It may be recalled that a group company Polyolefins was merged with Nocil in 1994, and in 1998, Nocil's estranged partner Shell rejoined the fold with a promise to infuse funds and pick up a 49 per cent stake.

Thus, in the new scheme of things, the business is being split into three companies, with each looking after petrochemicals, chemicals, and other chemicals. The polyolefins plant is being set up in the same complex, the Thane-Belapur belt (Maharashtra), where Nocil is located. Estimated to cost Rs 5,000 crore, the plant is expected to go on stream by 2003 Nocil will issue 8.4 crore shares on a preferential basis to Shell and Montell at a price between Rs 29 and Rs 35 per share. Shell and Montell together will invest around Rs 250 crore for the 49 per cent stake. The value of the assets being transferred to Nocil is around Rs 600 crore. Mantralaya sources say under normal circumstances, the company will have to pay stamp duty of around Rs 60 crore at the rate of 10 per cent based on the value of its assets. The company, however, feels the government should consider its plea sympathetically and charge the same rate of stamp duty as was levied when Hindustan Lever and Brooke Bond were merged in 1996.

In the much-debated HLL-Brooke Bond case, the government charged stamp duty at the rate of 0.7 per cent of the value of shares/assets, whichever is higher. Following this, Hindustan Lever had to pay a paltry Rs 23 crore, instead of the originally fixed Rs 350 crore.

Should the Government consider Nocil's plea, the company would have to fork out a modest Rs 4.2 crore as stamp duty. Nocil's official plea for a reduction in stamp duty was made by Hrishikesh Mafatlal on November 18 to Maharashtra's Chief Minister Vilasrao Deshmukh, who has promised to look into the matter.

Mafatlal has emphasised that, "A project of this size and magnitude, with such substantial foreign investment from two multinationals, cannot be realised without the active support of the state government." He added: "it is for this that we humbly seek your assistance to enable the project to come to fruition. This will go a long way in reinforcing the conviction of our partners in the state's foreign investment climate."

The company has also said that such sops were necessary because an investment of the size will induce further investment of a similar magnitude in downstream units, creating substantial benefits like increase in the state's revenue, both directly and indirectly of about Rs 700 crore.