Valuation of Stressed Assets Services in Delhi

Dealing with stressed financial assets is not safe or easy. These days, it’s become even more difficult because of how quickly everything changes in the financial world, and new rules are implemented. There are many strict rules to follow, and the economy is unpredictable. Because of these factors, more assets are in trouble. Because of all this, lawyers, investors, and banks are on the lookout for better ways to fix and handle these problematic assets.

In Delhi NCR, Sapient Services offers independent valuation of stressed assets services. We help financial institutions, lenders, and resolution professionals make defensible, clear decisions in financially stressed times. With the help of our asset valuation expertise, you can learn about the correct value for all your assets for financial reporting and insurance purposes.

What Are Stressed Assets?

Stressed assets are the key indicator of the risk exposure of a financial institution. These assets typically include:

• Projects facing a delay in execution or cost overrun.
• Non-Performing Assets.
• Businesses dealing with operational shutdowns or liquidity stress.
• Assets under insolvency, recovery, or enforcement proceedings.
• Assets under resolution or restructuring.

In most scenarios, stress is not just limited to finances, but it also affects operations, legal standing, and perception of the market.

Why Stressed Asset Valuation Requires a Different Approach

Stressed asset valuation is conducted to find out what you can recover under existing constraints.

Main challenges include:

• Outdated or incomplete financial information.
• Interrupted operations.
• Time-bound pressure for recovery or forced sale.
• Limited interest of the buyer.
• Disputes, charges, or any kind of legal encumbrances.

If you ignore these factors, it may lead to inflated numbers that may delay resolution.

When Is Valuation of Stressed Assets Required?

Valuation of stress assets is needed at multiple stages of stress, including:

• Bankruptcy and insolvency proceedings.
• Negotiations for one time settlement.
• Distressed or stressed assets sale.
• Analysis of investment for distressed opportunities.
• Recovery planning and enforcement by lenders.
• Restructuring of corporate debt exercises.
• Monitoring and identification of NPAs.

Valuation is not just a compliance document but a decision support tool in these cases.

Who Relies on Stressed Asset Valuation Reports?

• NBFCs and Banks.
• Insolvency practitioners.
• Distressed asset and private equity investors.
• Asset Reconstruction Companies.
• Promoters and corporate management.

Scope of Valuation of Stressed Assets Services

The scope of valuation typically depends on the valuation purpose, type of asset, and nature of stress. It covers the following:

Classification and Identification of Asset

• Immovable and movable assets.
• Machinery, plant, buildings, and land.
• Non-operational and operational assets.

Review of Operational and Financial Status

• Obsolescence and maintenance.
• Current operational situation.
• Dependence on all the important contracts, utilities, and licenses.
• Past performances.

Regulatory and Legal Review

• Verification of title and ownership.
• Encumbrances, security interests, and charges.
• Ongoing regulatory restrictions and litigation.

Recoverability and Market Assessment

• Sale-to-time assumption.
• Absorption and liquidity capacity.
• Demand when the conditions are distressed.
• Impact of orderly sale or forced scenarios.

Valuation Approaches Used for Stressed Assets

In stressed scenarios, a single valuation method doesn’t work. You may apply one or more of these approaches depending on the facts.

Asset-Based Approach

This approach is used when:

• Continuity of business is not certain.
• Assets are sealable and separable.
• Liquidation is one of the outcomes.

Income-Based Approach

You use this approach when:

• Partial operation continues.
• Uncertainty and risks are taken into account.
•  Cash flows are estimated reasonably.

Market-Based Approach

This approach is used when:

• Market evidences exist with required adjustments.
• Comparable distressed transactions are there.

This approach needs to be adjusted during stressful situations.

Key Assumptions and Their Prominence

Key assumptions that matter a lot during stressed asset valuation are as follows:

• Timeline of recovery.
• Discount rates that reflect elevated risk.
• Estimation of residual value.
• Execution and legal uncertainties.

At an early stage, Sapient Services documents all these assumptions. This allows stakeholders to understand what can help in driving the value conclusion.

Why Choose Us?

• Our team has years of experience working with all kinds of business owners, allowing them to uncover the true value of the intangible and tangible assets of their company.
• We conduct an in-depth analysis of the current capacity, history, procedures, and future projects of your company. The analysis helps in the creation of an accurate valuation report, which provides in-depth details about the company while still being completely defensible.
• We provide practical advice and go beyond compliance. All the services that we provide are in accordance with your needs. This makes us stand out from other accounting firms.
• We provide the best solutions to meet your personal and professional needs while considering your personal and business-related ambitions.
• We offer practical solutions, deliver personalized service, understand our clients’ unique needs, and develop lasting relationships.

Our Process for Valuation of Stressed Assets

A rigid checklist can’t be followed by stressed asset valuation. Therefore, it is important to follow a transparent and structured process.

Understanding the Purpose and Context

We try to establish:

• The report’s intended use.
• Valuation reason.
• Stress stage (pre-NPA, enforcement, NPA, insolvency)

Identification of Gap and Information Review

Our experts review:

• Loan-related documents and financial statements.
• Security details and asset schedule.
• Operational information.

Operational and Physical Assessment

We access the following wherever access permits:

• Deterioration and obsolescence.
• Status of maintenance and usability.
• Assets’ physical condition.

Encumbrance and Legal Review

We keep in mind the following:

• Security interests and other charges.
• Enforcement-related actions and litigation.
• Regulatory constraint on use or transfer.

Selection of Valuation Approach

We determine the following based on facts:

• Appropriate methods of valuation.
• Need for analysis of various scenarios.
• Extent of adjustment during distress.

Risk-Adjusted Analysis and Valuation

We derive values using:

• Discount rates that are stress-adjusted.
• Justified, conservative assumptions.
• Realistic timelines for recovery.

Decision Support and Reporting

Our final report:

• Explains the logic of valuation clearly.
• Suitability for legal scrutiny and lender review.

Frequently Asked Questions (FAQs)

Q-1: Why is stressed asset valuation conducted?

Ans: Stressed asset valuation is conducted to find out what you can recover under existing constraints.

Q-2: When Is Valuation of Stressed Assets Required?

Ans: Valuation of stressed assets arises in bankruptcy/solvency cases, negotiations for one-time settlement, distressed/stressed assets sale transactions, and investing decision for distressed opportunities.

Q-3: What valuation approaches are typically used for stressed assets?

Ans: Different valuation approaches are used for stressed assets depending on the situation.

Q-4: Why should you choose us?

Ans: We have years of experience in the industry, and our team comprises experienced professionals who take care of all aspects during valuation. Our prices are transparent, and we offer support throughout the service.

Q-5: What Are Stressed Assets?

Ans: Stressed assets are the key indicator of the risk exposure of a financial institution. These assets typically include projects facing a delaing with delay or cost overrun, and assets that are not performing well.

Q-6: Who appoints the valuer for stressed assets?

Ans: Independent valuers are appointed by resolution professionals, lenders, or investors.

Q-7: Who relies on stressed asset valuation reports?

Ans: The stressed asset valuation reports are often used by NBFCs/ banks, insolvency practitioners, distressed asset investors, private equity investors, and asset reconstruction companies.

Q-8: Is the liquidation value considered during stressed asset valuation?

Ans: Liquidation value is one of the important aspects that must be considered during stressed asset valuation.

Q-9: Is it always possible to conduct a physical inspection?

Ans: It may not always be possible to conduct a physical inspection.

Q-10: What are the main challenges during stressed asset valuation?

Ans: Main challenges include outdated or incomplete financial information, interrupted operations, time-bound pressure for recovery or forced sale, and limited interest of the buyer.