Companies

Grasim enters high-returns paints sector; to invest ₹5,000 crore over three years

Our Bureau Mumbai | Updated on January 22, 2021

Kumar Mangalam Birla, Chairman, Aditya Birla Group

Grasim Industries, an Aditya Birla Group company, has entered the paints business with an investment of ₹5,000 crore over the next three years.

Given the high margins, many large corporates  that enjoy a quick brand recall are entering the ₹50,000-crore paints business in India. 

Decorative paints  — used mainly for exterior and interior walls and wood finishes in buildings — account for over 75 per cent of the  market. Industrial paints — used for protective coatings for varied substrates  such as iron, galvanised iron, mild steel, aluminium and chimneys in automotive, marine and packaging — account for the rest.

Kumar Mangalam Birla, Chairman, Aditya Birla Group, said paint is a strategic portfolio choice for Grasim as it looks to identify new growth engines.

Big draw

“Grasim’s strong balance-sheet will facilitate this entry, which will add size, scale and diversity to its existing portfolio of established standalone businesses. The company endeavours to invest in businesses that have the potential to be a leader in their addressable markets, have the ability to achieve scale, and generate consistent and attractive returns in the long term. The paint industry presents a high-growth option for Grasim,” he said.

The sector saw a compounded annual growth rate (CAGR) in  revenue of about 11 per cent from FY14 to FY19. The value migration from the unorganised to organised market is expected to accelerate further.

 Grasim plans to introduce paint products in line with global mega-trends.

The JSW Group recently ventured into the paints business with a single  fixed price for all colours.

The sales of the top five paint companies almost doubled to ₹8,025 crore in the September quarter against ₹4,168 crore  in the June quarter.

The demand for decorative paints bounced back after the easing of Covid restrictions, led by strong demand from Tier 2/3 cities. Further, boost came from the recovery in the sales of passenger vehicles,  two-wheelers and white goods during the festival season.

Other growth drivers for the paints industry are  growing affordability, conversion of mud and clay houses to brick and mortar, the government’s affordable housing initiatives and rising disposable incomes.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on January 22, 2021
This article is closed for comments.
Please Email the Editor