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Transcript of Intern report to_Rajashekhar Ballary
Submitted by (as fulfillment of internship)
Rajashekhar Ballary
Student, M.F.Tech (Mngnt.)
National Institute Fashion Technology
Gandhinagar, Gujarat382007, India.
Submitted to
Vrajesh Sitwala,
Marketing Manager
SINTEX INDUSTRIES LTD.,
Textile division: BHARAT VIJAY MILLS
Near Seven Garnala, Kalol, (N.Gujarat) 382 721, INDIA
BHARAT VIJAY MILLS (BVM) TEXTILE DIVISION
SINTEX INDUSTRIES LIMITED. KALOL, NORTH GUJARAT.
INTERNSHIP REPORT
DEDICATED TO MY
BELOVED PARENTS
ACKNOWLEDGEMENT
First and foremost, I would like to thank my dear Parents for their trust and
continuous support. I dedicate my hard work and success to them.
I would like to express my sincere thanks to Vrajesh Sitwal, Marketing
Manager and Venugopal Iyer, Export marketing manager SINTEX
INDUSTRIES LTD, Textile Division, BHARAT VIJAY MILLS for their
patience and professional guidance.
I would like to express my sincere thanks to Dr. Mahim Sagar Sharma,
Centre Coordinator, Dr. Binaya Bhushan Jena. and Prof. Ankush
Sharma, FMS department NIFT, Gandhinagar.
Last but not the least I thank all employees and the members of BVM, textile
division Sintex Industries ltd. And my entire friends who are directly or
indirectly helped me without whose cooperation this internship report would
not have been a success.
I believe that this Internship has been a great learning experience to me.
RAJASHEKHAR BALLARY FMS 0606
Ì
4
CERTIFICATE
I have the pleasure in certifying that Mr. Rajashekhar Ballary,
Student M.F Tech (Management), is a bonafide student of third
semester of National Institute of Fashion Technology. He has
successfully completed his Internship work under my supervision.
I certify that this is his original effort and respect to his tremendous
effort given to his Internship.
Signature
Vrajesh Sitwala
Marketing Manager
12.07.2007 Π
5
Table of Content:
ACKNOWLEDGEMENT:………………………………………………………………Ì
CERTIFICATE:…...…………………………………………………………………….Π
CHAPTER 1: INTRODUCTION:..................................................................................7
1.1 Purpose: ...............................................................................................................8
1.2 Background: ........................................................................................................8
1.3 Organization Structure........................................................................................9
1.3 Terms of reference:..............................................................................................9
1.4 Objectives of Internship report:........................................................................10
CHAPTER 2: EXPORT PROCEDURE AND DOCUMENTATION: ..........................11
2.1 Preamble: ...........................................................................................................12
2.2 Preparation to enter the international marketplace: .......................................12
2.2.1 Foreign sales agents: . ...................................................................................14
2.3 Terms of payments: ...........................................................................................18
2.3.1 Open account: ...............................................................................................18
2.4 Export Documents: ............................................................................................19
2.4.1 Overseas Sales Contract:...............................................................................19
2.4.2 Invoice:.........................................................................................................19
2.4.3 Packing List: .................................................................................................19
2.4.4 Certificate of Inspection: ...............................................................................20
2.4.5 Insurance Certificate: ....................................................................................20
2.4.6 Bill of Lading: ..............................................................................................20
2.4.7 Liner Bill of Lading: .....................................................................................21
2.4.8 Charter Party Bill of Lading (Cogenbill): ......................................................21
2.4.9 Certificate of Origin: .....................................................................................21
2.4.10 Bill of Exchange: ........................................................................................21
2.4.11 Shipment Advice:........................................................................................21
2.4.12 Proforma Invoice: .......................................................................................22
2.4.13 Shipping Instructions: .................................................................................22
6
2.4.14 Insurance Declaration:.................................................................................22
2.4.15 Intimation for Inspection: ............................................................................22
2.4.16 Shipping Order:...........................................................................................23
2.4.17 Dock Receipt or Mate’s Receipt:.................................................................23
2.4.18 Application for Certificate of Origin: ..........................................................23
2.4.19 Letter to the Bank for negotiation:...............................................................23
2.4.20 Exchange control Declaration GR form (Guaranteed Receipt):....................23
2.4.21 Insurance Premium Payment Certificate:.....................................................24
2.4.22 AR 4/4 form:...............................................................................................24
2.4.23 Shipping Bill: ..............................................................................................24
2.5 Incentives and Duty Drawback: .......................................................................24
2.5 Export terms of delivery:...................................................................................26
2.5.1 INCOTERMS: Terminology used by exporters:............................................26
2.5.2 The Structure of Incotrems:...........................................................................26
2.6 Steps involved in execution of export order in BVM: ......................................30
CHAPTER 3: TECHNICAL TEXTILES AND NEW PRODUCT IDENTIFICATION32
3.1 Introduction:......................................................................................................33
3.1.1 Industry Definition:.......................................................................................33
3.2 Plan to enter coated technical textile market: ..................................................35
3.2.1 Focus At Initial Stage....................................................................................35
3.2.2 Points need to consider at the time of Coating Inquiry...................................35
3.2.3 Market entry: ................................................................................................36
CONCLUSIONS: .........................................................................................................37
APPENDIX: .................................................................................................................39
REFERENCES: ...........................................................................................................41
7
CHAPTER 1: INTRODUCTION
8
1.1 Purpose: The purpose of this report is to outline objectives, process for defining steps followed in
execution of export and to identify new product under technical textiles (performance
fabrics) where company, BVM textile division, Sintex Industries Ltd. can acquire market
and perform better. All above purposes are executed while/after completion of Internship
at Sintex Industries Ltd., BVM textile division Kalol, North Gujarat from 21 st may to 13 th
of July as a process of pursuing the degree PGFMS at NIFT, Gandhinagar.
