BASF in India Report 2013

Transcription

1 Chemicals Key data Chemicals (million ) The Chemicals segment comprises our business with basic chemicals and interme diates. Its portfolio ranges from solvents, plasticizers and high-volume monomers to glues and electronic chemicals as well as raw materials for detergents, plastics, textile fibers, paints and coatings, plant protection and pharmaceuticals. In addition to supplying customers in the chemical industry and numerous other sectors, we also ensure that other BASF segments are supplied with chemicals for producing downstream products. Performance Products Our Performance Products lend stability and color to many everyday items and help to improve their application properties. Our product portfolio also includes vitamins and other food additives as well as ingredients for pharmaceuticals and for hygiene, home and personal care items. Other products from this segment improve processes in the paper indus try, oil and gas production, mining and water treatment. They can also enhance the effi ciency of fuels and lubricants, the effectiveness of adhesives and coatings, and the stability of plastics. Functional Materials & Solutions In the Functional Materials & Solutions segment, we bundle system solutions, services and innovative products for specific sectors and customers, in particular for the automotive, electrical, chemical and construction industries as well as for household applications and for sports and leisure. Our portfolio comprises catalysts, battery materials, engineering plastics, polyurethane systems, automotive and industrial coatings and concrete admixtures as well as construction systems such as tile adhesives and decorative paints. Agricultural Solutions Our crop protection products guard against fungal diseases, insects and weeds, increase the quality of agricultural products and secure crop yields. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, better nutrition, and use as renewable raw materials. Research and development expenses, sales, earnings and all other data of BASF Plant Science are not included in the Agricultural Solutions segment; they are reported in Other. Oil & Gas 2012 Change in % 17,887 (5.0) 7,785 8,260 (5.8) Monomers 6,385 6,772 (5.7) Intermediates 2,824 2,855 (1.1) EBITDA 2,956 3,021 (2.2) Income from operations before special items 2,182 2, Income from operations (EBIT) 2,086 2,173 (4.0) Thereof Petrochemicals Key data Performance Products (million ) Change in % 15,534 15,713 (1.1) Thereof Dispersions & Pigments 3,557 3,668 (3.0) Care Chemicals 4,871 4,898 (0.6) Nutrition & Health 2,088 1, Paper Chemicals 1,442 1,564 (7.8) Sales 3,576 3,624 (1.3) EBITDA Performance Chemicals 1,987 2,090 (4.9) Income from operations before special items 1,365 1,421 (3.9) Income from operations (EBIT) 1,100 1,276 (13.8) Key data Functional Materials & Solutions (million ) Change in % 17,252 17, ,708 5, Construction Chemicals 2,120 2,315 (8.4) Coatings 2,927 2,961 (1.1) Performance Materials 6,497 6, EBITDA 1,498 1, Income from operations before special items 1, Income from operations (EBIT) 1, Sales Thereof Catalysts Key data Agricultural Solutions (million ) Change in % Sales 5,227 4, EBITDA 1,375 1, Income from operations before special items 1,222 1, Income from operations (EBIT) 1,208 1, Key data Oil & Gas (million ) We focus our exploration and production on oil and gas-rich regions in Europe, North Africa, South America, Russia and the Middle East. Together with our Russian partner Gazprom, we are active in the transport, storage and trading of natural gas in Europe. Dr. Vijay Swaminathan (center), Organic Synthetic Lab, BASF India, discusses research projects with Dr. Manojkumar Poonoth (left) and Mr. Nitin Gupte (right). Researchers at this lab work on solutions for agriculture, energy, leather and specialty chemicals ,994 Sales Change in % 14,776 12, ,929 2, ,847 10, EBITDA 3,144 2, Income from operations before special items 1,969 1, Income from operations (EBIT) 2,516 1, Net income 1,780 1, Sales Thereof Exploration & Production Natural Gas Trading

2 Chemicals Key data Chemicals (million ) The Chemicals segment comprises our business with basic chemicals and interme diates. Its portfolio ranges from solvents, plasticizers and high-volume monomers to glues and electronic chemicals as well as raw materials for detergents, plastics, textile fibers, paints and coatings, plant protection and pharmaceuticals. In addition to supplying customers in the chemical industry and numerous other sectors, we also ensure that other BASF segments are supplied with chemicals for producing downstream products. Performance Products Our Performance Products lend stability and color to many everyday items and help to improve their application properties. Our product portfolio also includes vitamins and other food additives as well as ingredients for pharmaceuticals and for hygiene, home and personal care items. Other products from this segment improve processes in the paper indus try, oil and gas production, mining and water treatment. They can also enhance the effi ciency of fuels and lubricants, the effectiveness of adhesives and coatings, and the stability of plastics. Functional Materials & Solutions In the Functional Materials & Solutions segment, we bundle system solutions, services and innovative products for specific sectors and customers, in particular for the automotive, electrical, chemical and construction industries as well as for household applications and for sports and leisure. Our portfolio comprises catalysts, battery materials, engineering plastics, polyurethane systems, automotive and industrial coatings and concrete admixtures as well as construction systems such as tile adhesives and decorative paints. Agricultural Solutions Our crop protection products guard against fungal diseases, insects and weeds, increase the quality of agricultural products and secure crop yields. Our research in plant biotechnology concentrates on plants for greater efficiency in agriculture, better nutrition, and use as renewable raw materials. Research and development expenses, sales, earnings and all other data of BASF Plant Science are not included in the Agricultural Solutions segment; they are reported in Other. Oil & Gas 2012 Change in % 17,887 (5.0) 7,785 8,260 (5.8) Monomers 6,385 6,772 (5.7) Intermediates 2,824 2,855 (1.1) EBITDA 2,956 3,021 (2.2) Income from operations before special items 2,182 2, Income from operations (EBIT) 2,086 2,173 (4.0) Thereof Petrochemicals Key data Performance Products (million ) Change in % 15,534 15,713 (1.1) Thereof Dispersions & Pigments 3,557 3,668 (3.0) Care Chemicals 4,871 4,898 (0.6) Nutrition & Health 2,088 1, Paper Chemicals 1,442 1,564 (7.8) Sales 3,576 3,624 (1.3) EBITDA Performance Chemicals 1,987 2,090 (4.9) Income from operations before special items 1,365 1,421 (3.9) Income from operations (EBIT) 1,100 1,276 (13.8) Key data Functional Materials & Solutions (million ) Change in % 17,252 17, ,708 5, Construction Chemicals 2,120 2,315 (8.4) Coatings 2,927 2,961 (1.1) Performance Materials 6,497 6, EBITDA 1,498 1, Income from operations before special items 1, Income from operations (EBIT) 1, Sales Thereof Catalysts Key data Agricultural Solutions (million ) Change in % Sales 5,227 4, EBITDA 1,375 1, Income from operations before special items 1,222 1, Income from operations (EBIT) 1,208 1, Key data Oil & Gas (million ) We focus our exploration and production on oil and gas-rich regions in Europe, North Africa, South America, Russia and the Middle East. Together with our Russian partner Gazprom, we are active in the transport, storage and trading of natural gas in Europe. Dr. Vijay Swaminathan (center), Organic Synthetic Lab, BASF India, discusses research projects with Dr. Manojkumar Poonoth (left) and Mr. Nitin Gupte (right). Researchers at this lab work on solutions for agriculture, energy, leather and specialty chemicals ,994 Sales Change in % 14,776 12, ,929 2, ,847 10, EBITDA 3,144 2, Income from operations before special items 1,969 1, Income from operations (EBIT) 2,516 1, Net income 1,780 1, Sales Thereof Exploration & Production Natural Gas Trading

3 BASF Group 2013 at a glance Economic data Change in % Sales million 73,973 72, Income from operations before depreciation and amortization (EBITDA) million 10,427 10, Income from operations (EBIT) before special items million 7,190 6, Income from operations (EBIT) million 7,273 6, Income from operations (EBIT) after cost of capital million 1,872 1, Income before taxes and minority interests million 6,713 5, Net income million 4,842 4, Earnings per share Adjusted earnings per share (4.8) Dividend per share Cash provided by operating activities million 7,870 6, Additions to non-current assets 1 million 7,513 5, Depreciation and amortization 1 million 3,154 3,267 (3.5) Return on assets % Return on equity after tax % Including acquisitions Value added Creation of value added (Million, previous year s figures in parentheses) Use of value added (Previous year s figures in parentheses) 1. Value added 17,028 (15,994) 2. Amortization and depreciation 3,154 (3,267) 3. Service purchased, energy costs and other expenses 12,562 (12,856) 4. Cost of raw materials and merchandise 43,124 (41,950) 4. Business performance 75,868 (74,067) Employees 54.6% (56.0%) Government 11.0% (7.8%) Creditors 4.0% (4.5%) Minority interests 1.9% (1.6%) Shareholders (Dividend and retention) 28.5% (30.1%) 2 Value added results from the company s performance minus goods and services purchased, depreciation and amortization. It shows the BASF Group s contribution to both private and public income as well as the distribution of this contribution among all stakeholders. Innovation Change in % Research and development expenses million 1,835 1, Number of employees in research and development at year-end 10,631 10,

