The Parryware-Roca Joint Venture

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Case Details:

Case Code : BSTR240
Case Length : 17 Pages
Period : 2005-2006
Organization : Parryware Roca Pvt. Ltd.
Pub Date : 2006
Teaching Note : Available
Countries : India
Industry : Ceramic

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"We have rewritten history through this joint venture. By joining hands with Roca, now becoming the World's No 1 player in bathroom products, we are well poised to usher in an era of innovative products that will continue to transform bathrooms to glamour rooms."¹

- A Vellayan, Vice-Chairman, EID Parry India Ltd., in 2006.

"Our foray into the Indian market with a trusted name of Parryware gives us immense confidence and credibility. We are committed to growing the Indian market and will rapidly strengthen our position as the No. 1 player in India."²

-Domingo Colomo, Senior Managing Director, Roca Corporacion Empresarial, S.A, in 2006.

Introduction

In September 2006, Parryware Roca Pvt. Ltd. (PR), a 50:50 joint venture between EID Parry (India) Ltd. (EID Parry), a major Indian business house, and Spanish sanitaryware company, Roca Corporacion Empresarial, S.A (Roca), announced plans to start selling Roca products in India, using a shop-in-shop retail format. PR would import Roca products and retail them at 25 of the joint venture's big showrooms across India. By the end of 2007, PR would be franchising 20 new exclusive PR stores in eight cities.

Roca was established in 1917 in Barcelona, Spain, as a manufacturer of cast-iron radiators. Later, the company entered the bathroom accessories market with the launch of sanitary fixtures and tapware³.

In the 1980s, the company started manufacturing and marketing bathroom tiles. Over the years, Roca established subsidiaries and factories in countries around the world. In 1999, Roca acquired Keramik Holding AG Laufen (Laufen)⁴ of Switzerland for US$ 272 million. With this acquisition, Roca became the world's second largest bathroom products group. Parryware was originally a division of EID Parry, which in turn was a part of the Murugappa group⁵.

Although it was set up in 1917, it was only in 1952 that EID Parry started production of sanitaryware. In 1999, after the acquisition of Johnson Pedder, a major Indian sanitaryware manufacturer, Parryware became one of the largest manufacturers of sanitaryware in India. In March 2006, Parryware was spun off as a separate company - Parryware Glamourooms Pvt. Ltd. (PGPL), leaving EID Parry free to concentrate on its sugar business. In April 2006, Roca picked up a 50% stake in PGPL, after which the company was renamed PR. With this, Roca became the world's largest manufacturer of bathroom products. In August 2006, PR announced the opening of its new production facility at Perundurai, Tamil Nadu.

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1] "Roca forms JV with Parryware,"www.chennaionline.com, April 22. 2006.

2] "Roca partners Parryware to become world's no.1 player,"www.murugappa.com, April 20, 2006.

3] Tapware is an industry term that refers to a sub-category in plumbing fixtures and includes water taps (or faucets), water spouts, and shower heads.

4] Laufen was established in 1892 as a factory for clay products. Located in Laufen, Switzerland, the company became the first sanitaryware manufacturer in Switzerland in 1925. As of 1999, the company had several subsidiaries around the world.

5] The Murugappa Group started off as a small family-run business in indigenous financing. As of 2006, the company had diversified interests in abrasives, engineering, farm inputs, plantations, sugar, bio-products, chemicals, nutraceuticals, etc.