Reserves and Surplus
The accumulated profits retained in the business plus other reserves such as securities premium and revaluation reserve.
Formula
Reserves and Surplus = Retained Earnings + Securities Premium + Other Reserves
Unit
₹ crore
In depth
Reserves are an accounting record of profits not distributed, not a pile of cash sitting somewhere — the money has already been spent on plant, inventory, receivables or acquisitions. This is the single most persistent misconception among new investors, who read large reserves as a hoard available for dividends. Some reserves are free and available for distribution, while others such as capital redemption reserve and revaluation reserve are restricted by law. A bonus issue capitalises reserves into share capital, moving money between two lines of equity without changing the total.
Worked example
Reserves of ₹390 crore alongside a cash balance of ₹25 crore. The company cannot pay a ₹390 crore dividend; it has ₹25 crore of cash, and the reserves were long ago converted into the factory and the inventory.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Reserves and Surplus” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.