22790805 Eic Analysis of Chemical Industry

8/3/2019 22790805 Eic Analysis of Chemical Industry

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EIC ANALYSIS

CHEMICAL INDUSTRY

ECONOMY

INDUSTRY

COMPANY


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CONTENTS

ECONOMY RELATED

FACTORS

Growth RatesInterest Rates

InflationBOP, Foreign TradeExchange RatesSavings & InvestmentsDemographic DataMonsoon

FIRM SPECIFIC

ANALYSIS

Company Details Technical andFundamental

Analysis Common SizeStatements

Ratio Analysis Trend Analysis

INDUSTRY RELATED

FACTORS

PLCDemand & Supply

Barriers to EntryMarket for the ProductsSupply of inputsGovernment AttitudeOther Details


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Growth Rates-

GDP

2006-07 2007-08

AGRICULTURE - 4.5 % 3.8%

INDUSTRY - 8.1% 10.6%

SERVICES - 10.7% 11.2%

Indexof Industrial

Production (IIP)

April-May 2008 rose by

5.0%

April-May 2007 rose by

10.9%


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As on 18th Sep. 2008 12.1%

MAR. 2007 4.76%

MAR. 2008 7.75%

JULY 2008 11.89%

AUGUST 2008 12.6%

INFLATION


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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%


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BalanceofPayments

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).


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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 %

Ason 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


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MARKET TREND (as on 18th Sep. 2008) BSE Sensex : 13518.80

S&P CNX Nifty : 4074.90MONSOON 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- 1,027,015,247Male - 531,277,078

Female - 495,738,169Most Populous State Uttar PradeshLeast Populous State SikkimHighest Density Delhi with 9,294 persons / sq. kmLowest Density- Arunachal Pradesh 13 persons / sq. kmSex Ratio 933 females over 1000 males

Literacy Rate 65%.


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Chemical Industry

Includes manufacture and/or distribute chemicals including

basic, intermediate and specialty chemicals, plastic resinsand 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.


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COMPOSITION- Current & Projected

Composition OfIndian Chemical Industry - 2006

57%25%

18%

BASIC

SPECIALTY

KNOWLWDGE

Composition (Projected) OfIndian Chemical Industry-2010

52%

23%

25%

BASIC

SPECIALTY

KNOWLWDGE


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Product Life Cycle

Chemical

Industry


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Overview

Total Investment US$60 billion

Contribution to GDP 3%

Share in Exports 13-14%

Imports 8 9%

12th

largest in World 3rd Largest in Asia

Per capita consumption in India 1/10th ofworld average

Global chemical Indus. US$ 1.7 trillion One of the fastest growing Industry in India

Average growth rate 12.5%

(In termsofVolume)


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Key Features-

Fragmented and dispersed - multi product and multifaceted.

A Fragemented Chemical Industry in India

0

1

2

3

4

5

6

78

9

Xylen

e

Machine

Tools

Ceme

nt

Caustic

Soda

Urea Te

aSte

el

Metha

nol

Benzene

Soda

Ash

Scooters

Woole

nFabrics

PassengerC

ars

Cigarr

ettes

AirCooler

s

Viscose

StapleFib

re

Industry

HerfindahlIndex


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Key Features

Chemicals sold directly to large customers and throughdistribution channels.

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

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

chemicals, petrochemicals and pharmaceuticals.


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RoleofGovernment INPUT COSTS

REVOLUTIONIZING THE POWER SECTOR

INFRASTRUCTURE IMPROVEMENT

PCPIRs

R&D

FINANCIAL ASSISTANCE

EXPORT PROMOTION

ENVIRONMENT RELATED ISSUES

AMENDMENT IN LABOR LAWS


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SWOT FRAMEWORK ANALYSIS OF

INDIAN CHEMICAL INDUSTRY

Diversified Manufacturing Base

Vibrant downstream industries in differentsegments

Competitive core industries

Capability to produce world-class end

products

STRENGTHS


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STRENGTHS

Strong presence in the export market insub-segments

Large domestic market

Major raw material component sources

within the country

Good R&D base


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WEAKNESSES

SCALE OF PRODUCTION

TECHNOLOGY

MULTIPLICITY OF TAXES

LABOR LAWS


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OPPORTUNITIES

Challenge to compete globally by concentrating onweaknesses

Markets in the developed countries

A large number of products going off patent.

