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?
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.
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.
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?
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