The common independent director on CRISIL Ratings Limited and BASF India Limited boards did not participate in the rating process or in the meeting of the rating committee, when the rating for securities of BASF India Limited was discussed. This rating was also not discussed in the meeting of CRISIL Ratings’ Board of Directors.
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.

CRISIL Ratings has taken note of the latest announcement by BASF India Ltd (BASF India) wherein its Board of Directors has given in-principal approval for demerger of the company’s agricultural solutions business (agri business) into a separate legal entity. In fiscal 2024, the agri business contributed ~Rs 2,006 crore to the company’s revenue and ~Rs 435 crore to EBIT (earnings before interest and tax), representing 14.6% and 53.9%, respectively.

This demerger is part of the global strategy of BASF SE, Germany (rated ‘A-/Stable/A2’ by S&P Global Ratings), which was announced on September 26, 2024, to complete the legal and enterprise resource planning separation of the agricultural solutions business by 2027. Thereafter, BASF SE is also planning an initial public offering (IPO) of its global agricultural solutions business.

Furthermore, the Board of Directors of BASF India has constituted a committee of independent directors to commence exploratory steps to examine the relevant aspects of the proposed demerger and make recommendations to the board, and the final decision of the demerger scheme will be made after that.

CRISIL Ratings will continue to monitor developments related to the bifurcation of assets and liabilities, and any other business segments moving out, and its impact on the credit risk profile of the company. Any rating action, if required, will be taken thereafter.

The existing ratings continue to reflect the adequate business risk profile supported by diverse revenue segments, strong financial risk profile and CRISIL Ratings expectation regarding the strong operational and financial support from BASF SE. These strengths are partially offset by susceptibility of the operating profitability to inherent risks in the crop protection sector, volatility in crude prices and foreign exchange rates.

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