Duediligencelegalandregulatoryvaluationaspects 131024023201-phpapp02

Due Diligence, Legal and Regulatory Valuation aspects

Chander Sawhney

FCA, ACS, Certified Valuer (ICAI)

Vice President, Corporate Professionals

ICSICertificate Course of Valuation

Oct 2013

Contents

Particulars Pg. No.

What and Why 3

How 10

When and Who 22

Tricky Issues 54

WHAT & WHY

Value & Valuation

Value is*An Economic concept;

An Estimate of likely prices to be concluded by the buyer and seller of a good or service

that is available for purchase;

Not a fact.

Valuation is the process of determining the “Economic Worth” of an Asset or

Company under certain assumptions and limiting conditions and subject to the data

available on the valuation date.

* Source -International Valuation Standard Council

Key Facts

PRICE IS NOT THE SAME AS VALUE

TRANSACTION CONCLUDES AT NEGOTIATED PRICES

VALUATION IS HYBRID OF ART & SCIENCE

VALUE VARIES WITH PERSON, PURPOSE AND TIME

S Standard of Valuation

T Thesis of Valuation

E Economics of Valuation

M Methodologies of Valuation

FAIR MARKET VALUE

INTRINSIC VALUE FAIR VALUE

INVESTMENT VALUE

Standard of Valuation

Thesis of Valuation Economics of Valuation

Methodologies of Valuation

Standard of Value is the hypothetical conditions under which a business is valued.

While selecting the Standard of Value following points is to be taken care of

Subject matter of Valuation;

Purpose of Valuation;

Statute;

Case Laws;

Circumstances.

Types of Standard of Value:




Thesis of Value is Premise of value which relates to the assumptions upon which

the valuation is based.

Premise of Value

Going Concern – Value as an ongoing operating business enterprise.

Liquidation – Value when business is terminated . It could be ‘forced’ or ‘orderly’.

Value-in-use

Value-in-exchange

Growing Cos.

Turnover/Profits: Increasing still Low Proven Track Record: Limited Valuation Methodology: Substantially on Business Model Cost of Capital: Quite High

High Growth Cos.

Turnover/Profits : Good Proven Track Record: Available Valuation Methodology: Business Model with Asset

Base Cost of Capital: Reasonable

Mature Cos.

Turnover/Profits: Saturated Proven Track Record: Widely Available Method of Valuation: More from Existing Assets Cost of Capital: May be High

Declining Cos.

`

Turnover/Profits: Drops Proven Track Record: Substantial

Operating History Method of Valuation: Entirely

from Existing Assets Cost of Capital: N.A.

Turnover/Profits: Negligible Proven Track Record: None Valuation Methodology: Entirely on Business Model Cost of Capital: Very High

Start Up Cos.

Turn

over

/ P

rofit

s

Time

Valuation across business cycle follow the law of economics




HOW

Enterprise / Business Value

Net Debt#

Equity#

Fixed Assets

Net Current Assets

Intangibles

Stakeholders Assets

# Based on Market Values




Valuation Approaches

Income Based Method

Market Based Method

Asset Based Method Other Methods

While concluding Value, all the methodologies must be considered and then weights applied

as per the facts of the case. In other words, Value conclusion should be based on the

Professional Judgement and Simple Average should best be avoided while concluding

Value.

Need of several valuation methods?

Each has strengths and weaknesses

Different methods useful in different situations

Each gives a different “take” on the value of the company’s stock

Provides a range of valuations instead of point estimates

Helps in Sanity Check

Sources of Information for Valuation

Sources of Information

Historical financial results – Income Statement, Balance

Sheets and Cash Flows

Data available in Public Domain – Stock Exchange /

MCA/SEBI/Independent Report

Data on comparable companies – SALES/EV-

EBITDA/ PAT/BV

Promoters and Management background

Data on projects planned/under implementation including future

projection

Discussion and Representation with/by the management of the

Company

7

Industry and Regulatory trends

CASH FLOW Investor assign value based on the cash flow they expect to receive in the future - Dividends / distributions - Sale of liquidation proceeds Value of a cash flow stream is a function of - Timing of cash Receipt - Risk associated with the cashflow

ASSETSOperating Assets - Assets used in the operation of the business including working capital, Property, Plant & Equipment & Intangible assets - Valuing of operating assets is generally reflected in the cash flow generated by the businessNon - Operating Assets - Assets not used in the operations including excess cash balances, and assets held for investment purposes, such as vacant land & Securities - Investors generally do not give much value to such assets and Structure modification may be necessary

