Bid capacity certificate by CA
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In the competitive world of government and private tenders, having a strong financial standing is crucial for securing contracts. One essential document that can help demonstrate your financial credibility is the Bid Capacity Certificate issued by a Chartered Accountant (CA). This article will explain what a Bid Capacity Certificate is, why it’s important for tender participation, and how you can obtain one.
What is Bid capacity certificate?
A Bid Capacity Certificate is a document provided by a Chartered Accountant that certifies a company’s financial capacity to undertake a particular project. It is an assessment of the company’s ability to execute contracts based on its current financial strength, past performance, and ongoing projects. The certificate typically includes details such as the maximum value of work the company can handle at a given time.
What is the formula to calculate Bid capacity for tender?
Bidders will be qualified only if their available bid capacity is more than the total bid value. The available bid capacity will be calculated as under:
Bid capacity = ((A x N x 2) – B)
Where
A = Maximum value of works executed in any one financial year during the last five years (Normally 3 or 5 years as mentioned in tender document).
N = Number of years over which the project is to be completed (duration in years)
Eg. Period of completion up to 6 months to be taken as ½ year.
B = Value of existing commitments and on-going works to be executed.
Example Calculation
Suppose:
- A contractor’s maximum work completed in a year over the last 3 years is Rs. 100 lakhs.
- The project duration (N) is 2 years.
- The contractor has current commitments (B) worth Rs. 10 lakhs.
Then,
Bid Capacity=(100 × 1.5 × 2)−10 = 290 lakhs
So, the contractor’s bid capacity for new projects would be Rs. 290 lakhs or 2.90 crores.
This formula helps to ensure that contractors aren’t overextending their resources, balancing workload, and managing project timelines.
Read about – How to calculate Bidding capacity of contractor
Contents of a Bid Capacity Certificate by CA
The contents and format of a Turnover Certificate by a Chartered Accountant (CA) vary based on the specific requirements and the purpose for which the certificate is issued. A basic turnover certificate for any purpose will typically include the following details:
Name and Address of the Business
Registration Details under the Respective Act (e.g., Income Tax, GST)
Purpose of the Bid Capacity Certificate
Period Covered by the Certificate
Documents Checked to issue the Certificate
Details of the Party Issuing or Referring the Certificate
Method of Calculation Used
Details of the Practicing CA like membership no., Firm registration no., etc
Unique Document Identification Number (UDIN) of the Certifying CA
Any Other Information, as required
Bid Capacity Certificate by CA format
(On the letterhead of the Chartered Accountant firm)
TO WHOMSOEVER IT MAY CONCERN
We have verified the books of accounts and related documents of M/S [Business name] having [PAN] and [GSTN], situated at [Business address]. Based on our verification, we hereby certify the bid capacity of this entity as per the following details:
Sr. No. | Financial Year | Total Turnover (in Rs.) |
1. | 2021-22 | 1,54,33,272 |
2. | 2022-23 | 1,64,19,115 |
3. | 2023-24 | 5,06,98,768 |
Total | 8,25,51,155 | |
Maximum Turnover (A) | 5,06,98,768 | |
Bid Capacity=(2×A×N)−B
Where:
- A is the maximum turnover achieved in any one year during the last three years.
- N is the number of years for which the work is to be awarded.
- B is the value of the existing commitments and ongoing works to be completed during the next N years.
Value:
- Turnover for 2021-22: ₹1,54,33,272
- Turnover for 2022-23: ₹1,64,19,115
- Turnover for 2023-24: ₹5,06,98,768
The maximum turnover (A) in any one year is ₹5,06,98,768
Assuming:
- N=1
- B=0 (assuming no existing commitments or ongoing works)
Bid Capacity= 2 × 5,06,98,768×1 − 0
Bid Capacity= 2 × 5,06,98,768
Bid Capacity= 10,13,97,536
Bid Capacity of M/S [Business name]: ₹10,13,97,536
For A R Dhorajiya & Co.
Chartered Accountants
Firm Registration No. XXXXXX
[Sign of CA with stamp]
CA Arjun Dhorajiya
(Proprietor/Partner)
Membership No. XXXXXX
UDIN: XXXXXXXXXXXXX
Place:
Date:
Bid Capacity Certificate by CA Sample
How to obtain Bid Capacity Certificate by CA?
Obtaining a Bid Capacity Certificate is a straightforward process, but it requires thorough financial documentation and analysis. Here’s a step-by-step guide:
-
Engage a Chartered Accountant: The first step is to engage a qualified Chartered Accountant like us who has experience in preparing Bid Capacity Certificates.
-
Provide Necessary Documentation: You will need to provide your CA with comprehensive financial records, including details of ongoing projects, previous ITR, balance sheet, P&L A/c and tender document. This information is critical for the CA to accurately assess your bid capacity.
-
Financial Analysis: The CA will analyze your company’s documents to determine your maximum bid capacity. This involves calculating the value of work you can handle based on your current resources, financial stability, and past performance.
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Certificate Issuance: Once the analysis is complete, the CA will issue the Bid Capacity Certificate with sign, stamp and UDIN, detailing your company’s bid capacity and other relevant financial information.
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Submission with Tender: Finally, submit the Bid Capacity Certificate along with your tender bid to demonstrate your financial capability to undertake the project.
Why is a Bid Capacity Certificate Important for Tenders?
When bidding for tenders, especially in large-scale projects, the issuing authority needs to ensure that the bidding company has the financial capability to complete the project. A Bid Capacity Certificate serves as a key piece of evidence, assuring the tendering authority that the bidder is financially sound and capable of fulfilling the contract’s requirements.
Here are some reasons why a Bid Capacity Certificate is important:
Demonstrates Financial Strength: The certificate highlights your company’s financial capacity, reassuring the tendering authority of your ability to complete the project without facing financial difficulties.
Enhances Credibility: Having a Bid Capacity Certificate from a qualified CA enhances your company’s credibility and increases your chances of winning the tender.
Compliance with Tender Requirements: Many tenders, especially in the government sector, require bidders to submit a Bid Capacity Certificate as part of their bid. Without this document, your bid may be rejected.
Competitive Edge: A well-prepared Bid Capacity Certificate can give you a competitive edge over other bidders who may not have as strong financial credentials.
Get CA Certificate From Us
Get your Bid capacity Certificate easily and affordably by ordering via call on +91 9769647582.
Our Team will guide you every step of the way. Whether it’s a Bid capacity, turnover certificate, net-worth certificate, or any specified certificate – we’ve got you covered.
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Frequently Asked Questions
You can obtain services from any qualified Chartered Accountant (CA) like us who is a member of ICAI for your specific needs.
Yes, UDIN is mandatory for all CA Certificates, according to the Q28 of FAQ on UDIN released by ICAI.
Every certificate we provide comes with a unique ID – the UDIN (Unique Document Identification Number). You can effortlessly check its authenticity online at https://udin.icai.org/search-udin.
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