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VALUATIONS –A CURTAINRAISER ON 
INDIAN SCENARIO 
PLANT AND MACHINERY PERSPECTIVE 
PRESENTED BY INDRANIL AICH 
MANAGING PARTNER 
AICH APPRAISERS AUCTIONERS AND VALUERS
VALUATIONS CURTAIN RAISER –CONTENTS 
PART A 
1) Valuations overview-Key references ,need and concepts . 
2) Valuation's Indian scenario - types of valuers, qualifications, apex bodies 
global and Indian.IP valuations in India 
PART B 
1) Overview of International valuations standards (IVSC) 
2) Role of IBA and nodal agencies in India 
3) Valuation of mobile assets - Plant & Machinery - classification and overview 
4) Valuation of construction and mining equipment - overview and case study 
5) Valuation in companies bill - hits and misses 
6) Valuation - a way forward and integral approach - Registered valuers, 
company secretary and chartered accountants role 
WE VALUE EVERYTHING 
2/17/2014 2 
UNDER THE SUN
VALUATIONS OVERVIEW – WHAT IS VALUE? 
• Depends on who is asking and why 
• Generally an economic concept where what a buyer is willing to pay and what a 
seller is willing to take overlap. 
– Implies transferability. 
– Implies agreeable to both parties. 
• In the real world it is a range, not a point 
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VALUATIONS OVERVIEW- DEFINITION OF VALUATION 
VALUATION DEFINED 
A quantitative representation of monetary values inherent in a 
business / entity, built by the past efforts, capable of 
generating economic benefits in the future. 
Enterprise value is the value of the financial instruments 
representing the ownership interests in an entity plus net 
financial debt of the entity. 
Fair value is an amount for which an asset could be 
exchanged between willing and knowledgeable parties in an 
arms length transaction. 
Value of an entity is a sum of parts of a business together adding up 
resulting the streams if economic returns and value of an enterprise can 
be more than sum of parts 
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VALUATIONS OVERVIEW –WHY ARE VALUATIONS 
PERFORMED GLOBALLY 
 Transaction pricing (mergers, 
acquisitions) 
 Privatization / post privatization 
 Financing 
 Tax and audit support 
 ESOPs 
 Management buyouts 
 Joint venture investment 
Bankruptcy reorganization 
and restructuring – SARFEASI 
ACT2002 
Allocation of purchase 
price 
Litigation 
Planning 
Value based management 
Loans –Refinance and top up loans 
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VALUATION OVERVIEW- ASSETS OF AN BUSINESS 
ENTITY 
• Tangible Assets 
- Current Assets 
Cash and Marketable Securities 
- Fixed Assets- 
Property, Plant,- immovable 
assets 
Equipments – movable assets 
• Intangible Assets 
Good Will 
- Trademarks 
- Technology 
Immovable Assets 
Classification 
•Non marketable assets – hospital , 
college,university ,monument 
•Marketable – nondynamic – flats 
,bunglow,residencia l houses. 
•Marketable – dynamic – service 
apartments ,hotels malls, resorts - 
Intellectual Property (IP) 
Know how 
Trade 2/17/2014 Secrets WE VALUE EVERYTHING UNDER THE SUN 6
VALUATIONS INDIAN SCENARIO - -TYPES OF VALUERS 
AS PER WEALTHTAX ACTIN INDIA 
Valuers for 
i.Immovable property (other than agricultural lands, plantations, 
forests, mines and quarries). 
ii. Agricultural lands (other than coffee, tea, rubber and cardamom plantations). 
iii. Coffee, tea, rubber or cardamom plantations 
iv. Forests 
v. Mines and quarries- JORC certification from Australia 
vi. Stocks, shares, debentures, securities, shares in partnership firms and 
business assets including goodwill. 
vii. Machinery and plant. 
viii. Jewellery 
ix. Works of art. 
x. Life interest, reversions and interest in expectancy. 
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VALUATION INDIAN SCENARIO – REGISTERED VALUER 
• Registration as a Valuer in India 
Any Engineer, Architect, Town Planner, Chartered Accountant, Cost 
Accountant  Company Secretary etc.with a degree in his discipline 
with minimum 10 years experience can become a Registered 
Valuer. He / She has to apply to Chief Commissioner Income Tax of 
the State in the prescribed Form N under section 34AB of Wealth Tax 
Act 1957. Some financial institutions accept degree holders as 
their Valuer with membership of Institution of Valuer 
(www.institutionsofvaluers.org) or Practicing Valuers Association, India 
(www.pvai.org). Therefore one must take the life membership of these 
Institutions and membership of Royal institute of Chartered Surveyors London 
UK . 
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VALUATIONS INDIAN SCENARIO – REGISTRATION AS 
VALUER 
• Application for registration as valuer in Govt of India. 
• An application for registration as a valuer under section 34AB shall be in Form 
N and shall be verified in the manner specified therein and shall be 
accompanied by a fee of Rs.1000 which shall not be refunded if the application 
is rejected. 
• No person in service is allowed to obtain the registration in the above 
form in India. 
• For details vide – www.laws4india.com/tax 
• More on Hand book of on Policy, Standards and Procedures for Real Estate 
Valuation by Banks and HFIs in India copy circulated to you published by the 
Indian Bankers Association . 
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VALUATION INDIAN PERSPECTIVE - 
• IBA Hand book specifies - 
• It shall be necessary that 
• Every valuer empanelled by banks / HFIs in India be a member of 
• any one of the undermentioned associations namely : 
• - Institution of Valuers ( IOV ) 
• - Institution of Surveyors ( Valuation Branch ) ( IOS ) 
• - Institution of Government Approved Valuers ( IGAV ) 
• - Practicing Valuers Association of India ( PVAI ) 
• - Centre for Valuation Studies, Research and Training ( CVSRT ) 
• - Royal Institute of Chartered Surveyors, India Chapter ( RICS ) 
• - American Society of Appraisers, USA ( ASA ) 
• - Appraisal Institute, USA ( AI ) 
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VALUATION INDIAN PERSPECTIVE- EDUCATION IN 
INDIA 
Career Education in valuation in India 
Till August 1994, there was no course on valuation available at College / University level 
for real estate anywhere in India and for plant and machinery anywhere in the worlds. 
Sarder Patel University has taken a lead in introducing Post Graduate Degree Course 
Real estate valuation. 
Plant and machinery valuation. 
Royal Institute of Chartered Surveyors, UK london (RICS ). Website :www.rics.org /in 
Short term courses on real estate valuation ,plant and machinery valuation by 
Indian chapter 
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VALUATION INDIAN OVERVIEW – EDUCATION IN INDIA 
• Indian institute of loss surveyors  insurance surveyors – membership thru 
examination . Vide www.iiisla.org (post graduation ) 
• IRDA – Insurance Regulatory Development Authority – Membership thru examination. 
vide website – www.irda.org( post graduation) 
Valuers in India go for these qualifications to enhance the work sphere. 
UPCOMING - International Institute of Marine Surveyors UK LONDON for Marine survey 
and valuations opened chapter in India 
Short term courses by ICSI ,ICAI on valuations . 
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VALUATION INDIAN OVERVIEW – VALUERS SPREAD IN 
INDIA 
• Total of 22000 valuers in India who are registered ( wealth tax , IOV,PVAI put 
together). 
• Market type – unorganised local players mainly in district level except a few 
companies . 
• Very few have all services under one roof . 
• Companies bill to give an enormous impetuous in India . 
