Chapter 1: Introduction to

the Organisation study and

Industry Profile
Organisation Study on BASF India Ltd.

Organisation

In common parlance, ‘organisation’ refers to ‘institution’. The term ‘organisation’ has emerged
over a period from the traditional task-oriented to the modern people-oriented concept.

According to business dictionary, organisation is defined as a social unit of people that is

structured and managed to meet a need or to pursue collective goals. All organizations have a
management structure that determines relationships between the different activities and the
members, and subdivides and assigns roles, responsibilities, and authority to carry out different
tasks. Organizations are open systems-they affect and are affected by their environment.

Organisational study

Organisational study refers to the practical learning about how a an organisation works under
day to day operations and method adopted by the organisation in order to increase optimum
usage of the resources and in order to have an competitive advantage over its competitors.
Organisational study encompasses as a critical component in and forms of Management
Education.

Organisational study was conducted at BASF India Ltd (Mangalore plant) for a period of 15
days, dating from 26th December 2018 to 14th January 2019.

This Organisational study is a partial fulfilment of the regular MBA Program. Organisational
study is done in order to understand the functional areas of the organization and it also helped
to learn and understand the theory and practice, which is being followed in the organisation

Nature and scope of study

BASF SE is a German chemical company and the largest chemical producer in the world. The
BASF Group comprises subsidiaries and joint ventures in more than 80 countries and operates
six integrated production sites and 390 other production sites in Europe, Asia, Australia, the
Americas and Africa. This study is conducted in the Mangalore plant located on Surathkal-
Bajpe Road, Bangalore.

1
An Organisation Study of BASF India Limited

Organization study is a part of MBA curriculum of CMS Business School, Jain University. It
is aimed to understand the functioning of different Departments of an organization. The study
was conducted in Chemical Industry.

Objectives of the study

 To understand the nature of business carried out by BASF India Limited.

 To understand and generate SWOT, PESTEL and Porter’ Analysis for the organisation.
 To understand and to review the Organisational structure carried out by Bosch Limited.
 To understand the business practices carried out by BASF India Limited under the core
activities of an organisation.

Methodology

The data for the study has been collected from Primary and Secondary source.

Limitations

This study will be only limited to BASF India Ltd (Mangalore plant).

Due to the busy schedule of managers, it was difficult to obtain all the required data.

The reliability of the data used for the study depends on the company’s reports and information
given by the executives.

The company has limitations to disclose some of their confidential data so a detailed analysis
of the same was not possible.

An in-depth study could not be carried on due to lack of sufficient time.

Chemical Industry

Chemical industry makes use of chemical response and a variety of process to spin raw
materials, such as coal, oil and salt into a mixture of products. During the 19th and 20th Century
hi-tech advances in the chemical industry severely transformed the economy. In the later stages
company unmitigated its business and starts developed pesticide and fertiliser for different

2
areas of farmers, pharmaceuticals industry for health care, in textile industry. Main items
include synthetic dyes and fibres, cosmetic industry for soap and beauty products, food industry
synthetic sweeteners and flavours, plastic for the packaging industry, chemicals and celluloid
were being used for the motion picture industry, artificial rubber and paints for the automobile
industry.

Meaning

The Chemical industry in simple can be defined as the industry involved in the production of
chemical. Other products include petrochemicals, agrochemicals, pharmaceuticals, polymers,
paints and oil chemicals method are used because of reaction of chemical to manufacture new
substance; parting is based on properties such as solubility or ironic charge and distillation in
adding to transformation method by heating and other route. Chemical industries are involved
dealing out of raw materials obtained by mining and agriculture. The products obtained from
one chemical industry can be used as a raw material to other industries and the expensive
products is sold in the market.

History

The Chemical industry discovered by Middle Eastern artisans, who enhanced the worth of
alkali and limestone for the production of glass in 7000 B.C, during the 6th century Phoenicians
manufactured soap and the Chinese person developed the black powder primitive explosive
around the 10th century. In the middle ages, Alchemists produced small traces of chemicals and
by in 1635 the pilgrims in Massachusetts were producing saltpetre for gunpowder and chemical
for tanning. However, a huge size chemical industry was initially progressed during 19th
century. In 1823, one of the British entrepreneur James Muspratt started producing soda ash in
bulk (needed for soap and glass) using a process developed by Nicolas LeBlanc in 1790.

During half of the 19th century organic chemistry progressed and then its gives permission to
manufacture synthetic dyes from the coal tar for the textile industry as early as the 1850s.

In the 1890s, German companies began producing sulphuric acid in bulk and at the same time
chemical companies taking place using the electrolytic method, which necessary huge amounts
of electrical energy and salt to create caustic soda and chlorine. Fabricated fibres changed the
textile industry. Rayon (made from wood fibres) was introduced in 1914.

3
The beginning of synthetic fertiliser by the American Cyanamid Company in 1909 led to a
green revolution in agriculture in effects that significantly improved crop yields. Advances in
the producers of plastics led to the invention of celluloid in 1869 and DuPont found an original
product such as nylon in 1928. Study in organic chemistry in 1910 approved companies in the
1920s and 1930s to start producing chemicals from oil.

Petrochemicals industries are the major sector in worldwide. During the Second World War,
synthetic rubber came into actuality but its impact on supplies of rubber from Asia. Since the
1950s, chemical industry has been generating toxic wastes, which gives pressure to government
to take domestic measures. This led the environment protect agency take action in the year
1972. The leakage of toxic chemical at the union carbide plant in Bhopal, India (1984) was the
most terrible industrial disaster in history and increased public apprehension about lack of
environmental rule by chemical companies in the developing countries. IN the 1980s, U.S.
Corporation faced difficulty because the escalating competition of oil plants from foreign
producers, some of the progressed country set up their own oil reefing and petrochemical
sector, U.S> chemical industry manufactured near 389 dollar billion of value of products and
there are 10,32,000 employed workers during the year of 1997. Total 71 dollar millions of
chemical are exported from home country to another country. Yearly around 450 dollars
billions chemical are shipping in U.S Chemical industry. Industry benefits for consumer covers
the major part of raw materials, end markets which includes home furnishing, textile, paints,
electronics, food and transportation. Raw materials serves as key to the chemical industry. For
example, the automobile industry makes use of about 1,500 types of chemical paints, lube
silicon based chemicals and a plastic assemble; similarly microwave ovens use silicon chips,
plastic housing and fire-retardant plastic additives.

