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1. In the last two and half years administration has moved from discretionary, favouritism based to system and transparency based.

2. Inflation brought under control. CPI-based inflation declined from 6% in July 2016 to 3.4% in December, 2016.

3. Economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17. FDI grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows. Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017.

4. War against black money launched.

5. Government continued on path of fiscal consolidation, without compromising here to read further




Circular No. 06 of 2017 / F. No. 142/11/2015-TPL / Government of India / Ministry of Finance / Department of Revenue / Central Board of Direct Taxes / Dated: 24th January, 2017

Section 6(3) of the Income-tax Act, 1961 (the Act), prior to its amendment by the Finance Act, 2015, provided that a company is said to be resident in India in any previous year, if it is an Indian company or if during that year, the control and management of its affairs is situated wholly in India. This allowed tax avoidance opportunities for companies to artificially escape the residential status under these provisions by shifting insignificant or isolated events related with control and management outside India. To address these concerns, the existing provisions of section 6(3) of the Act were amended vide Finance Act, 2015, with effect from 1st April,2016 to provide here to read further



Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros they’re produced by running computers using software. It is a crypto-currency. Bitcoin is designed around the idea of using cryptography to control the creation and transfer of money, rather than relying on central authorities. The first Bitcoin concept was published in 2009 by Satoshi Nakamoto. However, Satoshi left the project in late 2010 without revealing much about himself. The community has since grown here to read further



General lack of transparency and inefficiencies in the handling and disposal of the seized, confiscated, obsolete, surplus, unused assets has time and again created embarrassing situation for the government’s functionaries. Non - standardized assets disposal policies have also resulted into enormous financial losses, bribery, bungling, corruption and crime in this sector.

High value disposable assets in considerable quantum are regularly generated by all Government departments, financial institution, banks, public sector organization, local bodies etc.  Besides, revenue departments like Income Tax, Customs, VAT, Excise regularly seize / confiscate valuable assets in course of raids or at the time of recovering their dues. NPA accounts are also generating disposal assets in the hands of government here to read further



ANALYSIS: The 2016 Budget of the Narendra Modi Government, which was delivered on 29th February, was eagerly awaited. With increasing criticism of the perceived gap between promises made and action taken on the ground, this Budget was the key opportunity to regain lost ground and accelerate the process of converting the ‘Make in India’ dream into a reality. Indeed, there was little in the run-up to the Budget that generated cheer or optimism. The data from the manufacturing, banking, and real estate sectors were depressing. The ill-timed notice from the Indian tax department of over Rs. 14,000 crore to Vodafone two weeks ago seriously cast doubts on whether the Prime Minister’s Office and the Finance Ministry were pursuing a common agenda of making India an investment-friendly destination. The only large silver lining on the dark economic cloud was the drastic fall in oil here to read further


"STARTUP INDIA" A Step Forward in Right Direction

STARTUP INDIA is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design. In order to meet the objectives of the initiative, Government of India is announcing this Action Plan that addresses all aspects of the Startup here to read further




Those assessee with any undeclared overseas income or assets will have a 3 month window to come clean beginning on July 1, 2015 and a further 3 months to deposit the appropriate tax and penalty till Dec 31, 2015. Ministry of Finance, Government of India has announced details of a compliance window to curb black money. Central government has notified on 30th  September, 2015, as the date on or before which a person can make a declaration in respect of an undisclosed asset located outside India. The last date for depositing tax is December 31, here to read further



The Finance Minister, in his budget speech, while acknowledging the limitations under the existing law, had conveyed the considered decision of the Government to enact a comprehensive new law on black money to specifically deal with black money stashed away abroad. He also promised to introduce the new Bill in the current Session of the Parliament.


