Valuation Seminar Draft Report

A report on Asset Valuation Seminar Conducted by IE (I), Maharashtra

Organizer: Value Add Consultant P a g e | 1

Excerpts from the

Seminar on

‘Asset Valuation – A key

Element in Business Valuation’

Date: 18/04/2009

Venue: IE (I) Maharashtra State Centre, Mumbai



Institution of Engineers , Maharashtra Centre had organized this seminar by inviting Er.Mohit

Mehta, MRICS, Director , Value Add Consultant, a boutique valuation and advisory firm, for the

benefits of members as well as non members in order to provide them international class

education in the field of valuation. IE (I) encouraged Er.Mohit Mehta to conceptualize and

execute the seminar by actively engaging like-minded institutions. IE (I) organized this seminar

as a part of its commitment to provide continuous professional education to members,

students and society at large. Large number of participants attended the seminar from

Maharashtra and neighboring states like Goa, Gujarat, and Delhi, to name a few.

The seminar was inaugurated 10:15 AM by lighting the lamp by Chief Guest Shree Rajeevkumar,

District Valuation Officer, Superintending Engineer, Income Tax Department, Mumbai; Shree

Harshad Maniar, Chairman Institution of Valuer, Mumbai branch; Shree Shantilal Jain,

Chairman, Institution of Engineers, Mumbai; Shree Mohit Mehta, Director, Value Add

Consultant; Sponsor Dr.Ajay Nakashe, MD, ABN Technologies Pvt. Ltd., to name a few.

A view of the ceremony (From left to right) Shree Rajeevkumar, District Valuation Officer;

Valuer Mohit Mehta, Director, Value Add Consultant; Valuer Harshad Maniar, Chairman,

Institute of Valuer, Mumbai Branch; Shree Shantilal Jain, Chairman, IEI, MSC and Er.Amol Bora,

IEI, MSC.



Chairman Shree Shantilal Jain has welcomed participants and guest by highlighting importance

of valuation as well as continuous professional development and IE (I) role in promoting such

activities. IE (I) have prepared an information brochure and circulated information to members

and targeted audience through various communication channel including sending mail through

yahoo group and publishing activity in monthly news letter. Vide numbers of participants have

attended seminar by advance registration or availing spot registration facility provided by IE (I).

Shree Rajeevkumar superintending engineer CPWD has highlighted need of learning new

techniques in valuation to august gathering. He explained that it is becoming more and more

challenging due to multidisciplinary expertise a valuer needs to develop. He has also highlighted

process and role of valuation cell in Income Tax department. He has appraised audience on

importance of valuation as far as Income Tax department is concerned and what skills and

expertise a valuer should develop.



Rajeevkumar also spoke about amendment of Wealth Tax Act. Section-8 and Postgraduate

Course in valuation, which has been introduce first time in India by recognized universities like

Sardar Patel University, Vallabh Vidya Nagar, Gujarat.

Shree Harshad Maniar, Chairman Institution of Valuer, Mumbai branch has congratulated

participants for showing interest in learning new techniques in valuation. He has briefed

Institution of Valuer vision to help professional development of valuers.

He has appraised participants on the burning issue of indemnity bond and large amount of fixed

deposit to be deposited with bank to serve as valuer. Key concern shown by him was lowering

of the professional fees in spite of year on year inflation. The valuation fees are caped by many

financial institutions, banks and government bodies to maximum amount of Rs.10,000 to

Rs.50,000 irrespective of amount of valuation and risk a valuer take in doing such exercise.



He has informed participants about the proposed valuation bill and how engineers’ fraternity

has not been taken in confidence and ignored in overall process. Institution of Valuer and few

other professional bodies of valuer like Practicing Valuer Association of India, Centre for

Valuation Studies etc. has given their suggestions. The proposed document with suggestion is

available with Mr. Maniar and it will be circulated to participants along with other course

material. Mr. Maniar also invited every participant to attend monthly meeting held on last

Saturday of each month in Vile Parle.