Key drivers of valuation

That’s why DCF is most

prominent valuation

method

Need for Restructuring

• Mergers

• IPO

• RBI

• Income Tax• ESOP

• Companies Act

• SEBI

• Stock Exchange

Purpose Regulatory Accounting

• Purchase Price Allocation

Dispute Resolution

• Company Law Board/ Courts

• Impairment / Diminution

• Arbitration

• Mediation• Acquisitions / Investment

• Voluntary Assessment

Value Creation

• Equity Research

• Credit Rating

• Corporate Planning

Valuation depends upon

Choice of Valuation Approaches

“Value in Valuation is a question,

and

Your choice of Method is the first step

towards answer”

Applicability of a particular approach depends upon:

On whose behalf? – one buyer vs another buyer, buyer vs seller;

For what purpose? – independent strategic acquisition, group company consolidation, cross

border transaction;

When? – distress situation, industry downturn, boom etc;

Choice of Valuation Approaches

• In General, Income Approach is preferred;The dominance of profits for valuation of share was emphasised in “McCathies case”

(Taxation, 69 CLR 1) where it was said that “the real value of shares in a company will depend more on

the profits which the company has been making and should be capable of making, having regard to

the nature of its business, than upon the amount which the shares would realise on liquidation”.

This was also re-iterated by the Indian Courts in Commissioner of Wealth Tax v. Mahadeo Jalan’s

case (S.C.) (86 ITR 621) and Additional Commissioner of Gift Tax v. Kusumben D. Mahadevia (S.C.)

(122 ITR 38).

• However, Asset Approach is preferred in case of Asset heavy companies

and on liquidation;

•Market Approach is preferred in case of listed entity and to evaluate the

value of unlisted company by comparing it with its listed peers;

Company Specific Factors

• Management, Promoter Group

It is the alignment of

Company’s value via-a-

vis to its external

environment

• Operating, Capital and Corporate Finance Strategies• Competitive advantages and cost position• Product / Service offering / differentiation / pricing power•Scale & Diversification•Customer / Supplier concentration•Corporate Governance•Future prospects / Growth potential•Industry peer group•Regulatory environment

Industry Risk Analysis

• Good vs. Difficult industry• Porter’s 5 forces• Industry life cycle (growth)• Industry cyclicality (earnings quality)• Leading indicators• Competition (ROIC)• Pricing dynamics; Demand vs. Supply (ROIC)• Changing business environments• Regulation (ROIC)• Product characteristics (earnings quality)• Capital intensity and cost base (ROIC)• Event risk

Following factors are required to

be considered:

Rule of Thumb

A rule of thumb or benchmark indicator is used as a

reasonableness check against the values determined by the

use of other valuation approaches.

Industry Valuation Parameters

Hospital EV/Room

Engineering Mcap/Order Book

Mutual Fund Asset under management

OIL EV/ Barrel of equivalent

Print Media EV/Subscriber

Power EV/MW, EBITDA/Per Unit

Entertainment & Media EV/Per screen

Metals EBITDA/Ton, EV/Metric ton

Textiles EBITDA depend upon capacity utilization Percentage & per spindle value

Pharma Bulk Drugs New Drug Approvals , Patents

Airlines EV/Plane or EV/passenger

Shipping EV/Order Book, Mcap/Order Book

Cement EV/Per ton & EBITDA/Per ton

Banks Non performing Assets , Current Account & Saving Account per Branch

However, Exclusive use of Rule of Thumb is not recommended

WHEN & WHO

Valuation in Indian Regulatory Environment

Inbound Investment DFCF

Gift of Unquoted Equity Shares (Min)

NAV

Outbound Investment Valuer Discretion

Gift of Unquoted Shares other than Equity Shares

Price it would fetch if sold in open market

Takeover Code/ Delisting - Infrequently Traded

Only Parameters Prescribed – Return on Net Worth, EPS,

NAV vis-a vis Industry Average

Takeover Code/ Delisting - Frequently Traded Based on Market Price

Reserve Bank of India

ESOP Tax Valuer Discretion

ESOP Accounting Option – Pricing Model

Income Tax

SEBI

CA / MB

>5Mn$ - MB, otherwise CA/MB

-

MB

MB

-

CA/MB

-

Stock Exchanges Preferential Allotment to promoters / their relatives for consideration other than cash

