Clothing and Textiles Competitiveness Programme (CTCP) Production Incentive Programme (PIP) Presented by: EUKERIA CHIWARA – Account Manager CTCP 17 th MAY 2013 =

THE PARTICIPATING SECTOR The PIP is an incentive offered to : Clothing manufacturers; Textiles manufacturers; Footwear manufacturers; Leather goods manufacturers and Leather processors (Specifically for Leather Goods and Footwear industries); Related Cut, Make and Trim (CMT) operators ; And related Designers. - (The Sector) NOTE: The Production Incentive specifically excludes any Leather and Leather Goods manufactured for the automotive sector.

OBJECTIVE aimed at creating sustainable capabilities and employment in The Sector; The main objective of the PIP is to assist The Sector in upgrading processes, products, people and to re-position it so it competes effectively against other low cost producing countries.

BUDGET ALLOCATION Annual Programme, running from 1 April 2010 to 31 March Applications cut off date – 31 Jan each year

BENEFIT CEILING - GRANT Benefit Ceiling = 7.5% of a company’s Manufacturing Value Addition (MVA) for the year ending March The MVA will be calculated as follows: MVA = Sales (Goods manufactured locally by the company only) Less Material Input Costs (Used in the manufacturing process).

THE PRODUCTION INCENTIVE (PIP) The Benefit Ceiling utilisation; Applicants can either use the full benefit for the Upgrade Grant Facility or up to 50% of their benefit for the Interest Subsidy Facility or a combination of both. Benefit Ceiling (BC) Upgrade Grant ( Competitiveness Improvement) Interest Subsidy - Max 50% of BC (Working Capital) – CIP Own Contribution

THE PRODUCTION INCENTIVE (PIP) UPGRADE GRANT FACILITY The Upgrade Grant is available to provide financial support to the Sector to assist it in attaining higher levels of competitiveness. Upgrade Grant Facility Equipment Upgrade People / Skilling Process Improvement Product Development Material Usage - Optimization Certain Market Development

DETAILED PROGRAMME DESCRIPTION UPGRADE GRANT FACILITY The Upgrade Grant can partly be used in conjunction with the CIP. Beneficiaries have the option of using it towards funding their own contribution towards CIP. (Please refer to the CIP guidelines for details). Companies that have existing loans from any financial institution to fund expenditure for purposes that would have qualified under the Upgrade Grant facility will be able to utilise their Upgrade Grant to settle or partially settle these loans. Other IDC Facilities

DETAILED PROGRAMME DESCRIPTION INTEREST SUBSIDY FACILITY FOR WORKING CAPITAL An Interest Subsidy equal to the ruling prime interest rate will be made available to participating companies. The Interest Subsidy may not exceed 50% of the Benefit Ceiling.

MANDATORY CONDITIONS The applicant must be a registered legal entity in South Africa. The operations of the company applying must be classifiable as manufacturer (SIC code 3) in terms of the ‘Standard Industrial Classification of all Economic Activities’ or a designer. The applicant must be a taxpayer in good standing and must, in this regard, provide a valid tax clearance certificate before the grant is disbursed.

MANDATORY CONDITIONS The Applicant should be bargaining council compliant. The applicant must comply with all relevant environmental regulations, applicable to its operations. Should the company have any pending litigation against it, the outcome of which may have a material impact on the company’s financial position, then this needs to be brought to the attention of the CTCP Desk at time of application.

APPLICATION PROCESS In order to access the PIP, companies need to apply to the CTCP Desk at the IDC by;  Properly completing a Benefit Ceiling Application Form 1 FY2013/14, Redemption Application Form 2, Monitoring & Evaluation Questionnaire Form 3 and Employment Data Form 4, ensuring that contents of the forms are not amended.  Submitting all documentation as required per the documentation checklist on the Form 1 whilst ensuring that the relevant boxes are ticked as information is provided.  ed and / or incomplete applications will ultimately be rejected.

ASSESSMENT & APPROVAL PROCESS

REDEMPTION PROCESS Applicants wishing to access their approved funds have to submit a completed redemption application form 2 at the time of application. The redemption application must be accompanied by a proper description of the historical or planned qualifying interventions of the applicant. Redemption claims in the form of invoices on upgrading expenditure may be submitted to the CTCP desk for reimbursement of approved upgrade expenditure already incurred or for payment of approved upgrade expenditure to be effected.

VALIDITY OF BENEFIT CEILING The claims must be paid out within a period of twenty four (24) months from the approval date, otherwise the funds expire. Any benefit remaining on the Client’s account with IDC after the termination date will be cancelled. Upgrade Grants made by the programme will be made exclusive of Value-Added Tax (VAT).

DISBURSEMENTS Payments shall be made directly into the bank account of the approved receiver, whether it be the applicant (on reimbursement of expenditure already effected) or a supplier of goods or services to be expended. The name of the account holder must be the same as that of the approved receiver. On adjudication of an Interest Subsidy, the CTCP desk will pay the amount of the Interest Subsidy directly into the applicant’s account.

EXCLUSIONS AND LIMITATIONS Eligible projects that would have demonstrated economic viability and sustainability will be financially supported only if the upgrading investment costs could be linked directly to productivity and competitiveness improvement activities in a company. The following are examples of costs that do NOT qualify under the Upgrade Grant: –Normal operating costs will not be considered for support. –Staff costs will not be considered for support. –Upgrading of vehicles will not be considered for support.

THE CTCP DESK The CTCP Desk has been established at the IDC to administer the CTCP. The CTCP Desk resides within the Development Funds Department (DFD) of the IDC. The DFD was established in 2001 to manage ring-fenced funds within IDC. The members of the CTCP Desk are: Mr Joy Balepile - Programme Manager Ms Eukeria Chiwara - Pre - Account Manager Mr Khothatso Khoapa – Pre - Account Manager Mr Nduma Maluleka - Pre - Account Manager Mr Kagiso Matswalela – Pre - Account Manager Mr Patrick Matlhola - Pre - Account Manager Ms. Phemelo Koloti - Post Account Manager Mr. Makweng Nkoana – Post Account Manager Ms. Zandile Nyangane – Post Account Manager / Admin. Ms Gillian Venter - Administrator

Thank You The Industrial Development Corporation 19 Fredman Drive, Sandown PO Box , Sandton, 2146 South Africa Telephone (011) Facsimile (011) Ms. Eukeria Chiwara - Account Manager: Tel: Fax: