How to make a mountain out of a mole hill

Dear fellow Members

 

1.    The Society has sent letters to members dated 10^th January, 2009 asking us to pay a sum of Rs. 12,000/- towards Security Guard Services, supervision, site engineers, Electricity Expenses, administrative expenses, green belt and other utilities and common areas.

 

2.    The letter states that this was approved by the members at the AGM held on 10^th February, 2008. To the best of my knowledge this item was not on the agenda for the AGM nor the members ever approved it. If this was approved on 10^th February, 2008 how is it that members were asked to pay before that date and society actually collected these amounts?

 

3.    The list does appear to be a longish one and I tried doing some calculations on a simple Excel sheet by taking practical figures and realised that howsoever liberal I may have been, the numbers just do not add up.

 

4.    A copy of the Excel sheet is attached for the members in general and Mr. Amarjit Singh in particular such that he can guide us as to where is the gap? You may do your calculations by changing the cells in white. The results will appear in grey.

 

The excel sheet is reproduced below

 

Particulars	unit Salary/Expense	Nos	Salary per month	Expense per annum
Security Guards	3,500	2	7,000	84,000
Site Engineer	25,000	1	25,000	3,00,000
Secretary's Salary	10,000	1	10,000	1,20,000
Green Belt maintenance expense	5,000	1	5,000	60,000
Electricity Expense	10,000	1	10,000	1,20,000
Other administrative expenses	5,000	1	5,000	60,000
	Total		62,000	7,44,000
Amount charged by the Society under above heads			1000	12,000
No. of members				95
Amount collected from members			11,40,000
Excess amount collected from members				3,96,000
Excess amount collected from each member				4,168

 

5.    Rs. 4000 is certainly not a small amount as is proven by the fact that of the 95 members only 15 are stated to have paid the amount. What needs to be highlighted is that as high as 84% of the members are not enthused to pay, as demanded. The reasons are not unknown but do need to be documented and discussed since I believe that for expenses like these we should work on the principle of Zero based budgeting, more so in recession hit times. What worries me more is that this is not a one time expense but a recurring one.

 

6.    As you may notice, the principal head is the salary that we pay to Site Engineer. It adds up to Rs. 3.00 Lacs per annum. I have nothing personal against the Site Engineer but the question is do we really need him or so to say should we be paying for his salary? The site Engineer was recruited to oversee the site development which concerned all members. After the site development has been completed, he is supervising the construction of houses built by some of the members. It is the stated position of the Society that the houses are being built by the members and the Society has merely suggested the names of the contractors. Either his salary should be paid by the contractors concerned or by the members whose construction is being supervised by the site Engineer.

 

In ABC analysis, this is an ‘A’ ticket item and needs specific attention. Per member expense on this head alone is Rs. 3158/-

7.    On secretary’s salary my observation is that since we are paying to him, he should be accountable to us as a whole rather than a specific individual. A number of members have observed that he is rude and rough with them. There are mails from members to that effect. I have also personally experienced that. There are a number of documents that he has signed knowing well that they are false. I have copies of all of them and can provide to any member wishing to have them.

 

Additionally, a number of members have complained that the secretary does not observe fixed hours for attending the office. My observation is that the secretary must be available in the office during specified hours which should be notified to the members.

 

8.    The heads “other utilities and common areas” appear to have been added merely to make the list a longish one. The utilities are supposed to be Electricity which has already been accounted for. Water is the other utility which is extracted from the ground using tubewell, already paid for by us. My Contractor has paid an unheard of rate of Rs. 9.00 per unit to the society for consumption of Electricity since I am constructing on our own. As I have said before, it is the claim of the society that all members are constructing on their own, whether through society nominated contractors or otherwise. I think all of us would wish to know whether all members have paid at the same rate or this rate is applied only to members who are constructing on their own. In any event I hope this earning is duly accounted for in the books of the society.

 

9.    It is the stated position of the society that the sum is being demanded from the members for meeting the expenses, which are incurred on monthly basis rather than at the beginning of the year itself.

