Supply chain

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INTERNSHIP REPORT

ON INTERLOOP Pakistan

INTERLOOP LIMITED THE LARGEST HOSIERY MANUFACTURER AND EXPORTER OF SOCKS IN

PAKISTAN

Umair Hameed

MBSE-12-10

MBA (Marketing) 6th Semester 2012-15

Department of Business Administration

Bahauddin Zakariya University

Sahiwal Campus

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PREFACE

The purpose of this report is to provide an assessment of the current condition of

InterLoop Limited Pakistan and other organizations working in the Hosiery.

This report is submitted in partial the requirements for a Master of Business

Administration, Bahauddin Zakariya University

Another objective of this report is to increase the participation of students and managers

at all levels in synthesizing all available information to provide the most robust, integrated

assessment possible. Data collection and integrated reporting of information are crucial to

management efforts that strive to protect and converse coral reefs, their associated habitats, and

the organisms that depend on them. It is hoped that, through this and future reporting efforts,

gaps in the current state of knowledge organization will be identified and filled, and that the

availability of up-to- date, accurate, comprehensive information will enable the students to

grasp future job opportunities.

I would like to express my sincere gratitude to my leading Sr. Manager Mr. Muhammad

Sajjad without his advice and unique support this report would never had become a reality.

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ACKNOWLEDGEMENTS

My all acknowledgments and regards to MERCIFUL ALLAH, Who blesses us with

courage and enhances our skills in formation of the report also in all works of life

I am grateful to Mr. Waheed Iqbal DGM (SCL) of InterLoop, who provided me

information in key aspects of this report and spared their precious time and knowledge for the

completion of the report.

In last but of course not the least I show homage and all gratitude to my honorable

teacher Mr. Muhammad Sajjad, who supported and shared his great professional experience

and knowledge with me.

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Table of ContentExecutive Summary 8

Page No

Overview of the Organization 9 Vision 10 Mission Statement 10 Core Value 11 Company information 12

Board of Directors 12 BOD Profile 12

Factory Area 14 Mills 14 Organizational Structure 15 InterLoop Producing Worlds Most Prestigious Brands 16 Awards and Honors 18 Certifications 19 Code of Conduct approved 20 Bankers to Company 21 InterLoop Supply Chain 22

Consumer Purchase cycle 22 Manufacturing and Replenishment cycle 22 Procurement cycle 22

IL Supply Chain Structure 23 Types of Socks 24 Parts of Sock 26 Yarn and its types 27

Main Yarn 27 Cotton Yarn 27 Polyester Cotton 27 Spun Polyester 27 Cool Max 27 Acrylic 27 Melange Yarn 27 Marl Yarn 27

Yarn Characteristics Table 28 Socks Manufacturing Process 29 Machinery Capacity at InterLoop 30 InterLoop own Brands 31 Geographical distribution of exports 31 InterLoop Dairy Limited 32 Departments and Their Working in Interloop Limited 32

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Merchandising 32 PPC 33 Knitting 34 Toe Closing 35 Processing 36

Washing 36 Bleaching 36 Dyeing 36

Finishing/Packaging 37 Quality Assurance 38 Stores 39 Yarn Store 39 Local Sale of Socks 40 Parts, Dyes & Chemicals and General Store 40 Accessories Store 40 Process for imported accessories POs 41 Packaging supplied at buyers cost 41 Local PO (Concerned Merchandiser) 41 Packaging at our cost 41 Shipment terms agreed with Customer 41 Payment terms 42 Payment terms agreed with following suppliers 42 Amendment/revision in POs 42 Variations 42 Copies of packaging PO 43 Finished Goods Store 43 HR & Development 43 Administration 44 Finance 45 IMPORT 46 Importance of P.O and P.I 46

P.O 46 P.I 46

List of Inco terms (international commercial terms) used for I&E 46 Banking Activities 48 Bank involve in L/C Opening Procedure 48 Bank involves in Advance Payment process 48 Bank involves in after Shipment Payment process 48 L/C (letter of credit) 49 Advance Payment 49

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After Shipment Payment 49 What is 'Revocable Letter OF Credit' (L/C)? 49 What is 'Irrevocable Letter OF Credit (L/C)? 49 Back-To-Back Letters Of Credit 49 Advance Payment 50 After Shipment Payment 50 Other Department Role in Payment in InterLoop Limited 51

Audit Department 51 Finance Department 51

Freight Forwarding 51 Currently Freight Forwarders of InterLoop is 52 IATA 52 FIATA 52 ACAAP 52 Freight Forwarder of InterLoop Limited for Air Line Shipment 52 Freight Forwarder of InterLoop Limited for Sea Line Shipment 52 Port Types and Operations 52

Air Port 53 Sea Port 53 Dry Port 53 Port operator 53

Self-Regulatory Organization SRO 54 Duty 54 Customs 55 Tariff 55 Customs Duty 55 Harmonized System Code 55 Custom Clearance Process 56 Customs Clearance 56

Arrival of the goods at Customs Ports 56 Filing / Examination of Bills of Entry 57 Assessment of duties / taxes 57

Release of Goods 58 Submission of Goods Declaration 58 Process of Declaration 58 Transportation Arrangement 58 EXPORT 59 Customer Order Fulfillment Procedure 59 Process of Export products/Goods Delivered to the Customer named Destination 60 GSP (Generalized system of Preference) / "A" Form / Certificate of origin 60

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Documents for fulfillment of customer order 61 Inco Terms important for Export 61

FOB 61 CIF 62

Comparison of FOB and CIF 62 Transshipment 63 Customers of InterLoop 64 Contract procedure with Customer or Buyer 64 Purchase order 65 Invoice 65 Packing list 65 Certificate of Inspection 65 FCR (forwarder cargo receipt) 66 Bill of lading 66

House Bill of Lading 67 Master Bill of Lading 67

Bills of Exchange 67 Commercial invoice 67 Notify Party 68 Container Release Order 68 Covering Letter 68 ISF or 10+2 (import security filing) 68 The following 10 data elements are required from the importer 69 Certificate of Compliance 69 Single Country Declaration (T.D) 70 Uster Report 70 DTRE (Duty and Tax Remission for Export) 70 Automated manifest system (AMS) 70 194 Payless Customer of U.S.A with the C.I.F shipment and DTS term 70 Dividing Documentation of 194 in Different Categories 71 Billing Procedure 72 Bill Receiving 72 Checking Bills 72 System Entry 72 Audit 72 Sent to A/C Department 72 Posting in System 72 Billing Process 72 Conclusions 73 Recommendation 74

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Executive Summary

This Internship was my first step in practical life, through which I learnt a lot and it has

aided me in being well equipped with valuable experience that would help me once I enter the

professional life almost after the completion of my studies. (In the last summer vocations).I

worked in InterLoop city office as an internee. My association with this company`s city office

was being a part of the Import & Export Department. It was a great experience for me and it

helped me in realizing where my potential lies. This internship has also prepared me for my

future career in multinational organization so this internship has helped me a great deal. The

experience has taught me responsibility, teamwork and how to handle people in tough social

situations. Even though the nature of work was quite basic as an internee but I learnt a lot for my

upcoming professional life and find the internship in the best benefit of myself.

The rise of this Company epitomizes a true success story. InterLoop started out in 1992

with just 10 knitting machines, now it has 2300 machines and a workforce of more than 8000,

and has transformed itself into SOUTH ASIA'S largest sock manufacturer and exporter, offering

the highest quality socks at a level of service unknown in our industry. It is located in Pakistan's

Industrial hub Faisalabad; also known as the "Manchester of Pakistan". InterLoop is an integral

part of this business community, continuously striving to revolutionize business practices in this

region.

Hard work and utmost commitment from its employees and management, strict quality

control measures, timely shipments and reliable service standards have been paramount towards

InterLoop phenomenal growth. It is one of the very few firms in Pakistan with an impressive

social responsibility portfolio, realizing that a commitment to sustainability in all areas of

commercial activity endorse the long term interests of a business.

