Aditya Birla Group’s recently launched paints venture, Birla Opus, anticipates achieving a high-single-digit market share by the end of FY25, aiming to secure the second position in the decorative paints market, according to the group’s Director, Himanshu Kapania, speaking at a post-launch media conference on February 22.
These statements come amidst industry optimism regarding the decorative cement sector’s potential growth to Rs 1 lakh crore over the next five years.
“We are projecting a high-single-digit market share by the end of the next fiscal year,” stated Kapania. These remarks coincide with the group’s plans to enhance industry capacity by 40 percent following the commencement of production at all six plants.
On February 22, the group’s chairman, Kumar Mangalam Birla, inaugurated three plants in Haryana, Punjab, and Tamil Nadu, with the remaining three in Karnataka, Maharashtra, and West Bengal set to begin production throughout FY25. The group is intensifying its efforts to capture the decorative paints market amidst expectations of strong demand from the infrastructure and housing sectors. Birla remarked, “Our housing sector will nearly double the past decade’s effort to add 80 million homes.”
Market Share Strategy
A June report from brokerage Nuvama reveals that Asian Paints leads the Indian paints industry with a 53 percent market share, followed by Berger (approximately 19 percent) and Kansai Nerolac (about 12 percent). “Our initial capacity in the first year of operation will exceed the combined current capacity of the second, third, and fourth largest players in the industry,” stated Birla during the launch.
For the second phase, the company plans additional capacity expansions. “We are also prepared to increase our capacity by nearly 500 million litres per annum (MLPA) at our existing locations in the next phase, and that too at a significantly lower incremental capital cost,” he added.
As of 2023, Asian Paints’ capacity stood at 1,700 MLPA. Berger Paints aims to increase its capacity to 1,100 million litres from the current 620 MLPA, while Kansai Nerolac plans to invest in expanding its capacity.
While existing players have a presence in the industrial paints market, the Birla Group has no intentions to venture into other markets. “We are focusing on consumer-facing businesses, which is a mandate for every business,” affirmed Birla.
Revenue Goals and Capital Expenditure Plans
The company aims to achieve a gross revenue of Rs 10,000 crore within three years of commencing full-scale operations. The group has allocated Rs 10,000 crore for capex to execute phase 1 of its capacity plans. “We have already spent Rs 5000 crore, and by the time all plants are operational, the Rs 10,000 crore budget will be utilized,” mentioned Kapania. Grasim Industries, the cement firm, is financing the capex of the paints unit through internal accruals and debt.
Birla emphasized the need to increase Grasim’s net debt to EBITDA ratio. “We aim to raise the ratio to 3 – 3.5, which is easily achievable,” he added.
Distribution Strategies
The group has enlisted 300,000 painters and contractors since the brand launch. “By the end of the first year, our plan is to distribute paints through channel partners across 6,000 towns,” Birla explained.
Additionally, the group plans to provide dealers with a complimentary tinting machine, essential for customizing paint colors. Preferred financing options will be offered to dealers through Aditya Birla Capital, the group’s financial servicing arm. “Our objective is to strengthen the working capital of our dealers while ensuring product delivery within a four-hour window,” stated Birla.
