Uniform valuation standards for stressed firms needed: IBBI chief

economictimes.indiatimes.com:

IBBI) chairman Ravi Mittal has pitched for a “well-structured and comprehensive standards framework” for valuations for stressed firms under the bankruptcy law, which will have international acceptance. “Standardised valuations would enable stakeholders to make well-informed decisions, instil confidence in the resolution process, and maximise value for all parties concerned in the resolution of distressed enterprises,” Mittal said in an IBBI publication.

He highlighted the need for uniform valuation standards with global acceptance to ensure that the valuation process remains transparent and credible, and subjectivity is limited. “Standardised methodologies and defined techniques, clear guidelines on selecting appropriate valuation approaches, such as asset-based, marketbased and income-based, depending on the nature of the assets and businesses are required,” he said.

Mittal also stressed that uniform valuation standards would help in identifying potential biases or errors in the valuation process, thus minimising the risk of misrepresentation. “Valuation reports prepared in adherence to established standards would add an additional layer of validation and provide a reliable basis for negotiation in resolution plans,” he added.