CA. Kunal Kishore <kunal.kishore@icai.org>

RTI wrt Tender vide BRPNNL/ HQF/ A029/ 3795 published on 04/01/2019 1 message

Kunal KIshore <kunal.kishore@icai.org> Sun, Jan 27, 2019 at 10:43 PMTo: info@brpnn.co.inCc: chairman@brpnn.co.in, md@brpnn.co.in

Dear Sir/ Ma'am, Hope you're doing great! I am writing this email wrt the recent tender vide Tender No. BRPNNL/ HQF/ A029/ 3795 published on 04/01/2019for Empanelment of Chartered Accountants to carry out Finance/Tax/Audit related assignments of the BRPNNL("Nigam"). I'm a practicing Chartered Accountant with ~7 years of experience and have several questions concerning the abovecaptioned tender to which I'm seeking an urgent response under the Right to Information Act (RTI). In the letter attached with this email, I've explained the questions and their context. Request you to kindly have allthose questions answered at the earliest. Further, I've made a strong argument in the letter, and am beseeching the leadership of the Nigam (copied in thisemail) to have the Tender recalled/ cancelled on the grounds that it unreasonably excludes scores of amply qualifiedFirm of/ Chartered Accountants from even participating in the bid. Hope you find the letter and the annexure (attached with this email) in order. You can reach out to me (on mycontacts below) should you have any questions wrt my letter. Also, a duly-filled RTI form, and stamp of required value is being dispatched through courier to your office along withthe original copy of the letter. Thanks, Ward regards, CA. Kunal Kishore - Managing PartnerRBKK & Associates Chartered Accountants Patna | Bokaro | Saharsa | Chhapra Mobile : +91 62012 70234 Email : kunal.kishore@icai.org Email | Linkedin 3 attachments

RTI_TO_BRPNNL_LETTER.pdf 766K

RTI_TO_BRPNNL_ANNX1.pdf 2196K

RTI_TO_BRPNNL_ANNX2.pdf 154K

RBKK & Associates Chartered Accountants Mobile: +91 62012 70234 | Email: kunal.kishore@icai.org

H/o- Tarini Prasad, Beside Vishal Sumitra Apartment, Road No. 28, Rajendra Nagar, Patna 800016

Patna: H/o- Tarini Prasad, Beside Vishal Sumitra Apartment, Road No. 28, Rajendra Nagar, Patna 800016 Bokaro: C/o- Kailash Chand Goyal, Rana Pratap Nagar, Jora Mandir, Chas, Bokaro, Jharkhand 827013 Saharsa: Ward No. 18, Near S. M. Carmel School, Gangjala, Near Panchwati Chowk, Saharsa 852201

Chhapra: Mouna Sadha Road, Lah Bazaar Salempur, Chhapra 841301

27-Jan-2019 Public Information Officer Bihar Rajya Pul Nirman Nigam Ltd. 7, Sardar Patel Marg Patna, Bihar - 800 015 info@brpnn.co.in Subject: Seeking information under RTI wrt Tender vide BRPNNL/ HQF/ A029/ 3795 published on 04/01/2019 Dear Sir/ Ma’am, I hope this letter finds you in good health and spirit! At the outset, I wish to thank you for the ringing successes Bihar Rajya Pul Nirman Nigam Limited (“Nigam”) has recorded in recent years. The Nigam, under its present leadership, just as it did under their predecessors, has made consistent strides, and, I gratifyingly applaud the Nigam’s leadership for that. Indeed, I am delighted to learn from the data available at http://brpnn.bih.nic.in/ that, beginning 2005-06 up until Sep-2018, the number of projects pulled off by the Nigam and the total amount invested in them stand at 2,107 Nos. and whopping Rs. 9,678.91 crs, respectively. That is definitely an impressive feat! I’m a Chartered Accountant practicing in the States of Bihar & Jharkhand with four offices; three in Bihar and one in Jharkhand, and, as a conscious citizen and a stakeholder, I’ve been closely following the developments in the Nigam, as also in other Bihar/Jharkhand based public sector organizations. I am writing this letter to you concerning the recent tender for “Empanelment of Chartered Accountants for Internal Audit/ Concurrent Audit/ Tax Audit/ Physical Verification/ Other assignment of the Nigam” published at Nigam’s website, vide Tender number “BRPNNL/HQF/A029/3795” dated “04/01/2019” (“Tender document”) (“Annexure 1”), which has impelled me to reach out to you to seek answers to few questions. I’ve detailed those questions in the ensuing paragraphs. I’ve read through the Tender document several times, and, as a practicing Chartered Accountant myself who has been involved in numerous audits and other tax, advisory, and financial consulting assignments with private and public sector organizations alike, believe the eligibility conditions mentioned in the Tender document to be needlessly excessive, and has the effect, indeed, of unreasonably excluding hundreds of Firm of/ Chartered Accountants who, in my opinion, could with absolute ease, mastery, and precision carry out all the assignments, as stipulated in the Tender document, of the Nigam.

