Machinery-Equipment Valuation and the Future of the Sector

Industrial investments have accelerated with the rapid industrialization, increased potentials in production and support of exports during the recent years, and have also been the focus of interest for the financial system by supporting the SME’s. The investments are intended to be incentivized with regulations and laws that are passed as a result of the problems that are experienced and it has become compulsory to control and monitor these incentives.

The purpose of valuation is to assess the financial status of a business and the results of its activities realistically. The values of assets on the date they enter the business usually reflect their current value. However, due to reasons such as changes in the economic life, technological developments and current market conditions in the following periods, the book value and the current value may become different from each other.

The need has arisen to monitor the loans in industrial investments regarding the investment project and to subject the fixed assets within the company to valuation at certain intervals after the investment has been completed, and this gap is closed by valuation services.

In Machinery Valuation, the production lines, machinery and equipment included in the production activities, ancillary equipment, transport vehicles, electronic appliances, office furniture-fixtures etc. fixed assets, involve important differences from other real property varieties and influence the approach that will be used in valuation and reporting of the valuation. The referred tangible fixed assets may wear away much faster as compared to real properties and bear the risk of being technologically outdated.

While the purpose for which the valuation will be made (valuation purpose) constitutes the main subject of the study, the study stages and used valuation approaches depending on this may vary significantly. The appraiser is required to consider certain assumptions during the valuation of machinery-equipment and fixed assets, as compatible with the nature of the asset subject to valuation and the valuation purpose. While examples may be increased, machinery valuation reports are used for circumstances such as purchase-sale transactions of machinery-equipment, determination of book value or value according to IFRS, assessing the actual value of the machinery pool and subjecting the machinery to financial transactions, domestic/overseas business partnerships, supplier collaborations; and with major industrial organizations starting to move out of the city, valuation studies are made for matters such as moving the available machinery park, the ability of the facility to continue to operate as a whole with the machinery and equipment, and the facility being operative or inoperative.

In the valuation of all machinery and equipment that will be purchased and sold in our day, valuation studies are required in areas that require specific information and hardware such as livestock breeding farms and dairy farms, cement plants, textile businesses, refineries, ships, dockyards, vehicle fleets, renewable energy resources, WPP (wind power plants), HEPP (hydroelectric power plants) and Natural Gas Cycle Power Plants.

Machinery and equipment valuation should be handled as a process and the appraiser should value many parameters and data in each stage. While this process may be detailed in each stage, starting with the field visit that will be made for assessment purposes, it is definitely necessary to determine factors that define the facility capacity, efficiency, restricted raw materials resources, relations with the environment, to examine the limited-period utilization rights regarding the plot where the factory is located and the buildings, the ownership data and classification thereof as compatible with the valuation purpose with respect to macro features and specifications, and to determine complementary data such as the brand, model, serial number, capacity, technological status of the machinery with respect to the micro features, and to make a good overall analysis.

The International Financial Reporting Standards (IFRS), the importance of which increase every day in the globalizing world, are practices that are required for businesses to open to the world and be integrated in the foreign markets.

Within the scope of IFRS; it is necessary to assess the realistic re-valuation of fixed tangible assets in the company balance, as a requirement of the current Turkish Trade Law, not as an accounting process to establish an economic cooperation, make international investment decisions, access financial resources easily in the world markets, but as a solution that could fulfill the needs of the business world of our age.

Valuation of machinery-equipment, integrated facilities, ships and other fixed tangible assets may be performed by authorized valuation organizations. While publicly traded companies regularly have the tangible fixed assets included in their current assets re-valued, within the scope of the European Union harmonization process and the arrangements of the Turkish Trade Law; all fixed tangible assets included in the company’s current assets are required to be recorded in the company’s books with their new values as a result of being re-valued every year, as per the 16th article of the International Financial Reporting Standards. Furthermore, machinery valuation studies have an important place in transactions made in order to support partnership or investment decisions, and transactions of investment and development banks, factoring companies and leasing companies for security purposes.

In addition to these, private companies may request valuations pursuant to loan demands, purchase and sale transactions, insurance and damage assessment studies, tax planning, share transfer, partnership establishment, management decisions, expropriation and company liquidation. It is known that 80% of the valuation reports prepared by valuation companies are for security purposes in our country. Similar to the advances in the whole world and the developed countries, the path to collateralize moveable properties has also been cleared in our country with “Law on Amending Certain Laws in order to Improve the Investment Environment” numbered 6728, which has been prepared in order to facilitate access to financing and diversify assets subject to security, and ratified on 15.07.2016.

It is observed that SME’s constitute 99% of the businesses in Turkey, the banks ask for securities in the loans that these companies want to use for financing purposes and the security means of these companies are limited. As per the financial leasing, factoring and finance companies law numbered 6361 that has entered into force on 21.11.2012, the sell & re-lease transactions have also been included within the scope of financial leasing and has made significant contributions in meeting the operational capital need of companies. With the new arrangement, the sell & re-lease and pledge transactions that were previously applied for immoveable properties can now be applied also for moveable properties, and it is believed that legislation studies will be accelerated with this application aimed to increase the credit volume.

The subject moveable property will be recorded in the central registry system; and by the queries that will be made there, it will be prevented from being subject to a pledge transaction by another finance organization. In the valuation of machinery-equipment, facility, ship and other tangible fixed assets class, as TSKB Real Estate Appraisal Inc., we provide a competitive advantage where quality is at the forefront both in security transactions and realistic re-valuation studies in compliance with the IFRS standards, by the meticulous investigations in the effective market conditions in addition to technical analyses and calculations carried out by our Licensed Mechanical Engineers and specialists in the mechanical engineer staff who have combined their sector experiences in the field of valuation, and the expertise arising from the vast experiences and knowledge of the Turkish Industrial and Development Bank.

Basariyla tamamlandi
Bir uyari ile karsilasildi.
Bir hata ile karsilasildi.

Duis aliquet egestas purus in blandit. Curabitur vulputate, ligula lacinia scelerisque tempor, lacus lacus ornare ante, ac egestas est urna sit amet arcu. Class aptent taciti sociosqu ad litora ade torquent per conubia nostra, per inceptos himenaeos.

Sed molestie augue sit amet leo consequat posuere. Vestibul ante ipsum primis in faucibus orci luctus et ultrices posuere ile cubilia Curae; Proin vel ante a orci tempus eleifend ut.