1.2 Background: Established in the year 1931, Bharat Vijay Mills (BVM), is a composite textile mill,
initially operated on a very modest scale at Kalol, a town 30 Km in North of Ahmedabad,
(India). In 1956, the present management, Sintex Industries Limited took over, through
its textile division Bharat Vijay Mills Limited (“BVM”). Today, BVM is a vertically
integrated plant having its own spinning to finishing facilities. It has grown into 50
million US$ turnover group with a dedicated work force of 1600 people in the textile
division. BVM has already made a total capital investment of about USD 90 million for
the continuous modernization and capacity expansion in the last five years. This year it
has a planned capital outlay of USD 15 million for this year. BVM has been the
undisputed leader in varied product mix for the last 70 years with a continuous expansion
of its product range. Since last 20 years it has established a name in global market with its
Yarn Dyed, Piece Dyed Shirting, Corduroy and Bottom Weight. BVM’s 80% production
is catered to all the leading brands of the world through direct exports and indirect
deemed exports through garment exporters based in India. With the company well
equipped with fabric design and product development services it is able to provide high
level service to all the leading global brands associated with the company. BVM is also
having joint venture with the Italian fabric manufacturer M/s Canclini Tessile SPA, for
manufacturing and supplying highend yarndyed shirting fabric. The vision and mission
statement of BVM textile division Sintex Industries Ltd., are,
9
1.3 Organization Structure
1.3 Terms of reference: This section includes who asked to write the report and when it should be submitted. As
per the guidance/syllabus of Fashion Management department of National Institute
Fashion Technology (NIFT) Gandhinagar, it is take industrial training and prepare report
on the company. Hence summer internship has been successfully completed from 21 st
May 2007 to 13 th July 2007 in BVM textile division Sintex Industries Ltd., Kalol,
Gujarat. Efforts are made to examine existing institutional framework of exports and new
product market under coated Technical textiles. The report has been submitted to the
department on date 11 th July 12, 2007.
Vision
To achieve global presence in Textile business, through continuous product,
technological innovation, customer orientation and a focus on cost effectiveness,
quality and services.
Mission
We believe in strong customer orientation. We know that the company knows one he
keeps, and we value your company.
Sintex Ind. Ltd.
Textile Div. Plastic Div. Corporate Div.
Admin Purchase &
Stores
Operations Finance & Accounts
Sales & Marketing
10
1.4 Objectives of Internship report: In order to deliver above said purposes the following objectives have been set and are
executed while/after completion of Internship.
Learning Objective 1: To learn the export procedures and documentations followed.
Learning Objective 2: Examine, become familiar with the present Export procedures,
list the steps followed by BVM textile division, Sintex Industries Ltd., perform them
and report on the outcome.
Learning Objective 3: To study and identify new textile product under Technical
textiles category where BVM textile division Sintex Industries Ltd., can do/cater
better.
11
CHAPTER 2: EXPORT PROCEDURE
AND DOCUMENTATION
12
2.1 Preamble: In economics, an export is any good or commodity, transported from one country to
another country in a legitimate fashion, typically for use in trade. Export is an important
part of international trade. Its counterpart is import. For an export it requires two parties
i.e., buyer and seller in there respective countries and an export contract or export order
for sale and purchase of goods between them. Goods should leave the customs frontier, of
exporting country involving load port and discharge port. Value of the goods should be
realized in freely convertible currency. Domestic marketing is concerned with the goods
exchanged with the currency of the country that is in Indian Rupee. But in export
marketing, the goods have to be sold in freely convertible currency; i.e. United States
dollar ($), European Euro, etc. The goods leave the customs frontier of India first and the
money or the value comes later on. In other words though it is also a sale of goods but the
value of the goods sold or the money practically comes in exchange of the shipping
documents and not in exchange of goods. Hence in technical terms it is termed as “sale of
documents”. It is, therefore, proved beyond doubt, that the sale of Documents is the
backbone of International Marketing whether it is export or import.
2.2 Preparation to enter the international marketplace: A stepbystep guide led the company BVM textile division Sintex Industries Ltd.
through the process of exporting product to an international market. Following steps are
maintained to succeed in highly competitive international market. Each step/section
completed before to start the next section.
STEP 1: Select the most exportable products to be offered internationally.
To identify products with export potential for distribution internationally, company need
to consider products that are successfully distributed in the domestic market. BVM as a
most renowned producer of corduroy entered international market and the product
targeted need for the purchaser in export markets according to price, value to
customer/country and market demand. And has consider to ask questions like,
ü What are the major products that business sells?
ü What products have the best potential for international trade?
STEP 2: Evaluate the products to be offered internationally.
13
Identifying products with export potential that is list the products that believe to be have
export potential. Yarndyed and soliddyed fabrics in different plain and textured weaves
including leno weaves which are already being produced for various high end fashion
labels both in Europe and USA, with an equally strong presence among the Indian
brands. BVM has recently added two new product lines to its already existing varied
product range. Coated fabrics – which covers Poly Urethane, Water repellent, Water
proofing and pigment coating to serve a variety of enduses in fashion apparels like
outerwear, sportswear etc. and also few industrial applications like automobile covers,
soft luggage, canopies etc. Jacquard fabrics – in which BVM is producing designs both
in yarndyed and solid dyed shirting using Ne 50/1 as the main warp count. While
entering into these categories BVM has considered questions like,
ü What makes company products unique for an overseas market?
ü Why will international buyers purchase the products from our company?
ü How much inventory will be necessary to sell overseas?
STEP 3: Select the best countries to market company product.
While selecting a buying/exporting country market factor assessment of that country and
rating has to be made. While targeting Buyer/exporting market following checklist are
considered.
v Demographic/Physical Environment:
ü Population size, growth, density
ü Urban and rural distribution
ü Climate and weather variations
ü Shipping distance
ü Productsignificant demographics
ü Physical distribution and communication network
ü Natural resources.
v Political Environment:
ü System of government
ü Political stability and continuity
ü Ideological orientation
ü Government involvement in business
14
ü Attitudes toward foreign business (trade restrictions, tariffs, nontariff
barriers, bilateral trade agreements)
ü National economic and developmental priorities
STEP 4: Determine Method of Exporting
A firm can use direct export, indirect export or deemed export method. Since BVM is a
textile manufacturing company and it can use any method for exporting. BVM started
exporting its products to United States of America (USA), European Union market like
United Kingdom, France Italy, Germany and Asian countries include Srilanka,
Bangladesh, Turkey. Keeping in mind the strength and ability to produce a variety of
products for the fashion industry, BVM structured a supply arrangement with highend
Italian fabrics manufacturer Canclini Tessile SPA.
