H.P. Khadi and Village Industries Board Minimum Sales Guarantee (MSG) Policy
A. Aims and Objectives Related to MSG
- To implement uniform commission rates for various sales units of the H.P. Khadi and Village Industries Board (HPKVIB) involving Minimum Sales Guarantee (MSG).
- To enrich sales units with an additional product range by providing marketing facilities to any company, firm, or person dealing in products to be sold at HPKVIB outlets against MSG.
- To bring various products under one roof, offering customers a wide range of variety through MSG arrangements.
B. Scope of the Policy
I. Private Consignors in Sales Units
(a) Sales Across Counters with Consignor Personnel: Sales involving the consignor’s sales personnel against a Minimum Sales Guarantee (MSG).
C. Operational Modalities
1. Rates of Commission/Handling Charges
The following commission rates are proposed for MSG-related sales, considering sales prospects and market competition:
- The Board shall charge a 20% commission from consignors against a Minimum Sales Guarantee (MSG) when the consignor’s sales personnel are involved.
D. Terms and Conditions
- Handling charges/commission shall be calculated on net sales.
- The Minimum Sales Guarantee shall be determined based on the highest bid, over and above the “Reserve Price,” through a tender process conducted by a committee constituted for this purpose.
- If a party undertakes billing sales of approved products through counters against a Minimum Sales Guarantee, the commission rate shall be the same as for products sold across counters against MSG in retail sales.
- All expenses, including taxes, freight, transportation, and other incidental costs (including insurance), shall be borne by the consignor. Goods shall be supplied by the consignor on a “for sale units/destination” basis.
- The consignor’s staff (if deployed) shall work under the supervision and control of the concerned Incharge of HPKVIB sales units. The staff must maintain good conduct, failing which HPKVIB reserves the right to terminate the arrangement. HPKVIB shall not be responsible for the employment or wages of the consignor’s sales personnel.
- Sale prices shall be fixed by the consignor. The Incharge of the concerned sales unit shall ensure that the sale price and product quality are competitive. Any disputes in this regard shall be resolved by a committee constituted by the Chief Executive Officer (CEO). Sales shall be conducted using HPKVIB’s cash memos/bills, and cash/sale proceeds shall be collected by HPKVIB.
- HPKVIB shall not bear the cost of any concessions or discounts offered by the consignor. However, consignors may offer discounts from time to time in consultation with the concerned Incharge.
- The cost of publicity/advertisement for consignor products shall be borne by the consignor.
- Accounts shall be settled with consignors on a monthly basis. Consignors (billing/counter on MSG) shall submit a detailed, certified sales statement, tallied with the cash memo book, to the Incharge by the 5th day of each month. Due sale proceeds, after deducting the agreed commission, shall be released by the Incharge via payee account cheque, demand draft, or online transfer. Demand draft charges shall be debited to the consignor. Consignors may provide an account number for online payments.
- HPKVIB shall extend marketing facilities to consignors purely on a consignment basis and reserves the right to terminate the sale of products after giving one month’s notice.
- The space provided to consignors for product sales shall not be treated as an independent showroom.
- In case of customer complaints regarding product quality, the consignor shall be solely responsible, and any replacement of goods shall be at the consignor’s cost. The decision of the concerned Incharge shall be final.
- For herbal products, edibles, or cosmetics (products consumed orally or applied to skin, hair, etc.), the products must be certified by FPO, AGMARK, ISO, or GMP.
- Product packaging must include details of constituents/contents, method of application, manufacturing date, and expiry date.
- The consignor shall be liable to replace goods or compensate for losses if customers complain about substandard or defective products. The consignor shall also be liable for compensation as per legal provisions if a customer claims harm due to the use of the consignor’s products.
- The commission for MSG consignors shall be recovered based on the higher of the monthly average or actual sales and deducted from the sale proceeds if they fall below the MSG.
- Only one party per counter shall be allowed. Associated firms or partners of the same party shall not be permitted to operate additional counters in the same sales unit. An affidavit shall be submitted by the consignor confirming that no associates are participating in the tender process for the same sales unit counter.
