STANDARD OPERATING PROCEDURES FOR PROCESSING ANNUAL ACTION PLAN (BUDGET)


(Ref: KVIC/BGT/Budget Guidelines – 2018-19 Dated: 12/12/2017)


1. Introduction:

The Khadi & V.I Commission has been assigning annual target on the basis of additional infrastructure deployed in various schemes of KVIC and by enhancing the target to the tune of 20% in case of normal institution. The budget targets are discussed by the State Level Budget team headed by the State Directors and proposals are placed before the SFC (Khadi) for approval. The Standing Finance Committee (SFC) considers the proposals and approves them. The targets are then conveyed to Kls in the form of budget allocation letters. The annual targets are approved as Block provision for cotton, silk, wooden and polyvastra.
1.1. The institutions shall prepare their own plan for achieving the target approved by SFC. No proper exercise is carried out for analyzing the market based annual budget for most potential products.
1.2. The Kls usually increases their production by 10-20% annually without considering the demand potential in the market. Mostly the Kls fix their annual targets based on the production rather than on market demand.
1.3. This has resulted in huge stock and the institutions are unable to sell their products. The working fund is blocked in the form building up of huge inventory. Hence the commission has decided in its 647th meeting dated 26.07.2017 to adopt product based annual budget from the year 2018-19.
1.4. KVIC has also been approving the budget of Kl registered with State KVIB’s which is unwarranted, the respective KVIB shall approve the product based budget from 2018-19 onwards.

 

2. Product based Annual Action Plan (AAP) for 2018-19

2.1. The Ministry of MSME has conveyed the decision of target of sales of khadi @Rs.16,100 crores by 2022. The KVIC has prepared Khadi Vision Document with goal of achieving Rs.11,500 crores of Khadi production by the year 2021-22. This will be possible only if a focused Annual Plans are prepared, planned and implemented by all the Kls, KVIBs and KVIC in a systematic and sustainable basis.
2.2. Therefore, it is decided to adopt the product based Annual Action Plan from 2018-19 onwards in the following manner
2.2.1. The Khadi Institutions shall identify the fast moving products which have market potential based on their sales performance during last 3 years.
2.2.2. Khadi institutions shall also identify the khadi products which contribute maximum to their production and their sales revenue.
2.2.3. The Khadi Institutions shall prepare the list of such products taking into consideration of above two factors and they shall prepare a list of actions which they need to take to improve the product’s colours, design, quality, feel, finish and value addition for each of their identified products.
2.2.4. They shall prepare a 5 year Action Plan with year wise target and achievement in respect of each of their identified products to achieve the projected growth in consonance with the Khadi Vision 2022.
2.2.5. They shall prepare the Annual Action Plan (AAP) for producing the identified products as given in the explanatory note at Annexure – I
2.2.6. They shall prepare month wise action plan for achieving the annual target for each product and they also shall prepare action plan to increase the number of artisans so that the production is achieved.
2.2.7. The Kls shall prepare a detailed plan for marketing their products. The marketing plan shall clearly state how much will be sold through its own outlets, wholesale to other Kls, marketing through private channels, franchisees, SHGs, Govt. supply, retired employees of Kls etc.
2.2.8. The Kls shall put in place MIS developed by KVIC for achieving the target by close monitoring and supervision.
2.2.9. The Kls will approach the banks for their working capital requirement.
2.2.10. Allocation of Target : The production target for various products has to be fixed on prime cost of product i.e. only up to processed fabric stage as given in the model worksheet. The Annual target for all varieties like cotton, silk, wool, polyvastra & solarvastra will be the sum of the prime cost of all the products in each variety and consolidated as per Form – 9.
2.2.11. The consolidated summary sheet of the budget proposals of all State/Divisional Offices and KVI Board should be prepared in Excel Sheet only in Form – 10 attached.

3. Capital Expenditure for Khadi Implements, workshed, machineries etc:

3.1. The Khadi Institutions shall prepare the list of khadi implements, CFC machineries, CFC worksheds and other equipments required to achieve the annual target.
3.2. They shall decide number of charkhas, looms required and cot of each of the item.
3.3. The cost of Capital Expenditure can be met out through the following schemes:-
3.3.1. ISEC Scheme
3.3.2. PMEGP Scheme
3.3.3. Depreciation amount recoverd for each hank produced by spinners by Kls.
3.4. In case if the Kl decide to avail capital expenditure loan under PMEGP, they will be eligible for subsidy as per the PMEGP norms and the Kls have to prepare project report and apply online as per the existing guidelines of PMEGP. The Kls, artisans, bank will enter into a tripartite agreement, where the Kls will provide collateral security of raw material to the spinners and weavers.
3.5. In case the Kls opt for capital expenditure loan under ISEC, they will be elegable for interest subsidy as per existing guidelines.