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Nobel laureate for a clerk’s job? Apparently, one of the eligibility conditions, among several others, laid out in the Tender document is that of the applicant firm of Chartered Accountants having been in operations, and that too in audit, for at least 15 years. Whereas, the assignments for which those firms are sought to be engaged include carrying out internal audit, concurrent audit, tax audit, physical verification, and other assignments (“assignments”) of the Nigam. Further, in the latter part of the Tender document, the assignments have been detailed out to include maintenance of fixed assets register, governance of GST, TDS, Professional Tax and other statutory liabilities, Interest calculation on fixed deposits, et al. As you must be well aware, Goods and Services Tax is an entirely new legislation. I am finding it incredibly difficult to fathom how and why might an anterior experience of 15 years be a sine-qua-non for a Firm of/ Chartered Accountants before the Nigam could entrust it with GST related assignments. Similarly, preparing fixed assets registers, managing TDS and professional tax liabilities do not require a firm mandatorily possessing 15 years of prior experience. In this context, I request you to kindly have the following questions answered, point-wise, in detail:-

1. Was the final Tender RFP decided by the Managing Director himself or was it an outcome of a collective effort? In case a committee was formed to arrive at the final RFP, who all were members of such committee? Kindly give the names, respective designation of the personnel involved in deciding on the Tender RFP. Also, in case, at any point, during the deliberation on the Tender RFP, any advice/support was sought from anyone from outside of the Nigam, what were those advice/support about, and who were those external individuals/entities assisting the Nigam?

2. If the work was delegated to a committee, or a group of personnel, were the deliberations among them vis-a-vis the eligibility conditions and the scope of assignments written and recorded? If so, a copy of the same. If those deliberations were not recorded in writing, the reason/s for so not recording them.

3. In particular, the reason/s behind including the condition that the applicant firm mandatorily must have its head office in Bihar for at least 15 years and the firm having prior experience of at least 15 years in audit.

4. Was there an internal or externally assisted study done on the suitability of eligibility conditions vis-a-vis the assignments of the Nigam?

5. Does the leadership of the Nigam, particularly those charged with governance, not believe the eligibility conditions to be excessive enough? If indeed not, what are the considerations that cause them to believe otherwise?

6. If an applicant firm is expected to have at least 15 years of experience, one would assume

that there are some assignments which, in view of the leadership of the Nigam, indeed, require deploying 15+ yrs of Chartered Accountants? If so, what are those particular assignments in particular? Please list them out, along with estimated years of experience required to turn them around.

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7. Further, concerning all on-going existing assignments, please list out the projects/ assignments on which qualified Chartered Accountants (with any level of experience) were, or are being, actually physically deployed, preferably in below format:-

sno assignments Whether CA

deployed? If, yes,

their number

Highest

experience

Lowest experience

1 Internal audit Yes, 1 No. 1 -

2 Concurrent audit Yes, 3 No.- 2 Fresher

- - - - -

(text in bold above are for illustration purposes only)

8. If on all or most of the currents assignments of the Nigam, merely Graduates, or Post-graduates, or unqualified/ semi-qualified Chartered Accountants are being deployed, does the leadership of the Nigam, including those charged with governance, not believe that awarding the tender itself to little younger but amply competent Firm of/Chartered Accountants would have been a wiser decision? If not, why?