STEP 5: Building A Distributor or Agent Relationship. Following descriptions talk more
about foreign sales agents/distributors and agents/distributors of BVM textile division
Sintex Industries Ltd.
2.2.1 Foreign sales agents: (selection and appointment between BVM and Overseas
sales agents:
Export success often depends on representation overseas. Picking the right sales agent,
distributor, or other business partner is not easy and yet, critical. Therefore, it pays to
look at the nature of overseas reps.
2.2.1. a Why sales agent?
“Products don’t sell themselves, however well designed and competitively priced they
may be,” writes O. Mary Hill 1 . The bestdesigned and most competitively priced
products do not sell, if not backed by an adequate sales force. Therefore, selecting
training and supervising a sales force has increasingly come to occupy an important place
in doing business. The appointment and maintenance of sales force on a company’s pay
roll is very expensive. Then, it is not always possible and economic to have sales force all
over the world. The natural solution lies in the people who work on commission basis,
1 Professor, department of trades and commerce, Ottawa.
15
they are known as sales agents (and/or distributor). However large a firm is or howsoever
ambitious its export plans are, the appointment of commission agents is essential for
successful selling. Overseas agents normally called Sales ambassadors cut the company’s
selling cost. Being always on or near the market, they help in obtaining latest market
information and marketing strategy. They are sales ambassadors available at a much
cheaper price. Overseas agents selected and appointed with care, may help company
grow in short span. The job of these agents is to advise the firm on the right methods and
strategy for selling in their territory.
2.2.1.b Types of agents:
The agents are of two types, the commission agents and distributors. Every export
company has to be cautious about selection of overseas agents. What type of seller agents
a firm should have depends upon the products it wishes to sell. The choice between the
two depends primarily on the type of product an exporter firm offer. If the product is one
that is sold mainly to consumers, an agent is probably the logical choice because he can
keep in close touch with local retailers and keep informed about changing consumer
tastes. The distributor, on the other hand is well set up to sell consumer durables and
other product that require servicing a those designed for industrial users.
Following table 2 differentiates commission agents and Distributors.
Sl. Commission agents Distributors
1 They are solicits orders and passes on to
exporters.
A distributor buys the product and sells at his
own account.
2 The agents neither takes title to the goods
nor does he assumes the credit.
The distributor maintains stocks, sets the
resale price and sells through outlet at his
own terms.
3 The agent gets agreed rate of commission The distributor purchases the products at
price or gets a higher rate discount than
agent’s commission.
4 An agent seldom provides any servicing
facility.
Distributor has invariably such arrangements.
2 Ram Paras, “EXPORT what, where, how” 29 th edn. Anupam publications 199899 pg no. 8185.
16
2.2.1.c Sources of information:
Names of agents/Distributors for making the final choice can be had from different
sources, namely:
ü Country’s trade commissions abroad and/or the country’s trade representative in
the exporter’s country.
ü Manufacturers/exporters of related products but not directly competitive products.
ü Chamber of commerce and trade associations abroad.
ü Export promotion councils and Commodity boards.
ü Through advertisements in export trade and specialized international journals.
Agent and Distributor relationships are best governed by a binding contract or an
agreement. A competent attorney with international trade experience must draw it up.
This must be done carefully since most non AngloSaxon countries take a far looser
interpretation of contract terms.
2.2.1.d Checklist for Agent/Distributor Agreements:
The first and most important consideration textile company BVM made is to ensure that
the agreement clearly states what the relationship actually is agent or distributor. The
rights and duties of the two different relationships are very significant. Given this
distinction, the agreements should state very plainly and clearly, what relationship is
being established.
The following basic items are included in a foreign sales agreement:
ü Date when the agreement goes into effect
ü Duration of the agreement
ü Provisions for extending or terminating the agreement
ü Description of products included
ü Definition of sales territory
ü Establishment of a policy governing resale prices
ü Maintenance of appropriate service facilities
ü Restrictions to prohibit the manufacture and sale of similar and competitive
products.
ü Designation of responsibility for patent and trademark negotiations and/or
policing
17
ü The assign ability or nonassign ability of the agreement and any limiting factors
ü Designation of the country of contract jurisdiction in the case of dispute
ü Determine whether the relationship is exclusive versus nonexclusive
ü State which geographic regions are to be covered
ü Set forth issues of payment for the products (in the case of a distributor) and for
payments of commissions (in the case of agents)
ü Determine the currency in which payments are to be made and address currency
fluctuation issues
ü Provide specific provisions regarding renewal of the agreement, including specific
parameters for performance, promotional activity and notice of desire to renew
ü Establish a specific provision for termination of the agreement and for what
reasons, i.e., failure to perform to the terms of the contract. (Be careful with this
provision. Some foreign countries restrict or prohibit termination without just
cause or compensation.)
ü Outline the termination process for the end of the agreement period
ü Provide for workable and acceptable dispute settlement clauses
ü Assure that the agreement addresses whether or not intellectual property rights are
being licensed or reserved
ü Do not allow, without seller's consent, the contract to be assigned to another party
(subagents or subdistributors) to be used to fulfill obligations in the contract or
the contract to be transferred with a change of ownership or control over the
agent/distributor
After all consideration company selected foreign sales agents/distributors in countries
like United Kingdom, Germany, United States of America (USA), Turkey, Bangladesh
Srilanka, Singapore and Malaysia. The value or product based commission is made
depending on total sales contract by agent/distributor. The commission percentages vary
between 3% to 5%. The abovementioned steps are followed for all new country where
company BVM can cater. Once export order has been settled the company look upon
terms of payment for payment terms. In following paragraphs terms of payment for
export quotation, Export documentation and INCOTERMS used in export execution are
discussed.
