New Delhi: Diversified chemicals major BASF India on Tuesday said it will wrap up its Expandable Polystyrene (EPS), a type of plastic, business in India due to strong competition and low margins.
The company will thus shut down its EPS production facility located at Thane, near Mumbai.
BASF India`s EPS business, which is part of its plastics division, is sold under the brand name Styropor. EPS is an aromatic polymer used in making disposable cutlery, plastic models, CD and DVD cases and smoke detector housings.
In a communique to the BSE, BASF said that "The EPS business in India is under continuous pressure due to strong competition. This coupled with high overcapacities and low margins, have made the continuance of the EPS operations uneconomical."
The turnover of the company`s EPS business stood at Rs 207 crore as of March 31, 2012, it added.
"Hence considering that there is no potential to improve the overall performance of the EPS business in the long run, the Board of Directors of the company at its meeting held today approved the proposal to shut down the EPS business including company`s Styropor production at Thane," it said.
The proposal, subject to requisite approvals, is part of BASF`s global strategy, the filing added.
"There is no impact of a material nature on account of shut down of the EPS business and the same will not affect the company`s overall growth strategy in India," the filing said.
The company reported a net profit of Rs 71.68 crore for the quarter ended June 30, 2012 against Rs 52.66 crore in the year-ago period, while its net sales stood at Rs 1,288.84 crore against Rs 1,013.75 crore in the same period.
BASF manufactures tanning agents, crop protection chemicals, textile chemicals and automotive and coil coatings, construction chemicals, among others.
Shares of the company were at Rs 654.50 a piece in the afternoon, up marginally by 0.13 per cent from its previous close at the BSE.