III. Asset-class wise sample of disclaimers

The Rules provide for three asset classes of land and building, plant and machinery and securities or financial assets. In this section, a few sample disclaimers have been provided for each asset class.

A. Land and Building

i. I/We have not verified the title deeds of the properties with the records of registrar’s office as this is beyond the agreed scope of our services stated in our engagement letter.
ii. I/We assume no responsibility for the legal matters including, but not limited to, legal or title concerns. The assets and interests therein have been valued free and clear of any liens or encumbrances unless stated otherwise. No hidden or apparent conditions regarding the subject assets or their ownership are assumed to exist. No opinion of title is rendered by this report and a good title is assumed.
iii. The RV has endeavoured to visually identify the land boundaries and dimensions; however, he is not a surveyor. So where there is a doubt about the precise position of the structures, it is recommended that a Licensed Surveyor be contacted.

iv. The physical condition of the improvements was based on visual inspection. No liability is assumed for the soundness of the structure since no engineering tests were made at the site. Any unknown conditions existing at the time of inspection could alter the value. No responsibility is assumed for latent defects of any nature whatsoever, which may affect value, nor for any expertise required to disclose such conditions.
v. Where a sketched plan is attached to this report, it does not purport to represent accurate architectural plans. Sketch plans and photographs are provided as general illustrations only.
vi. Unless otherwise stated as part of the terms of engagement, the RV has not made a specific compliance survey or analysis of the various permits and licenses under central, state and local laws/regulations applicable to the operation and use of the subject property, and this valuation does not consider the effect, if any, of non-compliance.
vii. The sale of the subject property is assumed to be on an all-cash basis. Financial arrangements would affect the price at which the property may sell for if placed on the market.
viii. Value varies with the purpose and date. This report is not to be referred if the purpose is different other than that mentioned.
ix. The actual realizable value that is likely to be fetched upon sale of the property under consideration shall entirely depend on the demand and supply of the same in the market at the time of sale.
x. In the course of the valuation, we were provided with both written and verbal information. We have, however, evaluated the information provided to us by the Company through broad inquiry, analysis, and review but have not carried out a due diligence or audit of the information provided for the purpose of this engagement. Our conclusions are based on the assumptions, forecasts and other information given by/on behalf of the Company.
xi. We are independent of the client/company and have no current or expected interest in the Company or its assets. The fee paid for our services in no way influenced the results of our analysis.
xii. Our report is meant for the purpose mentioned above and should not be used for any purpose other than the purpose mentioned therein. The Report should not be copied or reproduced without obtaining our prior written approval for any purpose other than the purpose for which it is prepared.

Understanding the Guidelines on Use of Limitations, Caveats and Disclaimers by the Registered Valuers in Valuation Reports

Insolvency and Bankruptcy Board of India having office at 7th Floor, Mayur Bhawan, New Delhi – 110001 issued Guidelines on Use of Limitations, Caveats and Disclaimers by the Registered Valuers in Valuation Reports on 1st September, 2020, Some key features are mentioned below for knowledge gain purposes of the whole fertanity & the ecosystem attached to it. 

B. Plant and Machinery

i. The client/owner and its management/representatives warranted to us that the information they supplied was complete, accurate and true and correct to the best of their knowledge. We have relied upon the representations of the owners/clients, their management and other third parties concerning the financial data, operational data and maintenance schedule of all plant-machinery-equipment-tools-vehicles, real estate investments and any other investments in tangible assets except as specifically stated to the contrary in the report. In no event shall we be liable for any loss, damages, cost or expenses arising any way from fraudulent acts, misrepresentations, or wilful default on part of the companies, their directors, employee or agents.