Chemical Industry in India

Chemicals industry in India is highly diversified, covering more than 80,000 commercial
products. It is broadly classified into Basic chemicals, Specialty chemicals, and Agrochemicals.
India’s proximity to the Middle East, the world’s source of petrochemicals feedstock, makes
for economies of scale.

India is a strong global dye supplier, accounting for approximately 16% of the world production
of dyestuff and dye intermediates. Chemicals industry in India has been de-licensed except for
few hazardous chemicals. Upcoming Petroleum, Chemicals and Petrochemicals Investment

4
Regions (PCPIRs) and Plastic parks will provide state-of-the-art infrastructure for Chemicals
and Petrochemicals sector.

 The Indian chemicals industry is projected to reach $ 304 billion by 2025.

 Indian chemicals industry excluding pharmaceutical products) ranks 14th in exports
globally.
 Demand of chemical products is expected to grow at approximately 9% p.a. over the
next 5 years.
 Indian chemical industry employs more than 2 million people.
 100% FDI is allowed under the automatic route in the chemicals sector (except in the
case of certain hazardous chemicals)

Chemical Industry Scenario

India is the 3rd largest producer of chemicals in Asia by volume. Market size of the Chemicals
industry in India stood at $ 163 billion in 2017-18.Total production of chemicals and
petrochemicals stood at 47,882,000 MT during 2017-18, a 2.62% increase over 2016-
17. Alkali chemicals had the largest share in the Chemical industry in India with approximately
69% share in the total production. Production of polymers account for around 59% of total
production of basic major petrochemicals.

 The petrochemical market in India is expected to grow at a CAGR of 10% over the next 5
years to reach $ 100 billion by 2022.

 The market for crop protection chemicals in India is expected to reach $ 7.5 billion by 2019.
This growth in demand is based on a rapidly growing population and a decrease in per
capita availability of arable land, both of which result in a greater need to increase
agricultural yield

 The specialty chemicals market has witnessed a growth of 14% in the last five years; the
market size is expected to reach $ 70 billion by 2020.

Industry Trends

Agro-chemicals

5
India’s 50% exports of Agro-chemical production is likely to continue.

Specialty chemicals

World’s third largest polymer consumer owing to a growing Automobile industry.

Construction chemicals

100 Smart Cities by 2020 and other dependent construction projects.

Colourant chemicals

15% of global industry share.

KEY PLAYERS IN THE INDUSTRY:

French specialty chemicals major, Arkema. plans to invest USD 15 million for setting up a new
polyester powder resin manufacturing facility, the 1st of its kind in India.

As of October 2016, industrial chemicals manufacturer, Thirumalai Chemicals Ltd., plans to

enhance its production capacity of phthalic anhydride & fine chemicals in India.

The investment expo in the Odisha, organised on 2nd December, 2016, ended with investment
promises worth USD 29.87 billion & 1.4 lakh jobs for the state in 10 sectors, including
chemicals.

German based, BASF, plans to setup its 1st manufacturing plant in Myanmar in 2017, to meet
the growing demand for construction chemicals. The new plant will be designed specifically
to manufacture customised construction chemical solutions for the local building market.

6
KBR, a US based firm, secured a deal to modernize Mangalore Chemical & Fertilizers
ammonia plant in Panambur, Mangalore, to improve energy efficiency of the plant, by
providing its new ammonia technology.

In March 2017, Dow Chemical plans to increase its polyurethane system production facility
located in Maharashtra by 50 percent, to expand its manufacturing base in India. The company
plans to invest in a new technology center in Mumbai to improve product quality & strengthen
its customer base.

In May 2017, Resil Chemicals, a manufacturer of industrial chemical, plans to expand in

international markets in a phased manner. The company has full-fledged sales operation in
Bangladesh & has ventured into SriLanka, Turkey, Philippines, U.K. & Thailand as well.

The top ten key players in the chemical industry are as follows;

1. BASF

2. DOWDUPONT

3. SINOPEC

4. INEOS

5. FORMOSA PLASTICS

6. EXXONMOBIL

7. SABIC

8. LYONDELLBASELL INDUSTRIES

9. MITSUBISHI CHEMICALS

10. LG CHEM

7
PESTEL ANALYSIS

Political factors

 Trade regulation and policies

 Changing the prices of raw materials

Economical factors

 Fluctuations in currency markets

 Impact of change in Economic conditions

Social factors

 Product safety and inspection

 Customized products to meet consumer needs

Technological factors

 Focus on Digitized supply chain

 Rising sustainable technologies

Environmental factors

 Growing concern for the impact of products on the environment

 Reducing CO2 emissions.

Legal factors

 Intellectual property rights in Chemical industry and Environmental regulations

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PORTER’S FIVE FORCES ANALYSIS

Competitive Rivalry

 Chemical industry is highly fragmented with intense rivalry amongst companies.

 Since, 100 per cent FDI is allow hence domestic companies face stiff competition from
foreign competitors as well
 International companies may also dump chemicals at low price

Threat of New Entrants

 Huge capital requirements and patent protection are significant barriers

 Other barriers include - R&D and personnel requirements

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Substitute Products
 Buyers tend to have specific chemical requirements
 There are no direct substitutes for a specific chemical requirement
Bargaining Power of Suppliers

 Small chemical companies rely on supplies from larger plants, or petrochemical units
 Inputs for a chemical plant cannot be easily substituted

Bargaining Power of Customers

 Customers have multiple sources of supply

 Chemical companies are bound by long-term contracts
 Niche specialty chemicals have some pricing power

10
Chapter 2: Company Profile

11
Company Profile

BASF India Limited has very effectively improved India’s progress for centuries. The company
has developed to be a very important part of India’s growing chemical industry. The company
has a different portfolio of modern products and solutions which matches all the needs of
developing nation. The company is giving more importance for protected, innovative and new
and future-read solution. There are many divisions for BASF India and almost all divisions are
operating in India Except oil and gas.

BASF India manufactures polymers, tanning agents, crop protection chemicals used in the
agricultural field, leather chemicals and auxiliaries, textile chemicals used in the textile
industries, performance plastics, dispersions and speciality chemicals, automotive and oil coil
coatings, polystyrene and polyurethane systems, construction chemicals used in the civil
engineering field etc. The company also promotes ample range of intermediates, catalyst and
some other chemicals for life sciences, chemicals and allied industries in the country.