Mr.Amol Bora previous secretary of IEI, Maharashtra has concluded inauguration function and

thanked every one for joining such a noble cause of professional development and

congratulated Mr.Mohit Mehta, Director Value Add Consultant on bringing such an innovative

and international class education to seminar participants. He has thanked Dr.Ajay Nakashe,

Managing Director of ABN Technologies and Shree Harshad Maniar for sponsoring this event.

On that note Mr.R.J. Kamothi, the seminar compere has declared seminar open for educational

speeches.



Before the lighting lamp ceremony each participants has introduce him/her to entire gathering.

During introduction round it was observed that almost fifty five (55) registered participants in

addition to guest and dignitaries from multidisciplinary background like finance, engineering,

architecture, software, information technology, legal, arbitration, consultancy, contracting,

banking, valuation, accountancy, real estate and development have attended the seminar with

title Asset Valuation - A Key Element in Business Valuation.

Compere introduced the first speaker Shree R.K.Patel, Proprietor and Chief Valuer of M/s

R.K.Patel & Co based at Vadodara. He was born on 24-07-1958. He has studied Bachelors of

Mechanical Engineering form M.S. University Baroda, Masters of Engineering in Thermal

Science from M.S. University, Baroda. He is also a qualified Cost and Works Account form ICWA,

India.

He is certified Energy Auditor by the Bureau of Energy Efficiency, Ministry of Power,

Government of India. Mr.Patel is practicing as Insurance Surveyor, Loss Assessor, Valuer ,Cost

Accountant and Energy Auditor. He has valued many companies and assets in India and visited

several countries as well. To his credit he has published almost 29 papers in national and

international conferences and journals during his professional career. He is holding fellowship

of nine professional bodies. He has been awarded Gold Medal by the Institution of Valuer,

India in all India National Seminar on Valuations in 2008.



Mr.R.K. Patel has introduced his topic Business Valuation at started his speech 10.45 AM. He

has smoothly introduced topic to audience and gradually moved to the complexity of the

valuation. He has appraised elite and learned gathering of participants how engineer can

participate in the business valuation process by enhancing its skills on reading accounts and

financial statements of companies.

He has presented graphs and pictures to indicated importance of asset valuation in entire

enterprise valuation and equity valuation. In most going concern companies value attached to

asset carry highest percentage. He is presented fundamentals of valuation formulas and three

approaches used internationally to carry out business valuation, namely cost approach, market

approach and income approach. In between with a break of 10 minutes, Mr.Patel continued his

presentation upto 1330hours and presented three case studies on business valuation and a

valuation of derated thermal power plant for the purpose of testing impairment under

accounting standard (AS 24).

He has concluded his speech by congratulating and thanking the Institution of Engineers, the

Institution of Valuers and, in particular, Shree Mohit Mehta of organizing such a innovative and

professional development oriented seminar and giving him an opportunity to present his paper

in this gathering.

Lunch break was announced after a group photo session. It was informed by IE(I) that each

participant will get certificate of participation along with course material and other useful

information related to valuation. Participants and guest has enjoyed delicious lunch and utilized

time for networking with each other and exchange their ideas.



After lunch the third session speaker Mr.Madhvan Jaya Shankar was introduced by seminar

conductor. Mr.Jaya Shankar is serving as an Assistant Director with HDIL, Mumbai. He is a

qualified Chartered Accountant, Chartered Financial Analyst as well as Financial Risk Manager.

He is a member of New York Society for Security Analyst (NYSSA),CFA Institute, Global

Association for Risk Professionals(GARP) and Institute of Chartered Accountants of India.

He has acquired over 20 years of experience in the investment field in India & abroad. Held

positions as Head- Risk, Portfolio Manager, Sr. Analyst – Hedge funds, CTA, Performance, Risk &

Attribution. One of his favorite subjects is real estate valuation. He has develop training

material and conduct lectures on Financial market and its components viz. Equity, Fixed

Income, money Markets and Derivatives. Successfully conducted many training classes for multi

national companies including JP Morgan, Deutsche Bank, Lehman Bros, Countrywide, Aplabs,

Institute of Chartered Accountants of India, HDFC , Kotak Securities etc.



