export management
TRANSCRIPT
ON THE JOB TRAINING
REPORT
ON
EXPORT MANAGEMENTIN
RANA POLYCOT LIMITED
(IN THE PARTIAL FUFILLMENT OF REQUIREMENT OF THE
DEGREE OF BACHELOR OF COMMERCE-II IN
FOREINGN TRADE PRACTICE AND PROCEEDURE)
SESSION – 2009-2010
UNDER THE GUIDANCE OF: - SUBMITED BY:-PROF. J.K.GUPTA VIKRANT SINGLA(HOD) B.COM IICOMMERCE DEPARTMENT Roll No. 2052 S .A. JAIN (PG) COLLEGE
SUBMITTED TO:-
S.A. JAIN (PG) COLLEGEAMBALA CITY
KURUKSHETRA UNIVERSITY, KURUKSHETRA
CERTIFICATE
This is to certify that Vikrant Singla student of B.Com.II
(Vocational) is a bonafide student of the college. He has completed his on
the job training report on the topic "Export Management" at Rana Polycot
Limited under our supervision. This training report being submitted in the
partial fulfillment of the requirement of examination of B.Com.II.
In our opinion the report fulfill the requirement laid down by the
Kurukshetra University, Kurukshetra. It may be send for evaluation.
GUIDED BY: SUPERVISED BY:Prof. J.K. Gupta Mrs. Neetu BansalH.O.D. Assistant Professor(Commerce Deptt.) (Commerce Deptt.)S.A. Jain College,Ambala City
ACKNOWLEDGEMENT
Preservation, inspiration and motivation have always played a key role in the
success of any venture. In the present world of competition and success, project is like a
bridge between theoretical and practical working. Willingly I prepared this particular
project report. First of all I would like to thank the supreme power, the almighty god,
who is obviously the one who has always guided me to work on the right path of my life.
I am heartily thankful to Dr. Pardeep Sharma (Principal of S.A. Jain (PG)
College, Ambala City), who gave me permission, undersigned letter to allow me to go in
Rana Polycot Limited to learn with practical knowledge and also gave me admission to
learn, and also to my teacher Mrs. Neetu Bansal who gave me such a learning task, now,
I feel myself as a winner.
I am also grateful to Prof. J.K. Gupta, Head of Commerce who extended all
facilities and his professional practical knowledge at every step.
I also express my sincere thanks to Dr.Sudhir Chouhan, G.M (P&A) for
allowing me to complete my training firm and who played an important role in brining
this to fruition.
I am deeply indebted to all the empolyes of RPL for their guidance and
encouragement. Special thanks to Mr. Parmod Sharma (Vice Persident of
Commercial Deptt.) who are guide for this project and training incharge Mr.O.P.
Sharma (Labour Officer). It has been a pleasure working with him and I could learn the
characteistics of an efficient corporate professional. I got necessary parctical knowledge
and information about the Export procedure.
I am very thankful to Mr. Gurnaib Singh (Senior Asstt.), Mr. Vivek Thakur
(Asstt.) and Mr. Raman Deep Singh (Asstt.) and all members of commerce department
who have been with me whenever I need their help.
I am beholders to the RPL LTD. Management for being transparent sharing their
views and company related information which all has given me a holistic approach in
doing the project work.
(VIKRANT SINGLA)
PREFACE
Theory and practices are the two broad aspects of management education and in
order to produce an executive, the two have to be interwoven. Realizing the importance
of such practical exposure, the university has made it compulsory for all students to
undergo a vocational training in some concerns, which import or export their products. I
have done my training in Rana Polycot Ltd. situated on the Alamgir, Ambala-Chandigarh
Highway near Lalru, Distt. Patiala, PB 140501(INDIA). It was of one month vocational
training.
During my project, I have tried to concentrate on the various workings, functions
of supply chain management and possible gaps therein. There can be no successful action
in isolation unless it is incompatible with the company’s system and efforts. It has been
reflected in the report submitted herewith.
During my training, I got an opportunity to see myself as an executive. I observed
how the export manager works, how he deals with the buyers and staff. Really, I
observed how organization functions for the achievement of its goal.
My subject of training was “Export Management”. A concern goes for
international trade and has to fulfill a lot of formalities i.e. it has to produce a numbers of
documents. Without these documents export/import does not possible during my training
period learnt a lot about these documents.
Though care has been taken in the preparation of the report as to reflect the true
steps of operation. Yet my sincere apologies for my mistakes, which might have crept in.
I hope that this report should be able to add value to the reader and the organizations.
INDEX
I. Certificate of the CompanyII. Certificate of CollegeIII. AcknowledgementIV. Preface
CONTENTS
CHAPTER DESCRIPTION PAGE NO. NO.
I COMPANY PROFILE (07-17)
History 7
Present Status 7
Objectives of the Study 9
Organisation Structure of Rana Polycot Ltd. 13
Reason For Selecting Rana Polycot Ltd. 17
II. EXPORT MANAGEMENT (19-44)
Introduction 19
Foreign Market Selection 21
Method of Payment in Export Market 22
SWOT Analysis 24
Registration of Export 26
Export Pricing 31
Export Documentation 34
Export Pre-Shipment Finance 38
Export Postshipment Finance 41
III. EXPORT MANAGEMENT OF RPL (46-85)
Introduction of Export in Rana Polycot Ltd. 46
Starting Export Business 51
Market Communication Mix 54
Selecting Overseas Agent 57
SWOT Analysis in Rana Polycot Ltd. 61
Pre-Requisite For Export/Import 63
Export Pricing of Rana Polycot Ltd. 65
Label, Marking & Packing System in Rana Polycot Ltd. 67
Export Documentation of Rana Polycot Ltd. 68
IV. FINDINGS AND SUGESSTIONS (87-89)
Findings 87
Suggestions 89
CONCLUSION ( 90 )
BIBLIGRAPHY
ANNEXURES
CHAPTER -1
COMPANY PROFILE
HISTORY
Rana group of companies began in mid 1980’s when Mr. Rana Gurjeet Singh,
MD of Rana Group set-up, Agro Board Limited-a Kraft papers unit in Punjab.
Rana group’s commitment to add value to agro product lead to incorporation of
Rana Sugar. Rana Sugars, situated in district Amritsar, Punjab is an integrated sugar
company with a capacity to crush around 5000tons of sugarcane per day to utilizes the
waste the company has set up a baggage based power generation unit.
Getting success in its sugar venture and continuing with commitment to agro
based industry, the group entered into the field of spinning by setting up Rana Polycot
Limited.
PRESENT STATUS
Rana Polycot Limited is leading and recognized name in the Textile Industries in
India.
Rana Polycot Limited situated in the Delhi-Chandigarh Highway in Punjab State.
It is 200kms away from Delhi. Keeping an eye in growing textile export and catering to
one of the basic needs of human being, the company has 50000 spindles running on
100% cotton yarn.
Company imports the latest generation state of the art machinery from the Rieter,
Schlafhorst, Zelleweger-Uster and Savio & Luwa the pioneering textile machinery
companies out of India.
100% EXPORT ORIENTED UNIT
Rana Polycot produced at present producing 100% cotton yarns in the count range
from 16/1 to 40/1, combed for hosiery as well as Weaving. The Company is totally
dedicated to offer best quality yarns to its overseas buyers, our yarns meet the top 5-10%
user standards.
Company yarns meet the most stringent requirements of high quality conscious
customers in the overseas market like South Africa, Koria, France, Tunisia, Mauritius,
Malaysia, Hong-Kong, Belgium, Bangladesh, Mexico, Vietnam, Czech-Rep. Jakarta, etc.
Rana Polycot Ltd.’s yarns based on high quality mixing system viz. Bale
Management. Company purchase the raw material i.e. bale from its domestic market and
also import high quality viscose as on special export.
Company also sale the cotton wastes to its domestic buyers. A cotton waste mean
that cotton which is eliminates by the machinery during the production process and that is
not suitable for export product quality.
Rana Group’s commitment to add value to agro products led to incorporation of
Rana sugars. A Rana sugar, situated in district Amritsar, Punjab is an integrated sugar
company with a capacity to crush around 5000 tons of sugarcane per day. To utilize the
waste the company has set up biogases based power generation plant. Having tasted
sweet success in its sugar venture and continuing with commitment to agro based
industry, the group ventured into the field of spinning by setting up Rana Polycot
Limited. Success of this maiden venture was duly recognized by apex. State owned
industrial Promotion Corporation and this led to joint ventures of Rana group with
different state owned corporation
RPL is situated in the cotton heartland of India, almost 200kms. From Delhi on
Delhi-Chandigarh highway, Rana Polycot limited is a 100% export oriented unit based on
35000 spindles. Keeping an eye in growing textile exports and catering to one of the
basic needs of human being, the unit has 75000 spindles running on 100% cotton.
The plant has got the latest generation state of the art machinery from Reiter,
schlafhorst, zelleweger-uster, Savior & Luwa the names to reckon within textile industry.
Rana Polycot is presently producing 100% cotton yarns in the count range of NE 16/1 –
NE 40/1, combed & carded for hosiery as well as weaving. The company is totally
dedicated to offer best quality yarns to its discerning overseas buyers, our yarns meet the
top 5-10% ester standards.
Our yarns are based on rich and uniform mixing based on quality system viz., bale
management to produce consistently high quality yarns. Our yarns meet the most
stringent requirements of highly quality conscious customers in markets like South
Korea, Singapore, Hong-Kong, Mauritius, Malaysia, Israel, Philippines, Tunisia, Mexico,
United Kingdom, Hungary, Bangladesh, Belgium, Jakarta, Czech Republic and Vietnam,
etc. We are committed to offer the best products and services to our demanding
customers spread around the world. In the financial year 2006-07, export of Rana Polycot
Ltd. is above Rs. 140 crores.
RANA GROUP OF COMPANIES
Rana Sugar Limited
Rana Polycot Limited
Rana Textile (P) Ltd.
Global Trade (P) Ltd.
Rana Infomatics Ltd.
Guru Teg Bhadhur Forest Ltd.
Rana Fund and Investment (P) Ltd.