• Spread of valuers in India 
• 80 % of valuers in india are from real estate sector 
• 10 % of valuers in Plant and machinery 
• 10 % others 
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VALUATION INDIAN OVERVIEW – REVENUE STRUCTURE 
• Total market size approx. Rs 1000 crores expected to reach Rs 5000 crores inby 
2016 . 
• Source of data institute of valuers, personal interviews with the officials of IOV ,PVAI 
,company officials.( conservative estimate ) 
• No organized publication on the revenue generated available in INDIA. The data is 
basis the income tax deptt estimate on the returns filed cross checked. 
• Fees grid suggested by IT département prévalent with Banks and Financial 
institutions . 
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VALUATIONS SEGMENTWISE REVENUE MODEL 
• IMMOVABLE PROPERTIES -REVENUE MODEL MARKET PATTERN 
• Non cyclic, regular pattern ,localised support needed. 
• Focus on brown field projects in india. 
• Scalable model with rapid pace 
PLANT AND MACHINERY 
MOVABLE PROPERTIES – REVENUE MODEL MARKET PATTERN 
• Construction equipment's ,cars ,Commercial vehicles 
• Electrical , mechanical, chemical plants, steel, ferro alloy plants. 
• Key factors for valuation – vintage ,life expectancy, condition of the asset . 
• Second largest revenue generating valuation segment in India. 
• Scalable and non cyclic pattern of business 
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VALUATIONS SEGMENTWISE MOVABLE ASSETS 
REVENUE MODEL 
• Valuation fees of mobile fuel driven assets – high volume low price realization 
model-noncyclic ,voluminous , strong local network and presence required. 
• Valuation fees of plant machinery , hi tech machinery low volume and 
medium price realisation.Model – cyclic , high job content in each job and local 
presence not much required. 
• Movable Properties /Assets Valuations revenue generating agencies 
• Mainly borne by banks, business through banks ,NBFC’s  ABL’s. 
• Valuations required for Refinance , Repo assets , top up loans , additional 
loans to industries , sell off , auctions mainly. 
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VALUATION INDIAN OVERVIEW – IP VALUATIONS IN 
INDIA 
• Sunrise segment in India 
• Mostly dominated by BIG 4 firms 
• In India valuation mostly restricted to software firms 
• Non cyclic intermittent business pattern 
• Scalable but not regular flow business – slow 
• Economic downturn a catalyst to the business 
• High caliber manpower requirements high cost too ! 
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VALUATION INDIAN OVERVIEW – IP VALUATIONS IN 
INDIA- LIST OF ASSETS 
• Airport gates and slots 
• Bank customers –deposits loan, 
trust and credit card 
• Blueprints 
• Book libraries 
• Brand names 
• Broadcast licenses 
• Buy-sell agreements 
• Certificates of need 
• Chemical formulas 
• Computer software 
• Computerized Databases 
• Contracts 
• Cooperative agreements 
• Copyrights 
Credit information files 
Customer contracts 
Customer  client lists 
Customer relationships 
Designs  drawings 
Development rights 
Distribution networks 
Distribution rights 
Drilling rights 
Employment contracts 
Engineering drawings 
Envirornmental rights 
Favorable leases 
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VALUATION INDIAN OVERVIEW – IP VALUATIONS IN 
INDIA- LIST OF ASSETS 
• Proposals outstanding 
• Proprietary computer software 
• Proprietary processes 
• Proprietary products 
• Proprietary technology 
• Publications 
• Retail shelf space 
• Royalty agreements 
• Schematics  diagrams 
• Securities portfolios 
• Security interests 
• Shareholder agreements 
• Solicitation rights 
Stock  bond instruments 
Subscription lists 
Supplier contracts 
Technical  specialty Libraries 
Technical documentation 
Technology sharing agreements 
Title plants 
Trade secrets 
Trained  assembles workforce 
Trademark and trade names 
Training manuals 
Use rights – air, water, land 
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PART A RECAP 
• VALUATIONS – CONCEPTS 
• VALUATIONS – VALUATIONS IN INDIA , TYPES OF VALUERS 
QUALIFICATIONS , 
• VALUATIONS CLASSIFICATION OF ASSETS 
• REGISTRATION OF VALUERS 
• REVENUE MODELS FOR VARIOUS TYPES OF VALUERS 
• IP VALUATIONS IN INDIA 
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PART B 
1) Overview of International valuations standards (IVSC) 
2) Role of IBA and nodal agencies in India 
3) Valuation of mobile assets - Plant  Machinery - 
classification and overview 
4) Valuation of construction and mining equipment - overview 
and case study 
5) Valuation in companies bill - hits and misses 
6) Valuation - a way forward and integral approach - Registered 
valuers, company secretary and chartered accountants role 
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INTERNATIONAL VALUATION STANDARDS 
COUNCIL 
• WEBSITE: WWW.IVSC.ORG 
• EMAIL: IVSC@IVSC.ORG 
• INTERNATIONAL VALUATION STANDARDS BOARD 
(IVSB) 
• IVSC STANDARDS 2007 SUPERSEDED BY IVSC 
STANDARDS 2011 ELIMINATING REPITITIONS . 
• BASIS OF THESE STANDARDS ARE ON IFRS 3 . 
• ALL FIELDS OF VALUATIONS COVERED UNDER THE 
IVSC STANDARDS 2011. 
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INTERNATIONAL VALUATION STANDARDS 
COUNCIL 
• ENCOMPASSES THE KEY STANDARDS OF 
VALUATION 
• IVS FRAME WORK 
• GENERAL STANDARDS 
• IVS 101- SCOPE OF WORK –General principle 
requirements ,changes to scope of work.effective date . 
• IVS-102- IMPLEMENTATION –Investigations,Valuation 
Approaches,Valuation record ,Effective Date . 
• IVS – 103 REPORTING – guidelines , contents  date 
• ASSET STANDARDS 
• IVS 200- Businesses and Business interests –Business info 
,ownership rights ,valuation approaches ,market approach 
,income approach. 
• IVS210- Intangible assets ,characteristics ,relief from royalty 
method,premium profits method,Excess earnings method . 
• IVS 220 -plant and equipment ownership rights ,valuation 
approaches ,market approach ,income approach. 
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INTERNATIONAL VALUATION STANDARDS 
COUNCIL 
• IVS 230- real property interests 
• IVS 233 - Investment property valuations under 
constructions 
• IVS 250- Financial instruments 
• VALUATIONS APPLICATIONS – 
• IVS 300 – Valuations for financial reporting 
• IVS 310 - Valuations of real property Interests for secure 
lending 
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ROLE OF IBA AND NODAL AGENCIES 
• IBA HAND BOOK SPECIFIES THE FOLLOWING 
• Purpose of Valuation and Appointment of Valuers 
• 1.2 Criteria for Empanelment of Valuers 
• a) Educational Qualifications and Previous Work Experience 
• b) Minimum Age Requirement 
• c) Membership of Professional Bodies 
• d) Categories of Valuers 
• e) Registration with Government 
• f) References 
• g) Other Conditions 
• 1.3 Duration of Empanelment 
• 1.4 Removal 
• 1.5 Re-Empanelment 
• 1.6 Professional Fees 
• 1.7 Compliance of Standards and Procedures 
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ROLE OF IBA AND NODAL AGENCIES 
• 1.8 Independence and Objectivity 
• 1.9 Obligations of Banks and HFIs 
• 1.10 Continuing Education 
• 1.11 Date of Effect 
• RICS RED BOOK - Copy circulated to all 
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VALUATION OF PLANT AND MACHINERY 
IMMOVABLE AND MOBILE PLANT AND MACHINERY VALUTIONS 
Key components 
• Domain expertise desired 
• Mere financial valuation a pitfall. 
