VALUATION STANDARDS – AN ATTEMPT TO STANDARDISE SUBJECTIVITY
ANAND BATHIYA Chartered Accountant
‘Valuation is the process of
determining the economic worth of a subject under certain assumptions and
limiting conditions for a particular purpose on a particular date.’
description comes closest to defining ‘Valuation’ from a financial and economic
perspective. Such a process of valuation usually culminates into an ‘estimation
of value’, that is generally performed by a person with the desired skill-sets.
Since long, the valuation exercises have been the domain of various
subject-matter-experts, each claiming to be one in a specific category. The
nuances of such specific categories, e.g. real property, financial assets,
personal assets, intangibles, etc., ensured that the profession of valuation
remained scattered across various professional silos operating in a particular
In the recent past, various
developments and factors in the Indian context have contributed to the
thought-process of creating a distinct class of professionals who would be
entrusted with the responsible need of performing valuations. The shift to the
fair-value based financial reporting, fragmented regulatory regime surrounding
valuations, advent of the insolvency and bankruptcy code and enhanced
stakeholder expectations, were the key contributors to the thought-process of
creating a distinct class of professionals to focus on performing valuations.
The Companies Act, 2013 (‘Act’), more specifically section 247 therein,
incarnated this distinct class of professionals as ‘Registered Valuers’.