1.

ABC limited decides to buyback 10% of FULLY y paid up equity shares at 25% premium over
the prevailing market price of rupees 40 per share. The paid up equity shares capital of the
company is rupees 500 milliion. The face value per shares is rupees 10. ABC limited balance
sheet before buyback is as follows:

Sources of funds Millions

Paid up share capital 500
General reserve 300
Securities premium 200
Revaluation reserve 150
Loan funds 600
Total 1750
Application of funds
Fixed assets net block 1050
Investments (including non-trade investments of rupees 100 million) 250
Net current assets(including cash and bank balance of rupees 100 million) 450
Total 1750

The company decides to issues 9% preference shares of rupees 80 million and sell all non-
trade investments. The company may also utilize 80% of existing cash and bank balance for
buyback purpose. All non-trade investments cloud be sold at 150 million. Current liabilities
and provisions of the company was rupees 200 million.

Prepare the post buyback balance sheet.

2. A limited wants to buyback 15% of its paid equity share capital.The paid up equity share
capital is rupees 2500 million. The current market price of A limited is rupees 75. Company
decides to buy back 37.5 million shares at a price to be decided through book building
process. Company offers a price band of 80-100. The shareholders response were as follows:

Numbers of shares Price quoted

tendered (in million)
3.0 100
4.5 95
5 85
7.5 82
10 87
12.5 88
2.5 90

The balance sheet of A limited before buyback was as follows:

Sources of funds Rs. Million

Paid up share capital FV Rs. 2500
10
General reserves 27,500
Securities premium 12,500
Capital reserve 5000
Loan funds 30,000
Total 77,500
Application of funds
Net block 45,500
Investments 17,500
Net current assets 14,500
total 77,500

Investments with a book value of rupees 1200 million are sold for rupees 2000 million.9.5%
preference shares were issued for rupees 1000 million. Current liabilities and provisions
included in net current assets are rupees 8500 million. Cash and bank balance as on the date
if balance sheet is rupees 5000 million. Determine the buyback price and prepare the post
buyback balance sheet .