 4. Working Capital:

4.1. All the Kls are eligible to avail working capital under the existing ISEC Scheme.
4.2. The working capital shall be calculated on the sum of the turnover of all the products as per the existing formulae for each variety i.e. cotton, silk, woolen and polyvastra.
4.3. The State/Divisonal Directors shall issue ISEC to all Kls including those who have registered with KVIC & KVIBs.
4.4. The Kls will be issued with ISEC only to the extent of bank finance availed by them during the preceding year even tough their eligibility is higher as per the current year’s target. In case if they require additional working capital, they shall obtain consent letter/provision sanction from the Banks for sanctioning bank finance under ISEC and the State/Divisional Director shall issue ISEC for the enhanced limit.

5. Skill Development:

The State Director shall arrange training for spinners, weavers, reelers, twisters, tailors and other artisans through MDTCs, weavers Service Centers or through Master Trainers. The cost of the training will be borne by the concerned Kls out of MMDA support.

6. Design Development:

6.1. The State Director shall arrange a tie up with Fashion Institutes like NIFT, NID, NIFT-TEA in Tirpur, Textile Fashion Institutes, Weavers Service Centers etc. for design and product development.
6.2. The State Directors shall also utilize the facilities available with the DC Handicrafts and DC Handlooms for design enhancement and value addition in the areas of traditional textile handicrafts.
6.3. The State Directors shall also identify young designers from the Fashion Institutes and arrange to tie up between them and Kls for value added products which can be utilized by the Kls. The cost can be borne by the User institutions in the form of monthly fixed payment plus royality which can be worked out separately on mutually agreed terms.
6.4. The cost of engaging designer and development of designs can be shared among the user institutions so that designers can work with the Kls on full time i.e. on regular basis.

7. Quality Assuarance:

7.1. All the Kls shall test theur products for ensuring the purity and genuineness of khadi with testing labs of CSPs of KVIC. The testing may also include for development of Standard Specifications, identifying the presence of banned chemicals in case of dyed, printed and processed fabrics.
7.2. The test report may be displayed in the sales outlets at a prominent place for the notification of the customers.
7.3. The Kls shall also have to produce copy of the test report to departmental sales outlets under Directorate of making for supply to KVIC Bhavans and Govt. supply as the case may be.
7.4. KVIC has initiated process for signing MoU with Textiles Committee for testing and administration of Khadi Mark which will be communicated separately on finalization.
7.5. Every Kl will obtain Khadi Mark Certification as well as procure from KVIC on an agency appointed for the purpose for Khadi Mark tags for affixing them to their products. They will also permit the agency to appraise and rate the Kls in terms of their performance and also obtain samples for testing purpose periodically.

8. Budget Approval Process:

8.1. The State/Divisional Directors shall from a State Khadi Monitoring Committee (SKMC) for scrutinizing, recommending the AAPs submitted by the Kls to the Zonal Committees at the zonal level.
8.2. The State Khadi Monitoring Committee (SKMC) shall consist of the following members :
i. State Director
ii. SLBC Convenor or Representative
not below the rank of AGM
iii. CEO KVIB or his representative
iv. Secretary or Chairman of Kl
Federation or Leading Kl
v. The Representative for DIC
vi. Representative of Finance from
State/Divisional Office
vii. The Programme Incharge of Khadi
in the State/Divisional Office
8.3. The State/Divisional Director shall place the Five Year AAps received from the Kls with his recommendation to the SKMC for its consideration and recommendation before 31st January 2018.
8.4. The SO/Dos shall forward the AAP to Zonal Dy CEOs.
8.5. The Zonal Dy. CEOs shall place the Five Year AAP for all the States in his jurisdiction before the Zonal Committee for its consideration by 15th February, 2018.
8.6. The Zonal Committee shall consider and recommend provisional sanction of the AAP to the concerned States under its jurisdiction and convey the same to the State/Divisional Offices.
8.7. The State/Divisional Director shall issue provisional budget allocation to individual Kls.
8.8. The Zonal Dy. CEO shall send the consolidated proposal for each state under his jurisdiction to Director (Khadi) and Director (Solar Vastra) for placing before SFC for approval.
8.9. The Director Khadi & Director Solar Vastra shall place them in the SFC meeting during March 2018 for its consideration and approval.
8.10. The SKMC shall hold discussion with the Kls only if it is necessary and during normal course the Kls may not be called for any discussions.
8.11. The Kls shall be discouraged to produce any products which have low selling matrix and having long self life.

 

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