18
2.3 Terms of payments: It is necessary to stipulate the terms of payment in the export quotations. The following
are basic methods of collecting payments for exports:
v Cash in advancea remittance by the overseas buyer at the time or at some time
before shipment.
v Documentary letter of credit established by the buyer in favor of the exporter
enabling the payment to be collected immediately after presentation of the
required document.
v An irrevocable letter of credit cannot be cancelled or amended without the
consent of the beneficiary.
v A revocable letter of credit can be settled or cancelled by the buyer at any time
without the consent of beneficiary
v Bill of exchange
1. A D/P bill (document against payment) drawn “at sight” requiring the
bank to obtain payment before delivering the shipping document to the
buyer.
2. A D/A bill (document against acceptance) drawn for payment within a
specified period e.g., 60 days after sight. In the case, the shipping
document is delivered to the buyer after his acceptance of bill. The
exporter is then relying on the credit worthiness of the buyer.
2.3.1 Open account:
Open account 3 is similar to the ordinary system of selling on credit in the domestic
market. No bill of exchange is drawn and the overseas buyer pays on the remittance on
receiving the goods or at a certain times afterwards, e.g., as sales are maid from a
consignment stock. This method is very riskier and is generally done between firms with
long established transaction business.
3 Ram Paras, “INCOTERMS 2000 Export costing and pricing”, 14 th 2000 edition, Anupam Publishers, New Delhi, pg. 4849.
19
2.4 Export Documents: Following documents are required to be sent by a seller to the buyer in discharge of his
export obligations. Secondly it is only through the shipping documents that seller or
exporter is able to exchange the same for his Export sale proceeds or value of the goods;
The same documents are required by an importer from an exporter for taking physical
possession/delivery of goods from the ship or Airplane. Hence there lies the undoubted
importance of documents. Importance of Shipping Documents include, the documents are
the authenticated and valid proof of shipment in exports. They create the title of the
goods. The documents help a seller to realize export sale proceeds in exchange there of
through the bank.
2.4.1 Overseas Sales Contract:
It is a principle document that has to be prepared by exporter, after acceptance of an order
by Importer/Buyer.
2.4.2 Invoice:
It is a principal commercial document. An invoice is a Bill /Cash Bill or Cash Memo
through which the original owner of the goods creates and transfers their ownership to the
new owner (buyer) by showing as “sale”. This is the invoice through which the title of
the goods is passed on from seller to the buyer. As may be seen from Performa of invoice
(See appendix1) name of the seller (exporters), buyers (consignee), goods sold, rate
applied and total amount are shown.
2.4.3 Packing List:
It is a principal commercial document. The list certifies the nature of packing of exported
goods with markings. They are on for easy identification, safer and smoother handling so
as to withstand hazards of sea and multiple handling involved in export shipment. (See
appendix2).
20
2.4.4 Certificate of Inspection:
It is a principal commercial document. In order to ensure that the goods, so ordered, by
the buyer should conform to quality and quantity as per export order, a preshipment
inspection, at load port, takes places by the designated inspection agency or authority.
After this inspection the designated agency issues a certificate of inspection certifying
that the goods were inspected quantitatively and qualitatively at the load port and it
conform to the quality standards laid in export contract.
2.4.5 Insurance Certificate:
It is a Principal commercial document. In order to cover the risks involved in shipment
of export cargoes when the goods have been either put on board the vessel or when they
are on high seas. Marine insurance is taken either by the exporter or the importer
depending upon the payment negotiation. Following risk covers are taken:
a) Accidents, fire.
b) Riots
c) Rain or Flood.
d) Damage to the goods due to damage to the ship or ship when sinks
e) Piracy
f) Maritime Risks
The insurance company issues a Marine insurance policy covering above risks to the
goods as also insurance certificate. Hence the importance of insurance certificate.
2.4.6 Bill of Lading:
It is a principal commercial document. It is a valid and authenticated evidence of
shipment; it is a through bill of lading that the title of the goods is created from a seller to
the buyer. This the bill of lading, among other documents, which helps the buyer to claim
the value of the goods so exported in exchange there of. Bill of Lading carries certain
endorsements by master of vessel as, “freight to pay” in case of FOB terms “freight
prepaid “in case of C&F or CIF terms.
21
2.4.7 Liner Bill of Lading:
This Bill of Lading is used and issued by a shipping company for its vessel, which is
sailing on regular basis on specific points i.e. port to port.
2.4.8 Charter Party Bill of Lading (Cogenbill):
This bill of lading is issued by a vessel, which has been chartered (hired) specifically
from desired ports of loading to the desired ports of discharge. This is governed by
charter party terms on which it has been chartered involving rate or payment for charting,
rate of loading, discharge and demurrage or dispatch etc at respective ports.
2.4.9 Certificate of Origin:
It is a principal commercial document. This certificate is required for proving the origin
of the goods where they are produced for export. In view of bitter relations between two
neighboring or otherwise countries, importing countries make a stipulation that the
ordered goods or even packing material for the exportable goods should not have been
procured from one particular country i.e. enemy country. Hence lies the importance of
certificate of origin.
2.4.10 Bill of Exchange:
It is a Principal commercial document. This is the bill of exchange through which
negotiable. Documents are given or delivered in exchange of payment. A demand is
made on the bank/payee to make the payment as per the invoice or other documents. A
bill of exchange is made in 23 originals and presented as many times for realizing the
payments in case first bill of exchange remains unpaid.
2.4.11 Shipment Advice:
It is a Principal commercial document. After the shipment has been effected by the
exporter, the buyer become anxious to know the arrival of the goods at discharge port in
his country. Hence, he stipulates in the Letter of Credit that an exporter should advice
him suitably so that he keeps himself ready for receiving the cargo. As may be seen from
22
shipment advice following information is made available to the importer well before the
consignment arrives,
a) Name of the vessels (with voyage number),
b) Port of loading and port of unloading/discharge,
c) Final destination,
d) Name of the goods, number and kinds of packages, quantity, rate, amount etc.
e) Negotiation of documents if involved
2.4.12 Proforma Invoice:
It is an auxiliary document and can be termed as a “Kaccha Invoice”. This is the
proforma invoice through which the buyer is guided to open the letter of credit in favor of
the beneficiary i.e., exporter. Proforma invoice also guides the exporter to make the
invoice.
2.4.13 Shipping Instructions:
It is an Auxiliary document where by shipper or exporter notifies the shipping company,
about the shipment of his cargo. In other words through the shipping instruction the
shipper books suitable place on a particular vessel for his cargo.