In order to fulfil the commitment made by the Government to the people of India through the Parliament, the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015 has been introduced in the Parliament on 20.03.2015. The Bill provides for separate taxation of any undisclosed income in relation to foreign income and assets. Such income will henceforth not be taxed under the Income-tax Act but under the stringent provisions of the here to read further


A few years back, when the world was looking at us with high expectation of growth and stability, the apathetic fiscal management severely dented the Indian economic system. The erstwhile Indian Government failed to appreciate the ground rules and requirements of a growing Indian economy. When Indian corporate was looking at world map for their next destination, some over-enthusiastic Economists did everything possible to rattle the aspiration, ambition and dignity of the entrepreneurs and their enterprise. Why did they do it? This is a question for everyone.

Anyway, that is past. India has to come back and cover the losses of sixty seven years. In 1947, one rupee was giving us one dollar and today we have to pay almost sixty rupees for a dollar. As a person of basic virtues,  I am more than confident that, an emotional connect to country and little financial sensibilities in economic policy framing can progressively take us back to 1917. I am sure, our new PM will show us again, those respectable days.

Although, Mr. Modi has the best of the technology and talent around him to coordinate his plans and proposal, with all the humbleness, I would like to mention some suggestive ideas for the desired upgradation of Indian Fiscal System.
It is foremost important that the fiscal system should not be draconian, excruciating and compelling. It should be appeasable and amenable. Present Indian fiscal system is not only perplexing but also mystifying for a common person.  In existing format, Government is collecting revenue through multiple and multilevel tax legislation. The basic concept of Indian tax laws is centuries old and had its origin somewhere in Egypt. It is written in thousands of pages and most seasoned tax professional are often found totally befuddled in their interpretation and application. That is why the end result is recent cases of Nokia and Vodaphone. These two cases have disgraced and embarrassed the country around the world. We need to have fundamentally something very different from the here to read further



Railway Minister Shri D. V. Sadananda Gowda, in his 2014 Budget Speech has mentioned, “in the last 10 years, 99 New Line projects worth` 60,000 crore were sanctioned out of which only one project is complete till date. In fact, there are 4 projects that are as old as 30 years, but are still not complete.” The principal reason attributed by the Hon’ble Minister for the dismal performance is lack of availability of adequate financial resources. The Hon’ble Minister has further announced some new projects. But the big question is how the Railways will fund these schemes.

Traditional funding sources have already been exploited to their optimum level. Now the Railway Board has to look for some unconventional sources to fund the operational and developmental projects.….. including Prime Minister, Narendra Modi’s Bullet Train. If, the authorities involved in the process look beyond their centuries old rule book…….solutions are not far from reach.  To be more precise, the freely available Railway Real Estate assets have the required potential to generate enormous surplus to meet its financial needs and also to strengthen the Railways Balance Sheet to the envy of any successful corporate in the world. India has at least 500 - 700 major Railway Stations Real Estates assets, which can be developed for augmenting Railway revenue. Each of the Railway Station occupies sizable land. This station land over the platforms and adjoining Railway lines can be easily monetized. A multi-story multipurpose complex can be constructed without disturbing the regular functioning and movement, over the Railway platforms. This real estate can be easily marketed to generate capital and revenue profits. The monetary valuations of these properties can run into astronomical figures. Keeping in view the size of the city, a multistory complex can be erected over any railway stations. The construction can be done on BOT basis or contract basis etc. depending on various factors. The research data suggests, the space available can be easily marketed as the railway stations are always city centers and enjoy tremendous locational here to read further


The final Budget for the year is on the floor and will be shortly enacted to rule the country. This time, the expectations from Budget were extremely high but for the reasons best known to the Budget Makers, much has been left to be addressed in future. Whatever may be the reasons for going cautious, if India has to progress and survive in this competitive world and amongst aggressively progressing neighbouring countries, then some out of the box thinking, dynamic decision making and fearless actions are the only choices. We hope to look forward an aggressive Indian regime determined to put India on self sustaining growth course of over 10%. May be by 15th August our Hon’ble Prime Minister Mr. Narendra Modi will chalk out his new economic and development programme and unfurl the same with the flag of the nation.

