"We are investing Rs 150 crore to pick up an equity stake of 50 per cent in the joint venture, while one per cent will be held by Quest International, a wholly-owned subsidiary of ICI UK," ICI India executive director MR Rajaram told The Financial Express.

Hindustan Lever Ltd (HLL) will have a 49 per cent stake in the new company. The joint venture is expected to become operational by June this year. HLL will contribute to the equity capital of the joint venture company by transferring its existing assets, including its facilities and manpower to it, while ICI India will use its cash surplus generated from the sale of its surplus property and non-core business. Mr Rajaram said: "This joint venture is a perfect fit with ICI India's portfolio reshaping exercise and strengthens Quest's global position in speciality chemicals."

The existing business of HLL for making fragrances, flavours and food ingredients has a turnover of Rs 100 crore, he said, adding that the joint venture will help all the three partners to have a leadership position in the country. HLL's spokesperson said all the fragrances and flavour business of HLL be carried on by the joint venture. However, the joint venture will exclude the aroma chemicals business of HLL and the erstwhile Industrial Perfumes Ltd, which will be carried on as a division of HLL, he added.

According to HLL, the joint venture is in line with its intent to tie up with a technology partner to secure longer term future viability of this business, post-global disinvestment of Unilever's speciality chemicals business in 1997.

The tie-up with ICI India and Quest International BV will provide cultural and operational benefit for the Quest division of HLL, which until 1997 operated as the Indian arm of Quest International's business. The proposed transaction of the joint venture will be taken up for approval by the shareholders at the annual general meeting to be held on June 1, 2001. The joint venture combines ICI India's long-standing knowledge of the domestic market, HLL's detailed understanding of Indian consumer preferences with Quest International's technological and creative expertise, Mr Rajaram said.

ICI global holds 51 per cent equity stake in ICI India while financial institutions hold 9 per cent stake in the company. The balance 40 per cent is held by the public.