 

My suggestion is that we should pay these expenses on quarterly basis rather than on annual basis on the pattern of advance Taxes. The society should forward a statement of expenses actually incurred at the close of the quarter. This would not put burden on the members and also ensure accountability.

 

10. In response to a discussion I had with Mr. Amarjit Singh as to non receipt of a mail from the society, Mr. Singh clarified that the Society does not have its own telephone and internet connection. He followed this up with his Letter dated 15^th March, 2009 which stated that “ I have requested our secretary to immediately apply for a telephone connection and internet connection and this will add to the monthly outflow” With due respect I find that outrageous. I had merely asked for my copy of the circular letter which was sent to all members except me.

 

Even a 24 x 7internet connection with unlimited downloads costs Rs. 649 per month say Rs. 700 per month. That would mean Rs. 8400 per annum. I really wonder how with addition of Rs. 8400 per annum, an annual collection of Rs. 11.40 Lacs would fall short.

 

It is only then I realised how to make mountain out of a mole hill.

 

I welcome views of the members on this such that we could arrive at a consensus figure to be paid by the members. Alternately, I would request Mr. Singh to let this be part of the Agenda for the AGM.

 

Regards

 

Sandeep Khurana

Response to Mr. Amarjit Singh's e-mail

Dear Amarjit

 

I am well. Thank you. I trust you are doing well too.

 

1. It is not a question of liberty. You have all the rights to do so. You could have always sent BCC. I appreciate that you sent CC. As a matter of fact, I believe that by sending copies to others there is a better understanding and development  of trust between the members. One remains connected to each other and we truly act as a co-operative Society. Failing which, I believe, it will become a Pvt. Ltd. Company.

 

2. Contrary to what you have requested, I have to request you to not take away my or for that matter any one's right not to mark copies to other members. In fact I would request you to send this mail to all the members such that all of us could benefit.

 

We do need to discuss between the members our thought process as to what we think is right for us as a Society and how should we progress. In a fast paced world e-mail is perhaps an effective way to remain connected to each other. To illustrate, I called you on Saturday 12th April. You could not take the call. I understand, you must have been tied up. Similarly others could be tied up when I call them up or they call me up to exchange notes. On e-mail, we still exchange notes and yet we respect each other's time.

 

3. I appreciate that you have been away on office tour. I also appreciate that you will hold a meeting as soon as you are back. However, if you start believing in what I believe, as pointed out in 2 above, may be our administration could be far far effective.

 

3. To illustrate, I do not agree that fixation of AGM has to wait for the MC to meet. That can be done over e-mail. Similarly, I do not appreciate why withdrawal of FIR against me has to wait for MC to meet. We have already lost substantial time on this. Your own e-mail is of 9th March, 2009. Look to me that nothing has moved since then. Could you update me on the progress achieved on that front.

 

4. Further, sending the Balance Sheet to members need not wait your instructions. We have kept a secretary and pay him a fancy salary for that. He is obliged to send B/s to members within a reasonable time say by Aug-Sept. What is the use of sending annual reports after elapse of 1 year. I hope that is not the intent. Any way past is past. May be no one asked for a B/s. I am requesting now. can we have the B/s now?

 

5. You have rightly touched the subject of swimming pool. You are a person of finance and will surely understand it better. Even a layman will understand a bit. Without financial closure, you need not and do not start a project. What was the fun of starting construction of swimming pool without having achieved financial closure? I am disappointed more because instead of having one incomplete project we have two incomplete projects. More the merrier does not have universal application. I am reminded of movie Hum hai Rahi pyar ke.

 

6. I am afraid I do not share your perception of there being a case of cost overrun. I have requested you to explain in my previous mail that whether this is a case of mismanaging the funds. I have not yet received an answer to that. To my mind, the funds were raised for site development and should have been used for site development alone.

 

7. You did call me up on 30th March, 2009 and discussed with me you intent of inducting Kailash and Rathore. I am amazed that you did not call up Kailash for that or for that matter Mr. Rathore. I have checked up with each of them. Normally people talk to person to be inducted before they share their thoughts with others. It is over 45 days since you spoke to me.  I am unable to hazard a guess as to the true reasons for this inordinate delay. May be you can throw some light.

