P&M VALUATION BASIS

In-Situ vs Ex-Situ — A Distinction That Changes the Number Significantly

Plant and machinery can be valued on two location bases: in-situ (in its current installed position within the factory or facility, operational or capable of being made operational) and ex-situ (removed from its current location, transported to a neutral site, and available for collection by a buyer). The difference between the two can be material — particularly for heavy industrial equipment that is costly to dismantle, transport, and reinstall.

Get Expert Advice Call Principal Valuer

VALUATION BASIS P&M LOCATION IMPACT

01 IN-SITU Going Concern

02 EX-SITU Liquidation Basis

TWO VALUATION BASES

The Location of the Equipment Can Change Its Value

The same machinery can produce materially different valuation outcomes depending on whether it remains installed and operational or is dismantled and offered separately in the secondary market.

GOING-CONCERN BASIS

The In-Situ Value

The in-situ value is the value of the equipment to a buyer who would acquire it in its current location — either by acquiring the whole business or by acquiring the equipment in-place and continuing to operate the facility.

Productive value in its current configuration

Existing foundations, electrical connections, pipework and ducting

Avoidance of removal, transport and reinstallation costs

Typical Position Operational • Installed • In-Place

LIQUIDATION BASIS

The Ex-Situ Value

The ex-situ value is the value of equipment removed from its current location and made available for collection, typically from a dealer's yard or neutral warehouse.

Dismantling by skilled labour with appropriate equipment

Crane hire, rigging, loading and transport costs

Reconditioning, testing and removal damage risk

Typical Position Removed • Transported • Sale-Ready

01 IN-SITU

GOING-CONCERN BASIS

Why Installed Machinery Can Command a Premium

The in-situ value includes the equipment's productive value in its current configuration, together with the value of existing installation infrastructure that a buyer would otherwise have to replicate.

For a large industrial press bolted to a reinforced concrete foundation, the foundation alone may cost ₹15–25 lakh to replicate. Electrical connections, compressed air supply and hydraulic power unit installation may add another ₹10–20 lakh.

VALUATION INSIGHT In-Situ Value = Equipment Value + Saved Installation / Reconnection Costs

In IBC CIRP, the Fair Value for P&M is typically considered on an in-situ going-concern basis — equipment valued as operational within the manufacturing facility.

02 EX-SITU

LIQUIDATION BASIS

Why Removal and Relocation Reduce Realisable Value

The ex-situ value reflects machinery after it has been removed from its existing location and made available to a buyer. The transition itself introduces additional costs and risks.

01 Dismantling Skilled labour, tools & safety equipment

02 Transport Crane hire, rigging & flatbed movement

03 Reconditioning Cleaning, testing & basic checks

04 Damage Risk Risk created during dismantling and transit

IBC CIRP POSITION Liquidation Value reflects the equipment on an ex-situ basis for an orderly sale of individually removed assets.

THE IN-SITU PREMIUM

Installation Economics Can Move the Valuation Materially

The premium is driven by the installation, reconnection, transport and removal economics associated with the particular equipment.

15–25^%

STANDARD INDUSTRIAL

Machine Tools

CNC machining centres, lathes and presses may show an in-situ premium over the ex-situ secondary market price because installation costs and transport risks are avoided.

30–60^%

HEAVY INDUSTRIAL PLANT

Heavy Plant & Process Equipment

Large chemical reactors, steel mill rolling stands and compressor packages can command a substantially higher in-situ premium because relocation and reconnection costs are disproportionately high.

IBC CIRP • P&M

Fair Value vs Liquidation Value — Two Different Valuation Positions

VALUATION ELEMENT

FAIR VALUE

LIQUIDATION VALUE

Location Basis

In-Situ

Ex-Situ

Context

Going Concern

Orderly Sale

Installation

Existing installation retained

Removal & relocation required

Typical Result

Higher value

Lower realisable value

NEED THE CORRECT VALUATION BASIS?

Get Your P&M Valuation Assessed on the Right Basis

Discuss your industrial equipment, CIRP, liquidation, banking or collateral valuation requirement with a Government Approved Plant & Machinery Valuer.

Get Expert Advice