BASF India Ltd Management Discussions

The global economy demonstrated resilience amidst challenges like geopolitical tensions, climate risks, and economic fragmentation with a GDP growth of 3.2% as per International Monetary Fund (IMF). Meanwhile, India stood out as a beacon of robust growth, maintaining its position as the fastest-growing major economy supported by strong domestic demand and rising working-age population. According to IMF, Indias GDP is projected to grow by 6.5% in FY 2025-26 driven by robust private investment and macroeconomic stability and likely to be the 4^th largest economy globally.

During the financial year 2024-25, India also witnessed the continuation of the existing Government for the third term and their continuing focus on economic reforms and infrastructure development. Agricultural sector, the backbone of the Indian economy, is forecasted to grow by 3.8% in FY 2024-25. While the industrial output grew by 2.9% year-on-year falling short of the expected 4%, favourable monsoon conditions are anticipated to boost agricultural output, stabilize food prices, and support economic growth. Advancement of new technologies, increasing productivity and income of farmers are some of the challenges in the agricultural sector.

Industrial Sector has seen a surge in growth and is expected to grow by 6.2% in FY 2024-25. Joint ventures and partnerships between private and public sectors are growing and diversifying the industrial landscape. More autonomy and integration of modern technologies are main growth levers.

Overall, the agriculture, industry manufacturing and services have been working together to achieve economic growth and development. While challenges such as industrial output slowdown, trade tariffs and imbalances and employment concerns persist, continued focus on infrastructure development, diversification of trade partnerships, and employment generation will be crucial for sustaining growth momentum in the coming years.

AGRICULTURAL SOLUTIONS

Your Companys Agricultural Solutions business innovates, manufactures, and sells products required for Crop Protection such as Insecticides, Herbicides, Fungicides, Seed Treatment solutions and Plant Growth Regulators.

Overall rainfall and its distribution pattern has significant influence on Indian Agriculture as well as the Companys product sales. In 2024, India witnessed 8% higher monsoon than average, with surplus of more than 20% in Central, Southern & Western part of India. These prolonged patches of continuous rains impacted the sprayings and product consumption by the farmers, especially in the crops like Soybean and Cotton. Lower commodity prices in some of the crops also impacted the overall utilization of insecticides in major crops markets in parts of Southern India. Despite market challenges, the Agricultural Solutions business registered a modest growth during the financial year 2024-25. The diverse portfolio and continuous introduction of new products to suit the market needs, helped the Company to sustain its business growth.

During the FY 2024-25, your Company launched ‘Wah re Kisan (Hindi for "Salute to farmers") a first of its kind infotainment show under their flagship program of "The Biggest Job on Earth". This program seeks to advocate the Indians farmers of inspiring stories of extraordinary farmers who are making a difference to their communities and to Indias agricultural landscape. The campaign has currently reached 35 million viewers on social media.

Your Company utilizes digital platforms like Facebook, WhatsApp & YouTube very effectively for product promotions and for creating awareness about safe farming practices. Your Company also pioneered stewardship and sustainability practices among the farming community during the year. Various measures were also taken with the support of esteemed organizations on educating the principles of Diagnosis, Management and Treatment of Accidental Agrochemical Poisoning to over 9000 participants including doctors, State Agriculture Department officials and officials from District Administration.

CHEMICALS

Your Companys Chemicals segment comprises of the Petrochemicals & Intermediates businesses. The Petrochemicals business of your Company comprises of oxo-alcohols,   acrylic acid, acrylic monomers, superabsorbent and specialty plasticizers. These products are ¹ used in a variety of end user industries including I paints & coatings, adhesives, baby diapers, a i wide variety of flexible PVC applications such as artificial leather for automotive upholstery, wires and cables, packaging and as a solvent in the ! chemical industry. As the Petrochemicals business caters largely to non-essential end-user industries, the recovery in domestic demand and sales was slightly lower compared to essential goods. Prices were also impacted during FY 2024-25 due to regional overcapacities.

The Intermediates business of your Company caters to wide variety of end industries such as, pharmaceuticals, agrochemicals, coatings, food & feed, flavor & fragrance, surfactants, rubber chemicals, textiles, personal care, adhesives, dyes etc.

