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    Valuation Seminar Draft Report Valuation Seminar Draft Report Document Transcript

    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Excerpts from the Seminar on ‘Asset Valuation – A key Element in Business Valuation’ Date: 18/04/2009 Venue: IE (I) Maharashtra State Centre, Mumbai Organizer: Value Add Consultant Page |1
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Institution of Engineers , Maharashtra Centre had organized this seminar by inviting Er.Mohit Mehta, MRICS, Director , Value Add Consultant, a boutique valuation and advisory firm, for the benefits of members as well as non members in order to provide them international class education in the field of valuation. IE (I) encouraged Er.Mohit Mehta to conceptualize and execute the seminar by actively engaging like-minded institutions. IE (I) organized this seminar as a part of its commitment to provide continuous professional education to members, students and society at large. Large number of participants attended the seminar from Maharashtra and neighboring states like Goa, Gujarat, and Delhi, to name a few. The seminar was inaugurated 10:15 AM by lighting the lamp by Chief Guest Shree Rajeevkumar, District Valuation Officer, Superintending Engineer, Income Tax Department, Mumbai; Shree Harshad Maniar, Chairman Institution of Valuer, Mumbai branch; Shree Shantilal Jain, Chairman, Institution of Engineers, Mumbai; Shree Mohit Mehta, Director, Value Add Consultant; Sponsor Dr.Ajay Nakashe, MD, ABN Technologies Pvt. Ltd., to name a few. A view of the ceremony (From left to right) Shree Rajeevkumar, District Valuation Officer; Valuer Mohit Mehta, Director, Value Add Consultant; Valuer Harshad Maniar, Chairman, Institute of Valuer, Mumbai Branch; Shree Shantilal Jain, Chairman, IEI, MSC and Er.Amol Bora, IEI, MSC. Organizer: Value Add Consultant Page |2
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Chairman Shree Shantilal Jain has welcomed participants and guest by highlighting importance of valuation as well as continuous professional development and IE (I) role in promoting such activities. IE (I) have prepared an information brochure and circulated information to members and targeted audience through various communication channel including sending mail through yahoo group and publishing activity in monthly news letter. Vide numbers of participants have attended seminar by advance registration or availing spot registration facility provided by IE (I). Shree Rajeevkumar superintending engineer CPWD has highlighted need of learning new techniques in valuation to august gathering. He explained that it is becoming more and more challenging due to multidisciplinary expertise a valuer needs to develop. He has also highlighted process and role of valuation cell in Income Tax department. He has appraised audience on importance of valuation as far as Income Tax department is concerned and what skills and expertise a valuer should develop. Organizer: Value Add Consultant Page |3
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Rajeevkumar also spoke about amendment of Wealth Tax Act. Section-8 and Postgraduate Course in valuation, which has been introduce first time in India by recognized universities like Sardar Patel University, Vallabh Vidya Nagar, Gujarat. Shree Harshad Maniar, Chairman Institution of Valuer, Mumbai branch has congratulated participants for showing interest in learning new techniques in valuation. He has briefed Institution of Valuer vision to help professional development of valuers. He has appraised participants on the burning issue of indemnity bond and large amount of fixed deposit to be deposited with bank to serve as valuer. Key concern shown by him was lowering of the professional fees in spite of year on year inflation. The valuation fees are caped by many financial institutions, banks and government bodies to maximum amount of Rs.10,000 to Rs.50,000 irrespective of amount of valuation and risk a valuer take in doing such exercise. Organizer: Value Add Consultant Page |4
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra He has informed participants about the proposed valuation bill and how engineers’ fraternity has not been taken in confidence and ignored in overall process. Institution of Valuer and few other professional bodies of valuer like Practicing Valuer Association of India, Centre for Valuation Studies etc. has given their suggestions. The proposed document with suggestion is available with Mr. Maniar and it will be circulated to participants along with other course material. Mr. Maniar also invited every participant to attend monthly meeting held on last Saturday of each month in Vile Parle. Mr.Amol Bora previous secretary of IEI, Maharashtra has concluded inauguration function and thanked every one for joining such a noble cause of professional development and congratulated Mr.Mohit Mehta, Director Value Add Consultant on bringing such an innovative and international class education to seminar participants. He has thanked Dr.Ajay Nakashe, Managing Director of ABN Technologies and Shree Harshad Maniar for sponsoring this event. On that note Mr.R.J. Kamothi, the seminar compere has declared seminar open for educational speeches. Organizer: Value Add Consultant Page |5