BOARD OF DIRECTORS
Sh. Ramesh Inder Singh IAS (Chairman)
Rana Ranjeet Singh (M.D.)
Rana Gurjeet Singh
Sh. S.K. Duggal
Sh. D.S. Dhaliwal
Sh. A.S. Pooni
Mohanjeet Singh Pooni
Sh. B.K. Malhotra
Sh. S.A.S. Bajwa
Mrs. Rajbans Kaur
Sh. B.K. Batra
AUDITIORS
KANSAL SINGH & ASSOCIATIONChartered AccountantsSEO. 111-15,Sector 22-B,Chandigarh--160018
BANKERS
CANARA BANK, Sector 17- C, Chandigarh—160018
ANDRA BANK, Sector 17-B, Chandigarh—160018
REGD. OFFICE
SCO 49-50, Sector 8-C
Madhya Marg, Chandigarh---160018
PRODUCTION
Rana Polycot Limited
Village---Alamgir, Post Office, Lalru, District Mohali, Punjab
Ph--- 01762-2506751-756, Fax---01762-506750
ORGANISATION CHART
GM(Technical) V.P.(commercial) DGM ( P&A)
Manager Manager Manager Manager(Eng.) (Production) (R&D) (Mainte.)
Manager(SPG) Asstt. Scurit Manager -y
Personn el officer
Electronices (Asstt.Egr.) (A/C) (Manager worker costing) (EDP)
ORGANIZATION CHART OF RANA POLYCOT LTD.
Board of Directors
Managing Director
Chief Executive
Mechanical Stores
Electrical S.M. Finishing S.M. CivilMaintenance (A)
INFRASTRUCTURE FACILITIES OF RANA GROUP
RANA POLYCOT LTD., (SPINNING DIVISION) LALRU
Company is located in close proximity to the cotton belt of north India. The plant
is located at Lalru, Punjab. The unit was established with scaled to 35,000 spindles in
2000.RPL currently has a capacity of 72,768 spindles.
Ring spinning
Installed capacity72, 768 Spindles 50 tons per day of yarn
The above spindles include spindles of compact yarn and 30000 spindles with
Murata link coners.
VORTEX SPINNING
Latest Murata 4 MVS 861 and
1 MVS 810 machine to produce 3.5 tons per day of Vortex yarn.
RANA POLYCOT LTD., (DYEING DIVISION)
The dyeing unit of RPL is also located in Lalru, Punjab. The dyeing unit
commenced production in 2006 with a capacity of 5 tons/day. The company is proposing
Current capacity - 4.8 tons per day
Expansion planned - 6 tons per day
RANA POLYCOT LTD., (KNITTING DIVISON)
The knitting division was established in 2002 with an initial capacity of 1000
pieces/day. The division has since expanded and now has an installed capacity of 3000
pieces/day.
PRODUCT LINE
The product line includes designer wear garments in Men’s, Ladies $ Kids wear
range. We can make “(in flat knit) intarsia structure, jacquard structure, etc.
MANUFACTURING CAPACITY
Rana Polycot’s Khitting Division can make app.60k-70k units/month.
After setting up garment set up in the year 2001-02 (with a capacity of making
22k-25k units/month), Rana Polycot has increased it’s capacity to the tune of 3 times.
DYED YARN
In order to provide more value added services to its client, RPL set up it dyeing
division that provides package yarn dyeing of 100% cotton yarns. The dyeing division is
supported by its installed capacity of 4.5 tons/day. The plant is equipped to produce high
quality dyed yarns supported by fully automatic processing machines from FONG’S
(HONG KONG). The plant, with its latest technology, dyeing equipment and qualities
staff is able to achieve international quality standards.
KNITTING $ GARMENTS
As a part of its forward integration and diversification program. Company set up a
flat knit unit to manufacture premium quality flat knit garments and sweaters for export
to the international markets. The garments line is based on the latest generation
stitching/linking’s/over locks and finishing machines. The product line includes designer
wear garments in men’s, ladies and kids range. Various types of inputs like cotton, rayon,
lamb’s wool and viscose are used in the design. RPL also specialize in various types of
washes finishes and embellishments.
YARN
Company produce 100% cotton yarn in the count range of Ne 16/1-Ne 40/1 and
TFO doubled yarns in the count range of Ne16/2-Ne 40/2 for hosiery and weaving. RPL
has an installed operating capacity of 48,000 spindles including 10,000 spindles for the
production of compact yarn. RPL also operates five latest Murata Air Jet Vortex Spinning
Machines (MVS) to produce high quality yarn with lesser pilling. The company is totally
dedicated to offer the best yarn to it discerning buyers. Company yarns meet the top 5-
10% uster standards and are based on rich and uniform cotton mixing.
REASONS FOR SELECTING RPL
Rana Polycot Ltd. is one of the famous and recognized companies in India. Its
cotton rings are not only famous in India, but also in the international markets. RPL is the
concern of Rana Groups of Companies having the turnover of Rs. 200 core. RPL is the
100% Export oriented unit (E.O.U.). It is new in this business of cotton and since 1995
when Rana Polycot Ltd. is commencing it production till today constant upward growth
has symbolized and it also capture the highest exports in 2003-04.
Being a B.COM II student, I had curiosity to know how such a big concern
controls, Export procedure manages its different activities and it is always ready to
cooperative its experience to its trainees.
Another reason to select Rana Polycot Ltd. is its set up which is an excellent
blend of a classic and modern concern, RPL is disciplined to its core and is exploiting
strength to his maximum extent and ever growing.
Hence these are enormous opportunities to learn for a student to learn for a
student like me.
For a proper export planning following questions need to be answered.
1. Which products are selected for export development?
2. What modifications, if any, must be made to adapt them for overseas markets?
3. Which countries are targeted for sales development?
4. In each country, what is the basic customer profile?
5. What marketing and distribution channels should be used to reach customers?
6. What special challenges pertain to each market (competition, cultural differences,
and import, Controls, etc.), and what strategy will be used to address them?
7. How will the product's export sale price be determined?
8. What specific operational steps must be taken and when?
OBJECTIVES OF THE STUDY
The main objectives of study are:-
1. To know about mechanisms for reviewing and measuring progress.
2. To study about how company has focused on export management.
3. To study the procedure to get export license.
4. To study the documents required for export of goods.
5. To study the export procedure of the company.
6. To study the government policies related to the export of a particular product.
7. To study the government incentive schemes and tax exemption for exports.
CHAPTER - 2
EXPORT MANAGEMENT
INTRODUCTION
Export in itself is a very wide concept and lot of preparations is required by an
exporter Before starting an export business. A key success factor in starting any export
company is Clear understanding and detail knowledge of products to be exported. In
order to be a Successful in exporting one must fully research its foreign market rather
than try to tackle Every market at once. The exporter should approach a market on a
priority basis. Overseas Design and product must be studied properly and considered
carefully. Because there are Specific laws dealing with International trade and foreign
business, it is imperative that you Familiarize yourself with state, federal, and
international laws before starting your export Business. Price is also an important factor.
So, before starting an export business an exporter must consider the price offered to the
buyers. As the selling price depends on sourcing price, try to avoid unnecessary
middlemen who only add cost but no value. It helps a lot on cutting. The transaction cost
and improving the quality of the final products.
The Government of Indian has defined it, in very simple terms; export may be
defined as the Selling of goods to a foreign country. However, As per Section 2 (e) of the
Indian Foreign Trade Act (1992), the term export may be defined as 'an act of taking out
of India any goods by land, sea or air and with proper transaction of money”. Exporting a
product is a profitable method that helps to expand the business and reduces the
Dependence in the local market. It also provides new ideas, management practices,
marketing
Every company wants to growth and make international image. For this purpose
they entry in the overseas market. Although overseas market is more beneficial and
company expansion strategy but there is lot of risk i.e. different consumers taste,
preference, economic and other factors.
BASIC PLANNING FOR EXPORT
INTRODUCTION
Before starting an export, an individual should evaluate his company’s “export
readiness”. Further planning for export should be done only, if the company’s assets are
good enough for Export. There are several methods to evaluate the export potential of a
company. The most Common method is to examine the success of a product in domestic
market. It is believed that If the products have survived in the domestic market, there is a
good chance that it will also be Successful in international market, at least those where
similar needs and conditions exist. One should also evaluate the unique features of a
product. If those features are hard to duplicate abroad, and then it is likely that you will
be successful overseas. A unique product may have little competition and demand for it
might be quite high. Once a businessman decides to sell his products; the next step is to
developing a proper export plan. While planning an export Strategy, it is always better to
develop a simple, practical and flexible export plan for Profitable and sustainable export
business. As the planners learn more about exporting and Your company's competitive
position, the export plan will become more detailed and Complete.
WHAT IS EXPORTING: -Exporting means sell the products (services) out of national
boundries. When a company sells its products in the one or more than one nation it call
exporting. In briefest term, it is the process of earning money by selling products in
foreign markets.
FOREIGN MARKET SELECTION PROCESS
Step 1: Gather Information on a Broad Range of Markets
Market selection process requires a broad range of information depending upon
the products or services to be exported, which includes:
• The demand for product/service.
• The size of the potential audience.
• Whether the target audience can afford product.
• What the regulatory issues are that impact on exports of product.
• Ease of access to this market – proximity/freight.
• Are there appropriate distribution channels for product or service?
• The environment for doing business – language, culture, politics etc.
• Is it financially viable to export to selected market?
Step 2: Research a Selection of Markets In-Depth
From the results of the first stage, narrow your selection down to three to five
markets and undertake some in-depth research relating specifically to your product.
While doing so, some of the questions that may arise at this stage are:
• What similar products are in the marketplace (including products that may not be
similar but are used to achieve the same goal, e.g. the product in our sample matrix at the
end of this document is a hair removal cream. As well as undertaking competitor research
on other hair removal creams, we would also need to consider other products that are
used for hair removal, i.e. razors, electrolysis, wax).
• What is your point of difference? What makes your product unique? What are the
key selling points for your product?
• How do people obtain/use these products?
• Who provides them?
• Are they imported? If so from which countries?
• Is there a local manufacturer or provider?
• Who would your major competitors be? What are the key brands or trade names?
