SEBI Flags Concerns Over Valuation Practices, Urges Greater Transparency

The Securities and Exchange Board of India (SEBI), the capital market regulator, has expressed concerns over current valuation practices, highlighting potential conflicts of interest. Speaking at the ETCFO NextGen event, SEBI Whole-Time Member Ananth Narayan pointed out that valuers are often appointed and paid by the very entities whose assets they assess—raising questions about impartiality.

Narayan highlighted the wide discrepancies in valuations driven by varying assumptions, often with limited disclosure, and a lack of accountability when those valuations change significantly over time. He suggested that, similar to credit rating agencies that now disclose rating histories and adhere to strict standards, valuers should also be required to disclose their assumptions, sensitivity analyses, and track records and be held accountable for major deviations.

He further called on CFOs to reduce the time lag between the declaration of financial results and the publication of annual reports.