REPORT ON THE 39th ALL INDIA NATIONAL SEMINAR ON VALUATION

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REPORT ON THE 39^th ALL INDIA NATIONAL SEMINAR ON VALUATION OF ALL KINDS OF ASSETS HELD ON 26^th TO 28^th DECEMBER 2008 ORGANISED BY INSTITUTION OF VALUERS AND HOSTED BY TIRUCHIRAPPALLI (T.N) BRANCH AT TIRUCHIRAPPALLI.

26^th day of December 2008

 

Hotel Sangam at Thiruchirappalli was bustling with activity. The whole ambience wore a festive look. Delegates from near and far have  congregated at the reception area. There were many familiar faces; some were new. Many have arrived with their spouses and children to make the occasion colourful and glittering. It was pleasant sight to see the children bubbling around shrieking in joy on the green lawn. The assembly was mixture of old and young; raw and seasoned; experts and novices; wise and learning. The young valures yearning for knowledge was indeed heartening to note, auguring well for the institution. The camaraderie and bonhomie was there all to behold. Old friends were embracing each other with affection and concern. Office bearers of the Thiruchirappalli branch played a perfect host, always staying at a distance with a smile of welcome spread all over their faces. None could have given us such a perfect setting for a seminar at the highest level. A galaxy of source persons reading like "who is who" in that aspect of valuation science have descended on the venue, eager to share their expertise and knowledge with whoever was there to share.

In all, there were 403 delegates, a record number for a national seminar. The delegates have come from all over our county.

The inaugural session started on the dot 9.00 A.M. with a song of invocation on Lord Vigneshwara, Mr. P.K. Thiagarajan, Chairman, Thiruchirappalli Branch welcomed the gathering in his uninimitable, out of the heart manner. He outlined the elaborate arrangements made for the seminar and assured the delegates a two-day intellectual feast for all to devour.

Mr. M.V. Ramachandra, President of the Institution of Valuers, in his welcome address, spoke of the noble objectives of the institution as envisaged by its foundry fathers. Value is NOT length x breadth x height. The application of mind plays a major role in deciding on the value. Prospects of the valuers is very bright in the global melt down scenario. Young valuers are advised to take guidance from their mentors to come in grips with the intricacies, implications and consequences involved. Money is not everything. Dream big and achieve it. He also outlined on the activities of the institution and its endeavor to acquire own premises for every branch.

Mr. Justice Rajeswaran, Judge of the High Court at Chennai, who presided over the inaugural session followed up with an emphasis on the valuers' responsibility in assessing the real worth of the assets in court cases, particularly in suit filed accounts. It is public money we are responsible for. Value is left to the judgement of the valuer. You all play a crucial role in the economic development of the country. As all professionals, the valuer gets more matured with more experience. Excellence is the objective. Higher the summit, the broader is the base. A valuer must strive to learn as much as he can in every sphere of activity. A satisfied client is your best advertisement. Valuers must operate with the highest degree of integrity and code of conduct. He should not deviate from the procedures and "dos and don'ts" of the profession. When doctors differ, the patients suffer. When valuers differ, justice suffers. Rights can not exist without duty. Indis is known as a Karma Bhoomi. Regular seminars sharpen the skills of a valuer. Let the country benefit from your experience and skill. He stressed the need for dedication and credibility essential for a valuer when the honourable court of law deposed so much of faith in their ability, technical acumen and unbiased approach. He also expressed his gratitude to the Institution of Valuers in helping him in many difficult cases to arrive at the correct decision.

Dr. N. Ramachandran, Vice-Chancellor, Periyar Maniyammai University, Thanjavoor, in his key note address, explained the need to involve Information Technology in every sphere of valuation. Valuers are multidimensional these days. Role, responsibility and accountability of the valuers have increased several times under economic pressures. Globalization has redefined the performance of the valuers. A valuer must reorient himself with the latest tools in information technology and communication. All activities of a valuer must be rationalized. Self examination by the valuer is a must. Account-ability is the essence of any valuer's work. Your intellectual property should be passed on to the next generation through seminars and books, preferably E-books. A valuer must be aware of environmental protection. There is a dire need to develop methods of valuation for monuments, heritage buildings and antiques. Role of valuers in uplifting of the society can not be under rated. The valuer always has a social responsibility. Success to you would be the success of the country.

 

The Vice Chancellor also spoke about the new P.G. Diploma course in valuation available at his University through distance education.

 

The Vice Chancellor's address was followed by the release of the course Book of the seminar and the book "Practical Valuation Volume VIII", authored by Mr. B. Kanaga Sabapathy and presentation of awards for the papers published in Indian Valuer's Journal.

Mr. Bhaskar, Secretary of the Chapter proposed a vote of thanks.

Our former National Vice-President Mr. B. Kanaga Sabapathy was the Master of Ceremoney and he conducted the entire proceedings very neatly and systematically with a high degree of professionalism.

With this rich fare, the inaugural session of the seminar came to a conclusion with the National Anthem.

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Technical Session I

Started with an illustrative presentation by Mr. P. Raghavendra Rao on "Valuation based on "Wealth Tax act and rules". He traced the history of valuation subject with respect to the Central Board of Direct Taxes, formation of the valuation calls, various amendments to the Wealth Tax Act during the stages and the lessons learnt, powers of the valuation cell officers, appellate authorities and how to prepare a report for Wealth Tax purposes. He also recalled the adjustments the valuers have to make in their assessments to fall in line with the amendments effected from time to time. He also dwelled on the future of the valuation profession under the present scenario in the Central Board of Direct Taxes. A case study was presented on this subject highlighting the intricacies the intricacies involved in the C.B.D.T. valuation. He urged upon the valuers to study the subject thoroughly and not to embark on any assignment without knowing the subject inside out.

