Ravi Raghavan , Chemical Weekly Writes
Grasim’s entry into paints – a ‘Jio’ moment with a difference
Last week, the Adityabirla Group launched its paints brand ‘Birla Opus’ and announced commencement of operations at three paint manufacturing facilities – in Panipat (Haryana), Ludhiana (Punjab) and Cheyyar (Tamil Nadu). This, the biggest ever market entry in the Indian paints industry, will see the commissioning of three more plants for architectural paints at Chamarajanagar (Karnataka), Mahad (Maharashtra) and Kharagpur (West Bengal) by the end of FY25, to take overall manufacturing capacity to 1,332-mlpa.
The total capacity created in record time will be greater than the capacity of second, third and fourth players put together, and catapult Grasim to second spot behind the market leader, Asian Paints (with a capacity of 1,700-mlpa).
At present, the Indian architectural paints market is ruled by Asian Paints, with a market share of over 50%, followed by Berger Paints India (19%) and Kansai Nerolac Paints Ltd (12%). Together, these three account for close to 80% of the market, and this is being challenged – now by the entry of Grasim, and earlier the JSW Group.
Having said that, the strengths of the incumbents in the marketplace are not to be underestimated. Asian Paints, for one, has a spectacular growth record, and has increased its top-line year-on-year, and, just as impressively, even after being the largest player in the industry, gained market share. It reaches customers through ~120,000 mom-and-pop shops spread across the country serving a vast & widely dispersed population. This kind of supply chain takes time to replicate.
But if there is anyone who can take them on, it is Grasim. The company already has an extensive retail distribution presence for its UltraTech Cement white cement and ‘putty’ and it is this channel that the company will initially use to sell paints. In this sense the Aditya Birla Group was already in the paints business by selling a basecoat, and is now gravitating towards the surface through higher value finishing coats.
Grasim’s entry has been described as a ‘Jio’ movement in the Indian paints industry – alluding to the disruptive entry of the Reliance group into mobile calling and data services. The difference is that the market leader in paints will be challenged, not dethroned, and the disruptor will stand only one notch lower in market ranking!
The full opinion piece is available at: https://lnkd.in/d7XRvqnA
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