According to market sources, a ratio of 3:5 may be in the offing since the company had taken up expansion programmes in a major way during the past two years and may want to improve its leverage. The company has comfortable reserves of Rs 20 crore and an equity capital of Rs 7 crore.

The Vitara counter on the Mumbai Stock Exchange has been witnessing huge volumes in the past few trading sessions although the price has fallen in the post-budget decline in indices. On Friday, close to 21,000 shares exchanged hands at the counter, the highest inrecent days. The scrip, on the other hand, has slipped from Rs 56 on June 1 to Rs 45 on Friday.

Vitara Chemicals is engaged in the manufacture and trading of bulk drugs and pharma and allied chemical products. The company had come out with its maiden rights issue in 1996 in the ratio of 1:2 at a premium of Rs 10. For the first half of fiscal 1997-98, the company had reported a net profit of Rs 6.76 crore on sales of Rs 126 crore. For the year ended March 31, 1997, net profit was Rs 9 crore on sales of Rs 172 crore. According to company officials, Vitara is expected perform better than fiscal 1997 with higher sales and net profit.

During 1996-97, the company had implemented an expansion programme to increase the production of semi-synthetic antibiotic agent by 350 tonnes per year. In the previous fiscal, Viatara had proposed a project for manufacture of cephalosporin group of products with a capacity of 120 tonnes per annum. Production was slated to commence in the first quarter of 1998.