Policy Shifts Beat 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 corporate debtor is valued during its CIRP. Months later, resolution plans arrive at more than twice the assessed fair value.
The instinct is that somebody got the valuation wrong.
Usually nobody did. The market changed after the valuation date, and fair value is fixed to that date by definition.
Fair value is measured as on the insolvency commencement date, on evidence available then. A policy shift afterwards — a capital programme, an import restriction, a tariff change — creates option value that was never in the number. Plans above the benchmark are a signal about the market, not a criticism of the valuer.
Why the gap opens
Three structural features of fair value make it a lagging measure:
It is fixed to the commencement date. Both statutory values are. A change six months later cannot retrospectively alter a number measured on a fixed date. Fair value vs liquidation value →
It uses backward-looking evidence. Comparable transactions, historical earnings, observed market data — all of it describes the past.
It assumes a hypothetical buyer. Not a strategic acquirer with a particular reason to want this asset now.
So when a government announces a large capital programme in a sector, demand for the debtor's output can change fundamentally — and the resolution plans that follow reflect a market the valuation could not have seen.
What creates the option value
- Government capital programmes — infrastructure build-outs that transform demand for a supplier's product;
- Import restrictions or duties that reshape the competitive position of a domestic manufacturer;
- Regulatory mandates creating new demand, or destroying it;
- Sector incentive schemes that change the economics of production;
- Scarcity value — capacity, a licence or a clearance that becomes hard to obtain.
Each is a change in what a particular kind of buyer will pay, which is why the effect shows in bids before it shows in any valuation.
What the valuer can reasonably do
Not predict policy. But not ignore the sector either.
Include a forward-looking sector assessment. Where announced or clearly anticipated policy is already visible at the valuation date, it belongs in the analysis. Restricting the valuation to purely historical evidence when a programme has already been announced is a choice, and not a good one.
Identify strategic value explicitly. Where the asset has attributes that a particular class of buyer would pay a premium for — capacity, a clearance, a linkage, a location — say so, even if the premium cannot be quantified for a hypothetical buyer.
State the sensitivity to sector conditions. "This valuation assumes current demand conditions; a change in X would materially affect it" is a sentence that costs nothing and explains a great deal later. Assumptions and sensitivity →
What the CoC should take from it
Fair value is not a ceiling. Treating it as the most the market will pay leads a CoC to accept early bids at the benchmark when better ones were available. Run the process properly and let the market answer.
A bid far above fair value is not automatically suspect. It usually means the bidder has something the valuation could not price — a policy tailwind, a synergy, a tax shield. Understanding which matters, because it tells the CoC whether other bidders could match it. Synergies in fair value →
And the reverse happens too. A technologically advanced plant can become unviable within months when a cheaper substitute enters the market. The same date-fixing that leaves upside out of the number can leave a collapse out of it as well. Obsolete plant →
Key takeaways
- Fair value is fixed to the commencement date. Later change is not error.
- It uses backward-looking evidence and a hypothetical buyer.
- Policy shifts create option value the number could not contain.
- Include visible sector direction rather than restricting to history.
- Name strategic attributes even where you cannot price them.
- Fair value is not a ceiling. Do not let a CoC treat it as one.
- Ask why a high bid is high. The answer tells you if others can match it.
Read next
- Fair Value vs Liquidation Value Under IBC
- How the CoC Uses Valuation: Commercial Wisdom and Its Limits
- Synergies in Fair Value: The February 2026 Reform
- Obsolete Plant: When Physical and Income Valuations Diverge
Disclaimer: Positions stated as on 5 September 2026. General guidance only.