USE OF FLOW CHARTS – PLANS IN VALUATION
By- Mukesh S. Shah

 

The spread of Valuation Services has widened up in recent years. Our accountability has become fact & we are answerable to Banks/Financial Institutions and court of law.

After strict governance by Reserve Bank of India, Banks have started firm actions to reduce large NPA (Non Performing Assets). The valuers are required to undertake Inventory of Assets and evaluate them. Imagine the situation, when we have to visit an Industry in closed condition alongwith Bank official or Official Liquidator’s representative. The list of Machinery or Building Plans/Land details may not be available as usual & if at all available, you can hardly rely on them.

So, here the real task begins. Imagine, you are stepping in the complex, which is under lock and key for many years. Where electric connection is cut off. You are the leader of the group. Do take the help of security people to walk before you with torch and a stick. Following steps are recommended in sequence :

* Take a short trip (Flying Visit) to whole unit and develop a blueprint of the product being manufactured there. How raw material used to brought in- processed in various sections- finished product & godown location, utility services.

* Draw a rough flow chart using your logic.

* Develop rough sketch of unit with main sections & orientation of the unit with reference to adjoining units/roads.
The Plans available inside the office will help you.

Now start second phase of the assignment. Do not forget to take your camera, measuring tape, pencil/sketch pens, shoes, cap, small water bottle, your mobile, pad & torch with you. My experience is Cargo type pants help you in such assignments. You will remember the trekking experience.

While taking the inventory & other data , make list- room/ deptt. wise or process wise whichever you feel is more logical.

Make note of following items on separate pages – which may have standard input in them.

1) Furniture/Fixtures
2) Office Equipments
3) Utility Equipments
4) Store items
5) Goods in Process – Semi finished goods.
6) Finished Goods
7) Electrical Installation consisting of panel board, switches / starters / cabling / earthing & light fixtures / Transformer / DG set etc – along with service no. & Licensee name.

Note: i) The scope of your assignment should get very clear from beginning. You must know which items you have to undertake. Similarly there should not be any duplicate coverage of inventory with your Co- valuers. Such items are machinery foundations, effluent treatment plant tanks, borewell, U.G. & O.H. water tanks, machinery platforms.

ii) Specially in liquidation properties it is most important to define all machinery items undertaken by you. Because the buyers for machinery & buildings are different. Pipe supports, light fixture supports, insulation on cold room walls, U.G. pipes & cables etc. There have been disputes in many cases in past -where in Valuer has to attend the court.

Now the third & final stage of your assignment begins, viz. compilation of data & preparation of Panchnama. Read it carefully before signing. Remember that each and every phase & step of your assignment is vital. You have to be physically & mentally fit and alert during the whole day. Needless to say- about carrying your food & water with you for remote places.

Flow Charts – example Plans
Standard data sheets.

Conclusion : The thrust of this paper is to highlight importance and role of Valuer.You must have realised that Valuation is not simple inventory taking and arithmetical calculations. Our report should be referred as respectable and reliable document.Whether it is banker, a buyer or client himself, our report has to be a real guide & dependable document. I am confident after taking such approach , you will never complain @ monotony of job or lack of work in your profession.

(Mukesh Shah)
3,Parswanagar Society, New Sharda mandir Road,
Paldi, Ahmedabad 380 007, E Mail – indra99@satyam.net.in


 

 

 


REPORT OF VALUATION OF MACHINERY AND PLANT

TO WHOMSOEVER IT MAY CONCERN

This is to notify that on request of undersigned has visited the works of on to carry out Valuation of Plant & Machinery lying there in.

Our comments are as under :

1. The unit is suitable for manufacturing .
2. The unit started manufacturing in .
3. The condition of Machinery is Good/Fair/ Poor/ Scrap.
4. There will be ready buyer for these Machines/ It will be difficult to get ready buyer for these Machines.

Purpose for which Valuation is made :

Date as on which Valuation is made :

Basis of Valuation :

(For Liquidation Purpose).

The Valuation is carried out on Distress sale basis. (Orderely Liquidation). The price of similar equipments available as second hand item is taken as base. Obviously the cost incurred in erection, commissioning and civil foundation is not considered here. Over and above the cost of loading, unloading and transportation is deducted from its gross value.

