When is Ind AS Valuation required?

Indian Corporates are in the process of transitioning to a new set of accounting standards called the Indian Accounting Standards (Ind AS) which closely converge with the International Financial Reporting Standards (IFRS). The new Ind AS would improve comparability, transparency and make financial statements globally acceptable. The changes in financial statements would be significant with about 75% of the Balance Sheet items being impacted by it.

The Ind AS are applicable from 1.4.2016 to companies (listed and unlisted) whose Networth is equal to or exceed Rs. 500 crores. From 1.4.2017, it is applicable to all Listed Companies and those unlisted companies whose Networth is equal to or exceed Rs. 250 crores.

Approaches and Methodologies for Ind AS Valuation?

Ind AS use Fair Value as their guiding principle. Ind AS 113 is a Dedicated standard on Fair Value Measurement. It defines Fair Value as an Orderly Transaction which arrives at a Market-based measurement, NOT an entity-specific measurement. Thus an entity’s intention to hold an asset or to settle or otherwise fulfil a liability is NOT relevant when measuring fair value

While valuing complex instruments or derivative components, complex valuation models including binomial, back-solve etc. to be applied

Similarly why valuing corporate bonds or preference shares of unquoted companies be rely upon the FIMMDA guidelines for deriving their yield to maturity (YTM).

Fair Value Hierarchy Prescribed In Ind AS 113

Level – 1

• Observable Market inputs like Market Price of shares, if they are actively traded
• Under Ind-AS, there is no difference between value and price if the assets and/or liabilities are traded in active market.

Level – 2

• Based on value of Comparable Companies
• Adjustments are permitted for condition or location of assets

Level – 3

Unobservable inputs shall be used where there is little, market activity for the asset/liability at the measurement date. Suggested methods include-

• Discounted Cash Flow Method
• Black Scholes or Binomial methods
• Other methods

Our Ind AS Valuation Practice

We have a specialized team which comes in a league of one of the best Ind AS Valuation Consultants. We assist our clients in discovering the value for its shareholders after validation of the company financials, comparable companies and application of Discounted Cash Flow and other complex methods including Option Pricing methods and Back Solve model. We provide well-reasoned and defensive valuation reports for commercial purposes and Valuation certificates for regulatory compliance purposes. We have a dedicated team which looks into SEBI / Stock Exchange transactions. Corporate Professionals has the experience and commitment necessary to provide practical and timely services as an Ind AS Valuation Advisor in India for Share based payments – Ind AS 102 (ESOP – both cash and equity settled), .Business Combinations – Ind AS 103, Financial Instruments – Ind AS 109, Intangible Assets – Ind AS 38 and Property, Plant and Equipments – Ind AS 16, Impairment of Assets – Ind AS 36 and Investment Property – Ind AS 40.