2.4.14 Insurance Declaration:
This is a sort of an offer from a shipper to take insurance cover or policy for the goods to
be shipped.
2.4.15 Intimation for Inspection:
After the L/C has been established by a buyer, as per the contractual terms, he desires the
preshipment export inspection at load port and he nominates an agency for getting this
inspection done from the designated agency. The shipper requests the agency through
this letter to carry out an inspection so that the goods are inspected and certificate of
inspection is received by him.
23
2.4.16 Shipping Order:
It is an auxiliary commercial document. The shipping company gives an offer to the
exporter for the shipment of their goods in his vessel. After accepting his offer exporter
gives him shipping instruction which contains all useful information regarding mode of
payment, shipment date, document enclosed, insurance etc.
2.4.17 Dock Receipt or Mate’s Receipt:
It is a valid proof given by master of vessel or the person in charge in vessel to whom an
exporter hands over his consignment or shipment. It is just as a supporting or an auxiliary
by which exporter gets the bill of lading from the shipping company in exchange of
mates receipt.
2.4.18 Application for Certificate of Origin:
As the name itself says applying for the certificate of origin. It is an application
submitted by an exporter addressed to secretary (chamber of commerce or any other
authority) requesting for the issuance of certificate of origin.
2.4.19 Letter to the Bank for negotiation:
After the shipment is made exporter wants to realize export sale proceeds of the goods
shipped as soon as possible. For that he has to enclose a number of shipping documents
including bill of lading, Invoice, bill of exchange, certificate of origin, packing list,
certificate of inspection, certificate of insurance etc. along with the letter of negotiation.
Through this letter exporter gives information to the bank regarding term of payment
whether D.A or D.P or any other mode or L/C. If it is L/C, type of L/C whether Payable
at Sight or Transferable L/C. This letter includes information on realization of value
facilitate banker and in turn helps exporter in getting faster payment.
2.4.20 Exchange control Declaration GR form (Guaranteed Receipt):
It is a regulatory document prescribed by Reserve Bank of India (RBI) the exporter, as
seller/consignor of the goods gives an undertaking to the RBI guaranteeing that he will
realize the value of the goods within a maximum period of 180 days.
24
2.4.21 Insurance Premium Payment Certificate:
It is a regulatory document required by government. As the proof that exporter has made
insurance of the goods shipped. It is a preventive measure; Government makes it
compulsory on the part of shipper to take insurance cover so that maritime risks are
covered.
2.4.22 AR 4/4 form:
It is a regulatory document through which shipper or exporter declares the export value of
excisable goods and excise duty payable etc. It is through this document that exporter
takes out the goods meant for export, out of his factory, after completion of central excise
formalities.
2.4.23 Shipping Bill:
Shipping bill is a regulatory document through which an exporter submits the goods
meant for exports to Customs authorities. On this document shipper declares the goods
as if dutiable or duty free exbond export duty if any etc. After satisfying himself the
customs officers at the port clears the goods for export and endorse as “let export”. Also
through the shipping bill the dock/port charges payable are paid for final shipment. At
some ports this document is called shipping bill at others it is called dock challan or at
others port trust copy.
2.5 Incentives and Duty Drawback:
Incentives and duty draw back schemes from foreign trade policy have provided support
for exporters. Normal incentives given by government for exporters and duty drawback
schemes are discussed here.
2.5.1 Incentives.
2.5.1 a General Incentives Several no tax incentives in the form of capital subsidies and
credits are offered by the central and state governments in the interest of developing
backward areas, exports or some specific industries. No distinction is made between
domestic and foreign investors.
25
2.5.1.b Regional Incentives Industrial units that are set up in specified backward districts
are eligible for a central government subsidy on their fixed capital investment and for
financing from national financial institutions. The central government also grants a
transport subsidy in certain selected areas. In addition, the state governments offer
various types of incentives and facilities, such as land on concessional terms, water and
power at reduced rates, concessions in sales tax and octroi (a levy of duty on entry of
goods.
2.5.1.c Special Industry Incentives Certain industries, example jute textiles, are eligible
for concessional credits in the form of soft loans. Some others, e.g., tea plantations.
2.5.1.d Export Credits Export incentives take the form of cash assistance or cash
compensatory support on exports of certain items, duty drawback, i.e., a refund of central
excise and customs duties levied on raw materials and components used in the
manufacture of exports, import replenishment to replace imported raw materials and
components used in the manufacture of exports, airfreight subsidy on the export of
certain products, special treatment for exportoriented units for import of raw materials,
and credit facilities from approved financial institutions at preshipment and post
shipment stages.
2.5.2 Duty draw back.
Drawback means taking back or claiming back. It is an accepted proposition under the
customs legislations of all most all countries, and WTO compatible, that duties of
customs and other taxes like VAT, Excise, Sales Tax etc., as applicable, if paid, on
imported goods, re exported, on imported and/or domestic materials used in the
manufacture of the finished export goods, On indigenous goods exported has to be
granted as drawback, upon export/reexport so that it is only the goods that get
exported/reexported, from the country of export, and not the taxes on the
goods themselves or on inputs used in the manufacture of the export goods.
26
2.5 Export terms of delivery: Principle and approach to export should consider three important conditions viz.
1. What charges and expenses will be incurred by both the exporter i.e. seller and the
importer i.e. buyer.
2. When and where the delivery of goods will take place.
3. When and where the title of the goods passes from exporter to the importer
2.5.1 INCOTERMS: Terminology used by exporters:
International traders use a widely agreedupon shorthand type of terminology called
INCOTERMS to define the basis for the sale. Once the buyer and seller agree on one of
these terms, it will clarify: (1) where in the journey the seller releases the goods to the
buyer; (2) what charges and documentation are the seller’s responsibility prior to that
point; and (3) what charges and documentation are the buyer’s responsibility after that
point. An INCOTERM is always paired with a location and is meaningless without it. For
instance, FCA Ahmedabad is quite a different price from DAF Bangalooru. The
International Chamber of Commerce released the first version of INCOTERMS in 1936.
