Given the cyclical nature of its business, the first two quarters of the fiscal, Q1 and Q2 are always good, with Q2 being the best in the year and the worst is Q4. BASF India has posted an ‘Ok’ performance for Q1FY10. It reported a rise of 12% in its net profit for Q1FY10 though total income fell marginally to Rs384.15 crore from Rs385.87 crore in Q1FY09.
The company plans to stop production of agrochemicals at its Dadra site under the company’s rationalisation measures. The company has stated that this will not affect the earnings of the company in any way. Further, to rationalise the company’s manpower needs and to build efficiency, the board has also approved the introduction of voluntary retirement scheme for employees. As a part of its rationalization, the company has removed low margin generic products and has also shifted its resources from cotton to soyabeans, fruits and vegetables which would help boost the margins.
The company is planning to set up a 9000 tpa compounding plant at Thane for the engineering plastics business, costing Rs.17.20 crore which is to be funded mainly via internal accruals.
On consolidated basis, BASF Polyurethanes a wholly owned subsidiary is incurring losses, and BASF SE have expressed their intention to acquire this subsidiary, which if happens, would re-rate the company as also would increase its bottomline even on consolidated basis.
In July 08, Promoters of the company raised their stake from 52.69% to 71.18% by acquiring shares under open offer at Rs.300 per share. Open offer at the time did not evoke full response as insurance companies and financial institutions did not tender shares in open offer and continue to hold about 18% in the company. News has been floating around for some time now that the company might soon get delisted.
And even if that does not happen, with all these rationalization moves, the company is sure to improve its margins substantially in the coming months. Q2 will be robust. One can acquire this share at current market price for good returns over 12 months.
The company plans to stop production of agrochemicals at its Dadra site under the company’s rationalisation measures. The company has stated that this will not affect the earnings of the company in any way. Further, to rationalise the company’s manpower needs and to build efficiency, the board has also approved the introduction of voluntary retirement scheme for employees. As a part of its rationalization, the company has removed low margin generic products and has also shifted its resources from cotton to soyabeans, fruits and vegetables which would help boost the margins.
The company is planning to set up a 9000 tpa compounding plant at Thane for the engineering plastics business, costing Rs.17.20 crore which is to be funded mainly via internal accruals.
On consolidated basis, BASF Polyurethanes a wholly owned subsidiary is incurring losses, and BASF SE have expressed their intention to acquire this subsidiary, which if happens, would re-rate the company as also would increase its bottomline even on consolidated basis.
In July 08, Promoters of the company raised their stake from 52.69% to 71.18% by acquiring shares under open offer at Rs.300 per share. Open offer at the time did not evoke full response as insurance companies and financial institutions did not tender shares in open offer and continue to hold about 18% in the company. News has been floating around for some time now that the company might soon get delisted.
And even if that does not happen, with all these rationalization moves, the company is sure to improve its margins substantially in the coming months. Q2 will be robust. One can acquire this share at current market price for good returns over 12 months.
Source: www.premiuminvestments.in (By S P Tulsian)
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