Understanding the scenario:
Face Value = ₹100, Premium = 10% = ₹10, Issue Price = ₹110
Applications received = 50,000 shares
Applications rejected = 10,000 shares
Applications accepted = 40,000 shares
Shares to be allotted = 30,000 shares
Pro-rata allotment ratio:
Shares Allotted : Applications Accepted = 30,000 : 40,000 = 3 : 4
This means for every 4 shares applied, only 3 shares are allotted.
Calculation of refund:
When pro-rata allotment is done, applicants pay application money on the shares they applied for, but receive allotment for fewer shares.
Money received on application from accepted applications:
= 40,000 shares × ₹40 = ₹16,00,000
Money required on application for allotted shares:
= 30,000 shares × ₹40 = ₹12,00,000
Amount to be refunded:
= ₹16,00,000 - ₹12,00,000 = ₹4,00,000
The excess application money received on 10,000 shares (40,000 - 30,000) needs to be refunded to applicants who received fewer shares than they applied for.