BASF India History

BASF shared a vibrant history with India that spans over a century. BASF’s first dealing with
India was in the textile colours in 1890s. Afterwards the agreements with India have developed
stronger over years. The company’s business portfolio matches not only the present but even
for the upcoming needs of the growing Indian market.

 Establishing a strong India presence(1943-1996)

During 1943, as India was on the verge of being an independent nation, BASF India Limited
was originally a part of the world as R.A. Cole Private Limited Company. BASF was initially
involved in the production of escalating polystyrene. With this BASF placed its initial step
towards production sector in India.

Over the years, BASF in India developed systematically. Due to the increased demand for the
manufacture of plastics in 1961, the company established their first production site in Asia in
Thane.

12
During 1968, BASF was listed under the Bombay stock exchange limited (BSE). Late in 1995,
the company was listed under the national stock exchange of India limited (NSE). With the
addition of days and discretion to their product categories, in the year 1996 BASF Company
started new manufacturing operation site in Mangalore. Later this site went on to become their
largest manufacturing site in India and South Asia.

 Investment, integration and portfolio management(1990-2011)

Between 1998 and 2011, BASF in India has taken initiative to increase the product categories
to get business of automotive coatings, printing inks, coil coatings etc.

At the end of 2000, BASF acquired Pushpa Polymers Private Limited and became the first
internationally energetic polystyrene with its own invention in India.

During the year 2006, BASF AG (BASF SE today) acquired the global construction chemicals
business of Degussa AG. This resulted in the creation of BASF Construction Chemical (India)
Private Limited integrated with BASF India Limited. The merger increased BASF India’s
portfolio in the field of speciality chemicals.

Again in the same year, BASF SE acquired Cognis Holding GmbH Worldwide. This accession
further strengthened the position of BASF India Limited in personal care ingredients such as
value added products for home care, established a strong position in human nutrition and
strengthened position in the field of pharma excipient.

Later in the year 2010, three BASF legal entities in India were started. They subdivided the
entire BASF in to three main subdivisions as BASF Coatings (India) Private Limited, BASF
Construction Chemicals (India) Private Limited and BASF Polyurethanes India Limited were
merged with BASF India Limited.

Again the same year, BASF decided to globally develop its styrene business. Effectively in
October 2011, Sty solution has officially started working as an independent company,
following the approval of related authorities. BASF has retained worldwide business with
polystyrene foams.

 Creating a platform for the future

April 2012: investment in Dahej

13
BASF India announced its ideas to increase a production plant size and production rate in
Dahej. In the year 2014 the site started functioning and will be an integrated hub for
polyurethane manufacturing and will also be a unit of production facilities for care chemicals
and polymer dispersions for coatings and paper.

September 2012: EPS and Styr poor production ceased

The board of directors planned to stop the production of expandable polystyrene (EPS) business
including the Styr poor production plant at Thane, as a part of BASF’s global technique, subject
to require approvals.

BASF Mangalore

Mangalore site- The largest BASF site in South Asia

During the year 1993 BASF India Limited acquired 210 acres of land in the coastal regions of
Mangalore, 20 kilometres away from city. Initially only 50 acres of land were employed. Dyes
and dispersion plants started functioning at this plant. In this site the production started on 1996
March. Mangalore site was certified in accordance with ISO 14001 and it is one among the 153
BASF global production sites.

In the coastal regions of Mangalore the BASF India has four different production plants and
they are as follows

 Dyes plant
 Dispersion plant
 Coating plant
 Construction chemicals

Vision

BASF’s vison clearly define the goals and strategies that were set out to achieve. All strategic
plans and developments are based on this Vision

 We are “The Chemical Company” successfully functioning at all leading markets.

 Our Customers view BASF as their partner of choice with appreciation.

14
 Our innovative products, intelligent solutions and services make us the major competent
worldwide supplier in the chemical industry.
 We generate a high return on asset.
 We try earnestly and dedicatedly for sustainable development.
 We welcome change as a new opportunity.
 We, the employees of BASF, together ensure our success.

Mission

BASF is one of the leading chemical companies all over the world. We offer brilliant ideas on
innovative and creative products and tailor made services. We create opportunities for success
through trusted and reliable partnerships.

Values and their Principles

1. Sustainable Profitable Performance

Ongoing profitable performance, in the sense of Sustainable Development, is the fundamental

requirement for our activities. We create added value in the interest of our customers,
shareholders and employees, and assume a responsibility towards society.

Principles

 We try to achieve a goal in getting better market and also in the financial position, so that
we can shape the future of BASF productively and autonomously with our own unique
identity and ideas.
 We create the BASF Group financial result over a whole financial cycle, on average,
exceeds the cost of capital.
 We intend to provide our shareholder an attractive return
 We provide compensation benefit purely based on employee performance and as well as
company performance and condition of local market. This working condition is
internationally recognised fundamental labour standard.
 Major of our economic and sponsoring activities are only towards benefits of people, social
and culture matters, positive development contribution towards the society.
 “Verbund’ is one of BASF’s strengths. We continuously optimize this integrated
production network to produce more efficiently and protect expensive resources.

15
2. Innovation for the Success of Our Customers

Our business processes are oriented towards improving long-term value and competitiveness.
In partnership with our customers, we help them to be more successful. To accomplish this, we
jointly discover business opportunities and develop products, procedures and services that are
on
a high scientific and technical level.

Principles

 We seek advantages arising from changes in markets, science and society and use these as
an opportunity for value-enhancing growth.
 We use our leading position to help shape scientific and technological progress, we identify
new business opportunities and utilize synergistic effects arising from integrated research.
 We develop and optimize our products and services, together with our customers, so that
we can add value for both our customers and our Company.
 We measure customer satisfaction on a regular basis. The feedback that we receive from
our customers and partners is used to improve our business processes.

3. Safety, Health and Environmental Responsibility

We act in a responsible manner and support the Responsible Care initiatives. Economic
considerations do not take priority over safety and health issues and environmental protection.
Principles
 We encourage a high level of awareness of safety, health and environmental issues among
our employees and strive for continuous improvement through agreed-upon objectives.
 We produce products that are safe to manufacture, use, recycle or dispose.
 We support the efforts of our customers and suppliers in the safe and environmentally
sound handling of the products that they receive from us and those products that we receive
from them.

