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K.R. Srivats

"We have now asked the committee to submit a framework for valuation of assets, in a completely transparent manner, in the cases of mergers and acquisitions and other transactions".

NEW DELHI, Dec. 31

UNTIL now, it was the opacity in "valuation of shares" in mergers and acquisition deals that was worrying the Department of Company Affairs (DCA) and its officials. It now appears that they are not even comfortable with the existing framework for valuation of assets in corporate restructuring transactions.

In an effort to bring in complete transparency in the valuations in such transactions, the DCA has now gone ahead and broadbased the terms of reference of the Shardul Shroff Committee that is looking into measures required for bringing about more transparency in the "valuation of shares," especially in the cases of mergers and acquisitions.

"We have now asked the committee to submit a framework for valuation of assets, in a completely transparent manner, in the cases of mergers and acquisitions and other transactions. While earlier the terms of reference was only with respect to valuation of shares, it is now being felt that valuation of assets would be more relevant as issues relating to valuations of bifurcation can also be captured," the DCA Secretary, Mr Vinod Dhall, told Business Line here.

He said that the committee was likely to submit its report by January 31, 2003.

Mr Dhall also said that the DCA had no immediate plans to review or tighten the existing liberal company law provisions on inter-corporate loans and investments even though the department recognised that these provisions were being misused by the Indian corporate sector.

"There have been cases where a public company has been used to buy into overseas companies controlled by the promoters of the Indian company at very high prices without any criteria," he said, noting that such type of transactions were being undertaken after the provisions of inter-corporate loans and investments were liberalised a few years back.

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