This was followed by a paper presented by Mr. P.R.Seshadri on "Revaluation for financial institutions" Mr. Seshadri explained the importance of the revaluation procedure. He stressed that it is not a ritual of following the earlier valuation report, documents and the assessments. A totally fresh treatment is to be given to the case revivifying each and every aspect of the valuation like identification, measurement, scrutiny of title and other deeds to look for wrong identification, false documents, fraudulent documents, etc. whenever necessary, the help of the Village Administrative Officer or other authorities could be taken to safeguard the interests of the bank. All the previous documents could only be treated as reference. Pitfalls like over valuation, wrong classification, incorrect legal opinion, violations and deviations not revealed in the earlier report are to be carefully avoided. Failure on the part of the valuer to adhere to these basic procedures could lead to faulty valuations which are viewed very seriously by the courts of law. It amounts to the valuers abetting the fraud on the bank. Hence, a valuer should be very careful while doing a revaluation. A careful valuer adds value to himself and his country. Under no circumstances, the valuer should yield to pressure from the must always do a fair valuation. Two case studies were presented by him to highlight the points he has mentioned.

 

The technical session ended with an open house discussion on the papers presented by the authors. Mr. Raghavendra Rao and Mr. Seshadri answered several queries raised by the delegates.

 

Technical Session - II

 

After a sumptuous lunch, fifteen minutes of open house discussion preceded the paper presentations.

 

Mr. Mahendra S. Kakule presented his paper on "Development Method of Valuation" with a case study. Mr. Kakule explained the need to use the development method to ascertain the value of assets in underdeveloped areas. The costs involved involved in such developments like legal expenses, cost of development, advertisement cost, cost of finance, cost of acquiring access and developer's profit are to be considered while valuing these assets. Since these costs are likely to be incurred in different periods of time, all should be brought under a single time base before consolidation. This method of valuation was neatly explained through an illustrative case study performed under actual circumstances.

 

The next paper was on "Valuation of Parks and Water Bodies with underground development right" by Mr. Sandip Kumar Deb. This has been an interesting paper suggesting underground parking lots for the metropolis and also a procedure to value them. The speaker started with the present problem in our country that the urban and rural populations have just become equal throwing up a challenge in the explosive increase in the number of vehicles in our metro cities and the dire need to provide parking spaces for all of them. He envisages that commercial parking lots are becoming viable due to this pressure on the urban system. Mr. Deb explained vividly the data to be collected for the assignment, the procedure to carry out the valuation process which essentially is identifying the coats involved and converting them to a common base before arriving at the value. A case study was presented to emphasize the fact that such a project would be commercially viable.

 

Dr. Shanmugavel then presented a paper on "Report of Valuation of Imported Plant & Machinery". Many second hand plant and machinery are finding their way into our country through official channels. To cross the customs scrutiny, they have to be valued by a Chartered Engineer. Customs valuation is a well set procedure wherein a lot of details are collected about the plant and machinery both general and technical. The valuer is to carefully peruse the data collected, ascertain the condition of the machinery and certify its value in a structured format. Dr. Shanmugavel went through the procedure step by step and explained the intricacies involved in such a valuation process. He also provided several clues on condition monitoring of the machine with and without connected power, efficacy of using Non-Destructive Testing tools to their best use and the potential available in this area of plant and machinery valuation.

Technical Session II ended with lively open house discussion on the three papers presented, chaired by the three knowledgeable authors.

 

The evening was made memorable to all by a cultural programme of song and dance by a troupe called "Kalai Kaveri". The performance was excellent which left an indelible mark in the minds of all delegates, spouses and children present.

Day one of the seminar concluded with a typical South Indian dinner of variety and taste.

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Technical Session III commenced with a presentation by Mr. B. Kanaga Sabapathy on "Valuation for Capital Gains". The presentation started with the definition of Direct and Indirect taxes and capital gains. Definition of capital gains and the necessity to value the assets with a view to reduce the tax burden. Role of the registered valuers to correctly assess the fair market values as on date and as on 1981 were explained. The four methods of computation and their efficacy of usage depending on the circumstances is explained. A case study was presented highlighting the procedure, factors to be considered, references to be made and the computation. The report basically consists of derivation of land rate, valuation of the building and the certification. Mr. Kanaga Sabapathy emphasized that the CBDI procedure of valuation need not be followed in toto. Any method found appropriate by the valuer could be adopted provided the working could be made acceptable to the Income Tax Officer. He also advocated creation of a database for the guideline rates of assets as on 1981 by the local branches of the Institution of Valuers. Building rates could be derived from the rates specified by the local PWD and CPWD. He also stressed the need to enclose sketches, documents and data to convince the ITO the fairness of the report.

 

Mr. S.S.K. Bhagat presented the next paper on the "Role of Valuers in the present financial scenario". He detailed the current economic crisis facing the country mainly due to the melt down in the American economy". When America sneezes, the whole world catches cold". Major business houses like the Ambanis, Mittals, Ruias, Birlas, Premji and Godrej have lost stocks worth billions of dollars. Exporters have also lost heavily. Under these circumstances, many accounts could become non performing and push the valuers into jeopardy. Liquidity would be a major problem. Mr. Bhagat prescribes only one remedy: "the quest for quality is the only passport to prosperity".

 

Coming together is beginning; keeping together is progress and working together is SUCCESS.