Valuer Discretion

Companies Act, 1956 Sweat Equity Valuer Discretion

CA / MB

-

Transactions Prescribed Methodologies Mandate to be done by

SNAPSHOT OF REGULATORY VALUATIONS IN INDIA

Gift of Unquoted Equity Shares from Resident

(Max)

DCF (Valuation Based on Assets, Business & Intangibles is also

acceptable)FCA / MB

Preferential Allotment to Others

Based on 26 weeks / 2 weeks Market Price -

Companies Act, 2013

any property, stock, shares, debentures, securities or

goodwill or any other assets or the net worth of the

Company or its liabilitiesTo be prescribed REGISTERED VALUER

RBI Valuation Guidelines

FDI VALUATION

• Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time deals

with Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside

India) Regulations, 2000.

•In terms of Schedule 1 of the Notification, an Indian company may issue equity

shares/compulsorily convertible preference shares and compulsorily convertible debentures

(equity instruments) to a person resident outside India under the FDI policy, subject to inter alia,

compliance with the pricing guidelines.

•The price/ conversion formula of convertible capital instruments should be determined upfront

at the time of issue of the instruments.

Particulars Valuation before April 21, 2010 Valuation after April 21, 2010Guidelines in Force CCI Guidelines In case of FDI Transactions:

Listed Company: Market Value as per SEBI Preferential Allotment Guidelines

Unlisted Company: DFCF

In case of ODI Transactions:No method has been prescribed

Methods Prescribed Net Assets Value (NAV)Profit Earning Capacity Value(PECV)Market Value (in case of Listed Company)

Discount 15% Discount has been prescribed on account of Lack of Marketability

No such Discount has been prescribed

Historical / Futuristic It is based on Historical Values It is based on Future Projections

Possibility of variation in Value Conclusion

As valuation is more Formulae based, final values came standardized

As valuation is more dependent on Assumptions and choice of factors like Growth Rate, Cost of Capital etc, value conclusion may vary significantly.

FEMA Guidelines to Valuation

Note: Valuation guidelines do not apply to SEBI registered venture capital

Discounted Free Cash Flow Method (DFCF)

Approaches to FDI Valuation

RBI has prescribed DFCF as the only valuation method in case of FDI (excluding for

initial subscription); but has not provided any guidance on its technical aspects.

Though DFCF is one of the most acceptable Valuation methods used by Business

valuers worldwide; however DFCF for all FDI transactions-excluding for initial

subscription (like minority stake/start up valuation etc) may not yield Fair Value in

line with the Commercial understanding. However Law being such, suitable Logical

adjustments may be necessary on a case to case basis.DFCF expresses the present value of the business as a function of its future cash earnings capacity. In this method, the appraiser estimates the cash flows of any business after all operating expenses, taxes, and necessary investments in working capital and capital expenditure is being met. Valuing equity using the free cash flow to stockholders requires estimating only free cash flow to equity holders, after debt holders have been paid off.

Forward Looking and focuses on cash generation Recognizes Time value of Money Allows operating strategy to be built into a model

Incorporates value of Tangible and Intangible assets Only as accurate as assumptions and projections used

Works best in producing a range of likely values It Represents the Control Value

Major Characteristics of DFCF Valuation

DFCF Valuation Process

Understand Business Model Identify Business Cycle Analyze Historical Financial Performance Review Industry and Regulatory Trends Understand Future Growth Plans (including Capex needs) Segregate Business and Other Cash Generating Assets Identify Surplus Assets (assets not utilized for Business say

Land/Investments) Create Business Projections (Profitability statement and Balance Sheets) Discount Business Projections to Present (Explicit Period and Perpetuity) Add Value of Surplus Assets and Subtract Value of Contingent Liabilities

Free Cash Flows- Value Trend

Terminal Value is calculated for the Perpetuity period based on the Adjusted last year cash flows of the Projected period.

Free cash flows to firm (FCFF) is calculated as

EBITDA

Taxes

Change in Non Cash Working capital

Capital Expenditure

Free Cash Flow to

Firm

Note that an alternate to above is following (FCFE) method in which the value of Equity is directly valued in lieu of the value of Firm. Under this approach, the Interest and Finance charges is also deducted to arrive at the Free Cash Flows. Adjustment is also made for Debt (Inflows and Outflows) over the definite period of Cash Flows and also in Perpetuity workings.

Theoretically, the value conclusion should remain same irrespective of the method followed (FCFF or FCFE), (Provided, assumptions are consistent).

