The Parryware-Roca Joint Venture
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Case Code: BSTR240 Case Length: 17 Pages Period: 2005-2006 Pub Date: 2006 Teaching Note: Available |
Price: Rs.300 Organization: Parryware, Roca Industry: Engineering, Construction, and Real Estate Countries: India Themes: Mergers, Acquisitions, and Strategic Alliances |
Abstract Case Intro 1 Case Intro 2 Excerpts
"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."
- 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."
-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 tapware.
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) 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 group.
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.
Through the JV, Roca expected to gain access to the growing Indian sanitaryware market. PR was expected to benefit significantly through Roca's superior technology, improved manufacturing practices, better product offerings, and international presence. While Roca was set to gain market share in India, it also had plans to use the JV's plants to manufacture products for export to other countries. However, the JV was expected to face strong competition from foreign as well as domestic competitors....
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