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Overview of the Organization

The rise of this Company epitomizes a true success story. InterLoop started out in 1992 with just 10 knitting machines, now it has 2300 machines and a workforce of more than 8000, and has transformed itself into SOUTH ASIA'S largest sock manufacturer and exporter, offering the highest quality socks at a level of service unknown in our industry. It is located in Pakistan's Industrial hub Faisalabad; also known as the "Manchester of Pakistan". InterLoop is an integral part of this business community, continuously striving to revolutionize business practices in this region. InterLoop is a complete vertical unit offering a wide range of price points and needle counts and is on the cutting edge in terms of the latest technology for each production process. We believe our success is due to a highly focused concentration on quality and speedy turnaround; a combination which increases our customers' edge in a highly competitive marketplace. In pursuance of our goal to achieve and maintain good quality, InterLoop has now set up a high-tech spinning unit that will ensure finest quality yarn made from the best available natural cotton. This project will enhance the value of money for our customers by offering even more competitive rate to our clients. Hard work and utmost commitment from its employees and management, strict quality control measures, timely shipments and reliable service standards have been paramount towards InterLoops phenomenal growth. It is one of the very few firms in Pakistan with an impressive social responsibility portfolio, realizing that a commitment to sustainability in all areas of commercial activity endorse the long term interests of a business.

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Vision

We will strive to be one of the leading players in the global hosiery business by providing

best value to our stakeholders through improving our processes to match best international

practices

Mission Statement

I Care Our Core Values

I Integrity: Act with Integrity

C Care: Nurturing a Caring Culture

A Accountability: Accept Responsibility, Be Accountable

R Respect: Respect for Environment, Respect for the People

E Excellence: Achieving the Highest Standards

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Core values

We are ethical in our functions & dealingsWe are of benefit to community we operate inWe make efforts to preserve environment

Integrity &

CSR

We aggressively face competitionWe encourage deployment of latest technologyWe arrive at decisions through collective wisdomWe avoid undue financial riskWe meet or exceed customer expectations in quality of

product & services

Our Operation

We nurture a caring environment internallyWe acquire, nurture and reward talentWe ensure self respect of the work forceWe encourage teamwork

Our People

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Musadaq Zulqarnain CEO

Navid Fazil COO

Shereen Aftab

Jahan Zeb Khan

Tariq Rashid Malik

Saeed Ahmed Jabal company secretary

Muhammad Maqsood

COMPANY INFORMATION

Board of Directors

BOD Profile Musadaq Zulqarnain ( Chief Executive Officer/Director) Mr. Zulqarnain is a qualified Engineer and Chief Executive Officer of Interloop

Limited. Before establishing Interloop, He has had 11 years of experience in

Engineering department of Sui Northern Gas company of Pakistan. He is CEO of Faisalabad

Industrial Estate Development and Management Company. He is also a Member of Board of

Directors of Punjab Industrial Estate Development & Management Company.

Navid Fazil ( Chief Operating Officer/Director)

Mr. Navid is a qualified Engineer and Chief Operating Officer of Interloop Limited.

He holds Masters degree in Management from The University of Oxford, UK.

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Jahan Zeb Khan Banth (Director)

Mr. Khan is a qualified Engineer and Director of Interloop Limited. Before

Joining Interloop he was working with Sui Northern Gas Company of

Pakistan.

Tariq Rashid Malik (Director) Mr. Rashid holds Masters degree in Computer Sciences from UK.

Shereen Aftab (Director) Mrs. Aftab holds a Doctorate degree in Immunology from The University of Manchester. She is

Director of Interloop Limited since 1999.

Muhammad Maqsood ( Director) Mr. Maqsood is a qualified Chartered Accountant and director of the Interloop Limited since 2008.He is director incharge of finance department. He has been serving the company since 2002. Saeed Ahmed Jabal ( Executive Director/ Company Secretary) Mr. Jabal is a qualified Chartered Accountant. He is the Company Secretary of Interloop Limited since 2008 and serves as the Executive Director of Import & Export Department. He has been with Interloop Limited since 2007 and has an overall experience of more than 30 years.

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Factory Area

Total Area of Factory 3,230,680 SQ FT 300,141 SQ MTR

Total Covered Area Division 1

444,000 SQ FT 41,248 SQ MTR

Total Covered Area Division II 522,543 SQ FT 48,563 SQ MTR

Total Covered Area Spinning Division 325,000 SQ FT 30,200 SQ MTR

Mills

7-km Jaranwala Road, Khurianwala,Faisalabad, Pakistan

(Hosiery 2, Spinning and Energy)

1-km Jaranwala Road, Khurianwala, Faisalabad, Pakista

n (Hosiery)

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Organizational Structure

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InterLoop Producing Worlds Most Prestigious Brands InterLoop has been exporting 100% of its goods to all parts of the world for last 16 years, enjoying highest appreciation from its clients over the product and service, it has been offering for the last many years. Client satisfaction is one of the pivotal elements of our continuous success. InterLoop aims and its team is determined to provide even better consistent quality service to the best of its abilities.

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Awards and Honors InterLoop Limited has received the Best Exporter Trophy for the Year award consecutively every year since 2002. This is awarded by the Government of Pakistan based on a companys quantum of exports

200102 Best Exporter Trophy for the year







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Certifications WRAP

ISO 9001 REV 2008

CTPAT

OKEOTEX 100

SA-8000

ISO-14000

Fair Trade

AVE

OHSAS 18001

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Code of Conduct approved Nike

Levis

GAP

HFM

Converse

WAL-Mart

Target

Reebok

JC Penney

Columbia

Puma

FILA

Tesco stores UK

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Bankers to Company

Alfalah Bank Limited

Meezan Bank Limited

MCB Bank Limited

National bank of Pakistan

Silk Bank Limited

Standard Chartered Bank Limited

United Bank Limited

Habib Bank Limited

Faysal Bank Limited

Barclays Bank PLC

Arif Habib Limited

Atlas Bank Limited

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InterLoop Supply Chain

IL Supply chain starting from Cotton vendors to the final socks consumers can be divided into three cycles consumer purchase cycle, manufacturing and replenishment cycle, and procurement cycle. IL supply chain strategy is to maximize the total supply chain profitability by planning its resources to achieve strategic fit with all agents of supply chain. "IL supply chain strategy slides to-and-fro on responsive spectrum to make a strategic fit with various customer strategies" Consumer Purchase cycle

This cycle starts with customer arrival at retail store and purchase socks, to satisfy customers retailers have to ensure availability. This is Push Process of supply chain because retailers can't calculate the actual demand so, they forecast on the bases of past sales or market trends and maintain inventories. Actual demand may be less or more than the estimated demand, to avoid stock outs retailers have to maintain large inventories (Buffer inventory) to absorb fluxes in demand which ultimately increase cost. An accurate forecasting leads to minimize inventory costs. To minimize inventory levels retailers are moving toward VMI, where inventory is monitored, planned and managed by the vendor on behalf of the consuming organization based on the expected demand and on previously agreed minimum and maximum inventory levels. Manufacturing and Replenishment cycle

This cycle starts when retailer/importer places order to the merchandiser and after manufacturing the socks delivered to the desired destination. This is a Pull Process initiated by customer by providing specific information in purchase order. On the basis of that information production could be planned. Procurement cycle

This process occurs when IL sourcing department forecast the expected need of all the raw material which could be used in upcoming orders as lead time for some raw materials is more than the IL lead time for its customers. PPC segregates raw materials on the basis of their usage (regular or not) and their lead times to maintain inventory levels accordingly. This is also a Push Process based on forecasting, a small variation in sales at retailer end cause larger fluctuations in orders to the suppliers. Because to make a single pair of socks multiple suppliers contribute by supplying different raw materials this effect is called Bull-Whip effect. Most Important driver of supply chain Information, right information on right time effects the planning of production, Inventories, and transportation.

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Types of Socks

Crew Socks

Quarter Socks

.Ankle Socks

Low-Cut Socks

No Show Socks

Tube Socks

These are the socks which contains loops (terry) at the outer side of socks, just like towel.

Reverse Terry Socks

Arch Support

Socks

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Crew Quarter Low Cut

Ankle No Show Tube

Reverse

Terry

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Parts of Sock

Part Description Tie Down The very first part of sock that is knitted in machine. It is a very small portion between welt and rib to tie these two parts together. Welt Top part of the sock, which is normally folded. Elastic is used in welt for grip purpose Rib Rib comes after welt. Its function is also to grip leg. Welt is attached to rib with tie down stitches. Ankle It is the part of sock that comes on the ankle when we wear socks. It is knitted after rib.