4 Employees and society Change in % Employees at year-end 112, , Apprentices at year-end 3,060 2, Personnel expenses million 9,285 8, Annual bonus % of Group companies Donations and sponsorship million Supply chain management and Responsible Care Change in % Number of on-site sustainability audits of raw material suppliers (26.0) Number of environmental and safety audits Number of occupational medicine and health protection audits In 2013, we updated our approach for evaluating suppliers. In addition to on-site audits, we initiated 550 sustainability evaluations online through external service providers. Safety and health Change in % Transportation accidents per 10,000 shipments (8) Product spillages during transportation per 10,000 shipments (8) Lost time injuries per million working hours (18) Health Performance Index Environment Change in % Primary energy usage 4 million MWh Energy efficiency in production processes metric tons of sales product/mwh (1.7) Total water withdrawal million cubic meters 1,781 1,999 (10.9) Withdrawal of drinking water million cubic meters (2.5) Emissions of organic substances to water 5 thousand metric tons (7.5) Emissions of nitrogen to water 5 thousand metric tons Emissions of heavy metals to water 5 metric tons (16.7) Emissions of greenhouse gases million metric tons of CO 2 equivalents Emissions to air (air pollutants) 5 thousand metric tons Waste million metric tons Operating costs for environmental protection facilities million (0.9) Investments in environmental protection million Primary energy used in BASF s plants as well as in the plants of our energy suppliers to cover energy demand for production processes 5 Excluding emissions from oil and gas production BASF Group 2013 at a glance

5 About the report 1 Contents About the report 1 Message from the Chairman 2 BASF Group 4 BASF in the regions 8 BASF in Asia Pacific Environment, health and safety 22 Employees 27 Society 29 Selected prizes and awards 31 Ten-year summary, BASF Group 32 Connect with 33 Strategic areas 18 BASF s segments at a glance inside front cover About the report The - Report is published annually as a concise document about the performance of our activities across the three dimensions of sustainability - economy, environment, and society - in India. The reporting period for this publication is the financial year This report also carries an overview of BASF Group along with its financial performance, prepared in accordance with the requirements of the German Commercial Code and the International Financial Reporting Standards (IFRS). Since January 1, 2013, BASF has applied IFRS 10 and 11 and International Accounting Standard (IAS) 19 (revised). We have adjusted the figures for the 2012 financial year accordingly in order to ensure comparability. The figures for the 2011 financial year and earlier were not restated according to the new accounting and reporting standards IFRS 10 and 11. The emissions, waste, energy and water use of consolidated joint operations are included pro rata, based on our stake. The employee numbers refer to employees within the BASF Group scope of consolidation as of December 31, 2013.

6 2 Message from the Chairman Manufacturing is at the heart of BASF s growth story in India. Our commitment to infrastructure development through investment in Dahej, capacity building, upgradation of sites and focus on global R&D is aimed to strengthen the manufacturing process and enable it to serve the growing markets. Dr. Raman Ramachandran, Head of South Asia & Chairman, BASF Companies in India

7 Message from the Chairman 3 Introduction Message from the Chairman, Raman Ramachandran, Ph.D I am delighted to write to you for the first time, through the BASF in India. I have returned to India after several years in Singapore, in regional roles at BASF. Over the years, I have always kept a close eye on the development and growth of India. Now that I am back, I am keen to harness my 25 years of crossfunctional global expertise in research, operations, new market development and strategic planning to support and the Indian chemical industry. In 2013 in spite of the continuous market pressures, the depreciating rupee and slower economic growth in India, BASF achieved several business milestones. This includes historic high sales by the crop protection and the leather chemicals businesses. Innovation continued to be the cornerstone of all our business endeavors. In 2013, we have been quite successful in further developing our business to support customers at the Base-of-Pyramid. We made considerable progress on the manufacturing front as well. The successful commissioning of the fine chemicals catalysts production line in Mangalore and development of the site at Dahej sets BASF in good stead for the future. In 2013, we broke ground on a 47,000 square meters catalyst site in Chennai and expanded our global R&D activities in India, including an Agricultural Research Station in Lonikand, Pune. At BASF, we understand sustainability as the balance of economy, environment, and society. In 2013, Karnataka State Pollution Control Board once again recognized the Mangalore site for its high Environment, Health and Safety performance. Throughout the year, we also continued initiatives including BASF Kids Lab, the Water Education Project in Mangalore and the Seminar Series on Corporate Governance and Business Ethics. These actions show our committed focus on topics relevant to the country s progress and economic development. We are committed to creating chemistry together with our partners in India. I am honored to be a part of it all! Raman Ramachandran Head of South Asia & Chairman, BASF Companies in India About Raman Ramachandran - Head of BASF in South Asia, including group of companies in India, Pakistan, Sri Lanka and Bangladesh - Master of Science and a Ph.D in Agriculture from the University of Adelaide, Australia - Held several Asia Pacific leadership positions in business development, marketing; last assignment as Senior Vice President for Ag Solutions business of BASF in Asia Pacific based out of Singapore

8 4 The BASF Group BASF s combined cycle power plant at its Ludwigshafen Verbund site is a top performer in industrial energy conversion. The principle is simple: the waste heat is used to produce steam, which is then used by the site s production plants for a wide variety of chemical processes. This means BASF not only optimally supplies its Ludwigshafen site with energy but does so in a climate-friendly way.

9 The BASF Group 5 The BASF Group We are the world s leading chemical company The Chemical Company. In the BASF Group, around 112,000 employees work on contributing to the success of our customers in nearly all sectors and almost every country in the world. Our broad portfolio is arranged into five segments: Chemicals, Performance Products, Functional Materials & Solutions, Agricultural Solutions and Oil & Gas. Organization of the BASF Group Arranged into five segments, 14 divisions bear operational responsibility and manage our 66 global and regional business units. The divisions develop strategies for our 86 strategic business units and are organized according to sectors or products. The regional divisions contribute to the local development of our business and help to exploit market potential. They are also responsible for optimizing the infrastructure for our business. For financial reporting purposes, our divisions are grouped into the following four regions: Europe; North America; Asia Pacific; and South America, Africa, Middle East. Three central divisions, six corporate departments and eleven competence centers provide services for the BASF Group in areas such as finance, investor relations, communications, human resources, research, engineering, site management, and environment, health and safety. In line with our We create chemistry strategy, we optimized our segment structure as of January 1, 2013, in order to better serve customer industries and further increase our operational and technological excellence. By combining businesses that share the same business model, we can sharpen our focus on the respective success factors. Markets and sites BASF has companies in more than eighty countries and supplies products to a large number of business partners in nearly every part of the world. In 2013, we achieved 56% of our sales with customers in Europe, of which 35 percentage points were in the Oil & Gas segment. North America accounted for 19% of sales; Asia Pacific, 17%; and 8% of sales were generated in South America, Africa, Middle East. We operate six Verbund sites as well as 376 additional production sites worldwide. Our Verbund site in Ludwigshafen is the largest integrated chemical complex in the world. This was where the Verbund concept was developed and continuously optimized before it was applied to other sites around the world. Verbund The Verbund system is one of BASF s great strengths. Here, we add value as one company by using our resources efficiently. The Production Verbund, for example, intelligently links production units and energy demand so that heat released by production processes can be used as energy in other plants. Furthermore, by-products of one plant can serve as feedstock elsewhere. In this system, chemical processes run with lower energy use and higher product yield. This not only saves us raw materials and energy, it also minimizes emissions, lowers logistics costs and makes use of synergies. Another important part of the Verbund concept is the Technology and Know-How Verbund. Expert knowledge is pooled in our central research areas. For more on the Verbund concept, see basf.com/verbund_e Corporate legal structure As the publicly traded parent company, BASF SE takes a central position: Directly or indirectly, it holds the shares in the companies belonging to the BASF Group, and is also the largest operating company. The majority of Group companies cover a broad spectrum of our business. Some concentrate on specific business areas. The BASF Group Six Verbund sites and 376 other production sites worldwide; around 112,000 employees Largest BASF Verbund site located in Ludwigshafen, where Verbund concept was created Verbund: Intelligent plant networking in the Production Verbund; Technology and Know-how Verbund The picture shows one of various tanks that supply the production facilities in Ludwigshafen with feedstocks.