FREE CASH FLOWS

Free Cash Flow calculation

DISCOUNT RATE – WEIGHTED AVERAGE COST OF CAPITAL

Where:D = Debt part of capital structureE = Equity part of capital structureKd = Cost of Debt (Post tax)Ke = Cost of Equity

(Kd x D) + (Ke x E)(D + E)

In case of following FCFE, Discount Rate is Ke and Not WACC

WACC

Cost of Capital calculation

DISCOUNT RATE - COST OF EQUITY

Where:Rf = Risk free rate of return (Generally taken as 10-year Government Bond Yield)B = Beta Value (Sensitivity of the stock returns to market returns)Ke = Cost of EquityRm= Market Rate of Return (Generally taken as Long Term average return of Stock Market)SCRP = Small Company Risk PremiumCSRP= Company specific Risk premium

Mod. CAPM Modelke = Rf + B ( Rm-Rf) + SCRP + CSRP

The Cost of Equity (Ke) is computed by using Modified Capital Asset Pricing

Model (Mod. CAPM)

Cost of Equity calculation

PERPETUITY FORMULA– Usually comprises a Large part of Total Value and is sensitive to small

changes

– Capitalizes FCF after definite forecast period as a growing perpetuity;

– Estimate Terminal Value using Terminal Value Multiplier applied on last year cash flows

– Gordon Formula is often used to derive the Terminal CashFlows by applying the last year cash flows as a multiple of the growth rate and discounting factor

– Estimated Terminal Value is then discounted to present day at company’s cost of capital based on the discounting factor of last year projected cash flows

(1 + g)(WACC – g)

IMPORTANT TIP- It is advised to do Sanity check by applying Relative Valuation Multiples to the Terminal Year Financials and also doing Scenario Analysis.

Terminal value calculation

An Insight of Valuation- www.CorporateValuations.in

SEBI / Stock Exchange Valuation Guidelines

Traded Turnover of Shares ≥ 10%

[In the Last Twelve Calendar Months preceding the Month of Public Announcement (P.A.)]

Takeover RegulationsAPPLICABLE LAW:

SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 2011

FREQUENTLY TRADED SHARES

Method of Valuation1.Highest Negotiated Price Per Share under agreement attracting the obligation to make P.A.

2.The volume weighted avg. price paid or payable by acquirer or PAC during the 52 Weeks;

3.The Highest Price paid or payable by acquirer or PAC in last 26 Weeks;

4.Volume weighted average Market Price of Shares for a period of 60 trading days

HIGHEST PRICE AMONG ALL IS THE VALUE PER SHARE FOR P.A.

Traded Turnover of Shares < 10%

[In the Last Twelve Calendar Months preceding the Month of Public Announcement (P.A.)]INFREQUENTLY TRADED

SHARES

Method of Valuation1.Book value, 2.Comparable Trading Multiples;

Such other Parameters as are customary for valuation of shares of such companies

Preferential Issue (1 of 3)APPLICABLE LAW:

SEBI (ICDR) Regulations, 2009

Method of Valuation1.The average of the weekly high and low of the closing prices of the related equity shares quoted on the

recognised stock exchange during 26 weeks preceding the relevant date, or

2.The average of the weekly high and low of the closing prices of the related equity shares

quoted on the recognised stock exchange during 26 weeks preceding the relevant date.

HIGHEST PRICE AMONG ALL IS THE VALUE PER SHARE

Equity shares of issuer have been listed on recognized stock exchange for a period of 26 weeks or more as on relevant date

Preferential Issue ( 2 of 3)APPLICABLE LAW:


Method of Valuation1. The price at which equity shares were issued by the issuer in its IPO or value per share

arrived at in a scheme of arrangement under section 391 to 394 of the Companies Act, 1956,

pursuant to which the equity shares of the issuer were listed, as the case may be , or


quoted on the recognised stock exchange during the period shares have been listed

preceding the relevant date, or


quoted on the recognised stock exchange during 2 weeks preceding the relevant date.

HIGHEST PRICE AMONG ALL IS THE VALUE PER SHARE

Equity shares of issuer have been listed on recognized stock exchange for a period of less than 26 weeks as on relevant date

Preferential Issue ( 3 of 3)APPLICABLE LAW:


Method of ValuationNo Method for Valuation has been prescribed.