Heel The part of a sock that covers the rounded posterior portion of the foot under and behind the ankle. 4 types of Heel:

Real heel Y heel Extended Y heel Pouch heel

Foot The whole part of the sock that covers the foot. This part of sock is between toe and heel. Toe That portion of the sock which covers the toe of the foot. It is the closing part of the sock. Toe is of two types Real

Pouch

Motif It may be a monogram, a pattern, a design or anything alike as per the requirement of design or style. Normally formed on the rib Window Part of rib on which motif is formatted

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Yarn and its types A continuous strand of twisted threads of natural or synthetic material is called yarn.

Yarn is the basic raw material used in socks manufacturing. Yarns used for socks knitting are classified into following three categories:

Main Yarn: Yarn used in formatting the main body of socks is called main yarn. It is used in length wise direction. The types of main yarn are: Cotton Yarn: is the natural fiber which is comprised of 100% cotton fibers. Polyester Cotton: comprises of blend of cotton and polyester fibers. Spun Polyester: is spun in the same way as cotton is spun but it consists of 100% filaments. Cool Max: is the registered trademark of the manufacturer INVISTA. Acrylic: is a synthetic/man-made fiber which is manufactured with acid and is a replacement of wool Mlange Yarn: is mixture of two colored staples forming single yarn string. Marl Yarn: yarn of different colors is twisted together having 100% cotton or blend of cotton /polyester.

Socks

Pattern Yarn

Main Yarn

Plating Yarn

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The table shows some of the characteristics of the Yarn types

Clock wise twistPolyester has high strength (although somewhat lower than nylon) Excellent resilience and high abrasion resistance. Low absorbency which allows the fiber to dry quickly. It is measured by Denier

Polyester

It has comparatively more flexibility and elongationMeasured by Denier

Polypropylene

It has anti clock wise twists. High strength ,stability, and elasticity Easy washing and quick dryingIt is measured by Denier

Nylon

Polyester covered LycraNylon covered Lycra

Lycra (types)

Polyester covered LycraNylon covered Lycra

Elasctic (types)

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Socks Manufacturing Process The diagram below shows the steps involved in the socks manufacturing process at

InterLoop Limited.

Knitting

ToeClosing

Processing

Trimming

Reversing

Boarding

Finished goods

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Machinery Capacity at InterLoop

LIST OF KNITTING MACHINES

BRAND NAME NEEDLES CYLDR DIA (Inches) Qty ANGE 84 Single 5 50 CONTI 88 Single 4 10 108 Single 4 89 L372 Single

8

LONATI 72 Single 3.5 1 84 Single 4 33 108 Single 4 766 120 Single 4 70 132 Single 3.5 51 144 Single 3.5 49 144 Single 3.75 62 144 Single 4 253 156 Single 4 52 168 Single 3.75 361 108/132 Single 4 6 72/84 Single 3.5 63 84/108/120 Single 4 3 MATEC GE Single

33

SANGIACOMO 96 Single 3.25 5 108 Single 4 40 120 Single 3.25 5 168 Single 3.75 10 SANTONI (SAMPLING) 132 Single 4 1 SANTONI/STAR 132 Single 4 12 SILVER 84 Double 4.5 71 168 Double 3.75 10 168 Double 4 78 TORNADO/Santoni 84 Single 4 24 Grand Total 2,216

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InterLoop own Brands InterLoop Limited has no brand for Export of Socks while for Local Sales company has

following brands: Me

Royal Club

MAXIM GEOGRAPHICAL DISTRIBUTION OF EXPORTS

Currently InterLoop Limited is exporting to North America and Europe. In calendar year 2008, out of our total export of USD 95.00 Million, share of North America was USD 57.000 Million (60%) and remaining USD 38.000 Million (40%) was generated from sales to Europe. Export Sales of InterLoop Limited In calendar year 2009 were USD 95.5 Million, share of North America was USD 52.5 Million and share of Europe was USD 43 Million . Geographical Distribution for Year 2009

65%

35%

North America

Europe

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InterLoop Dairies Limited Pakistan with the current estimates is the 4th largest milk producing country in the world

with 33 million letters of milk produced annually. The potential is huge but the sector operates

mostly in the informal economy and needs a consistent effort to formalize and be able to

contribute better to the national economy. Out of the total milk produced, 97 % is the informal

sector (i.e. loose milk consumed in the villages and/or sold in the cities through Gawallas in

unhygienic conditions and without any quality standards.

The board of directors of InterLoop Limited is fully apprised of the importance and benefits of

both product and industry wise diversification. To reap the same, it has decided to exploit the

immense potential of diary sector. The board has formally approved the feasibility of dairy

project. Total investment of the project is going to be PKR 690.00 million. Initial investment

requirement is PKR 398.00 million out of which PKR 200.00 million will be financed as long

term loans. This project will not only reduce of InterLoop Limited on Textile sector but will also

ensure smoothness and enhancement of profitability in offing.

Departments and Their Working in Interloop Limited: Merchandising

The person who follows up the consignment from confirmation to shipment is known as a

merchandiser. No business in the world would run and makes progress unless it has a good

marketing strategy towards its product, and has a talent to promote the sales. Marketing is

supposed to be the most critical and imperative part of any business. That is why; CEO of the

INTERLOOP (PVT) LIMITED is determined to play this role followed by talented & well-

aligned merchandisers.

In the INTERLOOP (PVT) LIMITED, merchandising department is divided in two sections. 1) Europe Section 2) USA Section

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The procedure that is followed by this department is as under;

The departmental head (CEO) visit the different countries and also attend the exhibitions. Marketing is also done through company website and Internet search. Upon the receipt of any response as the result of marketing, CEO refers the inquiries/

responses to subordinate merchandisers. Merchandisers communicate further with buyers/customers to get the exact requirement. Price is settled for the specific product in the view of some specifications i.e. definition of

the product, quantity, quality, destination, mode of payment etc. Communicate further with buyers to arrange sampling (for new product definition). Sample is prepared by PPC and upon the receipt & checking, it is forwarded to customer

for approval. After approval, customer finalizes the quantity, date of shipment and generates PO

containing the specifications all about the required product. If any discrepancy is found related to the required information, it is negotiated with

customer and solved. When an order is confirmed and verified by merchandiser, it is forwarded to PPC

allocating a unique internal order number. Arrange of accessories is the responsibility of a merchandiser. In case of any amendment received from customer, it is informed properly to the

concerned department and PPC. Make a follow up of the production at every stage till its shipment. Also make it possible to ship the goods according to the scheduled delivery. In case of any delay, inform the customer accordingly. Confirm the shipment and inform the regarding details to customer. At the receiving of any complaint, contact the concerned department and reply the

customer. PPC

PPC depends upon three M i.e. man, material and machine and stands for production planning and control. It means to plan the production, (keeping in mind the capacity/availability of machines, labors and materials) and also to make it sure that all the planning is under control at every stage of production till shipment. In the INTERLOOP (PVT) LIMITED, (being a developing organization) PPC is mainly focusing on samples and playing a role of co-coordinator between the merchandising department and production department at about every stage.

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PPC receives a sampling request with complete specifications/details from Merchandising.

Raw material is arranged with the coordination of stores. Arrange knitting of socks and for this purpose, knitting information for sample is

prepared containing the requirements of sample. After the completion of knitting, it is handed over to processing. On receiving of processed sample, it is checked and handed over to merchandiser for the

approval of customer. Behavior of product in different processes is also noted for future reference. Upon the receipt of order sheet of buyer/customer for a particular order from

merchandising department, PPC check with sample and carried out the sample reference number.

Calculated the consumption of raw materials and given to sourcing department. Raise a work order to production and other concerned departments. The order file is prepared containing customer order sheet, order summary,

knitting/processing/packaging information, cartons detail and accessories requirement table.

