE. During FY11, BASF India merged all its local subsidiaries — BASF Coatings, BASF Construction Chemicals and BASF Polyurethanes — with itself. This was followed by the merger of Indian operations of Cognis, which was globally acquired by BASF SE in December 2010. BASF India has faced tough times in the first nine months of FY12. By December 2011, it had posted 36.1% higher revenues at . 2,717.3 crore while net profit fell 21.4% to . 92.9 crore. However, the quarter to December 2011 was bad with a 75% fall in net profit against the year-ago period.
The BASF share, which was trading in the . 650-670 range in July 2011, dropped one-third to . 440 levels by December 2011. Improved market conditions in 2012 helped it stabilise at around . 490 between end-January and end-March. The company carries a healthy balance sheet with a debt-to-equity ratio below 0.1 at end-September 2011, which means it won’t be too difficult to borrow funds for the planned . 1,000-crore Dahej facility. It has informed of its parent’s intention to introduce all its future products only through BASF India and also not to delist.