Grasim doubles investment outlay for paints biz to Rs 10,000 cr

Company to launch products by March 2024, take on Asian Paints and new entrants such as JSW

Aditya Birla group’s Grasim Industries is planning to invest Rs 10,000 crore in the paints business in the next three years in order to take on current market leader Asian Paints, and new entrants such as JSW.

Soon after its board meeting today, the company announced that the market dynamics of the decorative paints sector has changed with new capacities being announced backed by strong growth and outlook. “We have accelerated the execution of our paint capacity of 1,332 MLPA with commissioning of plants to start by March quarter of fiscal 2024,” the company said.

Last year, the company had announced its entry into paints business with an investment of Rs 5,000 crore. The company decided to double the investment today as the demand in the industry picks up for decorative paints.

The civil construction at two of its plant sites Panipat and Ludhiana has already commenced to cater to the North Indian market. The construction of new plants is expected to start shortly at Chamarajanagar in South India. The remaining three plants are at different stages of Government approval processes, the company said.

The company spent Rs 2,437 crore on its capex spent in the fiscal year ending March this year. Of this, Grasim invested Rs 579 crore in the paints business alone.

Analysts expect demand for paints to be robust in the medium term due to lower penetration of paints and opportunities in new segments and services and the company sees high growth opportunities for the Birla group.

In the fiscal year ended March this year, the company emerged as a zero net debt company with Rs 553 crore of net cash. Grasim’s cConsolidated revenue for the year was up 25 per cent on a year on year basis at Rs 95,701 crore while its consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) was up 13 per cent on a YoY basis at Rs 17,772 crore.

Grasim, which holds stakes in key Birla companies like Ultratech and Aditya Birla Capital, said its consolidated profit after tax was up 75 per cent YoY to Rs 7,550 crore – despite business disruption in the first quarter ending June last year due to Covid second wave. The company also announces successful commissioning of expansion projects in FY22 which includes VSF expansion at its Vilayat facility.

Grasim shares closed 3.7 per cent lower on Tuesday at Rs 1,402 a share thus giving a total valuation of Rs 92,335 crore to the company.

Grasim Inds
Consolidated Figures in Rs Crore	FY21	FY22
Net Sales	76,404	95,701
PBIDT	19,766	22,080
Net Profit	4,305	7,550
Total Debt	79,078	74,561
Net Worth	65,494	75,698
Source Capitaline
Compiled by BS Research Bureau