Average Annual Turnover Calculator

The figure is an arithmetic mean: turnover for three completed financial years, added and divided by three, measured against a rupee threshold the notice sets. The arithmetic is trivial. What causes rejections is which three years, which turnover, and what the threshold is a percentage of.

The standard formulation reads: average annual financial turnover of the bidder during the last three years ending 31st March of the previous financial year. That wording, which the Department of Expenditure's Manual for Procurement of Works uses, settles two things. The years are financial years ending 31 March, not calendar years and not assessment years. And the window closes on a 31 March that has already passed, so the year you are trading in never counts, however good it is.

The threshold is set by the buyer, almost always as a percentage of the estimated cost. The same manual suggests at least 30 percent of estimated cost as a benchmark for the officer drafting the criterion, but that is guidance to a buyer, not a rule binding every notice. Departments set their own figure and many set it higher.

Turnover here means revenue. It is unrelated to the employee turnover rate the same phrase means in HR. The clause is set out at length in how average annual turnover is calculated, and sits among the other eligibility criteria.

• Find the clause. It is in the notice inviting tender or the eligibility section of the tender document, not in the portal listing. The public list feeds do not publish eligibility criteria at all.
• Note three things from it: the exact financial years, the threshold in rupees, and any definition of turnover the notice supplies for itself.
• Take each year's turnover from the audited profit and loss account. In Indian company accounts that is revenue from operations, shown net of GST, and it excludes the separate other income line.
• Add the three figures and divide by three. Divide by three even if one year was weak or nil, unless the notice says otherwise. A nil year is still a year in the window.
• Compare the average with the threshold. If the average is short, the gap is the threshold minus the average, and the total the three years must add up to is the threshold multiplied by three.
• Get the evidence into the form the notice asks for, usually audited balance sheets and profit and loss accounts for each year, or a certificate of turnover from a chartered accountant carrying seal, signature and membership number.

The calculator above does the arithmetic in your browser. No turnover figure you type is transmitted or stored.

Other income. Interest on fixed deposits, rent, insurance claims and profit on sale of assets sit in the statements but are not turnover. Including them inflates the declared figure and the mismatch shows up the moment an evaluator opens the profit and loss account.

A GST inclusive figure. Turnover pulled off GST returns is often the gross taxable value. Turnover in audited accounts is net of GST, because tax collected is not revenue. The two numbers differ by a lot and the notice normally asks for the audited one.

The current year. A firm having its best ever year gets nothing for it until that year closes on 31 March and is audited. Provisional figures for the year in progress do not enter the window.

The wrong entity. Turnover of a parent, a sister concern, a group company or a partner's other firm is not the bidder's turnover unless the notice expressly allows it. Bids are evaluated in the name of the entity that submits them.

A figure that does not tie back. The declared turnover is read against the audited statements and against the income tax return, and a discrepancy is treated as a discrepancy rather than a rounding difference. See GST and ITR requirements and why tenders get technically rejected.

Where a notice defines turnover in its own terms, its definition governs, and the chartered accountant's certificate should be issued against that definition rather than the generic one.

Turnover from works only. Many works tenders ask for turnover from construction, or from works of a similar nature, rather than total turnover. Trading and service income is then excluded.

Updating to a common price level. Some notices bring earlier years to current price level using a multiplying factor they state, the same device that appears in the bid capacity formula as turnover updated at the current price level. On an illustrative factor of 1.21 for the year two years back, Rs 1.2 crore enters the sum at Rs 1.45 crore.

Joint ventures. Where a notice permits them, turnover is usually met by the partners collectively, with a separate minimum on the lead partner. Many notices do not permit them at all. See joint venture bidding.

Relaxation. Under the General Financial Rules 2017 a buyer may relax prior turnover and prior experience for a startup recognised by DPIIT, subject to quality and technical specifications and to provision being made in the tender document. That is permissive. It is not the exemption from EMD and tender fee that micro and small enterprises hold under the Public Procurement Policy for Micro and Small Enterprises 2012, and MSE registration does not by itself relax a turnover clause. See startup exemptions and MSME benefits.

It tells you one clause is satisfied. It says nothing about the rest of the technical evaluation, and turnover is rarely the clause that kills a bid on its own.

Still to check: similar work experience, which is judged on scope and value together and needs completion certificates rather than work orders; the solvency certificate and its validity date; your contractor registration class, which caps the value of a single work independently; and, on works tenders, available bid capacity, which the bid capacity calculator computes.

Turnover also measures size, not liquidity. A firm can clear a three-year average comfortably and still be unable to carry the contract, because the money a public contract locks up sits outside the profit and loss account: earnest money until refund, margin against a performance guarantee for the full life of the guarantee, retention through the defect liability period, and the gap between certifying work and being paid for it. That is a working capital question, covered in EMD and working capital.

Avsar reads the tender document itself, extracts the eligibility criteria, checks them against your company record and cites the clause and page for each verdict, and tracks EMD and performance guarantees so you can see what capital a bid commits.

One option is not on the table. Certifying a turnover you did not do is a false representation in a bid, and misleading or false statements in the qualification documents are a stated ground for disqualification, with blacklisting available afterwards. A rejection is recoverable. A debarment across a department is not.

What is worth doing:

• Read the clause again for a definition that helps you. If it asks for turnover from works of a similar nature and your total turnover carries trading income, the works figure may be closer than you assumed. If it carries a price level updating factor, apply it.
• Raise it at the pre-bid meeting. Criteria do get revised, and a revision only counts once it is issued as a corrigendum.
• Check whether a joint venture is permitted, and on what split of the criterion.
• Look at the smaller packages. The threshold moves with estimated cost, so the same work split into packages usually has a threshold you clear.
• If you are DPIIT recognised, check whether the tender document provides for relaxation of prior turnover.

Then apply the bid, no bid test honestly. A bid that fails an arithmetic gate costs the fee, the EMD and a week of somebody's time, and it fails at the first table.