Valuation Day: IBBI Urges Collaboration for Standardized Valuation Reports

Mohammed Farhan C

10/19/20231 min read

Delhi, 18.10.2023 - In a significant event celebrating "Valuation Day," the ICMAI Registered Valuers Organisation, IDV Registered Valuers Foundation, and the ICAI Registered Valuers Organisation organized a collaborative initiative. Ravi Mittal, Chairperson of IBBI, invited Valuers Organizations to unite and establish collective standards for valuation reports within the next few months. He emphasized the confidential nature of valuation reports, raising the question of whether valuations should be made public. This proposition sparked a lively debate among the audience, exploring the need for more contemporary valuation methods and broader disclosure. Mittal encouraged attendees to send suggestions to IBBI via email, underlining the importance of this discourse. He also announced IBBI's upcoming Valuation Conclave in the last week of November, inviting all Valuers Organizations to participate.

Question of the Day:
Why do valuations for the same land vary among different individuals?

During the event, Rajan Wadhawan from PwC India highlighted the importance of understanding and comprehensive assumptions in valuation processes, stating that it's not about rigid rules but the valuer's discernment.

Alok Kaushik stressed the critical role of valuation in the IBC process and CoC meetings, emphasizing the future benefits of assets rather than their historical value. He outlined the three primary approaches to valuation: Income Approach, Market Approach, and Cost Approach. Kaushik also outlined challenges faced by Registered Valuers (RVs), including insufficient information from Insolvency Resolution Professionals/Resolution Professionals (IRP/RPs) and lack of access to assets. He proposed stronger mechanisms, such as involving valuers after the RP gains complete control over the company.

IBBI Executive Director Shri. Satish Sethi and Chief General Manager Shri Manish Kumar Chaudhari urged valuers and RVOs to propose potential strategies for IBBI to frame standardized rules for valuers' assumptions during asset assessments and valuation reports.

The event marked a significant step toward fostering collaboration and standardization in the valuation industry, with professionals, students of the Post Graduate Insolvency Programme (Indian Institute of Corporate Affairs) and organizations actively engaging in crucial discussions for the future of valuation practices.