• What is the market’s structure and shape?
• What is the market’s size?
• Are there any niche markets, and if so how big are they?
• Who are the major importers/ stockiest / distributors / agencies or suppliers?
• What are the other ways to obtain sales/representation?
• What are the prices or fees in different parts of the market?
• What are the mark-ups at different distribution levels?
• What are the import regulations, duties or taxes, including compliance and
professional registrations if these apply?
• How will you promote your product or service if there is a lot of competition?
• Are there any significant trade fairs, professional gathers or other events where
you can promote your product or service?
• Packaging – do you need to change metric measures to imperial; do you need to
list ingredients?
• Will you need to translate promotional material and packaging?
METHODS OF ENTRY INTO FOREIGN MARKETS
There are various methods of entry in the foreign markets. A Company can
choose a method according to their desire. These methods are following.
1. Exporting:- Exporting is three types:-
a) Direct exporting:-When a company sells its products directly in the foreign
market without any middleman helps. In this case companies have its own export
department organization structure.
b) Indirect exporting: - It is opposite direct exporting. Indirect exporting happens
when the firm sells its products in the foreign market via an intermediary located
in the firm home country. The middlemen could be an export management
company (EMC), a trading house or simply a broker.
c) Cooperative exporting: - Companies that are not willing to commit the resources
to set up their own distribution organization but still want to have some control
over their foreign operation should consider cooperative exporting. One of the
most popular forms of cooperative exporting is piggyback exporting. Through
piggyback exporting the company uses the overseas distribution network of
another company (local or foreign) for selling its goods in the foreign market. For
example-Wrigley, the US chewing gum company, enters India by piggy backing
on parry’s a local confectionery firm.
2. Licensing: -licensing is a contractual transaction whereby the firm-the licensor-
offers some proprietary assets to a foreign company -the licensee-in exchange for
royalty fees. Examples of assets that include in contracts are trademarks,
technology known how, production process and patents.
3. Franchising:-It is an arrangement whereby the franchisor gives the franchisee the
right to use the franchiser trade names, trademarks, business models, and know-
how in a given territory for a specific time period, normally 10 years in exchange
of royalty and other fees.
4. Contract Manufacturing: -Contract manufacturing or outsourcing the company
arrange with a local manufacturer to manufacture parts of the products or even the
entire product. The marketing of the products is still the responsibility of the
international firm. Example-Net Steel Electronics (NEL) is one of the leading
global electronics contract manufactures.
5. Joint Venture: -With a joint venture, the foreign company agrees to share equity
and other resources with other partners to establish a new entity in the target
country. The partners typically are local companies, local govt., authorities, other
foreign companies or a mixture of local and foreign players.
6. Wholly owned subsidiaries: -MNCs often prefers to enter new markets with 100/
ownership. In this case company acquisition or purchased other company by
100%ownership or establish a separate 100%owned subsidiary in foreign market.
7. Acquisition and Merger: -In this case company acquisitions foreign company by
100% or management stake. The other strategy is merger .in this strategy a
company amalgamates with other company and share the ownership or
management.
REGISTRATION OF EXPORTERS
Registration with Reserve Bank of India (RBI)
Registration with Director General of Foreign Trade (DGFT)
Registration with Export Promotion Council
Registration with Commodity Boards
Registration with Income Tax Authorities
Once all the research and analysis is done its time to get registered with the
various government authorities. Registration with Reserve Bank of India (RBI) Prior to
1997, it was necessary for every first time exporter to obtain IEC number from Reserve
Bank of India (RBI) before engaging in any kind of export operations. But now this job is
being done by DGFT.
Registration with Director General of Foreign Trade (DGFT)
For every first time exporter, it is necessary to get registered with the DGFT
(Director General of Foreign Trade), Ministry of Commerce, Government of India.
DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required
for the purpose of export as well as import. No exporter is allowed to export his good
abroad without IEC number.
However, if the goods are exported to Nepal, or to Myanmar through Indo-
Myanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it
is not necessary to obtain IEC number provided the CIF value of a single consignment
does not exceed Indian amount of Rs. 25, 000 /-. Application for IEC number can be
submitted to the nearest regional authority of DGFT.
Application form which is known as "Aayaat Niryaat Form - ANF2A" can also be
submitted online at the DGFT web-site: http://dgft.gov.in.
While submitting an application form for IEC number, an applicant is required to
submit his PAN account number. Only one IEC is issued against a single PAN number.
Apart from PAN number, an applicant is also required to submit his Current Bank
Account number and Bankers Certificate. A amount of Rs 1000/- is required to submit
with the application fee. This amount can be submitted in the form of a Demand Draft or
payment through EFT (Electronic Fund Transfer by Nominated Bank by DGFT.
Registration with Export Promotion Council
Registered under the Indian Company Act, Export Promotion Councils or EPC is
a non-profit organization for the promotion of various goods exported from India in
international market.
EPC works in close association with the Ministry of Commerce and Industry,
Government of India and act as a platform for interaction between the exporting
community and the government. So, it becomes important for an exporter to obtain a
registration cum membership certificate (RCMC) from the EPC. An application for
registration should accompanied by a self certified copy of the IEC number. Membership
fee should be paid in the form of cheque or draft after ascertaining the amount from the
concerned EPC.
The RCMC certificate is valid from 1st April of the licensing year in which it was
issued and shall be valid for five years ending 31st March of the licensing year, unless
otherwise specified.
Registration with Income Tax Authorities
Goods exported out of the country are eligible for exemption from both Value
Added Tax and Central Sales Tax. So, to get the benefit of tax exemption it is important
for an exporter to get registered with the Tax Authorities.
EXPORT LICENSE
Introduction
An export license is a document issued by the appropriate licensing agency after
which an exporter is allowed to transport his product in a foreign market. The license is
only issued after a careful review of the facts surrounding the given export transaction.
Export license depends on the nature of goods to be transported as well as the destination
port. So, being an exporter it is necessary to determine whether the product or good to be
exported requires an export license or not. While making the determination one must
consider the following necessary points:
• What are you exporting?
• Where are you exporting?
• Who will receive your item?
• What will your items will be used?
Canalization
Canalization is an important feature of Export License under which certain goods
can be imported only by designated agencies. For an example, an item like gold, in bulk,
can be imported only by specified banks like SBI and some foreign banks or designated
agencies.
Application for an Export License
To determine whether a license is needed to export a particular commercial
product or service, an exporter must first classify the item by identifying what is called
ITC (HS) Classifications. Export license are only issued for the goods mentioned in the
Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application
can be submitted to the Director General of Foreign Trade (DGFT). The Export
Licensing Committee under the Chairmanship of Export Commissioner considers such
applications on merits for issue of export licenses.
Exports free unless regulated The Director General of Foreign Trade (DGFT)
from time to time specifies through a public notice according to which any goods, not
included in the ITC (HS) Classifications of Export and Import items may be exported
without a license. Such terms and conditions may include Minimum Export Price (MEP),
registration with specified authorities, quantitative ceilings and compliance with other
laws, rules, regulations.
How to take export licence? What type of documentation is required?
An export license is a document issued by the appropriate licensing agency after
which an exporter is allowed to transport his product in a foreign market. The license is
only issued after a careful review of the facts surrounding the given export transaction.
Export license depends on the nature of goods to be transported as well as the destination
port. So, being an exporter it is necessary to determine whether the product or good to be
exported requires an export license or not. While making the determination one must
consider the following necessary points:
(1) What are you exporting?
(2) Where are you exporting?
(3) Who will receive your item?
(4) What will your items will be used?
Canalization is an important feature of Export License under which certain goods
can be imported only by designated agencies. For an example, an item like gold, in bulk,
can be imported only by specified banks like SBI and some foreign banks or designated
agencies.
To determine whether a license is needed to export a particular commercial
product or service, an exporter must first classify the item by identifying what is called
ITC (HS) Classifications. Export license are only issued for the goods mentioned in the
Schedule 2 of ITC (HS) Classifications of Export and Import items. A proper application
can be submitted to the Director General of Foreign Trade (DGFT). The Export
Licensing Committee under the Chairmanship of Export Commissioner considers such
applications on merits for issue of export licenses.
For every first time exporter, it is necessary to get registered with the DGFT
(Director General of Foreign Trade), Ministry of Commerce, Government of India.
DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required
for the purpose of export as well as import. No exporter is allowed to export his good
abroad without IEC number.
However, if the goods are exported to Nepal, or to Myanmar through Indo-
Myanmar boarder or to China through Gunji, Namgaya, Shipkila or Nathula ports then it
is not necessary to obtain IEC number provided the CIF value of a single consignment
does not exceed Indian amount of Rs. 25, 000 /-.
Application for IEC number can be submitted to the nearest regional authority of
DGFT. Application form which is known as "Aayaat Niryaat Form - ANF2A" can also
be submitted online at the DGFT web-site: http://dgft.delhi.nic.in
While submitting an application form for IEC number, an applicant is required to
submit his PAN account number. Only one IEC is issued against a single PAN number.
Apart from PAN number, an applicant is also required to submit his Current Bank
Account number and Bankers Certificate.
A amount of Rs 1000/- is required to submit with the application fee. This amount
can be submitted in the form of a Demand Draft or payment through EFT (Electronic
Fund Transfer by Nominated Bank by DGFT.
The RCMC certificate is valid from 1st April of the licensing year in which it was
issued and shall be valid for five years ending 31st March of the licensing year, unless
otherwise specified.
Commodity Board is registered agency designated by the Ministry of Commerce,
Government of India for purposes of export-promotion and has offices in India and
abroad. At present, there are five statutory Commodity Boards under the Department of
Commerce. These Boards are responsible for production, development and export of tea,
coffee, rubber, spices and tobacco.
Goods exported out of the country are eligible for exemption from both Value
Added Tax and Central Sales Tax. So, to get the benefit of tax exemption it is important
for an exporter to get registered with the Tax Authorities.
