23 April 2014
Dear Sir/ Ma'am, I have a company (XYZ Ltd.)Details of Net assets of which are as follows: i)Net Assets as on 2012-13 - Rs. 619,67,173 ii) No. of shares as on 2012-13 is - 10000 iii) Bonus issued on 10.04.2013 is - 1040000
Now my quary is that whether we will give effect of issue of bonus shares while calculating Net Assets Value as on march 31, 2013?
Bonus shares are nothing but capitalisation of reserves of the company i.e., shares are issued by converting the reserves of the comapny into capital .. though the number of shares are increased the value wouldn't change ... one of the biggest advantages of bonus shares is that the additioanl shares get added to the total number of shares in the market.. say for example there are 10L shares in the market and it issues bonus shares in the ration 2:1 , the total no. of shares are in the market would be 30L in the market ... hence there is a dilution of equity... now the earnings of the company would be divided by that no. of shares .. though the capital employed remains the same number of shares are increased and then obviously the EPS would decline ... theorotically the stock price should also decline but in reality it doesn't happen... hence you should give effect for the bonus issue as well for calculating NAV...
CAclubindia
