Valuation of shares of private ltd company

This query is : Resolved

vibhor (Querist)
Follow

09 March 2013 What method should be adopted to do valuation of shares of a Pvt Ltd Co. which is accepted both as per the Companies Act and Income Tax Act. The company is a service provider and works as consultants. Can we value shares based on present and or future earnings?

umesh joshi

umesh joshi (Expert)
Follow

11 March 2013 please mention the purpose of shars valuation if it is for FIRC FC-GPR purpose than DCF Method should be Use.

vibhor

vibhor (Querist)
Follow

11 March 2013 it is reqd for selling off some stake in the company to outside investor. The company is 4 years old and our preference will be to follow some method based on future earnings and revenue.

vibhor

vibhor (Querist)
Follow

11 March 2013 it is not resolved

umesh joshi

umesh joshi (Expert)
Follow

12 March 2013 as you prefer to consider future earning of company and current value of shares should include the future earning so, as per my view your company should use Discounted Cash Flow Method Under which estimate your future earning and Expenses and discount such profit arise by a discount rate use the discount rate as per inflation rate or current interest rate and than make valuation of shares.

vibhor

vibhor (Querist)
Follow

12 March 2013 Thanks Sir. Lastly, is this method accepted as per Income Tax Act also? The changed provisions for Share Premium being included in income from other sources w.e.f. 01.07.2012 related to pvt ltd companies?

umesh joshi

umesh joshi (Expert)
Follow

12 March 2013 Dear Please Check Notification No. 52 Dated 29/11/2012 will help full to you

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now