Learned speaker has started his speech with very good carton about how in US market people

have lost their equity in home and become home less and in contrast there are high rise

buildings owned by the bank completely abounded due to lack of buyers.

He has given his talk on real estate valuation of the listed companies by presenting detail

analysis of stock prices and in what scenario asset valuation become important element to be

considered.He also briefed participant that

businesses are generally valued on going

concern basis. Hence enterprise valuation is

result of business future cash flow. DCF

technique has been used to discount future

cash flow at appropriate discount rate for

arriving net present value of enterprise.

Speaker has provided examples of cement

industry as well as other industry to demonstrate concept of replacement cost in valuation.

Speaker has concluded his speech. After his presenting few case studies. A short break was

announced by the compere.

After break compere has introduced most awaited speaker Er.Mohit Mehta as concluding

speaker for the seminar. Er. Mohit Mehta is founder of Value Add Consultant a boutique

valuation and advisory firm.



He is a Member of Royal Institute

of Chartered Surveyor, U.K. (MRICS)

in valuation discipline. He has

studied Bachelors in Civil

Engineering and Post Graduation in

Real Estate Valuation from Sardar

Patel University, Vallabh Vidya

Nagar. He holds fellowship of five

professional bodies. Er.Mohit

Mehta is practicing as a consulting

engineer, valuer and real estate advisor.

Er.Mohit has valued many properties in several countries in addition to India. He was Director

with gulf based investment bank. During his working with Banks he has gained extensive

experience in real estate fund creation, investment, acquisition and portfolio management. He

has been exposed to various types of real estate across all the major real estate markets i.e.

residential, commercial, retail, hotels, theme park, water park, industrial parks, business parks

and many other real estate income producing or development projects.

He has attended few seminar and courses on valuation and investments. He has valued project

like Hiranandani Meadows in Thane, Kalpataru Horizon as well as many properties in India.

Mr.Mehta has also worked with Insignia Brook ( Now “CBRE”) in Real Estate Advisory and

Valuation department during beginning of his career.



Mr.Mehta is committed to bring good quality training and development for Indian valuer in

addition to his practice as a valuer. Hence came up with idea of one day seminar when

requested by many fellow valuers and professional network. He has started his presentation by

thanking all the participants, sponsors Dr. Ajay Nakashe, MD of ABN Technologies Pvt. Ltd. and

IEI as well as IOV.

He has presented objectives of his presentation as goals of the talk. He invited participants to

ask as many question as they wish to make the seminar more interactive and fruitful for the

participants. After giving a definition of three word 1.Price 2. Value and 3. Cost He introduced

three approached used to valuation. During his presentation requested participant to shift from

traditional techniques of valuation to more sophisticated and relevant valuation technique like

Discounted Cash Flow Technique or Capitalization of Earnings.

After giving brief of Global Macro Economics and Micro Economics factors affecting valuation,

recommended to use top down approach. He explained how linkages of every asset class with

other with each other and enhancing overall knowledge about economy and finance helps

valuers in arriving particular asset valuation.

Mr.Mehta has given a detail steps and theory to conduct asset valuation with focus on the real

estate valuation. Er.Mohit has made session interactive by asking question to participants on

how they conduct land valuation or income producing property valuation. He has highlight the

pit falls of valuation and does and don’ts of the process. As many participants were interested

to know about Royal Institute of Chartered Surveyor, U.K. he has briefed audience on RICS role

and presence. He also encouraged participants to visit RICS web site Http://www.rics.org and

become member.

Mr.Mehta also requested valuer to develop three essential skills 1.Inspection 2. Measurement

3. Valuation in addition to various skills as he mentioned in his presentation. Some of the

participant interested to know about procedure to become registered valuer. Mr.Mehta has

mention ed the procedure one should follow to become registered valuer as well as informed

participant that each registered participants will get a CD containing information about the

process of registration as a valuer with Income Tax Department.