Distributed the order file to relevant production section with diskettes (if necessary). Update the loading schedules having deliveries and loading dates. Provide the trim cards and prototypes to production and other information regarding the

specific order on demand to the concerned department. Inform the delay to merchandiser about production, packaging, and others. Knitting

INTERLOOP (PVT) LIMITED has always especially focused its knitting section equipped with world's latest & modern computerized machines. That is why, today it is the biggest one manufacturer and exporter of Pakistan/Asia. The machines used in knitting department are mostly CONTI & LONATE based on 88, 108, 120, 132, 144 and 168 needles. In socks making, knitting means to make a product based on loops and stitches using needles & sinkers in different formations supported with jacks. For the socks knitting, two main tools functions as the key tools;

1) Needle 2) Sinker

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The procedure that is followed by this department is as under

Knitting department is divided in to three units and further divided in sub units/sections. Prepare samples according to the instructions of PPC department & modifying the

designs of samples when required. Orders detail (work order) receives from PPC department. Yarn is issued by knitting department according to the plan. Yarn issuance is according to the day capacity/requirement. Plan the production according to the priorities. Plan the orders on receiving, not on weekly/monthly basis. Revise the plan according the solution i.e. increasing the number of machines, working

hours etc. Generate size book containing general information about the product. Order plan is delivered along with trim card and knitting starts according to plan. Production of machines is matched with knitting plan/size book. Production of machines is checked side-by-side (with trim card) and fresh socks are tied

in dozen to placed in proper place. Scraped or faulty socks (B grade) are placed in waste bags. Update the daily production status of machines.

Update the order status on daily basis. Toe Closing

When a product is knitted it is needed to stitch for a specific shape. Regarding the stitching of socks, it is needed in toe closing. When the socks are knitted, it has both ends open. To make a shape of socks, it is stitched form toe side and the process is called toe closing. The procedure that is followed by this department is as under;

Arrange collection of production bags and wastage bags of socks from knitting department.

Update the records of incoming socks. Sorting the production batch wise and then start linking (stitching). Batch making focuses on the required process & capacity of the processing machine. Normally for wash batch, maximum quantity required is 120 Kg and for bleach batch 120

Kg and for dyed batch 150 Kg. Then socks are delivered for toe closing. Three types of linking is performed in toe closing department;

1) Over Lock Linking

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2) Rosso Linking 3) Hand linking

Over lock linking is normally used in toe closing, Rosso Linking is costly & better than

over lock and Hand Linking is considered as superior linking in toe closing. Over lock linking is repairable while Rosso linking is non-repairable. After the completion of linking, it prepares the material transfer advice (MTA) and

transferred the bags of sock to Batch store. Before transferring the batch store, product is checked and only passed/OK product is

delivered. Daily production report is updated to maintain a record.

Order completion report OCR is also generated which indicates the number of batches (date etc), specifications and quantity.

Processing INTERLOOP LIMITED, has its own processing unit fully managed & equipped with

manual, semi computerized and computerized machines. Three types of process are performed here, used in socks processing; Washing

This process is performed with water & softener providing a specific temperature. Antibacterial or any other chemical may also use as per requirement. Bleaching

After a simple wash, half bleaching process is performed with the help of chlorine and soda ash. Then specified chemicals are used with temperature and again wash. Using acetic acid with water for removal of chemicals (neutral), it is again washed and then softener is used. Any additional requirement/chemical (antibacterial etc) may also use with softening chemicals. Dyeing

Two types of dyeing are performed i.e. single portion (only main yarn is dyed) and double portion (main and platting, both yarns are dyed). After a simple wash, half bleaching/scouring, washing and neutral process, (pH is set and then platting yarn is dyed for double portion) then again it is washed. Dyeing the main yarn, washing, neutral, and again washing (for dark shade, hard wash is also required). At the end softening the goods with additional required chemicals.

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A sample is received from PPC for shade matching & main process. On the completion of process and successful color matching, a record is maintained with

a reference number. When Batches & MTA are received from stores for processing, referenced recipe is

arranged according to the record maintained at the sampling time. Dyes and chemicals are arranged from dyes & chemicals store for processing. After receipt of batches, the process of first batch is throughout checked and monitored

because there may be a slight difference in the recipe of sample and bulk. Then it is finalized and a new record of recipe is maintained for the bulk and all other

batches or next coming assignments will follow this final recipe record. One batch is processed in one machine. There are three types of machines in processing.

1) Dyed Machines 2) Hydro Machines 3) Dryer Machines

Dyeing machines are using to dye/bleach/wash the socks as required. Hydro Machines are used to soak water from processed socks Dryers are used to dry these socks. After processing, MTA's are sent to QA dept where quality of processing is checked. If the quality is rejected, lot is re-processed and re-offered for quality approval. Once lot is approved, MTA with its batch is submitted to batch store. Internal record of all the processing is maintained. Daily production report is also prepared which is used to analysis the monthly production

of washing, bleaching and dyeing. Finishing/Packaging

Presentation of everything attracts and reflects the taste of representative. It is with the packaging that is also used for the protection of the goods (socks). The procedure that is followed by this department is as under

Receipt of pressing/ packing/loading plan from PPC MTA and batches are received after the completion of processing and accessories are

arranged accordingly. Batches are noted order wise and it is verified with OCR.

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First of all hanging threads are removed (if required) and this function is called TRIMING.

Then function of REVERSING is done manually on rulers and then it is transferred to press section.

Socks are pressed on pressing plants (1 plant can press 4-6 socks at a time). For special orders, steam press is also used where all the processes are automatic and

socks are available to collect after being nicely steamed, pressed, dried, pulled and delivered to table for folding and packing.

First of all PROTOTYPE is made for the approval of packing and after its approval from merchandising section, packing is started.

Socks are folded manually and tied as per requirement i.e. in labels, cascades, band rolls etc.

Then it is packed in poly bags and cartons as per order's requirement. Since the packing section is end user, so everything regarding the product i.e. knitting,

stitching, processing, accessories, cartons etc are keenly checked or inspected and verify with the customers requirements.

Arrange delivery to finished goods store after quality standard approval. If shade variation is found, batch is transferred to press to inform the processing

accordingly for shade wise sorting. About SF packing section informs the concerned and up to 2% by knitting manager, 4%

by PPC manager and more than 4% is allowed by the Director of Production. In finished goods store, (before dispatch) final inspection is made and after clearance they

are ready for dispatch. Quality Assurance

In every high standard organization, quality assurance plays a main role to meet the customers requirements, improving the sources and product standards. Sole purpose of this department is to maintain the standard of quality, offering to its customers. INTERLOOP has established, documented, implemented and maintained a quality management system for this purpose. Each and every item whether coming in factory for production uses and going out as sales is comprehensively checked and approved by this department. The procedure that is followed by this department is as under

All kinds of yarns whether procured for sourcing/sampling or for production are thoroughly checked for their colors, fastness, count, knitting behavior and etc.

All kinds of dyes & chemicals whether procured for sourcing/ sampling or for production are thoroughly checked for their purity, physical and chemical properties.

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All kinds of accessories for production are thoroughly checked for the standards as requested or required in orders.

QA is completely equipped to carry any special test requested by the buyer for any specific order/ product.

To have a firm grip on the standard required by customer, QA is completely & physically involved in every stage of production and have its own staff in each department where quality of different processes is checked and reported.

In each Knitting section, quality inspectors supervised by an Officer are performing quality control meticulously for the socks immediately as they produced for the standards i.e. yarn count, colors, leg size, foot size, rib size, welt size, shape/design etc.

Knitting faults are also checked by QA department e.g. extra pattern yarn, pattern yarn shade variation, wrong yarn, flying yarn, yarn floats, yarn short/tight, main yarn on pattern yarn, platting yarn problems, Oil stains/line, double loops, hole, elastic problem, uneven knitting etc.

In Toe closing sections, quality inspectors also ensure the quality standard keeping in mind the knitting faults and stitching faults especially i.e. linking operation (over lock linking or Rosso linking or hand linking), linking yarn etc.

Processing section is also observed for quality control meticulously for socks over the standards i.e. Shade, Dyeing evenness, softness, washing, rubbing, PH, pilling etc

Pressing & packing section, being the end user, is keenly observed for quality standards/control as required in orders i.e. knitting faults, linking faults, processing faults (shade variation), accessories faults, packaging faults etc.

From the above QA inspection, it comes possible to maintain the quality standards. However, if any faulty product is ignored by QA inspection, the final inspection is performed in finished goods store and makes it possible at its level best to provide the customer a quality standard product.

