The stock is also rising on expectations of good third-quarter results. On the bourses, Kreb Biochemicals has shot up from Rs 160 to Rs 220 in less than a month. The surge in the stock has been accompanied by a sharp surge in trading volume, which has risen sharply from around 1500-2500 shares to around 20,000 shares a day.

According to a company source, the new 5 million tpa plant is expected to add around Rs 50 crore to the company's existing turnover of Rs 35 crore in its first year of operation. Although the plant is unlikely to add much to the turnover and net profit in the current fiscal, the company expects the new plant to contribute around Rs 7-8 crore turnover thereafter.

Krebs Biochemicals expects to end the financial year with a 20 per cent growth inturnover and a net profit figure of around Rs 15 crore. The company's first-half turnover stood at Rs 17.31 crore and net profit at Rs 7.14 crore. The company's board is meeting on January 22 to take up the quarterly results and announce the commencement of commercial production of the new plant.

The Rs 26.5 crore monosodium glutamate (MSG) plant at Kothapalli Village in Visakhapatnam has been set up at a cost of Rs 26.50 crore. MSG is an import substitute and the only other producer in India is Alembic Chemicals which uses the products for captive consumption. The currency crisis in some of the Asian countries has resulted in low international prices for MSG, (thereby affecting the profits of most MSGprojects. Krebs siezed the opportunity to enhance its product range by adding other fermentation products to maintain its profitability. With the inclusion of a few balancing equipment, the new plant will become more versatile and will manufacture products like erythromycin, gentamycin and vancomycin,which enjoy a substantial demand in India and the global market.

Last year, Krebs had made a preferential issue of 14,00,000 share warrants to its core promoters and the funds raised were used for the diversification of the new plant (coming up at Kothapally village) and modernisation of its facilities at Regadichilaka. Krebs Biochemicals, is a leading manufacturer of anti-asthmatic bulk drugs like ephedrine and pseudoephedrine through the fermentation process and uses molasses as raw material which is sourced from nearby areas. The only other manufacturer of ephedrine and pseudoephedrine in India is in the unorganised sector with a small capacity.