Calcutta, Nov. 8: ICI India will transfer its rubber chemicals division to a joint venture with the US-based PMC Group International.

?The business has been under intense international pricing pressure and competition in the recent past. To protect our long-term interest, it has become necessary to seek support from a business group with experience in allied operations,? said M.R. Rajaram, chief financial officer and executive director of ICI India.

PMC Group International and ICI India will hold a 51 per cent and a 49 per cent stake, respectively, in the new company. The cost of transferring 51 per cent to PMC Group International has been fixed at Rs 8 crore.

?The agreement includes a put option for us, whereby we have the right to sell our stake in the joint venture to PMC Group International in future. It has a corresponding call option for PMC Group International, which gives the US company the right to purchase our holding in the new entity. However, the valuation will depend on the performance of the joint venture company,? explained Rajaram.

?The transaction is expected to be completed over the next few months, after receiving all necessary approvals. This includes that of shareholders,? Rajaram added.

The rubber chemicals business clocked sales worth Rs 106 crore, including exports of Rs 22 crore, in 2004-05. It was set up in 1964 at Rishra in Bengal and the production capacity was increased progressively. About 200 employees working in the division will be transferred to the new company with continuity of service on terms no less favourable than the existing one.

?Now we have the unique strength in the areas we operate. Already, we have earmarked Rs 30-40 crore as capital expenditure over the next 12-18 months,? said Rajaram.

The company will finance the expenditure from its cash surplus of Rs 300 crore. ?We are also constantly evaluating options for inorganic growth in the four core business areas of paints, uniqema, national starch and quest, added Rajaram.

ICI India is also keen to buy out the stake of Hindustan Lever Limited (HLL) in Quest India International Limited, a joint venture between the two companies.

The diversified paints and chemicals company has the right to buy the 49 per cent stake held by HLL in April 2006. ICI India holds a 51 per cent stake in Quest India.

?Once Quest India is transformed into a wholly-owned subsidiary, it would help us increase operational efficiency,? he added.