Valuation Glossary

Asset Register

A detailed list of an entity's assets, typically including description, identification number, purchase date, cost, and current condition. Required as a base document for both real estate and plant and machinery valuations.

Chartered Engineer (CE)

An engineering professional certified by The Institution of Engineers (India), authorised to certify the existence, condition and technical specifications of fixed assets. Commonly required for SEBI IPO disclosures and PLI scheme investment verification, alongside valuation reports.

Corporate Debtor

Under the Insolvency and Bankruptcy Code (IBC), the company undergoing insolvency resolution or liquidation proceedings before the NCLT.

Cost Approach / Depreciated Replacement Cost (DRC)

A valuation method that estimates the current cost of replacing an asset with an equivalent new one, then deducts depreciation for age, wear and obsolescence. The standard approach for plant and machinery valuation where no active resale market exists.

DRHP (Draft Red Herring Prospectus)

The preliminary prospectus a company files with SEBI ahead of an IPO. It must include a Chartered Engineer certificate verifying the company's fixed assets for capital intensive issuers.

Empanelled Valuer

A valuer formally approved by a specific bank or financial institution to conduct valuations on their behalf. Empanelment is separate from IBBI registration; a valuer typically needs both to work on bank referred assignments.

Fair Market Value (FMV)

The price an asset would fetch in an open market transaction between a willing buyer and willing seller, both acting without compulsion and with reasonable knowledge of relevant facts. The most commonly used valuation basis for bank lending, IND AS reporting and tax purposes.

IBBI (Insolvency and Bankruptcy Board of India)

The regulator that oversees insolvency professionals and registered valuers in India, established under the Insolvency and Bankruptcy Code, 2016.

IBBI Registered Valuer

A valuer registered with the IBBI under one of three asset classes: Land & Building, Plant & Machinery, or Securities or Financial Assets. Only IBBI registered valuers are authorised to issue valuation reports for NCLT/IBC proceedings, and their registration is increasingly required by banks and under the Companies Act. See our guide on how to become an IBBI registered valuer.

IBC (Insolvency and Bankruptcy Code)

India's 2016 law governing insolvency resolution and liquidation of companies, individuals and partnerships, administered through the NCLT and overseen by the IBBI.

Income Approach

A valuation method that derives value from the income an asset generates, commonly used for commercial real estate (via rental capitalisation) and occasionally for specialised equipment.

IND AS 36 (Impairment of Assets)

The Indian Accounting Standard requiring companies to test assets for impairment when there are indicators of a decline in value, such as falling revenues, obsolescence, or damage, and to write the asset down to its recoverable amount if impaired. See our full guide to Ind AS 36 impairment testing.

International Valuation Standards (IVS)

The global standards for valuation methodology, adopted by the IBBI as the framework that all registered valuers in India must follow.

Lender's Independent Engineer (LIE)

A technical consultant or Chartered Engineer appointed by a bank, NBFC or lender consortium after a term loan is sanctioned, usually following a TEV study, to monitor project implementation and certify disbursements against physical progress. See our full guide to Lender's Independent Engineer (LIE) reports.

Liquidation Value

The estimated amount an asset would fetch in a forced or time constrained sale, typically lower than fair market value. Required alongside fair market value in every NCLT/IBC valuation report, as it determines the minimum recovery scenario for creditors.

Market Approach

A valuation method based on comparing the subject asset to recent sales of similar assets. The primary approach for residential and commercial real estate; used for plant and machinery only where an active resale market exists (for example vehicles, construction equipment).

NCLT (National Company Law Tribunal)

The quasi judicial body that adjudicates company law and insolvency matters in India, including approval of resolution plans, mergers, and schemes of arrangement.

NPA (Non Performing Asset)

A bank loan on which the borrower has stopped making scheduled payments. Banks require independent revaluation of assets securing an NPA before initiating recovery proceedings.

PLI Scheme (Production Linked Incentive)

A Government of India incentive scheme that rewards companies in specified sectors for incremental investment in manufacturing capacity. Beneficiaries must have their actual investment independently verified, typically through a combination of Chartered Engineer certification and IBBI registered valuer reports.

Registered Valuer under the Income Tax Act, 2025

A valuer registered under Section 514 of the Income tax Act, 2025, a separate registration from IBBI, specifically for valuation reports submitted to the Income Tax Department. See our guide on how to become a registered valuer under the Income Tax Act, 2025.

Reinstatement Value

The cost of rebuilding or replacing an asset at current prices, used as the basis for insurance sum insured calculations. Distinct from fair market value, which reflects depreciation and market conditions.

Remaining Useful Life (RUL)

A Chartered Engineer's asset-specific, condition-based estimate of how many more years or production cycles a piece of plant and machinery can operate, derived from physical inspection rather than the statutory useful life tables under Schedule II or the Income Tax Act. See our full guide to Remaining Useful Life (RUL) assessment.

Resolution Plan

The plan submitted to resolve a corporate debtor's insolvency under the IBC, requiring valuation of all assets before approval by the Committee of Creditors and the NCLT.

Resolution Professional (RP)

The insolvency professional appointed to manage a corporate debtor's affairs during the Corporate Insolvency Resolution Process (CIRP), responsible for appointing registered valuers and overseeing the resolution plan.

Rule 11UA

The Income Tax Rule prescribing how the fair market value of unquoted equity shares is determined, most commonly for angel tax and share issuance or transfer compliance under Section 56(2)(viib). The share valuation itself falls under the Securities or Financial Assets asset class; Axium's role is limited to the fair market value of a company's immovable property, one input into the Rule 11UA Net Asset Value method. See our note on Axium's role in Rule 11UA valuations.

SION (Standard Input Output Norms)

The DGFT-notified ratio of raw material consumption per unit of export product, used to fix duty-free import entitlements under schemes like Advance Authorisation. Where no SION exists for a product, adhoc norms are fixed based on a Chartered Engineer certificate in DGFT Appendix 4K format. See our guide to DGFT Chartered Engineer certificate formats.

Slump Sale

The transfer of a business as a going concern for a lump sum consideration, without assigning individual values to each asset or liability. Requires an overall valuation to support the agreed price and for stamp duty/tax purposes.

Stamp Duty Valuation / Guideline Value

The government notified minimum value of a property in a given area, used as the floor for computing stamp duty on transactions. A valuation report below guideline value typically invites scrutiny from tax authorities and must be independently justified.

Swap Ratio

The ratio at which shares of one company are exchanged for shares of another in a merger or demerger, determined with reference to an independent valuation of both entities.

TEV (Techno-Economic Viability) Study

The technical and financial feasibility appraisal a bank, NBFC or lender consortium commissions before sanctioning a term loan for a greenfield or expansion project, prepared by an empanelled Chartered Engineer independently of the promoter's own project report. See our full guide to TEV studies for bank loans.