Various Budget provisions have been comprehensively summarized herein below. We note from the detailed budget document that, with regards to Income Tax budget proposals several changes have been proposed which will have far reaching impact on the economy and business. These subtle changes although very important have not become the headlines of any media. Particularly changes about advance against assets, survey / search rules, charitable institutions, long term capital gains, dividend distribution tax, debt based mutual funds, investment allowance, institutions governed by section 35, overseas borrowing and divided, transfer pricing, FII income clarifications, MAT, TDS, anonymous donation, presumptive taxation u/s 44AE, commodity transaction tax, compulsory acquisitions, speculative gains, asset valuations, loan transactions u/s 269SS, attachment of property etc. must be studied meticulously.

The Current Economic Situation And The Challenges
  1. Decisive vote for change represents the desire of the people to grow, free themselves from the curse of poverty and use the opportunity provided by the society. Country in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance here to read further

 A few years back, when the world was looking at us with high expectation of growth and stability, the apathetic fiscal management severely dented the Indian economic system. Anyway, that is past. Let’s look forward to a brighter future in the hands of indomitable team of Governors. In 1947, one rupee used to fetch one dollar and let’s hope the time returns. I am confident that, an emotional connects to nation and financial sensibilities in economic policy framing can show us again those respectable days.

Present Indian fiscal system is perplexing to all concerned. Government is collecting revenue through multiple tax legislations. The basic tax concept is centuries old and had its origin somewhere in Egypt and travelled through Greece U. K. to India with British. Revenue laws are written in thousands of pages and most seasoned tax professional are often found totally befuddled in their interpretation and application. That is why the end result is recent cases of Nokia and Vodaphone. These two cases have disgraced the country around the world. We need to have fundamentally something very different from the present and aptitude to accept out of box thinking.

With complete new mindset, the entire revenue collection law can be framed in less than hundred pages. A suggestive scheme which will be manageable without the fleet of tax collecting agencies can be drafted on following lines. The simplicity itself will boost revenue collection by manifolds. The scheme may be referred as “Consolidated Revenue Act of India.” here to read further



To finance the welfare and the administrative expenditure, governments around the world impose certain taxes on their subjects. The taxation system helps in collecting revenue besides it also provides direction to the economic growth and also brings economic equilibrium amongst various classes. In any taxation system, the residential status of the taxpayer is of crucial significance. Residential status confirms the jurisdiction and the application of taxation account abilities.

However, in cases, where cross country economic activity is carried out, it is a tricky affair to identify and justify the appropriate jurisdiction of tax authorities. In order to mitigate the hardships of multiple jurisdictions, the Governments enter into bilateral arrangements, which are commonly denoted as “Double Taxation Avoidance Agreements” (DTAA). DTAA refers to an accord between two countries, aiming at elimination of double taxation. These are bilateral economic agreements wherein the countries concerned assess the sacrifices and advantages which the treaty brings for each contracting nation. It would promote exchange of goods, persons, services and investment of capital among such countries.

Indian Government is actively pushing DTAA negotiations with several countries to help its residents in understanding their tax jurisdictions and accountability towards the appropriate authorities. So far India has signed DTAA with 81 countries and discussion is on with many others. The natures of DTAA’s entered by India are greatly diverse in their nature and contents.


The first international initiative regarding DTAA was taken by the Organization for Economic Co-operation and Development. OECD presented the first draft of DTAA in ‘Model Tax Convention on Income and on Capital’. DTAA was proposed as a tool of standardization and common solutions for cases of double taxation to the taxpayers who are engaged in industrial, financial or other activities in other countries. The double tax treaties are negotiated under international law and governed by the principles laid down under the Vienna Convention on the Law of here to read further


The next General Elections are due in 2014. All political aspirants have already started working out policies and strategies to approach public for support and vote. However, it is no longer an easy mission to convince Indian voters to vote for any party or individual. Television programmes and print media have turned Indians into a conscious and informed class. Now, people are looking forward towards strong programmes and policies rather than traditional individuals and parties. It will be now be very tricky to play sentimental issues for electoral success.

