Overall, the company has earmarked Rs 2,600 crore capex for the ongoing fiscal year.
“We are currently in the process of carefully identifying plant sites that are close to consumption hubs…For the paints business, the company has approved an initial capex of Rs 5,000 crore for the next three years,” Birla told shareholders at its annual general meeting on Friday.
Asian Paints, Berger Paints and Kansai Nerolac are currently the top three players in the paints segment. Relative newcomer JSW Paints has announced plans to expand its footprint to the northern and eastern regions to become a pan-India player and has plans to make a public market debut by 2025. Competition from Grasim, according to analysts, is expected to disrupt the market share of the top three players.
“Over a slightly longer term, if Grasim or JSW Paints succeed, they would not only challenge the incumbents’ market share but also pose a risk to the pricing discipline in the industry,” financial services company Investec said in a report on the sector.
Grasim, part of the Aditya Birla Group, has businesses as diverse as cement, textiles and chemicals. The company has started trial production at its expanded Viscose Staple Fibre (VSF) facility at Vilayat, in Gujarat’s Bharuch district.
“The company has invested close to Rs 3,500 crore on this project,” Birla said. Cyclical upswing, conducive policy impulses and improving global backdrop are likely to align themselves to position India for a virtuous cycle of growth and investments in the medium-term, he added.
In the previous fiscal year, Grasim’s consolidated revenue from operations stood at $10.3 billion (Rs 76,398 crore) and consolidated operating income, or Ebitda, was $2.1 billion (Rs 15,766 crore).