10 6 The BASF Group Corporate strategy With the We create chemistry strategy, BASF has set itself ambitious goals in order to strengthen its position as the world s leading chemical company. We want to contribute to a sustainable future, and have embedded this into our corporate purpose: We create chemistry for a sustainable future. In 2050, around nine billion people will live on this planet. While the world population and its demands will keep growing, the planet s resources are finite. On the one hand, population growth is associated with huge global challenges; and yet we also see many opportunities, especially for the chemical industry. Our purpose We create chemistry for a sustainable future Through research and innovation, we support our customers in nearly every industry in meeting the current and future needs of society. Our products and solutions contribute to conserving resources, ensuring good nutrition and improving quality of life. Innovations based on chemistry will play a key role in three areas in particular: Resources, environment and climate Food and nutrition Quality of life Our leading position as an integrated global chemical company opens up opportunities for us in all three of these areas. In pursuing them, we act in accordance with four strategic principles. We drive sustainable solutions In the future, sustainability will serve more than ever before as a starting point for new business opportunities. We therefore value sustainability and innovation as important drivers for profitable growth. We form the best team Committed and qualified employees around the world are the key to making our contribution to a sustainable future. That is why we will continue to pursue our goal of building the best team. We offer excellent working conditions and an open leadership culture that fosters mutual trust and respect and encourages high motivation. Our values How we act is critical for the successful implementation of our strategy: this is what our values represent. They guide how we interact with society, our partners and with each other. Creative In order to find innovative and sustainable solutions, we have the courage to pursue bold ideas. We join our areas of expertise from many different fields and build partnerships to develop creative, value-adding solutions. We constantly improve our products, services and solutions. Open We value diversity in people, opinions and experience. That is why we foster dialog based on honesty, respect and mutual trust. We explore our talents and capabilities. Our strategic principles We add value as one company Our Verbund concept is unique in the industry. We plan to strengthen this sophisticated and profitable system even further. It extends from the Production Verbund and Technology Verbund to the Know-How Verbund, and provides access to all relevant customer industries worldwide. In this way, we combine our strengths and add value as one company. We innovate to make our customers more successful We want to align our business even more closely with our customers needs and contribute to their success with innovative and sustainable solutions. Through close partnerships with customers and research institutes, we link expertise in chemistry, biology, physics, materials sciences and engineering to jointly develop customized products as well as functional materials and system solutions. Responsible We act responsibly as an integral part of society. In doing so, we strictly adhere to our compliance standards. And in everything we do, we never compromise on safety. Entrepreneurial All employees contribute to BASF s success as individuals and as a team. We turn market needs into customer solutions. We succeed in this because we take ownership and embrace accountability for our work.

11 The BASF Group 7 Goals Growth and profitability 1 Annual goals 2015 Goals 2020 Goals Status at year-end 2013 Sales Approx. 80 billion Approx. 110 billion 74.0 billion Premium on cost of capital At least 2.0 billion on average each year 1.9 billion EBITDA Approx. 14 billion Approx. 22 billion 10.4 billion Earnings per share Around For more on the application of International Financial Reporting Standards 10 and 11, see basf.com/goals Employees Long-term goals Status at year-end 2013 International proportion of senior executives Increase in the proportion of non-german senior executives (baseline 2003: 30%) 35.0% Senior executives with international experience Proportion of senior executives with international experience over 80 % 81.6% Women in executive positions Increase in the proportion of female executives worldwide 18.5% Employee development Establishment of employee development as a responsibility shared by employees and leaders based on relevant processes and tools The project has been implemented for around 40,000 employees worldwide Environment, safety, security and health 2020 Goals Status at year-end 2013 Energy and climate protection Improvement of energy efficiency in production processes 2 (baseline 2002) +35% +19.8% Greenhouse gas emissions per metric ton of sales product 2 (baseline 2002) 40 % 34.0% Stop flaring of associated gas released during Wintershall s production of crude oil (2012 goal) 100% 100% Greenhouse gas emissions per amount and distance of transported gas (baseline 2010) 10% 9.0% Water Emission of organic substances to water 2 (baseline 2002) 80% 78.5% Emission of nitrogen to water 2 (baseline 2002) 80% 86.8% Emission of heavy metals to water 2 (baseline 2002) 60% 64.2% Withdrawal of drinking water for production (baseline 2010) 50% 25.3% Introduction of sustainable water management at production sites in water stress areas 2 (baseline 2010) 100% 11.1% Air Emission of air pollutants 2 (baseline 2002) 70% 62.2% Transportation Transportation accidents per 10,000 shipments (baseline 2003) 70% 61% Production Lost time injuries per million working hours (baseline 2002) 80% 58% Health Performance Index (annual goal) > Products Risk assessment for all products sold worldwide by BASF in quantities of more than one metric ton per year >99% 56% 2 Excluding oil and gas production

12 8 BASF in the regions BASF in the regions Sales 2013: 73,973 million; EBIT before special items 2013: 7,190 million Florham Park Freeport Geismar North America Sales 1 (in million ) 14,573 EBIT before special items 1 (in million ) 1,539 Employees 2 16,996 São Paulo South America, Africa, Middle East Sales 1 (in million ) 4,386 EBIT before special items 1 (in million ) 387 Employees 2 7,525 North America South America, Africa, Middle East At 14,573 million, sales for companies headquartered in North America were up year-on-year by 1%. In localcurrency terms, sales in the region grew by 4%. Income from operations before special items increased by 49% to 1,539 million compared with the previous year. At 4,386 million, sales for companies headquartered in South America, Africa, Middle East were 4% below the level of In local-currency terms, sales rose by 7%. Income from operations before special items in the region improved by 5% to 387 million.

13 BASF in the regions 9 Ludwigshafen Antwerp Europe Sales 1 (in million ) 43,335 EBIT before special items 1 (in million ) 4,422 Employees 2 70,977 Nanjing Hong Kong Kuantan Singapore Asia Pacific Sales 1 (in million ) 11,679 EBIT before special items 1 (in million ) 842 Employees 2 16,708 1 In 2013, by location of company 2 At year-end 2013 Regional centers Selected production sites Verbund sites Selected research sites Europe Asia Pacific In 2013, companies headquartered in Europe posted a sales increase of 5% to 43,335 million. At 4,422 million, income from operations before special items surpassed the level of the previous year by 2%. Companies headquartered in Asia Pacific were able to increase sales by 5% in local-currency terms in 2013; in euro terms, sales matched the prior-year level, reaching 11,679 million. Income from operations before special items declined by 5% to 842 million.

14 10 BASF in Asia Pacific BASF in Asia Pacific At a glance BASF strategy in Asia Pacific: grow smartly In 2013, BASF announced the implementation of its global We create chemistry strategy in Asia Pacific with a set of ambitious targets and a focus on sustainability. To achieve sales of 25 billion to customers in the region by 2020, BASF s Asia Pacific strategy grow smartly outlines investments of 10 billion, and annual savings of 1 billion. Around 25% of BASF s global R&D activities will happen in Asia Pacific by 2020, to develop innovative solutions that address the region s challenges of resource efficiency, food and nutrition, and quality of life. By 2020, BASF plans to employ a total of around 3,500 R&D personnel in the region. Investment in local production By 2020, BASF aims for local production of approximately 75% of the products it sells in the Asia Pacific region, in order to intensify its collaboration with and strengthen its supply position to customers in Asia Pacific. At the same time, local production improves resource efficiency by reducing the transportation needed for imports and exports, and by enhancing energy and raw material efficiency through highly-integrated production systems close to customers. In 2013, BASF started production at several new sites, including the inauguration of a wholly-owned tert-butylamine plant in Nanjing, China, with a capacity of 10,000 metric tons per year, as well as starting up production of Hydraulan brake fluid at its site in Shanghai, China. BASF also achieved several investment milestones in In Maoming, China, BASF and Sinopec took the next steps towards the establishment of a joint venture world-scale isononanol (INA) plant. In Chennai, India, BASF is expanding its production of mobile emissions reduction catalysts with new production lines and manufacturing capabilities. In Shanghai, China, BASF broke ground on an Ultramid polymerization plant with a capacity of 100,000 metric tons per year, and announced plans to invest 90 million to set up a world-scale production plant to produce high performance resins and electrocoat for the automotive industry. Business performance In 2013, BASF achieved sales of 12.5 billion to customers located in Asia Pacific (2012: 12.5 billion). EBIT before special items earned by companies in the region was 842 million (2012: 888 million). Collaborative projects help BASF create chemistry with customers and local industries throughout the region. For example, BASF is working with the National Academy of Construction in India to provide vocational training for builders to improve the sustainability, durability, and performance of buildings. In the automotive industry, BASF and Somic Ishikawa jointly developed a plastic seat damper that helps carmakers improve comfort and decrease production costs. Working together with the entire textile value chain, BASF in 2013 adopted the bluesign TM system, an internationally-recognized system for safety and environmental protection in textile chemicals. Through cooperation with partners in Japan, BASF s gas treatment technology is now supporting Japan s first large-scale carbon capture and storage demonstration project. Portfolio development BASF continues to improve its portfolio to enhance the resiliency towards market fluctuation. The goal is to generate more than 2 billion in regional sales by location of customer by 2020 through new business and acquisitions. BASF in Asia Pacific: at a glance Customers in 17 countries 16,708 employees Sales to customers in the region of around 12.5 billion EBIT before special items of around 842 million 700 R&D employees Around 100 production sites More than 130 sales offices The picture shows three employees working at the water treatment and paper chemicals plant in Nanjing, China.

