The company recorded an accumulated loss of Rs 5.51 crore as on March 31, 1999 against the net worth of Rs 6.30 crore, falling within the ambit of the SICA and eligible for referral to the BIFR, company officials said.

The board of directors at their last meeting ratified the decision. The board has also decided to call for an EGM immediately after the AGM which is scheduled to be held on September 30. The EGM will consider the causes for the sickness.

In a bid to consider the causes for errossion of net worth the KTL's board has proposed to conduct an extraordinary general meeting of shareholders immediatly after the ensuing AGM scheduled on September 30.

During January this year HBC group after has taken over the company with the funds it had generated from hiving off its aerated drinks business toBharat Coke. It had made an open offer to acquire 20 per cent of shares at a price of Rs 5 per share, and said that it has intention to turnaround.

While HBC group had acquired 30.05 per cent stake from the original promoters of KTL at a price of Rs 5 per share, its another group company JSK Holdings Pvt Ltd acquired 4.94 per cent in the company. For the year 1998-99, KTL had reported a net sale of Rs 11.86 crore and a net loss of Rs 3.47 crore as against Rs 12.72 crore and Rs 2.08 crore respectively in the last year.

While explaining the reasons for the poor performance, the company sources said, it is due to paucity of working capital and high interest cost. After takeover the management, the company has reported a higher sale of Rs 7.64 crore for the second half year, which is almost double to that of first half year sales.

Further the new management has re-condtioned the dye house, which has started development of designs as per the specifications of the customers. The company expected to obtaingood number of orders during the current finacial year, said the sources.