Grasim forays into paints business with 'Birla Opus'
Upstox
3 min read • Updated: February 23, 2024, 3:51 PM
Summary
In the first year of operation, Grasim Industries will start with a 1,332 million litres per annum paints production capacity, which is higher than the combined capacity second, third and fourth top players in the industry
Shares of Grasim Industries Ltd gained more than 2% to hit a record high on Thursday after the company launched its paints business under the brand ‘Birla Opus’. The Aditya Birla Group flagship hit a record high of ₹2,244 per share on NSE as the company entered the paints industry.
The company's Chairman Kumar Mangalam Birla launched the new paints brand along with the inauguration of three plants at Punjab's Ludhiana, Haryana's Panipat and Cheyyar in Tamil Nadu. The new paints will come with a QR-based system that enables end-to-end traceability of the products from production to application.
Speaking at the launch event, Kumar Mangalam Birla announced plans to increase the company's capacity by an additional 500 million litres per annum in the next phase with incremental investment.
In the first year of operation, the company will start with a 1,332 million litres per annum paints production capacity, which is higher than the combined capacity of the second, third and fourth top players in the industry
Birla Opus will get its fourth production plant by the first quarter of FY25 followed by the fifth facility in Q2 and the sixth unit in Q4 of the next financial year. The fourth, fifth and sixth production units of Birla Opus will come up at Chamarajnagar in Tamil Nadu, Mahad in Maharashtra, and Kharagpur in West Bengal, respectively.
Grasim Industries announced its plans to enter the paints business in India over three years ago with an initial investment of ₹5,000 crore, which was doubled to ₹10,000 crore later. The decorative paints industry is presently valued at around ₹80,000 crore, with a robust growth of 13-14% CAGR over the past five years.
The entry of the Aditya Birla Group flagship into the decorative paints segment could disrupt the industry due to the company’s aggressive expansion plan and capital deployment roadmap. The industry is currently dominated by leading players like Asian Paints, Berger and Kansai Nerolac.
Asian Paints is the largest player with more than 50% market share in the decorative paints industry while Berger Paints has a market share of 18%. Kansai Nerolac is another dominating entity with a market share of nearly 15% while the market share of AkzoNobel, which owns the Dulux brand, stands at around 7%.
Grasim Industries reported 11.61% growth in its revenue from operations year-on-year at ₹31,965.4 crore in the December quarter. Its net profit increased by 28.62% to ₹2,603.43 in Q3FY24 from ₹2,024.05 in the year-ago quarter.