Stores Inventory is the backbone of any manufacturing organization. If it is well managed

keeping in focus the inventory level and concentrating the financial control, there is likelihood that organization increases its efficiency and makes progress. INTERLOOP has also established a well organized & properly managed inventory system based on sectional requirements i.e. yarn store, waste store (local sale of socks is the sub section of this store), parts, dyes & chemicals and general stores, accessories store and finished goods store. The procedure that is followed by this department is as under Yarn Store This section is responsible to maintain stock of parts, dyes & chemicals and general items.

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This section is responsible to maintain and sale the stock of wastage. Wastage is sold to contractors (selected through annual quotation and finalization by Director Sourcing).

The store receive waste form all sections and then contact the contractor on a specific time.

Weighs the wastage and prepares GST with gate pass. Forwards the GST with contractor to accounts department. Contractor makes payment of wastage to accounts department, which stamps the GST for

cash received. After the verification of GST, gate pass is issued by SO. Then it is arranged to pick up of sold wastage by contractors.

Local Sale of Socks

This section is responsible to maintain stock & sale of socks produced for local sales (B-grade or left over).

Socks are sold to local parties through local sale dept. The store receives the socks form production sections and arranges their delivery to local

parties on discretion of LSO following the same procedure as for waste sales i.e. preparation of GST, gate passes and arrange delivery to customers.

Parts, Dyes & Chemicals and General Store

This section is responsible to maintain stock of parts, dyes & chemicals and general items.

A request is raised for any specific item, which is implemented through sourcing department.

To receipt the deliveries of parts/dyes & chemicals/general items, count them, placed them and maintain the record.

Inform and send the samples to QA section for properly inspection of the items. If the quality is according to the standard then placed it in proper place and record is

maintained. If the quality is rejected, then supply is returned to the supplier. Prepare the SRS (Store Receipt Statement) and forward it with expense receipts to

accounts. Upon the request of concerned department, required quantity is issued and updated the

record. Accessories Store

This section is responsible to maintain stock accessories i.e. cartons, stickers, poly bags, labels etc.

A request is raised for any specific item.

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To receipt the deliveries of accessories, count them, placed them and maintain the record. Inform and send the samples to QA section for properly inspection of the items. If the quality is according to the standard then placed it in proper place and record is

maintained. If the quality is rejected, then supply is returned to the supplier. Prepare the SRS (Store Receipt Statement) and forward it with expense receipts to

accounts. Upon the request of concerned department, required quantity is issued and updated the

record.

Process for imported accessories POs Packaging supplied at buyers cost Entries in inventory system PO form to be made as follows Supplier Name Buyer Packaging Delivery Terms Delivery at Factory Payment Terms Cash (Adjusting Entries) Delivery Date As Appropriate Others Socks Buyers Name A/C Rate Estimated Price in Rs. Packaging at our cost Internal Purchase Order Concerned Merchandiser Import PO Concerned Manager Supplier A/C No Account Number Of Packaging Supplier Job Account Number No Issued By GM (Finance) Currency As Agreed Pi Number If Available Shipment Terms Use one of the Following As Appropriate Ex-works FOB CFR Shipment terms agreed with Customer Our cost air shipment CFR / DDP (In Export) / Ex-Works (In Imports) Our cost sea shipment CFR (In Export) / Ex-Works or FOB (In Imports) Renfros cost air shipment CFR Lahore

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Payment terms Use one of the following as appropriate TT Company Account 100% payment through companys Private FC account. Registered contract 100 % payment to supplier through bank and custom invoice is

equal to 100% value LC & TT partial payment through LC and balance payment through company private FC

A/C. custom invoice is equal to LC amount Bank draft Bank Draft Cash Cash LC 100% payment through LC. Custom invoice for 100%

value Payment terms agreed with following suppliers Renfro Registered Contract 60 Days from Invoice Date Power Faith TT Company A/C after Receipt of Goods Perfect China TT Company A/C Advance Payment Others as appropriate Amendment/revision in POs Amending the P.O before R.S. can accommodate changes in price & quantity After R.S. the change in price can only be done by IT department with special permission by

the concerned director. Quantity in PO can be changed. However, after entry of (R.S.), the quantity of PO cannot be

reduce to a level less than total quantity of R.S. of the particular item After amendment the signing authority will only sign after ensuring that copies of original

PO with and master file have been stamped as canceled as revised. The amended PO must be stamped as revised Variations If the quantity received is more than actual PO and supplier also claims for the payment of

excess quantity, store will need to amend the original PO before R.S. In case R.S. has been entered then the original PO may be amended and new R.S. for balance quantity will be issued

If the quantity received is more than the actual PO but supplier does not claim for excess quantity, Store will raise a local PO of excess quantity in Pak rupees and will book buyers packaging. Separate R.S. will be entered against local PO for excess quantity.

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If quantity received is less than actual PO and supplier agrees with our R.S. and the balance quantity is not expected ever, Store will need to amend the PO according to R.S. so that there is no balance quantity available in PO

If quantity received is less than actual PO and supplier does not agree with our R.S. and claims that the quantity is more than our R.S. or per our actual PO. In said case we will need to amend the PO according to our R.S. but at the same we will need to have an approval from CEO to give credit of the disputed amount to our supplier in good faith if so required.

Copies of packaging PO

Copies of POs and amendments will have to sent to the following department Import and export Accounts Store Merchandising PPC (production file) Master file Finished Goods Store

This section is responsible to maintain the stock of finished goods and to deliver for export shipment or local dispatch.

The loading schedule is received. Finished goods are received from packing. Counting and quality is check through QA. Arrange the stripping of cartons (if required). Cartons are weight and allot order-wise number. Application of carton sticker is made perfect on requirement. A request is raised to export department for container arrangement. Loading on containers according the loading schedule. At the completion of loading, it is informed to export department. Dispatch advice is prepared and record of the stock is maintained.

HR & Development In the structure of any organization, HR & Development is placed as the backbone and it

plays a major role to build up a reputation as well. Considering the importance and to improve the pace of progress, INTERLOOP has also established a department of HR & Development.

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Main responsibilities of this department are as under; To advertise in media related to the company benefits (including Job vacancies). Collect the applications for new employees and send to the concerned department for

selection/proper action. Concerned department sort out the application as per their requirement and inform HR

department to call the candidates for interviews. HR issues a call letter to applied candidates for interviews and tests. Issuance of the appointment letters to successful candidates & to maintain/update their

record is also the responsibilities of HR department. HR department issues charge sheets, warning letters, termination letters, increments

letters etc too. Make the clearance sheet of account for terminated/resigned employees. Internal departmental transfer is made possible through HR department. The main object of this department is the continuous reviewing of the interests of

employees for their betterment. Any kind of welfare operation/function is made possible through this department. In spite of the above, protocol conveyance and accommodation is also arranged by HR

department.

Administration Administration department is like the dress of any organization that arranges the manners

of working environment and makes it suitable for employees. It leads to work in a sequence form with right time, right place & right way. In the INTERLOOP, administration department looks after the;

General Administration Security Estates Transportation Mosque Affairs Mess/Canteen Dealing Janitorial Services

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Finance All kinds of financial transactions are performed through finance department. In the setup of

INTERLOOP LIMITED, finance department is divided into three main sections. i) Finance/ Account ii) Inventory iii) Audit & Taxation


Finance/Account section deals with all financial transactions i.e. bank dealings, payments including EOBI & social security returns etc.

Vouchers are prepared for each accounting transaction, compiled with required receipt and presented to GM for signing (salary transfer is also included in this vouching).

Accounts statement, balance sheet, profit & lose and stocks reconciliation is also the responsibility of this section.

Inventory payable is prepared for purchase orders through inventory section. In auditing, all transactions are dually checked by audit staff. Sales tax returns, income tax exemption (company returns) and etc are performed through

taxation section. All related data is operated by a database and reports are generated through the system.

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IMPORT 14-07-2014 Importance of P.O and P.I P.O A buyer generated documents authorizes a purchase transaction. When accepted by the seller it becomes a contract binding on both parties. A purchase order sets forth the description, quantities, prices, discounts, payment terms, date of performance or shipment other associated terms and conditions and identifies a specific seller. P.I A commercial document or bill presented to a buyer by a seller or service provider for payment within a stated time frame that indicates what has been purchased, in what amount and for what price. A purchase invoice can be used to prove that something was bought and how much paid for it.

