The aluminum to cement and apparel major Aditya Birla Group has launched its paints business through its flagship firm Grasim Industries and has big plans in the Rs 80,000 crore decorative paints industry as it looks to take on incumbents like Asian Paints, Akzo Nobel and Kansai Nerolac.
Kumar Mangalam Birla, the Aditya Birla Group chairman, on Thursday, inaugurated three manufacturing plants— in Panipat of Haryana, Ludhiana in Punjab, and Cheyyar in Tamil Nadu. Three more plants—Chamarajanagar in Karnataka, Mahad in Maharashtra, and Kharagpur in West Bengal—are in various stages of completion and will be opened in the financial year 2024-25.
The products and services will be available under the 'Birla Opus' brand. The focus will be on decorative paints only and not industrial paints.
The total capacity of the six plants will be 1,332 million litres per annum—that is a 40 per cent addition to the current industry capacity.
Aditya Birla Group aims to garner Rs 10,000 crore gross revenue within three years of full-scale operations and become the second largest player in the decorative paints industry. The company has planned Rs 10,000 crore investment in the paints business, of which Rs 5,000 crore has already been invested.
Aditya Birla Group's Ultratech is already the largest cements player in the country and this will offer significant synergies as the group expands into paints business.
The construction sector alone is poised to command 9 per cent of GDP, translating to about $900 billion in a decade, said Birla.
"The Aditya Birla Group's deep insight into the building materials ecosystem, honed over the years, offers us a unique vantage point. Our journey into the paint industry, therefore, is a strategic extension, connecting the dots from the foundation to the facade of homes across the nation," he said.
Birla Opus products will be available in Punjab, Haryana and Tamil Nadu from mid-March 2024, and across all towns in India that have over one lakh population, by July 2024. Grasim aims to expand its distribution to over 6,000 towns by the end of the financial year 2024-25.
Currently, Asian Paints is the market leader in the paints business in the country.
In the year that ended March 2023, Asian Paints reported consolidated net sales of Rs 34,368 crore. Net profit of the company stood at Rs 4,106.5 crore.
Analysts say Grasim's aggressive entry into the paints business could hurt market shares of incumbent players.
"Paints sector has never seen such massive capacity build-out in such a short span even from incumbents. We expect this to reflect in industry market shares and margins," said Jefferies analysts Vivek Maheshwari and Jithin John.
Grasim is not the only company betting big on the paints business in the backdrop of the growing construction market.
Adhesives manufacturer Pidilite entered the decorative paints business in 2023. The Sajjan Jindal-led JSW Group also continues to expand in paints, a business it entered into in 2019.
Other smaller players like Nippon, Shalimar and Kamdhenu are also looking to ramp up, the Jefferies analysts noted. "Players like Nippon and JSW have been consistently spending 15-20 per cent on marketing, in a bid to build their presence," said Maheshwari and John.
So, for a new player like Grasim, an intense battle lies ahead.
Birla says the group's vision is ambitious and the initial goal is clear—to be profitable not later than the third year of full-scale operations.