The presentation of Mr. S.S.K. Bhagat was followed by a panel discussion chaired by Mr. B. Kanaga Sabapathy and Mr. S.S.K. Bhagat. Certain intricacies of the papers were discussed in a very lively manner.

 

Session IV was made memorable by Mr. Jawahar R.Raval who presented a paper on "Valuation for one time settlement with bank" in which a sick textile mill was further ravaged by rains, floods and consequent inundation. Buildings which were already in a poor condition were damaged further resulting in the mill stopping its functioning. He, picturised a sick unit losing quality and quantity of production and becomes incapable of maintaining its plant and machinery and land and buildings. The unit, when hit by a natural calamity, could not sustain its operation. Since the bank felt that the unit will not be able to recover its economic viability, could at least be permitted to pay back some of its dues by disposing off the assets. The valuer convinces himself of the occurrence of the natural calamity, its extent and the damages caused, before assessing the assets. A convincing case study was presented with a lot of photographs depicting the extent of damage and loss of value. Mr. Raval appealed to the valuers to share their experience and expertise by writing in the Journal about the cases they have handled.

 

The next paper was on "Anatomy of an industrial unit-causes for sickness-internal and external and rehabilitation" by Mr. H.R. Gopalakrishna. Mr. Gopalakrishna outlined the various functions of an industrial unit as finance, production, marketing and personnel. These functional areas are subdivided into their areas of influence. Causes for their sickness both internal and external were elaborately discussed. He was quite candid about the role of lending institutions in creating sickness and suggested a liberal and pragmatic approach by them in rehabilitation of sick units. "Pump good money to recover bad money" was him manthra. He stressed the total involvement of all those concerned in nursing a unit back to normalcy. He also felt that a shrewd banker can watch and control the finances of a unit to prevent sickness by timely actions and guidance.

 

Mr.C.S. Satish Chandra, in his paper, "Adoption of Valuation techniques in quantifying capital Budget" started with the concept of a capital budget, the traditional approach to capital budgeting, financial ratios, risk management and quantifying a sustainable investment. Valuation methods like Simple Income Capitalization Method, Modified Income Capitalization Method and Discounted cash flow technique were discussed. The advantages and disadvantages between traditional capital budgeting and valuation techniques were discussed. Different systems for computing the cash flow like operational cash flow, Gross Profit cash flow, EBIDTA cash flow, EBIT cash flow land PAT cash flow were discussed. A hybrid method of estimation of capital budgeting was presented by the author. In all, the whole paper was highly informative, focussed on the agricultural sector.

 

A panel discussion on the above three papers followed, chaired by the three authors.

The fifth technical session saw Mr. H.M. Kumar presenting the first paper on "Potential Value". He drew a line between market value and potential value. Various aspects of potentiality were discussed. The correlation between potential value and land acquisition were analyzed. Limitation on the doctrine of potential value were enumerated. The compensation that could be expected out of an asset according to its market value was explained citing some court cases. At last, the factors affecting the sale price and market value were discussed.

 

Mr. S. Krishnamurthy, in his paper, "Valuation report for assistance" insisted upon the correct identification of the property, particularly of flats in mega projects. He advised the valuers to annex a key plan so that identification at a later date will not be a problem. The borrower, in the case of flats should check the disposition of the undivided shares of lands to avoid the builder withholding some of it to build unauthorized structures later. The valuer also need not toe the line of the builder while certifying the rate per square foot of construction and arrive at his own rate which can be lower or higher or than the accepted rate between the buyer and seller. The time has arrived for the lending institutions to be more vigilant in preventing N.P.A.s which erode into their profitability.

A new concept of "Valuation of serviced Apartments - A report" was presented by Mr. I. Rama Rao. He enumerated the advantages of serviced apartments and their economic viability. He presented a case study on the valuation of serviced apartments which was very informative.

A panel discussion followed these presentations. The final technical session started with a paper by Mr. P.P. Agrawal on "Valuation of Land to determine suitability and maximum price for development and viable and profitable project over it".

Mr. P.P. Agrawal enumerated the factors to be considered while selecting a plot of land for a commercial or residential project. He advised the valuers to serve as property consultants to their clients while selecting lands for different and uses.

 

Mr. Deshpande's paper was on "Valuation as Career". He asserted that Valuation is a Noble Profession. He dwelled on the definition of profession and how it suits the valuer. Eligibility of a valuer, professional fee, valuation as a career after retirement, selection criteria for valuers by the banks and different types of loans were discussed. Mr. Deshpande categorized valuation as a super specialized field of profession and every valuer should be a credible valuer.

 

A panel discussion followed with active participation from the delegates.

The concluding session was chaired by our National President, Mr. M.V. Ramachandra who appreciated the efficient services of the convenor Mr. B. Kanaga Sabapathy, the team spirit and team work of the members of the Tiruchirappalli chapter. Mr. S.S.K. Bhagat was of the opinion that all chapters should learn from Tiruchirappalli Branch on running of future seminars. He also commended their perfect team work. He recognized their zeal for punctuality and remarked that the master of ceremony Mr. VR.Na.Arunn was harder than Mr. Somnath Chatterjee. The hospitality of the host was appreciated by one and all.

 

Mr. P.K. Thiagarajan, Chairman, presented the vote of thanks.

The 39^th  All India National Seminar came to a conclusion with the singing of National Anthem This also happens to be the 19^th such seminar by the Thiruchirappalli Chapter.

 

To Conclude….

