EIC ANALYSIS

CHEMICAL INDUSTRY
ECONOMY

INDUSTRY

COMPANY
 CONTENTS

ECONOMY RELATED FIRM SPECIFIC

INDUSTRY RELATED
FACTORS ANALYSIS
FACTORS

•Growth Rates • Company Details

•PLC
•Interest Rates • Technical and
•Demand & Supply
•Inflation Fundamental
•Barriers to Entry
•BOP, Foreign Trade Analysis
•Market for the Products
•Exchange Rates • Common Size
•Supply of inputs
•Savings & Investments Statements
•Government Attitude
•Demographic Data • Ratio Analysis
•Other Details
•Monsoon • Trend Analysis
 Growth Rates-

GDP Index of Industrial

Production (IIP)

2006-07 2007-08

AGRICULTURE - 4.5 % 3.8% April-May 2008 – rose by

5.0%
INDUSTRY - 8.1% 10.6%
April-May 2007 – rose by
SERVICES - 10.7% 11.2% 10.9%
INFLATION

AUGUST 2008 – 12.6%

JULY 2008 – 11.89%

MAR. 2008 – 7.75%

MAR. 2007 – 4.76%

As on 18th Sep. 2008 – 12.1

%
INTEREST RATES

Bank Rate- 6.00%

Repo Rate – 9.00%
Reverse Repo – 6.00%

PLR : 12.75%-13.25%
Savings Bank Rate : 3.5%
Deposit Rate : 7.50%-9.60%

RESERVE RATIOS

CRR – 9.00%
SLR- 25.00%
Balance of Payments

Merchandise Exports – rose by 23.7% as against 21.8%

in 2006-07

Forex Reserves - US $ 309.7 billion at end-March 2008.

FOREIGN TRADE

Exports – 21.7 % against 24.2% (as a % of GDP)

Imports – 31.8% against 37.9%(as a % of GDP).
Exchange Rates –
March 2008 – INR 39.97 / USD
July 8 “ – INR 43.37 / USD
July 25 “ - INR 42.23 / USD

Rupee depreciated against upto July 2008

USD – 5.4%
EURO – 5.0%
POUND STERLING – 5.2%
JPY – 1.3 %

As on 18th Sep., 2008

INR / 1 USD : 46.3400

INR / 1 EURO : 65.8200
INR / 100 Jap YEN : 43.6900
INR / 1 Pound Sterling : 82.9600
MARKET TREND (as on 18th Sep. 2008)
• BSE Sensex : 13518.80
• S&P CNX Nifty : 4074.90
 MONSOON
• Up to July 23, 2008 -cumulative rainfall 98%
• June-September – forecasted to be 100 % by India
Meteorological Department (IMD)

 DEMOGRAPHICS

Population as on 1st Mar. 2001- 1,027,015,247

Male - 531,277,078
Female - 495,738,169
Most Populous State – Uttar Pradesh
Least Populous State – Sikkim
Highest Density – Delhi with 9,294 persons / sq. km
Lowest Density- Arunachal Pradesh 13 persons / sq. km
Sex Ratio – 933 females over 1000 males
Literacy Rate – 65%.
Chemical Industry –
 Includes manufacture and/or distribute chemicals including
basic, intermediate and specialty chemicals, plastic resins and
materials used in synthetic fibers, paints and coatings

 Currently producing 70000 products.

 Products Classification –
• Inorganic
• Organic (commodity) chemicals,
• Drugs and pharmaceuticals,
• Plastics and petrochemicals,
• Dyes and pigments,
• Fine and specialty chemicals,
• Pesticides and agrochemicals, and
• Fertilizers.
COMPOSITION- Current & Projected

C o m p o s i t i o n O f I n d i a n C h e m i c a lC I no dm ups ot rsyi t -i o2 n0 0( P6 r o j e c t e d ) O f I n d

18%
25%

B A S IC B A S IC
S P E C IA L T Y SPEC
K NO W LW DG E 52% KNO W
57%
25%
23%
Product Life Cycle

