Grasim's entry into paints may have limited impact on existing players

Ability to penetrate distribution network and creating brand equity key challenges, say analysts

The domestic paints industry has a new kid on the block. Grasim Industries announced its plans to enter the high-margin business with an investment of Rs 5,000 crore over the next three years mainly towards adding new capacity at multiple locations in the country.

The company plans to become the second largest player and has a target of 20 per cent internal rate of return (IRR). To achieve this, it intends to leverage the distribution network of its subsidiary Ultratech Cement. Ultratech’s Birla White brand is well known for putty and white cement and has a reach of 35,000-40,000 paint dealers.

While