The Inaugural session was very crisp and the speakers spoke well on the subject. The faculty members in the technical sessions elaborated the subject well. Sufficient time was given in the open house discussion in which there were good deliberations and discussions which were highly useful to the participating delegates. The participants maintained a high degree of discipline and decorum the cultural programme was enjoyed by everybody. The food supplied were of high quality. Local sight seeing was arranged for spouses and children on both days. The highest admiration among the delegates was the perfect punctuality of the entire programme. Two outstation tours were organized on 28^th December.

 

The hall arrangements were excellent. No long queues were found anywhere. The Trichy Branch council members (who maintained an uniform dress code) served the delegates with a smiling face always. Everything was quite orderly and highly systematic. Everywhere enjoyed everything. They long for a similar seminar every year.

 

In simple words, "This is a model Seminar". Trichy Branch showed the way how a seminar should be conducted.

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Inaugural Speech by Mr. Justice S. Rajeswaran, Judge, High Court, Madras at the 39^th All India National Seminar, Tiruchirappalli.

 

I am very happy to be here in the midst of people who value for others and whose value is yet to be fully realised by society either by means of awareness or utility.

You are all experts in Economic, Legal, Financial and Technical Practices. You have been recognised/approved by the Ministry of Finance under the provisions of Wealth Tax Act.

According to International Valuation Standards, Valuer is a person who possesses the necessary qualifications, ability and experience to execute a valuation. Value is left to the judgement of a valuer. Valuation is an important and integral part of the material world in which we are living we are living. Assigning value to anything like building, machinery, etc. is of vital importance in today's world. Thus, you are playing a significant role in the society by serving in a very meaningful manner.

 

In my opinion, you play a crucial role in the economic growth of any country. In the absence of any proper valuation, the aim of planning, budgeting and development cannot be fully achieved. As in the case of a Lawyer/Doctor, the more experience you gain, the more is your clientele.

 

In the words of Mr. B. Kanaga Sabapathy, as I find from his book, "Practical Valuation", quality in service leads to excellence, which is definite attribute that paves way for growth and development of the profession. However, there are limits to the excellence we can achieve on a narrow base. Excellence is like the summit of a pyramid - larger the base, higher the summit. Valuer must broaden the base of the quality of their services with skills, standards and values and build the pyramid of excellence, the summit of which, is unmatched by that of any other profession. Again from the book of Mr. Kanaga Sabapathy, I quote:

 

"The reward for doing any work qualitatively is the opportunity to do more work; service rendered by adhering to best practices not only provides satisfaction in abundance to a professional but also generates enormous goodwill; a satisfied client is the best mode of advertisement too; this is true of every profession."

 

Capability is the ability to do better than what you are already doing. Capacity is about doing more than what you have already done.

A Valuer must be mentally prepared to face any type of challenge if be wants to thrive in his profession. The opinion given by you should be supported by documents as it is of evidentiary value. Whatever be the purpose of your valuation, maintain high degree of integrity and fairness. There must be judicious approach in valuing it correctly, taking into consideration the prevailing conditions.

Any professional opinion should withstand logical analysis in order to describe it as a reasonable and responsible one. Act within the parameters of your code of conduct so as to avoid any inquiry and criticism.

As a professional valuer, you have more obligations and duties. You are required to follow the procedure, give scientific calculations, enclose statistical evidence along with your report. You have to take accurate dimensions and it cannot be arbitrary and without any basis. You have to be neutral, fair and right. You cannot afford to deviate under any circumstances. The correctness of your report may be tested in the court of law, in which case, you must be able to defend the same. It is very important that records of all work undertaken by you are maintained for a reasonable period of time.

It is always said we are conscious of our rights, but, not our duties. We tend to forget that right of one has a corresponding duty cast on someone.

 

Rights cannot exist in isolation without a corresponding duty. The two are complimentary with each other. The only right which any man can possess is the right to do his duty. You would all agree with me, India is essentially a KHARMA BHUMI (land of duty) in contra distinction to Bhoga Bhumi (land of enjoyment). According to the culture evolved in this land, everyone owes a duty towards others and in this method, the right of every individual was made part of the duty of other individuals.

A professional can ill-afford to give a wrong and improper valuation. A bonafide mistake may be accepted as excusable, but, a mistake which would tantamount to negligence cannot be accepted. Please act with due care, caution, skill and diligence in discharging your duties so that no accusing finger can be pointed at you.

As a professional, I would request you to enhance your knowledge, disseminate information, share your experience and create an awareness among the people so that they could have the benefit of your expertise.

Please have regular Seminars, Conferences, etc. to update your knowledge.

It is said:

"Small minds discuss people;

average minds discuss events;

Great minds discuss ideas"

Seminars of this nature would definitely help you update your knowledge, as the vast and rich experiences from length and breadth of the country are being shared.

Please compile various reports which have a binding on your profession. There may be many case laws which could have affected or had any bearing with your duties. Please be aware of changes that might have been enacted by the Government and the various statutory bodies. The important legal citations must be brought to the knowledge of all the members. Let the country have the benefit of your immense knowledge and experience for a long time to come. Let us help those who seek us and let them leave, a happier human being.

I thank you for giving me this opportunity to share my thoughts with you. Let us sit, introspect, evaluate ourselves and resolve to contribute our mite for the sharing of knowledge and betterment of society.

 

I wish you all 'A very happy and prosperous new year."

Jai Hind

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PRESIDENTIAL SPEECH BY SRI.M.V.RAMACHANDRA ON THE OCCASION OF THE 39^th ALL INDIA NATIONAL SEMINAR AT TIRUCHIRAPPALLI ON 26^TH DECEMBER 2008.