ii. Definition and Premise of Value: It should be noted that Liquidation Value could be significantly different from Fair Value or fair market value. Further, Liquidation Value in an orderly sale can be very different from Liquidation Value in a fire sale transaction, and the Liquidation Value of a single machine or any individual asset on a standalone basis could be very different from the Liquidation Value of a single machine or any individual asset as part of the entire plant and machinery. As such, the premise of Liquidation Value for the said purpose in this report is Liquidation Value of the assets on a standalone basis (in most cases) or in some cases group of assets in an orderly sale.
iii. I/We have examined the assets described herein exclusively for the purposes of identification and description of the property. The RV’s observations and reporting of the subject improvements are for the valuation process and purposes only, and should not be considered as a warranty of any component of the property. This valuation assumes (unless otherwise specifically stated) that the subject is structurally sound and all components are in working condition.
iv. In the absence of a statement to the contrary, we have assumed that no hazardous conditions or materials exist which could affect the subject business or the assets. We are not qualified to establish the absence of such conditions or materials, nor do we assume the responsibility for discovering the same. Our valuation takes no such liabilities into account, except as they have been reported to the RV by the client or by an environmental consultant of the client. To the extent such information has been reported to us, the RV has relied on it without verification and offers no warranty or representation as to its accuracy or completeness.
v. I/We express no opinion as to how closely the actual results will correspond to those projected/forecasted because budgets/projections/forecasts relate to future events and are based on assumptions that may not remain valid for the whole of the relevant period.
vi. The sale of the subject assets is assumed to be on an all-cash basis. Financial arrangements would affect the price at which the property may sell if placed on the market.
vii. Value is an estimated worth equivalent of an asset on a particular date based on certain facts and findings vary with its purpose. The value that is likely to be realized upon sale shall entirely depend on the demand and supply of the same at the time of sale. The report is not to be referred if the purpose is different other than the mentioned one.
viii. In the course of the valuation, we were provided with both written and verbal information. We have, however, evaluated the information provided to us by the Company through broad inquiry, analysis, and review but have not carried out due diligence or audit of the information provided for the purpose of this engagement. Our conclusions are based on the assumptions, forecasts, and other information given by/on behalf of the Company.
ix. We are independent of the client/company and have no current or expected interest in the Company or its assets. The fee paid for our services in no way influenced the results of our analysis.
x. Our report is meant for the purpose mentioned above and should not be used for any purpose other than the purpose mentioned therein. The Report should not be copied or reproduced without obtaining our prior written approval for any purpose other than the purpose for which it is prepared.

C. Securities or Financial Assets

i. While our work has involved an analysis of financial information and accounting records, our engagement does not include an audit in accordance with generally accepted auditing standards of the client’s existing business records. Accordingly, we assume no responsibility and make no representations with respect to the accuracy or completeness of any information provided by and on behalf of you and the client. Our report is subject to the scope and limitations detailed hereinafter. As such the report is to be read in totality, and not in parts, in conjunction with the relevant documents referred to herein and in the context of the purpose for which it is made.
ii. The valuation of companies and businesses is not a precise science and the conclusions arrived at in many cases will be subjective and dependent on the exercise of individual judgment. There is, therefore, no indisputable single value and we normally express our opinion on the value as falling within a likely range. However, as [purpose] requires the expression of a single value, we have adopted a value at the mid-point of our valuation range. Whilst we consider our value/range of values to be both reasonable and defensible based on the information available to us, others may place a different value on the [company/business]
iii. The actual market price achieved may be higher or lower than our estimate of [value/value range] depending upon the circumstances of the transaction (for example the competitive bidding environment), the nature of the business (for example the purchaser’s perception of potential synergies). The knowledge, negotiating ability, and motivation of the buyers and sellers and the applicability of a discount or premium for control will also affect the actual market price achieved. Accordingly, our valuation conclusion will not necessarily be the price at which any agreement proceeds. The final transaction price is something on which the parties themselves have to agree. We also emphasize that our opinion is not the only factor that should be considered by the parties in agreeing on the transaction price.
iv. An analysis of such nature is necessarily based on the prevailing stock market, financial, economic, and other conditions in general and industry trends in particular as in effect on, and the information made available to us as of, the date hereof. Events occurring after the date hereof may affect this report and the assumptions used in preparing it, and we do not assume any obligation to update, revise or reaffirm this Report.
v. The ultimate analysis will have to be tempered by the exercise of judicious discretion by the RV and judgment taking into account the relevant factors. There will always be several factors, e.g. management capability, present and prospective competition, the yield on comparable securities, market sentiment, etc. which may not be apparent from the face of the Balance Sheet but could strongly influence the value.
vi. Unavailability of information as of valuation date: Please note that the Liquidation Value and Fair Value of assets of the company have been performed as of an earlier date based on the provisional unaudited standalone balance sheet of [company] provided by management (the RP) as of the valuation date. On the other hand, no financial information as of the valuation date was available for subsidiaries and associates, hence we have relied on the latest available financial statements.

The management / RP has also confirmed that there has not been any material change in the financials of subsidiaries and associates since the last available financial statements. Hence, due to the lack of financials as of the valuation date and based on representation given by the RP, I /we have considered financials as of XXX as the proxy for the financial position as of the valuation date, RV valuation report may change post availability of such information.
vii. In the course of the valuation, we were provided with both written and verbal information. We have, however, evaluated the information provided to us by the Company through broad inquiry, analysis, and review but have not carried out due diligence or audit of the information provided for the purpose of this engagement. Our conclusions are based on the assumptions, forecasts, and other information given by/on behalf of the Company.
viii. We are independent of the client/company and have no current or expected interest in the Company or its assets. The fee paid for our services in no way influenced the results of our analysis.
ix. Our report is meant for the purpose mentioned above and should not be used for any purpose other than the purpose mentioned therein. The Report should not be copied or reproduced without obtaining our prior written approval for any purpose other than the purpose for which it is prepared.

 

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