In this note, we are providing a evocative programme for effectively setting forth election strategy to the aspiring national players. We are confident, if an organization adopts policies and programme on the lines suggested herein below and delivers on promises, nothing can restrain them from winning and ruling this country for next several decades.

The suggestive programme is outlined herein here to read further



Rajkot Bench of ITAT in the case of Vineetkumar Raghavjibhai Bhalodia v. Income tax Officer, Rajkot has discussed the controversial issue of tax ability of gifts from HUF to its members. The issues taken up were.

1. Whether a gift received from 'relative', irrespective of whether it is from an individual relative or from a group of relatives is exempt from tax under provisions of section 56(2)(vi)?
Answer: Held, yes.

2. Whether HUF is a group of relatives and therefore, gift received from HUF would be exempt from tax under section 56(2)(vi)?
Answer: Held, yes
3. Whether for getting exemption under section 10(2) two conditions are to be satisfied, firstly, a person must be a member of HUF and secondly he should receive sum out of income of such HUF, may it be income of earlier year? Answer: Held, here to read further



Copyright is a legal term refers to protecting a creator’s work. It is a type of intellectual property that provides exclusive publication, distribution, and usage rights for the creator. This means whatever content is created cannot be used or published by anyone else without the consent of the creator. The length of copyright protection may differ from country to country, but it usually lasts for the life of the author plus 50 to 100 years.


Copyright is generally given by the law to creators of literary, dramatic, musical and artistic works and producers of cinematograph films and sound recordings. It is a pack of rights including, inter alia, rights of reproduction, communication to the public, adaptation and translation of the work. In modern times, copyright protection has been extended to websites and other online content. This is important in the digital age, since large amounts of content can be easily here to read further


With the development of Net Based Technologies along with availability of advanced software and hardware systems, it has become feasible to systematize and present the most complex data system in simple formats. This facilitates the quality of data storage system and also improves the retrieval of the information efficiently and accurately. Through the application of software based technologies it has become possible to design and maintain large database structures and provide user friendly application. These databases can be used for criteria based queries and also can be supplemented with other technologies like Biometric Solution etc.


Delhi Police is handling extremely complex and multi dimensional activities. The operations of Delhi Police are spread over very large area which needs to be constantly monitored and controlled. In fact, the operation of Delhi Police is as complex and multifaceted as any top corporate house. The operations just do not end with crime recording / investigation but also involve the application of finest management techniques, personal management skills, financial management acumen, deep knowledge of engineering and medicine sciences .The application of Information Technology can make many complex and strenuous tasks of Delhi Police Executives effortless and error here to read further


The term “Raid in Indian Income Tax Law” is incredulous and any unexpected encounter with IT sleuths generally leads to chaos and vacuity. If you are likely to experience such action it is better to familiarise with the subject, so that, the situation can be faced with confidence and serenity. Income Tax Raid is conducted with the sole objective to unearth tax avoidance. It is the process which authorizes IT department to search any residential / business premises, vehicles and bank lockers etc. and seize the accounts, stocks and valuables.

To face the situation efficiently, it is extremely important to understand some nitty-gritty of I.T. law on the subject. Lack of knowledge leads to panic and all the discomfort. The knowledge of your legal rights and responsibilities always protects here to read further




Survey has not been defined in the Income Tax Act. According to Concise Oxford Dictionary, The expression "survey" means general view, casting of eyes or mind over somethings, inspection or investigation of the condition, amount, etc. of something, account given of result of this etc.

According to Chambers 20th Century Dictionary, the meaning of the word 'survey' is to view comprehensively and extensively, to examine in detail, to examine the structure of a building, to obtain by measurements data for mapping, to perceive, collection of data, an organisation or body of men for that purpose.

