A company came out with an issue of 1000 shares at a price band of ₹300 to ₹360. The minimum lot size is 50. The company received the following bids: Bid Number of Shares Bid Price per share (₹) 1 250 360 2 250 355 3 100

CS Professional · Strategic Management and Corporate Finance · PYQS · June 2025
A company came out with an issue of 1000 shares at a price band of ₹300 to ₹360. The minimum lot size is 50. The company received the following bids: Bid Number of Shares Bid Price per share (₹) 1 250 360 2 250 355 3 100 350 4 450 360 5 150 330 6 250 320 7 150 300 From the above: (i) Decide how the allotment shall be made to each applicant under Book Building process, if the final issue price is ₹300. (ii) What is the amount to be charged from the applicant of Bid 1 and Bid 3?

Answer & Explanation:

(i) Since total number of shares for which application received is 1600, the allotment shall be made as follows: Bid Minimum (A) Proportionate Shares (B) Total (A+B) 1. 50 200 x 650/1250 = 104 154 2. 50 200 x 650/1250 = 104 154 3. 50 50 x 650/1250 = 26 76 4. 50 400 x 650/1250 = 208 258 5. 50 100 x 650/1250 = 52 102 6. 50 200 x 650/1250 = 104 154 7. 50 100 x 650/1250 = 52 102 350 650 1,000 (ii) Since both bidders 1 and 3 have been allotted 154 and 76 shares respectively, a sum of ₹46,200 (154 shares x 300 per share) and ₹22,800 (76 shares x 300 per share) shall be charged from them. The balance amount of ₹43,800 (₹360 x 250 - ₹46,200) shall be refunded to bidder 1 and an amount of ₹12,200 (₹350 x 100 - ₹22,800) shall be refunded to Bidder 3.

Topics: Corporate Finance

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