EXPORT PRICING AND COSTING
Pricing and costing are two different things and an exporter should not confuse
between the two. Price is what an exporter offer to a customer on particular products
while cost is what an exporter pay for manufacturing the same product. Export pricing is
the most important factor in for promoting export and facing international trade
competition. It is important for the exporter to keep the prices down keeping in mind all
export benefits and expenses. However, there is no fixed formula for successful export
pricing and is differ from exporter to exporter depending upon whether the exporter is a
merchant exporter or a manufacturer exporter or exporting through a canalizing agency.
Determining Export Pricing
Export Pricing can be determined by the following factors:
Range of products offered.
Prompt deliveries and continuity in supply.
After-sales service in products like machine tools, consumer durables.
Product differentiation and brand image.
Frequency of purchase.
Presumed relationship between quality and price.
Specialty value goods and gift items.
Credit offered.
Preference or prejudice for products originating from a particular source.
Aggressive marketing and sales promotion.
Prompt acceptance and settlement of claims.
Unique value goods and gift items.
EXPORT COSTING
Export Costing is basically Cost Accountant's job. It consists of fixed cost and
variable cost comprising various elements. It is advisable to prepare an export costing
sheet for every export product. As regards quoting the prices to the overseas buyer, the
same are quoted in the following internationally accepted terms which are commonly
known as Inco term.
PACKAGING AND LABELING
Introduction
An important stage after manufacturing of goods or their procurement is their
preparation for shipment which involves packaging and labeling of goods to be exported.
Proper packaging and labeling not only makes the final product look attractive but also
save a huge amount of money by saving the product from wrong handling the export
process.
Packaging
The primary role of packaging is to contain, protect and preserve a product as
well as aid in its handling and final presentation. Packaging also refers to the process of
design, evaluation, and production of packages. The packaging can be done within the
export company or the job can be assigned to an outside packaging company. Packaging
provides following benefits to the goods to be exported:
• Physical Protection – Packaging provides protection against shock, vibration,
temperature, moisture and dust.
• Containment or agglomeration – Packaging provides agglomeration of small objects
into one package for reason of efficiency and cost factor. For example it is better to put
1000 pencils in one box rather than putting each pencil in separate 1000 boxes.
• Marketing: Proper and attractive packaging play an important role in encouraging a
potential buyer.
• Convenience - Packages can have features which add convenience in distribution,
handling, display, sale, opening, use, and reuse.
• Security - Packaging can play an important role in reducing the security risks of
shipment. It also provides authentication seals to indicate that the package and contents
are not counterfeit. Packages also can include anti-theft devices, such as dye-packs, RFID
tags, or electronic article surveillance tags, that can be activated or detected by devices at
exit points and require specialized tools to deactivate. Using packaging in this way is a
means of loss prevention.
LABELING
Like packaging, labeling should also be done with extra care. It is also important
for an exporter to be familiar with all kinds of sign and symbols and should also maintain
all the nationally and internationally standers while using these symbols. Labeling should
be in English, and words indicating country of origin should be as large and as prominent
as any other English wording on the package or label.
Labeling on product provides the following important information:
Shipper's mark
Country of origin
Weight marking (in pounds and in kilograms)
Number of packages and size of cases (in inches and centimeters)
Handling marks (international pictorial symbols)
Cautionary markings, such as "This Side Up."
Port of entry
Labels for hazardous materials
Labeling of a product also provides information like how to use, transport,
recycle, or dispose of the package or product. With pharmaceuticals, food, medical, and
chemical products, some types of information are required by governments.
It is better to choose a fast dyes for labeling purpose. Only fast dyes should be
used for labeling. Essential data should be in black and subsidiary data in a less
conspicuous colour; red and orange and so on. For food packed in sacks, only harmless
dyes should be employed, and the dye should not come through the packing in such a
way as to affect the goods.
EXPORT DOCUMENTATION
COMMERCIAL INVOICE
Commercial Invoice document is provided by the seller to the buyer. Also known
as export invoice or import invoice, commercial invoice is finally used by the custom
authorities of the importer's country to evaluate the good for the purpose of taxation.
The invoice must:
Be issued by the beneficiary named in the credit (the seller).
Be address to the applicant of the credit (the buyer).
PACKING LIST
Also known as packing specification, it contains details about the packing
materials used in the shipping of goods. It also includes details like measurement and
weight of goods.
The packing List must:
Have a description of the goods ("A") consistent with the other documents.
Have details of shipping marks ("B") and numbers consistent with other
documents
SHIPPING BILL / BILL OF EXPORT
Shipping Bill/ Bill of Export is the main document required by the Customs
Authority for allowing shipment. A shipping bill is issued by the shipping agent and
represents some kind of certificate for all parties, included ship's owner, seller, buyer and
some other parties. For each one represents a kind of certificate document.
INSURANCE CERTIFICATE
Also known as Insurance Policy, it certifies that goods transported have been
insured under an open policy and is not actionable with little details about the risk
covered. It is necessary that the date on which the insurance becomes effective is same or
earlier than the date of issuance of the transport documents. Also, if submitted under a
LC, the insured amount must be in the same currency as the credit and usually for the bill
amount plus 10 per cent. The requirements for completion of an insurance policy are as
follow:
The name of the party in the favor which the document has been issued.
The name of the vessel or flight details.
The place from where insurance is to commerce typically the sellers warehouse or
the port of loading and the place where insurance cases usually the buyer's
warehouse or the port of destination.
Insurance value that specified in the credit.
Marks and numbers to agree with those on other documents.
CERTIFICATE OF ORIGIN
The Certificate of Origin is required by the custom authority of the importing
country for the purpose of imposing import duty. It is usually issued by the Chamber of
Commerce and contains information like seal of the chamber, details of the good to be
transported and so on. The certificate must provide that the information required by the
credit and be consistent with all other document, It would normally include:
The name of the company and address as exporter.
The name of the importer.
Package numbers, shipping marks and description of goods to agree with that on
other
documents.
Any weight or measurements must agree with those shown on other documents.
It should be signed and stamped by the Chamber of Commerce.
A Certificate of Origin (often abbreviated to CO or COO) is a document used in
international trade. It traditionally states from what country the shipped goods originate,
but "originate" in a CO does not mean the country the goods are shipped from, but the
country where their goods are actually made. This raises a definition problem in cases
where less than 100% of the raw materials and processes and added value are not all from
one country. An often used practice is that if more than 50% of the sales prices of the
goods originate from one country that country is acceptable as the country of origin (then
the “national content” is more than 50%. In various international agreements, other
percentages of national content are acceptable.
BILL OF LADING
Bill of Lading is a document given by the shipping agency for the goods shipped
for transportation form one destination to another and is signed by the representatives of
the carrying vessel.
Bill of landing is issued in the set of two, three or more. The number in the set
will be indicated on each bill of lading and all must be accounted for. This is done due to
the safety reasons which ensure that the document never comes into the hands of an
unauthorized person. Only one original is sufficient to take possession of goods at port of
discharge so, a bank which finances a trade transaction will need to control the complete
set. The bill of lading must be signed by the shipping company or its agent, and must
show how many signed originals were issued.
REGISTRATION
Any exporter who wants to export his good need to obtain PAN based Business
Identification Number (BIN) from the Directorate General of Foreign Trade prior to
filing of shipping bill for clearance of export goods. The exporters must also register
themselves to the authorized foreign exchange dealer code and open a current account in
the designated bank for credit of any drawback incentive.
Registration in the case of export under export promotion schemes:
All the exporters intending to export under the export promotion scheme need to
get their licenses / DEEC book etc.
Processing of Shipping Bill - Non-EDI:
In case of Non-EDI, the shipping bills or bills of export are required to be filled in
the format as prescribed in the Shipping Bill and Bill of Export (Form) regulations, 1991.
An exporter need to apply different forms of shipping bill/ bill of export for export of
duty free goods, export of dutiable goods and export under drawback etc.
PROCESSING OF SHIPPING BILL - EDI:
Under EDI System, declarations in prescribed format are to be filed through the
Service Centers of Customs. A checklist is generated for verification of data by the
exporter/CHA. After verification, the data is submitted to the System by the Service
Center operator and the System generates a Shipping Bill Number, which is endorsed on
the printed checklist and returned to the exporter/CHA. For export items which are
subject to export cess, the TR-6 challans for cess is printed and given by the Service
Center to the exporter/CHA immediately after submission of shipping bill. The cess can
be paid on the strength of the challan at the designated bank. No copy of shipping bill is
made available to exporter/CHA at this stage.
EXPORT PRE-SHIPMENT FINANCE
Pre Shipment Finance is issued by a financial institution when the seller wants the
payment of the goods before shipment. The main objectives behind preshipment finance
or pre export finance are to enable exporter to:
Procure raw materials.
Carry out manufacturing process.
Provide a secure warehouse for goods and raw materials.
Process and pack the goods.
Ship the goods to the buyers.
Meet other financial cost of the business.
Types of Pre Shipment Finance
Packing Credit
Advance against Cheques/Draft etc. representing Advance Payments.
Preshipment finance is extended in the following forms:
Packing Credit in Indian Rupee
Packing Credit in Foreign Currency (PCFC)
Requirement for Getting Packing Credit
This facility is provided to an exporter who satisfies the following criteria
A ten digit importer exporter code number allotted by DGFT.
Exporter should not be in the caution list of RBI.
If the goods to be exported are not under OGL (Open General License), the
exporter should have the required license /quota permit to export the goods.
Packing credit facility can be provided to an exporter on production of the
following
evidences to the bank:
1. Formal application for release the packing credit with undertaking to the effect that
the exporter would be ship the goods within stipulated due date and submit the
relevant shipping documents to the banks within prescribed time limit.
2. Firm order or irrevocable L/C or original cable / fax / telex message exchange
between the exporter and the buyer.
3. License issued by DGFT if the goods to be exported fall under the restricted or
canalized category. If the item falls under quota system, proper quota allotment proof
needs to be submitted.
The confirmed order received from the overseas buyer should reveal the
information about the full name and address of the overseas buyer, description quantity
and value of goods (FOB or CIF), destination port and the last date of payment.
ELIGIBILITY
Pre shipment credit is only issued to that exporter who has the export order in his
own name. However, as an exception, financial institution can also grant credit to a third
party manufacturer or supplier of goods who does not have export orders in their own
name.
