Going Concern or Realisable explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A factory stops production. Four years later, an insolvency application is admitted and an IRP walks through the gate.
The machines are all there. Nothing has been sold. On paper the company still owns a manufacturing business.
Does the valuer treat it as a business, or as a pile of assets?
The choice is not mechanical and it is not decided by how long the plant has been shut. Three tests decide it: is there demand for the output, what does revival cost, and is the technology obsolete. Going concern is defensible only where revival is demonstrably feasible. Where revival costs more than the economic benefit, a realisable or scrap basis is the honest answer — and every assumption behind it must be disclosed.
Why the choice matters so much
The basis of value drives everything downstream.
On a going concern basis the valuer is pricing a business — capable of producing, selling and generating cash, with the organisational capability that goes with it. On a realisable basis they are pricing assets to be sold, individually or in lots, to whoever will buy them.
The gap between the two answers is often an order of magnitude. It determines the benchmark the CoC uses, the floor for operational creditors, and in practice whether the case is heading for resolution or liquidation. Fair value vs liquidation value →
Getting it wrong in either direction causes harm. A going-concern number for a business that cannot restart raises expectations the market will not meet, and stalls the process while plans fail to materialise. A scrap number for a business that could restart destroys recoverable value.
Test 1 — is there demand for the output?
Start outside the factory, not inside it.
What did this equipment produce, and does that product still have buyers? A paper machine configured for a grade nobody uses is not a paper machine any more; it is an arrangement of steel.
This is the test most often skipped, because it requires market research rather than asset inspection. It is also the one that most often settles the question on its own — if there is no market for the output, no amount of physical soundness creates a going concern.
Test 2 — what does revival actually cost?
Restarting an idle plant is a project with a price: overhaul and recommissioning, replacement of perished components, recalibration, statutory and environmental clearances, working capital, and rebuilding a workforce and a customer book.
Add it up honestly and compare it with the cost of buying new equipment with current technology and a warranty.
Where reviving the old plant costs more than replacing it, no rational buyer will revive it. The going-concern premise fails at that point, however good the machines look. Plant and machinery valuation →
Test 3 — has the technology been overtaken?
A plant can be mechanically capable and commercially unviable, because efficiency, quality or emission standards have moved. A buyer who cannot produce competitively with the asset will not pay for its productive capacity — only for its materials.
Where this is the position, physical and income-based valuations diverge sharply, and both belong in the report with the divergence explained rather than resolved silently. When physical and income valuations diverge →
The other things a long shutdown takes with it
Assets are the visible loss. These are the ones that do not appear on any register:
- Customers, who moved to other suppliers years ago;
- Skilled workforce, dispersed and not recoverable;
- Licences and approvals, lapsed and requiring fresh application;
- Supplier relationships and credit terms;
- Brand standing, in a market that has forgotten the name.
A valuer pricing a going concern is pricing all of that as well as the machines. Where none of it survives, the "going concern" being valued does not exist — which is precisely why the choice of basis is a finding, not a formality.
How to document the conclusion
Whichever basis is adopted, the report has to show the reasoning, because this is the assumption a challenge will target first:
- state the basis of value and the date explicitly;
- set out the demand assessment for the product, with sources;
- show the revival cost estimate and the comparison against new equipment;
- state the obsolescence assessment against current industry standards;
- where going concern is rejected, say so in terms and explain why;
- where it is adopted, identify what makes revival feasible — a buyer with the technology, a surviving customer, a licence still valid;
- run sensitivity analysis on the key assumptions. Assumptions and sensitivity →
A conclusion of scrap value is defensible. A conclusion of scrap value with no reasoning is not — and neither is a going-concern figure that never tested whether the business could restart.
Key takeaways
- The basis is a finding, not a default.
- Duration of shutdown is evidence, not the test.
- No demand for the output ends the enquiry.
- Where revival costs more than replacement, nobody revives.
- Obsolescence separates mechanical capability from commercial viability.
- A long shutdown destroys customers, workforce, licences and brand — none of which are on the asset register.
- State the basis and the reasoning. It is the first thing challenged.
Read next
- Plant and Machinery Valuation Under IBC
- Obsolete Plant: When Physical and Income Valuations Diverge
- Fair Value vs Liquidation Value Under IBC
- Going Concern Sale Under IBC Liquidation
Disclaimer: Positions stated as on 5 September 2026. General guidance only — the basis of value turns on the facts of each case.