16
 We minimize the impact on mankind and the environment during production, storage,
transportation, sale, use and disposal of our products.

4. Personal and Professional Competence

We form the best team in industry by fostering the diversity of personal and professional
competencies Group-wide. Intercultural competence is our advantage in global competition.
We encourage our employees to make use of their creativity and their potential for common
success.

Principle
 We foster diversity programs and seek employees from all cultures and nationalities who,
with their interpersonal and professional competencies, are willing to devote their talents
and skills to meet our objectives and to support our Values.
 Our future leaders are promoted preferably from within BASF. The executive team is
recruited, selected, developed and positioned systematically based on the following four
criteria: knowledge, skills, leadership competencies and conduct in accordance with our
Values and Principles.
 Our organization, steering processes and cooperation, are focused to achieve top
performance by individuals and by teams.
 We do not tolerate within the BASF Group discrimination based on nationality, gender,
religion or any other personal.

5. Mutual Respect and Open Dialogue

We treat everyone fairly and with respect. We pursue an open and trusting dialogue within our
Company, with our business partners and relevant groups in society.

Principles
 Our communication within the Company, with our business partners, neighbours and
relevant opinion leaders in society, is based upon an open and factual dialogue.

17
 We involve our employees in work and decision processes in a timely manner through open
communication and information sharing not hindered by hierarchical and organizational
boundaries.
 Goals, priorities and responsibilities are mutually agreed upon by managers and their
employees or teams.
 We encourage entrepreneurial initiative by means of appropriate empowerment. Managers
discuss with their employees, on a regular basis, their ongoing development and encourage
their commitment to continuous learning.
 BASF strives to maintain relationships with elected employee representatives in good faith
and mutual respect based on internationally recognized fundamental labour standards and
orientated towards the customs of the respective countries.

6. Integrity
We act in accordance with our words and Values. We comply with the laws and respect the
good business practices of the countries in which we operate.

Principles

 Every executive is expected to be a role model and to set appropriate an example in

accordance with our Vision and Values.
 We abstain from any practice that is illegal from any practice that violates fair trade from
supplying any products for the purpose of producing illegal drugs or chemical weapons.
 We condemn all kinds of child labour as well as forced or compulsory lab or.
 We place BASF’s interests in any business transaction ahead of any personal interests. We
protect the Company’s property against abuse and misuse.
 Each BASF Group company establishes its own respective Codes of Conduct based on the
BASF Values and Principles and on local laws and customs. Each BASF Group Company
ensures that all of its employees are accordingly informed and use the Code of Conduct as
the basis for their behaviour.
 Every employee has the opportunity to seek confidential advice and help through the use
of their respective Compliance Program whenever questionable legal issues arise in the
workplace.

18
Goals

To provide innovative, clean and efficient energy solutions for better tomorrow.

We carry out our corporate purpose, “We create chemistry for a sustainable future,” by
pursuing ambitious goals along our entire value chain. In this way, we aim to achieve profitable
growth and take on social and environmental responsibility. We are focusing on issues where
we as a company can make a significant contribution.

Goal areas along the value chain

1. Suppliers

 Procurement

2. BASF

 Growth and profitability

 Employees
 Production
 Product stewardship
 Energy and climate protection
 Water

3. Customers

 Products and solutions

Economic Goals

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 Procurement 2020 Goal Status at end of
2017
Assessment of sustainability
performance of relevant 70% 56%
suppliers;1 development of
action plans where improvement
is necessary

Production 2025 Goals Status at end of 2017

Reduction of worldwide ≤0.5 1.4

lost-time injury rate per one
million working hours
Reduction of worldwide ≤0.5 2.0
process safety incidents per
one million working hours
Annual goal
Health Performance Index >0.9 0.97

Employees 2021 Goal Status at end of 2017

Proportion of women in
leadership positions with
22-24% 20.5%
disciplinary responsibility.

20
 Long-term goals

International representation Increase in proportion of

among senior executives non-German senior
38.9%
executives (baseline
2003: 30%)

Senior executives with Proportion of senior

international experience executives with
international experience 84.6%
over 80%

Employee development Systematic, global Project implemented

employee development worldwide
as shared responsibility
of employees and
leaders based on
relevant processes and
tools

Product stewardship 2020 Goal Status at end of 2017

Risk assessment of >99% 76.2%

products that we sell in
quantities of more than
one metric ton per year
worldwide

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 Water 2025 Goals Status at end of 2017

Introduction of 100% 45.2%

sustainable water
management at all
production sites in water
stress areas and at all
Verbund sites (excluding
Oil & Gas)

Energy and climate 2020 Goal Status at end of 2017

protection

Coverage of our primary 90% 54.3%

energy demand by
introducing certified
energy management
systems (ISO 50001) at all
relevant sites4
Reduction of greenhouse (40%) (35.5%)
gas emissions per metric
ton of sales product
(excluding Oil & Gas,
baseline 2002)

Products and solutions 2020 Goal Status at end of 2017

Increase the proportion of 28% 27.3%

sales generated by products
that make a particular
contribution to sustainable
development (Accelerator
products)

22
SWOT ANALYSIS
Strength

 A huge unit of manufacturing having a capability to make superiority chemicals from

standard class paints.
 Spirited core industries essential for the progress of chemical industries.
 Plays an important role in the export of dyes.
 Large domestic markets are increased
 Within the Country sources of raw materials are easily available
 First class Research and development (R&D) base in different streams brings in innovation,
modification of old product into new product and has also quality human resource
management.
 Producers various categories of dyes for different end users application.
 Company has the international standard of dye staff industry. It has domestic demand for
dyes and it is worldwide competitive enough and 95% dye staff industry catering.
 Variety of chemical products.

 Superb Performance in New Markets – BASF has built expertise at entering new markets
and making success of them. The expansion has helped the organization to build new
revenue stream and diversify the economic cycle risk in the markets it operates in.
 Good Returns on Capital Expenditure – BASF is relatively successful at execution of new
projects and generated good returns on capital expenditure by building new revenue
streams.
 Strong Brand Portfolio – Over the years BASF has invested in building a strong brand
portfolio. The SWOT analysis of BASF just underlines this fact. This brand portfolio can
be extremely useful if the organization wants to expand into new product categories.
 Successful track record of developing new products – product innovation.
 Highly successful at Go To Market strategies for its products.
 Automation of activities brought consistency of quality to BASF products and has enabled
the company to scale up and scale down based on the demand conditions in the market.
 Strong Free Cash Flow – BASF has strong free cash flows that provide resources in the
hand of the company to expand into new projects.

