Kumar Mangalam Birla confident about paints business, reaffirms Rs 10,000-cr revenue target

Aditya Birla Group's company has embarked on a capacity expansion drive with allocation of over Rs 50,000 crore in capital expenditures.

Addressing the 77th Annual General Meeting (AGM) of  Grasim Industries Ltd, Chairman Kumar Mangalam Birla on August 20 expressed strong confidence in the company’s newly launched paints business and reaffirmed the ambitious revenue target of Rs 10,000 crore within three years of full-scale operations.

Birla also noted a positive response from painters and contractors. "The feedback from the Painter and Contractor fraternity has been very encouraging, reinforcing our strategy to eliminate the ‘pain’ from painting," he said.  The comments come as analysts fan concerns over the current inflationary environment, warning it may erode both the pricing power of paint companies and their available budget for brand expenditures. Grasim aims to secure the second position in the decorative paints market, replacing Bеrgеr Paints India Ltd.

Grasim's paints business, Birla Opus, was launched in February this year. The group committed an upfront investment of Rs 10,000 crore towards setting up the paints business. So far, the company has invested Rs 7,000 crore in the paints business.

"In April this year, your Company commenced production at three plants, with the remaining three on track for completion. All six plants will be fully operational by FY25," he added.

These planned investments in the paints business impacted Grasim's first quarter results earlier in the month. The building materials firm reported a standalone loss of Rs 52 crore for the June quarter as against Rs 355-crore standalone net profit in the year-ago period.

"Over the past five years, Grasim has invested Rs 50,000 crore in capital expenditures, with 77% dedicated to growth initiatives. Remarkably, 40% of this amount—nearly Rs 20,000 crore—was spent in FY24 alone, marking the largest-ever capital expenditure in our history," Birla said. The company expects cement and decorative paints segments to benefit the most with the housing and infrastructure boom.

The group expects cement capacity to surpass the 200 million tonnes per annum (MTPA) by FY27.

Grasim which deals with, Cement, Cellulosic Fibres, Chlor Alkali, and the Speciality Chemicals businesses, reported consolidated EBITDA of Rs 20,837 crore in FY24, which the company touts as its "highest-ever".

"With our cement business, UltraTech, our decorative paints business, Birla Opus, and our B2B e-commerce platform for building materials, Birla Pivot, we are well-equipped to lead the charge in meeting the rising needs of India's construction sector," Birla added.