APPENDIX 225 GUIDELINES FOR VALUATION OF EQUITY SHARES OF COMPANIES AND THE BUSINESS AND NET ASSETS OF BRANCHES PARTI 1. Thowe ae operating guidlines for valuation of equly shares of companies. Briefly, they will be refered to a8 valtaion gullines uy er 2. These are purely administrative instructions for internal official use and are, therefore, not to be quoied, cited or published sth ofiial guidelines ofthe Government, 3. Toy will te effective from the date* oftheir issue and willbe applicable to all pending and-foture cases sising or consideration inthe Deparment of Boouomic Affairs Ministry of Finanes. 4. Specially, these guidlines willbe applicable to ine valuation of: (@) cavity shares of companies, private and public limited; (@) Indian busineasaot assots of te string tea companies; aed (©) Indian bosinesnet assets of the branches of feign companies PART IL Principles and method of valuation 5, The objective of the vahttion process is to make a hest reasonable jadgment of the value of the uy share of company ot of the busiress and net sees of Branch in cases afsng fr valaton under the Foreign Exchange Regulation Act, 1973, and the Capital Issues (Control) Act, 1947. The best reasonable judgment of the value will be referred 0 25 the fair value (FV) and it will be arrived at on the bass of the following inthe manner dessrited inthe subsequent paragraphs: (1) Net asset value (NAV); Q) Profitcaming capacity value (PECV): G) Market value (MV) inthe case of listed shares. 6.1 Net asset value (NAV)~The net asset value, a5 atthe latest audited belarce-shect date, will be ‘alloted stertiag from the total assets of the company or of the branch and deducting therefrom all cxclde the ficak year and work out an average based on the working fess Of the ematciog four ofthe Ines five yeas f, however, that average HDs out 10 be more ih Ihe fotte of he