The Hindu Business Line : ICI-HLL venture to set up EOU for fragrances

QUEST International India, the 51:49 joint venture between paints and chemicals major ICI India and Hindustan Lever, is in for some action in the coming months in the form of a possible exit from its food ingredient business, as well as an increased thrust on the fragrances division.

To meet the growing demand in the South Asian region, the company is planning to set up an export-oriented unit (EOU) in the coming months for fragrances. "We have the capability to deliver fragrances (used as inputs) competitively for low-cost end-products, such as soaps," said Mr M.R. Rajaram, Chief Financial Officer, ICI India.

The potential in the segment can be gauged from the recent price slashes that several soap and other personal care products manufacturers have had to undertake in order to maintain their volumes.

Incidentally, fragrances account for about two-thirds of Quest's estimated Rs 90 crore turnover.

Meanwhile, post the global sell-off of ICI Plc's food ingredients business to the Western Europe-based Kerry Group, Quest is also likely to exit from the food ingredient business in India.

However, Quest may subsequently approach the Kerry group to find out if the latter is interested in appointing Quest as its agent in India for food ingredients, failing which the company is most likely to exit from the business in India. The global deal between ICI Plc and Kerry would take another 2-3 months to be completed, before which Quest is likely to ascertain Kerry's interests.

According to Mr Rajaram, the global sell-off would have little impact on India, as the food ingredients business was quite small and contributed to only about 5 per cent of Quest's total turnover.

The food ingredients business of ICI Plc was not doing very well over the past three years and hence the company's decision to exit it.

The past few months have seen a number of changes at ICI India, in line with the company's strategy to focus on its core businesses of paints, adhesives, starch, surfactants, and flavours and fragrances. ICI India had recently exited from the explosives, nitrocellulose, pharmaceuticals and catalyst businesses.

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