 "Grasim Industries paints Rs 10K cr sales target in 3 years for Birla Opus")
Grasim Industries, the flagship company of Aditya Birla Group, launched its paints business under the ‘Birla Opus’ brand, here on Thursday. The company expects the new business to turn profitable once it clocks Rs 10,000 crore in gross revenue within three years of completing full-scale operations.
It aims to become the second-biggest player in the Rs 80,000 crore Indian decorative paints market, which is currently dominated by Asian Paints. The group has made investments of Rs 10,000 crore for the business.
“India today is teeming with dynamism, audacity, and a penchant for innovation, which finds a reflection in our paints venture Birla Opus. Aditya Birla Group’s deep insight into the building materials ecosystem, built over the years, offers us a unique vantage point,” Kumar Mangalam Birla, chairman, Aditya Birla Group said at the launch of the brand. He also inaugurated three facilities in Panipat (Haryana), Ludhiana (Punjab), and Cheyyar (Tamil Nadu). The company will continue to add capacity with the commissioning of a fourth plant in Chamarajanagar (Karnataka) by Q1FY25, a fifth plant in Mahad (Maharashtra) by Q2FY25, and a sixth plant in Kharagpur (West Bengal) by Q4FY25.
“Birla Opus is poised to transform the paint industry with a 40 per cent addition to current capacity,” Birla said. The company is eyeing a capacity of 1,332 million litres per annum (mlpa) – bigger than the second, third, and fourth players combined. “Additionally, we will increase our capacity by 500 mlpa over the coming five years,” he said.
The company aims to clock in a revenue market share of high single digits by the end of the next financial year. It also aims to have a distribution network of 50,000 by leveraging its existing dealer network in the white cement business to push growth. Grasim Industries aims to expand its distribution to all towns with a population of 100,000 by July this year and further expand it to 6,000 towns by the end of FY25.
In recent years, JSW Group entered the paints business in 2019 with JSW Paints and Pidilite forayed into this sector in 2023. Grasim first announced its entry into this space in 2021
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JSW Paints revenue touched Rs 2,000 crore in the current financial year and the conglomerate expects its paint business’s revenue to reach Rs 2,200 crore by the end of FY24. It has already broken even at an operating level during the year and its Ebitda (earnings before interest, tax, depreciation and amortisation) margins is expected to be in single digits.
Currently, Asian Paints holds the lion’s share in the market. Berger Paints and Kansai Nerolac have second and third positions, respectively.
“Demand for paints is very strong and it is a high growth sector that can accommodate more players. Margins and RoE (return on equity) are also better in the paints business. But with competition heating up in the segment, margin expansion could become a challenge for existing players,” said Sachin Bobade, vice-president at brokerage firm Dolat Capital.
Talking about advertising and marketing spends, Rakshit Hargave, chief executive officer, Birla Opus, said that to help drive growth, the brand’s investments will be in line with the market leader.
In its investor presentation for Q3FY24, Grasim mentioned that strong housing demand on account of the government's focus on “housing for all” and rising aspirations are the key drivers of growth in the decorative paints industry.
Responding to a question on Vodafone Idea, Birla said, “We remain very committed to Vodafone Idea. And we have said in the public domain, efforts are on to get outside investors.”