• Visual evidence asset inspection by an expert a must 
• Brand value 
• Mostly market approach but cost approach and and 
income approach on non standard assets 
• Gamut- includes mechanical,chemical,electro mechanical 
and a combined knowledge of all branches of engineering 
including electronics and computer science . 
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VALUATION OF PLANT AND MACHINERY 
• GAMUT IS LARGE WE RESTRICT OURSELVES TO AN 
INTERESTING AND FASTEST GROWING MACHINERY 
SEGMENT IN INDIA . 
• MOBILE ASSETS - CONSTRUCTION AND MINING 
EQUIPMENTS INDUSTRY 
• The Indian Construction sector growing at an average 
rate of 7% per annum despite recession 
• Accounts for 6% of the GDP. 
• Is the Second largest Employer. 
• Major employment generators in the rural areas 
• Absorbs Skilled, Semi-Skilled and Unskilled workers. 
• Construction accounts for 60-70% of the infrastructure 
project cost. 
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VALUATION OF PLANT AND MACHINERY 
• INDIAN EARTHMOVING  CONSTRUCTION 
EQUIPMENT INDUSTRY : CURRENT STATUS 
Expanding at Compounded Annual Growth Rate(CAGR) of 21 % in 
last five years. 
Having Global Market of US$2.3 Billion 
• New techniques and technology in various construction projects 
• Key Infrastructure Projects are Road  Highways, Bridges  
Urban Construction, Power Projects, Railways, Airport- 
Modernization, Real Estate development. 
• India’s earth moving and construction equipment (ECE) industry 
has the potential to expand five-fold, from revenues of US$ 
billion today to US$ 10 billion by201to US$ 13 billion by 2015. 
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DOSSIER OF CONSTRUCTION AND MINING 
EQUIPMENTS 
• Construction Machinery 
and Equipment 
1. Power Shovels 
2. Cranes 
3. Concrete Mixers 
4. Dredging Machinery 
5. Articulated Dump Trucks 
6. Asphalt Finishers 
7. Backhoe Loaders 
8. Crawler Dozers 
9. Crawler Excavators 
10.Wheel Excavators 
11. Scrapers 
12. Earth Moving Compactors 
13. Skid Steer Loaders 
• Mining Machinery 
1. Excavators 
2. Drills 
3. Feeder Breakers 
4. Crushers 
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HOW DO THEY LOOK 
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VALUATION OF PLANT AND MACHINERY 
• FINANCING SCENARIO OF CONSTRUCTION AND 
MINING BUSINESS IN INDIA 
• Total Estimated Funding in India is about Rs 19,000 Crores. 
• Valuation of Construction  Mining equipment is required for 
the following :- 
1) Refinance of the equipment by a Non Banking Finance Company 
/Banks 
2) Liquidation of bad debts and repossessed assets 
3) Top up loans for construction houses and corporates. 
4)As per the new companies bill valuation of assets mandatory . 
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REFINANCE OF THE EQUIPMENT BY A NON 
BANKING FINANCE COMPANY 
• Refinance is a activity wherein one equipment which has already 
served a project and is free from any loans or financial liabilities, 
the same is bought by another company or individual and before 
financing the same it is valued by a financer. 
• The valuation has got key parameters as follows :- 
a) Vintage 
b) Economic useful life 10000 to 20000operational hours 
c) Brand value 
d) After market support and availability of spares 
e) Title of the asset,documentation 
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KEY POINTS OF METHODOLOGY OF 
VALUATIONS 
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TECHNO-COMMERCIAL ANALYSIS 
• While valuing an equipment the health of each components / 
sub-assembly / assembly needs to be checked in operational 
conditions. 
• Pre – requisite of valuation exercise includes: 
1. Site Visit: It is mandatory that a site visit be made where the 
equipment is parked 
2. Photography: At least 3 to 4 photographs at various angles needs 
to be taken. 
3. Maintenance Log Book: Regular maintenance schedules, 
preventive maintenance chart, oil changes need to be noted 
down. 
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TECHNICAL IN DEPTH ANALYSIS 
FOR EXCAVATOR 
WE CHECK THE 
FOLLOWING 
1. Excavator Hydraulic 
System 
2. Excavator Final Drive 
Line 
3. Excavator Boom and 
Stick Arm  Bucket 
Condition 
4. Undercarriage 
5. Turn Table  Turn 
Joint. 
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TECHNICAL IN DEPTH ANALYSIS 
FOR DUMPERS WE 
CHECK THE 
FOLLOWING 
1.Power Train 
System 
2.Brake and 
Steering 
3.Chassis and 
Suspension 
4.Dumper Body 
5.Wheels 
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TECHNICAL IN DEPTH ANALYSIS 
FOR HYDRAULIC CRANE 
WE CHECK THE 
FOLLOWING 
1. Hydraulic Cranes / 
Lattice Boom and Hook 
Block 
2. Undercarriage 
3. Hydraulic System 
4. Turn Table  Turn Joint. 
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COMMERCIAL DOCUMENTATION FOR VALUATION 
1. Invoice copy certified by a competent authority 
2. Engine and chassis Imprint- Documentary evidence of 
match with the 
3. Road Tax Form certificate of fitness ,pollution and road 
tax and insurance paid 
4. The title of equipment,Insurance document 
5. Safe load test certificate by competent personin case 
of material handling euipments 
6. CONCEPT OF REGISTRABLE AND NON 
REGISTRABLE ASSET 
7. www.vahan.nic.in- All registrable asset details available 
Non registrable assets – Tieup with CIBIL AND AAAV 
towards DATA BANK of assets identified. 
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TECHNO COMMERCIAL ASSESSMENT 
• Key approaches  factors for valuation of construction and 
mining equipment are: 
• Over all asset condition –operative /nonoperative 
1. Brand Value brand pull 
2. Current Market Value - Market approach IVS 220 
3. After Market Support 
4. Cost of Spares part 
5. Refurbishment Cost 
6. Salvage Value 
7. Auction Value 
8. Marshall  Swift Equipment Cost Index. -based on a 
global average for 47 different industries. A cost index is 
made up of a market basket of equipment and indicates the 
general direction in which equipment costs are moving. They 
represent an estimate of the trends in installed equipment 
costs . 
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VALUATION OF PLANT AND MACHINERY – 
KEY POINTS 
• ASSET KNOWLEGE – DOMAIN EXPERTISE 
• ASSET INSPCTION 
• MARKET KNOWLEGE 
• APLLICATION STUDY 
• COMMERCIAL KNOWLEDGE 
• IVS STANDARDS TEMPLATE 
• A KNOWLEGE DRIVEN PROFESSION WITH AN EVER 
CHANGING LANDSCAPE . 
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COMPANIES BILL 2012-REGISTERED VALUER 
• The Companies Bill, 2012 has introduced the concept of 
‘Registered Valuer’ through Chapter XVII to cover valuation of 
any property, stock, shares, debentures, securities, goodwill or 
any other assets of the company as well as its net worth and 
liabilities. The qualification and experience of the person 
registered as a valuer and the basis of valuation shall be 
prescribed through Rules by the Central Government 
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COMPANIES BILL 2012-REGISTERED VALUER 
• STIPULATIONS IN THE COMPANIES BILL, 2012 
•  All valuations under the Act to be made by Registered Valuer. 
•  The Valuer shall be appointed by the Audit Committee or the 
Board of Directors of the company. 
•  The Valuer shall conduct valuation in accordance with the rules 
prescribed. 