Chemical
Industry
 Overview
• Total Investment – US$60 billion
• Contribution to GDP – 3%
• Share in Exports – 13-14%
• Imports – 8 – 9%
• 12th largest in World (In terms of
• 3rd Largest in Asia Volume)

• Per capita consumption in India – 1/10th of

world average
• Global chemical Indus. – US$ 1.7 trillion
• One of the fastest growing Industry in India
• Average growth rate 12.5%
 Herfindahl Index
M X

0
1
2
3
4
5
6
7
8
9
ac yl
en
hi
ne e
To
ol
C s
C e m faceted.
au en
st
ic t
So
da
U
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a
Key Features-

Te
a
S
te
M e l
et
ha
no
B
en l
ze
S ne
od

Industry
a
As
S h
W co
oo ot
le er
P n s
as F ab
se ric
A Fragemented Chemical Industry in India

ng s
er
C
C ar
ig s
ar
V re
is A tte
co ir s
• Fragmented and dispersed - multi product and multi

se Co
S o
ta lers
pl
e
Fi
br
e
 Key Features

• Chemicals sold directly to large customers and through

distribution channels.

• Annual Turnover Rs. 90,000 crore (approx.)

• 1/3rd contribution by 3 main sub-sectors – basic

chemicals, petrochemicals and pharmaceuticals.
Role of Government
• INPUT COSTS

• REVOLUTIONIZING THE POWER SECTOR

• INFRASTRUCTURE IMPROVEMENT

• PCPIRs

• R&D

• FINANCIAL ASSISTANCE

• EXPORT PROMOTION

• ENVIRONMENT RELATED ISSUES

• AMENDMENT IN LABOR LAWS

 SWOT FRAMEWORK ANALYSIS OF
INDIAN CHEMICAL INDUSTRY
STRENGTHS

• Diversified Manufacturing Base

• Vibrant downstream industries in different

segments

• Competitive core industries

• Capability to produce world-class end

products
STRENGTHS

• Strong presence in the export market in

sub-segments

• Large domestic market

• Major raw material component sources

within the country

• Good R&D base

 WEAKNESSES
• INFRASTUCTURE

• COST DISADVANTAGES

C ost D isadvantages - India vs. Other D eveloping C ountries

4.5
4
3.5
Percentage of Net Sales

3 India
2.5 China
2 T hailand
1.5 Indonesia
1
0.5
0
Power Interest Local T axes Import Duties
Name o f th e Co u n try
WEAKNESSES
• SCALE OF PRODUCTION

• TECHNOLOGY

• MULTIPLICITY OF TAXES

• LABOR LAWS
 OPPORTUNITIES
• Challenge to compete globally by concentrating on weaknesses

• Markets in the developed countries

• A large number of products going off patent.

• Advantages in certain categories can be used for boosting

exports.

• Close to middle-east- cheaper and abundant source for

petrochemicals feedstock.
OPPORTUNITIES

• Stringent environmental laws in the western countries

• Climatic conditions in India

• Competencies to utilize renewable resources

• Competency to emerge as a global player in the area of

Specialty chemicals.
THREATS
• Imports of chemicals, intermediates and end products

• Tariff levels for chemicals

• Greater competition due to

• Chinese products

• Bilateral/multilateral trade agreements

• The labor laws, power supply and infrastructure

facilities
Growth Imperatives
Imperatives Degree of relevance

Basic Specialty Knowledge

Aggressive growth strategies Medium Medium High

Stimulated demand
Access to global markets
Invest in new areas

Consolidation High High High

Research & Development (R&D) Low Medium High

Cost reduction High Medium Low

Operational
Financial

Collaboration Low High Medium

Clusters
Co-opetition
Institutional interaction
Firm Specific Analysis- BASF Ltd.
• Started in India in 1943,

• when it acquired shares of R. A. Cole Private Limited

• Indoplast Limited in January 1963

• BASF India Limited in September 1967.

• Public limited listed company

• Subsidiary of BASF Aktiengesellschaft, Germany.

