Emami limited wishes to redeem its preference shares amounting ₹100000...
Redemption of Preference Shares:
- Emami Limited is redeeming its preference shares amounting to ₹100000 at a premium of 5%.
- This means the company will pay ₹100000 + 5% premium = ₹105000 to redeem the preference shares.
Issue of Equity Shares:
- To raise funds for the redemption, Emami Limited issues 5000 equity shares of ₹10 each at a premium of 5%.
- The total amount raised through this issue is calculated as follows:
- Face value of shares = 5000 * ₹10 = ₹50000
- Premium on shares = 5000 * ₹10 * 5% = ₹2500
- Total amount raised = ₹50000 + ₹2500 = ₹52500
Utilization of Profit and Loss Account Balance:
- Emami Limited has a balance of ₹100000 in the profit and loss account.
- This balance can be utilized to partly fund the redemption of preference shares or for any other business purpose as decided by the company.
In summary, Emami Limited is redeeming its preference shares at a premium of 5% and issuing equity shares to raise funds for the redemption. The balance in the profit and loss account can also be used to support this financial transaction or other business needs.