In this case some of the responsibilities of meeting the export requirements have
been out sourced to them by the main exporter. In other cases where the export order is
divided between two more than two exporters, pre shipment credit can be shared between
them Quantum of Finance. The Quantum of Finance is granted to an exporter against the
LC or an expected order. The only guideline principle is the concept of Need Based
Finance. Banks determine the percentage of margin, depending on factors such as:
The nature of Order.
The nature of the commodity.
The capability of exporter to bring in the requisite contribution.
DISBURSEMENT OF PACKING CREDIT ADVANCE
Once the proper sanctioning of the documents is done, bank ensures whether
exporter has executed the list of documents mentioned earlier or not. Disbursement is
normally allowed when all the documents are properly executed. Sometimes an exporter
is not able to produce the export order at time of availing packing credit. So, in these
cases, the bank provides a special packing credit facility and is known as Running
Account Packing. Before disbursing the bank specifically check for the following
particulars in the submitted documents"
a. Name of buyer
b. Commodity to be exported
c. Quantity
d. Value (either CIF or FOB)
e. Last date of shipment / negotiation.
f. Any other terms to be complied with
The quantum of finance is fixed depending on the FOB value of contract /LC or
the domestic values of goods, whichever is found to be lower. Normally insurance and
freight charged are considered at a later stage, when the goods are ready to be shipped.
EXPORT POSTSHIPMENT FINANCE
BASIC FEATURES
The features of post shipment finance are:
Purpose of Finance Post shipment finance is meant to finance export sales
receivable after the date of shipment of goods to the date of realization of exports
proceeds. In cases of deemed exports, it is extended to finance receivable against
supplies made to designated agencies.
Basis of Finance Post shipment finances are provided against evidence of
shipment of goods or supplies made to the importer or seller or any other
designated agency.
TYPES OF FINANCE
Post shipment finance can be secured or unsecured. Since the finance is extended
against evidence of export shipment and bank obtains the documents of title of goods, the
finance is normally self liquidating. In that case it involves advance against undrawn
balance, and is usually unsecured in nature. Further, the finance is mostly a funded
advance. In few cases, such as financing of project exports, the issue of guarantee
(retention money guarantees) is involved and the financing is not funded in nature.
Quantum of Finance
As a quantum of finance, post shipment finance can be extended up to 100% of
the invoice value of goods. In special cases, where the domestic value of the goods
increases the value of the exporter order, finance for a price difference can also be
extended and the price difference is covered by the government. This type of finance is
not extended in case of preshipment stage. Banks can also finance undrawn balance. In
such cases banks are free to stipulate margin requirements as per their usual lending
norm.
Period of Finance
Post shipment finance can be off short terms or long term, depending on the
payment terms offered by the exporter to the overseas importer. In case of cash exports,
the maximum period allowed for realization of exports proceeds is six months from the
date of shipment. Concessive rate of interest is available for a highest period of 180 days,
opening from the date of surrender of documents. Usually, the documents need to be
submitted within 21days from the date of shipment.
Financing For Various Types of Export Buyer's Credit
Post shipment finance can be provided for three types of export:
a) Physical exports: Finance is provided to the actual exporter or to the exporter in
whose name the trade documents are transferred.
b) Deemed export: Finance is provided to the supplier of the goods which are
supplied to the designated agencies.
c) Capital goods and project exports: Finance is sometimes extended in the name
of overseas buyer. The disbursal of money is directly made to the domestic
exporter.
Supplier's Credit Buyer's Credit is a special type of loan that a bank offers to the
buyers for large scale purchasing under a contract. Once the bank approved loans to the
buyer, the seller shoulders all or part of the interests incurred.
Payment Collection against:- Bills also known documentary collection as is a payment
method used in international trade all over the world by the exporter for the handling of
documents to the buyer's bank and also gives the banks necessary instructions indicating
when and on what conditions these documents can be released to the importer.
Collection against Bills is published by International Chambers of Commerce
(ICC), Paris, France. The last updated issue of its rule was published on January 1, 1966
and is know as the URC 522.It is different from the letters of credit, in the sense that the
bank only acts as a medium for the transfer of documents but does not make any payment
guarantee. However, collections of documents are subjected to the Uniform Rules for
Collections published by the International Chamber of Commerce (ICC).
ROLE OF VARIOUS PARTIES
EXPORTER
The seller ships the goods and then hands over the document related to the goods
to their banks with the instruction on how and when the buyer would pay.
EXPORTER'S BANK
The exporter's bank is known as the remitting bank, and they remit the bill for
collection with proper instructions. The role of the remitting bank is to:
Check that the documents for consistency.
Send the documents to a bank in the buyer's country with instructions on
collecting payment.
Pay the exporter when it receives payments from the collecting bank.
BUYER/IMPORTER
The buyer / importer are the drawer of the Bill.
The role of the importer is to
Pay the bill as mention in the agreement (or promise to pay later).
Take the shipping documents (unless it is a clean bill) and clear the goods.
IMPORTER'S BANK
This is a bank in the importer's country: usually a branch or correspondent bank
of the remitting bank but any other bank can also be used on the request of exporter. The
collecting bank act as the remitting bank’s agent and clearly follows the instructions on
the remitting bank's covering schedule. However the collecting bank does not guarantee
payment of the bills except in very unusual circumstance for undoubted customer, which
is called availing. Importer's bank is known as the collecting / presenting bank.
The role of the collecting banks is to:
Act as the remitting bank's agent
Present the bill to the buyer for payment or acceptance.
Release the documents to the buyer when the exporter's instructions have been
followed.
Remit the proceeds of the bill according to the Remitting Bank's schedule
instructions.
If the bill is unpaid / unaccepted, the collecting bank:
May arrange storage and insurance for the goods as per remitting bank
instructions on the schedule.
Protests on behalf of the remitting bank (if the Remitting Bank's schedule states
Protest)
Requests further instruction from the remitting bank, if there is a problem that is
not covered by the instructions in the schedule.
EXPORT FINANCE PRE SHIPMENT AND POST SHIPMENT
EXIM Guide to Export Finance offers a wide variety of financial measures to
promote exports. The guide also deals with the role of commercial banks and export
credit agencies and private-sector credit insurance. This complete guide offers
entrepreneurs practical information on how identify the most suitable payment methods
and required credit facilities. The guide also provides information on finance related legal
documentation and models of the most common forms and agreements.
CHAPTER -3
EXPORT MANAGEMENT IN RANA POLYCOT LTD.
The role of export management is very significant. The export management
undertakes the cumbersome but very important task of export marketing and creates the
image of the company and its products in the overseas market. To fully appreciate the
role of Export Management it is necessary to study few point about the company’s
objectives and polices.
COMPANY OBJECTIVES: -
Company objectives are usually broad guidelines, which permit the operation of
the company within certain parameters. The main object of a company is to make a profit
on the capital invested. Other objectives could be the type of business in which the
company wishes to trade.
A Company’s objectives, therefore, lay the foundation of the company’s
managerial thinking and set the pattern for the company’s polices. The Rana polecat Ltd.
all polices are maintained by the company directors.
COMPANY POLICIES: -
Based on the company’s objectives, management prepares its policy by which
company should operate. The policy covers the guidelines for the proposed action to be
taken by the company.
To meet the objectives and maximize profit, the policy may state either to
increase the selling prices, to increase production, or to enter the new export market to
gain an additional outlet for its product rang. If the management has decided to enter the
export market, the policy will merely state “We will export our products from this
September in order to increase sales.” The RPL the policies are maintained under the
export procedure and all the export are regimented management policies.
EXPORT POLICY: -
Within the framework of the company’s objectives and polices, the export
director prepares the export department’s policy which is either short-term or long-term.
The more detailed export policy permits the whole export function to commerce with a
planned structure and could be used as a system and procedure for the department.
The export policy covers the main objectives of the export department and the
strategies by which these objectives will be achieved. The export policy should cover:
Export production policy
Export marketing and sales promotion policy
Export pricing policy
Export distribution and transport policy
Overseas agencies and sales representation policy
Spares and after-sales-service policy
The export executive delegate powers to the departmental managers, for the
operation of the export function within the export policy and departmental policies. The
main duty of the export director is to develop overseas market, increase export sales,
control department and guide the export staff.
Managers play an active part in the running of a company. They control their
departments and supply central management with a vast amount of information to assist
in the control of the whole company. The elements of management, as applicable to the
Export Director, are as follows
Company management Export Director (DGM Marketing) Export policy
Company objectives Policies, planning Export Manager & Strategies Vice President (commercial) Forecasting, Origination Planning, Direction & coordination, Communication, Motivation & control of export actives Export staff / Commercial Staff Performance of export
FORECASTING AND PLANNING:-
The forecast is essential for preparation of export budget and planning the
production. The export director forecasts the expected future of the total export activity
on the information gathered from various sources. Both the forecast and planning may be
either short or long term but are usually both. Based on the forecast, the export director
selects programs and procedures for achieving the forecast.
ORGANIZATION: -
Organization is the practical method of putting the export policy into action. The
export director must plan the detailed organization of the department to achieve the aims
and goals of the export function.
The Export Management of RPL
1. Control and Delegation – The organization should be planned to manage easily
and control effectively. The delegation of authority should be as far down as
possible so that manager can play a collective role in decision making and control
the staff. The span of control of a manager should be in accordance with the type
of work.
2. Unity of Objective – The export staff must contribute towards the overall
objective of the export department. Instructions to one person from two or more
managers should be avoided.
3. Knowledge of the work – Each area of operation is very important and jobs are
specialized in the Export Department. Each staff member should be familiar with
the total function of the department. The changes in personnel or absenteeism
should not disrupt or suffer the function of the department.
4. Human behavior – Good staff relations and management/staff communication is
essential. Personnel management techniques like job specification, job evaluation
and appraisal should be considered when planning the organization.
DIRECTION AND CO-ORDINATION: -
The export executive must be well versed to the departmental activities, export
marketing, export procedures, export documentation, and government’s export policies
and must be able to guide his managers and staff properly. In the export department, each
section is dependent on the other and hence co-ordination among the staff members is
very essential and important. The export procedure and documentation of Rana Polycot
Ltd. are managing by Head office in Chandigarh.
