In 2025, distressed asset valuation under India’s Insolvency and Bankruptcy Code (IBC) demands not only technical expertise but also precision under uncertainty.
This case study by RNC Valuers showcases how our team efficiently valued the assets of a reputed acid and chemical manufacturer that was declared a Non-Performing Asset (NPA) due to its inability to repay bank debts and subsequently entered insolvency resolution.
Challenges
Key Challenges Identified During Site Valuation
During the site visit, our team encountered the following difficulties:
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Several assets were degraded due to prolonged plant inactivity.
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Some machinery parts were missing or dismantled.
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Many assets were in idle condition, making operability testing impossible.
The Burning Problem
As registered valuers, we had to determine the best and highest possible value for lenders, while keeping it attractive for potential buyers — despite incomplete records and inaccessible equipment data.
The goal was to balance accuracy with market appeal under insolvency constraints.
Our Approach
Systematic Valuation Framework Adopted
We implemented a structured methodology to achieve reliability and compliance:
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Process Understanding:
We mapped the complete production flow and identified critical machinery and dependencies. -
Asset Mapping:
Created a comprehensive list of all available plant, machinery, and equipment. -
Condition Assessment:
Conducted a visual and functional review on a best-effort basis. -
Asset Classification:
Each item was categorized based on realizable condition:-
Operable — can function after minimal repairs
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Salvageable — parts usable for restoration or resale
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Scrap — non-functional, recoverable metal value only
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Valuation Outcome:
Using our internal benchmarks and IBC valuation principles, we derived the best possible realizable value for the asset pool.
Conclusion
By leveraging our in-house technical and valuation expertise, RNC Valuers successfully delivered an accurate and defensible valuation for the insolvency resolution process.
This approach demonstrates how combining engineering knowledge, IBC compliance, and real-world judgment results in better outcomes for lenders, buyers, and resolution professionals alike.
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FAQs
1. How do valuers estimate fair value for insolvent companies?
Through asset inspection, classification (operable/salvageable/scrap), and compliance with IBBI standards.
2. Why is asset classification critical in insolvency valuation?
It ensures realistic realization value and supports lender recovery planning.
3. What is the difference between fair value and liquidation value?
Fair Value = market-based realizable amount; Liquidation Value = forced-sale scenario amount.