Construction Industry News
Grasim Industries, part of the Aditya Birla group, plans to invest Rs 10,000 crore in the paint sector over the next three years to compete with current market leader Asian Paints and new entrants such as JSW.
The company announced that the market dynamics of the decorative paints industry had changed, with new capacity and strong growth and prospects.
The company disclosed that they have progressed implementation of their 1,332 MLPA paint capacity, with plant commissioning expected to begin in the March quarter of fiscal year (FY) 2024.
Grasim Industries announced its entry into the paint market last year with an investment of Rs 5,000 crore. As the industry's need for decorative paints grows, the company has opted to double its spending.
Civil construction for the North Indian market has already started on two of its plants, Panipat and Ludhiana. Construction of new factories will soon start in Chamarajanagar, India.
According to the company, the remaining three facilities are in various stages of government approval.
In the fiscal year ended March this year, the company spent Rs 2,437 crore on capital expenditures (CapEx). Grasim alone spent Rs 579 crore in the paint industry.
The analysts revealed that paint demand is likely to be strong in the medium term due to lower penetration and opportunities in new areas and services, and the Birla group expects significant growth opportunities.
The company has zero net debt in the fiscal year ended March this year with net cash of Rs 553 crore. Grasim's consolidated revenue for the year increased by 25% year-on-year (YoY) to Rs 95,701 crore, while its consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) increased 13% to Rs 17,772 crore.
Grasim, which owns investments in key Birla companies such as Ultratech and Aditya Birla Capital, said its after-tax consolidated profits rose 75% Y-o-Y to Rs 7,550 crore, despite the business interruption caused by the second wave of Covid-19 in Q12021.
In FY22, the company also announced the successful commissioning of expansion projects, including the expansion of VSF at its Vilayat facility.
Grasim shares closed 3.7% lower at Rs 1,402 per share giving the company a total value of Rs 92,335 crore.