 

At a tangent, may I add that when you keep the majority out, and for that matter specific members, you can not win their trust. I have always believed that before you ask people to trust you, it is imperative that you trust them first.

 

8. You have also mentioned of some members being intermittently out of town. I perceive that you must be referring to Mr. Joneja. He is on the high seas for good 8-9 months.  That was known when he was nominated.

 

9. I understand that more than meeting the lawyer, you need to meet the members. Kaushik has requested you to meet the members with who you have not met. Could you take out some time despite your pre-occupation?

 

10. I will be happy to discuss the lapses of the previous MC such that accountability could be fixed. My only request is that let us discuss in an open forum of members say AGM formal or informal rather than in a covert and surreptitious  manner as was done in 2005, because that will be a disaster.

 

I look forward to meeting you.

 

Regards

 

Sandeep Khurana

 

 

----- Original Message -----

From: Amarjit Singh

To: Sandeep Khurana

Cc: Krishna Samiti ; Rajbir Singh ; S S Kaushik ; Shyam Joneja ; kailash rustagi

Sent: Monday, April 20, 2009 8:17 AM

Subject: Re: Financial implications of the mail from the Society

Dear Mr Sandeep Khurana

How are you? I have taken the liberty to mark a copy of this to some of our esteemed members who have written to me or with whom I have had dialogues on some of the larger subjects concerning the society.

 

I am in reciept of both your mails and have been out of Noida / Delhi on office tours. I am back on 27th April and will hold an MC meeting at the earliest to address these issues. Let me assure you that these issues are also on the top of our minds and the members together will need to find solutions as we move forward.

 

The MC is committed to move forward and these issues have already been highlighted in the letters we have sent. We may not have covered specifics like swimming pool etc but you and I jolly well know that the club house will cover all these! I have had meetings with the Architect and his team also in order to find out the state of Civil costs and the overruns for some of the items. Some monies have been spent on unbudgeted items too, like the green belt.

 

There are lots of areas which are of concern included in the letter ( which include increasing the MC to include some more members, however, two to three MC members have been intermittently out of town, hence the meeting to discuss all these issues has not been held ). We shall hold this soon and also decide  / discuss on a date for the AGM.

You too have raised issues on the Contractor's case. the MC needs to meet with the Lawyer to ascertain the facts.

 

May I request you to please refrain from copying all members till we get to the actual facts and stop assuming. We need to together build trust and bonding with each other to enable the Society to move forward. We can continue to dig the past, however, i may not be able to predict as to what damage it can do further, we are already behind by almost two years. The more we move on the past can only set us backwards. There may have been many lapses ever since the Society was formed from late 1990's, many monies spent on behalf of members by the past MC's ( large sums after 2003) , but if we need to dig into all that...my question is what are we gaining?

 

The MC's endeavour is have things completed before the Commonwealth Games so that our value creation can pay us dividends. The Commonwealth games date may just be a target for us to set our eyes on either to start living, dispose, rent our properties. ]

 

Kind regards,

 

Amarjit Singh

Financial implications of the mail sent by Society

Dear Fellow Members

 

Greetings for the day

 

I wish to bring your attention to my e-mail dated 13.04.2009. I had raised my concerns and had requested the Secretary to respond thereto. Mr. Rajbir Singh and Mr. S.S. Kaushik also requested alike. I am disappointed that there has been no response.

 

2.   No one wishes to have uncomfortable questions. But it is important for all of us to understand the financial implications of the contents of the mail forwarded by Mr. Amarjit Singh.

 

3.     In his mail, Mr. Singh has stated as under:

 

“The roads, electricity sub station transformers, club house, amphitheatre, shopping complex, parks, green belt all need an urgent decision and funds to start completing them. I have already requested the Secretary to dig out all the old decisions, issues, future plans and I will shortly communicate to you all the present state and plans so that we can jointly address these common facilities”.

 

4.   It was interesting to see the photographs sent by Mr. Singh. I would have been happy had the photographs matched the contents of the text. The text clearly outlines that the roads are incomplete, the sub station and transformers are yet to be put up, the amphitheater is yet to be completed, the parks and green belt are in a state of neglect.

