what amount is to be refunded while allotting shares on a Pro-rata basis

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.