For very poor & scrap condition equipments, salvage value is considered, The U.G. tanks, reservoir, masonary chimney etc. are not considered in such case, since they will not fetch any value.

(Common)

We have considered Present Price of similar Machines available in Market. Depreciation is deducted from it depending on its usage & condition to arrive at Present Market Value of same. For very old and obsolete Machines, suitable obsolence factor is also applied over and above Depreciation.

(For Bank Purpose)

The Valuation is carried out on Running Unit Basis. The present price of similar Equipments is considered and Depreciation is deducted from it to arrive at Present market value. The cost of erection & commissioning along with civil foundation is taken in basis cost. The cost of fittings, instrumentation, insulation, drive package, supports etc. is included in basic vessel itself. For very old & obsolete Machines, suitable derating factor is applied.

 

Based on above, we certify total present market value of above listed Machinery as Rs. ______ only.

Note : The Distress Sale Value of Above Plant & Machinery can be taken as 80% of above.

 

STATEMENT OF LIMITING CONDITION :


1. Assumptions are made to the best of our knowledge and belief. Reliance is based on the information furnished to us by the identifier AND/OR client.

2. The valuer shall not be responsible for matters of legal nature that affects the values and opinion expressed by us.

3. If our appearance is required, we will be pleased to appear and give the necessary clarification, provided the fees for each appearance (including traveling, per diem and out of pocket expenses) is pre – determined in writing the acceptance of he assignment under reference.

4. In no event shall the valuer be held responsible or liable for special, direct, indirect or consequential damages as the assignment has been completed on best efforts, available knowledge and in good intentions of persons concerned and belief.

Above certificate is issued in Best Engg. Practice & without prejudice to any body. No consideration has been given to liens or encumbrances which may be against the property. No investigation of legal fee or title to the property has been made and the claim to the property has been assumed to be valid.

This valuation report shall not be used for any other purpose, other than specified in purpose of valuation.

I hereby declare that –

a) The information furnished above is true and correct to the best of my knowledge and belief; the statements of fact contained in this report are trueand correct, and this report has been prepared in conformity with the Principles of valuation practice and code of ethics of the practicing valuers Association (India)”.

b) We have no direct or indirect interest in the machinery/plant valued;

c) We have personally inspected the machinery / plant ;

d) We have not been convicted of any offence and sentenced to a term of imprisonment.

Date :

Place :
(Mukesh Shah)
Govt. Approved Valuer

Ref. No.: MS//2005 Date :

VALUATION REPORT OF THE PROPERTY OF MR.

OWNER :

DATE OF VALUATION :

PURPOSE OF VALUATION :

PLOT NO. & AREA :

YEAR OF CONSTRUCTION :

AMENITIES :


Pursuant to instructions received from the Client, I have inspected the above property under valuation for ascertaining its Fair Market Value.

CONSTRUCTIONAL DETAILS :

Based on above & prevailing

Based on above, I assess the present market value of above aforesaid property as Rs. /- only.

STATEMENT OF LIMITING CONDITIONS :

1. Assumptions are made to the best of our knowledge and belief. Reliance is based on the information furnished to us by the identifier AND/OR client.

2. The valuer shall not be responsible for matters of legal nature that affects the values and opinion expressed by us.

3. If our appearance is required, we will be pleased to appear and give the necessary clarification, provided the fees for each appearance (including traveling, per diem and out of pocket expenses) is pre – determined in writing the acceptance of he assignment under reference.

4. In no event shall the valuer be held responsible or liable for special, direct, indirect or consequential damages as the assignment has been completed on best efforts, available knowledge and in good intentions of persons concerned and belief.

Above certificate is issued in Best Engg. Practice & without prejudice to any body. No consideration has been given to liens or encumbrances which may be against the property. No investigation of legal fee or title to the property has been made and the claim to the property has been assumed to be valid.

This valuation report shall not be used for any other purpose, other than specified in purpose of valuation.

I hereby declare that –

a) The information furnished above is true and correct to the best of my knowledge and belief; the statements of fact contained in this report are trueand correct, and this report has been prepared in conformity with the Principles of valuation practice and code of ethics of the practicing valuers Association (India)”.

b) We have no direct or indirect interest in the property valued;

c) We have personally inspected the property ;

d) We have not been convicted of any offence and sentenced to a term of imprisonment.

Date :

Place :
(Mukesh Shah)