Periodic revisions have been necessary due to innovations such as intermodal containers,
blended rail/sea cargo rates, roll on/roll off vehicles, and electronic data interchange. The
latest version is INCOTERMS 2000. Certain INCOTERMS in widespread usage tend to
persist despite the revision process. If a term that do not able recognize, such as C&F
Ahmedabad, then trading partner may simply be using an earlier version of
INCOTERMS. Trading partner might speak of a price that is CIF Bangalooru Airport,
although the current modern term is CIP New Delhi Airport.
2.5.2 The Structure of Incotrems:
Incotrems 4 are grouped into four different categories, starting with the term where by the
seller only makes the goods available to the buyer at the sellers own premises (the “E”:
term Ex works); followed by the second group where by the seller is called upon to
deliver \the goods to a carrier (CHA) appointed by the buyer (the “F”: terms FCA, FAS
4 Ram Paras, “INCOTERMS 2000 Export costing and pricing”, 14 th 2000 edition, Anupam Publishers, New Delhi, pg.6467.
27
and FOB); continuing with the “C” terms where the seller has to contact for the carriage,
but without assuming the risk of loss of or damage to the goods or additional cost due to
events occurring after shipment and dispatch (CFR, CIF, CPT and CIP); and finally the
“D” terms where by the seller has to bear all cost and risks needed to bring the goods to
place of destination (DAF, DES,DEQ, DDU and DDP). Accordingly, the four categories
are:
v “E” terms EX works where under the seller only makes the goods available to the
buyer at the sellers own premises.
v “F”terms FCA, FAS and FOB where by the seller is called upon to deliver the
goods to a carrier appointed by the buyer.
v “Cterms CFR, CIF, CPT and CIP under which the seller has to contract for the
carriage, but without assuming the risk of loss of or damage to the goods or
additional cost due to events occurring after shipment and dispatch.
v “D” terms DAF, DES, DEQ, DDU and DDP whereby the seller has to bear all
Cost and risks needed to bring the goods to the place of destination.
Following are the few thumbnail examples for the Indian exporter’s perspective:
• EXW Ahmedabad means, "Here are the goods; come and get them." Any export
permits are the buyer’s concern; seller does not even have to load the truck.
• FCA Ahmedabad shows where goods properly cleared for export will be turned
over to the main carrier for shipment abroad. Whatever means of conveyance
picks up the goods from seller’s place of business, exporter pays any cost of
loading it aboard. If main carrier does not provide cargo pickup services free to
the exporter, he pays cost of inland delivery to that carrier’s terminal in
Ahmedabad. Overseas buyer is liable for transportation and insurance expenses
once main carrier receives the cargo.
• CPT Ahmedabad means the vendor’s price includes freight all the way there, but
insurance is up to the buyer. Seller has no stake in insuring anything past the point
where he turns the cargo over to the export carrier.
28
Table: The following table 5 sets out the above classification trade terms:
• CIP Ahmedabad means vendor’s price includes freight and insurance all the way
to Buyer destination. Once it comes over the ship’s side or down the plane’s ramp
at the other end, the buyer takes full possession.
• DAF Ahmedabad means vendor’s goods, properly cleared for export; will be at
border point ready to cross over to the other side. Vendor will bear all costs and
risks of moving goods across the border and beyond.
• DDU Ahmedabad means that transport of the goods all the way inland to buyer is
paid for by the seller, although the city is not the place of entry. Getting the goods
through customs is the buyer’s responsibility and at the buyer’s expense.
5 Ibid.
Group E Departure:
EXW Ex Works (…named place)
Group F Main carriage unpaid:
FCA Free Carrier (…named place)
FAS Free Alongside Ship (…named port of shipment)
FOB Free On Board (…named port of shipment)
Group C Main carriage paid:
CFR Cost and Freight (…named port of destination)
CIF Cost Insurance and Freight (…named port of destination)
CPT Carriage Paid to (…named port of destination)
CIP Carriage and Insurance Paid to (…named port of destination)
Group D Arrival:
DAF Delivered at Frontier (…named place)
DES Delivered Ex Ship (…named port of destination)
DEQ Delivered Ex Quay (…named port of destination)
DDU Delivery duty unpaid (…named port of destination)
DDP Delivery duty paid (…named port of destination)
29
• DDP Ahmedabad means the exporter’s delivered price includes customs duties
and surcharges in the country of destination. Exporter also bears the risk that his
goods may be rejected by customs for whatever reason (diseased fruit, inadequate
product labeling, banned ingredient, lowerthanexpected quota, etc.).
• FAS Ahmedabad means the price includes delivery to a point alongside the
vessel, whereupon ownership of the cargo passes to the buyer. Any export permits
are the buyer’s concern. (Documentary evidence of FAS compliance is a clean
dock receipt, with no shortages or damage apparent.)
• FOB Ahmedabad means the vendor undertakes to get the cargo that is properly
cleared for export loaded onto the outbound vessel. (Documentary evidence of
FOB compliance is a clean onboard bill of lading.)
• CFR Ahmedabad means the vendor’s price includes ocean freight all the way
there, but the insurance is up to the buyer. Exporter has no stake in insuring
anything past the point where he turns the cargo over to the export carrier.
(Documentary evidence of CFR compliance is a clean onboard bill of lading
showing freight prepaid to the destination port.)
• CIF Ahmedabad means the vendor’s price includes freight and insurance all the
way there. Once the cargo passes the ship’s rail at the destination port, it belongs
to the buyer. (Documentary evidence of CIF compliance is a marine insurance
certificate plus a clean onboard bill of lading, showing freight prepaid to the
destination port.)
• DES Ahmedabad means the buyer will take ownership of the goods while they
are still on board the vessel in the destination port, before unloading.
• DEQ Ahmedabad obliges the vendor to get the export cargo offloaded onto the
quay or wharf at the other end before passing ownership to the buyer. Since goods
are normally liable for import duties as soon as they touch the wharf, DEQ
Ahmedabad duty unpaid is a modification that relieves the seller of responsibility
for getting the goods through customs.
Normally it is in the exporter’s interest to insure any portion of the cargo movement for
which he could be held liable under the INCOTERM. However, the CIF and CIP terms
are the only ones that assure the buyer that the exporter has obtained insurance.