During the first half of the financial year 2024-25, the Intermediates business division benefitted from the growth in key sectors such as pharmaceuticals, agrochemicals, coatings, and food & feed due to improved demand and favorable weather conditions in India. Export sales were particularly strong, driven by continued supply disruptions and the recovery in western countries. However, oversupplies in the market, driven by increased capacities and a weak recovery in China, led to prices and margins under intense pressure. High inflation in the second half of the financial year impacted consumer savings and discretionary spending, resulting in reduced domestic demand compared to the first half.

Your Companys Intermediates business implemented cost optimization measures and efficiency improvements to minimize the impact on earnings and focused on strengthening customer relationships, exploring new market opportunities, offering sustainable solutions and remaining resilient in the face of challenging environment.

Despite the challenges, your Companys Intermediates business successfully achieved double-digit volume growth in FY 2024-25 due to consistent focus on key customers and securing their volumes by long-term contracts & better services.

MATERIALS

Your Companys Materials segment includes the Performance Materials and Monomers businesses.

The Performance Materials business of your Company which has Polyurethanes, Engineering Plastics, Specialty Plastics product lines primarily caters to the requirements of the Consumer, Construction, and Transportation Industries.

The passenger vehicles production grew by 3.3% during FY 2024-25. Your Companys product lines that cater to the Interior, Exterior, Powertrain, Chassis and Vehicle Suspension related applications grew over the market growth due to participation in new launches and winning new business including in electronic vehicles segment.

The Consumer Industry business continues to have a strong presence in the appliance (refrigerator), footwear and furniture markets. The appliance business segment has been able to strengthen its supply reliability and thus gain higher trust and confidence from its customers. With warmer climate for more days in many parts of the country, sales in appliance segment grew significantly. The footwear market is moving towards lighter and comfortable products. Your Company is continuously working to provide solutions for this trend and are collaborating with customers specially for sports and casual shoes. However, its growth was marred by sluggish demand and excess supply. Your Companys e-commerce channel, mypu.basf.com, helped to further boost sales in the footwear and furniture industry.

Construction segment which predominantly supplies polyurethane insulation for cold chain, infra and residential markets, showed improved volumes. The Construction market is expected to grow at a faster pace due to government norms for energy efficiency in the industry.

The Specialty business comprises of multi-application product Ultrason?, thermal and sound insulating melamine foam Basotect? and compostable plastic material ecovio?. Volumes were under pressure due to low pricing by competition and short supply. The business continues to sweat the assets of its Engineering Plastics unit at Thane and Panoli, Polyurethanes unit at Dahej and Thane and CELLASTO? unit at Dahej. The Performance Materials sales grew well with steady margins throughout the year.

Your Companys Monomers business deals in basic raw materials for polyurethanes, inorganics & polyamides, and its precursors. The financial year 2024-2025 showed significant growth in volume and value across all the business segments.

Although the Monomers business grew well, the business continued to face global challenges with respect to shipping line availability and high lead time, margins impact due to increased spot freight rate bookings and prices volatile for some of the commodity segments. The domestic demand remained fairly stable during the financial year 2024-25, however intense competition adversely impacted the competitiveness. Over-capacities in the Asian market for isocyanates continue to remain challenge for the business. Despite the same, the business continued to have strong engagement with customers and markets that helped to maintain its position as one of the key suppliers in the market.

Methylene diphenyl diisocyanate (MDI) continued to show growth in all application segments especially in the flexible packaging and coating adhesives, footwear resins and construction. Your Company was able to capture opportunities through newer applications and precursors sales that helped utilization of assets. Growing consumer demand in rigid PU foam applications helped to maintain the sales of TDI (Toluene diisocyanate), despite local availability. High future demand growth in appliances, infrastructure, construction, automotive sector and innovation in slab stock will drive the usage of PU.

In the Polyamide and precursors portfolio, the focus continues to remain on barrier films for packaging and mono-filament segment, in which the demand remained stable due to the market conditions with downward price trends. Despite this, the business was able to show improved margins and volume growth during the financial year 2024-25. The demand revival in the monofilament industry coupled with scaling up of small-midsized customer base and improved utilization in packaging remain the key growth drivers.