Dear Delegates, ladies and gentlemen,

 

I deem it a privilege to welcome you this distinguished audience to the 39^th All India Seminar of the Institution of Valuers held at his city of Tiruchirappalli all-round of which there are several Temples and places of worship exemplary in an awestruck architectural features. They are a must to visit. The weather is very much congenial and enjoyable. Hence it is but proper that the convention is organized here.

 

Your Institution is gaining more and more popularity of the public as it is an essential service provider. People engage the members of the Institution at their service and get the appraisal done of their property intensively.

The Institution is highly thankful to its honorable members who frequently offer their valuable suggestions for improving the functioning. I am really overwhelmed by your innovative ideas. All these suggestions are respectfully received and considered by the council for their suitability in the prevailing context and when found necessary are adopted. The image of the Institution is thus regularly growing.

 

The Institution has got in its mind firstly providing the service to Society suiting to the ever changing economic activities, and secondly helpin the members in all respects to be worth of if.

There are 40 branches of the Institution of Valuers spread all over the country covering nearly 19,000 life members apart from the non-life members. All are humming with activities regularly holding lecture meetings by renowned personalities also maintaining good contact with the public. The Centre provides support fully in all respects in their activities.

I am very happy to say that 12 of the Branches came forward to have their own office building and were allowed to purchase by the centre providing funds to an extent of nearly Rs. 182.60 lakhs. One web site is provided by the centre which is used very much by the public making the best use of it.

The present economic situation is drawing the attention of all the transactions taking place indigenously as well as globally. The valuers are needed to be acquainted fully of the developments happening. Property registration is down to be acquainted fully of the developments happening. Property registration is down by 30%. Manufacturing firms are cutting their output. Sales of automobiles down by 50% Several leading Banks globally went bust and looking up to their Governments to bail them out from liquidity crunch. There is a fear of loosing job looming large owing to the market conditions.

This is mentioned because this depression affected badly the fundamentals of the industries and businesses. Values have gone down. There is no market for housing and several manufactured products. Demand is reduced; consequently values of properties are down. Banks are not easily coming forward to offer loan to industries and business houses unless they have repayment capacity.

Mr. Jems R. Barth, Financial Expert, Aubum University and Michigan Institute, U.K., while delivering a talk at Bangalore recently on US housing and Financial Meltdown said that there are sufficient regulations but needed timely enforcement. Since 1980, about 135 countries the world over have witnessed similar banking or financial crisis and not all of them are low income countries. The lowest common denominator in most of these countries has been the housing sectors as has been the case in the US melt down this year. Sub-prime borrowers with a shady credit history started buying homes, in turn leading to a housing sector bubble and the subsequent crisis.

 

The Valuers while conducting Valuation exercise for banks have to keep these factors in mind and safety of their clients kept in view. Valuation is not merely that of LxBxD. But, it is necessary to look into the environment where the property is situated.

The economy in US is dependant upon the valuation. But, in our country on fundamentals. The banks in India are regulated. But, the major failures of the international systems that had left to the crisis are:

1.    Regulatory and supervisory failures

2.    Failures of risk management in private financial institutions

3.    Failure of a market disciplinary mechanism

All these factors are affecting the values of properties. The valuers, in modern times have to upgrade their working skills. I am happy to say that our valuers indulge in a passion for advanced technologies to provide effectively their services to the society.

Kindly allow me to repeat that our member-valuers keep abreast of the market situation not only indigenously but also globally and look in advance the problems that may crop up which will definitely affect the value of the property they are dealing with.

Under these existing conditions, a few tips to success may be mentioned here:

1. Have a clear vision.

2. Seek expert’s opinion.

3. Seek guidance from experienced mentor.

4. Money is not every thing. Organization and well thought out plans work.

5. If you fail, do not loose faith in your self.

With these humble words, I beg to take leave of you all Gentlemen. You are having seminar to-day and tomorrow. Deal with valuation in modern times and return gaining full knowledge. My sincere request and expectation is dream big and achieve it. Wishing you all Merry Xmas and Happy New Year.

[hitesh]

Speech of Prof. Dr. N. Ramachandran, Vice-Chancellor, Periyar Maniammai University, Vallam, Thanjavur-613 403 on Role, Responsibility and Accountability of Valuers at the 39^th All India National Seminar.

 

1. INTRODUCTION:

    Valuation is the assessment of current worth of assets based on the physical, functional, economical and cultural perspectives by prepositional, process and ethical knowledge. It differs from price or cost, which do not always give a true criterion of value. In some contracts, as in the case of insurances, the thing insured is sometimes valued at the time of making the contract, so that if lost, no dispute may arise as to the amount of the loss.

The one who estimates or assesses the value professionally is called valuer and is an expert in his field. The valuer is authorized to declare the worth of a particular property/machine/gold or any other item. The responsibility and accountability of valuers play important role in effective valuation.

The cost of a building in the construction world refers to the amount of money spent on the building. This can also be referred to as the construction cost or the development cost. When dealing with a homebuilder the cost may also refer to the estimated amount of money needed to build a building.

The price of a building refers to the amount of money spent on a piece of property. While the price of a building may be indicative of the value in some cases, this is not always the case. In markets where comparable sales drive the price of a home down, the value will waver as will the price. However, in some cases house buyer are willing to spend more than the value of a house if they have fallen in love with a piece of property, thus boosting up the price.

The value of a building in real estate is truly just an estimate. The estimated value of a building based upon comparable sales in an area will cause that value to move up or down. When a value of the building is established, the sales price of building in that area will weight heavily on the value of the building.