•  The Valuer shall exercise due diligence while performing his job. 
•  The Valuer is required to make an impartial, true and fair 
valuation of any asset required to be valued. 
•  The Valuer is prohibited from undertaking valuation of any 
assets in which he has a direct or indirect interest. 
•  If the Valuer commits any default under the Act or the Rules, he 
can be fined. If the intention was to defraud the company or its 
members, the Valuer can face imprisonment. 
•  On committing a default, a valuer shall be liable to refund the 
remuneration received from the company and pay for damages to 
the company or to any other person for loss arising out of 
incorrect or misleading statements made in his report. 
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COMPANIES BILL 2012: CLAUSES FOR 
VALUATION 
• Clause 62(1)(c)– For Valuing further Issue of Shares 
• Clause 192(2)– For Valuing Assets involved in Arrangement of Non 
Cash transactions involving Directors 
• Clause 230(2)(c)(v)– For Valuing Shares, Property and Assets of 
the company under a Scheme of Corporate Debt Restructuring 
• Clause 230(3)- Under a Scheme of Compromise/Arrangement, 
along with the notice of creditors/shareholders meeting, a copy of 
Valuation Report, if any shall be accompanied 
• Clause 232(2)(d)- The report of the expert with regard to 
valuation, if any would be circulated for meeting of 
creditors/members 
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COMPANIES BILL 2012: CLAUSES FOR 
VALUATION 
• Clause 232(3)(h)- Where under a Scheme of 
Compromise/Arrangement the transferor company is a listed 
company and the transferee company is an unlisted company, for 
exit opportunity to the shareholders of transferor company, 
valuation may be required to be made by the Tribunal 
• Clause 236(2) – For Valuing Equity Shares held by Minority 
Shareholders. 
• Clause 260(2)(c) – For preparing Valuation report in respect of 
Shares and Assets to arrive at the Reserve Price for Company 
Administrator 
• Clause 281(1) – For Valuing Assets for submission of report by 
Liquidator 
• Clause 305(2)(d) – For report on the Assets of the company for 
preparation of declaration of solvency under voluntary winding 
up 
• Clause 319(3)(b) – For Valuing the interest of any dissenting 
member of the transferor company who did not vote in favour of 
the special resolution, as may be required by the Company 
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VALUERS IN COMPANIES BILL- HITS AND 
MISSES 
• The introduction of the concept of Registered Valuer in the 
Companies Bill, 2012, will lead to the setting of Indian Valuation 
Standards that will improve transparency and governance. 
Impact of Change 
• The concept of a registered valuer is likely to have a big impact on 
Industry, professionals, shareholders and government. 
• The increase in requirements for valuation will lead to a 
substantial increase in professional opportunities for CAs, CSs and 
CWAs, and Registerd valuers 
• Fine for misleading and incorrect information and imprisonment 
for intention to defraud a company or its members will ensure 
that valuation reports disclose a true, fair and complete view and 
that valuation procedures are more objective. Indemnity in vogue 
in UK and US now introduced in India 
• Stakeholder confidence would be boosted with the increased 
transparency and fairness in the valuation system. 
• Government revenues may improve as loopholes in valuations 
may be plugged. 
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VALUERS IN COMPANIES BILL- HITS AND 
MISSES 
• ISSUES THAT NEED REVIEW 
• The Companies Bill, 2012 intends that registered valuer value all 
assets. It is beyond reason how Professionals like CA/ CS/ CWA 
can value a property or machinery etc without the help of experts 
say Property Valuers and Engineers. 
• The Valuer is required to exercise due diligence. In reality, most 
valuation reports carry caveats that valuers have not done any 
due diligence as the general practice is to rely on facts and 
numbers placed before the valuer. Though the valuer should 
check the data for consistency and reasonableness and apply 
professional due care and suitable adjustments, due diligence is a 
broad term and such exercise does not come within the scope of 
the valuer. 
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INTEGRATED APPROACH – 
CA’S,CS,REGISTERD VALUERS 
• Given the colloidal situation the concept of registered valuers 
only integrated approach of company secretaries ,charatered 
accountants and registered valuers can join hands . 
• A concept note on valuations in the perspective of registered 
vauers is being prepared by CII national council to be submitted 
to the Government of INDIA . 
• Fostering education and knowledge IN THE FIELD OF 
VALUTION STUDIES CAN SHAPE UP A PROPER MODEL 
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YOU CAN REACH ME AT 
INDRANIL AICH 
AICH GROUP OF COMPANIES 
+919831088204/+919038088204 
indranilaich@gmail.com/aichappraisers@g 
mail.com 
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QA 
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• AICH APPRAISERSAUCTIONERS AND VALUERS 
We value every thing under the sun 
• Partnership firm Started in August 2009 
•Valuation Services for Movable And Immovable Assets Construction 
and Mining ,Medical Equipments for asset based lenders banks and 
financial institutions 
•Consulting Partnership With American Appraisals Pvt. Ltd. 
•Over 6000 assets valued in three years with a value of around 
3000crores INR 
•MEMBER COMPANY OF CII ,BNCCI AIMA IGCC 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 53
AICH APPRAISERSAUCTIONERS AND VALUERS 
We value every thing under the sun 
EMPANELMENTS 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 54
AICH APPRAISERSAUCTIONERS AND VALUERS 
We value every thing under the sun 
•EMPANELMENTS 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 55
•200% Year on year Growthboth 
bottomline and topline 
•Strong credit rating 
•Qualtrics Rated top 3 in India in Valuation 
Services 
•Finalist forAIMA -Dr J.S Juneja Award for 
Innovation and creativity for MSME 
enterprises for 2012 -2013 and ICICI - 
CNBC India Emerging India Awards 2013 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 56
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 57
KATAICH INFRACORE ENGINEERING PVT. LTD 
• KATAICH INFRACORE ENGINEERING PVT. LTD. 
•Started with Changling construction machinery distribution and Nawa 
crushers 
•Year on year growth 200% 
•Revenue of ½ million USD in 2011-2012 
•Shantui heavy machinery dealership 
•Spare parts supplier company 
•Started as the flagship company and diversified 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 58
AICH MINING RESOURCES PVT. LTD. 
Opencast  Underground Mining of ferrous  non ferrous metal  non 
metal mines concept to commisioning projects 
•Opencast  Underground Equipment Selection, installation 
•Concept to commissioning Technical Consulting  Mining Consulting 
•Coal Washers Consulting 
•CHF Concept to Concept to commissioning projects 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 59
AICH MINING RESOURCES PVT. LTD. 
Partners of South West India Trading PVT LTD of South West Middle East LLC 
for their total rental machine solution of open cast mining projects for 
Eastern part of India 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 60
A BRIEF ABOUT INDRANIL AICH 
Chequered career of 18 years in the industry out of which 14 years in 
multinationals of repute 
Worked in Titagarh Wagons Ltd GoIndustry – Dovebid (Formerly Henry Butcher) 
,UT Limited (JV between Usha Group and Telehoist of U.K.) Ingersoll Rand 
India Ltd,TIL (Tractors India Limited) -Jayashree Textiles, Indian Rayon 
Group –Rishra. 
Award winning Production engineer with MBA from IIFT kolkata . 
Publications and teaching assignments in several institutions of repute . 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 61
A BRIEF ABOUT INDRANIL AICH 
PROFESSIONAL MEMBERSHIPS 
International Memberships 
Honorary Life member of Royal Institute of Chartered Surveyors (RICS), London. 
Life member American Society of Mechnical Engineers USA 
Life member of the Mining ,geological and metallurgical Society of India . 