Your Monomers business is well positioned to capture opportunities and meet the challenges led by dynamic market conditions.

INDUSTRIAL SOLUTIONS

Your Companys Industrial Solutions segment comprises of Dispersions, Resins, Additives and Performance Chemicals businesses, including Process Catalyst business.

The Dispersions business of your Company mainly caters to the needs of paints & coatings, construction and paper industries. The Resins & Additives business caters to the needs of adhesives, automobile, printing & packaging industries.

Your Company was able to grow sales, despite the sluggishness in the paints & paper industry, with its customer centricity, broad product portfolio and value-based innovations. The paints industry witnessed challenges due to weakness in underlying demand and muted customer sentiments. While the paper industry was adversely impacted with low- cost imports from Asia impairing local domestic manufacturing of paperboards. The overall margins for your Company were lower due to volatility in raw materials & changes in product mix. Your Company mitigated these risks by maintaining optimal levels of inventory and by offering innovative and competitive solutions to the market.

The innovative products launched during the financial year 2024-25 in the architectural coatings business led to increase in the coverage of the paint with our innovation product offering and solutions to improve dirt pickup resistance in economy exterior segment. Further, the Construction segment launched high performance and sustainable waterproofing solutions. The Paper segment introduced Basonal Plus^? series with sustainable binder.

The Performance Chemicals business comprises of Plastic Additives, Fuel & Lubricant solution, Mining & Enhanced Oil Recovery (EOR) portfolio. Your Companys Plastic Additives business is categorized into antioxidants and light stabilizers for the plastics industry. Customers are broadly classified into upstream industries such as polymer manufacturers and downstream industries such as master batchers, compounders & converters. The Plastic Additives business continues to focus on value-added products to customers to further enhance sales.

Your Company continues to grow in the market with the increase in demand from packaging, automotive, agriculture, electronics & renewable solar energy sectors.

The Fuel and Lubricant Solutions business is categorized into Formulations and Components. Under Formulations, your Company offers finished products such as anti-freeze/coolants. Your Company is a key solution provider to various oil companies as well as automotive OEMs.

Under Components, your Company offers Polyisobutylene (PIB) of various molecular weights for different applications, performance additives and synthetic base fluids, which are used for formulating a wide spectrum of automotive & industrial lubricants. The fuel & lubricant solutions business witnessed steady growth in its product portfolio in light of increased automotive production & other industrial activities.

Your Companys mining solutions portfolio provides sustainable solutions which increase I productivity, recovery and flexibility throughout the mining operations including leaching, solvent extraction, flotation, solid/liquid separation and tailings management. During the year, your Company divested the flocculant portfolio as a part of global portfolio optimization efforts to focus on core strategic areas.

Your Companys Enhanced Oil Recovery (EOR) business offers customized surfactant to Oil operators, aiding in the recovery of additional crude oil from mature oil fields. EOR technology improves oil recovery from existing wells, which in turn adds to the domestic production volume of crude oil, thereby reducing imports. Your Company offers EOR chemical solutions through globally recognized Trade name "Aspiro™". Your Company has successfully started production of surfactants at Dahej plant in Gujarat & is geared up to meet the local & export demand.

The Process Catalysts business caters to the refining, petrochemicals and downstream base and fine chemical industries. With the innovation and development in our refining catalyst, the Company won several orders that lead to a robust year for the refining catalyst business. At the same time, the growth in Polymers production capacity and Governments focus on improving the intermediate production in the country, has helped the Company to develop a strong opportunity pipeline in chemical catalyst business.

SURFACE TECHNOLOGIES

Your Companys Surface Technologies segment comprises of Coatings Solutions businesses.