 

2. ROLE OF ENGINEERS/TECHNOCRATS AND ARCHITECTS AS VALUER

Either Engineer/Technocrat or Architects should take active part and apply the minds professionally and ethically. The lack of knowledge in valuation leads of improper valuation of real time worth of manpower, machine, materials and properties and other assets. Valuation should have multi-dimensional and integrated knowledge in valuation. They should have knowledge in various information and communication technology tools too:

 

Improve the quality and quality of the work

Improve the service

Improve the planning and controlling

Automation of valuation details

 

The multiple benefits through successful utilization of ICT tools to leverage the valuation are only possible way to growth in the competitive world. The basic requirement for a valuer is the social focused actions in their profession.

The charted engineers are not treated like charted accountants in India. An integrated approach, awareness, action etc., by the engineers will yield recognition among the public. The interest and prestige of the profession should be protected through proper legislator mechanism. In the globalization of construction activities, manufacturing of equipment's etc., the role of valuer is redefined as a flexible interorganisational arrangement between technologies and intelligence. The valuation of arts and craft, heritage structure, fancy materials is an intelligence oriented and problematic work. Here the role of Valuers is essential and unavoidable. However in the conventional valuation, the valuer should apply rational thinking in order to maintain the relationship with customers. The right to information act is popularizing even in rural areas. One can ask the valuation procedure, documentation etc., at any time through this act. It is therefore essential for effective valuer to maintain the archives.

 

1.    ACCOUNTABILITY OF VALUERS:

 

The valuer should be able to account and answer favorably for the following self examination questions.

 

What do I know that other people need or want to know? Can my expertise or one of my ongoing interests support a newsletter or website?

 

Where and how can I access or compile information, either from secondary sources, such as government agencies or public records or from primary sources, such as surveys, that I can conduct or have someone conduct?

 

Who wants to get information out to the public or to specialized audiences? How can I help them do that for a fee?

 

Where does information change more often than it's updated? Would anyone pay for more current. Information? Could I update it cheaply and accurately, perhaps via the" internet?

 

What information of my own can I repurpose for other media or audiences? Have I written articles that can become a book or an e-book? Have I written a book that can spawn articles? Do I have material that would work on a web site?

 

4. SOFTWARE AND INTELLECTUAL PROPERTIES VALUATION

 

The valuation of software and intellectual property assets is skill oriented and responsibility related. The financial accounting and reporting for the cost of software as asset is very difficult and identifying the proper method is impracticable. It needs various approaches test etc., for the proper accounting and treatment instead of calculating the values in the balance sheet as cost estimation. A formal value of intellectual property most likely refer to a standard of fair market value, cost approach methods, reproduction cost, method, income approach method and technology factors. Fairly correct valuation is needed when evaluating the worth of the assets of a firm for sale or mortgage of the firm and also for giving a correct picture to its stakeholders and shareholders. This is also required for tax purposes. Issue of bonus etc.,

There are many methods like Federal Accounting Standards Board (FASB) and International Accounting Standards Board (ISAB) available to calculate the value of intellectual properties and software. However no method is available to account the quality and accuracy.

 

2.    PROBLEMS IN VALUATION:

1. intangible assets such as intellectual property, software patents, copyrights, trademarks, venture capital etc can not be assessed accurately.

 

2. Even in tangible assets, there are many cases where they cannot be accurately assessed such as water resources, aqua culture and agricultural projects. Though there is a provision for crop-insurance, by various insurance corporations to protect the interests of the farmers, the compensation given is too meager and irrational because of the non-availability of appropriate methods to assess the risks involved in agricultural projects.

 

3. Hazards are caused by environmental damages to the public and also the assets in that area could not be moneytized.

 

4. Heritage structures, building, monuments, antiques are again other areas where their value cannot be correctly assessed.

 

In view of the above problems it is imperative to device or improve methods by carrying out joint research with eminent practicing professionals and academia. This is an urgent need of the present day to overcome the valuation problems in the fast developing global economy.

 

6. PARTICIPATION OF PMU IN DEVELOPING VALUERS

The Periyar Maniammai University is a people's university and working for developing technology for socially and economically depressed society. In view of developing trained Valuers, the Periyar Maniammai University has already planned several courses and research works like Post Graduate Diploma in valuation in regular mode. However University is planning for the same course in distance mode, online and video conferencing using ICT gadgets. At present one batch of PG diploma professionals is going out and one researcher is doing valuation.

 

7. FUTURE PLAN OF PMU ASSOCIATION WITH INSTITUTION OF VALUERS TRICHY

 

It is planned to create awareness of importance of valuation among the professionals and public through seminars, symposia, workshop at National and International levels. Also, it is planned to conduct various diploma and degree courses including Ph.D. in valuation.

 

8. POINTS TO PONDER

The role of Valuers in uplifting the depressed society is inevitable

Need integration between different professions in valuation.

The professional ethics in valuation is essential to ensure quality.

Using ICT tools in valuation profession is mandatory

Value of time and value of individual are not given due importance at present in our country.

Like Corporate Social Responsibility (CSR), Professional Social Responsibility (PSR) should also be imposed on professionals.

 

9. CONCLUSIONS

 

The role of valuers in the society is very vital. They must own full responsibility for their activities as this forms the basis of many financial transactions for individuals/groups/ companies/ Government institutions.

 

In areas, where it is obscure they must work jointly and device proper methods so as create a win-win situation in the public.

 

[hitesh]

ANNUAL REPORT OF HON. GENERAL SECRETARY, SHRI P.C.GOEL AT THE ALL INDIA NATIONAL SEMINAR IN TIRUCHIRAPPALLI ON 26^TH DECEMBER 2008

 

Hon’ble Chief Guest, President, distinguished guests, member delegates, ladies and gentlemen.