Life Member of Operational Society of India, Quality Circle Forum of India, Systems 
Dynamics Society of India 
Life Member of Institution of Engineers (Membership No.M-132302-9) and Chartered 
Engineer from Institution of Engineers (AM 092132-5). 
Approved valuer (Registration No.18328) Category – Production  Industrial Engineering 
and Fellow and Life Member of Institution of Valuers. 
Member of Indian Council of Arbitration, New Delhi an organization of FICCI and Ministry 
of Commerce.Member of Practicing Valuers Association of India 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 62
A BRIEF ABOUT INDRANIL AICH 
A BRIEF ABOUT INDRANIL AICH 
INDUSTRY CHAMBER MEMBERSHIPS 
Member of Confederation of India Industry Eastern Region 
Member of MSME National council CII 
Member of West bengal state council 
Member of the economic affairs ,taxation and finance subcommittee 
Member of the Safety subcommittee 
Member of the MSME subcommittee 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 63
• : Indranil Aich 
indranilaich@gmail.com 
THANK YOU 
2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 64

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Icsi valuation presentation final old but relevant

  • 1. VALUATIONS –A CURTAINRAISER ON INDIAN SCENARIO PLANT AND MACHINERY PERSPECTIVE PRESENTED BY INDRANIL AICH MANAGING PARTNER AICH APPRAISERS AUCTIONERS AND VALUERS
  • 2. VALUATIONS CURTAIN RAISER –CONTENTS PART A 1) Valuations overview-Key references ,need and concepts . 2) Valuation's Indian scenario - types of valuers, qualifications, apex bodies global and Indian.IP valuations in India PART B 1) Overview of International valuations standards (IVSC) 2) Role of IBA and nodal agencies in India 3) Valuation of mobile assets - Plant & Machinery - classification and overview 4) Valuation of construction and mining equipment - overview and case study 5) Valuation in companies bill - hits and misses 6) Valuation - a way forward and integral approach - Registered valuers, company secretary and chartered accountants role WE VALUE EVERYTHING 2/17/2014 2 UNDER THE SUN
  • 3. VALUATIONS OVERVIEW – WHAT IS VALUE? • Depends on who is asking and why • Generally an economic concept where what a buyer is willing to pay and what a seller is willing to take overlap. – Implies transferability. – Implies agreeable to both parties. • In the real world it is a range, not a point 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 3
  • 4. VALUATIONS OVERVIEW- DEFINITION OF VALUATION VALUATION DEFINED A quantitative representation of monetary values inherent in a business / entity, built by the past efforts, capable of generating economic benefits in the future. Enterprise value is the value of the financial instruments representing the ownership interests in an entity plus net financial debt of the entity. Fair value is an amount for which an asset could be exchanged between willing and knowledgeable parties in an arms length transaction. Value of an entity is a sum of parts of a business together adding up resulting the streams if economic returns and value of an enterprise can be more than sum of parts 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 4
  • 5. VALUATIONS OVERVIEW –WHY ARE VALUATIONS PERFORMED GLOBALLY Transaction pricing (mergers, acquisitions) Privatization / post privatization Financing Tax and audit support ESOPs Management buyouts Joint venture investment Bankruptcy reorganization and restructuring – SARFEASI ACT2002 Allocation of purchase price Litigation Planning Value based management Loans –Refinance and top up loans 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 5
  • 6. VALUATION OVERVIEW- ASSETS OF AN BUSINESS ENTITY • Tangible Assets - Current Assets Cash and Marketable Securities - Fixed Assets- Property, Plant,- immovable assets Equipments – movable assets • Intangible Assets Good Will - Trademarks - Technology Immovable Assets Classification •Non marketable assets – hospital , college,university ,monument •Marketable – nondynamic – flats ,bunglow,residencia l houses. •Marketable – dynamic – service apartments ,hotels malls, resorts - Intellectual Property (IP) Know how Trade 2/17/2014 Secrets WE VALUE EVERYTHING UNDER THE SUN 6
  • 7. VALUATIONS INDIAN SCENARIO - -TYPES OF VALUERS AS PER WEALTHTAX ACTIN INDIA Valuers for i.Immovable property (other than agricultural lands, plantations, forests, mines and quarries). ii. Agricultural lands (other than coffee, tea, rubber and cardamom plantations). iii. Coffee, tea, rubber or cardamom plantations iv. Forests v. Mines and quarries- JORC certification from Australia vi. Stocks, shares, debentures, securities, shares in partnership firms and business assets including goodwill. vii. Machinery and plant. viii. Jewellery ix. Works of art. x. Life interest, reversions and interest in expectancy. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 7
  • 8. VALUATION INDIAN SCENARIO – REGISTERED VALUER • Registration as a Valuer in India Any Engineer, Architect, Town Planner, Chartered Accountant, Cost Accountant Company Secretary etc.with a degree in his discipline with minimum 10 years experience can become a Registered Valuer. He / She has to apply to Chief Commissioner Income Tax of the State in the prescribed Form N under section 34AB of Wealth Tax Act 1957. Some financial institutions accept degree holders as their Valuer with membership of Institution of Valuer (www.institutionsofvaluers.org) or Practicing Valuers Association, India (www.pvai.org). Therefore one must take the life membership of these Institutions and membership of Royal institute of Chartered Surveyors London UK . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 8
  • 9. VALUATIONS INDIAN SCENARIO – REGISTRATION AS VALUER • Application for registration as valuer in Govt of India. • An application for registration as a valuer under section 34AB shall be in Form N and shall be verified in the manner specified therein and shall be accompanied by a fee of Rs.1000 which shall not be refunded if the application is rejected. • No person in service is allowed to obtain the registration in the above form in India. • For details vide – www.laws4india.com/tax • More on Hand book of on Policy, Standards and Procedures for Real Estate Valuation by Banks and HFIs in India copy circulated to you published by the Indian Bankers Association . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 9
  • 10. VALUATION INDIAN PERSPECTIVE - • IBA Hand book specifies - • It shall be necessary that • Every valuer empanelled by banks / HFIs in India be a member of • any one of the undermentioned associations namely : • - Institution of Valuers ( IOV ) • - Institution of Surveyors ( Valuation Branch ) ( IOS ) • - Institution of Government Approved Valuers ( IGAV ) • - Practicing Valuers Association of India ( PVAI ) • - Centre for Valuation Studies, Research and Training ( CVSRT ) • - Royal Institute of Chartered Surveyors, India Chapter ( RICS ) • - American Society of Appraisers, USA ( ASA ) • - Appraisal Institute, USA ( AI ) 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 10
  • 11. VALUATION INDIAN PERSPECTIVE- EDUCATION IN INDIA Career Education in valuation in India Till August 1994, there was no course on valuation available at College / University level for real estate anywhere in India and for plant and machinery anywhere in the worlds. Sarder Patel University has taken a lead in introducing Post Graduate Degree Course Real estate valuation. Plant and machinery valuation. Royal Institute of Chartered Surveyors, UK london (RICS ). Website :www.rics.org /in Short term courses on real estate valuation ,plant and machinery valuation by Indian chapter 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 11
  • 12. VALUATION INDIAN OVERVIEW – EDUCATION IN INDIA • Indian institute of loss surveyors insurance surveyors – membership thru examination . Vide www.iiisla.org (post graduation ) • IRDA – Insurance Regulatory Development Authority – Membership thru examination. vide website – www.irda.org( post graduation) Valuers in India go for these qualifications to enhance the work sphere. UPCOMING - International Institute of Marine Surveyors UK LONDON for Marine survey and valuations opened chapter in India Short term courses by ICSI ,ICAI on valuations . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 12