List of Inco terms (international commercial terms) used for I&E CFR (Cost and Freight) The exporter must deliver the goods at the port of destination selected by the importer. Transport expenses are thus the responsibility of the exporter. The importer bears the expenses of insurance and unloading of the goods. Utilization of this term obliges the exporter to offload the goods for export, and to use only sea and inland waterway transportation. CIF (Cost, Insurance and Freight) Modality equivalent to CFR, except that the insurance costs are born by the exporter. The exporter must deliver the goods aboard ship, at the port of embarkation, with freight and insurance paid. The responsibility of the exporter ceases when the product is offloaded from the ship at the port of destination. This modality may only be used for sea and inland waterway transportation. CIP (Carriage and Insurance Paid to...) Adopts a principle similar to CPT. The exporter, aside from bearing expenses for shipment of the goods and freight to the destination, must also bear expenses of insurance for transport of the goods to the destination indicated. CIP may be used for any mode of transportation, including Multi modal.

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CPT (Carriage Paid to...) Similarly to CFR, this condition stipulates that the exporter must pay expenses relating to the shipment of the goods and international freight to the designated destination. Thus, the risk of loss or damage to the goods, and any increase in costs, are transferred to the exporter by the importer, when the goods are delivered into custody of the transporter. This Inco term may be used for any mode of transportation. DAF (Delivered At Frontier) The exporter must deliver the goods at the designated place and location on the frontier, prior to crossing over to the country of destination. This term is used principally in the case of highway or railroad transportation. DDP (Delivered Duty Paid) The exporter assumes a commitment to deliver the goods, cleared for importation, at the destination point designated by the importer, and to pay all expenses, including taxes and import charges. The exporter is not, however, responsible for unloading the goods. The exporter is also responsible for domestic freight to the destination designated by the importer. This term may be used for any mode of transportation. This is the Inco term that places the largest degree of responsibility upon the exporter. DDU (Delivered Duty Unpaid) The exporter must place the goods at the disposal of the importer at the designated place and location abroad. The exporter assumes all expenses and risks for placement of the goods at the named destination, except expenses relating to customs duties, taxes, and other import charges. This term may be used for any mode of transportation. EXW (Ex Works) The goods and invoice are at the importers disposal, at the exporters premises. All expenses and any losses or damages after delivery of the goods, including shipping of the goods overseas, are the responsibility of the importer. When requested, exporter must provide assistance to the importer in obtaining documents necessary for shipping the goods. This modality may be used for any mode of transportation. FCA (Free Carrier) The exporter delivers the goods, cleared for export, into custody of the transporter, at a location indicated by the importer, whereupon all responsibilities of the exporter cease. This may apply to any type of transportation, including multimodal. FOB (Free on Board) The exporter must deliver the goods, cleared for export, on board the ship indicated by the importer, at the port of embarkation. This modality is used for sea and inland waterway transportation. All expenses, up until the loading of the goods on the transport vehicle, are born by of the exporter. The importer is responsible for expenses and risks of loss or damage to the goods, once delivered on board the ship.

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Banking Activities Banks played important role in import department. Banks deal with InterLoop on the base of three types of payments. One and major payment mod is L/C (letter of credit), second one is Advance payment, and the last one is after shipment payment. Bank involve in L/C Opening Procedure Bank required these documents for L/C opening.

Request letter for opening L/C on the letter head paid of the company Attached Sheet Performa Invoice L/C opening form of bank

When L/C documents clear and sent them to the bank then bank check these documents and resent to the company for verifying these documents. Then company again check L/C documents and finalizing then again sent them to the bank. And after this process bank start own working on L/C transaction. Bank involves in Advance Payment process Bank also plays an important role in Advance Payment. Advance payment only proceed when amount exceed $10,000. Bank allows 120 days to the company for completing shipment order to received shipment. Company bound fulfill or follow requirements of the bank. If company not fulfill or meet this requirements then bank have a right for impose penalty. Another side bank always tolerate excess amount of shipment but not tolerate less amount of shipment thats wrote in documents. Bank requires these documents for Advance Payment.

Request letter to the bank Undertaking letter to state bank Performa Invoice Import Form

Bank involves in After Shipment Payment process Bank play role in after shipment payment as per L/C and advance payment. Bank requires no more terms and conditions just require the simple documentation for this transaction. Bank requires these documents for after shipment payment.

Commercial Invoice Airway Bill Custom Clearance Evidence Good Declaration Request Letter

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L/C (letter of credit) Advance Payment After Shipment Payment

L/C (letter of credit) A letter from a bank guaranteed that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Letters of credit are often used in international transactions to ensure that payment will be received. Due to the nature of international dealings including factors such as distance, differing laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. The bank also acts on behalf of the buyer (holder of letter of credit) by ensuring that the supplier will not be paid until the bank receives a confirmation that the goods have been shipped.(L/C open when amount exceed $10,000 of any products or goods). Two types of L/C

i. Revocable L/C ii. Irrevocable L/C

What is 'Revocable Letter OF Credit' (L/C)? This may be cancelled or amended by the buyer at any time without the sellers approval. Rarely used as there is no protection for the seller.

What is 'Irrevocable Letter OF Credit (L/C)? Correspondence issued by a bank guaranteeing payment for goods and services purchased by the one requesting the letter. An irrevocable letter of credit, or ILOC, cannot be canceled or modified in any way without explicit consent by the affected parties involved. For example, the issuing bank has no power to change the terms of an ILOC simply because the letter requester is having second thoughts. It should be noted, however, that ILOCs are in effect only for a specified time period and do, in fact, expire at a pre-determined point. Back-To-Back Letters Of Credit Two letters of credit (LCs) used together to help a seller finance the purchase of equipment or services from a subcontractor. With the original LC from the buyer's bank in place, the seller goes to his own bank and has a second LC issued, with the subcontractor as beneficiary. The subcontractor is thus ensured of payment upon fulfilling the terms of the contract.

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Example: Like most LCs, back-to-back LCs is used primarily in international transactions, with the first LC serving as collateral for the second. Documents require for opening L/C:

Request letter for opening L/C on the letter head paid of the company Attached Sheet Performa Invoice L/C opening form of bank Purchase Order Undertaking form of referred bank (in case of Beneficiary required bank)

Advance Payment Only proceeds when amount exceed $10,000/-.

Any type of payment that is made of its normal schedule, such as paying for a good or services before you actually received the goods or services. Advance payments are sometimes required by sellers as protection against non-payment. Some everyday examples of advance payments are prepaid cell phones, or simply prepaying your rent or utilities as many people do now. In the corporate world, companies often have to make advance payments to suppliers when their orders are large. Suppliers may not have enough capital to buy the materials needed to produce a large order, so they use part of the advance payment to pay for the product they will be creating. If a corporation is required to make an advance payment, it is recorded as a prepaid expense on the balance sheet under the accrual accounting method. Bank also plays an important role in Advance Payment. Bank allows 120 days to the company for completing shipment order to received shipment. Company bound fulfill or follow requirements of the bank. If company not fulfill or meet this requirements then bank have a right for impose penalty. Another side bank always tolerate excess amount of shipment but not tolerate less amount of shipment thats wrote in documents.

Request letter to the bank Undertaking letter to state bank Performa Invoice Import Form

After Shipment Payment A type of transaction which payments were made at the time of delivery. If the purchaser does not make payment when the good is delivered, then the good will returned to the seller. Payment can be made by cash, certified check or money order, depending on what is stipulated in the shipping contract. This type of transaction is usually done through a shipping company and allows both the seller and the buyer of the product to minimize the risk of fraud or default. COD allows the

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purchaser to pay at the time of delivery instead of having to pay upfront. Payment is made to the shipping company, and the shipping company then relays the payment back to the seller.

