IVS Compliance for P&M Valuation Under the IBC: A New Professional Standard

IVS vs. IBBI Valuation Standards

Where Indian P&M Valuers Must Raise Their Game

For most of India’s registered valuers in the Plant and Machinery (P&M) asset class, the phrase “internationally accepted valuation standards” used to offer comfortable room to manoeuvre. It was cited in regulations, invoked in reports, and rarely tested. That flexibility is now gone.

On April 1, 2026, the Insolvency and Bankruptcy Board of India issued Circular No. IBBI/RV/93/2026, formally notifying the International Valuation Standards (IVS) — as published and updated by the International Valuation Standards Council (IVSC) — as the binding framework for all valuations conducted under the Insolvency and Bankruptcy Code, 2016. The circular takes effect immediately, covers every IBC proceeding from CIRP to liquidation to personal guarantor insolvency, and applies without exception to registered valuers, insolvency professionals, valuer organisations, and valuer entities alike.

This is not an incremental update. It is a structural shift in what Indian P&M valuation practice is expected to look like — and understanding exactly where IVS diverges from existing IBBI practice is now a professional necessity, not optional reading.

What the IBBI Framework Has Required Until Now

The Companies (Registered Valuers and Valuation) Rules, 2017 established the foundational architecture for registered valuers in India. Under this framework, P&M valuers are required to hold qualification and registration in their specific asset class, conduct physical inspections of assets, and prepare reports that reflect the purpose of valuation — whether for financial reporting, secured lending, mergers, or insolvency.

IBBI’s existing guidance has made several things clear over successive circulars and disciplinary orders: physical inspection is not optional, reports must distinguish between different bases of value, and the method chosen must be defensible. Where valuers have been pulled up — and several P&M valuers have faced IBBI disciplinary proceedings — the issues typically involved absent site visits, inadequate methodology rationale, and reports that could not withstand scrutiny from resolution professionals or NCLT.

The framework was not poorly designed. But it left significant discretion in how IVS-aligned the final output actually needed to be. Valuers could reference multiple methods in a single report without explaining why each was weighted the way it was. Courts accepted them. Resolution professionals signed off. The system moved forward. That era is over.

Where IVS Sets a Higher Bar

The IVS framework — currently IVS 2025, effective January 31, 2025 — introduces structured requirements that go beyond what IBBI standards have explicitly mandated in practice. For P&M valuers specifically, the key divergences fall into four areas.

1.  Basis of Value — Explicit, Not Implied

IVS requires the basis of value to be explicitly stated and defined in every report. For P&M under IBC, this typically means Fair Value (the estimated price in an orderly market transaction) or Liquidation Value (the distressed-sale floor). Under existing IBBI practice, the basis was often implied by the purpose of the assignment rather than formally declared. Under IVS, there is no implied anything. The report must state the basis, define it against IVS definitions, and ensure the methodology chosen is consistent with that basis. For a P&M valuer appraising manufacturing equipment under CIRP, this means fair value cannot be determined using a methodology that is really measuring liquidation value — and the report must show that the valuer understood the difference and chose accordingly.

2.  Scope of Work — Documented, Not Assumed

IVS 101 requires a clearly defined Scope of Work that covers the assets included, the purpose of the valuation, the valuation date, the intended users, and the limitations of the assignment. In P&M practice, scope creep and scope ambiguity have been recurring problems — particularly in insolvency assignments where asset lists change, machines are physically relocated, or records are incomplete. IVS requires the valuer to document what was and was not inspected, what records were relied upon, and what assumptions were made to address information gaps. That documentation now needs to be part of the report itself.

3.  Methodology Rationale — Reasoned, Not Formulaic

Perhaps the most significant practical shift is in how valuers are expected to explain their method selection. IVS requires that the valuer consider all three approaches — Cost, Market, and Income — and explain, with reasoning, why a particular approach was adopted or why others were not applicable. In P&M valuation, the Cost Approach has historically dominated because comparable market data for specialised industrial assets is often thin in India. IVS does not prohibit this — but it requires the valuer to demonstrate that the choice was deliberate and reasoned, not default. A report that simply states “the Cost Approach was adopted” without explaining why Market and Income approaches were unsuitable will not meet IVS requirements.

4.  Depreciation — All Forms, All Documented

IVS 220, which covers Plant, Machinery and Equipment specifically, requires that physical deterioration, functional obsolescence, and economic (external) obsolescence all be considered and, where applicable, quantified. Indian P&M practice has often focused primarily on physical depreciation — using straight-line or declining balance methods, sometimes referencing RBI or IOWA charts — while underweighting functional and economic obsolescence. For manufacturing assets in sectors experiencing rapid technological change (automation, clean energy transition, EV supply chains), functional obsolescence can be material and yet absent from the depreciation analysis. IVS makes this a disclosure requirement, not an optional enhancement.

The MSME Dimension

One aspect of the April 2026 circular environment that deserves particular attention is the amendment that allows a single registered valuer per asset class for MSME corporate debtors undergoing liquidation, rather than the standard two-valuer requirement under Regulation 35. On the surface, this reduces cost — and for smaller insolvency estates where dual-valuer fees were disproportionate, that is a genuine benefit.

The practical implication, however, is that when there is only one valuer, IVS compliance falls entirely on that individual. There is no averaging between two reports, no secondary check. The report stands alone — and it now must stand up to IVS-level scrutiny. For P&M valuers who frequently work on MSME insolvency mandates, this is not a relaxation. It is an increase in individual accountability at the same time that the standard of the report has been formally raised.

What Needs to Change in Practice

The IVS mandate is not asking Indian P&M valuers to abandon their technical judgment. It is asking that judgment to be visible in the report.

The most immediate changes required are structural. Every IBC valuation report from April 1, 2026 must explicitly document the Basis of Value, a defined Scope of Work, a reasoned methodology selection, and an obsolescence analysis that covers all three forms of depreciation. Reports that do not conform to this structure — regardless of the quality of the underlying analysis — are non-compliant under Circular IBBI/RV/93/2026.

Beyond structure, the circular should prompt P&M valuers to revisit their working paper practices. In the most demanding documentation environment for IBC valuation that India has seen, the valuer’s working files are no longer just internal records. They are the evidence base that supports every assumption and conclusion in the report. Valuers who maintain rigorous working papers are protected; those who do not face increasing IBBI scrutiny and exposure in proceedings before the NCLT.

There is also a longer-horizon implication that the immediate compliance pressure can obscure. IBBI’s broader trajectory — aligning Indian valuation practice with IVS, strengthening RVO oversight, and building toward global recognition — suggests that IVS compliance in IBC proceedings today is likely to be the baseline for all statutory valuations in India over time. P&M valuers who build IVS-compliant practice now are positioning themselves ahead of that curve.

The Practical Takeaway

For CFOs, resolution professionals, and lenders who commission P&M valuations under the IBC, the IBBI’s April 2026 circular means the question to ask has changed. It is no longer sufficient to ask whether the valuer is IBBI-registered and the report covers the right assets. The right question now is whether the report explicitly states its Basis of Value, documents its Scope of Work, explains its methodology rationale, and addresses all three forms of depreciation.

A report that cannot answer those questions clearly is not IVS-compliant — and from April 1, 2026, that is no longer an acceptable outcome in any IBC proceeding.

The shift is significant. But for P&M valuers who approach it as a professional upgrade rather than a compliance burden, IVS alignment offers something that IBBI’s previous discretionary framework never quite did: a clear, internationally recognised standard against which the quality of the work can be measured, defended, and respected.