Quantum of bonus shares

As per Section 63(1) of the Companies Act, 2013,

A company may issue fully paid-up bonus shares to its members, in any manner whatsoever, out of—

(i) its free reserves;

(ii) the securities premium account; or

(iii) the capital redemption reserve account.

As per Section 63(2) of the Act, Company can also capitalise its profits or reserves for the purpose of issuing bonus if:

(a) it is authorised by its articles;

(b) it has, on the recommendation of the Board, been authorised in the general meeting of the company;

(c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it;

(d) it has not defaulted in respect of the payment of statutory dues of the employees, such as, contribution to provident fund, gratuity and bonus;

(e) the partly paid-up shares, if any outstanding on the date of allotment, are made fully paid-up;

Reserves of Rs. 1 crore can be utilised fully if it's any one of the points mentioned in (i) to (iii) of Sec. 63(1)

Turnover of Rs. 7 crore is not relevant, the profit if any can be capitalised by following Sec. 63(2).

Hence reserves and capitalised profit to be added. After getting final value, assuming shares are 10,000 of Rs. 10 each we can issue to the closest multiple of Rs. 10. 

For eg. if reserves are Rs. 10,00,000/- and no of shares is 10,000 of Rs. 10 each, then share can be issued in ratio of 10 shares for very 1 share held.