15 BASF in Asia Pacific 11 Operational excellence In order to achieve our ambitious goals, we need to continuously improve our operational efficiency and our organizational effectiveness. BASF will implement a range of efficiency measures that will save approximately 1 billion annually by Excellence in functional units, marketing and sales, organization structures, investment processes and operations are the focus areas addressed to establish a competitive advantage for BASF in the region. Talent development Our employees are key to our long-term success in Asia Pacific. We focus on attracting and developing the most qualified talents. In 2013, BASF employed 16,708 people in the Asia Pacific region (2012: 16,406). Dr. Martin Brudermüller, Vice Chairman of the Board of Executive Directors, BASF SE, responsible for Asia Pacific Dr. Martin Brudermüller Number of employees in Asia Pacific (as of December 31) , % 27.6% , % 16.0% Men Women Innovation BASF is continuously expanding its R&D footprint in the region. We plan to employ a total of around 3,500 R&D personnel in the region by In 2013, BASF announced its intention to set up its new Electronic Materials Research and Development Center Asia Pacific in Seoul, Korea. The facility will serve as an integrated hub for electronic materials research in the region. We also inaugurated an R&D laboratory and application technology center for Battery Materials in Amagasaki, Japan. What is BASF s biggest challenge in Asia Pacific? We see a rapid rise in the innovativeness and competitiveness of Asian companies in the marketplace. This is why we have to grow smartly by delivering leadingedge solutions in the most efficient way. Societies are also becoming more demanding, when it comes to companies contribution to this development. We reflect this with our corporate purpose: We create chemistry for a sustainable future. How will BASF tackle the sustainability needs in the region? Our strategy balances the three dimensions of sustainability: economy, society and environment. Resource scarcity drives the need for more innovative and sustainable solutions. To deliver those, we can build on our strong local presence, our portfolio and our innovation capabilities. Cross-business growth initiatives, innovations, and close partnerships will contribute to the solutions we offer to customers to help tackle these challenges. BASF sales in Asia Pacific (billion ) (by location of customer) BASF EBIT before special items in Asia Pacific (million ) (by location of company)

16 12 Bhoja Moolya (left) and Krishnamorthy (right), both technicians, carry out a routine safety inspection. The Mangalore site, spread across 85 hectares, has been in operation since 1996 and is the largest BASF production site in South Asia.

17 13 Business development BASF has successfully partnered India s progress for over a century. At present, all of BASF s global businesses maintain a local presence in India, except for Oil & Gas. BASF upholds excellent performance in India in environment, health and safety, in line with the company s global and internationally accepted standards. Sites BASF has established a strong local presence across India in terms of manufacturing, technical centers, and research and development. With this, we aim to constantly increase the value of our company and maintain healthy growth in sales and profitability. By periodically reviewing and aligning our portfolio, together with investment in new projects and facility expansions, we work to improve our efficiency and effectiveness in the market and better serve our customers to meet our strategic goals. Sales and business update Our strategic goal, as per BASF s Asia Pacific grow smartly strategy, is to leverage our broad range of competencies to help our customers grow their business. In 2013, we continued to develop entrepreneurial solutions to serve the middle and lower income segments in emerging markets, through our Base-of- Pyramid (BoP) project. Whether it is in the area of developing affordable home and personal care solutions or offering packaging innovations that improve the shelf-life of perishables, BASF s solutions have been successful in creating innovations that support sustainability in the area of resource conservation, food & nutrition and in people s general quality of life. For more information about BASF s contribution to meeting India s sustainability challenges, see page 16 For more information, see content/sustainability/sustainability Sales growth In 2013, BASF achieved sales of 1.02 billion (2012: 1.14 billion) to customers in India. Sales rose in local currency terms but were affected due to rupee depreciation. As of December 31, 2013, had 2,254 employees (2012: 2,157), eight production sites and two R&D centers that work closely with BASF s Global Technology platform. Sales 1.02 billion Employees 2,254 Sales of BASF Group companies in India in 2013 (by location of customer) Sales of BASF Group companies to customers in India (million ) ` billion 1.02 billion (At the exchange rate of 1 =` as of December 31, 2013) , ,139 Sales rose in local currency terms but were affected due to rupee depreciation.

18 14 History The early days Acquiring momentum 1865: Badische Anilin- und Soda-Fabrik is founded in Ludwigshafen, Germany. 1890: BASF s first sales figures for India reported BASF s first interaction with India is in textile colors, beginning in May 13, 1943: R. A. Cole Private Limited is incorporated, which will later become BASF India Limited. 1998: The automotive coatings business is acquired from Dr. Beck & Co. and printing inks business is acquired from JBA Printing Inks Limited. The automotive coatings and printing inks businesses later become a part of BASF Industries Limited. January 2000: BASF acquires the coil coatings business from Hydro Coatings worldwide and Hydro Coatings India Limited is renamed BASF Coatings Private Limited. 1961: BASF acquires a 50% holding in R. A. Cole Private Limited and the Company is known as R. A. Cole Limited. At this time, is involved in the production of Expandable Polystyrene under the Thermocole trade name at the Thane site, BASF s first production site in Asia. January 9, 1963: R. A. Cole Limited is renamed Indoplast Limited, marking a shift in focus towards plastics manufacturing. November 2000: BASF and the New York-based Chatterjee Group form a strategic alliance to produce and market polystyrene in India. BASF takes a majority share in the partnership and takes operational and administrative direction of Pushpa Polymers Private Limited. This acquisition makes BASF the first globally active polystyrene manufacturer with its own production in India. Pushpa Polymers Private Limited changes its name to BASF Styrenics Private Limited. September 23, 1967: Indoplast Limited is renamed BASF India Limited, its present name. April 1968: BASF India Limited is listed on The Bombay Stock Exchange Limited (BSE). 1995: With the purchase of additional shares in 1994, BASF Aktiengesellschaft acquires majority holding ( %) in BASF India. July 2001: Cyanamid Agro Limited is merged with BASF India Limited pursuant to BASF s global acquisition of Cyanamid Aktiengesellschaft. May 2003: The automotive coatings business is transferred from BASF Industries Limited to BASF Coatings Private Limited. February 2005: The printing inks business of BASF Industries Limited is divested. May 1995: BASF India Limited is listed on The National Stock Exchange of India Limited (NSE). April 6, 2005: BASF Polyurethanes India Limited is formed as a 100% subsidiary of BASF India Limited. May 1996: BASF Industries Limited, a 100% owned BASF Group company, is formed. 1996: BASF starts operations at its new production site in Mangalore, manufacturing dyes and dispersions. July 2006: BASF Aktiengesellschaft acquires the global construction chemicals business of Degussa Aktiengesellschaft. This leads to the inception of BASF Construction Chemicals (India) Private Limited, which was earlier known as Master Builder Technology Private Limited. BASF then BASF shares a rich and vibrant history with India that spans over a century. BASF s first sales figures for India have been reported as far back as BASF sold dyestuffs (textile colors) through a sales company called M. Ostermeyer & Co. in Bombay (now Mumbai). Synthetic Indigo, introduced by BASF in 1897, was the main export. BASF advertisement for Indigo Dyes in India.