In short the term 'survey' in context of the Income Tax Act means collection of data or information for the purposes of the Act.
Objects of Survey

Survey is an important weapon in the armoury of the Income Tax Department to call for information of various kinds as may be found necessary for making proper assessments. Survey is mainly conducted with the object of broadening the tax base by discovering new assessees,to gather information about possible tax evasions by assessees, spot checking of available cash and stock and to verify in a surprise and systematic manner, whether or not accounts are maintained properly and on day to day basis here to read further


07.06.2017:  By signing a multilateral treaty in Paris, India has, in one sweep, sought to make its double tax avoidance agreements (DTAAs) with 93 nations, including the ones with countries like Cyprus, Mauritius and Singapore, foolproof in terms of preventing aggressive tax avoidance by multinational corporations (MNCs).

The multilateral instrument signed at a meeting of the Organisation of Economic Cooperation and Development (OECD) seeks to prevent the corporate practice of making profits artificially disappear from the market where economic activity takes place in jurisdictions with low or no tax.

The treaty will come into force early 2018, according to an OECD statement issued in Paris. A finance ministry statement issued  said the deal signed by finance minister Arun Jaitley reaffirmed New Delhi’s commitment to cooperate in global efforts to tackle aggressive tax planning. Sixty seven other nations signed the deal on Wednesday and many others have expressed their intention to sign.

This deal will result in automatic modification of about 1,100 tax treaties worldwide. Preventing the generation and laundering of unaccounted wealth has been a priority for the National Democratic Alliance (NDA) administration.

India’s DTAAs with countries like Cyprus, Mauritius and Singapore, originally meant to prevent double taxation of the same income in two countries, are long known to be exploited by some investors for non-taxation of the same income in neither of the countries. India eventually amended the treaties with these nations to install safeguards to prevent “double non-taxation”.

The treaty with Singapore was amended with effect from February 2017 and the one with Mauritius was amended with effect from July 2016. The treaty with Cyprus was modified with effect from December 2016.

While these amendments address some of the gaps, the multilateral instrument is more comprehensive and covers issues such as characterization of financial instruments that are treated differently in different nations and definition of the taxable presence of an MNC in a country, referred to as “permanent establishment”.

India, however, did not accept a provision for binding arbitration in tax disputes, which has been accepted by 25 nations. New Delhi is of the view that taxation is a sovereign right of the government not subject to international arbitration.

OECD stated “conservatively” that the magnitude of tax base erosion for nations from the artificial shifting of profits by businesses to low tax jurisdictions is of the order of $100-240 billion a year, or the equivalent of 4-10% of global corporate income tax revenues.

“The signing of this multilateral convention marks a turning point in tax treaty history,” an OECD statement said, quoting OECD secretary-general Angel Gurría.

India has been closely involved in preparing the multilateral treaty text and has already adopted some of the action plans under the Base Erosion and Profit Shifting (BEPS) project, including provisions for taxation of the digital economy and country-by-country reporting (CBCR) of transactions by MNCs.

The CBCR framework enables national tax authorities to determine whether the taxable income reported by a unit of an MNC in a particular country actually corresponds to the economic activity and value creation in that market.

Certificate course on valuation was launched in compliance of the decision of the Council of the Institute of the Chartered Accountants of India for its members and students of CA course who have qualified the final examinations. In the light of the emerging diversities & complexities in valuation jobs, the course has been designed to empower the members to be the leaders in the global service market.

The objective of the Course is

1) To enable the members to gain acumen, expertise and in-depth knowledge on various methods of valuation;

2) To empower the members with the technical skills as well as analytical and decision-making discretion in the valuation job;

3) To provide through knowledge of the best practices as well as procedural and documentation aspects of the valuation job;

4) Apart from the comprehensive theoretical aspects, this course, first of its kind in India, will sharpen the expertise and excellence of our members through multiple case studies across the industry and service sector like pharmaceuticals, retail, manufacturing, banking, insurance, valuation, mining, infrastructure, private equity valuation.

The Companies Act 2013 also provides a separate chapter on Registered Valuers. As per section 247 of the Act wherever any valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by a person having such qualifications and experience and registered as a valuer.


Only the members of the ICAI and Final pass students are eligible to pursue this course

Programme Structure/Topics covered

1) Valuation Overview, Basic Techniques, Impairment and Fair Value Concept, Valuation under Companies Act 2013.

