Physical Site Inspection 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.
Regulation 35 requires the estimates to be computed after physical verification of the inventory and fixed assets of the corporate debtor.
Not "supported by". Not "with reference to". After.
That wording turns site inspection from good practice into a precondition — and it is a precondition that a surprising number of reports quietly fail.
Physical verification is a statutory precondition to the estimate, not a supporting step. Since the February 2026 reforms it also binds the Securities or Financial Assets valuer wherever inventory is within scope — not only the Land and Building and Plant and Machinery valuers. It is where the paper position and the real position diverge — missing assets, cannibalised equipment, third parties in occupation, encroachments. Where access is genuinely blocked, the obstruction and the steps taken must be documented on the day, not reconstructed later.
Who has to do the walking
The obvious cases are the physical-asset valuers. A Land and Building valuer visits the land; a Plant and Machinery valuer visits the plant.
The case practitioners used to argue about is the Securities or Financial Assets valuer, whose subject matter — receivables, investments, intangibles — looks like a desk exercise. That argument closed with the February 2026 reforms: where inventory falls within the SFA valuer's scope, physical verification is mandatory for them too.
The reasoning is the same one that drives the rest of the requirement. Inventory is the asset class where the paper position drifts furthest from the real one — stock recorded and gone, stock present and unsaleable, stock belonging to somebody else on a consignment arrangement. A stock statement filed with a lender by management that has since been displaced is a claim, not a finding.
Practically, this means the SFA valuer either attends the count or explains in the report why they could not, and what that does to the estimate. Regulation 35 and the two values →
What inspection finds that documents cannot
Assets that no longer exist. A fixed asset register is a historical record maintained by management that is no longer in control. In a debtor that stopped trading years ago, equipment may have been sold, removed or simply lost, and nobody updated the register.
Cannibalisation. Machinery stripped of motors, control systems or saleable components — physically present, listed in the register, and worth a fraction of the figure it implies.
Condition after prolonged idleness. Corrosion, seizure, water damage, perished seals and belts. A machine idle for four years is not the machine described in the last audited accounts.
Third parties in occupation. Tenants, licensees, encroachers, or a party asserting a lien. Possession affects both realisable value and the practical ability to hand the asset over.
Access and removability. A machine embedded in a building, or a plant reachable only by a road that cannot carry the load, has removal costs that come off the value.
Encroachments and boundary discrepancies. Land measured on paper and land measured on the ground routinely differ.
The custody record, and why it protects you
Photographs, videos and dated site reports at the time of taking custody serve a purpose beyond valuation.
An RP takes control of assets they have never seen, in a company whose management has every reason to dispute what was there. Months later, allegations of asset diversion or misrepresentation are common — and in a plant that stood unsecured for years, entirely plausible.
The custody record is the only evidence of the position at the moment control passed. It protects the RP, it protects the valuer, and it is far easier to create on day one than to reconstruct at a hearing.
Practical minimum: date-stamped photographs of every material asset, a video walkthrough of each site, a signed site report listing what was found and what was expected but absent, and the same for each subsequent visit.
When access is genuinely blocked
Four situations recur, and none of them excuse the requirement:
Workforce blockade. In manufacturing cases, workers frequently prevent entry pending settlement of employment dues. This is resolved through engagement with the workers and their union, not correspondence — and it is the RP's problem to solve before valuers can start. When workers block access →
Records or premises sealed by an enforcement agency. Where the ED or another agency has sealed a site or seized records, release runs on the agency's timetable regardless of the RP's legal entitlement. Valuing when records are seized →
Remote assets. Mining operations, power plants and industrial sites in inaccessible locations need real travel and logistics. The cost is unavoidable and cannot be substituted with a desk assessment.
Promoter obstruction. Keys withheld, addresses misstated, sites undisclosed.
What to do in each case is the same. Attempt access, record the attempt and its date, record the refusal and by whom, escalate — to the CoC, to the agency, or to the Adjudicating Authority — and record that too. Then state in the valuation report exactly which assets were not physically verified and why, and how that limitation affects the estimate.
A report that silently omits the limitation is the defective one. A report that discloses it is doing its job. Assumptions and limitations →
What a defensible inspection record contains
- Dates of each visit and who attended.
- Scope: which sites, which assets, what was outside the scope.
- Photographic and video evidence, date-stamped.
- Reconciliation to the fixed asset register — matched, missing, unlisted.
- Condition notes for material assets.
- Occupation and access observations.
- Limitations: assets not verified, the reason, and the effect on the estimate.
Key takeaways
- Verification precedes the estimate. It is a statutory precondition, not support.
- The SFA valuer is not exempt where inventory is in scope.
- The fixed asset register is a claim, not a finding.
- Cannibalisation and idleness damage are invisible on paper.
- Custody photographs protect the RP and the valuer against diversion allegations.
- Blocked access is documented, not waived.
- Name the unverified assets in the report and state the effect.
- Remote does not mean exempt. The travel cost is part of the job.
Read next
- Regulation 35: Determining Fair Value and Liquidation Value
- When Workers Block Access: Asset Verification in CIRP
- Valuing a Debtor Whose Records Have Been Seized
- Plant and Machinery Valuation Under IBC
Disclaimer: Positions stated as on 5 September 2026. Verify the current text of the CIRP Regulations on ibbi.gov.in.