Equity shares have been issued to promoters / their relatives for consideration other than

cash, The VALUATION OF ASSETS in consideration for which the equity shares are

issued shall be done by an independent valuer

ValuerChartered Accountant or a Merchant Banker

ESOP Accounting ValuationAPPLICABLE LAW:

SEBI (ESOS and ESPS) Guidelines, 1999

Method of ValuationBlack-Scholes Model

If a Company listed on recognised stock exchange in India and issued shares under an

ESOS / ESPS, the fair value of stock option shall be estimated using an option pricing model

(Black-Scholes or a binomial model) which shall be treated as employee compensation cost

for the Company.

ValuerNot Prescribed

Income Tax Act-1961

Equity Shares ValuationAPPLICABLE LAW:

Income Tax Act – 1961 and Rule 11UA

Method of ValuationMinimum Valuation- Net Asset Value

Maximum Valuation- DCF and other methods factoring Tangible and Intangibles

If Individual, HUF, Firm or *closely held Company receives Equity shares of a closely held

Company – Valuation norms shall apply.

ValuerNo specific Valuer prescribed for undertaking Minimum Value

FCA / Merchant Banker for determining Maximum Value

*If a Public Listed Company receives any shares or anyone receives shares of a Public listed Company, valuation norms are not applicable if transaction takes at market price.

Valuation of shares other than Equity SharesAPPLICABLE LAW:

Income Tax Act – 1961 and Rule 11UA

Method of Valuation

Price at which such shares will fetch in the open market.

If Individual, HUF, Firm or *closely held Company receives shares other than Equity shares

of a closely held Company – Valuation norms shall apply.

ValuerValuation report to be issued by Merchant Banker

ESOP Tax ValuationAPPLICABLE LAW:

Income Tax Act – 1961 and Notification no. 94/2009 dated 18.12.2009 issued by CBDT

Method of Valuation

No method has been prescribed

To determine the value of perquisite taxable in hands of employees

ValuerSEBI registered category – I Merchant Banker

Companies Act- 2013

Registered Valuer – Sec 247

Registered Valuer

Financial Valuer Technical Valuer

• A Chartered

Accountant, Company

Secretary or Cost

Accountant

• A Merchant Banker

registered with the

Securities and

Exchange Board of

India

• Member of the

Institute of Engineers

or Member of the

Institute of Architects

• A Merchant Banker

registered with the

Securities and

Exchange Board of

India

Shall have 5 Years of Continues Experience

Shall have 5 Years of Continues Experience

having in employment under it, either a

chartered accountant or company secretary

or cost accountant and either of whom shall

have continuous experience of five

years

having in employment under it, either a

member of Institute of Engineers / Architects

and either of whom shall have continuous

experience of five years

Stock, Shares, Debentures, Securities, Goodwill

Property

Registered Valuer – Sec 247

Registered Valuer (Financial Valuation)

Values

• Valuer not to be interested • Valuer to exercise due diligence• Valuation to be done as per rules• Valuer liable for damages on default

Accounting Valuation

What is a Purchase Price Allocation?-an acquiring entity must allocate the purchase price to the assets acquired and liabilities assumed based on estimated fair values at the date of acquisition;

-The excess of the cost of an acquired entity (including tangible and intangible assets) over the net of the amounts assigned to assets acquired and liabilities assumed is recorded as “Goodwill”;

Consideration paid for

acquisitionAllocated to

Tangible Assets

Intangible Assets

Goodwill

In Proportion

to Fair Value

Balancing Figure

Purchase Price Allocation

Why Purchase Price Allocation?

-Intangible assets recognized separately from goodwill must be valued and amortized for financial reporting purposes, if appropriate

-This may result in better Tax planning for undertaking the transactions of acquisition of assets and liabilities; Under Slump sale transaction, specifically the Intangible Assets can be separately accounted for by the Acquirer and Depreciation also claimed under the provisions of Indian Income Tax Law.

-PPA is used to allocate the Business Value between Tangible and Intangible Assets.

Purchase Price Allocation

Tricky Issues

Discounts

• Discount for Entity Level

Discounts & Premiums come into picture when there exist difference between the

subject being valued and the Methodologies applied. As this can translate control value

to non-control and vise versa , so these should be judiciously applied.

– Impact on entity as a whole

Key Person DiscountDiscount for Contingent LiabilityDiscount for diversified companyDiscount for Holding Company

•Discount for Shareholders Level– Impact on specific ownership interestDiscount Lack of Control (DLOC)Discount Lack of Marketability (DLOM)

•Size of distribution or dividends

•Dispute•Revenue / Earning – Growth / Stability

•Private Company

Tax Payout

•% stake & special rights

•Shareholders Agreement caveats

Global Studies over the years on diversified

companies and holding companies has shown

that companies trade at a discount in the range

of 20%. to 40% each.

