Companies

Grasim doubles capex to ₹10,000 crore to set up paints business

BL Mumbai Bureau | | Updated on: May 24, 2022

The company plans to set up 1,332 mlpa capacity by end of FY24

Grasim Industries has enhanced planned investment in its paint business venture to ₹10,000 crore by FY25 against the earlier plans to invest ₹5,000 crore by FY24 on the back of strong growth outlook. It plans to commission paint production capacity of 1,332 MLPA by the fourth quarter of FY24.

The company has acquired six land parcels and taken possession of five after completing the registration. It has also received environment clearance for setting paint plant at Panipat (Haryana), Ludhiana (Punjab) and Chamarajanagar (Karnataka) and has awarded detailed engineering contract for all six plant sites. Civil work has commenced at Panipat and Ludhiana sites, it said.

Grasim has managed to mitigate inflationary pressure by changing the plant configuration. It has so far spent ₹579 crore in paints business from the overall capex of ₹2,537 crore incurred in FY22.

With the economy pulling out of Covid impact, Grasim sees big opportunity in the high return on capital employed business which will provide new avenues for growth and importantly, steady earnings. The strategy for entry into the high-end paints business is backed by a strong balance sheet which is expected to further strengthen after the sale of its fertiliser business, said the company.

Complete portfolio of paints

Birla White, a wall care putty brand of Grasim subsidiary UltraTech Cement, has the second largest distribution network in the paints industry with presence across 6,000 towns in metros, tier-1 cities and rural India. It is aggressively growing its business and expanding its overall presence, which will add synergy to Grasim’s paints business. The company believes that the attraction of a complete portfolio of paints will lure more dealers on board.

Though the paint industry is already dominated by leading brands, Grasim plans to initially focus is on becoming one of the leading players with plans to leverage the decades-old strong distribution network.

Impetus to paint segment

The decorative paint market is estimated at ₹40,000 crore with unorganised players holding one-fourth of the market share. The sector is on an upward trajectory with the decorative paint segment growing at 11 per cent CAGR. The demographics-led demand, urbanisation, shortening of repainting cycles and the Prime Minister’s ‘Housing for All’ vision has provided an impetus to this sector. Grasim believes that the entry of power brands will lead to a shift of demand from unorganised players to organised players which the company aims to catalyse.

Published on May 24, 2022
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