SYSTEM AND PROCEDURE: -
The simple and clear systems and procedures helps the staff members to
procedures helps the staff members to understand the company’s and export department’s
policies and carry out various operations efficiently. A good system prevents duplication
of work and records, ensures a smooth flow of work. When setting up a procedure, it is
necessary to consider actual job is necessary to consider actual job of each individual or
the jobs of a group of individuals, to determine whether specialization is necessary.
CONTROL: -
The performance of different departmental executives, managers and staff
members is assessed and controlled by the company management using various control
techniques. Similarly the export executive/DGM (Marketing of RPL) exercises his
authority and control the function of the export department. He checks whether his plans
are carried out and attend deviations.
STARTING AN EXPORT BUSINESS
Exporting is a scientific activity requiring knowledge of the rules and regulations
relating to export and promotional measures, procedural formalities and documentation
required not only in INDIA, but also in the countries of importation. To fulfill these
requirements exporter will follow the essential steps to start an export business.
The basic requirement for starting an Export Business: -
1. Assess the capability- If concern is already strong in domestic market and want
to start export, then it must assess its production and marketing capability that it
can fulfillment the export order requirement and if a new concern established only
for export business e. g. export house, trading house etc. than it must fulfill the
basic requirement for an export business.
2. Organizing- To start an export business it is first imperative to create the
necessary infrastructure, however modest it may be. It might involve starting a
complete new organization and adding new activities to an existing one.
3. Naming the concern: - There is already some sort of an organization, including a
manufacturing concern, exporting can be started under the same name and style to
set up a new firm, the first essential task is to name the firm. The name and style
should be attractive short and meaning.
4. Trade name and logo: - Moreover the name, symbol or logo chosen should
reinforce the company name and create an image in the customer mind when they
see the (letterhead and business) company product.
5. Business card: -The most important marketing tool is the business card. It is what
others will keep to remember the company by and even more importantly. It
represents the quality of service offered to a potential client.
6. Bank account: - A current account has to be opened in the name of the
organization in whose name it is intended to export, in a deal in foreign exchange.
7. Registration in sales tax Authority-For procurement i.e. purchasing goods from
manufacturers or merchants/traders without payment of sales tax. The exporter
needs to register him with the sales tax department of the state /union territory
within whose jurisdiction he is located obtains TIN NO.
8. Registration in central excise/custom authority: - Every person manufacturing
excisable goods for home consumption or export or both should registered
himself with the central excise dept. for dispatch of goods without payment of
excise duty payment after goods dispatch.
9. Registration in export promotion councils:- Any person applying for 1.a
license to import/export or 2.any other benefit or concession under the Exim
policy’s required to furnish a registration –cum-membership-certificate (RCMC)
number granted to him by the authorities like export promotion councils,
commodity boards, federation of Indian export organization (FIEO) and
Agriculture and Processed food products Export Development Authorities
(APEDA), Marine Product Export Development Authority (MPEDA).
10. Obtain I/E code no.-Every businessman whether an individual or a firm or a
company, importing, exporting goods is required to obtain an I/E Code no from
the regional I/E Licensing authority.
11. Selecting the markets:-Target markets should be selected after carefully
consideration of various factors like political embargo, scope of exporter selected
countries, market penetration by competitive countries and products, distance of
potential market, transport problems, language problems, tariffs and non-tariffs
barriers, distribution infrastructure, demand in the market, expected life span of
market and product requirements, sales and distribution channels.
12. Export commodity selection: -When selecting the commodity for exports, some
following points have to be taken into consideration:-
The exporters manufacturing capacity, if he is a manufacturer of a particular
commodity.
The availability of commodity from other manufacturers when the exporters
desire in act as a, exporters desire to act as a merchant exporter.
The demand for the commodity in the importing country.
The Govt. of India policy and regulations in respect of export of various
commodity.
The foreign Govt. Policy and Regulations respect of importing of various
commodities.
Total profitability of such commodities considering cash incentives available, if
any.
The import replenishment available, if any. Quota fixation, if any, in respect of
such commodities in both the countries.
Knowledge and experience of similar exporters in respect of the respect of such
commodities in various countries.
13. Understanding risk of international trade: -while selling abroad, the exporter
may understand the major risk i.e. Credit risk, Currency risk, Country risk and
Carriage risk.
MARKETING COMMUNICATION MIX
After selecting the target market for the product, company now has to consider
about how to hit that target surely and effectively, how to communicate with it so that the
market knows about the product and is persuaded to buy it.
To achieve the objective of communicating with a target market and creating a demand
for the product, it is necessary to understand the various techniques that can be used.
The major techniques are: -
1. Personal selling-It is selling is predominantly a personal activity. It requires that
the salesperson understand the needs/wants of the customer. The salesperson must
understand local customers well enough to be accepted and the salesperson must
be able to form relationships with the customers.
2. Advertising- It is the latest technique of marketing communication by this
technique, company can make introduce their product to lot of customer in short-
time, but before advertising the product company must understand that country
advertising rules and regulations where company wants to introduce their
products. There are various tools of advertising e.g. T.V., Radio, Newspaper,
Magazines, Posters etc.
3. Direct marketing: It is also a marketing communication technique because by
this technique seller can make the direct contact to their customers and tells about
the existing and potential product features to the customers.
4. Trade fairs and exhibitions: -Trade fairs and exhibition are a vital part of the
communication package for many international businesses –to-business
marketers. The Purpose of trade fairs and exhibitions is to attract the customer to
the exporter. Trade fairs and exhibitions can be a very valuable marketing
communication tool for exporters from developing countries. But before attending
an international trade fairs and exhibition, exporters must understand the potential
customer needs and taste and that country rules and regulations of business.
5. Sales promotion: - Today every concern wants to increase their sales and earn to
maximum profit from their competitors for living ling-time in the business. There
are various tools by which company can promote their sales i.e. contest, rebate,
price back offer, guarantee/warranty, sample, after sales services.
6. Publicity: -Publicity is the process of stimulating a favorable mention in the
media of significance news items about the firm, its products and its activities
without actually paying for it. Publicity is often achieved as a result of public
relation activities.
EXPORT MARKETING MIX OF RANA POLYCOT LTD.
Marketing mix is very important in the overseas business as well as domestic
business .to get the success and lives long-time in the business. Marketing mix state the
company’s business strategy and planing.The businessmen should be awareness and
carefully study of their marketing mix. Marketing mix state about the company’s product,
price, place and promotion. Businessmen can guess competitors strategy with the help of
marketing mix.
Marketing mix is introduce by the famous marketing expert MR.CARTHEY.in
marketing mix includes four P’s i.e.
Product:- Product is the most important element of marketing mix. Because if product
does not fulfill the customers needs than all the business will be fail. In this section a
marketing manager make the product strategy like new product development, product
withdraw, change /improvement in the product, quality etc.
RPL produce many kind of product according to their customer requirement and
order. Actually RPL produce all kind of yarn product i.e.16/1 to 40/1 cotton and viscose.
Viscose is the high quality yarn product. Both type products are export.
Price: - Price means what price will be set for their product. Manager set that price
which is beneficial for the company. The major price effecting factors are company’s
goal, objective and competitors price.
RPL set differenr-2 export price according to their product demand. Export price
set in U.S. dollar and mostly take payment in U.S.dollar.The price lie between US$2.40
to 2.90 per kgs.
Place:- Place refers the proper distribution of the product in the market .if your product
demand is good in the market and your distribution system is not good or you can not
provide the product in the market on the right time, in this situation, your company’s
product and image will be effected and you may be out of market due to customer deny.
RPL distribute its product in the foreign market through its overseas agent. These agents
make the contact to its wholesalers and distributors and direct customer’s time to time
and makes the proper supply of the product.
Promotion:- Promotion is also play an important role in the marketing. it is a
communication system of product awareness in the target through these channel company
tell about the product quality and other feature that is able to fulfill the customers the
special need and desire. There are various communication channels and manager can
choose the channel according to their requirement.
RPL promote its product in the foreign market through it’s appoint agents. These agents
give the sample to its distributors and search customer’s response towards that product
and sometime give fewer prices than its competitors and give credit period to the
customers.
SELECTING OVERSEAS AGENTS
If a supplier has some success in personal selling to visiting buyers or during sales
visits abroad, he massy feel that the next step in to has someone selling for him in a
selected export market. He may also feel that he needs on the spot help in establishing the
marketing channels, for example, in finding and working with distributions or
wholesalers.
The exporter (supplier) can not spend a great deal of time on export selling
himself because to his responsibilities to the home business. The idea of a full time
traveling sales person may seem attractive at first, but it is probably not economic to
make such an appointment as a first step in exporting. If the supplier appoints one of his
sales executives to handle this, it would tale this executive time before he or she gets to
know the export market well enough to sell successfully. In such situations, it is usual to
appoint an agent.
Who is the agent?
An agent may be a firms person (employee) that handles negotiations on the
suppliers behalf, may be an independently person who active in the export market.
An export agent is simply an agent who in active in the export market and does
works on the commission basis and does not assume any risk but if exporters give some
extra incentive there agents bear a risk on a limited amount.
Finding an Agent: -agent should be active and recognized person in the export market.
When finding an agent following factors must be considered: -
1. They are respectable business representatives.
2. They are not representing a competing firm.
3. They have the organizational structure and the facilities necessary to do the job
4. They have serious ling-term interest in the product and are not handling too many
other products.
5. They are experienced in the type of product and market area and have established
connections.
6. They have good knowledge of export rules and regulations.
Appointing an Agent: -When an agent has been found, it is important to have a clear
writing agreement with him or her. This must cover all the points that are potential
sources of difficulty or disagreement in the future. In this agreement state all the points
like commission, contract period, sales promoting efforts etc.
Finding, Appointing and using an agent need carefully planning. Firstly a list of
the possible agents for this particular product is needed. The supplier’s own embassy
abroad or local chambers of commerce can probably supply that list. Then the supplier
can write to their possible agents, explain his requirements and asks if they are available
to handle the product.
