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Murugappas to exit sanitaryware business

CHENNAI: The Murugappa Group is set to almost exit the sanitaryware business. Signalling the near exit is the decision of EID Parry (India) to sell 47 per cent stake in the equal joint venture, Parryware Roca Private Ltd., to its partner Roca Sanitoria of Spain for a consideration of euro 112 million (about Rs. 717 crore). The share sale move will see the holding of EID Parryware Roca stand reduced to a bare three per cent. Roca’s stake will rise to 97 per cent. The board of EID Parry met on Thursday and approved the proposed stake sale to Roca.

Roca has requested A. Vellayan to continue as the chairman of Parryware Roca (Private) Limited. Arun Alagappan, currently a nominee of EID Parry, will continue as an independent director on the board of Parryware Roca. The current Managing Director K. E. Ranganathan will move back to the Murugappa Group. Emilio Salazar, currently Deputy Managing Director, will become the Managing Director of the company on receipt of required statutory approvals.

The joint venture, it may be recalled, was formed during May 2006 when Roca had acquired 50 per cent stake in the Parryware business of the Murugappa Group. Parryware Roca reported a turnover of around Rs.360crore in 2007-08.

Parryware brand consolidated its leadership in the organised sanitary ware market and moved forward in its taps business. Roca brand was successfully launched in India a year ago, and already has set up a distribution network of more than 50 showrooms, covering 30 cities. The company has four factories.

“It is a win-win move for both the partners. For EID Parry, the stake sale will help realise good value which can be invested in its core businesses. For Roca, the deal will ensure its strategy to stay ahead of competition in the high-growth Indian bathroom products market,” a release quoted Mr. Vellayan, who is also the Vice-Chairman of the Murugappa Group, as saying.

“We are very happy to increase our stake in the company. India is one the growing markets in the world and is expected to grow in a sustained manner due to infrastructure boom in the country. For us, it is important to consolidate our market leadership in India with the Parryware brand and also offer our Roca brand to Indian consumers to meet their increasing demand for international products,” the release quoted Domingo Colomo, Senior Managing Director of Roca, Spain, as saying.

Asked about the fate of the Parryware brand, Mr. Ranganathan said the brand was owned by the company and, hence, would stay with it. The Murugappa Group would have no claim on the Parryware brand, he added.

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