2) DCF Model, Forecasting, Cost of Capital, Discounts, Premiums, DCF as a model for Valuation of Shares.

3) Examples of Specific Industry in case of Valuation, Multiple methods of Valuation, Options, Basics of Options, ESOP only significant portion.

4) Merger and Acquisitions, Valuation for tax Purposes, Closely held Companies, Stressed Assets for Asset Restructuring Companies and Banks, Valuation of Complex Securities.

5) General Considerations in Valuation with Case Study and Valuation of Intellectual property and Human resources with case study, Brands and Copyrights, regression Analysis.

6) Valuation - Effective use of excel spread sheets, Drafting Valuation Report, Valuation as a profession, Competence, quality and ethics.

7) Practical case studies, Questions and Answers session

Course Duration and Course Hours

7 (Seven) days class rooms studies on weekends (i.e Every Saturday and Sunday) , Time: 10.00 am to 5.00 pm

Fees for the Course

Rs. 25,000 for Delhi, Kolkata, Chennai and Mumbai (Metro Cities)
Rs. 20,000 for other cities (Non Metro Cities)
[This Includes fees for the examination to be held after completion of the Course]


The registration will be on first come first served basis. Interested members may register online, take a print of the filled in detailed form, sign it and send the same along with a copy of membership card/certificate of membership and fees prescribed above vide DD/Pay order.

Members may also pay the fees online, take the print of the automatically generated acknowledgement and send the same along with the print of the duly filled registration form, a copy of membership card/certificate of membership.

Examination for the Course

1. Examination is conducted twice a year after completion of the classes.

2. Written examination is of 3 hours of 100 marks

3. MCQ- 60 MARKS

4. Practical/Theory questions - 40 MARKS

5. Project report of 100 marks – to be submitted by the participants after the classes. Topics covered for project report are Private Company, Unlisted Company, Infrastructure, telecommunication, ESOP, Power, construction, Intangibles, Brand or any other topic as per the choice of the participants.


A certificate will be awarded to the members on successful completion of course and passing the examination.

CPE Hours

The maximum CPE Hours may be as per the minimum requirement recommended by the CPE Committee for a Calendar year for the members in practice.


The concept of Brand Valuation emerged in late 1970’s when commercial establishments were looking at low profile but sound, business houses for acquisition. At the time of negotiation the balance sheet of such target companies needed to be spruced up by the intangible but yet very much real worth of the brands marketed by these businesses.

Brands are seen as strategic assets whose value is strongly correlated to companies’ value. The relevance of brand valuation goes from marketing portfolio optimization and strategic positioning, M&A pricing, to the day-to-day business for royalty rates definition. The difficulty in brand valuation starts from the definition of brand. 

Each enterprise has a name which defines its identity, but some brands goes beyond a simple label. In some cases, the brands become evocative of a concept, a product and a style, they represent a guarantee. It is difficult to draw a line between which brand should be considerate only the identification of a company/product and which has a value in itself. When this is the case, brands are intangible asset as strategic and valuable as the least identifiable when looking at the financial statement.

Brand Valuation is the process used to calculate the value of the brands. It is the job of estimating the total financial value of the brand. Like valuation of any product, or self review, a conflict of interest exists if those that value of brand also were involved in its creation.


A.   Company Name: The Company’s name in itself is a Brand that is promoted and nurtured over a period. Example: Reliance, Britannia, Godrej etc. which are the company’s name themselves.

B.   Product Branding: An identified product or service is branded and promoted. Each product has a separate Brand name. Example: Lux, Rin, Pepsodent from HUL etc.

C.   Others: There are other variants / approaches to branding such as Derived Brands i.e. branding the products by promoting supplier’s component, Attitude Brands i.e. branding a feeling or experience, more than a product etc.


A. Increased Sales in Competitive Environment: Brand gives tremendous competitive advantage to entities. More often, it is the brand that sells the product, rather than the product selling itself.

