Aditya Birla Group's new paints business, Birla Opus, expects to exit FY25 with high-single-digit market share, with aim to secure the second position in the decorative paints market, said the group's Director Himanshu Kapania, in a post-launch conference with media on February 22.
The comments come as industry players are betting high on the decorative cement business amid expectations for the sector to grow to Rs 1 lakh crore in the next five years.
"We will be exiting the next financial year with a market share of high-single-digits," Kapania said. The comments come as the group is set to add 40 percent addition to the current industry capacity after all the six plants start production.
Eariler on February 22, the group's chairman Kumar Mangalam Birla inaugurated the three plants in Haryana, Punjab and Tamil Nadu. The remaining three plants in Chamarajanagar in Karnataka, Mahad in Maharashtra and Kharagpur in West Bengal will commence production over the course of FY25.
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The group is doubling down its efforts to capture the decorative paints space amid expectations on robust demand from the infrastructure and housing sectors. "Our housing sector will nearly double the past decade's effort to add 80 million homes," Birla said in his speech.
Market share push
As per a June report from brokerage Nuvama, as of 2023, Asian Paints leads the Indian paints industry business with 53 percent market share, followed by Berger (approximately 19 percent) and Kansai Nerolac (about 12 percent).
"Our capacity in the very first year first year of operation will be greater than the combined current capacity of the second, third and fourth largest players in the industry," said Birla during the launch.
Further for the second phase, the company is planning additional capacity additions. "We are also prepared to increase our capacity by nearly 500 million litres per annum (MLPA) at our existing locations in the next phase, and that too at a significantly lower incremental capital cost," he said.
As of 2023, Asian Paints' capacity stood at 1,700 MLPA. According to reports, Berger Paints will increase its capacity to 1,100 million litres from the current 620 MLPA. Kansai Nerolac will also be spending Rs 290 crore to expand its current capacity of MLPA.
While the existing players have presence in the industrial paints market, Birla group has no plans to venture into other markets. "We are moving for consumer facing business, that's a mandate for every business," Birla said.
The Aditya Birla Group company aims to achieve a Rs 10,000 crore gross revenue within three years of starting full-scale operations.
Capex spending plans
The group has earmarked Rs 10,000 crore worth capex to execute the phase 1 of capacity plans. "We have already spent Rs 5000 crore and by the time all plants are rolled out, the Rs 10,000 crore would be stretched out," said Kapania. Cement firm Grasim Industries is funding the capex of paints unit through internal accruals and debt.
Birla flagged that Grasim's net debt to EBITDA (Earnings before interest, taxes, depreciation) is required to be raised. "We need to raise the ratio to 3 - 3.5, which we are very comfortable, easily doable," he added.
Distribution plans
The group said it has already enrolled 300,00 painters and contractors enrolled brand launch. "By the end of first year, our plan is to distribute paints through channel partners across 6,000 towns," Birla said in his speech.
The group plans to provide dealers with a free tinting machine. Tinting is the process of adding two or more colors to a system. Tint machines or color dispensing machines are used to tint the standard paint bases.
The group is also offering preferred financing to dealers through its financial servicing arm, Aditya Birla Capital. "Our endeavour will be to fortify the working capital of our dealers whilst guaranteeing product delivery within a four-hour window," Birla said.
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