23
 Strong distribution network – Over the years BASF has built a reliable distribution network
that can reach majority of its potential market.

Weakness

 Organization structure is only compatible with present business model thus limiting
expansion in adjacent product segments.

 The company has not being able to tackle the challenges present by the new entrants in the
segment and has lost small market share in the niche categories. BASF has to build internal
feedback mechanism directly from sales team on ground to counter these challenges.

 Days inventory is high compare to the competitors – making the company raise more
capital to invest in the channel. This can impact the long term growth of BASF

 The profitability ratio and Net Contribution % of BASF are below the industry average.

 Investment in Research and Development is below the fastest growing players in the
industry. Even though BASF is spending above the industry average on Research and
Development, it has not been able to compete with the leading players in the industry in
terms of innovation. It has come across as a mature firm looking forward to bring out
products based on tested features in the market.

 Financial planning is not done properly and efficiently. The current asset ratio and liquid
asset ratios suggest that the company can use the cash more efficiently than what it is doing
at present.

 Limited success outside core business – Even though BASF is one of the leading
organizations in its industry it has faced challenges in moving to other product segments
with its present culture.

Opportunities

 Stable free cash flow provides opportunities to invest in adjacent product segments. With
more cash in bank the company can invest in new technologies as well as in new products
segments. This should open a window of opportunity for BASF in other product categories.

24
 Government green drive also opens an opportunity for procurement of BASF products by
the state as well as federal government contractors.

 Organization’s core competencies can be a success in similar other products field. A

comparative example could be - GE healthcare research helped it in developing better Oil
drilling machines.

 Economic uptick and increase in customer spending, after years of recession and slow
growth rate in the industry, is an opportunity for BASF to capture new customers and
increase its market share.

 New trends in the consumer behaviour can open up new market for the BASF. It provides
a great opportunity for the organization to build new revenue streams and diversify into
new product categories too.

 The new taxation policy can significantly impact the way of doing business and can open
new opportunity for established players such as BASF to increase its profitability.

 The new technology provides an opportunity to BASF to practices differentiated pricing

strategy in the new market. It will enable the firm to maintain its loyal customers with great
service and lure new customers through other value oriented propositions.

 Lower inflation rate – The low inflation rate bring more stability in the market, enable credit
at lower interest rate to the customers of BASF.

Threats

 No regular supply of innovative products – Over the years the company has developed
numerous products but those are often response to the development by other players.
Secondly the supply of new products is not regular thus leading to high and low swings in
the sales number over period of time.

 Rising raw material can pose a threat to the BASF profitability.

 Growing strengths of local distributors also presents a threat in some markets as the
competition is paying higher margins to the local distributors.

 Rising pay level especially movements such as $15 an hour and increasing prices in the
China can lead to serious pressure on profitability of BASF

25
 Increasing trend toward isolationism in the American economy can lead to similar reaction
from other government thus negatively impacting the international sales.

 Changing consumer buying behaviour from online channel could be a threat to the existing
physical infrastructure driven supply chain model.

 Intense competition – Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only profitability but
also on overall sales.

 The company can face lawsuits in various markets given - different laws and continuous
fluctuations regarding product standards in those markets.

26
PRODUCT PROFILE
1. Chemical Products

 Petrochemicals
Basic products: ethylene, propylene, butadiene, benzene, alcohols, solvents, plasticizers,
alkylene oxides, glycols and acrylic monomers

Specialties: special plasticizers, special acrylates

 Monomers

Basic products: isocyanates (MDI, TDI), ammonia, caprolactam, adipic acid, chlorine, urea,
glues and impregnating resins, caustic soda, polyamides 6 and 6.6, standard alcoholates,
sulfuric and nitric acid

 Intermediates

Basic products: butanediol and derivatives, alkylamines and alkanolamines, neopentyl glycol,
formic and propionic acid.

Specialties: specialty amines such as tertiary butylamine and polyetheramine, gas treatment
chemicals, vinyl monomers, acid chlorides, chloroformates, chiral intermediates.

2. Performance Products
 Dispersions & Pigments

Polymer dispersions, pigments, resins, high-performance additives, formulation additives,

electronic materials.

 Care Chemicals

Ingredients for skin and hair cleansing and care products, such as emollients, cosmetic active
ingredients, polymers and UV filters.

Ingredients for detergents and cleaners in household, institution or industry, such as surfactants,
enzymes, chelating agents, polymers, biocides and products for optical effects.

27
Solvents and other ingredients for crop protection product formulations, as well as products for
concrete additives and chemical processes such as metal surface treatments or textile
processing.

Superabsorbent for baby diapers, incontinence products and feminine hygiene articles.

 Nutrition & Health

Additives for the food and feed industries, such as vitamins, carotenoids, sterols, enzymes,
emulsifiers and omega-3 fatty acids.

Flavours and fragrances, such as geraniol, citronellol, L-menthol and linalool

Excipients for the pharmaceutical industry and selected, high-volume active pharmaceutical
ingredients, such as ibuprofen and omega-3 fatty acids.

 Performance Chemicals

Antioxidants, light stabilizers and flame retardants for plastic applications

Fuel and refinery additives, polyisobutene, brake fluids and engine coolants, lubricant additives
and basestocks, components for metalworking fluids and compounded lubricants

Process chemicals for the extraction of oil, gas, metals and minerals, chemicals for enhanced
oil recovery

Functional chemicals and process chemicals for the production of paper and cardboard, water
treatment chemicals, membrane technologies, kaolin minerals.