The Automotive Coatings business, housed under BASF India Coatings Pvt Ltd, Wholly Owned Subsidiary of the Company, caters to innovative solutions that improve the appearance and quality of cars. Your Companys "Beyond Paints" range of sustainable products & solutions cater to these needs and has been serving major global and Indian automotive players. During the FY 2024-25, the Indian automotive market scaled up in global rankings leading to high demand for Coatings which your Company could address very well. Amidst supply chain bottlenecks and raw material, uncertainties, the Company delivered the best customer experience to make our customers successful. Anticipating a long-term growth of Indian automotive market, your Company has invested in the expansion of state-of-the-art E-coat plant in 2024 at Mangalore site and doubled the capacity, which would enable to support increase market need of next generation CED materials. With major OEMs preparing to launch SUVs and EVs, your Company sees a trend towards premiumization of cars. All these indicators point towards an optimistic outlook and with the strategic balance of portfolio mix, digitalization and price management, your Companys Automotive Coatings business is prepared to tap into this growth. As part of differentiated steering, your Companys Coatings business was transferred to BASF India Coatings Pvt Ltd, a wholly owned subsidiary of the Company, effective January 1, 2025 for better business focus and to compete with pure play companies.

NUTRITION & CARE

Your Companys Nutrition & Care Segment comprises of Care Chemicals, Nutrition and Health Care businesses.

The Care Chemicals business provides solutions to customers in personal care, home care & institutional cleaning and industrial formulation segments viz: textile, leather, agrochemicals, metal surface cleaning etc.

Indias beauty personal care industry has experienced rapid growth and transformation in the FY 2024-25, driven by digital adoption, evolving consumer preferences, and increased disposable income and has been recognized as the worlds fastest-growing market for personal care.

With customer behavioral change and premiumization of home care segment, the Home Care business, leveraged opportunities for the performance driven products in commodity segments like floor cleaners and dish wash bars, driven by global key players.

For Industrial Solutions Industry the domestic demand was positive while exports still slow due to uncertain global scenario. However stiff pricing from competition keep pressure on margins. For Standard Surfactant Business, demand is expected to be stable with revival of rural demand. However, sulfate free trend will put some challenge to the sulfation business.

The Nutrition & Health Segment of your Company offers a comprehensive range of products across Nutrition (Human & Animal Nutrition), Pharma Solutions and Aroma Ingredients. This business continued to deliver impressive performance for another successful year driven by strong growth in Aroma ingredients and Pharma solutions while steady business continued in Nutrition ingredients in a market that witnessed muted volume growth and decline in prices

The Nutrition business aims to be the most credible food & health ingredient supplier with the portfolio of Vitamins & Carotenoids for both human and animal nutrition and high-quality feed enzymes business for animal feed. Demand for nutrition ingredients remained steady during the year under review with increasing awareness about preventive health, need for high quality protein thereby resulting in improved consumption of vitamins in food (including poultry), dietary supplements, as well as fortification of staples like Oil & Mill and other functional food. Product supply was impacted during the year due to force majeure at one of the plant in Germany, limited our capability to cater to the growing market needs, however the same was compensated with increased sales of other ingredients in the portfolio.

The Aroma Ingredients portfolio has diverse product lines for our customers in fragrance and flavor (F&F) applications that eventually find their way into fast-moving consumer goods (FMCG). The business witnessed steady growth of the entire portfolio across applications. Innovative product launches continued to generate distinct value for the F&F industry in the coming years. A few products of Aroma Ingredients business were also impacted due to global force-majeure, yet this business could mitigate the business impact with higher sales in non-affected products ensuring that Aroma Ingredients continues to be key driver for the growth of Nutrition & Health business segment in India. This business also saw the acceptance and demand for our 100% natural isobionics? product portfolio from advanced bio-technology route, giving the confidence for higher growth in coming years.

The Pharma solutions team specializes in functional excipients and select Active Pharma Ingredients (API) for the pharmaceutical industry. During the financial year 2024-25, along with organic growth in the core pharmaceutical excipients space, your Companys pharma solutions ventured into the promising Biopharma industry. Your Company launched two key products - Kolliphor? Urea and Kolliphor? P 188 cc, which caters to the needs of excipients for Biosimilars in India. These two products are expected to support leading biopharmaceutical players in developing new formulations, thereby making the excipients portfolio more comprehensive.

TECHNICAL MANAGEMENT

Your Companys unwavering commitment to safety, quality, productivity, and sustainability continues to be the foundation of our operational success. Safety remains our top priority. Your Company has implemented various programmes across manufacturing sites resulting in industry-leading safety performance during FY 2024-25. With a strong foundation and a shared commitment to high performance, your Company is well positioned for a resilient and responsible future.