  • 13. VALUATION INDIAN OVERVIEW – VALUERS SPREAD IN INDIA • Total of 22000 valuers in India who are registered ( wealth tax , IOV,PVAI put together). • Market type – unorganised local players mainly in district level except a few companies . • Very few have all services under one roof . • Companies bill to give an enormous impetuous in India . • Spread of valuers in India • 80 % of valuers in india are from real estate sector • 10 % of valuers in Plant and machinery • 10 % others 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 13
  • 14. VALUATION INDIAN OVERVIEW – REVENUE STRUCTURE • Total market size approx. Rs 1000 crores expected to reach Rs 5000 crores inby 2016 . • Source of data institute of valuers, personal interviews with the officials of IOV ,PVAI ,company officials.( conservative estimate ) • No organized publication on the revenue generated available in INDIA. The data is basis the income tax deptt estimate on the returns filed cross checked. • Fees grid suggested by IT département prévalent with Banks and Financial institutions . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 14
  • 15. VALUATIONS SEGMENTWISE REVENUE MODEL • IMMOVABLE PROPERTIES -REVENUE MODEL MARKET PATTERN • Non cyclic, regular pattern ,localised support needed. • Focus on brown field projects in india. • Scalable model with rapid pace PLANT AND MACHINERY MOVABLE PROPERTIES – REVENUE MODEL MARKET PATTERN • Construction equipment's ,cars ,Commercial vehicles • Electrical , mechanical, chemical plants, steel, ferro alloy plants. • Key factors for valuation – vintage ,life expectancy, condition of the asset . • Second largest revenue generating valuation segment in India. • Scalable and non cyclic pattern of business 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 15
  • 16. VALUATIONS SEGMENTWISE MOVABLE ASSETS REVENUE MODEL • Valuation fees of mobile fuel driven assets – high volume low price realization model-noncyclic ,voluminous , strong local network and presence required. • Valuation fees of plant machinery , hi tech machinery low volume and medium price realisation.Model – cyclic , high job content in each job and local presence not much required. • Movable Properties /Assets Valuations revenue generating agencies • Mainly borne by banks, business through banks ,NBFC’s ABL’s. • Valuations required for Refinance , Repo assets , top up loans , additional loans to industries , sell off , auctions mainly. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 16
  • 17. VALUATION INDIAN OVERVIEW – IP VALUATIONS IN INDIA • Sunrise segment in India • Mostly dominated by BIG 4 firms • In India valuation mostly restricted to software firms • Non cyclic intermittent business pattern • Scalable but not regular flow business – slow • Economic downturn a catalyst to the business • High caliber manpower requirements high cost too ! 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 17
  • 18. VALUATION INDIAN OVERVIEW – IP VALUATIONS IN INDIA- LIST OF ASSETS • Airport gates and slots • Bank customers –deposits loan, trust and credit card • Blueprints • Book libraries • Brand names • Broadcast licenses • Buy-sell agreements • Certificates of need • Chemical formulas • Computer software • Computerized Databases • Contracts • Cooperative agreements • Copyrights Credit information files Customer contracts Customer client lists Customer relationships Designs drawings Development rights Distribution networks Distribution rights Drilling rights Employment contracts Engineering drawings Envirornmental rights Favorable leases 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 18
  • 19. VALUATION INDIAN OVERVIEW – IP VALUATIONS IN INDIA- LIST OF ASSETS • Proposals outstanding • Proprietary computer software • Proprietary processes • Proprietary products • Proprietary technology • Publications • Retail shelf space • Royalty agreements • Schematics diagrams • Securities portfolios • Security interests • Shareholder agreements • Solicitation rights Stock bond instruments Subscription lists Supplier contracts Technical specialty Libraries Technical documentation Technology sharing agreements Title plants Trade secrets Trained assembles workforce Trademark and trade names Training manuals Use rights – air, water, land 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 19
  • 20. PART A RECAP • VALUATIONS – CONCEPTS • VALUATIONS – VALUATIONS IN INDIA , TYPES OF VALUERS QUALIFICATIONS , • VALUATIONS CLASSIFICATION OF ASSETS • REGISTRATION OF VALUERS • REVENUE MODELS FOR VARIOUS TYPES OF VALUERS • IP VALUATIONS IN INDIA 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 20
  • 21. PART B 1) Overview of International valuations standards (IVSC) 2) Role of IBA and nodal agencies in India 3) Valuation of mobile assets - Plant Machinery - classification and overview 4) Valuation of construction and mining equipment - overview and case study 5) Valuation in companies bill - hits and misses 6) Valuation - a way forward and integral approach - Registered valuers, company secretary and chartered accountants role 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 21
  • 22. INTERNATIONAL VALUATION STANDARDS COUNCIL • WEBSITE: WWW.IVSC.ORG • EMAIL: IVSC@IVSC.ORG • INTERNATIONAL VALUATION STANDARDS BOARD (IVSB) • IVSC STANDARDS 2007 SUPERSEDED BY IVSC STANDARDS 2011 ELIMINATING REPITITIONS . • BASIS OF THESE STANDARDS ARE ON IFRS 3 . • ALL FIELDS OF VALUATIONS COVERED UNDER THE IVSC STANDARDS 2011. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 22
  • 23. INTERNATIONAL VALUATION STANDARDS COUNCIL • ENCOMPASSES THE KEY STANDARDS OF VALUATION • IVS FRAME WORK • GENERAL STANDARDS • IVS 101- SCOPE OF WORK –General principle requirements ,changes to scope of work.effective date . • IVS-102- IMPLEMENTATION –Investigations,Valuation Approaches,Valuation record ,Effective Date . • IVS – 103 REPORTING – guidelines , contents date • ASSET STANDARDS • IVS 200- Businesses and Business interests –Business info ,ownership rights ,valuation approaches ,market approach ,income approach. • IVS210- Intangible assets ,characteristics ,relief from royalty method,premium profits method,Excess earnings method . • IVS 220 -plant and equipment ownership rights ,valuation approaches ,market approach ,income approach. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 23
  • 24. INTERNATIONAL VALUATION STANDARDS COUNCIL • IVS 230- real property interests • IVS 233 - Investment property valuations under constructions • IVS 250- Financial instruments • VALUATIONS APPLICATIONS – • IVS 300 – Valuations for financial reporting • IVS 310 - Valuations of real property Interests for secure lending 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 24
  • 25. ROLE OF IBA AND NODAL AGENCIES • IBA HAND BOOK SPECIFIES THE FOLLOWING • Purpose of Valuation and Appointment of Valuers • 1.2 Criteria for Empanelment of Valuers • a) Educational Qualifications and Previous Work Experience • b) Minimum Age Requirement • c) Membership of Professional Bodies • d) Categories of Valuers • e) Registration with Government • f) References • g) Other Conditions • 1.3 Duration of Empanelment • 1.4 Removal • 1.5 Re-Empanelment • 1.6 Professional Fees • 1.7 Compliance of Standards and Procedures 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 25
  • 26. ROLE OF IBA AND NODAL AGENCIES • 1.8 Independence and Objectivity • 1.9 Obligations of Banks and HFIs • 1.10 Continuing Education • 1.11 Date of Effect • RICS RED BOOK - Copy circulated to all 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 26
  • 27. VALUATION OF PLANT AND MACHINERY IMMOVABLE AND MOBILE PLANT AND MACHINERY VALUTIONS Key components • Domain expertise desired • Mere financial valuation a pitfall. • Visual evidence asset inspection by an expert a must • Brand value • Mostly market approach but cost approach and and income approach on non standard assets • Gamut- includes mechanical,chemical,electro mechanical and a combined knowledge of all branches of engineering including electronics and computer science . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 27
