Company X, the parent company, is demerging its subsidiary, Company Y, into a separate entity called Y New. The following information is available for company X and company Y: 1. Company X: Number of outstanding shares:

To determine the swap ratio, we need to calculate the relative value of Sub Co Y compared to Company X. Market capitalization of Company X = Number of shares * Market price per share = 10 crore * ₹60 = ₹600 crores Market capitalization of Sub Co Y = Number of shares * Market price per share = 6 crore * ₹30 = ₹180 crores Calculation of the swap ratio: Swap ratio = Market capitalization of Sub Co Y / Market capitalization of Company X = ₹180 crore / ₹600 crores = 0.3 This means that for every 0.3 shares of Sub Co Y, shareholders of Company X will receive one share of Y New. If the shareholder of Company X owns 20,000 shares. Based on the swap ratio, he would receive: Number of Y New shares = Number of Company X shares * Swap ratio = 20,000 * 0.3 = 6000 shares of Y New