DLOM: As per CCI Guidelines, 15%

discount has been prescribed; however

practically DLOM and DLOC depends

upon following factors:

Premium

•Control Premium - An investor seeking to acquire control of a company is typically

willing to pay more than the current market price of the

company. Control premium is an amount that a buyer is usually

willing to pay over the fair market value of a publicly traded

company to acquire controlling stake in a company

Research has shown that the control premium in

India has ranged from 20% to 37% in the past few

years.

Excess Cash and Non Operating Assets

Excess cash is defined as ‘total cash (in balance

sheet) – operating cash (i.e. minimum required

cash) to sustain operations (working capital) and

manage contingencies

Key Issue: Estimation of Excess Cash ?

Non operating Assets are the Surplus assets which are not used in operations of the business and does not

reflect its value in the operating earnings of the company. Therefore the fair market value of such Assets should

be separately added to the value derived through valuation methodologies to arrive at the value of the company.

One of the solutions is to estimate average

cash/sales or total balance sheet size of the

company’s relevant Industry and then estimate if the

company being valued has cash in excess of the

industry’s average.

What is an asset is not yielding adequate returns ?

Cross Holding and Investments

Holdings in other firms can be categorized into:

Types of Cross Holding Meaning

Minority, Passive Investments If the securities or assets owned in another firm represent less

than 20% of the overall ownership of that firm

Minority, Active Investments If the securities or assets owned in another firm represent

between 20% and 50% of the overall ownership of that firm

Majority, Active Investments If the securities or assets owned in another firm represent more

than 50% of the overall ownership of that firm

Investment Value

Ways to value Cross Holding and Investments:

Dividend Yield Capitalization or DCF based on expected

dividends Seperate Valuation (Preferred)

By way of Shareholders

Agreement even less %

holding may command

control value

Accounting Practices and Tax issues

Most of the information that is used in

valuation comes from financial statements.

which in turn are made on certain

Accounting practices considered

appropriate.

•Cash Accounting v/s Accrual Accounting

•Operating Lease v/s Financial Lease

•Capitalization of Expenses

•Notional Tax vs. Actual Tax

•Treatment of Intangible Assets

•Companies Paying MAT

•Treatment of Tax benefits and Losses

Valuation Methodologies and Value Impact

Major Valuation Methodologies Ideal for Result

Net Asset Value

Net Asset Value (Book Value) Minority ValueEquity Value

Net Asset Value (Fair Value) Control Value

Comparable Companies Multiples (CCM) Method

Price to Earning , Book Value MultipleMinority Value

Equity Value

EBIT , EBITDA Multiple Enterprise Value

Comparable Transaction Multiples (CTM) Method

Price to Earning , Book Value MultipleControl Value

Equity Value

EBIT , EBITDA Multiple Enterprise Value

Discounted Cash Flow (DCF)

Equity Control Value Equity Value

Firm Enterprise Value

IRS Revenue Ruling (1959-60),USA

• Revenue Ruling (RR) 1959-60 is one of the oldest guidance available on Valuation in the world

but still most relevant for Tax Valuations specifically for Valuing closely held common stock.

It is the most widely referenced revenue ruling, also often referenced for Non Tax Valuations.

• While Valuing , it gives primary guidance on eight basic factors to consider-

• Nature of the Business and the History of the Enterprise from its inception

• Economic outlook in general and outlook of the specific industry in particular

• Book Value of the stock and the Financial condition of the business

• Earning Capacity of the company

• Dividend-Paying Capacity of the company.

• Goodwill or other Intangible value

• Sales of the stock and the Size of the block of stock to be valued

• Market prices of stock of corporations engaged in the same or a similar line of business

Email : [email protected]: 9810557353; Direct: 40622252

www.corporatevaluations.in;

D-28, South Extention, Part-I, New Delhi-110049

Chander Sawhney, Vice PresidentCorporate Professionals Capital Pvt. Ltd.

SEBI registered merchant banker

Disclaimer:This presentation contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither corporatevaluations.in nor any other member of the Corporate Professionals organization accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this presentation. On any specific matter, reference should be made to the appropriate advisor.

© 2013, Corporate Professionals. All rights reserved

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Duediligencelegalandregulatoryvaluationaspects 131024023201-phpapp02

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confidentialprivate

free cash

free cash

year cash

recognised

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relevant datepreferential

rule 11ua