Valuation is an exercise which is unique for every transaction and requires efforts, involvement, application of mind and thought for each assignment separately. Only guiding principles can be adopted and considered by the valuer while undertaking each assignment. Further, ‘value’ is an estimate of the value of a business or assets, arrived at by applying the valuation procedures appropriate for a valuation engagement and using professional judgment and depends on many factors including the investor, the structure, the marketplace, and the approach.
An important aspect under valuation is to arrive at the correct value, which requires selection of correct approach and one or more processes or methods available for each approach. The Institute of Chartered Accountants of India (ICAI) has issued ICAI Valuation Standards 2018 which recognises three broad approaches to business valuation, namely, the Income Approach, the Market Approach and the Cost Approach under ICAI Valuation Standard 103- Valuation Approaches and Methods.
The application of the correct approach and principles is crucial for arriving at an accurate fair value. In this regard, there was a need for practical case studies and detailed elucidation of ICAI Valuation Standard 103.
At this juncture, I compliment the efforts of Valuation Standards Board and ICAI Registered Valuers Organisation in taking this joint initiative of bringing out this “Educational material on ICAI Valuation Standard 103- Approaches and Methods”, with the aim to facilitate the understanding and considerations required in selection of valuation approaches and practical applications of various valuation methodologies.
I extend my sincere appreciation to the entire Board of ICAI RVO and Valuation Standards Board of ICAI specially appreciate the efforts put in by CA. Pramod Jain, Chairman and CA. Dheeraj Kumar Khandelwal, Vice- Chairman of the Board for initiating this Educational Material.
I am confident that this Educational Material will be very useful not only to the members of the profession but also to other concerned stakeholders in proper understanding and implementation of the Standard.
Date: 4th February 2021
Place: New Delhi
CA. Atul Kumar Gupta
Director ICAI RVO