Grasim Industries, the flagship company of Aditya Birla group, is still in the process of acquiring land for its proposed paint manufacturing business. Considering the time required for getting environmental clearance and other approvals and also for setting up the factory, it may take another two years for the company to start paint manufacturing.
According to analysts, by then clouds of uncertainty caused by COVID-19 may get cleared and also economy may revert back on high growth track. They also say that land acquisition might have delayed due to second wave and localised lockdowns.
In January this Grasim had surprised everyone by announcing its decision to foray into paint manufacturing business. Grasim had announced that it would invest about Rs 5,000 crore in paints business over the next three years. The company aspires to be a strong no. 2 player over a reasonable period of time by targeting multi location plants to setup sizeable capacity.
The company will focus on decorative paints and is planning to introduce the latest range of paint products in line with global mega-trends. Providing differentiated products which meet aspiration of consumers at lower cost as company does not have traditional legacy cost will be the main strategy of the company.
Indian Paints industry is oligopolistic in nature with Asian Paints enjoying a market share of nearly 50% of the organised market. Increasing nuclearisation and urbanisation of families, shortening of repainting cycle, growing demand from smaller towns and rural areas, affordable housing initiatives from government, increasing distribution reach and innovations, upgradation and growth in premium segment – make the industry very attractive with good growth potential. Also, high margins of the industry and formalisation of the industry have started attracting new players into the market. In 2019, JSW forayed into paints business which is now replicated by a Birla flagship company.