Building materials business expected to log significant growth: Birla

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Aditya Birla Group Chairman Kumar Mangalam Birla on Tuesday said the conglomerate's building materials business is expected to see significant growth over the next several years with cement and decorative paints poised to be a key segment on the back of housing and infrastructure boom in India.

Moreover, the outlook of the Indian economy remains "positive" supported by strengthening of macroeconomic fundamentals, a robust financial and corporate sector, and a resilient external sector.

The government's continued thrust on capex while pursuing fiscal consolidation, and consumer and business optimism augur well for investment and consumption demand, he said.

Birla was addressing the AGM of the group's holding firm Grasim, which controls the group's flagship firms including UltraTech, Aditya Birla Finance and other investments in textiles, chemicals and paints.

Grasim has invested Rs 50,000 crore in capex over the past five years, of which 77 per cent is dedicated to growth initiatives, he said adding this would position it for sustained growth and value creation.

"Remarkably, 40 per cent of this amountnearly Rs 20,000 crore was spent in FY 2023-24 alone, marking the largest-ever capital expenditure in our history," he added.

According to Birla, its cement and decorative paints are poised to be a key segment of this expansion, with "robust demand" projected across the nation.

"With our cement business, UltraTech, our decorative paints business, Birla Opus, and our B2B e-commerce platform for building materials, Birla Pivot, we are well-equipped to lead the charge in meeting the rising needs of India's construction," said Birla.

Cement maker UltraTech is rapidly scaling its capacity through acquisitions and brownfield expansions. It had last month announced acquisition of Tamil Nadu-based India Cements Ltd (ICL). Its Rs 3,142 crore open offer for acquiring 26 per cent stake in ICL would open on September 19.

In FY24, it increased its cement production capacity by 13.8 MTPA through expansion projects and crossed 150 MTPA production capacity. It is now the third-largest cement company in the world, excluding China.

"With the completion of the ongoing expansion projects across India, and after the receipt of requisite approvals for the recently announced acquisitions of Kesoram Cement and India Cements, our total cement capacity will surpass the 200 MTPA by FY27," said Birla.

On its new paint business Birla Opus, he said production has commenced at three plants, with the remaining three on track for completion. All six plants will be fully operational by FY25.

"We remain confident in our guidance of achieving Rs 10,000 crore in revenue within three years of full-scale operations," he said.

Its B2B e-commerce business for building materials, Birla Pivot has crossed Rs 1,000 crore revenue in its first year of operations.

"With the strong growth trajectory in the construction materials sector and the rapid digital adoption across industries, Birla Pivot aims to achieve USD 1 billion in revenue within the next three years," said Birla.

He also added that as per its goal of becoming a net-zero company by 2050, Grasim is actively working to reduce its carbon footprint and enhance environmental sustainability through various measures.

In FY24, Grasim's annual revenue was at Rs 1,30,978 crore, surpassing USD 15 billion in consolidated revenues.

Incorporated in 1947, Grasim operates in segment such as Viscose Staple Fibre, Viscose Filament Yarn, Chemicals, Textiles, Insulators, Paints and B2B E-Commerce.

Through its subsidiaries, UltraTech Cement, Aditya Birla Capital and Aditya Birla Renewables, it is also India's prominent cement producer, leading diversified financial services player and a clean energy solutions player.