Aerodots Ltd. has the following capital structure as on 31.03.2025 : Particulars Amount (in thousands) Equity Share Capital (shares of 10 each) 600…

Statement determining the maximum number of shares to be bought back (in thousands) Particulars Number of shares Shares Outstanding Test (W.N.1) 15 Resources Test (W.N.2) 12 Debt Equity Ratio Test (W.N.3) 11 Maximum number of shares that can be bought back [least of the above] 11 Thus, the lowest being 11,000 shares, the company cannot buy back 14,000 shares. Working Notes: 1. Shares Outstanding Test Particulars (Shares in thousands) Number of shares outstanding 60 25% of the shares outstanding 15 2. Resources Test Particulars ₹ (in thousands) Paid up capital 600 Free reserves (540 + 200 +100) 840 Shareholders' funds 1,440 25% of Shareholders fund 360 Buy-back price per share 30 Number of shares that can be bought back 12,000 shares 3. Debt Equity Ratio Test: Loans cannot be in excess of twice the Equity Funds post Buy-Back Particulars ₹ in thousands (a) Loan funds 2,000 (b) Minimum equity to be maintained after buy-back in the ratio of 2:1 (₹) (a/2) 1,000 (c) Present equity shareholders fund (₹) 1,440 (d) Future equity shareholders fund (₹) (see W.N.4) (1,440-110) 1,330 (e) Maximum permitted buy-back of Equity (₹) [ (d) – (b)] 330 (f) Maximum number of shares that can be bought back @30 per share 11,000 shares 4. Amount transferred to CRR and maximum equity to be bought back will be calculated by simultaneous equation method. Suppose amount transferred to CRR account is 'x' and maximum permitted buy-back of equity is 'y' Then Equation 1: (Present Equity- Transfer to CRR)- Minimum Equity to be maintained = Maximum Permitted Buy-Back = (1,440 – x) – 1,000 = y = 440 - x = y (1) Equation 2: Maximum Permitted Buy-Back X Nominal Value Per Share/Offer Price Per Share y/30 x 10 = x or 3 x = y (2) by solving the above two equations we get x = 110 thousands y = 330 thousands Alternatively, Maximum number of shares from debt equity ratio test may be worked out as follows: Buy-back price + Face value of equity shares - 30 +10 = 40 Excess of equity fund over the minimum equity to be maintained 1440-1000 = 440 thousands Number of Shares that can be bought back = 440/40 thousands = 11 thousands.