Business Valuation Services in Mumbai by an IBBI Registered Valuer

Why You Need a Registered Valuer

Several provisions of the Companies Act, 2013 require a valuation "by a registered valuer", and section 247 says who that is: a person registered with the IBBI for the relevant asset class. The Insolvency and Bankruptcy Code uses the same register for fair value and liquidation value. For those purposes a valuation from a Chartered Accountant who is not registered does not meet the requirement, however good the work is.

Other regimes have their own rules. The income-tax value of unquoted equity shares under Rule 57 of the Income-tax Rules, 2026 is a formula with no prescribed signatory, and the FEMA pricing certificate can be signed by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant. In practice one transaction often touches all three, which is why we issue them from one desk: CA Karan Shah is both a chartered accountant in practice and an IBBI Registered Valuer, so the Companies Act report, the FEMA certificate and the Rule 57 computation come from the same model and the same set of facts.

At KC Shah & Associates we combine financial modelling with the regulatory detail of each regime, so that the report you file is one you can defend when the ROC, the authorised dealer bank, an assessing officer or an investor's diligence team asks how the number was reached.

Valuation Methodologies We Use

Discounted cash flow (DCF) is the usual primary method for an operating company with a credible business plan. We project free cash flows for five years or until the business reaches a steady state, discount them at a cost of capital built up from a risk-free rate, an equity risk premium, beta from listed peers and a company-specific premium for size and stage, and add a terminal value. The forecast is the founder's; the job of the valuer is to test it against history, the order book and the sector, and to say in the report which assumptions moved the answer.

Net asset value (NAV) is used where value sits in the balance sheet rather than in future earnings: investment and holding companies, asset-heavy businesses, and companies being wound down. It is also the logic of the Rule 57 income-tax formula, which is a prescribed, adjusted NAV and not a matter of choice.

Market multiples (EV/EBITDA, EV/revenue, price/earnings from listed peers, and prices from recent funding rounds in the company itself) are used as a primary method where good comparables exist and as a cross-check on the DCF everywhere else. A recent priced round between unrelated parties is often the strongest single piece of evidence for an early-stage company. Where methods give different answers, the report explains the weighting rather than averaging them silently.

Specialized Valuation Services

• Startup Funding Valuations - Pre-money & post-money for VC/angel rounds
• Rule 57 Share Transfer Valuations - Income-tax fair market value of unquoted shares (formerly Rule 11UA)
• ESOP Valuations - Grant-date option fair value and the underlying share value; see ESOP valuation services
• Mergers & Acquisitions - Swap ratios, purchase price allocation
• IBC / CIRP Valuations - Fair value and liquidation value of securities and financial assets in insolvency proceedings
• Financial Reporting - Ind AS, Impairment testing, PPA valuations

When the Law Requires a Registered Valuer

A valuation opinion from any competent Chartered Accountant is useful for negotiation. For a statutory purpose it is usually not sufficient — the report has to come from a Registered Valuer holding the relevant asset-class registration under the Companies Act and the IBBI regulations. The situations that require one are specific:

• Preferential allotment of shares — Section 62(1)(c) of the Companies Act, 2013, read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014, including an allotment made by private placement under section 42.
• Schemes of merger, demerger or arrangement — Sections 230 to 232, filed with the NCLT.
• Sweat equity shares — Section 54, read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.
• Non-cash transactions with directors — Section 192, where the value of the asset is to be fixed by a registered valuer.
• Buy-out of minority shareholders — Section 236, where the price is fixed on a registered valuer's valuation.
• Insolvency proceedings — fair value and liquidation value under the IBC, by a valuer registered for each asset class involved.

Two common situations are not on this list. The FEMA pricing certificate for an issue or transfer involving a non-resident can be signed by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant, so IBBI registration is not what makes it valid. And the fair market value of unlisted shares for taxing an ESOP perquisite at exercise is, under Rule 15 of the Income-tax Rules, 2026, the value determined by a SEBI category I merchant banker, not by a registered valuer.

Where the Companies Act requirement applies and the report does not come from a Registered Valuer, the consequence is not a technical objection — the allotment or the scheme is open to challenge. A comparison of when a registered valuer is legally required and when a chartered accountant's opinion is enough is in Registered Valuer vs CA.

Rule 57 Valuation for Share Issue and Transfer (Income-tax Rules, 2026)

This is the provision founders discover late, and it changed twice in two years. Angel tax under Section 56(2)(viib), which taxed a company on shares issued above fair market value, was abolished from 1 April 2025. From 1 April 2026, Rule 11UA has been replaced by Rule 57 of the Income-tax Rules, 2026. Rule 57 prescribes a single net-asset formula, computed from an audited balance sheet drawn up on the transfer date with property at stamp-duty value, and that formula is a floor on both sides of a transfer of unquoted shares: the buyer is taxed on any shortfall above ₹50,000 and the seller's capital gain is computed on the formula value. We explain the computation with a worked example in Rule 57 Replaces Rule 11UA.