19 15 September 2006: BASF Aktiengesellschaft acquires US-based Engelhard Corporation. This leads to the inception of BASF Catalysts India Private Limited, which was earlier known as Engelhard Environmental Systems (India) Private Limited. April 2012: BASF India announces plans to set up an integrated production plant for polyurethane manufacturing, care chemicals and polymer dispersions for coatings and paper in Dahej, Gujarat involving an investment of `1,000 crores. January 1, 2008: BASF Aktiengesellschaft converts to a European company and now operates under the name BASF SE. September 2012: Shut down of the Expandable Polystyrene (EPS) business and Styropor production plant at Thane as part of the BASF s global strategy. September 2008: BASF SE acquires Ciba Holding Aktiengesellschaft and begins integration of local Ciba entities around the world. February 2010: The merger of Ciba India Limited, Diamond Dye-Chem Limited and Ciba Research (India) Private Limited with BASF India Limited is completed. November 2010: BASF SE acquires Cognis Holding GmbH worldwide. December 2010: BASF decides on a global carve-out of its styrene business. BASF SE and INEOS Industries Holdings Limited plan to enter a new joint venture. January 2011: Three BASF legal entities in India BASF Coatings (India) Private Limited, BASF Construction Chemicals (India) Private Limited and BASF Polyurethanes India Limited are merged with BASF India Limited Developing future growth opportunities March 2013: Launch of the brand Master Builders Solutions TM BASF launched a new brand for the construction industry. The new brand is an effort to present BASF s combined strength and enable easy access to the company s comprehensive portfolio of varied specialty brands to construction industry majors, all under one umbrella. July 2013: BASF India Limited proposed to set up an Agricultural Research Station in Lonikand, Pune, for its crop protection business. July 2013: Due to safety risks arising from operations of neighboring industries, the Board of Directors approved the company s proposal to cease the blending plant operations of the automotive coatings division, located in Khushkhera, Rajasthan. The customers of the said location are now served from the company s Mangalore plant. July 2011: Further to the global acquisition, BASF India Limited acquires the business of Cognis Specialty Chemicals Pvt. Ltd. in India, including all assets and liabilities. October 2013: BASF launches Asia s first metal-based fine chemical catalysts production plant and product development laboratory at the company s operating site in Mangalore. October 2011: Styrolution officially starts operating as an independent company, following the approval of relevant authorities. December 2013: BASF Catalysts (India) Private Limited expands mobile emissions catalysts production capacity with the groundbreaking of a 12.3 acres site in Mahindra World City, Chennai. BASF now With a partnership that spans more than a century, BASF today has become an integral part of India s chemical industry. All global businesses of BASF maintain a presence in India, except for oil and gas. BASF provides innovative and high quality products and solutions for the construction industry in India.

20 16 Sites BASF maintains eight production sites in India. The key production sites are at Mangalore, Ankleshwar and Thane, with an additional site being developed in Dahej. The Mangalore site is BASF s largest manufacturing site in South Asia to date. BASF also maintains two R&D centers in India, one each in Mumbai and Mangalore, which are part of BASF s Global Technology Platform. Dahej on fast track BASF s site at Dahej will strengthen the company s local production capacity and ensure supplies for key industries such as appliances, footwear, automotive, construction, architectural coatings, paper and personal care. At `1,000 crores, it is BASF s single largest investment in India. The site, upon completion, will house manufacturing facilities for polyurethanes, care chemicals and polymer dispersions for coatings and paper, enabling BASF to serve the northern and western regions of India even more efficiently. The development of the site is progressing quickly, with the start of production scheduled for New Catalyst site in Chennai BASF s Catalysts division is the world s leading supplier of environmental and process catalysts. BASF delivers advanced emission control catalysts for cars, trucks and motorcycles to customers in India and throughout South Asia. To expand the company s production capacity of mobile emission catalysts, in 2013 BASF broke ground at its 4.68 hectares site in Mahindra World City, Chennai. The project will cater to automotive and motorcycle manufacturers in India and ASEAN markets. Upon completion, nine manufacturing lines will be housed in the new operating site, producing light duty, heavy duty and motorcycle emissions control catalysts to meet the growing market demand and customer technology needs. Fine Chemical Catalyst Production at Mangalore With an extensive experience of supporting fine chemical producers around the globe, BASF is providing high-quality catalyst products and technologies to meet the needs of the fast-growing Indian market. BASF India Limited launched its first precious metal-based fine chemical catalysts production plant and product development laboratory at the company s operating site in Mangalore, India. These catalysts will play a key role in the production of active pharmaceutical ingredients, agrochemicals, nutrition components, and flavors and fragrances. BASF currently produces precious metal-based fine chemical catalysts at its operating sites in Rome, Italy, and Seneca, South Carolina. The Mangalore plant is the first of its kind in the Asia Pacific region. The Dahej site, spread over hectares, brings BASF closer to its customers in northern and western India. A precious new beginning Dr. Raman Ramachandran, Chairman, BASF Companies in India & Head South Asia (second person on the left) along with Dr. Chris Wai, Vice President - Process Catalysts and Technologies - Asia Pacific (standing besides Dr. Ramachandran, facing the equipment) at the inauguration of the Fine Chemical Catalysts Plant at the Mangalore site. The inauguration of Fine Chemical Catalysts Plant at Mangalore.

21 17 Research and Development activities in India Chemistry driven by research and development can help address the future needs of a growing Asian population. The challenges faced, require solutions based on new systems and functional materials. To this end, BASF is significantly expanding its Research and Development (R&D) organization in Asia Pacific, including growth clusters like India, as part of its global R&D network. The objective is to create innovations for a sustainable future in Asia, for Asia and the world. To augment research activities in India, BASF has initiated a Global Agricultural Research Station in Lonikand near Pune. Here, new crop protection compounds will be tested on agricultural crops in field experiments to examine their efficacy under local climatic conditions and evaluate their potential for introduction in Indian and other Asian markets. Furthermore, has inaugurated a Global R&D Center at its Thane site in Navi Mumbai. With an initial investment of 2 million, BASF set up this new facility under its group company, BASF Chemicals (India) Private Ltd. The new R&D facilities will accommodate more than 60 scientists in the first phase. These labs will be part of BASF s global technology platform. BASF s R&D network in India is fully oriented towards market and customer needs with its robust set up of two R&D centers, one each in Mangalore and Mumbai, and several technical labs. Through its unique combination of chemistry and application know-how, BASF is well positioned to work closely with customers across the region and help them address their challenges. Dr. Harald Rang, Senior Vice President, Crop Protection Research at the opening of the Global R&D Center at the Thane site in Navi Mumbai. Organic Chemists, Vinay Kalasapur and Mahesh Belhekar, discussing and working on a new synthesis for an insecticidal lead compound at the labs. Providing value to customers The global R&D footprint supports close cooperation between research, manufacturing and business teams to create innovative solutions for current and future-relevant demands of the customers.

22 18 Strategic areas Strategic areas Overview In 2050, around nine billion people will live on this planet. On the one hand, this population growth is associated with enormous global challenges but we also see many opportunities, especially for the chemical industry. We expect the chemical industry to grow particularly strongly in the emerging economies, and that these markets will account for around 60% of global chemical production by Innovations based on chemistry will play a key role in three areas in particular: Resources, environment and climate Dramatically rising energy demand is one of the world s most pressing challenges. In addition, access to clean water and efficient use of resources are becoming increasingly important. Resources, environment and climate Food and nutrition A growing world population obviously needs correspondingly more food. And it will be necessary to enhance nutrition quality. Quality of life Population growth and globalization present further challenges. Aspirations differ greatly from region to region and among different social groups, but there is a common ambition: people want to improve their individual quality of life. BASF s products and solutions contribute to conserving resources, ensuring nutrition, and improving quality of life. Food and nutrition Quality of life We create chemistry for a sustainable future We combine economic success, social responsibility and environmental protection. Through science and innovation, we enable our customers in almost all industries to meet the current and future needs of society.

23 Strategic areas 19 Resources, environment and climate Optimizing natural resources through chemistry Conservation of natural resources is of paramount importance around the world. It is even more critical for a developing nation like India, which has high current and future population growth. BASF is addressing these challenges with innovative solutions that optimize the usage, performance and management of natural and renewable resources like wind and water. Powering a cleaner energy source BASF has an extensive portfolio that helps modern wind turbines face tough weather conditions. Our products find use in the construction, maintenance and repair work of wind turbines, from base to blades, making them more efficient and costeffective. While mortars provide a lasting, solid bond between the tower and foundation, lubricants make sure that the turbine engines run reliably. Fiber-reinforced epoxy systems by BASF make rotor blades robust and special foams ensure additional stability with minimal weight. Also, BASF s coating systems protect rotor blades against weather-related wear and tear. In 2013, BASF launched the RELEST Wind RepKit, a highperformance system for repairing rotor blades in wind turbines, in India. BASF s wind energy solutions power the production of cleaner and more sustainable energy. Raising efficiency of thermal desalination According to a UN study, the growth in population is increasing the demand for the ever-dwindling fresh water, leading India towards acute water scarcity by Potable water is needed not just for drinking but also for agriculture, industrial and construction purposes. One solution lies in desalinating the abundantly available seawater and converting it into potable water for all possible applications. BASF has developed Sokalan antiscalant, which acts as a scale control dispersant for desalination plants. This means that the equipment that desalts the water can desalt longer, leading to better performance of the plant. BASF partners with thermal desalination companies to improve their performance and ensure uninterrupted supply of drinking water to the city and its people. In 2013, BASF successfully partnered with a thermal desalination power project in Gujarat and improved the plant s sea water desalination performance by up to 25%, while reducing its energy consumption. BASF s commitment to efficient wind power BASF solutions for sustainable wind energy range from epoxy systems for rotor blades to coatings solutions, concrete admixtures, foams, lubricants and core materials. A customer explores BASF solutions for sustainable wind energy at the 7th Renewable Energy India 2013 Expo.