3. Functional Materials & Solutions

 Catalysts

Automotive and process catalysts

Battery materials

Precious and base metal services

 Construction Chemicals

Concrete admixtures, cement additives, underground construction solutions, flooring systems,

sealants, solutions for the protection and repair of concrete, high-performance mortars and

28
grouts, tile-laying systems, exterior insulation and finishing systems, expansion joints, wood
protection

 Coatings

Coatings solutions for automotive applications, technology and system solutions for surface
treatments, decorative paints

 Performance Materials

Engineering plastics, biodegradable plastics, standard foams, foam specialties, polyurethanes

4. Agricultural Solutions

 Fungicides

Boscalid, metiram, dimethomorph, Initium, metrafenone, F 500, Xemium,

AgCelence (umbrella brand)

 Herbicides

Kixor, Engenia, pendimethalin, imazamox, topramezone, Clearfield herbicide tolerance

system, dimethenamid-P

 Insecticides

Fipronil, alpha-cypermethrin, chlorfenapyr, teflubenzuron, Nealta, Termidor to guard against

termite infestation, Interceptor mosquito nets to protect against malaria

Functional Crop Care

Vizura, Limus, Systiva, Vault HP, Nodulator PRO, Flo Rite, Integral, Serifel

BALANCED SCORECARD

It is a financial matrix to win in the long run that a company need to develop for more balanced
view for translating Strategy into Action. Professor of Harvard Business School Robert
Kaplan and consultant David Norton developed the Balanced Score Card.

Four-order wise perspective to measure Company’s health are:

29
1st- Financial Perspective

Performance

 Revenue from operations (net of GST / Excise) at Rs. 55,834 million, represents an
increase of 10% over the previous year. The Company reported a profit after tax (after
exceptional items) of Rs. 2,465 million for the year ended 31st March, 2018 as
compared to loss after tax (after exceptional items) of Rs. 141.3 million in the previous
year due to good performance in all business segments.
 The Agricultural Solutions business of the Company registered good growth in sales
and profits during the year as compared to the previous year mainly due to increased
sales realised from successful launch of new products as well as diversification into
new crops like rice & corn.
 The Chemicals segment of the Company comprising of the Intermediates,
Petrochemicals & Monomers businesses registered substantial increase in sales &
profits during the year mainly due to better realisation coupled with strong domestic
demand driven by increase in prices of Monomers and Amine related products.
 The Functional Materials & Solutions segment of the Company which comprises of the
Performance Materials, Coatings, Construction Chemicals and Process Catalysts
Technologies business registered modest growth in sales during the year under review
as compared to the previous year. However, it registered good growth in profits on

30
 account of better margins in performance materials business, driven by good
performance in transportation segment.
 The Performance Products segment, which includes Performance Chemicals,
Dispersions & Pigments, Care Chemicals, Nutrition & Health products and Paper
Chemicals businesses registered higher sales & margins during the year under review
as compared to the previous year owing to increase in volumes from Dahej Plant &
improved profitability of the Dispersions
 business.
 Export sales stood at Rs. 6,847.5 million during the year under review.

2nd -Customer Perspective Revenue

Capital Expenditure
Do they like your products and services? “Number One
in delivering Value to Customers”.

Customer
Quality Service Availability Brand
Satisfaction

Sales turnover grew by 7.4 percent over previous year for FY 2017-18.

On Time Delivery

Quality Satisfaction

Durability
31
3rd -Internal Perspective

Can you efficiently deliver what your customers what?

4th-Learning and Growth Perspective

Can you continue to improve and create value?

Human Capital Organisational Information Capital

Capital
Skills Culture Database
Knowledge Ethics Network

Attitude Leadership System

Training

32
Chapter 3: Organisational
Design

33
Introduction

Organisation Design is a formal guided process for integrating the people using information
and technology of an organisation. It can also be referred as process for improving the
probability that an organisation will be successful as closely as possible to the purposes the
organisation seeks to achieve. Through the design process, organisation act to improve the
probability that the collective efforts of members will be successful.

Types of Organisation Structure

 Line Organisational Structure:

A line organisation has only direct, vertical relationships between different levels in the firm.
There are only line departments-departments directly involved in accomplishing the primary
goal of the organisation. For example, in a typical firm, line departments include production
and marketing. In a line organisation authority follows the chain of command.

 Line and Staff Organization:

This type of organization structure is in large enterprises. The functional specialists are added
to the line in line and staff organization. Mere, staff is basically advisory in nature and usually
does not possess any command authority over line managers. Allen has defined line and staff
organization as follows.

 Project Organisation:

This organisational structure is temporarily formed for specific projects for a specific period of
time, for the project of achieving the goal of developing new product, the specialists from
different functional departments such as production, engineering, quality control, marketing
research etc., will be drawn to work together. These specialists go back to their respective
duties as soon as the project is completed.

34
 Matrix Organisation:

According to Stanley Davis and Paul Lawrence matrix organisation is “any organisation that
employs a multiple command system that includes not only the multiple command structure,
but also related support mechanism and an associated organisational culture and behaviour
pattern.

Operations Logistics Finance Human

Planning
Resource

Coating
plant

Dyes plant

Dispersion
plant

Construction
chemical
pant

Organisation design at BASF Mangalore Works

The company uses a matrix structure that combines Production functions and Business units
all together.

The company has many business units under the coatings which specialises in various different
industries. The divisions are coating plant, dyes plant, dispersion plant,Construction chmical
plant and each of these divisions have thes production functions like Planning, Procurement,
Operations, Logistics, Finance & Human Resource.

35
Organisation Structure & Design: Factors and Approach

An organisation is designed and structured with the following points in mind:

 It should clearly define the goals of the organisation

 It should clearly define the roles and responsibilities of the employees
 It should clearly define the relation bet3ween all the employees in the organisation and
also the relation between various departments and its members.

The approach followed while forming the organisation structure is to establish good corporate
relations and to establish good communication both within the organisation and externally.
Also, all the employees of the organisation, irrespective of their positions are treated equally
in the organisation.

The following are the points which affect the organisation structure and design:

 Size
 Life Cycle
 Strategy
 Environment
 Technology

Organizational size

The larger an organization becomes, the more complicated its structure. When an organization
is small — such as a single retail store, a two-person consulting firm, or a restaurant — its
structure can be simple.

In reality, if the organization is very small, it may not even have a formal structure. Instead of
following an organizational chart or specified job functions, individuals simply perform tasks
based on their likes, dislikes, ability, and/or need. Rules and guidelines are not prevalent and
may exist only to provide the parameters within which organizational members can make
decisions. Small organizations are very often organic systems.

