Grasim enters B2B e-commerce in building materials, to invest Rs 2,000 cr

Investment adds new high-growth engine within Grasim's standalone businesses and of its associate cos; firm is spending Rs 10,000 cr in new paints business, will launch products by early 2024

Grasim Industries, an Aditya Birla Group company, on Tuesday approved a foray into B2B e-commerce in the building materials segment with an investment of Rs 2,000 crore over the next five years.

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 company is spending Rs 10,000 crore in new paints business and will launch its products by early 2024. The group owns India's largest cement company with a capacity of 120 million tonnes per annum.

Kumar Mangalam Birla, Chairman of the $60 billion revenue Aditya Birla Group, said the B2B e-commerce foray is yet another strategic portfolio choice as it crystallises the group's 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," Birla said.

This move will also catalyse the growth of the MSME universe in India and provide an impetus to the Government’s vision of ‘Digital India’, he said.

The overall building materials procurement segment in India has grown at an annual rate of 14 per cent in the last 3 years. This industry is estimated at about $100 billion with current digital penetration of just 2 per cent. Grasim’s digital platform will address various challenges within the existing supply chain.

The platform will primarily focus on medium- and small-sized companies 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.

This platform will be operated by a newly recruited leadership team from the digital ecosystem.

The company believes that B2B e-commerce is a high growth opportunity with attractive long-term returns and will be highly value accretive to its stakeholders, it said. An earlier attempt by the group to enter the online retail fashion business failed to take on competition from existing players like Amazon and Flipkart.