Request Letter Commercial Invoice Airway Bill Custom Clearance Evidence Good Declaration

Other Department Role in Payment in InterLoop Limited Other department of the company involves in payment modes. Mainly Audit and Finance department play an important role in payments. No payments were made without any concern of these departments. Audit Department When payments were made then start the making documentation for this payment. When documents are ready then sent to the audit department. Auditor checks and conform this invoice and record in system and sent invoice to the pre-audit factory. Pre-Audit department record invoice in the system and sent to the finance department. Finance Department Accounts/Finance department arrange balance for these payments. Balance are shows for these payments then make a voucher/cheque for these payments.

Freight Forwarding

Firm specializing in arranging storage and shipping of merchandise on behalf of its shippers. It usually provides a full range of services including: tracking inland transportation, preparation of shipping and export documents, warehousing, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims. Freight forwarders usually ship under their own bills of lading or air waybills (called house bill of lading or house air waybill) and their agents or associates at the destination (overseas freight forwarders) provide document delivery, deconsolidation, and freight collection services also called forwarder.

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Currently Freight Forwarders of InterLoop is: (Agility, CEI, Combined, USP, Demco, Dynamic, CP world, Facility, UCL, Vision

Cargo, Pakistan Cargo, TML, Expeditors, C-Gold, CIM, and DHL). Pakistan Cargo Service (PVT) and International Freight Forwarding Registered by (internationally) IATA, FIATA, and (nationally/Pakistan) ACAAP. IATA Is a trade association representing a small proportion of the worlds airlines? These 240 airlines, primarily major carriers, equate to approximately 84% of total Available Seat Kilometers air traffic. IATA supports airline activity and helps formulate industry policy and standards. It is headquartered in Montreal, Canada with Executive Offices in Geneva, Switzerland. FIATA The International Federation of Freight Forwarders Associations (FIATA) is a non-governmental organization representing 40,000 forwarding and logistics companies, employing 8 to 10 million people in 150 countries. ACAAP Air Cargo Agent Association of Pakistan. Freight Forwarder of InterLoop Limited for Air Line Shipment: Agility, Demco, DHL, ICA and other nominated forwarders on the customer requirement. Freight Forwarder of InterLoop Limited for Sea Line Shipment: For sea shipment mostly used Shipping Lines. Just like APL (American president Line) APL is the most favrot or mostly used shipping line for InterLoop Limited. APL one of them whos provide 21 free days to the InterLoop for return container. Other forwarders provide 14 free days for returning containers to the line. InterLoop Limited forwarders choosing criteria on the basiss of (Cost, Service, Flight, after shipment billing procedures) and then negotiation in rates.

Port Types and Operations Three types of Ports

Air Port Sea Port Dry Port

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Air Port In addition to people, airports move cargo around the clock. Cargo airlines often have

their own on-site and adjacent infrastructure to transfer parcels between ground and air. Cargo Terminal Facilities are areas where international airports export cargo has to be stored after customs clearance and prior to loading on the aircraft. Similarly import cargo that is offloaded needs to be in bond before the consignee decides to take delivery. Areas have to be kept aside for examination of export and import cargo by the airport authorities. Designated areas or sheds may be given to airlines or freight forward ring agencies. Every cargo terminal has a landside and an airside. The landside is where the exporters and importers through either their agents or by themselves deliver or collect shipments while the airside is where loads are moved to or from the aircraft. In addition cargo terminals are divided into distinct areas export, import and interline or transshipment. Sea Port

A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land. Port locations are selected to optimize access to land and navigable water, for commercial demand, and for shelter from wind and waves. Ports with deeper water are rarer, but can handle larger, more economical ships. Since ports throughout history handled every kind of traffic, support and storage facilities vary widely, may extend for miles, and dominate the local economy. Some ports have an important military role. Dry Port A dry port (sometimes inland port) is an inland intermodal terminal directly connected by road or rail to a seaport and operating as a centre for the transshipment of sea cargo to inland destinations. In addition to their role in cargo transshipment, dry ports may also include facilities for storage and consolidation of goods, maintenance for road or rail cargo carriers and customs clearance services. The location of these facilities at a dry port relieves competition for storage and customs space at the seaport itself. Port operator A port operator is port authority or company that contracts with the port authority to move cargo through a port at a contracted minimum level of productivity. They may be state-owned (particularly for port authorities) or privately run. The work involves managing the movement of cargo containers between cargo ships, trucks and freight trains and optimizing the flow of goods through customs to minimize the amount of time a ship spends in port. Maintaining efficiency involves managing and upgrading gantry cranes, berths, waterways, roads, storage facilities, communication equipment, computer systems and dockworkers' union contracts. The port operator also manages paperwork, leases, safety and port security

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Self-Regulatory Organization SRO A non-governmental organization that has the power to create and enforce industry regulations and standards. The priority is to protect investors through the establishment of rules that promote ethics and equality. Some examples of SROs include stock exchanges, the Investment Dealers Association of Canada, and the National Association of Securities Dealers in the United States. A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could be applied in addition to some form of government regulation, or it could fill the vacuum of an absence of government oversight and regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government. In United States securities law, a self-regulatory organization is a defined term. The principal federal regulatory authoritythe Securities and Exchange Commission (SEC)was established by the Federal Securities Exchange Act of 1934. The SEC originally delegated authority to the National Association of Securities Dealers (NASD) and to the national stock exchanges (e.g., the NYSE) to enforce certain industry standards and requirements related to securities trading and brokerage. On July 26, 2007 the SEC approved a merger of the enforcement arms of the NYSE and the NASD, to form a new SRO, the Financial Industry Regulatory Authority (FINRA). In addition, Congress created the Municipal Securities Rulemaking Board (MSRB) as an SRO charged with adopting investor protection rules governing broker-dealers and banks that underwrite trade and sell tax-exempt bonds, 529 college savings plans and other types of municipal securities. The American Arbitration Association is also an SRO with official, statutory status. Because of the prominence of the SROs in the securities industry, the term SRO is often used too narrowly to describe an organization authorized by statute or government agency to exercise control over a certain aspect of the industry. The National Association of Realtors (NAR) is an example of an SRO that fills the vacuum left by the absence of government oversight or regulation. The NAR sets the rules for Multiple Listing Services and how brokers use them. Another example is the American Medical Association which sets rules for ethics, conflicts, disciplinary action, and accreditation in medicine. Duty In economics, a duty is a kind of tax levied by a state. It is often associated with customs, in which context they are also known as tariffs or dues. The term is often used to describe a tax on certain items purchased abroad. Properly, a duty differs from a tax in being levied on specific commodities, financial transactions, estates, etc. rather than on individuals. Duties may be import duties, excise duties, stamp duties, death or succession duties, etc.; but not such direct impositions as personal income taxes.

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Customs Customs is an authority or agency in a country responsible for collecting customs duties and for controlling the flow of goods, including animals, transports, personal effects, and hazardous items, into and out of a country. The movement of people into and out of a country is normally monitored by immigration authorities, under a variety of names and arrangements. The immigration authorities normally check for appropriate documentation, verify that a person is entitled to enter the country, apprehend people wanted by domestic or international arrest warrants, and impede the entry of people deemed dangerous to the country. Each country has its own laws and regulations for the import and export of goods into and out of a country, which its customs authority enforces. The import or export of some goods may be restricted or forbidden. In most countries, customs are attained through government agreements and international laws. A customs duty is a tariff or tax on the importation (usually) or exportation (unusually) of goods. Commercial goods not yet cleared through customs are held in a customs area, often called a bonded store, until processed. All authorized ports are recognized customs areas. Tariff A tariff is a tax on imports or exports (an international trade tariff). The meaning in list of tax rates for different import goods. Customs Duty A customs duty or due is the indirect tax levied on the import or export of goods in international trade. In economic sense, a duty is also a kind of consumption tax. A duty levied on goods being imported is referred to as an import duty. Similarly, a duty levied on exports is called an export duty. A tariff, which is actually a list of commodities along with the livable rate (amount) of customs duty, is popularly referred to as a customs duty. Harmonized System Code For the purpose of assessment of customs duty, products are given an identification code that has come to be known as the Harmonized System code. This code was developed by the World Customs Organization based in Brussels. A Harmonized System code may be from four to ten digits. For example 17.03 is the HS code for molasses from the extraction or refining of sugar. However, within 17.03, the number 17.03.90 stands for "Molasses (Excluding Cane Molasses)". Introduction of Harmonized System code in 1990s has largely replaced the Standard International Trade Classification (SITC), though SITC remains in use for statistical purposes. In drawing up the national tariff, the revenue departments often specifies the rate of customs duty with reference to the HS code of the product. In some countries and customs unions, 6-digit HS codes are locally extended to 8 digits or 10 digits for further tariff discrimination: for example the European Union uses its 8-digit CN (Combined Nomenclature) and 10-digit TARIC codes.