 

5.   More than the physical state of the site, what worries me is the financial implication of the state of affairs. There is a clear admission on the part of Mr. Singh that the Bank Balance of the Society is in precarious state. I appreciate his admission of the poor state of affairs of the Society.

 

6.   The enormity of the financial implications of this incomplete state of affairs shall wake up some of our members from the deep slumber they are in.

 

7.   I have dug up the old files and traced out the letter which was sent to the members in September, 2003. (Copy enclosed as PDF) The aggregate cost was then estimated to be Rs. 369.72 Lacs. Based thereon the Society had demanded a sum of Rs. 3,89,500/- per member which has been paid by all of us. The Society demanded additional Rs. 50,000 per member which was paid by all of us in December, 2005. The work that we see on the internal development front had been completed by the Society before the allotment of plots in September, 2005 and no work on the common pool account has been done by the society after that.

 

8.   If you carefully read through the letter of Mr. Singh, the Electricity Sub Station and Transformers are yet to be put up. Roads need to be laid. Amphitheater needs to be put up. The costs estimated by the Architects towards these heads in 2003 were as under:

 

Electricity Sub Station and Transformers	19.05 Lacs
Roads	57.23 Lacs
Amphitheater	Included in the sum of Rs. 53.30 Lacs

 

9.     From these figures you and I can easily estimate the actual sums sum that the society may have incurred under the respective heads and we will have the sums which still need to be incurred. My estimate is that it will be an enormous sum and Mr. Singh was just preparing us for the bad news. The situation becomes alarming since there will be many heads which Mr. Singh may not have touched at all, such as external lighting, pavements, and landscaping.

 

10.  I would like the Society to circulate to the members without any delay a headwise detailed sheet of costs estimated, costs incurred and costs still to be incurred under each head.

 

11.  Even pending the receipt of that sheet from the society, it is clear to me that If the Society had collected all the money that was required for the completion of the internal development work, that money should have been spent actually for that work. Now if you correlate that statement with the precarious state of affairs remark, it is clear to me that the sums collected for internal development have been spent elsewhere which I demand that the Society should explain.

      12. The Society collected these sums in advance which were deployed in Fixed Deposit                          before the allotment of plots. The rate of interest was also attractive. The interest                                  earning  was also handsome. The interest also belongs to members.  

  

13.  Could it be that these funds have been paid to the Contractors for the construction of individual units? Could it be that these funds have been deployed elsewhere? If not why would the financial situation of the Society be termed precarious?

 

14.  The Society should have given an account of the funds collected to the members on its own. Otherwise what is the purpose of having paid staff at all? The Society has not even forwarded the annual accounts for the year ended 31.03.2008 even after elapse of 1 year since the close of the financial year.

 

15.  Mr. Singh has stated that a sum of Rs. 5.00 Lacs is due from the defaulting members. The obvious question is whether that default is to the society or whether that is a default of a member vis –a-vis the contractor? The payments were last demanded by the Society in December, 2005. Does that mean that this money was due for 3 years and the previous management did nothing about this? Why should the names of defaulting members be not published? Why were their names included in the list of members prepared for the elections?

 

16.  In the EGM that was held in 2008 it was openly claimed that a particular member owes to a contractor a sum of Rs. 6.00 Lacs. I know for sure that many more members have received demands from the Society for payment of sums ranging from 2-4 Lacs to the contractors. The aggregate sums that way would not be less than Rs. 30 Lacs. If that is so, I sometimes wonder why the contractors are NOT demanding money from the members concerned.

 

17.  In his mail Mr. Singh is simultaneously talking of completing the Club house and shopping complex. I do not know why did he not talk about the swimming pool. What will be the cost of these? If we did not get what we have already paid for, can we trust that the additional sums that we may be asked to pay will be deployed rightfully?

 

I now realise why the mail of 9^th March, 2009 was not sent to me in the first place.

 

I will be happy if we can have a response to these questions, howsoever difficult they may be.

 

Regards

 

Sandeep Khurana