B. Ease of Identification: Brand achieves a significant value in commercial operation through the tangible and intangible elements. Brand name distinguishes the entity’s product from that of its rivals, helping customers to identify it while going in for it.

C. Brand Loyalty: Brands make a lasting impact on the consumers and it is almost impossible to change his preference even if cheaper and alternative products are available in the market.

D. Takeover Scenarios: Brands have major influence on takeover decisions as the premium paid on takeover is almost always in respect of the strong brand portfolio of the acquired company and of its long term effect on the profits of the acquiring company in the post-acquisition period.


A. Unique Corporate Identity: Brands assist in creating and manufacturing an unique identity for a company in the market place. This is done by brand popularity and the eventual customer loyalty attached to the brands.

B. TQM: By building brand image, it is possible for a body corporate to adopt and practice Total Quality Management. Brands help in building a lasting relationship between the brand owner and the brand user.

C. Customer Preference: Brand extends as a solution to choices and preferences of a customer, as they associate themselves with a brand only if it meets their requirement. Branding gives the customers the status of fulfillment.

D. Market Segmentation: Markets should be classified into different segments based on homogeneous patterns and strategic areas should be identified to effectively target, reach out to the customers and to meet competition. This is facilitated through building strong brands and with well defined brand values.

E. Strong Market: By building strong brands, firms can enlarge and strengthen their market base and also confidently foray new products lines. This would also facilitate programmes, designed to achieve maximum market share.

**Brand Value = Market Leadership + Relative Stability + Market Share + International Acceptance + Marketing Trends + Strategic Support +Competitive Strength + Brand Protection

BRAND VALUATION METHODS: Three different financial approaches to brand valuation can be identified:–

1. Cost Based Approach
2. Market Based Approach
3. Income Based Approach

1. Cost Based Approach: The brand is valued according to the cost of developing it. This is an analysis of the past and relies on hard facts. Overall, the cost approach is more appropriate to value those assets that can be easily replaceable, such as software or customer databases. The Cost-based approach includes the following different methods:

A. Accumulated Cost or Historical Cost Method: Historical cost method value the brand as the sum of all costs incurred in bringing the brand to its current state. The biggest drawback in the method is difficulty in identifying the cost involved and separating them from marketing expenditure which was responsible for brand building.

** Value of Brand = Brand Development Cost + Brand Marketing & Distribution Cost + Other Related Costs

B. Cost to Recreate Method: The Cost to Recreate Method uses current prices in order to estimate the cost of recreating the brand today. As the Historical Cost of Creation Method, the Cost to Recreate Method is optimal to obtain a minimum value and when dealing with a newly created brand. This method tries to overcome the difficulties arising from the historical cost by focusing on the present instead of on the past. However, the main issue is that some brands cannot be realistically recreated because they might have been created in a period when advertising expenditure was negligible and when brands were nurtured over time by word-of-mouth, which is not possible today anymore. It could also be difficult to define the cost of recreation of the brand because it is not easy to delineate the performance of brand leaders. The value obtained with this method will include the same pitfalls and obsolescence as the company's intangible assets. The final issue is that the cost to recreate method is still not a good indicator for the future.

C. Replacement Cost Method: This approach values a brand using an estimated cost of creating a similar but new brand. Here the biggest difficulty is in estimating costs. Assumptions required for estimation are often questionable and arbitrary.

D. Capitalization of Brand – Attributable Expenses Method: The Capitalization of Brand-Attributable Expenses Method defines the brand value as the business value attributable to the brand, which depends on the proportion of accumulated advertising expense over the total marketing expenses incurred, including other selling and distribution costs.

E. Residual Method: The Residual Value Method states that the value of the brand is the discounted residual value obtained subtracting the cumulative brand costs from the cumulative revenues attributable to the brand.