Mr.Mehta suggested participants to value income producing properties like hotels, theme park,

sports stadiums, toll roads, bridges, airports, ports, container yards, logistic parks, water parks

using going concern principles.



He has presented detailed notes on DCF

and Capitalization Technique and how to

select capitalization rate or discounting

rate. Some of the exercises like finding

required return using a fisher’s equation

for each asset class like Index

Government Bond, Non Index Bond,

Equity, Japanese Bond, Cash, Matured

Property, and Development Project.

Participants gained a valuable

information in that exercise.

Mr.Mehta appraised role of leveraging / gearing in property valuation and how the structure of

the deal or terms of equity participation changes valuation. He has introduce concept of private

equity valuation to participants and key performance indicator like IRR,ROI,NPV and pa back

period. Er.Mehta apprised and urged participants to find all the risk related to investments and

mitigation mechanism to value precisely.

As briefed by other speakers highlighted importance of finance. He also stress upon the quality

of the report to be produced by practicing valuer to enhance dependability and reliability. Due

to time constrain instead of focusing on theories he quickly moved to case studies. He has

presented two case studies to demonstrate concept of valuing income producing properties

based on income in addition to market and cost approach.

The first case study was about acquisition of hotel portfolio in London,U.K. He has highlighted

in his presentation how under renting, over renting or market rent will affect fair market value

to be certified by a valuer. The terms under rented properties, over rented properties was very

new in Indian scenario however highly applicable due to recent boom and slow down in real

estate market. He advised participant to find out fair market rent of the property under

valuation before valuing on passing rent. Identification of this will have huge impact on

valuation.



Other case study was about Sears Tower Chicago a one of the

tallest building in the United State. Mr.Mehta has demonstrated

how cash flow modeling techniques can be used in large high-

rise building valuation. i.e. valuation of income producing

properties using going concern.

The tower was having hundreds of tenants with different lease

terms; It is very difficult for a valuer to incorporate each and

every variable in given short time period in the spread sheet

base valuation models. Hence he recommends use of software’s

like Argus and other similar software’s. Argus will help in analysis

of complex rental income structure and ultimately valuation of property using various

capitalization rate matrixes. Argus can collaborate with excel and easily synchronize with it.

During his discussion few other case studies like valuation of hotels, textile mill and agriculture

land was highly recognized by the participants. He has concluded his presentation by stating

that it is useful to use multiple techniques for valuation as there is a very fine line exists

between values derived under one method if compared to other method. He has given eleven

recommendations for valuers in concluding slide.

As seminar was elongated then proposed time of 0500 PM, however due majority of the

participants interest in the learning hence he has continued till 0615 PM. The participants has

gained lot of details during Mr. Mehta’s presentation and requested to conducted three days

seminar to learn more techniques. Er.Sathyanarayan officer on special duty and IE(I) staff was

the key person in bringing life to the seminar.



Many senior learned valuers from IOV and PVAI were present in the seminar. Every one has

appreciated Mr.Mehta’s efforts and innovative theme of the seminar as well as content of the

seminar.

The seminar was concluded around 6.15 PM. Mr.Mohit has thanked every one and requested

to send email feedbacks for all the question or queries they have and advised them to join

Linked in Group Indian Business Valuers and Networkers for keeping in touch with latest

happenings in valuation. Link to visit the group is as under.

http://www.linkedin.com/groups?gid=1447867

Contact Details :

Mohit Mehta

Director

Value Add Consultant

GSM # +91-98924 89265 /

Tele Fax # +91-22-2808 2583

Email # [email protected]

Institute of Engineers (India)

Maharashtra State Centre

15,Haji Ali Park,K.Khadye Marg,

Mumbai-400034

Tel:23543650,23542943,Fax : 2354 2942

Email : [email protected] Web : www.ieimaharashtra.org

eGroup : IEI-Maharashtra [email protected]

Valuation Seminar Draft Report

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