  • 28. VALUATION OF PLANT AND MACHINERY • GAMUT IS LARGE WE RESTRICT OURSELVES TO AN INTERESTING AND FASTEST GROWING MACHINERY SEGMENT IN INDIA . • MOBILE ASSETS - CONSTRUCTION AND MINING EQUIPMENTS INDUSTRY • The Indian Construction sector growing at an average rate of 7% per annum despite recession • Accounts for 6% of the GDP. • Is the Second largest Employer. • Major employment generators in the rural areas • Absorbs Skilled, Semi-Skilled and Unskilled workers. • Construction accounts for 60-70% of the infrastructure project cost. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 28
  • 29. VALUATION OF PLANT AND MACHINERY • INDIAN EARTHMOVING CONSTRUCTION EQUIPMENT INDUSTRY : CURRENT STATUS Expanding at Compounded Annual Growth Rate(CAGR) of 21 % in last five years. Having Global Market of US$2.3 Billion • New techniques and technology in various construction projects • Key Infrastructure Projects are Road Highways, Bridges Urban Construction, Power Projects, Railways, Airport- Modernization, Real Estate development. • India’s earth moving and construction equipment (ECE) industry has the potential to expand five-fold, from revenues of US$ billion today to US$ 10 billion by201to US$ 13 billion by 2015. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 29
  • 30. DOSSIER OF CONSTRUCTION AND MINING EQUIPMENTS • Construction Machinery and Equipment 1. Power Shovels 2. Cranes 3. Concrete Mixers 4. Dredging Machinery 5. Articulated Dump Trucks 6. Asphalt Finishers 7. Backhoe Loaders 8. Crawler Dozers 9. Crawler Excavators 10.Wheel Excavators 11. Scrapers 12. Earth Moving Compactors 13. Skid Steer Loaders • Mining Machinery 1. Excavators 2. Drills 3. Feeder Breakers 4. Crushers 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 30
  • 31. HOW DO THEY LOOK 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 31
  • 32. VALUATION OF PLANT AND MACHINERY • FINANCING SCENARIO OF CONSTRUCTION AND MINING BUSINESS IN INDIA • Total Estimated Funding in India is about Rs 19,000 Crores. • Valuation of Construction Mining equipment is required for the following :- 1) Refinance of the equipment by a Non Banking Finance Company /Banks 2) Liquidation of bad debts and repossessed assets 3) Top up loans for construction houses and corporates. 4)As per the new companies bill valuation of assets mandatory . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 32
  • 33. REFINANCE OF THE EQUIPMENT BY A NON BANKING FINANCE COMPANY • Refinance is a activity wherein one equipment which has already served a project and is free from any loans or financial liabilities, the same is bought by another company or individual and before financing the same it is valued by a financer. • The valuation has got key parameters as follows :- a) Vintage b) Economic useful life 10000 to 20000operational hours c) Brand value d) After market support and availability of spares e) Title of the asset,documentation 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 33
  • 34. KEY POINTS OF METHODOLOGY OF VALUATIONS 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 34
  • 35. TECHNO-COMMERCIAL ANALYSIS • While valuing an equipment the health of each components / sub-assembly / assembly needs to be checked in operational conditions. • Pre – requisite of valuation exercise includes: 1. Site Visit: It is mandatory that a site visit be made where the equipment is parked 2. Photography: At least 3 to 4 photographs at various angles needs to be taken. 3. Maintenance Log Book: Regular maintenance schedules, preventive maintenance chart, oil changes need to be noted down. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 35
  • 36. TECHNICAL IN DEPTH ANALYSIS FOR EXCAVATOR WE CHECK THE FOLLOWING 1. Excavator Hydraulic System 2. Excavator Final Drive Line 3. Excavator Boom and Stick Arm Bucket Condition 4. Undercarriage 5. Turn Table Turn Joint. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 36
  • 37. TECHNICAL IN DEPTH ANALYSIS FOR DUMPERS WE CHECK THE FOLLOWING 1.Power Train System 2.Brake and Steering 3.Chassis and Suspension 4.Dumper Body 5.Wheels 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 37
  • 38. TECHNICAL IN DEPTH ANALYSIS FOR HYDRAULIC CRANE WE CHECK THE FOLLOWING 1. Hydraulic Cranes / Lattice Boom and Hook Block 2. Undercarriage 3. Hydraulic System 4. Turn Table Turn Joint. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 38
  • 39. COMMERCIAL DOCUMENTATION FOR VALUATION 1. Invoice copy certified by a competent authority 2. Engine and chassis Imprint- Documentary evidence of match with the 3. Road Tax Form certificate of fitness ,pollution and road tax and insurance paid 4. The title of equipment,Insurance document 5. Safe load test certificate by competent personin case of material handling euipments 6. CONCEPT OF REGISTRABLE AND NON REGISTRABLE ASSET 7. www.vahan.nic.in- All registrable asset details available Non registrable assets – Tieup with CIBIL AND AAAV towards DATA BANK of assets identified. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 39
  • 40. TECHNO COMMERCIAL ASSESSMENT • Key approaches factors for valuation of construction and mining equipment are: • Over all asset condition –operative /nonoperative 1. Brand Value brand pull 2. Current Market Value - Market approach IVS 220 3. After Market Support 4. Cost of Spares part 5. Refurbishment Cost 6. Salvage Value 7. Auction Value 8. Marshall Swift Equipment Cost Index. -based on a global average for 47 different industries. A cost index is made up of a market basket of equipment and indicates the general direction in which equipment costs are moving. They represent an estimate of the trends in installed equipment costs . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 40
  • 41. VALUATION OF PLANT AND MACHINERY – KEY POINTS • ASSET KNOWLEGE – DOMAIN EXPERTISE • ASSET INSPCTION • MARKET KNOWLEGE • APLLICATION STUDY • COMMERCIAL KNOWLEDGE • IVS STANDARDS TEMPLATE • A KNOWLEGE DRIVEN PROFESSION WITH AN EVER CHANGING LANDSCAPE . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 41
  • 42. COMPANIES BILL 2012-REGISTERED VALUER • The Companies Bill, 2012 has introduced the concept of ‘Registered Valuer’ through Chapter XVII to cover valuation of any property, stock, shares, debentures, securities, goodwill or any other assets of the company as well as its net worth and liabilities. The qualification and experience of the person registered as a valuer and the basis of valuation shall be prescribed through Rules by the Central Government 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 42
  • 43. COMPANIES BILL 2012-REGISTERED VALUER • STIPULATIONS IN THE COMPANIES BILL, 2012 • All valuations under the Act to be made by Registered Valuer. • The Valuer shall be appointed by the Audit Committee or the Board of Directors of the company. • The Valuer shall conduct valuation in accordance with the rules prescribed. • The Valuer shall exercise due diligence while performing his job. • The Valuer is required to make an impartial, true and fair valuation of any asset required to be valued. • The Valuer is prohibited from undertaking valuation of any assets in which he has a direct or indirect interest. • If the Valuer commits any default under the Act or the Rules, he can be fined. If the intention was to defraud the company or its members, the Valuer can face imprisonment. • On committing a default, a valuer shall be liable to refund the remuneration received from the company and pay for damages to the company or to any other person for loss arising out of incorrect or misleading statements made in his report. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 43
  • 44. COMPANIES BILL 2012: CLAUSES FOR VALUATION • Clause 62(1)(c)– For Valuing further Issue of Shares • Clause 192(2)– For Valuing Assets involved in Arrangement of Non Cash transactions involving Directors • Clause 230(2)(c)(v)– For Valuing Shares, Property and Assets of the company under a Scheme of Corporate Debt Restructuring • Clause 230(3)- Under a Scheme of Compromise/Arrangement, along with the notice of creditors/shareholders meeting, a copy of Valuation Report, if any shall be accompanied • Clause 232(2)(d)- The report of the expert with regard to valuation, if any would be circulated for meeting of creditors/members 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 44
