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A public limited company is a manufacturer of chemical fertilisers. Its annual turnover is Rs. 50 crores.

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A public limited company is a manufacturer of chemical fertilisers. Its annual turnover is Rs. 50 crores. The company had issued 5,000, 12% Debentures of Rs. 500 each at par. Calculate the amount of Debentures Redemption Reserve which needs to be created to meet the requirements of law.

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Amount required to be transferred to DRR = 25 % of the Face value of Debentures 

= 25% of Rs. 25,00,000 = 6,25,000.

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