Grasim Industries, the flagship company of the Aditya Birla Group, is setting up a business-to-business (B2B) e-commerce platform for building materials with a Rs 2,000-crore investment spread over the next five years. The move follows Grasim’s recent announcement to invest Rs 10,000 crore for its paint foray by financial year 2025.
“The foray into B2B e-commerce is yet another strategic portfolio choice as it crystallises our intent to invest in the new-age, high-growth digital space. The building materials segment presents a huge scalable business opportunity with a proven path to profitability. With this foray, Grasim would be able to leverage the large B2B ecosystem within the Aditya Birla Group,” Aditya Birla Group chairman Kumar Mangalam Birla said in a statement.
“This move will also catalyse the growth of the micro, small and medium enterprises (MSME) universe in India and provide an impetus to the government’s vision of ‘Digital India’,” Birla added.
The platform will be operated by a newly-recruited leadership team from the digital ecosystem.
This investment adds a new high-growth engine with clear adjacencies within Grasim’s standalone businesses as also that of its subsidiaries and associate companies. The platform will primarily focus on MSMEs in the building materials segment with the potential to further extend to other relevant categories. The key value proposition would be an integrated procurement solution, including on-time delivery and a superior product range at ‘competitive’ pricing, the statement said.
According to Grasim, the B2B e-commerce segment is of ‘high-growth opportunity with attractive long-term returns and will be highly value accretive to its stakeholders’.
The overall building materials procurement segment in India has grown at an annual growth rate of 14% over the last three years. This industry is estimated to be at $100 billion with current digital penetration of just 2%. Grasim’s digital platform will address various challenges within the existing supply chain, it added.
Earlier on May 24, Grasim Industries had announced plans to invest Rs 10,000 crore for its paint foray by FY25, double of what was initially earmarked when the firm announced its entry into the sector in January last year. It intends to set up plants with production capacity of 1,332 million litres per annum (MLPA) and commission operations by the fourth quarter of FY24.
The domestic paint segment is estimated to be at Rs 68,000-70,000 crore with organised players cornering 70% of the market. Within the organised segment, decorative paints account for about 78-80% and industrial paint accounts for the rest.
This follows similar moves by other players. In November last year, Sajjan Jindal-led JSW Group announced plans to invest Rs 250 crore in an e-commerce venture – JSW One Platforms – to sell steel, cement and paint products. The platform was also targeting an annual gross market value run-rate of Rs 500 crore by March 2022.
While Tata Steel’s e-commerce platform, Ashiyana, targets B2C segment (mainly individual home builders), ArcelorMittal Nippon Steel India had earlier launched eSales to take orders for its premium range of steel products. State-owned Steel Authority of India also has an online platform, Sail Suraksha, to sell steel.