9. Please share a list of present/past assignments/activities as stipulated in the Tender document, along with number of personnel deployed by the C.A. firm to which last tender was awarded, preferably in the below format.

sno assignments team leader team members

1 Fixed assets register

preparation

1 No.

Graduate, with

knowledge of Tally

4 Nos.

Graduates, with

knowledge of Tally

2 Professional tax

computation and

return filing

1 No.

Graduate, with 3

yrs experience

1 No.

Graduate with 0-1 yrs

experience

- - - -

(text in bold above are for illustration purposes only)

Nigam has competitors to look up to Nigam, for all the complexities involved in its operations and the wide expanse of the sector it works, isn’t engaged into activities that are unique to it, or has no comparable entities engaged in activities of ‘same or similar in nature’. Indeed, we do have its counterparts in other States of India. For example- UP State Bridge Corporation Limited (“UP Nigam”) in the State of Uttar Pradesh. UP Nigam is engaged into activities of absolutely ‘same or similar in nature’. Accordingly, the process adopted by the UP Nigam in engaging consultants including the eligibility conditions

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prescribed for them offers a good comparison. It is important to note here that recently the UP Nigam issued tender for engaging finance professionals for Internal audit assignments wherein the eligibility requirements w.r.t. the experience of professionals was kept at mere five (5 Nos.) years. So, clearly, the leadership at UP Nigam isn’t of the view that execution of their assignments ‘mandatorily’ requires Firm of/ Chartered Accountants with at least 15 years of experience. Further, not only do I find UP Nigam’s financials better in presentation than, but superior in qualitative details too to, Nigam’s. The key comparative data for FY 2014-15 (latest year for which the data for two companies are publicly available) is as below:- (Rs. Crs)

sno Particulars UP State Bridge Corporation

Limited (“UP Nigam”)

Bihar Rajya Pul Nirman Nigam

Limited (“Nigam”)

Difference Multiple

(UP Nigam/ Nigam)

(a) (b) (a/b)

i Total revenue 1403.19 183.22 7.66

ii Issued capital 15.00 3.5 4.29

I request yourself to kindly go through the UP Nigam’s recent tender document attached with this letter (“Annexure 2”), and then answer the following questions:-

10. Has an internal or an externally assisted study done by the Nigam w.r.t. how their public counterparts in other States, and private organizations working in the same sector manage their financial reporting and taxation systems? If yes, when was last such study done? Please share a report of such study.

11. Particularly, is the leadership of the Nigam, including those charged with governance, aware of the captioned tender document issued by the UP Nigam which requires significantly younger Chartered Accountants for their finance/tax assignments? If yes, what were the reasons recorded for requiring 15 years of experience as a mandatory qualifying condition in the Tender disregarding UP Nigam’s substantially different view on the subject?

12. As seen from the above, the UP Nigam’s operations and capital are in the multiple of roughly 8 and 4 respectively. UP Nigam recently put out an advertisement to engage Chartered Accountants for Internal audit assignments, and the eligibility demanded for experience was 5 years. Accordingly, in view of the above, request your good office to respond on following questions:-(i) During the pre-deliberation on the Tender document and in particular while deciding on the eligibility conditions, was the above fact discussed, and what were the inputs supplied by Nigam’s personnel discussing it? (ii) Does, in view of the Nigam’s Managing Director, who is the signatory to the Tender document, the fact that UP Nigam is willing to consider a 5-year experienced Chartered Accountant calls for a deliberation?

