MUMBAI, May 22: JK Industries Ltd (JKIL) has decided to transfer its pharmaceutical division to JK Drugs & Pharmaceuticals (JKDPL) by way of a scheme of arrangement under Section 391/394 of the Companies Act, 1956.

JK Drugs & Pharmaceuticals is a fully-owned subsidiary of JK Industries Ltd. Under the order of Calcutta high court, JK Industries has convened an extra ordinary general meeting of company shareholders on June 14 for the scheme's approval.

JK Drugs & Pharmaceuticals was initially incorporated as a private limited company christened `Sonex Pharma Private Ltd' with the main objective of carrying on the business of manufacture and sale of pharmaceuticals and drugs. The company was subsequently converted into a public limited company and rechristened JK Drugs & Pharmaceuticals Ltd.

The proposed scheme will take effect only after the approval from company shareholders. Accordingly, JK Drugs & Pharmaceuticals shall issue and allot to JK Industries, without further application, one crore equity shares of Rs 10 credited as fully paid up at a premium of Rs 10 per equity share aggregating to Rs 2 crore.

Further, two crore, 12 per cent redeemable cumulative preference shares (RCPS) of Rs 100 each in JK Drugs & Pharmaceuticals, credited as fully paid up and aggregating to Rs 20 crore. Each of these RCPS thereof will be converted, at the option of investors, into five fully paid up equity shares of Rs 10 each at a premium of Rs 10 per equity shares.

The arrangement would also see an equal number of zero coupon fully convertible debentures (zero CFCD) of Rs 1,000 each in JK Drugs & Pharmaceuticals, credited as fully paid up the aggregate face value of which is equal to the difference between the assets and liabilities of the pharmaceuticals division.

These preference shares will be redeemable at par on the expiry of a period of 10 years from the date of allotment. The zero CFCD's of Rs 1,000 each to be issued and allotted by JK Drugs & Pharmaceuticals will be convertible into 100 fully paid up equity shares of Rs 10 each at the option of the debenture holders at any time after the expiry of 36 months and before the expiry of 60 months from the date of allotment.

However, for the conversion of the FCD's into equity shares, the debenture holders shall give one month's notice (in writing) to JK Drugs.

Unless option for conversion is exercised by the debenture holders, the debentures will be redeemed in two annual instalments of Rs 300 each and one instalment of Rs 400 on the expiry of the five, six and seven years respectively from the date of allotment.

Lastly, as per the scheme of arrangement the Plant III of JK Industries at Gajraula in Uttar Pradesh will be also be transferred to JK Drugs & Pharmaceuticals. On the Bombay Stock Exchange, the shares of JKIL and JKDPL are traded at Rs 34.50 and Rs 5 (May 20) respectively. Besides BSE, the shares are also listed on the Delhi, Jaipur and National stock exchanges.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.