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Before the lighting lamp ceremony each participants has introduce him/her to entire gathering. During introduction round it was observed that almost fifty five (55) registered participants in addition to guest and dignitaries from multidisciplinary background like finance, engineering, architecture, software, information technology, legal, arbitration, consultancy, contracting, banking, valuation, accountancy, real estate and development have attended the seminar with title Asset Valuation - A Key Element in Business Valuation. Compere introduced the first speaker Shree R.K.Patel, Proprietor and Chief Valuer of M/s R.K.Patel & Co based at Vadodara. He was born on 24-07-1958. He has studied Bachelors of Mechanical Engineering form M.S. University Baroda, Masters of Engineering in Thermal Science from M.S. University, Baroda. He is also a qualified Cost and Works Account form ICWA, India. He is certified Energy Auditor by the Bureau of Energy Efficiency, Ministry of Power, Government of India. Mr.Patel is practicing as Insurance Surveyor, Loss Assessor, Valuer ,Cost Accountant and Energy Auditor. He has valued many companies and assets in India and visited several countries as well. To his credit he has published almost 29 papers in national and international conferences and journals during his professional career. He is holding fellowship of nine professional bodies. He has been awarded Gold Medal by the Institution of Valuer, India in all India National Seminar on Valuations in 2008. Organizer: Value Add Consultant Page |6
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Mr.R.K. Patel has introduced his topic Business Valuation at started his speech 10.45 AM. He has smoothly introduced topic to audience and gradually moved to the complexity of the valuation. He has appraised elite and learned gathering of participants how engineer can participate in the business valuation process by enhancing its skills on reading accounts and financial statements of companies. He has presented graphs and pictures to indicated importance of asset valuation in entire enterprise valuation and equity valuation. In most going concern companies value attached to asset carry highest percentage. He is presented fundamentals of valuation formulas and three approaches used internationally to carry out business valuation, namely cost approach, market approach and income approach. In between with a break of 10 minutes, Mr.Patel continued his presentation upto 1330hours and presented three case studies on business valuation and a valuation of derated thermal power plant for the purpose of testing impairment under accounting standard (AS 24). He has concluded his speech by congratulating and thanking the Institution of Engineers, the Institution of Valuers and, in particular, Shree Mohit Mehta of organizing such a innovative and professional development oriented seminar and giving him an opportunity to present his paper in this gathering. Lunch break was announced after a group photo session. It was informed by IE(I) that each participant will get certificate of participation along with course material and other useful information related to valuation. Participants and guest has enjoyed delicious lunch and utilized time for networking with each other and exchange their ideas. Organizer: Value Add Consultant Page |7
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra After lunch the third session speaker Mr.Madhvan Jaya Shankar was introduced by seminar conductor. Mr.Jaya Shankar is serving as an Assistant Director with HDIL, Mumbai. He is a qualified Chartered Accountant, Chartered Financial Analyst as well as Financial Risk Manager. He is a member of New York Society for Security Analyst (NYSSA),CFA Institute, Global Association for Risk Professionals(GARP) and Institute of Chartered Accountants of India. He has acquired over 20 years of experience in the investment field in India & abroad. Held positions as Head- Risk, Portfolio Manager, Sr. Analyst – Hedge funds, CTA, Performance, Risk & Attribution. One of his favorite subjects is real estate valuation. He has develop training material and conduct lectures on Financial market and its components viz. Equity, Fixed Income, money Markets and Derivatives. Successfully conducted many training classes for multi national companies including JP Morgan, Deutsche Bank, Lehman Bros, Countrywide, Aplabs, Institute of Chartered Accountants of India, HDFC , Kotak Securities etc. Organizer: Value Add Consultant Page |8