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PSUs must abide by a higher principle: Propriety Nigam, being a public sector entity, confers on its office-holders the obligation to observe highest order of probity and not only should they observe caution with respect to fairness and due process of law, but must additionally pay due regard to the principles of propriety, i.e. establishing the most appropriate level of quality required in services, and then ensuring that the expenses being incurred are commensurate with the nature and quality of services received in return. The linchpin of the Principle of propriety is that you must use the Government resources with exactly the kind of care and caution you would observe while using your own personal resources. The principle of propriety isn’t honoured by merely following the due process of inviting applications from eligible firm of Chartered Accountants and then, through a fair process, awarding the contract to the most eligible firm from amongst the applicants. Rather, it additionally requires the leadership of the Nigam to assess the most effective cost of getting the required assignments executed ensuring deliverables of needed quality. If that requires awarding part or whole of the assignments as mentioned in the Tender document to a younger but amply competent firm of Chartered Accountants or even an individual Chartered Accountant with sufficient credentials, the Nigam should award the contract to such younger professionals and must not waste higher fees in engaging needlessly high experienced professionals. Further, given the mandatory high experience expected of the consultants by the Nigam, one naturally assumes the quality of deliverables, being received by the Nigam, to be of exceptionally high order. Alas! That’s not the case. As a finance practitioner myself, who has put to use tens and hundredths of financial statements in last 10+ years of pre and post qualification experience, I’ve no hesitation in stating that, among all the financial statements I ever laid my hands on, the financial statements of the Nigam are one of the worst presented financial statements. The financial statements and other statements forming part of the financial statements are replete with errors of grammar, punctuation, and present a very sorry impression of the members of Nigam’s top leadership who have signed those documents. No care seems to have been afforded to making it interesting to read. One of the principal objectives of having the financial statements of a public corporation reported to the public is to entice them to read the results of (their) Organization. Nigam’s financials acutely fail to impress a consummate professional like myself. In light of the above, your good-self is requested to have the below questions answered, point-wise:-

13. Has an internal or externally assisted study done by the Nigam w.r.t. the amount of experience and other credentials required of the Consultants to be engaged in the assignments of the Nigam? If yes, when was last such study done?, and a copy of the report of such study? If no, the reasons thereof?

14. Has there been an internal or externally assisted study done by the Nigam assessing the quality of the deliverables received by it over the years? If yes, when was last such study done?, and a copy of the report of such study? If no, the reasons thereof?

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15. Is the leadership of the Nigam, particularly, those charged with governance, satisfied with the quality of the deliverables received by it over the years?

16. What were the initiatives taken to monitor the quality of ongoing audit work? Are attendance records of Internal auditors maintained? Is Frequency of visit by Principal Auditor and staffs monitored? If yes, then provide attendance records. Was the Internal Audit Report or concurrent audit report discussed in board/committee meetings? If yes, then provide extracts of minutes in which the discussions took place during previous audit period.

17. Is it the view of the leadership of the Nigam, including those charged with governance, that even if younger but amply experienced Chartered Accountants are offered assignments, the fees paid by the Nigam would not see a reduction? If on the contrary, i.e. the leadership does believe that engaging younger but amply experienced Chartered Accountants would lead to reduction in fees, how does the leadership justify the existing level of fees being paid to the consultants?

[Please note that I comment on the financial statements of the Nigam and their quality as a stakeholder of the Organization. I do not wish to comment on the work of a senior member of the fraternity to which I myself belong, and exclude from my comments the part of the work that belonged in the domain of Chartered Accountants. However, given an opportunity, I’d be more than willing to volunteer to comprehensively review the past financial statements of the Nigam for quality, fairness and accuracy. Further, if the minimum fees guidelines of the Council of the Institute of Chartered Accountants of India permitted; I would be willing to do it absolutely pro-bono.]