2. Market Based Approach: Market based approach, basically deals with the amount at which a brand is sold and is related to highest value that a “willing buyer & seller” are prepared to pay for an asset. This approach is most commonly used when one wishes to sell the brand and consists of methods herein stated:

A. Comparable Approach or the Brand Sale Comparison Method: This method involves valuation of the brand by looking at recent transactions involving similar brands in the same industry and referring to comparable multiples. In other words, this method takes the premium (or some other measure) that has been paid for similar brands and applies this to brands that the company owns. The advantage of this approach is that it looks at a third party perspective that is, what the third party is willing to pay and is easy to calculate but the flaw in this method is that the data for comparable brands is rare and the price paid for a similar brand includes the synergies and the specific objectives of the buyer and it may not be applicable to the value of the brand at issue.

B. Brand Equity based on Equity Evaluation method: Simon and Sullivan (1993) believe that brand equity can be divided into two parts:

 The "demand-enhancing" component, which includes advertising and results in price premium profits,

 The cost advantage component, which is obtained due to the brand during new product introductions and through economies of scale in distribution.

Hence, they basically estimated the value of brand equity using the financial market value and the advantage of this approach is that it is based on empirical evidence but shortfalls of this approach is that it assumes a very strong state of efficient market hypothesis and that all information is included in the share price.

C.   Residual Method: Keller has proposed the valuation of the brand by means of residual value which would be when the market capitalization is subtracted from the net asset value. It would be the value of the "intangibles" one of which is the brand.

Another alternative approach that is suggested is that of usage of real options as proposed by Damodaran (1996). The variables that need to be calculated are: risk free interest rate, implied volatility (variance) of the underlying asset, the current exercise price, the value of the underlying asset and the time of expiration of the option. This method is useful in calculating the potential value of line extensions but the inherent assumptions in this approach make any practical application difficult.

3. Income Based Approach: The Income-based Approach is the most popular among financial analysts and it comprehends many different methods.

A. Royalty Relief Method: The Royalty Relief method is the most popular in practice. It is premised on the royalty that a company would have to pay for the use of the trademark if they had to license it. The methodology that needs to be followed here is that the valuer must firstly determine the underlining base for the calculation (percentage of turnover, net sales or another base, or number of units), determine the appropriate royalty rate and determine a growth rate, expected life and discount rate for the brand. Valuers usually rely on databases that publish international royalty rates for the specific industry and the product. This investigation results in a variety and range of appropriate royalty rates and the final royalty rate is decided after looking at the qualitative aspects around the brand, like strength of the brand team and management. This method has an edge of being industry specific and accepted by tax authorities but this method loses out as there are really few brands that are truly comparable and usually the royalty rate encompasses more than just the brand.

B. Price Premium Method: The premise of the price premium approach is that a branded product should sell for a premium over a generic product. The Price Premium Method calculates the brand value by multiplying the price differential of the branded product with respect to a generic product by the total volume of branded sales. It assumes that the brand generates an additional benefit for consumers, for which they are willing to pay a little extra. The fault in this method is that where a branded product does not command a price premium, the benefit arises on the cost and market share dimensions.

C. Brand Equity based on discounted cash flow: The problem faced by this method is the same as when trying to determine the cash flows (profit) attributable to the brand. From a pure finance perspective it is better to use Free Cash Flows as this is not affected by accounting anomalies; cash flow is ultimately the key variable in determining the value of any asset (Reilly and Schweihs, 1999). Furthermore Discounted Cash Flow do not adequately consider assets that do not produce cash flows currently (an option pricing approach will need to be followed) (Damodaran, 1996). The advantage of this model is that it takes increased working capital and fixed asset investments into account.

D. Brand Equity based on differences in return on investment, return on assets and economic value added: These models are based on the premise that branded products deliver superior returns, therefore if we value the "excess" returns into the future we would derive a value for the brand (Aaker, 1991). This method is easy to apply and the information is readily available, but there is no separation between brand and other intangible assets and does not adjust, by their volatility, the earnings of the two companies compared, including discount rate.

Other methods also include conjoint analysis, income split method, brand value based on future earnings, competitive equilibrium analysis model, etc. The very fact that there are so many methods worth discussing under the income or economic approach show how accurate and sought after this approach is.

This blog is Created by CA Anil Kumar Jain.