Advantages in certain categories can be used for boostingexports.

Close to middle-east- cheaper and abundant source forpetrochemicals feedstock.


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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.

OPPORTUNITIES


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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 infrastructurefacilities


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Growth Imperatives

Imperatives Degree of relevance

Basic Specialty Knowledge

Aggressive growth strategies

Stimulated demand

Access to global markets

Invest in new areas

Medium Medium High

Consolidation High High High

Research & Development (R&D) Low Medium High

Cost reduction

Operational

Financial

High Medium Low

Collaboration

Clusters

Co-opetition

Institutional interaction

Low High Medium


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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


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At present, the BASF Group in India isrepresented 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


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Activities & Products

Offers innovative, hi-tech and safe solutions

Tanning agents,

Leather chemicals and auxiliaries,

Crop protection chemicals,

Textile chemicals,

Dispersions and specialty chemicals,


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Products

Plastics, automotive and coil coatings, catalysts,construction chemicals, polystyrene and polyurethanesystems.

Strong manufacturing and R&D base,

>1300 employees multi-location production sites and anR&D centre,

Global Technology Platform


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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.


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TECHNICAL ANALYSIS

BASF vs. Sensex ason 18th Sep., 2008

240

245

250

255

260

265

270

1 2 3 4 5 6 7 8 9 10 11 12

Time

In

d

e

x BASF

Sensex

BASF vs. Sensex (Jan 2008 to Sep. 2008)

0

50

100

150

200

250

300

350

1 2 3 4 5 6 7 8 9

Date

In

d

e

x BASF

Sensex


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BASF vs. Nifty ason 18th Sep., 2008.

240

245

250

255

260

265

270

1 2 3 4 5 6 7 8 9 10 11 12

Time

In

d

e

x BASF

Nifty

BASF vs. Nifty (Jan 2008 - Sep. 2008)

0

50

100

150

200

250

300

350

1 2 3 4 5 6 7 8 9

Date

In

d

e

x BASF

Nifty


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RATIO ANALYSIS

ROE

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

ROE

1 2 3 4 5

Years

Trend - ROE

Series1


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ROTA

00.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

ROTA

1 2 3 4 5

Years

Trend - ROTA (04-08)

Series1

Series2

Series3

0

0.05

0.1

0.15

0.2

0.25

0.3

RONA

1 2 3 4 5

Years

Trend - RONA(04- 08)

Series1


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0

200

400

600

800

1000

1200

Sales

1 2 3 4 5

Years

TREND Analysis- Sales (04-08)

Series1

0

20

40

60

80

100

120

EBIT

1 2 3 4 5

Ye

ars

TREND Analysis- EBIT (04-08)

Series1

245

250

255

260

265

270

275

280285290

295

CA

1 2 3 4 5

Years

TREND Analysis- CA (04-08)

Series1

SALES EBIT

Current Assets

0

10

20

30

40

50

60

PAT

1 2 3 4 5

Years

TREND Analysis- PAT (04-08)

Series1

PAT


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0

20

40

60

80

100

120

140

160

CL

1 2 3 4 5

Years

TREND Analysis- CL (04-08)

Series1

0

50

100

150

200

250

300

350

TA

1 2 3 4 5

Years

TREND Analysis- TA (04-08)

Series1

0

50

100

150

200

250

300

350

NW

1 2 3 4 5

Years

TREND Analysis- NW (04-08)

Series1

15.5

16

16.5

17

17.5

18

18.5

19

19.5

20

Dividend

1 2 3 4 5

Years

TREND Analysis- Dividend (04-08)

Series1

CURRENT LIABILITIES TOTAL ASSETS

NETWORTH DIVIDEND


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Conclusion

Consistent Trend

Increasing Returns

Profitable


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THANKYOU !

22790805 Eic Analysis of Chemical Industry

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