Introduction to Valuation
Valuation is the process of determining the present value (PV) of an asset. Valuations can be done on assets (for example, investments in marketable securities such as stocks, options, business enterprises, fixed assets or intangible assets such as patents and trademarks) or on liabilities (e.g., bonds issued by a company). Valuations are needed for many reasons such as investment analysis, capital budgeting, merger and acquisition transactions, financial reporting, secured lending, collateral security, taxable events to determine the proper tax liability, and in litigation etc.
Valuation as a Standalone Profession
Valuation of any Asset or Business Enterprise or Shares has been in existence for long and they have been primarily used in the scenarios as listed below.
| Valuation for Banks & Financial Institutions | Valuation for Impairment of Assets | Valuation for Insurance Purposes |
| Internal Audit Valuation | Valuation for Visa | Self-Assessment Valuation |
| Customs Pre-Shipment Inspection & Estimation of Value | Valuation for Asset Reconstruction Companies | Valuation for Duty Payback |
| Valuation for Mergers, Acquisitions, Demergers | Valuation for Liquidation or Auctions | Valuation for updating Book Records |
Asset Classes in Valuation
- Land & Building
- Plant & Machinery
- Financial Assets
- Overall Business Valuation ( combination of all three Valuer)
Background
Valuation of Assets are mostly done by Domain specific Valuers who were experienced with respect the type of asset being valued like for ex. Civil Engineer values Land & Building Assets, Chartered Account values Financial Assets , Mechanical Engineer values Machinery etc. And in most cases Valuation is a part time profession where the Valuer has other business interests in his domain of expertise - like for ex. Construction Company or Structural Consultant + Land & Building Valuer / Auditor + Financial Asset Valuer & Mechanical Engg Consulting + Machinery Valuer.
Only recently we have seen the emergence of many Valuers who are pursuing Valuation as a full time scope of Work. As the economy grows the requirement of Valuers & Valuation has increased multifold and has given way for the possibility of a Full Time Valuation Profession or Career with good remuneration over a period of time and Valuation has become a significant professional Service just like Chartered Accounts or other Professional Services which are recognized by the government of India .
Opportunities in a Full Time Valuation Profession
As the need for Valuation for various needs increases so the demand for Valuers have increased exponentially. Many new entrants are joining the Valuation Profession and many people leave their current full time careers to explore opportunities as a Full Time Valuer.
Just like any other Professional Service, Valuation is also a field where one needs considerable experience as a Valuer to know the nitty gritties and various aspects of Valuation and as one gains experience then it is easier to standout amidst the competition. For people who join as Associate or Junior Valuers with practising values find it easy to wade through the field and eventually establish themselves as an Independent Valuer over a period of Time People who directly venture into the field without completely understanding the various challenges, aspects of Valuation find it little difficult as to where to start from, how to go about and how to sustain the initial years as they establish themselves as a credible valuer and experienced valuation professional and get recurring customers/clients.
Registrations Needed for Valuation Profession
Registration with Income Tax Department under Section34AB of Wealth Tax Act 1957
Registration with IBBI- Insolvency & Bankruptcy Board of India Section 247 under Companies Act 2013
Eligilibility for Registration as a Valuer
An individual shall have the following qualifications and experiences to be eligible for registration:
| Asset Class | Eligiblity/Qualifications | Experience in Discipline |
| Plant and Machinery | (i) Graduate in Mechanical, Electrical, Electronic and Communication, Electronic and Instrumentation, Production, Chemical, Textiles, Leather, Metallurgy, or Aeronautical Engineering, or Graduate in Valuation of Plant and Machinery or equivalent; (ii) Post Graduate on above courses. | Five Years Three Years |
| Land and Building | (i) Graduate in Civil Engineering, Architecture, or Town Planning or equivalent; (ii) Post Graduate on above courses and also in valuation of land and building or Real Estate Valuation (a two-year full time post-graduation course) | Five years Three years. |
| Securities or Financial Assets | (i) Member of Institute of Chartered Accountants of India, Member of Institute of Company Secretaries of India, Member of the Institute of Cost Accountants of India, Master of Business Administration or Post Graduate Diploma in Business Management (specialisation in finance). (ii) Post Graduate in Finance | Three |