Plant & Machinery Valuations

 

For valuation and appraisal of plant, machinery and equipment, or asset management advice and boking services, RHAS is your full-service consultancy, with a personalised touch.

 

• Insurance

• Merger and Acquisition

• Finance for lenders and borrowers

• Litigation including Family Law

• Stock

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Valuation of plant and machinery is highly complex in nature as our practice caters to a wide spectrum of industries each having plant and machinery with its own inherent characteristics. Among the issues to be considered in the valuation of plant and machinery are the specific utility or usefulness of industrial property, its contribution to the production of goods and services for which it is designed and deployed.

 

Valuers at Sreenidhi, are highly experienced and bring along more than a decades experience as Valuers.

 

We have expertise in a wide range of industries: 

 

• Agriculture

• Jewellery

• Buildings and Building Fit-outs

• Chemical

• Clothing and Textiles

• Information Technology

• Earthmoving and Construction

• Electronics

• Gymnasiums

• Health Care

• Hospitality

• Laundry/Dry Cleaning

• Livestock/animals

• Mining and Quarrying

• Office Furniture and Equipment

• Printing and Packaging

• Retail Inventory

• Steel

• Telecommunications

• Trucks and Trailers

• Warehousing and Logistics

 

 

Our reports would generally comprised of the following valuations:

 

• Fair value

• Market value based on existing use (as-is where-is)

• Replacement value

• Reinstatement value

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Commercial Real Estate Valuation

 

The term commercial property (also called commercial real estate, investment or income property) refers to buildings or vacant land intended to generate a profit, either from capital gains or rental income or sale of units. 

 

Commercial Real Estates are broadly classified into 6 categories:

1. Office Buildings

2. Industrial Properties

3. Retail/Restaurant

4. Residential projects

5. Vacant Land

6. Specialised properties.

 

The basic elements of an investment are cash inflows, outflows, timing of cash flows, and risk. The ability to analyze these elements is key in providing services to investors a realistic value of commercial real estate.

Cash inflows and outflows are the money that is put into, or received from, the property including the original purchase cost and sale revenue over the entire life of the investment. 

Cash inflows include the following:

• Rent

• Operating expense recoveries

• Fees: Parking, vending, services, etc.

• Proceeds from sale

• Tax Benefits

• Depreciation

• Tax credits (e.g., historical)

Cash outflows include:

• Initial investment (down payment)

• All operating expenses and taxes

• Debt service (mortgage payment)

• Capital expenses and tenant leasing costs

• Costs upon Sale

 

The timing of cash inflows and outflows is important to know in order to project periods of positive and negative cash flows. Risk is dependent on market conditions, current tenants, and the likelihood that they will renew their leases year‐over‐year. It is important to be able to predict the probability that the cash inflows and outflows will be in the amounts predicted, what is the probability that the timing of them will be as predicted, and what the probability is that there may be unexpected cash flows, and in what amounts they might occur.

While easily said, the challenge arises in drawing up assumptions and the resultant estimates.  These assumptions and estimates are of paramount significance as they impact the valuation directly. 

At Sreenidhi, we begin with basics.  Our experts based on several decades of experience and based on the research inputs, make CRE valuations as objective as possible, which otherwise is largely subjective in nature.

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Specialized Property Valuations

 

Properties, depending on the type and use, are divided into non-specialised and specialised properties.  For non-specialised property, there exists sufficient transaction activity, and thus the level of prices can be established without having to interpret the property's underlying essentials. The final price is determined by comparison. The market of specialised properties is significantly more diverse than the non-specialised one. The main reason for this is that specialised properties do not transact sufficiently often (or there is no established market of transactions) to allow establishing the price of property by comparison with previously sold assets.  Under these circumstances, the process of valuation is based on a restricted number of methods, which assess the nature and underlying essentials of property in a way that its value can be established by referring to the cost of replacement, income- or profit-producing qualities of the property. This is the foundation of the valuation methods used for the valuation of specialized property.

 

Valuations are required for many different purposes ranging from open market transaction to compulsory purchase. Although the underlying preferred method of valuation should not be dependant upon the purpose of the valuation, it is important that the purpose is determined before undertaking any calculation.

 

We generally adopt the below methods of valuation for Specialized properties

The Income Capitalisation approach

The Sale Comparison Method

The Residual Value method.

The Net Replacement Cost Method.

The Contingent Valuation

 

It must also be noted that the method of valuation adopted largely depends on the nature and purpose of valuation.

 

We, at Sreenidhi, have over the last decade gained extensive expertise in conducting specialized valuation.  The research data and inputs gathered both thru internal and external data sources help us handle such complex valuation assignments, with ease.

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