Because the formula is prescribed, the work is in the inputs rather than the method. Rule 56 requires a balance sheet drawn up on the valuation date and audited by the statutory auditor, so a transfer in July needs audited accounts as at that July date, not the previous 31 March. Immovable property goes in at its stamp-duty value, which is usually well above book value, and every unquoted investment has to be valued under the same formula, which can mean running it again for each subsidiary. Our Rule 57 engagement covers:

• the computation itself, component by component, with the adjustments to assets and liabilities shown line by line;
• the tax on both sides at your proposed price: the buyer's shortfall under section 92(2)(m) of the Income-tax Act, 2025 against the ₹50,000 threshold, and the seller's deemed consideration under section 79, which has no threshold;
• for a fresh allotment, a note on the subscriber's position, since the company itself is no longer taxed on a premium after the abolition of section 56(2)(viib);
• working papers kept with the share transfer form, because the buyer will need the taxed value again as her cost when she sells.

FEMA Pricing Valuation for FC-GPR and FC-TRS

When an Indian company issues shares to a person resident outside India, or shares in an unlisted company change hands between a resident and a non-resident, the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 set the price limits. For an unlisted company the price is tested against the fair value worked out under any internationally accepted pricing methodology for valuation on an arm's length basis, certified by a chartered accountant, a SEBI-registered merchant banker or a practising cost accountant. That fair value is a floor when a non-resident subscribes or buys from a resident, and a ceiling when a non-resident sells to a resident.

The certificate travels with the reporting. Form FC-GPR is filed on the FIRMS portal within 30 days of allotment, and Form FC-TRS within 60 days of receipt or remittance of the consideration; the authorised dealer bank checks the price against the certificate before it processes either form. The RBI's Master Direction on foreign investment also expects the valuation to be not more than 90 days old on the date of the investment, so the valuation date has to be planned against the expected closing date, not fixed months in advance.

The common mistakes are mechanical: a certificate dated more than 90 days before the funds arrive, a per-share value computed on a different share count from the one in the share purchase agreement, convertible notes or CCPS ignored in the dilution, or a secondary sale by a founder to the foreign investor priced below the floor because "the primary round was at a higher price anyway". Each turns a routine filing into a contravention that can only be regularised by compounding. How the FEMA floor, the Rule 57 value and the Companies Act report fit together in one round is set out with a worked example in Share Valuation for a Foreign Investor: FEMA vs Income-tax vs Companies Act. The filing side is covered on our FEMA compliance page.

Companies Act Section 247 Valuation Reports

Section 247 is the gateway provision: wherever the Companies Act requires a valuation of shares, property, net worth or assets, it must be done by a registered valuer appointed by the audit committee or, where there is none, by the board. The valuer has to act impartially, must not value an asset in which he has had a direct or indirect interest in the three years before the appointment or acquires one in the three years after the valuation, and must apply the valuation standards recognised under the Companies (Registered Valuers and Valuation) Rules, 2017. The reports we sign under section 247 are typically for:

• Preferential allotment and private placement (sections 62(1)(c) and 42): the price of the issue is determined on the basis of the registered valuer's report, which is referred to in the special resolution and the explanatory statement, and the offer letter in Form PAS-4 sets out the basis of the price.
• Schemes of arrangement (sections 230 to 232): the share exchange ratio for a merger, the entitlement ratio for a demerger, and the valuation report that accompanies the scheme to the NCLT and to shareholders.
• Sweat equity (section 54): the value of the shares and, where the consideration is intellectual property or know-how, the value of what is being contributed.
• Related-party and minority transactions: non-cash transactions with directors under section 192 and buy-outs under section 236.

Where a scheme involves real estate or plant, the Companies Act report needs a valuer registered in those classes for those assets. We sign the securities or financial assets part and coordinate with the other valuers so the final report reads as one piece of work.

ESOP Valuation

An employee stock option plan needs more than one number. The board fixes an exercise price, usually by reference to the fair market value of the share at grant. The accounts need the grant-date fair value of the option itself, under Ind AS 102 or the ICAI Guidance Note on Accounting for Share-based Payments, which means a Black-Scholes or binomial model on top of the share valuation. And at exercise, the perquisite taxed in the employee's hands uses the fair market value of the share on the exercise date, which for an unlisted company Rule 15 of the Income-tax Rules, 2026 requires to be determined by a SEBI category I merchant banker. We prepare the first two and support the third, as explained in detail on our ESOP valuation services page. What each part costs and how long it takes is in ESOP Valuation Cost and Timeline in India.

M&A and Fundraise Advisory

Not every valuation is filed with a regulator. Before a founder agrees a pre-money number, buys out a partner or sells a business, the useful question is what range the evidence supports and which assumptions decide where in that range the price lands. Our transaction work includes negotiation-stage valuations for buyers and sellers, fairness and reasonableness reviews of a price someone else has proposed, purchase price allocation after a deal closes, and an independent read of the projections in an information memorandum. It is also where the statutory reports are cheapest to get right: the Companies Act report and the FEMA certificate are far easier to sign when the method and the key assumptions were settled before the term sheet, not reverse-engineered after it. For fundraise preparation more broadly, including models, data rooms and vendor due diligence, see Corporate Finance & Fundraising.