During the year, your Company continued to enhance manufacturing capacities and capabilities across its manufacturing sites. At Dahej site, new product ‘Aspire™ for enhanced oil recovery (EOR) applications was successfully commissioned at the Care Chemicals plant. Our performance materials plant at Panoli has completed 14 years without any lost time injury (LTI) or process safety incident (PSI) and expanded its capacity during the year adding multiple product grades and enhancing lab testing capabilities to support new business opportunities. Your Companys Thane site increased the production capacity of its polyurethanes system house by 15% through the implementation of smart measures driven by operational excellence initiatives. At Companys coatings plant at Mangalore, e-coat expansion facility was inaugurated to meet the increasing demand in coatings market.

Your Company is deeply committed to digital transformation to enhance operational efficiency, support data-driven decision-making, and maintain competitiveness in an increasingly digital landscape. At Dahej site, a Goods Track System has been implemented to monitor end-to-end vehicle tracking system & movement, enabling unmanned weighbridge operations, detailed analysis of turnaround time (TAT) & improve logistics efficiency. At Panoli site, the engineering store has been digitalized through a QR code-based inventory management system, significantly enhancing warehouse operations and inventory accuracy. At Mangalore site, the adoption of smart factory systems (SFS) has enabled seamless integration of operational processes through end-to-end digitalization of material flow, improving overall production visibility and efficiency. At Thane site, automation in product handling operations at process plants has been upgraded, leading to increased packing accuracy, enhanced error-proofing, and a noticeable reduction in product loss and waste generation.

All manufacturing sites are actively pursuing sustainability initiatives aimed at reducing Scope 1 and Scope 2 emissions in alignment with BASFs global sustainability goals for 2030. Under Scope 1 emission reduction initiatives, Dahej site utilized excess low-pressure steam from process plants to heat boiler feed water, thereby reducing natural gas consumption. Additionally, thermic fluid heater operations were optimized for greater energy efficiency. Under Scope 2 emissions and the transition to renewable energy Mangalore site signed a group captive power agreement for 2.7 MW of renewable power, supporting long-term cost competitiveness and the sites commitment to net-zero emissions. Similar initiatives are being initiated at other manufacturing sites of the Company. In the area of sustainable waste management, your Companys manufacturing sites continued its efforts by recycling plastic packaging waste (big bags) through authorized recyclers.

All manufacturing sites continue to maintain and pursue certifications aligned with business requirements, including ISO 9001, ISO 14001, ISO 50001, IATF 16949, EFfCI GMP, and RSPO. At the Thane site, recertification audits for TS, ISO 9001, ISO 14001, and IATF 16949 were successfully completed. The Panoli site also achieved successful recertification for IATF 16949 during the current financial year. Your Company remains committed to promoting and upholding the principles of Responsible Care?, in collaboration with the Indian Chemical Council (ICC).

Your Company is committed to promoting community development initiatives in the vicinity of manufacturing sites. At the Dahej site, your Company has partnered with an NGO to install Water ATM, ensuring access to clean and safe drinking water for the local community. The Thane and Mangalore sites are actively engaged in education and health promotion programs, including the distribution of scholarships to meritorious students from government schools. Additionally, educational games have been donated to the Navi Mumbai Municipal Corporation to raise awareness about health and hygiene among school children. At the Panoli site, the Company has supported the promotion of local culture by encouraging regional sports activities.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has established adequate internal financial control systems to ensure reliable financial reporting and compliance in accordance with the laws and regulations. All resources are put to optimal use and adequately protected against any loss. All transactions are authorized, recorded and reported correctly. Policies and guidelines of your Company are being adhered to and improvements in processes are being carried out on an ongoing basis. The principles of risk avoidance, such as segregation of duties and approval-based authorization matrix form the core of the internal control systems. The efficiency and effectiveness of the internal control systems over financial reporting has been performed by the management through evaluation, documentation, testing and reporting of the relevant processes and controls.

