Aditya Birla Group enters B2B e-commerce, to invest Rs 2,000 crore over 5 years

The Aditya Birla Group said on June 19 that it would invest Rs 2,000 crore in a B2B e-commerce play for the building materials segment over the next five years. The board of Grasim, a flagship company of the cement to financial services conglomerate, has approved its investment plan.

Tech unicorns like Infra Market and OfBusiness have become major players in the building materials segment of B2B e-commerce over the last few years.

Infra Market was valued at $2.5 billion in August last year. It has raked in over $400 million through 12 funding rounds to date, according to Crunchbase. Meanwhile, OfBusiness was last valued at around $5 billion earlier this year and has raised around $900 million through 11 funding rounds.

According to Aditya Birla Group, the overall building materials procurement segment in India has grown at a CAGR of around 14 percent over the last 3 years. This industry is estimated at ~ $100 billion with current digital penetration of just 2 percent.

Grasim’s digital platform will address various challenges within the existing supply chain. The platform will primarily focus on MSMEs in the building materials segment with the potential to further extend to other relevant categories. The key value proposition would be an integrated procurement solution including on-time delivery and a superior product range at competitive pricing.

Kumar Mangalam Birla, Chairman, Aditya Birla Group said, “The foray into B2B e-commerce is yet another strategic portfolio choice as it crystallises our intent to invest in the new-age, high-growth digital space. The building materials segment presents a huge scalable business opportunity with a proven path to profitability.”

“With this foray, Grasim would be able to leverage the large B2B ecosystem within the Aditya Birla Group. This move will also catalyse the growth of the MSME universe in India and provide an impetus to the Government’s vision of ‘Digital India’,” he added.

According to a report by Research and Markets, the building construction industry in India is expected to record a CAGR of 15 percent to reach $120 billion by 2025. Experts say that building materials account for 50-75 percent of construction costs in India.