Q.Purandar Foods Limited invited applications for 5,000, 9% debentures of ₹100 each; it received applications for 8,000 debentures, the full application money having been paid with every application. The Board decided to allot debentures to applicants on a proportionate (pro-rata) basis. Mr. Ramesh Gaikwad, who applied for 400 debentures, was allotted 250 debentures. Draft the letter the Secretary should send to Mr. Gaikwad, and state what happens to the application money paid on the debentures not allotted to him.

Where an application is only partly successful, the same letter must both allot the debentures actually granted and refund the application money paid on the balance that could not be allotted. …

Since Purandar Foods Limited offered 5,000 debentures against applications for 8,000, the issue was oversubscribed in the ratio of 5,000 : 8,000, i.e., 5 : 8. Applying this same ratio to Mr. Gaikwad's application of 400 debentures gives an allotment of 400 × (5,000/8,000) = 250 debentures, exactly matching the allotment stated in the question, and confirming the pro-rata calculation is consistent.

Having paid the full application money for 400 debentures at ₹100 each (₹40,000) but been allotted only 250 debentures (worth ₹25,000), Mr. Gaikwad is owed a refund of the application money paid on the 150 debentures not allotted to him: 150 × ₹100 = ₹15,000.

PURANDAR FOODS LIMITED

Registered Office: Saswad Road, Pune – 412301

CIN: U15400MH2013PLC148520

Date: 20th August

Mr. Ramesh Gaikwad

Dear Sir,

Sub: Allotment of Debentures and Refund of Excess Application Money

We thank you for your application for 400, 9% Secured Redeemable Non-Convertible Debentures of ₹100 each of our Company. As the issue was oversubscribed, our Board of Directors, at its meeting held on 18th August, allotted debentures to applicants on a proportionate basis. …

Pro-rata ratio = 5,000 offered / 8,000 applied for = 5:8. Debentures allotted to Mr. Gaikwad = 400 × 5/8 = 250 (matches the figure given). Debentures not allotted = 400 − 250 = 150. Refund = 150 × ₹10 …

Students sometimes refund the full application amount instead of only the portion corresponding to the debentures not allotted, or forget that a partial allotment needs both pieces of information — th …