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Grasim Ltd, Aditya Birla Group's flagship company, has announced that it will be entering the B2B e-commerce for the building materials segment and invest Rs 2,000 crores over a span of 5 years.
The digital platform will cater to MSMEs with the potential to expand into other categories. The USP of the platform would be an integrated procurement solution including on-time delivery and a superior product range at competitive pricing.
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The platform is expected to focus on the existing problems within the supply chain as it will be run by a freshly recruited leadership team from the digital ecosystem.
"The foray into B2B e-commerce is yet another strategic portfolio choice as it crystallizes 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," said Kumar Mangalam Birla, Chairman of Aditya Birla Group.
According to the company, the B2B e-commerce business for building materials is unexplored and presents a huge opportunity for growth. It said that the CAGR of the segment was around 14% in the past 3 years and has an industry worth of around $100 billion with digital penetration of only 2%. Some reports suggest that the industry could reach $120 billion by 2025.
OfBusiness and Infra Market are two tech unicorns operating in the building materials segment. Both of them are currently valued at $5 billion and $2.5 billion respectively. Grasim said that it believes the e-commerce segment has high growth opportunities with good long-term returns and will be highly valuable to the stakeholders.
The stock of Grasim has seen significant correction but recently the stock has shown signs of recovery. It currently trades around yesterday's close of Rs 1,442 per share.
Article by Aman Agarwal.
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