Competition set to intensify as Aditya Birla Group-owned Grasim enters paints market

With six manufacturing plants, Birla Opus set to add 40 percent to industry capacity, targets Rs 10,000 crore revenue within three years

By Naandika Tripathi Forbes India Staff

Published: Feb 23, 2024 10:55:53 AM IST

Updated: Feb 23, 2024 12:16:16 PM IST

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About 100 km from New Delhi in Panipat, Haryana, the Birla Opus Paints factory is a hive of activity. The manufacturing plant, which will offer decorative painting solutions from March onwards, has commenced full-fledged production. Aditya Birla Group's flagship firm, Grasim Industries, has launched the new paint brand with an investment of Rs 10,000 crore. On February 22, during the inauguration, Kumar Mangalam Birla said the group is set to disrupt the paint industry with a 40 percent addition to industry capacity and is targeting Rs 10,000 crore revenue within three years.

Birla Opus has six fully automated and integrated manufacturing plants with a total commercial capacity of 1,332 million litres per year. The company has currently started production at three plants in Panipat, Ludhiana in Punjab, and Cheyyar in Tamil Nadu. The other three plants—in Karnataka, Maharashtra, and West Bengal—will commence production over the course of FY25. Each of these factories has a capacity of about 200 million litres; one of the factories also has a capacity of 30 million litres of solvent. The ones that are up and running have about 630 million litres of capacity. At full capacity, Birla Opus will be become second in terms of capacity, ahead of Berger Paints.

The products will be available in Punjab, Haryana, and Tamil Nadu from mid-March and across all 1 lakh population towns in India by July. The company aims to expand its distribution to over 6,000 towns by the end of the fiscal year. Birla Opus claims this will be the fastest and widest pan-India launch by any paint brand. The brand will be offering 145 products and 1200 SKUs across water-based paints, enamel paints, wood finishes, waterproofing, and wallpapers. It has multiple category offerings, from economy, premium, and luxury to designer finishes and institutional clients. Birla Opus will also present a range of 2,300 tintable colour choices.

Rakshit Hargave, CEO, Birla Opus, said, “On the back of strong in-house R&D and extensive field validations, Birla Opus is committing to a higher product warranty than the leading players across most water-based products. Birla Opus is also setting a benchmark by offering a first-time warranty on enamels and wood finish products. As part of the inaugural offer, consumers will get an additional 10 percent volume on water-based products, and contractors will get loyalty benefits across most of our products.”

Birla Opus has already enrolled over 3,00,000 painting contractors. And the company claims to be building the second-largest network of dealers within the first year.

In the last few years, companies like Indigo Paints, JSW Paints, and Pidilite have entered the segment, gaining market share and competing with established giants like Asian Paints, Berger Paints and Kansai Nerolac, which collectively control nearly 3/4th of the market. The Indian paint industry exhibits an oligopolistic structure, with the top five players dominating approximately 90 percent of the organised market, according to a recent report by CareEdge Ratings. The long-term competitive intensity in the industry is predicted to escalate with the entry of new players such as Grasim Industries, Pidilite, and JSW Paints.

Decorative paints hold a majority share in terms of consumption, contributing about 70 percent of the market, while industrial paints account for the rest. The demand for decorative paints increases due to a rise in both repainting activities and housing sales. Traditionally, about 20 percent of the demand for decorative paints comes from new construction.

Demand from repainting, which accounts for 80 percent of total decorative paint demand, is also expected to pick up due to factors such as a growing population, an increase in rental homes, and growth in the income levels of consumers. The repainting cycle has also reduced as consumers have started to paint their houses at frequent intervals.

Birla Opus expects to exit FY25 with a high single-digit market share and secure the second position in the decorative paints market, said Aditya Birla Group's director, Himanshu Kapania. Currently, Asian Paints has the biggest market share with an upward of 50 percent in decorative paints, followed by Berger Paints with a rough 19 percent share, and Kansai Nerolac with around 12 percent.

The target of Rs 10,000 crore in revenue within three years looks a bit ambitious in the backdrop of a general slowdown in the segment, but everyone has their eyes on the execution part right now, says Amit Purohit, vice president of Elara Capital. “They’ve done the right thing by doing a big bang launch, because that actually creates the image of a premium product. Unlike the existing players, who struggle to have a specific image. For instance, Berger over a period has evolved as a water-based company, but they were largely an enamel-based paint company. Birla Opus has entered the market positioning itself as a premium product in which Asian Paints are very strong. If Birla Opus cracks the execution bit, then they can definitely stand out.”

But will this new player shake up the dominant players? As the experts say, Grasim’s Birla Opus has come head-on with Asian Paints, which is not going to sit idle and will soon have its counterattack.

Shares of Grasim Industries reached a new 52-week high price of Rs 2,222 yesterday, after international brokerage Jefferies assigned a buy call on the stock with a target price of Rs 2,300. According to Jefferies, the company is poised to make significant strides in its paints business with the opening of its first paints plant.