icsi valuation presentation final old but relevant
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VALUATIONS A CURTAINRAISER ON
PLANT AND MACHINERY PERSPECTIVE
PRESENTED BY INDRANIL AICH
AICH APPRAISERS AUCTIONERS AND VALUERS
VALUATIONS CURTAIN RAISER CONTENTS
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UNDER THE SUN
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 overview4) Valuation of construction and mining equipment - overview and case study5) Valuation in companies bill - hits and misses6) Valuation - a way forward and integral approach - Registered valuers, company secretary and chartered accountants role
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
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A quantitative representation of monetary values inherent in abusiness / entity, built by the past efforts, capable ofgenerating 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
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
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Bankruptcy reorganization and restructuring SARFEASI
ACT2002Allocation of purchase
priceLitigationPlanningValue based managementLoans Refinance and top up loans
VALUATION OVERVIEW- ASSETS OF AN BUSINESS
Tangible Assets- Current Assets
Cash and Marketable Securities - Fixed Assets-
Property, Plant,- immovable assets
Equipments movable assets
Intangible AssetsGood Will
- Trademarks- Technology
Intellectual Property (IP)Know howTrade Secrets2/17/2014 6WE VALUE EVERYTHING UNDER THE SUN
Immovable Assets Classification Non marketable assets hospital , college,university ,monument
Marketable nondynamic flats ,bunglow,residencia l houses.
Marketable dynamic service apartments ,hotels malls, resorts -
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. Forestsv. 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. Jewelleryix. 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 IndiaAny Engineer, Architect, Town Planner, Chartered Accountant, Cost Accountant & Company Secretary etc.with a degree in his disciplinewith 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 TaxAct 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
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VALUATIONS INDIAN SCENARIO REGISTRATION AS
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 -
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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 )
VALUATION INDIAN PERSPECTIVE- EDUCATION IN
Career &Education in valuation in IndiaTill 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
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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
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
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 dpartement prvalent with Banks and Financial
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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 pacePLANT 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
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 Valu