• Prasad Chandran- Chairman and Managing director

At present, the BASF Group in India is represented
by the following companies:
• BASF India Limited

• BASF Coatings Private Limited

• BASF Styrenics Private Limited

• BASF Polyurethanes India Limited

• BASF Construction Chemicals (India) Private Limited

• BASF Catalyst India Private Limited

• BASF Asia Pacific (India) Private Limited

 Activities & Products
• Offers innovative, hi-tech and safe solutions

• Tanning agents,

• Leather chemicals and auxiliaries,

• Crop protection chemicals,

• Textile chemicals,

• Dispersions and specialty chemicals,

Products
• Plastics, automotive and coil coatings, catalysts,
construction chemicals, polystyrene and polyurethane
systems.

• Strong manufacturing and R&D base,

• >1300 employees multi-location production sites and an

R&D centre,

• Global Technology Platform

BASF- FINANCIALS
• NETWORTH – Rs. 339.68 Cr.

• BOOKVALUE – Rs. 120.50 Cr.

• P/E – 9.47

• TURNOVER – Rs. 1031.86 Cr.

• PAT – Rs. 59.37 Cr.

• Market Capitalization – Rs. 720.82 Cr.

 TECHNICAL ANALYSIS
B A S F v s . S e n s e x a s o n 1 8 th S e p ., 2 0 0 8 B A S F v s . S e n s e x (J a n 2 0 0 8 to S e p .

270 350
265 300
250
260
BASF 200 BASF
255
Index

Index
Sensex 150 S ensex
250 100
245 50

240 0
1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9

T im e D a te
 B A S F v s . N if t y a s o n 1 8 t h S e p ., 2 0 0 8 . B A S F v s . N ifty (J a n 2 0 0 8 - S e p . 2 0 0 8

270 350
265 300

260 250
BASF 200 BASF
255

Index
Index

N i ft y 150 N ift y
250
100
245 50
240 0
1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9
T im e D a te
RATIO ANALYSIS

• ROE –
Trend - ROE

0.18
0.16
0.14
0.12
0.1
ROE
0.08
Series1
0.06
0.04
0.02
0
1 2 3 4 5
Years
 • ROTA

T re n d - R O T A (0 4 -0 8 ) T re n d - R O N A (0 4 - 0 8 )

0 .1 8 0 .3
0 .1 6
0 .1 4 0 .2 5
0 .1 2 0 .2
0 .1
ROTA S e rie s 1 R O N 0A. 1 5
0 .0 8
0 .0 6 S e rie s 2 S e r ie s 1
0 .1
0 .0 4 S e rie s 3
0 .0 5
0 .0 2
0 0
1 2 3 4 5 1 2 3 4 5
Y e a rs Ye a rs
 SALES EBIT
TREND Analysis - Sales (04-08) T R E N D A n a ly s is - E B IT (0 4 -0 8 )

1200 120

1000 100

800 80

Sale s 600 EB IT 60
Series1 S eries 1
400 40

200 20

0 0
1 2 3 4 5 1 2 3 4 5

Ye ars Ye a rs

Current Assets
PAT
TREND Analysis - PAT (04-08)
T R E N D A n a ly s is - C A (0 4 -0 8 )

295
60
290
50 285
280
40 275
PAT 30 C A 270
265 S eries 1
Series1
20 260
255
10
250
0 245
1 2 3 4 5 1 2 3 4 5
Years Ye a rs
 CURRENT LIABILITIES TOTAL ASSETS
TREND Analysis - CL (04-08) TREND Analysis - TA (04-08)

160 350
140 300
120 250
100
200
CL 80 TA
150
60 Series1 Series1
40 100
20 50
0 0
1 2 3 4 5 1 2 3 4 5
Yea rs Years

NETWORTH DIVIDEND
TREND Analysis - NW (04-08) TREND Analysis - Dividend (04-08)

350 20
300 19.5
19
250
18.5
200 18
NW Dividend
150 17.5
Series1 Series1
17
100
16.5
50 16
0 15.5
1 2 3 4 5 1 2 3 4 5
Years Yea rs
Conclusion

• Consistent Trend

• Increasing Returns

• Profitable
THANKYOU
!