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2.6 Steps involved in execution of export order in BVM textile division
Sintex Industries Ltd : The following flow chart shows the steps followed by Sintex Industries Ltd., BVM textile division
(If Sample confirms)
(If order confirms)
(Continued in next page..)
Spec sheet (sample spec) from buyer
Sample preparation (seller, BVM)
Approval/Negotiation stage (Marketer BVM)
Overseas sales contract (OSC), if need more information for LC prepare Perfoma Invoice
And order for Production (PPC)
Pre shipment invoice (PI), Package list, Weight cum packing list are transferred
to custom house agent (CHA)
Payment terms 100% advance (TT), Cash against document
(CAD) or against letter of credit (LC)
Preparation of Application for Removal of Excise (ARE) form Excise extension
The products are now transferred from BVM warehouse to CHA warehouse.
31
Continued.
No. of documents to be prepared In case of
Bill of Lading – 3 original documents
Air way bill – 1 original documents
After custom clearance CHA transfers goods to Air/Ship line to export on receipt of Airway bill/Bill of Lading.
All the documents (Shipping bill, PI, Packing list, Wright cum pkg list, Airway Bill, etc.) are to be forwarded to bank for payment
Exporter Bank transfers above documents to Importers Bank for verification and transfer of negotiated amount to A/c of Exporter
Mean time Exporter, BVM prepares BANK CERTIFICATE for Incentives by Govt.
Execution of Export Order.
Exporter BVM prepares post shipment invoice (By informing buyer, Importer.)
Shipping bill (Airway bill/Bill of lading) are prepared for custom clearance by CHA
32
CHAPTER 3: TECHNICAL
TEXTILES AND NEW PRODUCT
IDENTIFICATION
33
3.1 Introduction: “Technical” or “industrial” textiles represent a significant proportion of total textile
activity. In 2006, estimates suggest it accounted for some 30% of enduse fiber
consumption. Because of the industry’s strong growth, demanding technical requirements
and close working relationships between suppliers and customers, many segments offer
longterm potential for all companies.
3.1.1 Industry Definition:
“Technical textiles” comprises a diverse range of manufacturing activities tied to broad
enduse markets. The industry embraces products ranging from the mundane, such as
wiping cloths to the spectacular such as heart valves, aerospace composites and
architectural fabrics. The supply chain that connects fiber producers with enduse markets
is a long and complex one. It embraces companies vast and small from fiber producers
through yarn and fabric manufacturers, finishers, converters, and fabricators who
incorporate technical textiles into their own products or use them as an essential part of
their business operations. The common characteristic that unify all technical textile
applications, activities and companies is the use of fibers, often engineered in fiber, yarn
and fabric form, to provide specific technical performance characteristics to meet the
final customer/ market requirements, either as a final product in themselves or as a
component in another product. Below are two definitions of technical textiles and
industrial textiles:
Technical textiles:
Textile materials 6 and products intended for enduses other than nonprotective clothing,
household furnishing and floor covering, where the fabric or fibrous component is
selected principally but not exclusively for its performance and properties as opposed to
its aesthetic or decorative characteristics.
Industrial textiles:
A category of technical textiles called industrial textiles 7 used either as part of an
industrial process or incorporated into final products.
6 Textile Terms and Definitions, TI, Manchester, 10 th Ed… 7 Textile Terms and Definitions, TI, Manchester, 10 th Ed.
34
3.1 Table: Technical textiles sector and markets:
SECTOR EXAMPLES MARKRTS
Earth Work Linings, Netting, Insulation,
Artificial grass (GEO TECH)
Roads, Water Engg, Tunnel,
Stabilization, Soil etc.
Constructions Insulation, Roofing Mat
(BUILD TECH)
Building firms, Architect etc.
Agriculture Sun protection or Green house
fishing nets (AGRO TECH)
Farming, Horticulture, Fishing
etc.
Transport Car mats, Linings, Airbags, Fire
resistant, Seat covers (TRANS
TECH)
Cars, Aero planes, Boats etc.
Medical and health care Bandages, Medical sutures
(MED TECH)
Hospitals, Nursing house,
House hold (first aid) etc.
Protection Safety nets, Tapes, Fire
resistance, Seat covers (PRO
TECH)
Industry, Children ware,
Public procurement etc.
Packaging Twines & Cordages, Sacks &
Bags, Tarpaulins (PACK
TECH)
Distribution, Household etc.
Military & Public
services
Fire services, Bullet proof Army
tents, Parachutes (MILI ECH)
Military, Security, Forestry,
Off shore industry etc.
Specialized Clothing Sports, Skiing, Leisure, (SPEC
TECH)
Active sports, Mountaineering
etc.
Communication Optical fibers, Image conductor,
Image cables, (COMM. TECH)
Communication sector, Media
entertainment etc.
Industry Filter, Auto mobile, Conveyer,
Abrasive belts (INDO TECH)
Engineering, Plastics,
Textiles, Mining, Energy etc
Furnishing Inter lied, braiding, curtains,
umbrella’s, textile wallpapers
(FURN TECH)
Decoration, Household etc
35
In identifying a product under broad area of Technical textiles Sector, company searched
carefully all the available methods of producing/manufacturing technical textiles. After
thorough research company decided to cater in to flame retardant performance technical
textiles for defense use under coated textiles. Since company has already on to coated
textiles it become competitive advantage to produce the cost effective performance
technical textiles. In the present scenario company has installation to do coating on all
types of different fabrics like Cotton, Polyester, Denim, Canvas, Poplin, Sheeting’s,
Nylon etc. With facility to coat from thin to very thick i.e. 5 GSM to 1000 GSM and will
coat up to 1800 mm. width (180 ms) with different type of designs.
3.2 Plan to enter coated technical textile market: BVM textile division Sintex Industries Ltd., to cater in to new segment, performance
technical textiles under coated textiles will maintain following steps to enter coated
technical textile market.
3.2.1 Focus At Initial Stage
As above, company understood that it will do different kind of coatings and will cater
different industry also but initially we have to focus few specific targets only and put our
efforts in below applications initially.
1) Rainwear (coated Raincoats, Jackets, Auto Covers etc.)
2) Fashion &Apparel (Coating on any fabric including Sports Wear, Shirting, Jackets
etc.)