- Any disputes regarding marketing arrangements shall be resolved through mutual negotiation or in the local courts within the jurisdiction of the HPKVIB sales unit.
- The consignor’s income tax, sales tax, or VAT matters must comply with relevant laws.
- For MSG consignors, three months’ commission or an equivalent amount shall be kept as a refundable security deposit, returnable upon termination of the agreement. If the arrangement is terminated mid-term due to the consignor’s fault or if the consignor withdraws, the security deposit shall be forfeited.
- The consignor shall insure their stock with a nationalized company and provide a copy of the insurance to the concerned Incharge.
- HPKVIB employees or their relatives cannot act as consignors. Relatives of HPKVIB employees shall not be appointed as staff by the consignor in HPKVIB sales units.
- Consignors must obtain CST, GST, or TIN numbers where applicable.
- Bills and proforma bills shall be issued only by HPKVIB personnel.
- The sales guarantee and terms of business, once fixed, shall not be reduced, changed, or altered. However, in exceptional circumstances such as natural calamities, railway accidents, riots, or other unavoidable events leading to poor target achievement, the Board of Directors of HPKVIB may reconsider reducing the MSG.
- Consignors may participate in exhibitions at their own cost and risk if desired by HPKVIB management. Sales personnel for such events shall be provided by the consignor at their own expense.
- All expenses related to credit card sales, including verification costs, shall be debited to the consignor. The consignor shall ensure the validity of credit card transactions.
- Consignors shall adhere to the allocated counter/space for sales as per the agreement. The allocated space must remain adequately stocked and presentable during working hours.
- Holidays and timings shall be observed as per the HPKVIB schedule or as directed by the CEO.
E. Code of Conduct
- The credibility of consignors is of paramount importance to HPKVIB.
- The quality of products sold through HPKVIB must be marketable and not inferior to similar products in the market.
- Where applicable, selling prices must align with the listed Maximum Retail Price (MRP) and be comparable to similar products in the market.
- HPKVIB reserves the right to regulate the selling price of consignor products to prevent excessive profiteering.
- HPKVIB has a discount schedule, and consignors shall harmonize their discounts accordingly.
- Confidentiality of sales terms, commissions, and agreements between consignors and HPKVIB must be maintained. Business matters learned during the association shall also remain confidential.
- Consignors shall maintain a register of their stock, which HPKVIB reserves the right to inspect as per the agreement.
- Accurate product information must be conveyed to customers. Misleading or exaggerated claims shall be avoided. Consignors shall not pressurize customers, and the showroom’s ambiance must be maintained.
- Consignors shall maintain decorum in the sales unit and avoid adverse commentary on products, displays, management, or staff. Suggestions or information shall be discreetly provided to the concerned Incharge. Only authorized personnel shall manage the sales counter.
- Consignors’ personnel must maintain harmony with HPKVIB staff. Grievances shall not be raised directly with HPKVIB headquarters without first addressing the concerned Incharge. A written representation, with a copy to the Incharge, may be sent to headquarters if needed.
- State guests, VIPs, or senior government officials may visit sales units, sometimes unannounced. These dignitaries shall be attended by the concerned Incharge or the second-in-charge if the Incharge is unavailable. Consignors may assist as permitted by the Incharge.
- HPKVIB may conduct publicity campaigns through audio, video, or print media, including consignor products. Consignors shall share the costs proportionately in consultation with the Incharge.
- Product clashes must be avoided.
F. Mode of Selection of Consignors
(a) Counter Sales (Private) with MSG and Consignor Personnel
- Selection shall be based on tenders advertised in newspapers. The party offering the highest bid above the reserve price shall be selected for a three-year period, extendable by one year with a 20% increase in MSG to ensure rapport, brand image, and conduct. If a party leaves mid-term or is discontinued by HPKVIB, the counter shall be re-allotted through open tender advertised in newspapers.