24 20 Strategic areas Food and nutrition Making India stronger Iron deficiency is prevalent across rural and urban areas of India. It is estimated to be as high as 74% in pre-school age children, 54% in rural women and 46% in the urban areas. It can lead to anemia and many other diseases. Government-sponsored iron supplementation programs have become an important tool to tackle this issue across the country. BASF is supporting this with a solution for the pharmaceutical coating industry. Fighting anemia through smart coatings Local pharmaceutical companies develop and deliver iron supplement tablets and premixes to government bodies for free distribution among pregnant women and children. These tablets need specialized enteric coatings to facilitate proper release of the ingredients in the patient s intestine. Traditionally, pharmaceutical companies dissolved the enteric material in organic solvents. This led to uneven coating of the tablets, hampering its effectiveness and usability. Addressing this issue, BASF is now partnering with pharmaceutical companies and providing them with waterbased technology to manufacture the iron supplements. This technology makes the coating process safer, quicker, environmentally-friendly and labor-friendly. BASF produces new generation polymers Kollicoat IR White and Kollicoat MAE 30 DP for coating tablets. These polymers do not require organic solvents and help achieve uniform coating on tablets, which ensure that iron is delivered only in the intestine as desired and are aesthetically good and palatable. It also ensures that the tablets dissolve in the patient s intestine. Overall, this results in higher effectiveness of the medicine, cost savings and improved production capabilities. This polymer coating for iron tablets enables BASF to offer quality medicines to the ever-growing and high potential Baseof-Pyramid market. By addressing the iron deficiency issue, BASF is supporting India to fight anemia and contributing to build a stronger and healthier nation. BASF s polymer coating for iron tablets enables and assures supply of quality medicines to the Base-of-Pyramid market. Boosting the nation with iron BASF is working with partners in India to fight anemia, with its tablet coating that makes the manufacturing process easier as well as more economical and environmentally-friendly.

25 Strategic areas 21 Quality of life Inspiring change by fulfilling aspirations Growth in urban population, increased purchasing power in rural India, and rising income are fueling aspirations across the country. This opens up new opportunities for almost every end-use industry, including personal care, automotive, housing, apparel, and food and nutrition. BASF is creating solutions together with its customers to address challenges faced by the middle-income groups for safer food, high quality beauty and hygiene products, and better transportation. A beautiful story of success BASF manufactures and sells several innovative products and solutions, which find their way into the production of beauty and hygiene products. However, to tap the Base-of-Pyramid market segment, BASF has initiated a unique holistic business model wherein we partner with local manufacturers to set up and develop a range of high quality, economical and effective beauty products. These products are then marketed and distributed in association with Local Self Help Groups run by aspiring women entrepreneurs who connect with the beauty salon owners, predominantly run by women. The benefits are multi-fold: it enables the manufacturer to develop and manufacture highquality branded products; aids the Self Help Group to augment its income and earn better profits for the owners of beauty salons and spas, owing to cost-effectiveness. One such successful business model was launched in Pune, where BASF tied up with Laxmi Bachat Gat, a local Self Help Group, led by women entrepreneurs for the marketing and distribution of a brand called Gorgeous, developed by a local manufacturer. Currently, the Gorgeous line of beauty products includes shampoo, face wash and face pack, with formulations provided by BASF. These are distributed to over 1,000 salons in and around the city. The initial success of this project in Pune has opened doors to untapped markets in the rural and semi-urban India. Beating the heat for a better journey India has a predominantly hot climate and the impact of the heat becomes more intense during travel and transportation where people and perishables in vehicles are exposed to the relentless sun for a longer duration. BASF is addressing this challenge with specially formulated Cool Black Pigments Sicopal TM and Paliogen. The combination of these pigments allows to reflect the Near Infrared Radiation (NIR) of the sun the heat rays and to reduce the surface temperature by degrees Celsius. These IR-reflective pigments are finding use in several unexplored segments, including seat covers of bikes and tarpaulins for food transportation trucks. On a hot summer day, the seat temperatures of bikes parked under the sun can rise up to 80 degrees Celsius, causing great discomfort to the riders. This is due to the carbon black pigment used in the seat covers, which absorbs the sun s infrared radiation and converts it into heat. BASF is supplying seat cover companies with its Cool Black Pigments to replace the carbon black pigments and thereby keep the bike cooler and make the ride comfortable. NIR reflective pigments can also reduce food wastage. In India, where the distance from the farms to the outlets is vast, the lack of proper transportation facilities and insufficient number of refrigerated trucks results in food wastage on a large scale. The conventional transportation trucks of perishables are usually covered with tarpaulins which heat up under the sun and cause the food to spoil. BASF is encouraging the use of NIR reflective pigments on tarpaulins to reduce the surface temperature. A pilot project with a leading chain of retail stores in India has shown excellent results and reduced the wastage of perishable food items like bananas and potatoes by 20% during transportation to the Delhi and Mumbai markets. In the near future, we envisage broader opportunities for these infrared reflecting pigments in enhancing the quality of life across India. New Gorgeous line for the Base-of-Pyramid BASF-enabled local manufacturers are creating the low-cost, yet highly effective, Gorgeous brand of beauty products for emerging India. The Gorgeous line of beauty products comprises shampoo, face wash and face pack.

26 22 Environment, health and safety Environment, health and safety Adhering to safety standards Workers at the plant being evaluated at the Forklift driving competition conducted during the Global Safety Week. BASF s Responsible Care Management System (RCMS) comprises the global rules, standards and procedures for environmental and health protection, safety and security for the various stations along our value chain. It allows BASF to achieve compliance with regulatory and internal requirements, operate safe and environmentally sound facilities and manufacture safe products. Adherence to the processes in RCMS drives continuous improvement in performance and increases the efficiency and effectiveness of EHS-related activities. Product stewardship To improve chemical management, India needs an Inventory of Chemical Substances, including those manufactured as well as sold in the country. In 2013, BASF continued its active participation in the chemical inventory committee of CHEMEXCIL, to support regulations creating an inventory of chemical substances. On a global basis, the chemical industry has developed Responsible Care and the Global Product Strategy (GPS) as key contributions to the United Nations Environment Program s Strategic Approach to International Chemicals Management (SAICM). The primary objective of SAICM is to foster the sound management of chemicals, thereby ensuring that by the year 2020, chemicals are produced and used in ways that minimize significant adverse impacts on the environment and human health. The GPS has been translated into a regulatory toolbox based on its fundamental principles. BASF is working to bring this regulatory toolbox to India. In 2013, BASF along with the Indian Chemical Council (ICC) facilitated a two-day GPS workshop in Mumbai. Transportation and distribution safety In 2013, BASF focused on further improving the safety performance of logistics service providers. To this end, BASF collaborated with the ICC and organized a three-day training course on the transportation and safe handling of hazardous goods for more than 100 drivers. The warehouse safety workshops, as well as the continuous engagement and interaction with third party warehouse operators, have led to a significant improvement in safety performance and awareness. The transportation and distribution safety and logistics teams also conducted road route assessments for hazardous chemicals, including, for example, butadiene and propylene Responsible Care TM management system BASF s Responsible Care Management System (RCMS) comprises the global rules, standards and procedures for environmental and health protection, safety and security for the various stations along our value chain. Adherence to the processes in RCMS drives continuous improvement in performance and increases the efficiency and effectiveness of EHS-related activities. BASF supports the chemical industry s global Responsible Care initiative.