What about Nigam’s fiduciary responsibilities? Our State, which had been pre-eminent centre of trade and commerce in the ancient and medieval past fell by the wayside as India stepped into the modern era. Not much changed until India attained independence and the Government of Independent India and the State Government of Bihar, like all other State Governments, set-up several public sector organizations to invest in long-gestation infrastructure sector. Private sector too joined the chorus, albeit very hesitantly. The reforms of 1991 made a marked shift in how the Indian economy was to be run afterwards. The Government at the Union, and all the States retreated to their role as ‘facilitators’ and a confident private sector began to take the burden of uplifting the nascent Indian economy. While most of India witnessed a major surge in private participation in most industrial sectors, there were few States which didn’t see any impressive investment in the private sector. Bihar was one of them. Even to this date, roughly 28 years since 1991, the public sector occupies a pre-eminent position in Bihar’s economy. We do not have many large scale private enterprises, and the fewest that we do have, have a very limited operations in our State. Expectedly, for finance/ legal practitioners, as for professionals in any other field, public sector continues to be major source of their work, and by extension, revenue. Indeed, even today, public sector organizations in Bihar keep the commanding heights of the State’s economy. Nigam, with its revenue base of 183.22 crs (2014-15), clearly, is one of the premier-most public sector organizations in Bihar. Nigam plays an important role in augmenting economic activities in Bihar. Engaging professionals, such as Chartered Accountants, Valuers, Contractors, DPR preparers, etc opens up ample professional opportunities in a depressed economy like ours. The leadership of the Nigam must see to it that

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unnecessarily excessive eligibility criteria in their tenders do not have the effect of limiting the opportunities for a tiny minority of finance practitioners, particularly when, as I’ve attempted to show above, the assignment may not necessarily demand experience or other credentials of very high quantum. In light of the above, please answer the followings:-

18. Does the leadership of the Nigam, particularly those charged with governance, agree that the eligibility criteria as stipulated in the Tender document has the effect of excluding many competent and sufficiently credible Firm of/ Chartered Accountants who may have otherwise had the occasion to, at least, participate in the Tendering process? If no, please explain why?

19. Does the leadership of the Nigam, particularly those charged with governance, believe that, given the special position held by the Nigam in context of Bihar’s nascent economy, they have not been derelict in discharging Nigam’s fiduciary responsibilities w.r.t. expanding the professionals’ economy for younger participants?

Conclusion Even though my firm fails to qualify the Tender’s eligibility hurdle, I have considerable experience of handling such assignments before. I qualified Chartered Accountancy in May, 2012 in my first and maiden sitting. Previously, I secured All India Sixth Rank in CA entrance and was, thereupon, awarded scholarship for the full duration of my Articled training. Subsequent to availing of the membership of the Institute of Chartered Accountants of India, I worked with HCL Corporation (promoter-holding company of $6bn Indian conglomerate), American Express (World leader in credit cards and travel payments), and Trifecta Capital (India’s first Venture debt fund). As part of my wide-ranging industrial experience, I have independently handled, inter alia, financial reporting, auditing, taxation, and treasury responsibilities, year-after-year, for as large as Rs. 30,000 crs Entity. Yet, all I wish is to have a seat at the competing table to be able to argue suitability of my/ my firm’s candidature. But, the eligibility conditions stipulated in the Tender document has the effect of having me disentitled even to that opportunity! Indeed, I write for many of my contemporaries and peers when I state that the Tender document has us all imprudently excluded. The young, passionate breed of Chartered Accountants based in Bihar today offer resounding optimism about the future of Chartered Accountancy profession in the State. They are excitedly looking forward to contributing to the building of a sound financial reporting system at Bihar based organizations, public and private sectors alike. Nigam, by disregarding everyone below 15 years of experience, is sending an extremely de-moralising signal to the entire fraternity of young finance professionals in Bihar that the former has little to offer to, or gain from, the latter. But, It is not Nigam’s place to make that judgment particularly when, possibly, most of Nigam’s assignments, even under current tender, will be executed by same very lot of young professionals. Of course, in that case, they may only get the salary and the enterprise surplus would go to the tender awardee. World over, Governments in developing economies are orienting policies of their respective State towards making it conducive, and far easier, for young individuals to participate in the entrepreneurial economy, and are using incentives, including offering risk-financing, to steer

