Birla Opus Eyes Ambitious Target: High Single-Digit Market Share by FY25

23 Feb 2024 , 10:41 AM

According to director Himanshu Kapania of the Aditya Birla Group, Birla Opus, the company’s new paint division, aims to finish FY25 with a high single-digit market share and take the second spot in the decorative paints market. This was said during a press conference held on February 22.

The remarks coincide with industry participants placing large bets on the ornamental cement market, which is predicted to reach ₹1 Lakh Crore in the next five years.

‘We will be exiting the next financial year with a market share of high-single-digits,’ Kapania stated. The remarks are made as the organisation prepares to increase industry capacity by 40% once all six factories begin operating.

The three facilities located in Tamil Nadu, Punjab, and Haryana were officially opened by the group’s chairman, Kumar Mangalam Birla, on February 22. During FY25, production will start at the remaining three plants, which are located in Kharagpur, West Bengal; Mahad, Maharashtra; and Chamarajanagar, Karnataka.

The company is stepping up its attempts to take market share in decorative paints in anticipation of strong demand from the housing and infrastructure industries. In his speech, Birla declared, ‘Our housing sector will nearly double the past decade’s effort to add 80 million homes.’

According to a June estimate from brokerage Nuvama, Asian Paints holds a 53% market share as of 2023, leading the Indian paints sector. Berger and Kansai Nerolac are next in line, with 19 and 12% market shares, respectively.

‘Our capacity in the very first year first year of operation will be greater than the combined current capacity of the second, third and fourth largest players in the industry,’ Birla stated during the event.

The business is also preparing more capacity additions for the second phase. ‘We are also prepared to increase our capacity by nearly 500 million litres per annum (MLPA) at our existing locations in the next phase, and that too at a significantly lower incremental capital cost,’ he stated.

The group has set aside capital expenditures of ₹10,000 Crore to carry out the first phase of the capacity plans.  ‘We have already spent ₹5000 Crore and by the time all plants are rolled out, the ₹10,000 Crore would be stretched out,’ stated Kapania. Grasim Industries, a cement company, uses debt and internal accruals to finance the paints unit’s capital expenditures.

Birla pointed out that Grasim needs to increase its net debt to EBITDA (earnings before interest, taxes, and depreciation).  ‘We need to raise the ratio to 3 – 3.5, which we are very comfortable, easily doable,’ he stated.

According to the group, 300,00 painters and contractors have already signed up for the brand launch. ‘By the end of first year, our plan is to distribute paints through channel partners across 6,000 towns,’ Birla stated in his address.

The group intends to give away free tinting machines to dealers. The process of adding two or more colours to a system is called tinting. The common paint bases are tinted using tinting or colour dispensing devices.

Additionally, the group provides dealers with preferred financing through Aditya Birla Capital, its financial servicing division. ‘Our endeavour will be to fortify the working capital of our dealers whilst guaranteeing product delivery within a four-hour window,’ Birla stated.

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