![]() ![]() “This business requires investment in a large distribution network besides aggressive sales-push and ad-spend, resulting in high selling expenses. For the first few years, the company would need to invest heavily in brand building while increasing its penetration at the distribution level. Given the high entry barriers, the Group’s deep pockets will come in handy. “The work in terms of meeting the trade, meeting the dealers, collecting the data, is also going on track, in line with our proposed launch." “We have obviously studied all competition, including the market leader, and we have a clear view of what our key tasks are," said Rakshit Hargave, CEO, Grasim Paints, at the investor call. This would give them a touch and feel of how the industry works. For now, it is only catering to employees, friends and families of the extended Aditya Birla Group. The company recently started beta testing its painting service ‘Sparkle’ in Mumbai, Pune and Bengaluru. The build-up to the launch has already begun. “All the plant capex will be done for the paints (business) in the next financial year and by 2024-25," said Pavan Jain, chief financial officer at Grasim, at an investor call last month. 2 player in the market, and about 70% of leader Asian Paints’ current capacity. This is about a third more than Berger, the No. To start with, Grasim will have six manufacturing plants-in Haryana, Punjab, Karnataka, Tamil Nadu, Maharashtra and West Bengal-and a total capacity of 1,332 million litres per annum (MLPA). We have very ambitious plans…we have every reason to believe that we would be a very strong number two in the next five years," he added. We have an overlap of a whole distribution network for cement and white cement. But what I am saying is that we have a great reason to be in the business. “When we announced our foray into paints, we said that we have a natural right to win-when I say ‘win’, I don’t mean against Asian Paints," Kumar Mangalam Birla, chairman of the Aditya Birla Group, said at Davos earlier this year. Initially, the company planned a ₹5,000 crore capex but quickly dialled up and doubled it realizing that bigger players have most to gain. The scale of Grasim’s investment underlines the promise of this market. “Growth opportunities are significant and post implementation of the goods and services tax (GST), the share of unorganized players is shrinking while large organized players are consolidating their position," said Anuj Sethi, senior director, Crisil Ratings. And volumes in this industry typically grow at 1.6-2x of the gross domestic product (GDP), which translates into a steady revenue growth of 12-15%, estimated Crisil Ratings, a rating agency. For nearly two decades, the decorative paints segment has grown at a CAGR of 14%. New entrants such as Grasim have done the math. For the first time, in decades, there are rumblings of an impending war in an industry known for its calm. The group also has deep pockets, a proven capability to build brands and know-how of the consumer and the market. Unlike most, the group has a strong presence in the allied cements industry-Ultratech is the largest player in the category, and the white cement business gives it a toehold in the paints segment. The company’s first products in the decorative segment are expected later this fiscal. ![]() The conglomerate’s foray, with its flagship Grasim Industries, has set the cat among the pigeons. But the game changer could be the $60 billion Aditya Birla Group. Last month, Pidlite Industries of Fevicol fame also launched its range of decorative paints in select geographies. A few months later, JK Cement did the same by acquiring a controlling stake in Acro Paints. In 2022, building materials firm Astral entered the market by acquiring Gem Paints. Steel behemoth JSW Group made its foray into paints in 2019. Despite the failures, there is never a dearth of new entrants. Nonetheless, the industry promises high growth and sustained double-digit profitability for those who can crack it. The second segment of the paints industry is industrial, where the automotive industry is a major buyer. That leaves very little room for the others. In the more lucrative decorative paints segment, Asian Paints commands over 55% share. The industry is dominated by four companies that account for over 65% of the market. The entry barriers are high with a strong bias towards established players. Sherwin-Williams is one in a long line of companies that have failed to make it big in the Indian paint industry over the last two decades. Those proved not to be correct," the American company stated in a conference call in 2013. “We made some assumptions about the country’s readiness for the type of products that we manufacture. ![]()
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