Our internal control systems are also supplemented by an extensive program of internal audit by an independent firm of Chartered Accountants. Internal audits are conducted regularly and their summary as well as recommendations are placed before the Audit Committee/ Board of Directors of the Company. The Audit Committee reviews the internal financial control systems on an ongoing basis. Some of the Key Financial Ratios for the financial year 2024-2025 are provided hereunder for your reference:

Key Financial Ratios:

Key Ratios		2024-25	2023-24	Change %
Trade Receivables Turnover (times)	(Revenue from Operations / Average Trade Receivables)	6.0	5.7	7%
Inventory Turnover (times)	(Cost of goods sold / Average Inventory)	5.2	5.3	-1%
Interest Coverage Ratio	(Earnings Before Interest Tax & Depreciation before exceptional items / Finance cost)	53.2	62.2	-14%
Current Ratio	(Current assets / Current liabilities)	1.6	1.6	-
Debt Equity Ratio	(Total Debt [Long term borrowings + Short term borrowings + Current maturities of long term debts] / Total Equity)
Operating Profit Margin (%)	(Earnings Before Interest & Tax before exceptional items / Revenue from Operations)	4.3%	5.6%	-24%
Net Profit Margin (%)	(Profit after tax / Revenue from Operations)	3.3%	4.1%	-20%
Return on Net Worth (%)	(Profit After Tax (PAT) / Average Total Equity)	14.5%	19.0%	-24%

HUMAN RESOURCES AND EMPLOYEE RELATIONS

Your Company remains committed to attracting, onboarding, developing, motivating, and retaining top-performing employees, a cornerstone of our continued business success. Recognizing our workforce as our greatest asset, your Company prioritizes creating a robust leadership pipeline through strategic hiring, comprehensive training programs, and skill development initiatives. To motivate and nurture talent, your Company has implemented measures to reward, differentiate, and recognize high-performing employees, including a new incentive system designed to deliver instant recognition for exceptional performance.

Your Company has placed diversity and inclusion at the forefront of its organizational priorities, as it builds a future-ready enterprise. Your Company continues to foster an inclusive and welcoming work environment for all employees.

Your Company has successfully transitioned to a new office in Vikhroli, where all business and service units are now co-located. This state-of-the-art office offers a hybrid working format and has significantly enhanced collaboration among teams by housing them together under one roof. Employee well-being remains central to our values.

Your Company continues to remain dedicated to educating employees, promoting wellness, and maintaining positive relationships with the union.

As of March 31, 2025, the total employee strength stood at 1242.

CORPORATE COMMUNICATIONS

Your Companys Corporate Communications team collaborates with various business and service units, enabling them to communicate effectively with stakeholders across various platforms. Strong partnerships with Corporate Advocacy teams on several key business topics with the Government of India and various associations continued to create strong positioning and enhance brand visibility for your Companys products and solutions.

Your Company shared insights and built awareness for its solutions that help create sustainable chemistry through strategic alliances with customers and industry bodies. During the year, your Companys leadership team engaged with customers, academia, and industry through various forums, such as the 25^th International Conference Indian Petrochem, India Chem Expo & Conference, Mahindra Tech Days, TATA Motor Tech Days, Hyundai Tech Days, The Battery Show, 17^th Annual India Chemical Industry Outlook Conference, and Chlor-Alkali World Expo 2024, among others. These engagements emphasized sustainability, innovative solutions, and fostering collaboration for continued success. Furthermore, your Company is the first in India to achieve the REDcert² standard, marking a significant milestone in our commitment to sustainability and environmental stewardship. This endeavour will support our customers in their low-carbon-footprint roadmap journey.

AWARDS AND RECOGNITION

Your Company was awarded the "TATA Motors Award" by TATA Motors, recognizing "Innovation & Technology Excellence" for the successful launch of High Solids Technology at the Sanand plant, which led to significant reduction of VOC (Volatile Organic Components) emissions. Your Companys focused initiatives towards promoting gender diversity and enhancing inclusion led to recognition from Avtar & Seramount as one of the Best Companies for Women in India: Manufacturing for seven consecutive years, along with the 2024 Hall of Fame award.

On behalf of the Board of Directors For BASF India Limited	PRADIP P SHAH	ALEXANDER GERDING
Mumbai	(Chairman)	(Managing Director)
Dated: May 14, 2025	(DIN: 00066242)	(DIN: 09797186)