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the youth into being a profit-earning, and not just salary-drawing, members of their economies. Here in India too, the schemes such as Startup Yojana, Standup Yojana, Mudra Yojana, Skill India, PMEGP, launched by the current Government at the Centre are aimed precisely at that objective. Of course, a large part of these loans/advances may turn bad, and, most likely, will. But, it is still a better course to pursue for an economy having large youth bulge like ours, than to keep the profits of the entrepreneurial economy reserved for a fortunate few. Similarly, the Government of the State of Bihar has launched their own risk-financing schemes to lure local youth into entrepreneurship. Seen in this context, Nigam’s Tender document is in complete contrast to, and might I add bears total contempt for, the spirit of ongoing large-scale mega-initiatives of the Governments at the Centre and in the State. Indeed, from where I stand, even if the leadership of the Nigam isn’t convinced of the ability of younger professionals to turn around the assignments mentioned in the Tender, it can’t choose to not invest in them. Taking cue from UP Nigam, it could break up the assignments and invite differently experienced professionals for different assignments. By disowning its fiduciary responsibility of investing in Bihar’s youth, i.e. its future, Nigam is setting a disastrous precedent. Finally, I wish to sincerely request the Chairman of the Nigam, through you, to consider the facts stated in this letter, and cause the recall of the published Tender immediately, and later issue a revised Tender RFP with conditions such that all of us could approach the Nigam with our credentials and there will be a wider array of consultants for the Nigam also to choose from. At the very least, I believe the Tender should be split-up and different experience requirements may be laid out for different assignments after making a wider consultation within and outside of the Nigam. I think it is important to state here, albeit it should be obvious, that the only motivation behind writing this letter is an avowed public interest. Further, I’m not accusing, nor even insinuating, any wrong-doing what-so-ever, legal or ethical, on part of any one within or outside of the Nigam. I just happen to genuinely believe that the eligibility conditions stipulated in the Tender document are not just excessive but, as I argued above, also have the effect of excluding hundreds of highly able Chartered Accountants who can execute all of Nigam’s assignments with impressive finesse and precision. Most certainly, I wish to have the answers to all the questions at the earliest. Just to dispel any ambiguity, please treat all the nineteen (19 Nos.) questions asked above as having been asked under Section 6 of the Right to Information Act, 2005, and accordingly, should you decide not to answer any question or part thereof, kindly supply your reasons for so disregarding the whole or any part of those nineteen questions. I’m attaching the duly-filled RTI form and stamp of required amount with this letter. Also, I will be more than willing to bear any expenses that the Nigam may have to incur in arranging resources to have those nineteen questions answered. In case you wanted me to pay such expenses in advance, you can write to me at kunal.kishore@icai.org indicating the amount that I have to pay, I’d be more than happy to make the wire immediately, or, in any case, within a day. Further, you need not send me physical letter to my address. An email from any official at the Nigam to my email id as above (kunal.kishore@icai.org) containing responses to my questions as above would be fine with me.

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A soft-copy of this letter may be posted on the web for information of all the stakeholders. An early response from your side would be highly appreciated. Thanking you in advance. Yours, humbly,

CA. Kunal Kishore Partner RBKK & Associates, Chartered Accountants

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For information and necessary urgent action, a copy of this letter is being also

forwarded to the following Officers in top leadership of the Nigam:-

Sri Jitendra Srivastava (IAS) Chairman Bihar Rajya Pul Nirman Nigam Limited 7, Sardar Patel Marg

Patna, Bihar - 800 015

chairman@brpnn.co.in

Sri Umesh Kumar Managing Director Bihar Rajya Pul Nirman Nigam Limited 7, Sardar Patel Marg

Patna, Bihar - 800 015

md@brpnn.co.in Yours, humbly,

CA. Kunal Kishore Partner RBKK & Associates, Chartered Accountants

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