Aditya Birla Group’s flagship company Grasim Industries intends to invest Rs 10,000 crore for its paint foray by FY25, double of what was initially earmarked, in line with the changing dynamics of the industry.
“We have accelerated the execution of our paints capacity of 1,332 MLPA, with commissioning of plants to start by the fourth quarter of financial year 2024. The project cost is likely to be Rs 10,000 crore by FY25,” the company said in a statement.
“Market dynamics of the decorative paints sector have changed, with new capacities being announced backed by strong growth and outlook,” it said.
Grasim Industries has already started construction work at two of its plant sites — Panipat and Ludhiana — while that at Chamarajanagar is expected to start shortly. The remaining three plants are at different stages of the government approval processes.
The company has decided to double the investment in the wake of rising demand for decorative paints in the country.
In January 2021, Grasim had announced its plans to enter the paints business with a Rs 5,000 crore initial investment spread over the next three years. The company, which had started as a textiles manufacturer, was expecting the foray to identify new growth engines and add to the cash flows of its existing business portfolios.
At present, Asian Paints is the market leader in the decorative paints market, which is estimated to be at Rs 40,000 crore and is growing at 11% per annum. In 2019, the Sajjan Jindal-led JSW Group forayed into the paints segment, starting with coil coatings and offering a complete range of decorative paints.
Q4 net up 62%
Grasim Industries, which holds stakes in group companies such as UltraTech Cement and financial services firm Aditya Birla Capital, posted a consolidated net profit of Rs 2,777 crore for the quarter ended March 31. This is a rise of 62% from the Rs 1,715 crore recorded during the year-ago period.
The company recorded an exceptional item of Rs 69.11 crore in the reporting quarter.
Its consolidated revenue rose 18% to Rs 28,811 crore from Rs 24,401 crore posted in the year-ago period, while Ebitda (earnings before interest, tax, depreciation and amortisation) fell 10% to Rs 4,647 crore from Rs 5,142 crore.
It emerged as a zero-net-debt company with Rs 553 crore of net cash as of March 31.
Grasim Industries’ total capex plan for FY22 was at Rs 2,537 crore, which included Rs 579 crore spent for its paints business. The company’s board has recommended a dividend of Rs 5 per share for the year ended March 31, and a special dividend of Rs 5 per share, taking the total dividend to Rs 10 per share. The total outflow on account of the dividend would be Rs 658 crore, it said.
The consolidated revenue for UltraTech Cement was at Rs 52,599 crore, up 18% on a year-on-year basis in FY22, while its consolidated net debt fell to Rs 3,901 crore in FY21 from Rs 6,717 crore in FY21.
The consolidated revenue and net profit after minority interest of Aditya Birla Capital for FY22 were up 15% y-o-y and 51% y-o-y to Rs 22,230 crore and Rs 1,706 crore, respectively. For the fourth quarter, revenue and net profit were up 18% and 20%, respectively, to Rs 6,617 crore and Rs 450 crore.
The company’s textile value chain in India operated at optimum capacity utilisation, it said.