Healthy Ltd provides the following information for the financial year ended 2017-18: Paid-up share capital - ₹50 Crore Profit after tax - ₹10 Crore The investments have been valued at fair market value which resulted in

Proviso to Section 123(1) of the Companies Act, 2013 stipulates that profits for the purpose of arriving at available surplus for dividend shall be computed after excluding any amount representing unrealized gains, notional gains or revaluation of assets and any changes in carrying amount of an asset or of a liability on measurement of the asset or liability at fair market value. Thus, Healthy Ltd has to deduct the gain of ₹2 Crore in valuation of investments at fair market value and revaluation gain of ₹1 Crore in respect of the fixed assets. Calculation of Available Surplus: Profit after tax: ₹10 Crore Less: Unrealized gain on investments: ₹2 Crore Less: Revaluation gain on fixed assets: ₹1 Crore Available Surplus for Dividend: ₹7 Crore Maximum Percentage of Dividend: Maximum percentage of dividend that can be declared = (Available Surplus / Paid-up Share Capital) * 100 = (₹7 Crore / ₹50 Crore) * 100 = 14% for the financial year 2017-18. Feasibility of Interim Dividend: Proviso to Section 123(3) of the Act provides that in case the Company has incurred loss during the current financial year up to the end of the quarter immediately preceding the date of declaration of interim dividend, such interim dividend shall not be declared at a rate higher than the average dividend declared by the Company during immediately preceding three financial years. Thus, Healthy Ltd cannot declare interim dividend in 2018-19 at a rate exceeding 12% (average dividend of previous three years) as the Company has made a loss in the preceding two quarters. Therefore, declaring an interim dividend of 15% is not feasible .