Grasim’s Entry into the Paint Industry May Impact Competitor’s Profit Margins: Analysts

The announcement made by Aditya Birla on Friday, to foray into the Paint Industry with initial investment of INR 50000 million has created a hustle in this oligopolistic market. As per the company, their entry into the paint industry is likely to add scale, size and diversity to their present portfolio. However, the move apart from capitalizing the company’s portfolio could also dwindle the ratings of well-established players like Nerolac and Asian Paints thereby negatively impacting country’s voluminous business.

As paint manufacturers are expecting a strong rebound in the sector amidst a positive revival in the economy after the pandemic induced slump, the company believe that this is the right time to foray into the industry as it can multiply their revenues in the coming years. Supporting the decision, chairman of Aditya Birla Group stated that the plan is a strategic choice for the company as it is eyeing to fetch revenues in new potential businesses. The personnel even remarked that the primary focus of the company is to foray into business which are possessing the potential to emerge as leaders in their segmental markets and fetch long term return for consistent growth.

Since the industry is planning to introduce a vivid range of products in the Indian market, it will positively serve in interest of its consumers giving them a vast choice. Moreover, it is also likely to assist the emerging distributers to expand their foothold in the market.

As per ChemAnalyst, this move from Aditya Birla is expected to contribute to Government’s vision of ‘Atmanirbhar Bharat’ as it will expand the volume growth of the paint industry but at the same time it is likely to impact the margins of existing manufacturers in the long run.