3) Flexible Luggage & Umbrella
4) Defense (Military Tent, Uniforms etc.).
3.2.2 Points need to consider at the time of Coating Inquiry
It is important to consider following four points at the time of buyer and supplier inquiry.
Type of coating require
Coating Grams per Square Meter (GSM)
End use of the product and
Customer’s swatch & Parameters.
36
3.2.3 Market entry:
To target all three segment (Fashion Apparel, Industrial & Defense), company has
developed few verities and will develop new qualities for potential customers on a
regular basis. For buyers coating details in excel sheet of Cotton and Synthetic verities,
company prospectus and details about development in coated fashion apparel are sent to
put into the market. For defense company has started internal procedure for registration.
Once the target market has decided company will use will maintain following steps to
enter technical textile market.
Identify chemical suppliers for coating
Find the technical intelligence required for R&D
Design a product catalogue
Design website/web design for product
Identify/search prospective buyer
Source nominated fabric suppliers of nylon and polyester
37
Conclusions:
38
At each and every aspect we require some kind of theoretical knowledge as well as
practical knowledge. It means only classroom lecture may not be enough to get proper
knowledge, either in business field or in a social corporate world. Theoretical lecture and
classroom discussion of various kinds are not enough for a student and that is why from
the practical point of view an industrial internship and preparing a report on analysis is a
practical learning for a student. Hence, after successful completion of industry internship
in BVM, textile division Sintex Industries Ltd., Kalol, Gujarat following conclusions are
made.
Ø Export marketing division of BVM, Textile division, Sintex Industries Ltd.,
follows all the export documents that are required for export execution. The
company utilizes its production at three fronts, domestic supply constitutes 20%,
direct export 20% and deemed export constitutes other 60%.
Ø For Coated technical textiles Fabric Company is at Infant stage (Introductory) in
PLC (Product Life Cycle) of BVM, textile division Sintex Industries Ltd., and
need to nurture every step with proper planning. Company focusing on Defense
and Industrial/Technical fabric also along with Fashion apparel verities and so
require more concentration to get success and to trap diversified business in a
long run.
39
APPENDIX:
40
APPENDIX1: PROFORMA INVOICE
Manufacturer / Exporter Invoice No.& Date Exporter's Ref. SINTEX INDUSTRIES LTD., PI/TEX/03/200304 IEC NO:0888003447 Textile Division : BHARAT VIJAY MILLS 12.03.2004 RBI CODE NO:AS 001989 Near Seven Garnala, Buyer's Order No. & Date : Kalol, (N.Gujarat) 382 721, INDIA Tel.: 00 91 2764 223 731 36,220 246, 220793 Other references (if any) : Fax : 00 91 2764 220 436 EMail : [email protected] Buyer (if other than consignee)
Consignee
Country of Origin of Goods Country of final Destination INDIA
Terms of Delivery and payment
PreCarriage by Place of Receipt by precarrier
Vessel/Flight No. Port of Loading :
Port of Discharge : Final Destination:
Marks & Nos. No. & Kind of Pkgs. Description of Goods Quantity Rate Amount
/Container No. (Specification) MTRS (Price) (VALUE) USD
PAYMENT :
OUR BANK DETAIL
OUR BANK A/C NO. TOLLERANCE
Amount Chargeable
(in words)
PACKING : FOR BHARAT VIJAY MILLS
Declaration : Signature & Date We declare that this invoice shows the actual price of the goods described and that all particulars are true and correct. AUTHORISED SIGNATORY
41
REFERENCES:
42
Internship Company:
Bharat Vijay Mills (BVM), textile division Sintex Industries Ltd., Kalol, Gujarat
Export documentation and Technical textiles:
1. Albaum Gerald, Jesper Stranskov and Edwin Duerr. “International Marketing and
Export Management”, 3 rd ed. MA: AddisonWesley, 1998.
2. Baker, James. C. “International Finance: Management, Markets, and Institutions”,
NJ: Prentice Hall, 1998.
3. Berry, Brian J., Edgar C. Conkling and D. Michael Ray. “The Global Economy in
Transition”, 2 nd ed., NJ: Prentice Hall, 1997.
4. Daniels, John D. and Lee H. Radenbaugh. “International Business”, 8 th ed. MA:
AddisonWesley, 1998.
5. Eiteman, David K., Arthur I. Stonehill, and Michael H. Moffett. “Multinational
Business Finance”, 8th ed. MA: AddisonWesley, 1998.
6. Fatehi, Kamal. “International Management: A CrossCultural and Functional
Perspective”, NJ: Prentice Hall, 1996.
7. Gibson, Heather D. “International Finance: Exchange Rates and Financial Flows in
the International System”, NY: Longman, 1996.
8. Gerald Albalm, Edwin Dueer and Jesper Strandstov, “International Marketing and
Export management”. 2 nd edition. 2001. Pg 42.
9. Hill, Charles W.L. International Business: Competing in the Global Marketplace. 2 nd
ed. IL: Irwin, 1997.
10. Koshy O Darlie,” Garment Exports: Winning Strategies”, 1st edition, 1997 Pg. 35
50.
11. Melvin, Michael. International Money and Finance. 5 th ed. MA: AddisonWesley,
1997.
12. Quelch, John A. and Christopher A. Bartlett. “Global Marketing Management”, 4 th
ed., MA: AddisonWesley, 1999.
13. Ram Paras, “ExportImport finance and Letter of Credit (L/C)”, 1999 edition, abc
Anupam publications. New Delhi.
43
14. Ram Paras, “Incoterms 2000, Export costing and Pricing”, 14th 2000 edition, abc
Anupam publications. New Delhi.
15. Shukla R.S, “How to Export Garment Successfully”, 2 nd edition, 1997.
16. “The stitch Time”, Vol. 3 issue, July 2005, Pg. 2428.
17. Vernon, Raymond, Louis T. Wells, Jr. and Subranian Rangan. “The Manager in the
International Economy”, 7 th ed. NJ: Prentice Hall, 1996.
Other references:
www.sintex.co.in
www.google.co.in
www.rollyo.com
www.ldec.org
www.vivisimo.com
www.grokker.com