 

On this august event of the inaugural function of the 39^th all India national seminar and Annual General Meeting (AGM), it is my privilege to present a brief review of the activities of the Institution for the year 2008.

We have gathered here to participate in the 39^th All-India National Seminar on valuation of all types of assets. As you know, the valuation profession has been classified by the government of India, under various categories, namely, valuers of urban land & buildings, agricultural land, coffee & tea plantation, forests, mines & quarries, jewellery, stocks and shares, machinery & plants, works of art & life interest (actuaries). However, the Institution due to member's demand and to cover new avenues in a logical way has introduced a number of new categories, namely, chemicals of all types, automobile including transportation and highway engineering, marine (ships, boats of all types), automobiles including transportation and highway engineering, marine (ships, boats of all types), Textile (all types of fibres, yarn and fabrics), computer technology including electronic & telecommunication engineering, ceramics technology and aeronautical engineering including various types of aero planes, metallurgical engineering and engineering materials, production engineering and industrial engineering & leather technology. In fact, the list is still not complete and there is also a demand for more categories, for example, information technology, etc.

Holding of national seminar is an annual feature of this Institution. Hitherto such seminars were held at Ahmedabad, Allahabad, Bangalore, Bhopal, Bhubaneswar, Kolkata, Chandigarh, Chennai, Goa, Hyderabad, Indore, Jaipur, Jabalpur, Lucknow, Nashik, Mumbai, New Delhi, Shimla, Trivandrum, Bhilai, Dehradun, Aurangabad, Udaipur, Mysore, Kolkata, etc,. during the past 38 years of its existence. These seminars have been inaugurated / chaired by high dignitaries and central/state ministers besides state governors.

The all India National Seminar and local seminars organized by the branches of the institution from time to time have proved very instructive and educative.

Apart from the members of the institution, the seminars have also been attended by delegates of the central, state governments and government undertakings like LIC, banks, CPWD and PWDs of states, municipal corporations, municipalities, etc. and also by those engaged in allied professions, realizing the importance of valuation.

To spread the activities of the institution all over the country and to make it more effective, branches of the institution have been set up conforming more or less to the state boundaries. There are 40 branches of the institution at present, and I am happy to say that all branches have done very well in furthering the objectives of the institution. They have conducted a number of seminars/lecture meetings/ workshops, etc., in an efficient manner in their respective areas. They deserve our appreciation and congratulations.

[hitesh]

AWARD FOR THE BEST BRANCH:

 

After considering the activities of all the branches, the council of the institution has awarded this year's shield to Tiruchirappalli branch of the Institution of Valuers.

The council has also decided that the following branches who have performed appreciable activities in their area during the year 2008, be awarded merit certificates,

1.    Chennai branch

2.    Lucknow branch

3.    Mysore branch

4.    Visakhapatnam branch

 

MEDALS

 

Gold medal, silver medal, bronze medal and merit certificates have been awarded to the following members for their under-mentioned articles/papers published during December 2007 to November 2008 in the Indian Valuer.

 

GOLD MEDAL

Shri R.K.Patel, Vadodara for his articles "Business Valuation-General Requirements, Approaches, Concluding and Reporting" published in pages 59-66 of January 2008 issue of the Indian Valuer and for "Understanding Financial Statements (A Valuer's Perspective)" published in pages 1180-1196 of October 2008 issue of the Indian Valuer.

 

SILVER MEDAL

Shri B. Kanaga Sabapathy, Tiruchirappalli for his article "Valuation For Liquidation" published in pages 644-661 of June 2008 issue of the Indian Valuer.

BRONZE MEDAL

Shri S. Ganesh & S. Venkatesh, Karur for their article "Valuation of Jewellery" published in pages 288-301 of March 2008 issue of the Indian Valuer. Another bronze medal is awarded to Shri R.S.Baabu, Chennai for his article "Information Technology (IT) Parks & Valuation" published in pages 944-948 of August 2008 issue of the Indian Valuer.

 

MERIT CERTIFICATE

 

(a)   Shri Arun Kumar Datta, New Delhi for his article "Judgement of The Supreme court of India In Dilip N. Shroff Vs. Joint Commissioner of Income Tax Others-May 18,2007- Some Thoughts" (Pages 338-344) in March 2008 issue of India Valuer.

(b)   Shri Anil Dhope, Jabalpur for his article "Intangible Property Valuation, US Guidelines" (Pages 783-790) in July 2008 issue of Indian Valuer.

(c)   Shri S. Krishnamurthy, Chennai for his article "Leasing of Open Lands For Erection of Hoardings, Construction of ATMs and Similar Structures Within One's Own Free Land And Space (Pages 1066-1068) in September 2008 issue of Indian Valuer.

(d)   Shri G.A. Mahadevia, Ahmedabad for his article "Remarks For The Valuation For Banks/ Fls" (Pages 150-153) in February 2008 issue of Indian Valuer.

(e)   Shri Q.L. Dua, New Delhi for collecting & providing useful information regarding Cost Inflation Indices (C 11) published in several issues of Indian Valuer.

(f)    In order to enocurage good editorials in the Indian Valuer, the council has decided to recognize the authors of good editorials. A special certificate is given to Shri S.S.K. Bhagat of Delhi, as the best writer of editorial for Indian Valuer, published during the year 2008.

Qualified / Registered Valuer from all corners of India and abroad are very eager to become members of this Institution. Nearly 200 applications for seeking membership of this Institution are being received every month. The council of the institution closely scrutinizes their qualifications, experience, etc. and if found in order, enrolls them as members in appropriate categories. It may be stated without any hesitation that we look for quality in our membership. The membership of the Institution is increasing day by day.

