Steps to reproduce:

1. Open the attached project
2. Rename and change the color of the material 'SM_GroundMat' under Assets/Materials
3. Notice the model and the game object are now using the changed material
4. Save the scene and close the editor
5. Go to project folder and delete the 'Library' folder
6. Reopen the project
7. Notice the model/game object are now using the original material which gets recreated, the changed one still exists, but is not used.

Partial workaround: If you reassign the changed material to the game object, then when the Library folder is rebuilt, the game object will use the changed material, however the original material will be recreated and used for the model.