The company has called for an extraordinary general meeting of its shareholders on June 1, 1998 to ratify the preferential allotment to the core promoter group and their business associates. The share price would be determined as per the SEBI norms at the time of conversion of warrants in the ratio of 1:1. Earlier, KBL had taken up the expansion project to set up a unit to manufacture the monosodium glutamate (MSG) with an installed capacity of 5,000 tpa.

The project was appraised by ICICI and IDBI with a project cost of Rs 26.50 crore. KBL had also obtained the shareholders nod in the fifth AGM by authorising the company to issue of shares through private placement to raise funds to thetune of Rs 4 crore. However, the company has not acted upon the resolution within the stipulated period as it can draw funds from the internal accruals. As the MSG project has adversely affected the profitability of the company owing to low international prices, the management has proposed to increase the product range by adding balancing equipment, which facilitates the plant to produce other fermentation products such as erythromycin, gentamycin and vancomycin besides MSG.

According to sources, KBL also plans to modernise its existing facilities at Nellore with an investment of Rs 20.50 crore. The management proposes to finance the modernisation project from the proposed preferential issue to the crore promoters and their business associates. According to the company sources, Ganes Chemicals Inc., the proposed new equity partner associated with KBL for long, has entered into a long-term supply contract for lifting major portion of ephedrine produced. Ganes is one of the major players in the internationalmarkets in the product range of pseudoephedrine and ephedrine, said the source.