Valuation for Plant & MachineryBy Lt. Col.(Retd.) J.S.Danke (Nashik) 

AIM

• TO BRING OUT PROCESS OF VALUATION TO INCLUDE

• THE TASK

• PURPOSE OF VALUATION

• SITE INSPECTION

• INFORMATION

• MACHINERY

• DIFFICULTIES

• VALUATION APPROACH

• LESSONS LEARNT

 

THE TASK

• DIRECT

• INDIRECT

 

SITE INSPECTION

• PHYSICAL CHECK

• PARTICULARS SER NUMBER ETC

• CAPACITY

• YEAR OF MANUFACTURE

• MANUFACTURER DETAILS

• MODEL

• CONDITION

• NUMBERING

• PHOTOGRAPH, INSET OPERATOR ETC

 

SNAGS IN INFORMATION

• WE HAVE NO BILLS/ INVOICES

• RECORDS ARE WITH CA

• YOU ARE OMNISCIENT

• ABSENCE OF ANY STAFF

• ACTIONS LIKE SHERLOCK HOMES

 

IMPLEMENTS

• TORCH

• MAGNIFYING GLASS

• TAPE

• COMPASS

• CAMERA

 

DIFFICULTIES

• DEALING WITH SUPERVISORS

• NO SECOND INSPECTION

• TELESCOPING ACTIVITIES

• ASSET REGISTER

• NEW VALUE

• INADVERTENT RECORDING OF INFORMATION

• UNRELIABLE DATA

• MACHINERY NOT CONVERSANT

• TECHNOLOGY

 

VALUATION APPROACH

• CIRCUMSTANCES EXISTING AND ARROUND

• MARKET DEMAND OF PRODUCT

• AVAILABILITY OF MACHINERY

• ADVANCE VERSIONS

• ENERGY EFFICIENCY

• PAST PERFORMANCE

• MSEB BILLS

• ORDERS EXISTING

• STOCKPILE

 

REPLACEMENT VALUE

• Assuming that a new but similar model of the depreciating machine would be available today e.g. similar in its original features,parameters etc. without any change in design, speeds, sophistication etc. the value paid to this machine today; is the replacement value of the existing machine.

 

Valuation

• Market survey

• IR RBI

• Replacement val = Market val x EFL/Age + EFL

• Discounting-condition, standard parts, over invoicing, second hand purchase, type of use, shifts, accuracy, obsolecence etc.

 

EXAMPLE

• AS GIVEN IN THE PAPER

 

 

LESONS LEARNT

• ASK CLIENT TO KEEP LIST AND DOCUMENTS READY.

• KEEP ABREAST OF PROFESSINAL INFORMATION.

• GIVE VALUATION APPROACH.

• ATTEND SEMINARS.