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Custom Clearance Process The procedure for imports comprises of following three processes:

Arrival of Goods at Customs Port Filing and Examination of Bills of Entry; and Assessment of customs duty

Customs Clearance:

It is a common belief by the importers in Pakistan that custom clearance is very difficult, time consuming and cumbersome procedure. As a result it has become a common practice to engage a clearing agency in fulfilling the requirements and procedures of the customs departments, as well as clearance of consignments. However a part of the negative perception relates to the low awareness level about the compliance requirements for import procedure. It can be divided into two major segments. First appraisal, where the goods are physically verified and customs duty is assessed and second appraisal where the actual or final duty is calculated and levied upon the importer. This document covers all the necessary aspects, which are the fundamental part in clearance of goods/shipment and the process of assessment of customs duty and taxes. Shipments may be received at either the Sea, Air port or Dry port declared by the customs authorities as customs ports, customs air port and land customs station; the procedure for clearance is same for every customs station.

i- Arrival of the goods at Customs Ports

The Central Board of Revenue of and on declares the customs ports comprising of sea, land and air ports for the purposes of clearance of goods. The customs clearance process starts with the arrival of cargo ship, plane or other carrier of goods in the country on the designated sea, land and air ports. Upon arrival of the goods at the customs port, the port authorities issue the Import General Manifest (IGM) to each shipment. It is a number indicating the serial of the shipment arrived during the year. Upon receipt of the IGM the consignment is further indexed to allow for a systematic reference of all goods received. After issuing this number, the shipment is off loaded and sent back to port warehouse. In the case of land customs station i.e. dry port etc. the IGM is issued not at the time the goods reach the land customs station but at the time the goods are off loaded at the sea or air port. Upon arrival of the off loaded goods, the clearance process starts. Normally at this point clearing agency is engaged by the importer to facilitate the process of customs clearance and to reduce interface with the customs officials. Following documents are required and provided to the clearing agent for processing.

a) Invoice of shipment b) Packing list c) Bill of lading d) Copy of the Letter of Credit or Contract

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If the importer is importing for the first time, following additional documents are to be submitted.

a) Copy of the Sales Tax Registration Certificate as an importer b) Copy of Registration Certificate issued by the Export Promotion Bureau in case of

import of Gems and Jewelry c) Copy of the National Tax Number d) Copy of the most recent sales tax return

It may be noted that now there is no need to obtain import and export license from the Export Promotion Bureau.

ii- Filing / Examination of Bills of Entry:

Provided all the above mentioned documents are complete, the clearing agency prepares the Bill of Entry. It may be noted that at present the bills of entry are being filed electronically with the customs department. For such purposes the customs official have issued Pin Code to every clearing agent along with a CD which contains the standard formats of bills of entry in blank form. The clearing agent after giving all the particulars in the bills of entry hand over the CD along with all the requisite documents to the customs officials for their review and clearance of goods.

iii- Assessment of duties / taxes On delivery of the bill of entry, the goods or any part thereof is examined without delay

for the purposes of assessment of customs duty and other taxes thereon. This examinations made in the following manner: First appraisal of the consignment: During first appraisal the case is forwarded to the appraisement hall where the specific percentage of goods imported is determined for examination. The principal appraiser marks the case to the Inspector and Deputy Superintendent for examination. The inspector after examining the goods marks the case to the Deputy Superintendent for further approval. Provided the case is approved by both of them, the case is referred to the Principal Appraiser for assessment of customs duty and other taxes thereon. The second appraisement of the shipment: Is carried out by the customs department in reference to the report forwarded by the principle appraiser along with documents submitted by the clearing agent for determination of customs duty.

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Release of Goods After assessment of valuation the case is then forwarded to the Inspector - Out of

Charge for final release and issuance of a gate pass. Following documents are submitted to the Inspector for Processing:

A) Copy of Invoice B) Copy of Packing List c) Bill of Entry (Original Copy, Quadruplicate Copy and Statistical Copy)

With the issuance of gate pass, the importer is directed to deposit the amount of duty assessed, warehouse charges, fines and penalties, if any, and placed by the port authorities. Once the payment is made, the shipment is released and can be loaded and transported to its destination. Submission of Goods Declaration

The Goods Declaration i.e. on line filing of bills of entry etc. may be filed on line at least24 hours before the arrival of the vessel. The duties and taxes are computed and discharged (at any nearest online bank branch) by the importer before submission of the declaration to the Customs. On submission of the document the importer is granted an online receipt in the shape of Customs Reference Number (CRN) also known as Machine Number. Process of Declaration

The moment a CRN is allotted, the Risk Management System of PACCS commences the processing of the declaration. In case the customs are satisfied that the particulars contained in the declaration do not pose a threat to the country of the exchequer, the cargo is cleared in seconds and the importer is intimated online. However, in case a threat is detected, detailed scrutiny including examination of the cargo is undertaken.

Transportation Arrangement Arrangement of Transportation is a main working for any import and export. In import department transportation arrangement process as follows: Firstly, receive loading plan for cargo. Second, allocate weight KGs to per ton according to container size. Third, contact with PPC (production planning and controlling) department for cargo loading or unloading places and also placement of empty container. Fourth, forward cargo loading detail/quotations to the transporter and negotiation for rates and compare rates to the different transporters. Fifth, give cargo order to the select one transporter. Finally, load cargo from the port of loading and company in touch with transporter till unloading of the cargo in the final destination.

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EXPORT 05/08/2014 EXPORT In International Trade, "exports" refers to selling goods and services produced in the home country to other markets. Ship the goods and services out of the port of a country.

Customer Order Fulfillment Procedure:

Firstly generate P.O (purchase order) by the merchandising department

Export department received P.O from merchandising department

Then Export department sent P.O to the nominated forwarder of the customer (Cargo ready to loading please provide conformation order/shipment for moving)

Forwarder contact with the customer and approval for shipment or vessel

Forwarder sent us customer approval message for shipment

After conforming the order then we arrange transportation and sent them cargo to the port for custom clearance

After clearing the custom formalities then we move cargo for vessel and received B/L (bill of leading) on Karachi port

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Process of Export products/Goods Delivered to the Customer named Destination:

Generate P.O (purchase order) by the merchandising department. Merchandising sends P.O to the export department. Export department send P.O to the nominated forwarder of the customer that cargo is

ready please provide vessel or shipping line detail. Forwarder contact with customer and get approval for shipment. Forwarder send approval message of the customer to the export department. Then export department arrange transport and sent cargo to the port for custom clearance. After clearing custom formalities forwarder sent Bill of Leading to the export department

for moving cargo to the vessel. After receiving B/L export department sent B/L to the customer.

GSP (Generalized system of Preference) / "A" Form / Certificate of origin

The Generalized System of Preferences, or GSP, is a preferential tariff system which

provides for a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries, without also lowering tariffs for rich countries. The idea of tariff preferences for developing countries was the subject of considerable discussion within the United Nations Conference on Trade and Development (UNCTAD) in the 1960s. Among other concerns, developing countries claimed that MFN was creating a disincentive for richer countries to reduce and eliminate tariffs and other trade restrictions with enough speed to benefit developing countries. In 1971, the GATT followed the lead of UNCTAD and enacted two waivers to the MFN that permitted tariff preferences to be granted to developing country goods. Both these waivers were limited in time to ten years. In 1979, the GATT established a permanent exemption to the MFN obligation by way of the enabling clause. This exemption allowed contracting parties to the GATT (the equivalent of today's WTO members) to establish systems of trade preferences for

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other countries, with the caveat that these systems had to be "generalized, non-discriminatory and non-reciprocal' with respect to the countries they benefited (so-called "beneficiary" countries). Countries were not supposed to set up GSP programs that benefited just a few of their "friends.' GSP basically is a free trade certificate for under develop countries issued by the European Union for dut

Supply chain

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