As an organization grows, however, it becomes increasingly difficult to manage without more

formal work assignments and some delegation of authority. Therefore, large organizations
develop formal structures. Tasks are highly specialized and detailed rules and guidelines dictate

36
work procedures. Interorganizational communication flows primarily from superior to
subordinate, and hierarchical relationships serve as the foundation for authority, responsibility,
and control. The type of structure that develops will be one that provides the organization with
the ability to operate effectively. That's one reason larger organizations are often mechanistic—
mechanistic systems are usually designed to maximize specialization and improve efficiency.

Organization life cycle

Organizations, like humans, tend to progress through stages known as a life cycle. Like
humans, most organizations go through the following four stages: birth, youth, midlife, and
maturity. Each stage has characteristics that have implications for the structure of the firm.

 Birth: In the birth state, a firm is just beginning. An organization in the birth stage does not
yet has a formal structure. In a young organization, there is not much delegation of
authority.
 Youth: In this phase, the organization is trying to grow. The emphasis in this stage is on
becoming larger. The company shifts its attention from the wishes of the founder to the
wishes of the customer. The organization becomes more organic in structure during this
phase. It is during this phase that the formal structure is designed, and some delegation of
authority occurs.
 Midlife: This phase occurs when the organization has achieved a high level of success. An
organization in midlife is larger, with a more complex and increasingly formal structure.
More levels appear in the chain of command, and the founder may have difficulty
remaining in control. As the organization becomes older, it may also become more
mechanistic in structure.
 Maturity: Once a firm has reached the maturity phase, it tends to become less innovative,
less interested in expanding, and more interested in maintaining itself in a stable, secure
environment. The emphasis is on improving efficiency and profitability. However, in an
attempt to improve efficiency and profitability, the firm often tends to become less
innovative. Stale products result in sales declines and reduced profitability. Organizations
in this stage are slowly dying. However, maturity is not an inevitable stage. Firms
experiencing the decline of maturity may institute the changes necessary to revitalize.

37
Organisational Chart

38
Chapter 4: Business Level
Functions/ Processes

39
Various Departments of the Organisation
The following are various departments of the Organization

1) Planning
2) Procurement
3) Finance
4) Operations
5) Human Resource
6) Logistics

Business Plan
In BASF Mangalore works, the business plan is divided into

Demand Review (DR)- This is done by Sales to check for new product introduction and regular
demand.

Supply Review (SR)- This is done by Supply Planning and Logistics.

Supply Chain

In BASF Mangalore works, the company uses supply chain for many functions. The Supply
Chain contains these functions.

Supply Chain

Planning Operations Logistics

40
Planning

Planning is the process of thinking about the activates required to achieve a desired goal. It is
the first and foremost activity to achieve the desired results. In BASF Mangalore Works there
are three main types of planning

1) Demand Planning
2) Supply Planning

1) Demand Planning

Demand Planning is the process which takes place in a manufacturing companies which
estimates the demand that the customer needs and communicates to the production team. This
process is done by the Demand manager. In BASF Mangalore Works the demand manager has
two chances to correct the demand before implementing the plan into production. The demand
manager has to confirm with the customers for any changes one month prior to the production
of the goods. This is because the team has to prepare weekly plans and daily production plans
and once the raw materials are ordered and brought in for production it is difficult to change
the schedule.

3) Supply Panning

Supply Planning is the process of managing and planning the inventory supply to meet
customer demand. In BASF Mangalore works the Supply Planning is divided into two types

I. Make to Stock- This s mostly for fast moving Products

II. Make to Order- This is more of manufacturing on order bases. This gives the customer an
option to customise.

Procurement

Procurement is the function which takes care of everything from source to pay. It is
the process of finding, agreeing terms, acquiring goods, services or works from an external
source often via bidding process or tendering. Generally, Procurement function includes all the
functions from source to contract and procure to pay.

41
 Procurement

Procurement
Team

4 Regional
Procurement
Directors

Regional
Procurement
Managers

Finance

Financing is the process of providing funds for business activities, making purchases or
investing. This is one of the most important part of a company.

There are two major financial activities performed in BASF at site level and they are;

1. Budgeting

2. Monitoring

1. Budgeting: The planning for budgeting is done by carrying out budget meeting at BASF site
offices every once a year at departmental level and cost centre level.

The demand proposal is carried out as per the need requirements and it will be presented during
the meeting. Further the demand proposal will be forwarded to headquarters of BASF India
Ltd, which is located in Mumbai. Then the plan is further passed to the supreme headquarters
of BASF in Germany.

42
 Funds allocation planning will take place in the following order,

Supreme HQ BASF

Germany

Regional Division

Country Level

Site Level

Funds allocation are carried out on the basis of priority. For E.g.: More priority is given to the
plant who works aggressively in accordance to profit generation and less priority to the plan
which generates less profit and less efficiency.

Operating Budget: Meeting is done every once in a year

Capital Budget: is carried out on a daily basis to regularly keep track of the costs incurred for
running the plant.

The cost centre which is aligned towards particular department to keep records of the cost being
incurred in different departments.

2. Monitoring: Monitoring activity is carried for both operating budget and capital budget, to
keep track of the expenses based on the funds being allocated.

In case of capital budget the monitoring activity has to be carried out on a regular basis because
of the increased fund flow.

Also when it comes to demand proposal proper justification has to be provided regarding the
business operational efficiency in safety and maximum returns generation.

Credit control department checks the credit level of the company and control the credits. Credit
control duration is solely dependent on customers.

43
Operations
Operations is to oversee the process of transforming resources into goods and services. The
role of operations managers in the manufacturing sector includes production planning,
manufacturing and quality control.

Production Planning

Production Planning is the process which takes place in a manufacturing companies that
involves making sure that sufficient raw materials, staff and other necessary items are readily
available in order to manufacture the finished goods.

Manufacturing

Manufacturing is the process of converting raw materials into semi-finished goods or finished
goods. Under manufacturing there are different components like Quality checking,
Engineering/Maintenance, Health Safety Environment & Security.

The process of Manufacturing in BASF Mangalore works

Generating the
production plan

Material Resource
planning

Scheduling the
production plan

Contacting Raw material

warehouse

Manufacturing

44
 Quality check

Filling & Packaging

Finished goods
warehouse

Dispatch

Quality Checking
Quality Control is one of the most important parts of manufacturing because without this
process the company will lose its potential customers over the quality of goods. In BASF
Mangalore Works there are two Quality Checks

In quality assurance lab two kind of work are been done

1. Evaluation of raw materials.

2. Capacity of finished products.

i.e.