27 Environment, health and safety 23 oxide, with assessments supported by global experts to prevent, minimize and mitigate the risks of transportation of High Consequence Dangerous Goods in bulk. Occupational safety BASF continues to focus on ensuring a safe working environment, in plants, laboratories and administrative offices. We organize periodic safety inspections as well as training programs for work permit system, effective usage of Personal Protective Equipment as well as hazard identification and risk assessment. In 2013, BASF launched a Forklift Safety Campaign in India. Additionally, to improve safety, BASF centralized the release of work permits related to height-work and digging-work of our contractors in India. In 2013, BASF reported a Lost Time Injury Rate (LTIR) per million working hours of 0.1 for BASF employees (2012: 0.6) and 1.0 for contractors (2012: 0.4). There were no fatalities in Occupational health In 2013, BASF s Global Health promotion campaign Health Checks was rolled out in India, wherein health check-ups have been started for all office employees. Concurrently, several health talks on ergonomics and computer vision syndrome were conducted and the Employee Assistance Program for Stress Management was also launched. At the site level, all the sites continued to fulfill the requirements of medical emergency response and emergency preparedness. A pilot study of chemical health risk assessment was carried out in the coatings plant, Mangalore, by the BASF regional industrial hygienist. Process safety BASF undertakes an extensive review in the planning and construction of new chemical plants in order to ensure safety and security of employees, site neighbors and the environment. In 2013, the BASF process safety group directive and mandatory requirement on explosion protection was introduced, while the Clean Sheet Reviews continued for existing plants, wherein reviews and audits of existing plants were conducted in line with the most updated local and international safety standards. Emergency response and community awareness In 2013, BASF entered into a worldwide contract with global emergency response expert ALERT SGS in the areas of emergency response, industrial fire-fighting and hazardous material control. Having strengthened the on-site chemical emergency response, the teams have now coordinated with various industries and forums to build capacity in India for effective transport chemical emergency response. BASF has also initiated an industry-wide drive to enable the chemical industry in India to establish globally recognized standards, infrastructure and services for safe and secure transportation. BASF has actively participated in the development and execution of Nicer Globe, an initiative spearheaded by ICC. The initiative is dedicated to establishing standards, fostering cooperation and collaboration within the industry, thereby enabling emergency response infrastructure and services. Also, transport safety capabilities are routinely evaluated and improved. Additionally, this year an Emergency Response Manager attended the Train the Trainer workshop at Ludwigshafen. Security Information protection, fraud and risk management, and business continuity are important tasks for corporate security. Ongoing training of employees in information protection at all manufacturing sites and major office locations of continued in Employees were given insights into everyday work practices that help protect crucial company information through interactive sessions. Additionally, corporate security supported the development of uniform security concepts and solutions for ongoing projects. Lost time injury rate - BASF India employees (per million working hours) Lost time injury rate - contractors 1 (per million working hours) India statistics

28 24 Environment, health and safety Environment, health and safety Environmental protection Energy Energy efficiency is an outcome of reduced energy consumption (fuel, electricity, steam) per ton of product, which contributes to lowering emissions. Steam consumption in 2013 decreased to 60,860 metric tons as compared to 62,819 in 2012, due to cessation of Styropor production at Thane. The electricity and fuel consumption in 2013 increased to 36,426 MWh (2012: 35,064 MWh) and 62,217 MWh (2012: 62,186 MWh) respectively, owing to the start-up of a Multi-Effect Evaporator for waste-water treatment at the Ankleshwar site. Steam consumption (total) (metric tons) , ,819 Emissions to air The major portion of greenhouse gas emissions constitute CO 2 emissions. In 2013, emissions of greenhouse gases from chemical operations of amounted to 53,228 metric tons, as compared to 51,497 metric tons in In 2013, emission of air pollutants from chemical operations of amounted to 218 metric tons, in contrast to 198 metric tons in The increase in the emission of greenhouse gases and air pollutants was due to the installation of a multi-effect evaporator for waste-water treatment at the Ankleshwar site. Newly started production activities at the fine chemicals catalyst production plant and the micronutrient plant in Mangalore also contributed to the increase in air pollutants. Greenhouse gas emissions (total) 1 (metric tons of CO 2 equivalents) Electricity consumption (total) (MWh) , , , ,064 ¹ CO 2, N 2 O, CH 4, HFC, PFC, SF 6 Air pollutants (total) 2 (metric tons) Fuel for central energy supply (MWh) , , CO, NOX, NMVOC, SOX, dust, NH 3 /other inorganics Greenhouse gas emissions along the BASF value chain in (in million metric tons of CO 2 equivalents) (BASF Global) Prevention of greenhouse gas emissions through the use of BASF products by sector (in million metric tons of CO 2 equivalents) (BASF Global) 23 BASF Production (including generation of steam and electricity) 15 Disposal Incineration with energy recovery, landfilling (C 12) 1 Housing and construction Suppliers Purchased products, services and capital goods (C 1, 2, 3a) 4 Transport Transport of products, employees commuting and business travel (C 4, 6, 7, 9) 51 Customers Emissions from the use of end products (C 11) 2 Other (C 3b, 3c, 5, 8, 13, 15) 1 According to Greenhouse Gas Protocol, Scope 1, 2 and 3 (categories within Scope 3 shown in parentheses) 2 Industry 31 3 Transport 7 4 Agriculture 7 5 Other million metric tons 1

29 Environment, health and safety 25 Water In 2013, used 601,306 cubic meters of water compared to 704,115 cubic meters in The decrease in water consumption was mainly on account of discontinued production activities of Styropor in India as well as the site closure at Khushkhera. Of the 601,306 cubic meters of water used, 409,333 cubic meters was used for production as compared to 460,698 cubic meters in ,766,493 cubic meters of water was used for cooling and was re-circulated to minimize fresh water consumption. This number was greater than the previous year (21,719,872 cubic meters), mainly due to the installation and increase of running hours of the multi-effect evaporator at the Ankleshwar site. Emissions of organic substances to water (measured as Chemical Oxygen Demand - COD) stood at 49 metric tons in 2013 compared to 56 metric tons in The decrease was due to the start-up of the upgraded effluent-treatment plant in Ankleshwar. The emission of nitrogen to water was 0.37 metric tons in 2013 as compared to 0.26 metric tons in This was due to the increase in production activities at Thane plant. The emissions of heavy metals into water were 0.09 metric tons, as compared to 0.08 metric tons in 2012, owing to an increase in the production of micronutrients. Emissions to water (total): Organic substances (COD) (metric tons) Emissions to water (total): Nitrogen (metric tons) Emissions to water (total): Heavy metals (metric tons) Water consumption in India in 2013 (million cubic meters) Water Supply Water use Water supply (total) (million cubic meters) Production Cooling Although we used million cubic meters of water for cooling and 0.41 million cubic meters of water for production in 2013, thanks to recirculation, our actual water supply was only 0.6 million cubic meters.

30 26 Environment, health and safety Waste In 2013, generated 7,211 metric tons of waste as compared to 5,809 metric tons in The increase is mainly attributed to the inventory of sludge and high quantity of scrap materials generated at the Thane site, owing to the dismantling of operations of the Styropor plant. More waste was recovered due to reuse of non-hazardous wastes such as plastic drums, barrels. The total waste recovery rate reduced to 65% as compared to the previous year s rate of 76%, due to an increase in the generation of solid waste. Waste (Total) (metric tons) ,211 65% ,809 76% Amount of waste Amount of recycled waste Recognition for Responsible Care commitment The Indian Chemical Council (ICC) annually organizes the ICC Awards to encourage excellence in various fields across the chemical industry. This year, BASF won the most prestigious award among the various categories, the Aditya Birla Award for Best Responsible Care Committed Company. This award recognizes efforts undertaken by a chemical company in the field of responsible care, safety and security not just on a company level but on an industry level, covering its key stakeholders. The panelists interviewed stakeholders such as fishermen, tollers, customers, suppliers, warehouse managers, workers unions, regulatory bodies, and health practitioners. BASF stood out from the other nominees due to unique initiatives such as its Community Advisory Panel, which involves influencers and decision-makers from the communities as part of the committee which identifies projects, implementation partners and the beneficiaries for BASF s ongoing community initiatives; active participation in Project Nicer Globe, its Emergency Response System and its Transportation Distribution System management. Demonstrating commitment to Responsible Care BASF won the title Aditya Birla Award for Best Responsible Care Committed Company, organized by the Indian Chemical Council (ICC) in recognition of the efforts undertaken by the company to ensure responsible, safe and secure manufacturing activities as well as community development initiatives. BASF received the Responsible Care Award organized by ICC.

