Grasim tests painting service 'Sparkle'; Asian Paints not to be impacted, says analyst

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Grasim, an Aditya Birla group company that has announced its foray into paint manufacturing, is beta testing its painting service 'Sparkle' in Mumbai, Pune and Bengaluru. Initially, it will cater exclusively to the staff of the Aditya Birla group and their friends and family, a recent report by Jefferies has said.

As Grasim is yet to commission its own manufacturing, the Sparkle
painting service is not using its own brand at this stage. It uses paint products procured from authorised dealers of respective paint companies.

In case of any product complaints, customers will be directed to the respective paint companies for warranty-related claims. However, Sparkle will assist in the warranty registration process, as stated in the Jefferies report.

In addition to the Sparkle painting service, Grasim's subsidiary, UltraTech Cement, introduced a white-cement-based liquid primer named Birla White PrimaCoat in 2022. The company claims that this primer offers superior adhesion and higher coverage compared to acrylic wall primers available in the market.

The verdict

Jefferies' analyst Vivek Maheshwari believes that it will be an uphill task for
Grasim to grab a large market share and that smaller players may be impacted, while Asian Paints will remain unscathed.

"While success is not guaranteed, the sheer magnitude of the Rs 10,000 crore capex investment by Grasim will likely push the new competitor to adopt an aggressive stance to ramp up," he said.

Higher discounts, promotions for dealers and even painters could impact the industry's profitability, at least in the medium term, he added.

Grasim is set to launch its paints early in 2024 with 1,332 million litres per annum (MLPA) total capacity. To counter it, Asian Paints’ has also been ramping up its capacity, which will reach 2,636 MLPA in few years.

At 11.30 am on June 2, Asian Paints was quoting flat at Rs 3,241.75 on the NSE. Grasim was also trading flat at Rs 1,705.30.