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VALUATION OF PLANT & MACHINERY AND CASE STUDIES

VALUATION OF PLANT & MACHINERY AND CASE STUDIES. BY AMISH SURYAKANT PATEL, MRICS B.E.(Elect.), Master of Valuation (P&M) Master of Valuation (Real Estate), LL.B. (Special), Certified Valuer Practicing Valuer, Land & Building, Plant & Machinery

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VALUATION OF PLANT & MACHINERY AND CASE STUDIES

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  1. VALUATION OF PLANT & MACHINERY AND CASE STUDIES BY AMISH SURYAKANT PATEL, MRICS B.E.(Elect.), Master of Valuation (P&M) Master of Valuation (Real Estate), LL.B. (Special), Certified Valuer Practicing Valuer, Land & Building, Plant & Machinery Director, RBSA Valuation Advisors LLP, Ahmedabad – 380 015 Phone: +91 79 4050 6080 Mobile: +9197243 43842 W: www.rbsa.in E: amish.patel@rbsa.in, amish8971@yahoo.com PRESENTED AT Institute of Science & Technology for Advanced Studies and Research (ISTAR) On 14th December, 2013, Saturday

  2. Valuation ???!!!

  3. Basic Definitions

  4. Procedure for the Valuation of Plant & Machinery

  5. Definition As per the International Valuation Standards published by IVSC, Market Valueis the estimated amount for which an asset or a liability*should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. * Will be applicable from 1st January, 2014

  6. Definition As per IVS, Fair Valueis the estimated price for the transfer of an asset or liability between the identifiedknowledgeable and willing parties that reflects the respective interests of those parties.* *This definition does not apply to valuations for Financial Reporting… As per IFRS 13 Fair Value Measurement, Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

  7. Basis of Valuation A basis of value is a statement of the fundamental measurement assumptions of a valuation Basis of Valuation fall into Three principal categories: Market Value Investment Value and Special Value Fair Value (these three basis are well described in IVS) Valuation may require the use of different Bases of Value that are defined by statute, regulation, private contract or other document like various valuation measurement bases found in IFRS.

  8. Definition As per the IVS, Investment Valueis the value of an asset to the owner or a prospective owner for individual or operational objectives. Special Valueis an amount that reflects particular attributes of an asset that are only of value to a special purchaser.

  9. Checklist for the Valuation of Plant & Machinery Data Collection

  10. Valuation of P & M can be done under following Scenarios

  11. Data Analysis Approach

  12. Cost Approach

  13. Assumption & Special Assumption Assumptions are matters that are reasonable to accept as fact in the context of valuation assignment without specific investigation or verification. They are matters that, once stated, are to be accepted in understanding the valuation. Special Assumption is an assumption that either assumes fact that differ from the actual facts existing at the valuation date or that would not be made by a typical market participant in a transaction on the valuation date. Assumptions and Special Assumptions must be reasonable and relevant having regard to the purpose for which valuation is required.

  14. Conclude with opinion or advice. Opinion or advice must be clear, definite and unambiguous.

  15. Report Writing Report Writing means the information and opinion, which the client is seeking to be put in to words in the best possible manner. Important decisions depend on the information & advice given in a report. Advice should not be obscurely expressed, it should be skillfully worded to convey the meaning as intended.

  16. Essentials of Reports

  17. Essentials of Reports

  18. Other important points for Report Writing

  19. Other important points for Report Writing

  20. General structure of the Report

  21. Submission of Report Submit along with the Covering Letter. Preservation of Data

  22. Conclusion A Plant & Machinery valuer should follow the above mention procedure to execute an assignment of Valuation of Plant & Machinery, but make appropriate modification in the procedure depending on the type of industry, type of Plant & Machinery, availability of data, the time period within which the assignment to be executed, purpose of valuation, any specific instruction given by the client.

  23. Thank You

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