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Learned speaker has started his speech with very good carton about how in US market people have lost their equity in home and become home less and in contrast there are high rise buildings owned by the bank completely abounded due to lack of buyers. He has given his talk on real estate valuation of the listed companies by presenting detail analysis of stock prices and in what scenario asset valuation become important element to be considered.He also briefed participant that businesses are generally valued on going concern basis. Hence enterprise valuation is result of business future cash flow. DCF technique has been used to discount future cash flow at appropriate discount rate for arriving net present value of enterprise. Speaker has provided examples of cement industry as well as other industry to demonstrate concept of replacement cost in valuation. Speaker has concluded his speech. After his presenting few case studies. A short break was announced by the compere. After break compere has introduced most awaited speaker Er.Mohit Mehta as concluding speaker for the seminar. Er. Mohit Mehta is founder of Value Add Consultant a boutique valuation and advisory firm. Organizer: Value Add Consultant Page |9
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra He is a Member of Royal Institute of Chartered Surveyor, U.K. (MRICS) in valuation discipline. He has studied Bachelors in Civil Engineering and Post Graduation in Real Estate Valuation from Sardar Patel University, Vallabh Vidya Nagar. He holds fellowship of five professional bodies. Er.Mohit Mehta is practicing as a consulting engineer, valuer and real estate advisor. Er.Mohit has valued many properties in several countries in addition to India. He was Director with gulf based investment bank. During his working with Banks he has gained extensive experience in real estate fund creation, investment, acquisition and portfolio management. He has been exposed to various types of real estate across all the major real estate markets i.e. residential, commercial, retail, hotels, theme park, water park, industrial parks, business parks and many other real estate income producing or development projects. He has attended few seminar and courses on valuation and investments. He has valued project like Hiranandani Meadows in Thane, Kalpataru Horizon as well as many properties in India. Mr.Mehta has also worked with Insignia Brook ( Now “CBRE”) in Real Estate Advisory and Valuation department during beginning of his career. Organizer: Value Add Consultant P a g e | 10
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Mr.Mehta is committed to bring good quality training and development for Indian valuer in addition to his practice as a valuer. Hence came up with idea of one day seminar when requested by many fellow valuers and professional network. He has started his presentation by thanking all the participants, sponsors Dr. Ajay Nakashe, MD of ABN Technologies Pvt. Ltd. and IEI as well as IOV. He has presented objectives of his presentation as goals of the talk. He invited participants to ask as many question as they wish to make the seminar more interactive and fruitful for the participants. After giving a definition of three word 1.Price 2. Value and 3. Cost He introduced three approached used to valuation. During his presentation requested participant to shift from traditional techniques of valuation to more sophisticated and relevant valuation technique like Discounted Cash Flow Technique or Capitalization of Earnings. After giving brief of Global Macro Economics and Micro Economics factors affecting valuation, recommended to use top down approach. He explained how linkages of every asset class with other with each other and enhancing overall knowledge about economy and finance helps valuers in arriving particular asset valuation. Mr.Mehta has given a detail steps and theory to conduct asset valuation with focus on the real estate valuation. Er.Mohit has made session interactive by asking question to participants on how they conduct land valuation or income producing property valuation. He has highlight the pit falls of valuation and does and don’ts of the process. As many participants were interested to know about Royal Institute of Chartered Surveyor, U.K. he has briefed audience on RICS role and presence. He also encouraged participants to visit RICS web site Http://www.rics.org and become member. Mr.Mehta also requested valuer to develop three essential skills 1.Inspection 2. Measurement 3. Valuation in addition to various skills as he mentioned in his presentation. Some of the participant interested to know about procedure to become registered valuer. Mr.Mehta has mention ed the procedure one should follow to become registered valuer as well as informed participant that each registered participants will get a CD containing information about the process of registration as a valuer with Income Tax Department. Organizer: Value Add Consultant P a g e | 11