Our only income is form the membership fees and sale of publications. This amount is mostly used for publishing the Indian Valuer, meeting office and staff expenses. Annual aid beside separate financial aid for holding large scale seminars is also provided to the branches regularly which perform well.

The Indian Valuer, a monthly periodical, is the mouthpiece of the Institution and is becoming popular day by day, not only among the members but also among the Government departments, district and high courts and the general public. It is a top ranking monthly technical journal on the subject of valuation containing relevant details about valuation, rates of construction, land, plant & machinery, judgements, etc.

Further I am proud to state that the Indian Valuer is being published, printed and dispatched to the members and subscribers every month in time on the dot.

Besides the above, the Institution publishes every year an All India National Seminar Book containing more than 100 technical articles on valuation subjects which is a complete guide book for valuers of immovable and movable assets.

At present the institution at Delhi function in its own premises having 4500 sft. Covered area but feeling shortage of space and in view of expanding future demand, we are searching for a bigger plot one acre in New Delhi at a suitable place and hope we will be lucky to get the same shortly.

Almost all banks, financial institutions and govt. department throughout the country have issued instructions to their branches to get all assets valued only by the corporate members of the Institution of Valuers.

The headquarters of the institution is encouraging is encouraging the branches to purchase office premises (builiding properties) in their respective areas. Visakhapatnam, Bangalore, Mangalore, Cochin, Trivandrum, Ahmedabad, Chennai, Lucknow, Jabalpur, Mysore, Madurai and Kolkata of the institution have already purchased office premises. Other branches of the Institution of Valuers are also going to purchase premises for their office on their own.

I have placed the digest of the activities of the institution before you. But my report will be incomplete if I don't thank Shri MV Ramachandra, President of the institution who efficiently and effectively controlled the affairs of the Institution and helped me from time to time in discharging the affairs of the institution as Hon. Gen. Secretary.

Tirchirappalli Branch. Of the Institution of Valuers has put in a lot of hard work to attend to the major and minor details in organizing various aspects of the 39^th All-India National Seminar. The branch applied itself not only to the technical aspects of the seminar but have also taken great pains to works to work out programmers of entertainment and arranging sight-seeing tours of local and surrounding areas. They deserve our sincere and high appreciation and thanks for their hard work and intelligent organizing. Particularly all credit goes to the Chairman Shri. P.K. Thiagarajan, Secretary Shri. S. Baskar, and specially to Shri B. Kanaga Sabapathy, convener of the seminar & master of ceremony and the selfless and dedicated team work.

I thank Shri T.V.B. Haranath and Shri S.S.K. Bhagat, Vice Presidents who helped me in all spheres to discharge my duties as Hon. Gen. Secretary. I also again thank Editor-in-Chief Shri S.S.K. Bhagat, Indian Valuer who helped me in publishing the magazine regularly and on time.

 

I take this opportunity to thank Dr. P.C. Gupta, the Treasurer of the Institution who efficiently controlled the financial matters of the Institution and also selected candidates who wanted to become members of this Institution as per the rules & regulations of the institution, as chairman membership selection committee by perusing minutely their qualifications, experience and their status.

Last but not the least, I also take this opportunity to thank all the council members, secretary and staff of the institution at the HQ  for their co-operation and hard work in managing the affairs of the institution.

 

[hitesh]

Speech of Shri B Kanaga Sabapathy, Convenor of the 39^th All India National Seminar

 Today my 11^th book on valuation has been released. I published my first book Practical Valuation Vol. I in the year 1994 and with god’s grace, I am able to publish one volume once in every two years. The latest volumes deals with one main chapter Questions & Opinions. The queries raised by the valuers throughout the country and the opinions given by me are consolidated and given here for the sake of early career valuers.

“You ask me a Question

And you are teaching me a subject”

This is true in my case. If at all I possess some knowledge, it is because of the questions you have raised. I am indebted to you. That is why I have dedicated by earlier book to my fellow valuers of the country.

 

I hope you will agree with me if I say that the course book has come out well. This contains 53 articles on various topics written by different authors. The selection of paper is based on certain guidelines. I am sorry…we were unable to publish few papers which were received after the due dates.

For the past 18 years, Tiruchirappalli has been conducting courses on valuation of immovable properties, training programme for the beginners, exclusive seminar on Plant & Machinery and seminar on techno-legal aspects also. The programmers conducted here are so popular that the delegates call Trichy as Mecca of valuation. We are proud of not being proud.

For this 39^th National Seminar 403 have registered apart from the spouses. This is the highest in any National Seminar held so far. We are thrilled and overwhelmed by the expectation of the delegates who have come to this temple town from the other parts of the country. Trichy branch of IOV has done elaborate arrangements for your comfortable sojourn here.

Today we have two technical session in the morning and afternoon. A cultural programme has been organized tonight followed by the Dinner. Tomorrow we have again two technical sessions in the forenoon and afternoon. This is followed by AGM in the evening.

 

In order to maintain our tradition we have adopted this seating arrangements. If you feel any inconvenience, you can occupy the seats meant for the spouses after the inaugural session. Relax.

There are two important things for any practicing valuers.

 

1. Practical experience
2. Theoretical knowledge

 

If this seminar helps the participants to acquire some more knowledge in the field of valuation well, we will be very happy. The purpose is solved. Kindly listen the lectures, participate in the discussion and deliberate freely within the time frame.

It is my cherished objective to request my fellow valuers to ever maintain the professional integrity and honesty while doing FAIR valuation after knowing the exact purpose behind it.

 

Thank you and wish you to have a rich acquisition of knowledge in these two days proceedings.