  • 45. COMPANIES BILL 2012: CLAUSES FOR VALUATION • Clause 232(3)(h)- Where under a Scheme of Compromise/Arrangement the transferor company is a listed company and the transferee company is an unlisted company, for exit opportunity to the shareholders of transferor company, valuation may be required to be made by the Tribunal • Clause 236(2) – For Valuing Equity Shares held by Minority Shareholders. • Clause 260(2)(c) – For preparing Valuation report in respect of Shares and Assets to arrive at the Reserve Price for Company Administrator • Clause 281(1) – For Valuing Assets for submission of report by Liquidator • Clause 305(2)(d) – For report on the Assets of the company for preparation of declaration of solvency under voluntary winding up • Clause 319(3)(b) – For Valuing the interest of any dissenting member of the transferor company who did not vote in favour of the special resolution, as may be required by the Company Liquidator 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 45
  • 46. VALUERS IN COMPANIES BILL- HITS AND MISSES • The introduction of the concept of Registered Valuer in the Companies Bill, 2012, will lead to the setting of Indian Valuation Standards that will improve transparency and governance. Impact of Change • The concept of a registered valuer is likely to have a big impact on Industry, professionals, shareholders and government. • The increase in requirements for valuation will lead to a substantial increase in professional opportunities for CAs, CSs and CWAs, and Registerd valuers • Fine for misleading and incorrect information and imprisonment for intention to defraud a company or its members will ensure that valuation reports disclose a true, fair and complete view and that valuation procedures are more objective. Indemnity in vogue in UK and US now introduced in India • Stakeholder confidence would be boosted with the increased transparency and fairness in the valuation system. • Government revenues may improve as loopholes in valuations may be plugged. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 46
  • 47. VALUERS IN COMPANIES BILL- HITS AND MISSES • ISSUES THAT NEED REVIEW • The Companies Bill, 2012 intends that registered valuer value all assets. It is beyond reason how Professionals like CA/ CS/ CWA can value a property or machinery etc without the help of experts say Property Valuers and Engineers. • The Valuer is required to exercise due diligence. In reality, most valuation reports carry caveats that valuers have not done any due diligence as the general practice is to rely on facts and numbers placed before the valuer. Though the valuer should check the data for consistency and reasonableness and apply professional due care and suitable adjustments, due diligence is a broad term and such exercise does not come within the scope of the valuer. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 47
  • 48. INTEGRATED APPROACH – CA’S,CS,REGISTERD VALUERS • Given the colloidal situation the concept of registered valuers only integrated approach of company secretaries ,charatered accountants and registered valuers can join hands . • A concept note on valuations in the perspective of registered vauers is being prepared by CII national council to be submitted to the Government of INDIA . • Fostering education and knowledge IN THE FIELD OF VALUTION STUDIES CAN SHAPE UP A PROPER MODEL 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 48
  • 49. YOU CAN REACH ME AT INDRANIL AICH AICH GROUP OF COMPANIES +919831088204/+919038088204 indranilaich@gmail.com/aichappraisers@g mail.com 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 49
  • 50. QA 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 50
  • 51. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 51
  • 52. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 52
  • 53. • AICH APPRAISERSAUCTIONERS AND VALUERS We value every thing under the sun • Partnership firm Started in August 2009 •Valuation Services for Movable And Immovable Assets Construction and Mining ,Medical Equipments for asset based lenders banks and financial institutions •Consulting Partnership With American Appraisals Pvt. Ltd. •Over 6000 assets valued in three years with a value of around 3000crores INR •MEMBER COMPANY OF CII ,BNCCI AIMA IGCC 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 53
  • 54. AICH APPRAISERSAUCTIONERS AND VALUERS We value every thing under the sun EMPANELMENTS 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 54
  • 55. AICH APPRAISERSAUCTIONERS AND VALUERS We value every thing under the sun •EMPANELMENTS 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 55
  • 56. •200% Year on year Growthboth bottomline and topline •Strong credit rating •Qualtrics Rated top 3 in India in Valuation Services •Finalist forAIMA -Dr J.S Juneja Award for Innovation and creativity for MSME enterprises for 2012 -2013 and ICICI - CNBC India Emerging India Awards 2013 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 56
  • 57. 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 57
  • 58. KATAICH INFRACORE ENGINEERING PVT. LTD • KATAICH INFRACORE ENGINEERING PVT. LTD. •Started with Changling construction machinery distribution and Nawa crushers •Year on year growth 200% •Revenue of ½ million USD in 2011-2012 •Shantui heavy machinery dealership •Spare parts supplier company •Started as the flagship company and diversified 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 58
  • 59. AICH MINING RESOURCES PVT. LTD. Opencast Underground Mining of ferrous non ferrous metal non metal mines concept to commisioning projects •Opencast Underground Equipment Selection, installation •Concept to commissioning Technical Consulting Mining Consulting •Coal Washers Consulting •CHF Concept to Concept to commissioning projects 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 59
  • 60. AICH MINING RESOURCES PVT. LTD. Partners of South West India Trading PVT LTD of South West Middle East LLC for their total rental machine solution of open cast mining projects for Eastern part of India 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 60
  • 61. A BRIEF ABOUT INDRANIL AICH Chequered career of 18 years in the industry out of which 14 years in multinationals of repute Worked in Titagarh Wagons Ltd GoIndustry – Dovebid (Formerly Henry Butcher) ,UT Limited (JV between Usha Group and Telehoist of U.K.) Ingersoll Rand India Ltd,TIL (Tractors India Limited) -Jayashree Textiles, Indian Rayon Group –Rishra. Award winning Production engineer with MBA from IIFT kolkata . Publications and teaching assignments in several institutions of repute . 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 61
  • 62. A BRIEF ABOUT INDRANIL AICH PROFESSIONAL MEMBERSHIPS International Memberships Honorary Life member of Royal Institute of Chartered Surveyors (RICS), London. Life member American Society of Mechnical Engineers USA Life member of the Mining ,geological and metallurgical Society of India . Life Member of Operational Society of India, Quality Circle Forum of India, Systems Dynamics Society of India Life Member of Institution of Engineers (Membership No.M-132302-9) and Chartered Engineer from Institution of Engineers (AM 092132-5). Approved valuer (Registration No.18328) Category – Production Industrial Engineering and Fellow and Life Member of Institution of Valuers. Member of Indian Council of Arbitration, New Delhi an organization of FICCI and Ministry of Commerce.Member of Practicing Valuers Association of India 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 62
  • 63. A BRIEF ABOUT INDRANIL AICH A BRIEF ABOUT INDRANIL AICH INDUSTRY CHAMBER MEMBERSHIPS Member of Confederation of India Industry Eastern Region Member of MSME National council CII Member of West bengal state council Member of the economic affairs ,taxation and finance subcommittee Member of the Safety subcommittee Member of the MSME subcommittee 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 63
  • 64. • : Indranil Aich indranilaich@gmail.com THANK YOU 2/17/2014 WE VALUE EVERYTHING UNDER THE SUN 64