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Mr.Mehta suggested participants to value income producing properties like hotels, theme park, sports stadiums, toll roads, bridges, airports, ports, container yards, logistic parks, water parks using going concern principles. Organizer: Value Add Consultant P a g e | 12
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra He has presented detailed notes on DCF and Capitalization Technique and how to select capitalization rate or discounting rate. Some of the exercises like finding required return using a fisher’s equation for each asset class like Index Government Bond, Non Index Bond, Equity, Japanese Bond, Cash, Matured Property, and Development Project. Participants gained a valuable information in that exercise. Mr.Mehta appraised role of leveraging / gearing in property valuation and how the structure of the deal or terms of equity participation changes valuation. He has introduce concept of private equity valuation to participants and key performance indicator like IRR,ROI,NPV and pa back period. Er.Mehta apprised and urged participants to find all the risk related to investments and mitigation mechanism to value precisely. As briefed by other speakers highlighted importance of finance. He also stress upon the quality of the report to be produced by practicing valuer to enhance dependability and reliability. Due to time constrain instead of focusing on theories he quickly moved to case studies. He has presented two case studies to demonstrate concept of valuing income producing properties based on income in addition to market and cost approach. The first case study was about acquisition of hotel portfolio in London,U.K. He has highlighted in his presentation how under renting, over renting or market rent will affect fair market value to be certified by a valuer. The terms under rented properties, over rented properties was very new in Indian scenario however highly applicable due to recent boom and slow down in real estate market. He advised participant to find out fair market rent of the property under valuation before valuing on passing rent. Identification of this will have huge impact on valuation. Organizer: Value Add Consultant P a g e | 13
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Other case study was about Sears Tower Chicago a one of the tallest building in the United State. Mr.Mehta has demonstrated how cash flow modeling techniques can be used in large high- rise building valuation. i.e. valuation of income producing properties using going concern. The tower was having hundreds of tenants with different lease terms; It is very difficult for a valuer to incorporate each and every variable in given short time period in the spread sheet base valuation models. Hence he recommends use of software’s like Argus and other similar software’s. Argus will help in analysis of complex rental income structure and ultimately valuation of property using various capitalization rate matrixes. Argus can collaborate with excel and easily synchronize with it. During his discussion few other case studies like valuation of hotels, textile mill and agriculture land was highly recognized by the participants. He has concluded his presentation by stating that it is useful to use multiple techniques for valuation as there is a very fine line exists between values derived under one method if compared to other method. He has given eleven recommendations for valuers in concluding slide. As seminar was elongated then proposed time of 0500 PM, however due majority of the participants interest in the learning hence he has continued till 0615 PM. The participants has gained lot of details during Mr. Mehta’s presentation and requested to conducted three days seminar to learn more techniques. Er.Sathyanarayan officer on special duty and IE(I) staff was the key person in bringing life to the seminar. Organizer: Value Add Consultant P a g e | 14
    • A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra Many senior learned valuers from IOV and PVAI were present in the seminar. Every one has appreciated Mr.Mehta’s efforts and innovative theme of the seminar as well as content of the seminar. The seminar was concluded around 6.15 PM. Mr.Mohit has thanked every one and requested to send email feedbacks for all the question or queries they have and advised them to join Linked in Group Indian Business Valuers and Networkers for keeping in touch with latest happenings in valuation. Link to visit the group is as under. http://www.linkedin.com/groups?gid=1447867 Contact Details : Mohit Mehta Director Value Add Consultant GSM # +91-98924 89265 / Tele Fax # +91-22-2808 2583 Email # vac@consultant.com Institute of Engineers (India) Maharashtra State Centre 15,Haji Ali Park,K.Khadye Marg, Mumbai-400034 Tel:23543650,23542943,Fax : 2354 2942 Email : ieimsc@gmail.com Web : www.ieimaharashtra.org eGroup : IEI-Maharashtra StateCentre-subscribe@yahoogroups.com Organizer: Value Add Consultant P a g e | 15