MAJOR PORTS OF RPL
1. NSICT -- 2. JNPT -- (NHAVASHEVA)
3. MUNDRA - (GUJRAT) 4. PIPAVAV -
SHPPING LINES
MUSAK, UDPI, RAJAN, NAVJOT
ORGANIZING EXPORT
To implement its global plans effectively company needs to reflect on the best
organizational setup that enables it to successfully meet the threats and opportunities
posed by the global marketing arena.
Organizational issues that the global marketer must confront cover questions like
what is the proper communication and reporting structure. Who within our organization
should bear responsibility for each of the functions that need to be carried out? Where
should the decision-making authority belong for the various areas?
There are several options of organizational design of export business.
1. International Division: - Most companies that engage in global marketing will
initially start by establishing sales reach a threshold, the company might set up a full –
blown international decisions. This division develop and coordinate the firms global
market. But this option is mostly used when company product line is not too diverse and
does not require a large amount of adaptation to local country needs.
2. Product –Based Structure: -This option used when the company has different
product lines or strategic business units (SBU). Each product decision, being a separate
profit center is responsible for managing worldwide the activities for its products line.
This alternative is especially popular among high-tech companies with highly complex
products or MNCs with a much diversified product portfolio.
3. Geographic Structure: -This is a setup where the company configures its
organization along geographic areas: countries, regions or some combination of these two
levels. Area structures are especially appealing to companies that market closely related
product lines with very similar end user and application around the world.
4. Matrix Structure: - This is an option where the company integrates two
approaches-for instance, the product and geographic dimensions-so, there is a dual chain
of command. With a matrix organization, two dimensions are integrated in the
organization.
EXPORT OF RPL 2000 TO MARCH 2006
Years Value Percentage
2000- 01 944998780.20 4.72%
2001- 02 968862601.20 4.84%
2002- 03 984804386.00 4.92%
2003- 04 995840025.05 4.98%
2004- 05 997076000.00 -------
2005-06 9995496400.00
SWOT ANALYSIS
STRENGTHS
1. Rana Polycot Ltd. has highly modern and sophisticated technology.
2. Good reputation in the market.
3. Have acquired 100% E.O.U.
4. At present, Rana Polycot is market leader in cotton yarn.
5. There is availability of most experienced technical manpower.
6. There have been no major strikes and problem since the birth of RPL.
7. Rana Polycot has great potential for diversification.
8. Extensive use of computers.
9. There is good relation between management and workers.
10. Employees have job security, all the facilities like residential colony, workers
canteen, bus facility another welfare amenities.
11. Good relation in overseas markets.
12. High export quality cotton yarn.
WEAKNESSES
1. Working system lacks teamwork.
2. No. Separate training department is there.
3. Overheads are very high.
4. It is away from the city.
5. There is still need to improve working conditions.
6. More formalities in export procedure & documentation.
OPPORTUNITIES
1. The market is open for export and RPL should increase its export.
2. RPL has 100% EOU facilities in the export.
3. The company should attempt to improve the distribution chain.
4. Should go directly to the end use through their representatives.
5. Techniques being used in the modern firm for better civilization of present
resource.
6. Bring into practice the new business.
7. Step into the readymade market for its growth.
8. Should also prove itself in the domestic market.
9. Huge market for export in international level.
THREATS
1. There is shift in consumer preferences from simple white cotton yarn to dyed yarn
because RPL is only produced simple whit cotton yarn.
2. Threats from competitors like Oswal, Nahar,Jct etc.
3. Globalization makes the competition tough.
4. The company needs to revise its pricing and marketing strategy.
PRE-REQUISITES FOR EXPORT/IMPORT
An exporter should follow the following rules such as Rana Polycot Ltd.
I) Registration in Reserve Bank of India: -
Before 1.1.1997, it was compulsory for every exporter to obtain an exporter’s
code number from the Reserve Bank of India before engaging in export. This has since
been dispensed with and registration with the licensing authorities is sufficient before
commencing export or import.
II) Registration in Regional Licensing Authorities(Obtaining IEC No.) :
Until 31st December, 1997, it was mandatory for every person/firm/company
engaged in export business in India to obtain Exporter’s Code Number from the Reserve
bank of India. The custom authorities will not allow you to import/export goods into or
from India unless you hold a valid IEC number. However, if you are exporting goods to
Nepal or Myanmar through Indo-Myanmar Border area, you not required to obtain IEC
number provided the CIF value of a single consignment does not exceed Indian Rs.
25000/for obtaining IEC number you should apply to regional licensing authority in
duplicate in the prescribed form.
Rana Polycot Ltd. also obtaining import/export codes (IEC) number-2294000854
under the export –import regulation acts.
III) Registration in Export Promotion Councils: -
In order to enable you to obtain benefits/ concession under the export/import
policy, you are required to register yourself with an appropriate export promotion agency
by obtaining registration-cum-membership certificate (RCMC). RPL Company has also
RCMC certification.
IV) Registration in Sales Tax Authorities: -
Goods, which are to be shipped out of the country for export, are eligible for
exemption from sales tax and Central Sales Tax. For this purpose, you should get
yourself registered with the Sales Tax authorities of your state after following the
prescribed under the Sales Tax Act.
V) Registration in Excise Authorities: -
Goods meant for exports are exempt from excise duty. For this purpose the
manufacture and merchant exporter have two options, either they can deposit Excise duty
at the time of clearance from factory and later on take refund or avail the procedure for
export of goods with out payment of duty.
VI) Change of name address or constitution: -
Whenever there is a change in the name, address or constitution of the holder of
an IEC number, such change is required to be intimated within 30 days to the regional
licensing authority concerned, which granted the IEC number.
VII) Identity Cards: -
To facilitate collection of licenses and other documents, identity cards are issued
by the licensing authorities to the authorized employees of the importer/ exporter. An
application for this purpose is required to be made to the Regional Licensing Authority
concerned along with two photographs of the applicant’s nominated representative, duty
attested by the firm/company. The Regional Licensing Authority concerned will deliver
to the holder of the identity card, on the responsibility and risk of the importer/exporter,
all the documents licenses of the importer/ exporter whom he represent. In case of loss of
an identity card, a duplicate card may also be issued by the Regional Licensing Authority
concerned
EXPORT PRICING OF THE COMPANY
Export pricing is the most important factor of export marketing mix, because it is
only one factor which generates the revenue for the company. So the exporter should
carefully decide and the export price depends on the company goal, company cost and
competitors price. In developing countries exporter are price-followers not pricing
setters? There is various export price quotations.
INCOTERMS
Terms of delivery such as ex-work and fob have been developed over many years
to fit particular circumstances there are confusion in this terms due to country culture in
order to clear up the confusion that existed in international trade, the international
chamber of commerce drew up a set of standard terms and definitions on 1 st July, 1990.
These are called Inco term and amendment time to time and these indicate the division of
costs and administrative between the exporter and his customer although internationally
accepted, the terms are still sometimes interpreted differently in different countries so
care and clarification are necessary which using them.
The major price quotes are: -
1. Ex-works (Ex-factory/Ex-Go down): When such a price is quoted, it is
stipulated that the foreign buyer should take delivery of the goods at the
exporter’s premises and all the risks and expenses thereafter should be borne by
him i.e. the exporter is responsible for the delivery of the goods at his factory. The
other cost and risk involved in bringing the goods from the place of bringing the
goods from the place of the exporter to desired destination will be on the buyer’s
account.
2. F.O.R. (Free on Rail/F.O.T. (Free on Truck): F.O.R. term is used when the
goods are to be sent by rail and F.O.T. term is used when the goods are sent by
road. The seller’s obligations are fulfilled as and when the goods are delivered to
the carrier.
3. F.O.B. (Free on Board): Board price is inclusive of Ex- Works price, packing
charges, transportation charges unto the place of shipment, warfare and portage,
custom duties, export duties, cost of checking of any, which an exporter incurs
while delivering the export goods to the foreign buyer on board the ship. In this
type of term the Bill of Lading must carry the wording ‘Shipped on Board’ and it
must bear the signature of the carrier or his authorized representative together
with the date on which goods were ‘boarded’.
4. F.A.S. (Free alongside Ship): This price includes all the costs incurred in
delivering the goods alongside the vessel at the port of export or other place
named, but does not include charges for loading the goods on board the vessel. It
also does not include ocean freight charges and marine insurance premium. The
exporter’s obligations are fulfilled as and when the goods have been placed by
him alongside the vessel and notified to the buyer.
5. C & F (Cost & Freight): This price covers F.O.B. value of the goods plus freight
charges of transporting goods to the port of destination. In this term although the
exporter bears the cost of carriage to the named destination, the risk is already
transferred to the buyer at the port of shipment itself.
6. C.I.F. (Cost, Insurance and Freight): This type of contract includes F.O.B.
price plus cost of ocean freight and marine insurance unto the port of destination.
In this term, the exporter has to obtain insurance at his cost against the risks of
loss or damage to the goods during the carriage.
7. D.A.P. (Delivered at Frontier): This term is used when the goods are to be
carried by rail or road. The seller is responsible to make the goods available to the
buyer the customs border of the country named in the sales contract.
8. F.O.A./F.O.B. Airport: F.O.B. Airport’ is based on the same principal as the
F.O.B. term. The exporter fulfils his obligation by delivering the goods to the air
carrier at the airport of departure and his obligations with respect to costs and
risks do not extend to the arrival of the goods at the airport of destination.
(i) D.D.U. (Delivered Duty Unpaid): D.D.U. term in export means that the
seller delivers the goods to the buyer, at the port of destination. The seller has to
bear the costs and risks involved in bringing the goods thereto the buyer has to get
the goods unloaded and cleared for import, by playing the applicable duty.
LABEL, MARKING AND PACKING SYSTEM IN COMPANY
Label:- Label means a tag on which write all the product information i.e. type,
price, quantity, excise number etc. RPL used a label that gives all the
information about the product .The label give the major information is:
Count yarn – Type of the product i.e. combed hosiery or carted hosiery or viscose.
Excise number –these numbers given by the excise Deptford a year.
Lot number –which refer the different products.
Marking: - Marking refers the special mark in the product like in RPL used a mark on
their product i.e. on cartons and pallet a special stamp on the product
according to their requirement.
