Though the promoters had proposed an expansion of equity by Rs 11 crore through conversion of warrants, K S Raju, the vice-chairman and managing director of NFCL, surprised everyone at the EGM this morning by watering down the figure to Rs 6.95 crore which was approved by the shareholders.

The size has been cut down following discussions with the financial institutions, the company said in a statement later. However, at a subsequent board of directors meeting it was decided to issue 1.54 crore equity shares of Rs 10 each at par to the FIs converting loan amounts into equity.

The premium for the warrant conversion for issue of additional equity to the promoters is to be filed as per the SEBI norms. With preferential issue tothe FIs and the warrant conversion in favour of the promoters will increase the capital of NFCL to Rs 417 crore.

The expansion of the capital will enable the company to raise more resources from the markets to fund its future plans which include the setting up a 1000 mw power project and a Rs 2500 core refinery project on which work is in progress. Certain market observers feel the issue of additional equity to the promoters will also insulate NFCL from any potential takeover threats.