31 Employees 27 Employees Form the best team BASF employees are fundamental to achieving the goals of the We create chemistry strategy. To meet the targets established by our Asia Pacific strategy grow smartly, the company requires a high performance culture. BASF aims to attract the right people and create space for their performance and personal development across regions, divisions and teams. As of the end of 2013, had 2,254 employees (2012: 2,157). We want to hire, motivate, develop and retain this talent through career development, learning and employee engagement activities implemented during the course of the year. Strategy Our Best Team Strategy is derived from our corporate strategy and simultaneously contributes to its implementation. We want to form the best team. To achieve this, we put focus on three strategic directions: excellent people, excellent place to work and excellent leaders. Work-life balance The results of the Global Employee Survey conducted in 2012 highlighted work-life balance as an area for improvement. Responding to this request, BASF India launched an Employee Assistance Program in This program aims to support employees and their family members in dealing with personal and professional challenges that impact their health and productivity. BASF partnered with PPC Worldwide, a leading global provider of behavioral health services, to provide information, advice and counseling to our employees and their families. BASF continues to foster global connections between employees from all countries. BASF India participated in the BASF Global Family program. This is an international exchange program during school vacations for the children of BASF employees. Children of BASF employees from India had the opportunity to visit and live with families of BASF employees overseas, and vice versa. Recruitment and new graduate programs GROW, our flagship campus recruitment program, continued to help us attract talent from engineering and business schools in India. This structured training program aims to transform young graduates into future business leaders with a blend of classroom training and experiential learning. Employee development At BASF, we believe in the philosophy of life-long learning. This is important for an employee s personal and professional development. In a 2013 project, we rolled out close to 50 workshops to sharpen the existing skills of our colleagues, which included short courses and certification programs on customer management, influencing skills and more. We also launched e-learning programs for the employee development of the employees. Ishika Agrawal and Nina Catharina Stinchcombe participated in this year s BASF Global Family program. BASF employees support social causes BASF employees participate in a variety of social causes. This includes donating school items for underprivileged kids associated with Goonj, a charity that works for children s reforms during Mumbai s Joy of Giving week ; contributing to the Prime Minister s Relief Fund for the victims of the Uttarakhand floods; and personally distributing food packets as part of flood relief operations in Ankleshwar and Bharuch. Contributing further to the cause of sustainability, employees celebrate a water-free Holi.

32 28 Employees Diversity + Inclusion BASF seeks to recruit and develop employees from a wide range of backgrounds and diverse skill sets. As of December 31, 2013, the largest group of employees was in the years range. BASF also encourages professional development of both women and men. BASF s professional networking platform, Women@BASF, entered its third year and continued to celebrate women s empowerment through its varied offerings for women employees at BASF. This year, the focus was on personal safety and female employees participated in a dynamic and interactive session on self-defense, which inducted them on basic defense techniques in adverse situations. BASF also conducted sessions on financial planning for female employees. These workshops delved into the significance of investments beyond savings and familiarized female employees with various investment tools that are well-suited to fulfill short-term, mid-term and long-term financial goals, enabling them to become more financially secure and independent. Insuring the future At BASF, our commitment to health extends beyond the workplace. In 2013, BASF India initiated a more comprehensive group health insurance coverage wherein the company s employees and their immediate family members get insurance coverage. At the same time, we also encouraged employees to undergo periodic health check-ups, by means of tie-up and association with a leading diagnostic center. Drive against sexual and other workplace harassment Right to work with dignity and protection against sexual harassment are fundamental rights of every human being. The BASF Code of Conduct strictly prohibits harassment of all kinds, including sexual harassment and other workplace harassment. With the objective of providing all employees with a healthy work environment, BASF India has formulated a policy to prohibit harassment of any employee at work place. This policy also complies with the domestic law relating to sexual harassment of women at workplace and is applicable to all employees of BASF India. Under this policy, the company shall ensure that any harassment incident is investigated promptly and discreetly and appropriate disciplinary action is taken against the wrongdoer. The details of this policy are also available on the company s intranet website for employees information. Mangalore site of BASF, in partnership with BASF Women s Association, celebrated International Women s Day in March Employee age structure Number of employees (in percent) (as of December 31) Up to and including 25 years 6.8 Between 26 and 39 years 57.1 Between 40 and 54 years years and older , ,157

33 Society 29 Society We create chemistry for a sustainable future BASF s corporate purpose is: We create chemistry for a sustainable future. We understand sustainability as the balance between economic, environmental and social aspects. Our social activities are centered on topics which are relevant to the country s progress, and overall, the betterment of communities in which we operate. Education and Resource Conservation are our focus areas and we cater to these through our projects Sadbhavana ( empathy in Hindi) and Million Minds. The former pertains to education-led activities, women empowerment and community development, while the latter aims to raise governance standards by educating young people on best practices in corporate governance and business ethics. Spreading the magic of chemistry BASF Kids Lab continued to inspire kids and evoke their interest in science, particularly chemistry with simple hands-on lab experiments that demonstrate how chemistry improves our daily lives and promotes a sustainable future. Over the years, BASF Kids Lab has connected with over 50,000 students in India. In 2013, BASF India organized Kids Lab at the Kerala State Science & Technology Museum in Trivandrum and BASF s Thane site in Navi Mumbai. Michael Steiner, Ambassador of the Federal Republic of Germany in India at BASF Kids Lab in Mumbai. Words of inspiration At BASF Kids Lab in Mumbai, I literally joined hands with enthusiastic KV (Kendriya Vidyalaya) youngsters from Meerut who are part of our milestone project Germany at 1,000 schools. We want to connect with the young bright India. And we want to create the right chemistry at grassroot level. Kids Lab does an excellent job in this regard. Michael Steiner, Ambassador of the Federal Republic of Germany in India.

34 30 Society Society Water Education Project in Mangalore BASF and BASF Stiftung, a charitable foundation based in Germany, through the Water Education Project, aims to bring a behavioral change in Mangalore by educating school students regarding water usage and testing. The way forward includes teaching them how to conserve, analyze and purify water by establishing water laboratories and classrooms. Now, over 5,000 students across 25 schools in Mangalore have access to safe drinking water and sanitation facilities. Eight out of the 25 schools are equipped with water laboratories to facilitate water quality monitoring and two have water classrooms to educate students on water cycle and conservation methods using the water quality testing kits. In 2013, the project was formally handed over to the beneficiary, with BASF volunteers mentoring the project for sustaining and carrying it forward. The project, started in May 2011, was successfully steered by the joint efforts of BASF employees, UN-HABITAT, implementation partner The Energy and Resources Institute (TERI), and financed by BASF Stiftung. Good governance among youth in India The Seminar Series on Corporate Governance and Business Ethics, under the aegis of the Million Minds project, is held at leading educational institutes across India. In 2013, we conducted two sessions under this seminar series. One was at the Indo-German Training Centre, and the other was at Shri Dharmasthala Manjunatheshwara (SDM) College of Business Management & Post Graduate Center for Management Studies & Research in Mangalore. The opening session of the seminar series at Mangalore, where 120 students of SDM College participated, was attended by industry representatives, government officials, members of the college management, media and students. The primary objective of this initiative is to instill good governance practices among the student community, who are on the threshold of entering the corporate world. In the seminars, training on all practical aspects of governance and ethical issues is covered through a formal study course. This includes an overview on sustainable development, corporate governance in India and ethical dilemmas at workplace. Since the program s inception, BASF has partnered with the HR College, the SIES College of Management Studies and the Indo-German Training Centre in Mumbai, and has trained hundreds of students on good governance practices. Students learned water quality testing and how to handle water responsibly in Mangalore through BASF s Water Education Project. Aligning CSR with the new Companies Act The introduction of the new Companies Act, 2013 has made it mandatory for Indian Companies to be socially responsible by contributing towards Corporate Social Responsibility. In line with the Act, effective April 1, 2014, BASF will spend 2% of its average net profits of past three financial years on CSR activities. BASF intends to implement projects in the areas of resource conservation, health care and education for undertaking CSR activities. BASF is currently in the process of aligning its CSR activities in India in line with the new Companies Act and Company s objectives. Seminar on corporate governance and business ethics The Seminar Series on corporate governance & business ethics at Mangalore was inaugurated by Padma Bhushan Dr. D. Veerendra Heggade. Inauguration of the seminar series at Mangalore.

35 Selected prizes and awards 31 Selected prizes and awards BASF received the Certificate of Appreciation from Karnataka Minister for Forest, Environment and Ecology. BASF received the Best Supplier Award in the paints category from Honda Motorcycle & Scooters India. BASF gets recognition for its environmental initiatives In Karnataka, location of BASF s largest production site in India, BASF participated in an initiative entitled Green Nurturing Programme, led by the Karnataka State Pollution Control Board. BASF adopted the neighboring Dakshina Kannada Jilla Panchayath Higher Primary Schools and engaged in a series of activities ranging from tree planting to awareness campaigns, for which it received a Certificate of Appreciation. BASF s coating division wins the Best Supplier Award BASF s coatings division was named Best Supplier in the paints category for the fifth time in a row by Honda Motorcycle & Scooters India (HMSI). BASF s association with HMSI dates back to 2004, beginning as a supplier of base-coats and clearcoat. Today, BASF is a leading supplier of clear-coat and more than 10 base-coat colors to HMSI, and also sells to Tier 1 suppliers of the company. BASF s Thane site recognized for energy conservation The Maharashtra Energy Development Agency (a part of Government of Maharashtra) felicitated outstanding contributors in the area of efficient utilization, management and conservation of energy. BASF s Thane site was recognized in the chemicals sub-category of industrial units at the 8th State level Energy Conservation Awards.