Shares of BASF India were higher by over 5% in early trade on December 20 on very high volumes, after the board approved the demerger of its agricultural solutions business into a separate listed entity.
The move is in line with German parent BASF SE's decision to separate the agricultural solution business by 2027. BASF SE is also preparing for a potential Initial Public Offering (IPO) of its global agricultural solutions business, and also evaluating the option of listing a 'minority share' in the mid-term, the Indian entity said. BASF India said it would assess the implications of the new strategy for its India business.
BASF India's statement said it has "accorded its in-principle approval for demerger of Company’s Agricultural Solutions business into a separate listed legal entity. This will enable operational flexibility, leverage differentiated steering and create value."
"Necessary announcements and disclosures in accordance with the SEBI Listing Regulations and other applicable laws in respect of the demerger will be made in due course, post recommendation of the Independent Committee, Audit Committee and the approval of the Board of Directors of the Company," BASF India's statement said.
In December 2023, BASF India had informed stock exchanges about the plans to simplify the global agricultural solutions business. The agricultural solutions segment contributed 17% to the September quarter revenue, second only to nutrition and care.
Alexander Gerding, Managing Director, BASE India had recently said that the group sees 80% of the chemical market growth in the next 10 years coming from seven countries, and all seven countries are in Asia, one of them being India.
Read More: BASF India's September quarter results
BASF India has a market capitalisation of over Rs 25,000 crore and the shares are higher by 90% so far this year. The company posted a sales growth of 15% in the September quarter, led mostly by volume growth. The agrochemical segment posted a healthy show in the first half of the fiscal, with Rs 1,400 crore in sales, a growth of more than 10% on year. The company is optimistic about its long-term growth potential in India driven by domestic consumption trend and young demographics.
BASF SE is streamlining the German manufacturer in order to generate returns from its main chemicals, industrial and nutrition businesses, along with considering asset sales at its other units, including agriculture and battery materials.
BASF SE's CEO Markus Kamieth is attempting to pivot the company as it deals with high energy prices in the aftermath of the Russia-Ukraine war.
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