 Water resistance
 Humidity testing
 UV resistance
 Stone chip resistance
 Salt spray test

45
Engineering/Maintenance

It is a process in which the engineers check and maintain the machines which help in
manufacturing the products. The maintenance has to be done regularly to ensure the smooth
running of the production line in the company.

Health Safety Environment & Security.

In this process the company tries to promote safety of the employees both on campus and off-
campus. The company also believes in sustainability.

Human Resource Management

The main function if this department is to carefully carry out the employee management and
training. HR policies are constantly updated for employee satisfaction and optimising
workload. Each employee is trained in all departments of the company so that they can develop
a complete idea about the working of the company. The major concern of this department is
the labour force which causes many problems as permanent labour does not take their work
seriously.

Some of the functions performed by HR are

 Recruitment
 Training & Development
 Performance Management
 Optimum Utilization of Manpower
 Disciplinary Matters
 Statutory Compliances
 Legal Matters
 Wage Negotiation/Wage Settlement
 Wage and Salary Administration
 Administration
 Public Relations & Community Welfare
 Contractors Management

46
 HR Department – Organisation Chart

Mr. Srinivas Pranesh

Site Director – Mangalore Works

Mr. C M Nataraj

Head HR – Mangalore
Works

Mr. Michael D’Souza Mrs. Savitha

Mr. Santhosh Pai
Asst. Manager- Fernandes
Asst. Manager HR
Personnel & Executive – Secretarial
Administration Services

Logistics

Logistics is the part of supply chain management in BASF Mangalore Works that plans,
implements, and controls the efficient storage of goods, and its transportation related
information between the point of origin and the point of consumption in order to meet
customer's requirements. In BASF Mangalore Works the process of Logistics is

Finished Goods warehouse

Dealer desk

Pick List

Dispatch

Delivery & Customer returns

47
Finished goods warehouse: This s the place where the finished goods are kept after
manufacturing.
Dealer desk: The Logistics team picks up the finished goods once the demand for the finished
goods is generated.

Pick list: It is the document which is created for which finished goods to pick from which go
down in order to dispatch it to the right customer.

Delivery & Customer returns: In this process the order is delivered to the customer and
sometimes the customer rejects the paint and returns it back.

Under logistics the transport of goods operation takes place in two ways

1. Inbound
2. Outbound

Inbound: Supply of raw materials from the supplier/vendors to the company.

This procedure involves a transportation unit coming into the factory gate who is sent by the
vendor. Once the transport unit of raw materials enters the factory, they will be permitted to
enter the factory warehouse only after verifying the order number which takes place in the
factory warehouse involving interaction/ communication between transport representative and
factory logistics manager.

Outbound; Outbound transportation operation involves supply of finished products from the
factory to the required customers.

Once the product is out of factory gate either customer takes the responsibility of transportation
through customer nominated transport unit or company nominated transport unit with
additional transport & delivery charges.

48
5-S methodology

1. Seiri (Sorting Out)

 Look around your work area & ask yourself “ is it really necessary for all items to be
there”?
 Separate O.K, rework able and rejected items.
 Rework the rework able items and dispose off the rejected items.
2. Seiton (Systematic Arrangement)
 Items must b placed in prefixed location so that they are easily accessible and can easily
be used. Make sure that items can be easily identified by labelling them properly
3. Seiso (Spic and Span)
 Sesio means cleaning the work place and all the machinery by ourselves.
4. Seiketsu (Serene Atmosphere)
 Even a clean workplace with proper selection and proper arrangement will soon become
dirty if Seiri, Seiton and Seiso are not continuously repeated. Let us keep our area neat
and clean, including one’s uniform also, through which will achieve serene atmosphere

49
 5. Shitsuke (Self Discipline)
 Everyone should be disciplined to follow strictly the rules and maintain standards while
working. For Examples: Let us adhere to the timings and let us follow the prescribed
operations standards. Everybody should wear helmets for safety.

Advantages of 5-S

By thoroughly enforcing 5S in each work area.

 Operations can be performed without the error, proceeding in a well regulated fashion,
resulting in fewer defective items thereby increasing the overall quality of the products
 Operations can be performed safely and comfortably reducing the chances of accidents.
 Machinery and equipment can be carefully maintained reducing the number of
breakdowns
 Operations can be performed efficiently, eliminating waste thereby increasing the
efficiency and productivity

How to achieve 5-S

5-S can be achieved easily by every employee. By having a close look at his/her workplace.

He/she has to ensure that

 No rejected /unwanted items are lying at his work place

 All items are kept in proper location/order
 Everybody should co-operate with each other in keeping his/her others area the
machines clean
 Follow the rules and regulations and maintain required standards

50
Chapter 5: Findings/
Recommendations/
Conclusion

51
Findings
 A wide variety of products offered in different segments of chemical industry.
 Big emphasis on safety and security.
 Systematic process of manufacturing.
 Everything in the company is pre-defined.
 Business process like Business Planning, Supply Chain, 5-, etc.
 More focus on Research and Development.

Recommendations
 Production- Usage of automated machines in filling line instead of manual labour.
 Human Resource- HR management carries out employee performance appraisal process in
order to measure and reward the employees based on the quality of work that they do. This
also helps the employees to develop better competitive spirit.
 ERP- Usage of one standard software for all the process eg.SAP.

Conclusion

The study conducted at BASF India Ltd . which is a market leader when it comes to chemical
industry in India, helped me in getting a wider outlook about the business environment and
managing an organization.

It was a general study regarding all the functions and aspects of BASF. The company has six
functioning departments with the help of which the company is operating. It was found that the
company has a good working environment and cordial relationship is maintained with all
departments for the smooth functioning and achieving the goals of the company. Porters five
forces model and PEST analysis was done in the period of study. SWOT analysis was also
done for the company during the study.

Learning experience
BASF India Ltd has been one of the first manufacturing companies I have done my OS in.
Firstly, I thoroughly enjoyed working for BASF as the staff and my mentor were really friendly
and they assisted me and coordinated with me with the study that had been doing and here in
BASF I got to learn practically what I had learnt in class. I got first-hand experience of all the
processes that generally happen in an organisation.

52