Company Net Worth Calculator (Section 2(57))
This calculator computes a company’s net worth on the section 2(57) definition in the Companies Act 2013, not on shareholders’ funds. It adds paid-up share capital, the securities premium account and reserves created out of profits, then deducts accumulated losses, deferred expenditure and miscellaneous expenditure not written off. Reserves the statute excludes — revaluation, write-back of depreciation, and reserves arising on amalgamation — are entered separately, totalled, and never added to the figure, so you can see the reconciliation between the statutory number and the balance sheet. It also reports tangible net worth, which is what most tender conditions actually specify. This is an estimate from figures you enter: it carries no UDIN and is not a certified computation.
Section 2(57) Net Worth Computation
Classify each reserve by how it arose, not by what it is called. The tool applies the statutory additions and deductions, keeps the excluded reserves visible as a memo, and reconciles the result back to shareholders’ funds.
COMPUTATION OF NET WORTH
| Particulars | Amount (₹) |
|---|---|
| Total additions (A) | — |
| Less: deductions under section 2(57) | Amount (₹) |
|---|---|
| Total deductions (B) | — |
| NET WORTH UNDER SECTION 2(57) (A − B) | — |
⚠️ Four things in-house computations get wrong
- Treating shareholders’ funds as net worth. Every reserve sits in shareholders’ funds; section 2(57) excludes three of them. Start from the reserve schedule, not from the total.
- Classifying a reserve by its name. Companies label reserves inconsistently. What decides the treatment is how the reserve arose, which the reserve schedule and the board minutes show.
- Netting a revaluation against a loss. A revaluation reserve is excluded whether or not the company is carrying accumulated losses. It cannot be used to absorb them for this purpose.
- Reading net worth where the condition says tangible net worth. Tender conditions frequently specify the tangible figure. If your number clears a threshold only because an intangible is carried at a substantial value, expect the reader to recompute it without.
What This Calculator Computes for a Company
This calculator computes a company’s net worth on the statutory definition rather than on a general one. It starts from paid-up share capital, adds the securities premium account and reserves created out of profits, then deducts accumulated losses, deferred expenditure and miscellaneous expenditure not written off. The result is the figure section 2(57) of the Companies Act 2013 describes. It is not the same as shareholders’ funds on the face of the balance sheet, and where the two differ it is almost always because a reserve has been included that the definition excludes.
The formula in one line. Paid-up share capital + securities premium account + reserves created out of profits − accumulated losses − deferred expenditure − miscellaneous expenditure not written off. Reserves created out of revaluation of assets, out of writing back of depreciation, or arising on amalgamation are excluded from the aggregate.
Reserves It Includes, and the Ones It Excludes
The reserves it includes are those built from profits the company actually earned: general reserve, retained earnings, and the securities premium account. The ones it excludes are the ones the statute names. A revaluation reserve arises from writing an asset up without selling it and is excluded. A reserve created by writing back depreciation is excluded. A reserve arising on amalgamation is excluded. The calculator asks you to classify each reserve by how it arose rather than by its name, because companies label them inconsistently and the label is not what decides the treatment.
| Reserve | How it arose | Section 2(57) |
|---|---|---|
| General reserve | Appropriation out of earned profits | Included |
| Retained earnings / surplus in P&L | Undistributed profits carried forward | Included |
| Securities premium account | Premium received on issue of shares | Included — named in the definition |
| Capital redemption reserve | Created out of profits on redemption | Included |
| Revaluation reserve | Asset written up, nothing realised | Excluded |
| Reserve from write-back of depreciation | Depreciation reversed to reserves | Excluded |
| Reserve arising on amalgamation | Created by a scheme, not by trading | Excluded |
Where the label misleads. A reserve called “general reserve” that was in fact credited on a revaluation is still a revaluation reserve for this purpose, and a reserve with a scheme’s name on it that was genuinely appropriated out of profits is not. Read the reserve schedule and the board resolution that created it, not the caption.
Reading the Result Against a Lender’s Expectation
Read the result against what the recipient will do with it. A lender assessing an unsecured facility reads the statutory figure alongside gearing and cash generation, and a company can meet the first while failing the others. A tender committee frequently specifies tangible net worth, which removes goodwill and other intangibles and produces a lower number again. If your figure clears a threshold only because an intangible is carried at a substantial value, expect the reader to recompute it without. The result is also a snapshot rather than a trend. A lender looks at three years and reads the direction as much as the level, so a single strong figure following two weak ones tells a different story from three steady ones.
Convert the Computation Into a Certificate
Converting the computation into a certificate means starting from signed audited accounts rather than from a trial balance, because the definition reads the figure from the audited balance sheet. Each addition and deduction is traced to the line it came from, the reserve schedule is built so exclusions are visible, and any modification in the auditor’s report is disclosed. The certificate then carries the company name as the register holds it, its CIN, the balance sheet date and a UDIN. Where the accounts for the year are not yet signed, the honest options are to wait or to certify on provisional figures with that stated on the face of the document. What is not available is presenting unaudited numbers as though they were audited.
Get the section 2(57) figure certified
Signed audited accounts in, a certificate with the CIN, the balance sheet date, the reserve schedule and a UDIN out. Tell us who is asking for it and we will confirm the format they expect.
How This Tool Is Used on Our Service Pages
This calculator sits inline on the company net worth page, where the statutory computation is the subject, and on the RERA page, where a promoter’s certified position is read against the estimated project cost. Those pages carry what the tool does not: which set of accounts applies, how a modified audit report is handled, and what the authority’s own format requires. Between them those two pages cover the two situations in which a company’s statutory figure is most often demanded: a lender assessing the business, and an authority assessing a promoter behind a project. A reader who arrived here from a search rather than from a service page should start with the net worth certificate for company page, which is where the engagement itself is set out.
Adjacent to this computation. Where a tender asks for solvency rather than net worth, the solvency certificate page covers what that certificate states and how charged assets are presented. For the ratios a lender reads alongside the statutory figure, the ROE and ROCE calculator, the working capital calculator and the turnover threshold checker all work from the same audited accounts.