The practical failure mode in every statutory report is reverse-engineering: agreeing a price with the investor first, then commissioning a DCF built backwards to justify it. The investor's diligence team, the ROC and the authorised dealer bank all compare the year-one projections in the valuation report against the actuals subsequently filed. Choose the method and test the assumptions before the price is agreed, not after.

What a Valuation Report Contains

A report that will survive scrutiny by an assessing officer, a bank credit committee or the NCLT is not a spreadsheet with a number at the bottom. Ours set out the purpose and the statutory basis, the valuation date and standard of value, the information relied upon and its source, a business and industry overview, the methodology selected with reasons for rejecting the alternatives, the workings in full, sensitivity analysis on the assumptions that move the answer most, and the valuer's declarations and registration particulars.

Documents We Need

Most of the delay in a valuation is waiting for information, so we send a checklist on the first day. For a typical share valuation it covers:

• Financial statements: audited accounts for the last two or three years, and the latest management accounts or provisional trial balance to a recent month-end.
• For Rule 57: a balance sheet as at the valuation date audited by the statutory auditor, the stamp-duty value of every immovable property, and accounts of every unquoted subsidiary or investee to the same date.
• Projections: a business plan or forecast for three to five years with the main assumptions (volumes, pricing, headcount, capex, funding), and the board-approved budget if there is one.
• Capital structure: the current shareholding pattern, a fully diluted cap table including CCPS, convertible notes, warrants and the ESOP pool, and the articles of association.
• Transaction documents: the term sheet, share subscription or share purchase agreement in draft, and the expected closing date.
• Company facts: certificate of incorporation, a short note on the business, key contracts or the order book, and details of any pending litigation or contingent liabilities.

Turnaround Time

A straightforward valuation of an operating company with clean audited financials typically takes 5 to 10 working days from receipt of complete information: a draft for your comments first, then the signed report. A Rule 57 computation on its own is usually quicker, once the audited balance sheet as at the valuation date is available; that audit is often the longest step and should be booked with the statutory auditor two to three weeks ahead. What extends the timeline is almost always information flow rather than analysis — unaudited recent periods, group structures requiring separate consideration of each entity, or forecasts that have to be built rather than reviewed. Schemes of arrangement and multi-entity M&A work are scheduled separately. Where a transaction has a hard closing date, or a FEMA certificate has to be within 90 days of the money arriving, tell us the date first; the sequence of work changes.

Valuation Fees

Indicative professional fees for typical engagements, excluding GST, government/ROC fees and stamp duty. The final fee depends on scope, the number of entities and the state of the data, and is confirmed in writing before work starts. Fees are subject to change without notice.

What moves the fee within a range is the number of entities to be valued, whether projections exist or have to be built with you, the number of share classes and convertible instruments, and whether one report has to serve more than one regime. A fixed fee is agreed against a written scope before we start.

Example Engagement: Seed Round With a Foreign Angel

Illustrative example: a composite of typical engagements, not a specific client. Names and figures are representative.

Situation. A three-year-old Mumbai software company with revenue of about ₹2.4 crore was raising ₹3 crore: ₹2 crore from a Singapore-resident angel by fresh issue of equity shares, and ₹1 crore from two resident angels, one of whom was also buying 5,000 shares from a co-founder who was leaving. The closing date was six weeks away.

What we did. We built one DCF model from the founders' five-year plan, tested it against two years of actuals and a set of listed software peers, and issued three outputs from it: a registered valuer report under section 62(1)(c) for the preferential allotment, a FEMA pricing certificate for the non-resident's subscription, and a Rule 57 computation from a balance sheet audited as at the transfer date for the co-founder's sale. The model supported a value of about ₹410 per share; the round was priced at ₹425. The Rule 57 value was about ₹48 per share, so neither the angels' subscription nor the co-founder's sale at ₹425 created a shortfall on either side.

Timeline. Information request on day one, complete data on day nine, draft report on day sixteen, signed reports on day eighteen. The audited balance sheet for the transfer date took the statutory auditor about two weeks and ran in parallel.

Outcome. The board and shareholder resolutions referred to the registered valuer report, the allotment was filed in PAS-3, and Form FC-GPR was filed within the 30-day window with the certificate dated inside 90 days of the receipt of funds. The working papers were handed to the company secretary and the auditor for the year-end file.

For the detailed mechanics of a round like this, including which value governs each side, see FEMA vs Income-tax vs Companies Act valuation.

Business Valuation Services in Mumbai

We work with startups, SMEs and corporate groups across Mumbai — Andheri, BKC, Lower Parel and Fort — from our offices at 91 Springboard, Marol MIDC and Jeevan Sahakar, Horniman Circle, and with clients across India. If you are looking for a registered valuer near you in Mumbai, the first meeting can be at either office or by video call, and most of the work after that runs on shared documents. For background on when the registration matters, see Registered Valuer vs CA; for share-based compensation specifically, see ESOP valuation in India and our ESOP valuation services.

For how these two engagements work together at an early stage, see outsourced accounting and valuation for Mumbai startups.

Frequently Asked Questions