Taking on well-established players like Asian Paints and Nerolac, the Aditya Birla Group's Grasim said on Friday that it will foray into the paints business with an initial investment of 5,000 crore over the next 3 years.
In a statement, Kumar Mangalam Birla, Chairman, of Aditya Birla Group said: “The foray into paints is a strategic portfolio choice for Grasim as it looks to identify new growth engines. Grasim’s strong balance sheet will facilitate this entry, which will add size, scale and diversity to its existing portfolio of established standalone businesses."
Birla said the company endeavours to invest in businesses that have the potential to be a leader in their addressable markets and have the ability to achieve scale, and generate consistent and attractive returns in the long term. "The paints industry presents a high-growth option for Grasim,” said he.
The sector has registered a revenue CAGR of around 11% during FY14 to FY19, and given the value migration from the unorganized to the organized market, the outlook remains robust, providing the space for a quality new player.
The entry of Grasim in the paints sector will offer a wide choice to Indian consumers as the Company plans to introduce the latest range of paint products in line with global mega-trends. The Company’s entry into this high growth sector will help painters / applicators and all traditional and emerging channel partners across India to expand their existing business and grow. This move will also provide an impetus to the Government’s vision of ‘Atmanirbhar Bharat’ and supports the supplier ecosystem of MSMEs by helping them expand their existing raw material manufacturing base. Apart from Grasim, the JSW group is also making substantial investment in the paints business.
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