The Board of Directors of Grasim has approved a foray into the paints business. Grasim’s Board has approved initial capital expenditure of ~INR 5,000 crore over the next 3 years.
Mr. Kumar Mangalam Birla, Chairman, Aditya Birla Group, said: “The foray into paints is a strategic portfolio choice for Grasim as it looks to identify new growth engines. Grasim’s strong balance sheet will facilitate this entry, which will add size, scale and diversity to its existing portfolio of established standalone businesses. The company endeavours to invest in businesses that have the potential to be a leader in their addressable markets; have the ability to achieve scale, and generate consistent and attractive returns in the long term. The paints industry presents a high-growth option for Grasim.”
The sector has registered a revenue CAGR of around 11% during FY14 to FY19, and given the value migration from the unorganized to the organized market, the outlook remains robust, providing the space for a quality new player.
The entry of Grasim in the paints sector will offer a wide choice to Indian consumers as the company plans to introduce the latest range of paint products in line with global mega-trends. The company’s entry into this high growth sector will help painters / applicators and all traditional and emerging channel partners across India to expand their existing business and grow. This move will also provide an impetus to the Government’s vision of ‘Atmanirbhar Bharat’ and supports the supplier ecosystem of MSMEs by helping them expand their existing raw material manufacturing capacities.
The company believes that this sector is likely to be value accretive to its stakeholders.