Packing:- Packing means protective covering used for transportation and shipment
of goods. Packing should be in good style, colors, and protective and
easily carry on. RPL pack their cotton product on the paper box which are
2 to 5 ply ranges and this paper cover purchase from its domestic
suppliers.different-2 colors type tape used on these paper box for adhere
and easily check out of the product type.
And the products packed on the cartons and pallets form and cartons and
pallets weight lie between 30 to 51 and 750 to1200 kgs respectably.
EXPORT DOCUMENTATION OF RANA POLYCOT LTD.
Export documentation plays a vital role in the international marketing as it
facilitates the smooth flow of physical goods payment thereof across national frontiers. In
the international exports the documentation are divided in two categories: -
Pre-shipment exports documents.
Post-shipment exports documents.
The documentation both at pre-shipment and post shipment stages is very important
in export trade. The exporter must thoroughly check the details of order/LC received
from the buyer, and obtain all required documents and submit then in time to his banks
for negotiations. A single error in completion of documentation may be delay in the final
payment for goods exported.
Pre-shipment export documents, which are used by RPL LTD. in
manufacturer export:-
i) A.R.E.-1
ii) INVOICE
iii) PACKING LIST
iv) SHIPPING BILL
V) INSURANCE
VI) EXPORT APPLICATION
VII) CERTIFICATE OF ORIGIN
VIII) ANNEXURE C-1
IX) B-17 (Under export without payment of duty)
Post-shipment exports documents.
i) Special Declaration Form (SDF)
ii) Bill of Lading
iii) Letter of Credit
iv) Ep Copy
v) Annexure-19
vi) Others.
Documentation practices in India-in India on an average, about 25 documents are
associated with the Preshipment stage to export transaction. These documents are
classified into two categories namely, commercial and regulatory.
1. The Commercial Documents are those which, by custom of trade, are required
for effecting physical transfer of goods and their title from the exporter to the
importer. These are:-
Pro-Forma Invoice
Commercial Invoice
Packing List
Shipping Instruction
Intimation of inspection
Certificate of inspection/Quality
Control
Insurance Declaration
Certificate of Insurance
Shipping Order
Mate’s Receipt
Bill of Lading /combined
Transport Document
Application for certificate of origin
Bill of exchange
Shipping Advice
Letter to the bank for
collection/negotiation of
Documents.
2. Regulatory Preshipment documents are those which have been prescribed by
different Govt. Departments/Bodies in compliance of the requirements of various
Rules and Regulations under relevant laws like Exchange Control Regulations,
Export Trade Control, Customs, etc.
The major regulatory Preshipment documents are below: -
Gate Pass
AR-4
Shipping Bill/Bill of Export
Dock Challans/Port Trust Copy of
shipping bill
Receipt for Payment of Port charges
Vehicle Chit
Exchange Control Declaration Form
Freight Payment Certificate
Insurance Premium Payment
Certificate
INVOICE
Invoice: - An invoice is the document under cover of which the excisable goods are to
be cleared by the manufacturer or merchant export. This is also the document, which
indicates the assessment of the goods to due. No excisable goods can be cleared except
under an invoice. The invoice is a prima facie evidence of the contract of sale, should be
on the paper of seller, and must be singed by the exporter. The invoice is the
manufacturer own document and through the department has specified the entries
thereon, the format etc is left the manufacturer’s choice.
DETAIL OF THE INVOICE:- Invoice contains different types of information in
detail:-
EXORTER : -There is assigned the whole name and address of the export company.
CONSIGNEE : - There is mentioned the whole address of the consignee or where
exporter sent the goods such as – RPL sent the cotton yarn to M/s DELTA GALIL
IND. LTD. 2 KAUFMAN ST., TELAVIV (ISRAEL).
PRE-CARRIAGE BY : - This column is used for the place of receipt by pre-carrier.
VESSAL : - This column is used for the vessel, flight No. and port of loading. Such
as vessel by air and port of loading New Delhi by the RPL.
PORT OF DISCHARGE : - This column contains the place of final destination.
Such as Israel are the final destinations of the RPL.
COMMERCIAL INVOICE NO. /DATE : - Commercial invoice number assigned
in this column by the exporter that what no of the invoice and what is date.
CUSTOMER PURCHASE ORDER NO. & DATE : - This column contains
customer purchase order No. and date.
EXPORTER’S REF : - Exporter’s ref or IEC (import and export code) are assigned
by the exporter in this column.
COUNTRY OF ORIGIN : - The exporter assigns Country of origin of shipment.
COUNTRY OF FINAL DESTINATION: - There is also mention the final
destination by the exporter in this column.
COMBIN BOX : - It has three columns: -
Term and delivery: - Which make descriptions of the term, conditions and currency
of settlement.
1. Determine the days from date of Invoice.
2. D.D.U Term: - ‘DDU’ means that the seller delivers the goods to the buyer, at the
port of destination. The seller has to bear the costs and risks involved in bringing the
goods thereto. The buyer has to get the goods unloaded and cleared for import, by
playing the applicable duty.
RPL D.T.A. INVOICE: - Company is used two types of Invoice.
1. Overseas exports Invoice.
2. DTA export Invoice.
About the Overseas Invoice we have already discussed.
D.T.A. export Invoice: - This D.T.A.(Domestic trade affairs) is used by RPL for sale
within India sales. This Invoice is filled by the commercial dept. In this form, mention all
information of goods and duty (BED/TCS, Schrage, Ed.cess, CST & VAT, bore charges,
loading charges etc.
It has sixth copies that as following: -
1. White Copy
2. Duplicate Copy
3. Triplicate Copy
4. Quadruplicate Copy
5. Quintuplicate Copy
6. Sixtuplicate Copy
WHERE ARE THESE COPIES USED: - White copy is sent to Buyer Company and
duplicate copy for transport, third copy is sent to excise department and forth copy for
accounts, fifth copy is sales tax purpose and last copy is consisted for record in commerce
department.
Documents sent in D.T.A. export goods with container: -
i) White Invoice
ii) Challan- Inward: - This document is used by exporter in the favors of importer
company under the condition of inter state export in India.
iii) Union operator form (GR)
iv) Gate pass.
MERITS OF INVOICE: -There are following merits of Invoice.
It is used for exporting and made proper for regular billing for goods or services.
Invoice document gives detail of all goods for custom.
Invoice gives detail of all goods for buyer.
It helpful in bank payment because it provide the information to the bank about the
goods details.
It gives detail of all goods for supplier.
Invoice is used for all information about the consignee & consignor and amount or
term of payment.
PACKING LIST
Packing list is shown the packing goods and the weight, quality, rate etc.
information of the goods. Packing list is prepared by RPL Company on the base of the
supplier/agent’s Performa packing list that how many pallet and counts. of yarn carton
and which quality of cotton yarn sent. The packing list document is an extension of the
commercial invoice; as such it looks commercial invoice. The exporter or his agent, the
customs broker or freight forwarder reserves the shipping space based on the gross
weight that is shown it packing list.
DETAIL OF THE PACKING LIST:-
Packing list contains different types of information in detail: -
EXPORTER : - There are assigned the whole address of the exporter.
CONSIGNEE :- In this list is mentioned the whole address of the consignee or where
exporter sent the goods such as RPL sent to France etc.
PRE-CARRIAGE BY :- This column is used for the place of receipt by pre-carrier.
VESSAL :- This column is used for the vessel, flight no., and port of loading such as
– vessel by air and port of loading New Delhi or Mumbai by the RPL.
PORT OF DISCHARE : - This column contains the place of final destination such
as German are the final destination of the RPL Company
COMMERCIAL INVOICE NO. /DATE : - Commercial invoice number assigned
in this column by the exporter that what no. of the invoice and what is date.
EXPORTER’S REF: - Exporter’s ref. or IEC (import & export code) are assigned
by the exporter in this column.
COUNTRY OF ORIGEN : - Country of origin of shipment is assigned by exporter.
COUNTRY OF FINAL DESTIONATION :- There are also mention the final
destination by the exporter in this column.
COMBIN BOX :- It has three type of column:-
I. Term and delivery: - Which make description of the term, conditions and currency
of settlement.
Determine the days form date of invoice.
II. D.D.U. Term: - DDU means that the seller delivers the goods to the buyer, at the port
of destination. The seller has to bear the costs and risks involved in bringing the
goods thereto. The buyer has to get the goods unloaded and cleared for import, by
the playing the applicable duty.
MERITS OF PACKING LIST: - It is most important for different person in export such
as: -
Packing list contain all detail of goods packing for custom.
This list contains all detail of goods packing for suppliers.
This list contains all detail of goods packing for buyer.
This list contains all detail of goods packing for bank.
Packing list are used for know total weight and net weight of the goods.
WHERE IS USED PACKING LIST:- These are also has same procedure such as
invoice, these packing list are used 16 copies in actual procedure of export but the RPL
company are prepare sixth copies for use in export procedure. These sent in this way: -
i) One copy ------------------------------for------------------------------Agent/supplier.
ii) One copy-------------------------------for-----------------------------custom office.
iii) One copy-------------------------------for-----------------------------Buyer.
iv) One copy-------------------------------for-----------------------------Bank.
v) One copy-------------------------------for-----------------------------accounts.
vi) One copy-------------------------------for-----------------------------Head office.
SHIPPING BILL
Shipping bill is an important required by the customs authorities for allowing
shipment. The exporter prepares it and it contains the name of vessel, Master or agents,
flag, port at which goods are to be discharged and country of final destination. Exporter’s
name and address details about packages, number and description of goods, marks and
number, quantity, details of each case, FOB price real value as defined in the sea customs
act. Whether Indian or foreign merchandise to be re-exported, total number of packages
with total weight and value and the name and address of the importer.
Shipping bill is usually of five types: -
i) Duty free shipping bill
ii) Dutiable shipping bill
iii) Drawback shipping bill
iv) Shipping bill for shipment Ex-bond
However, the RPL LTD. is a 100% EOU unit of cotton yarn the duty is free on
export under the bond scheme and the bill is used duty-free.
INSURANCE
Marine Insurance act 1963 U/s sec.(2), in the international trade when the goods
are in transit, they are exposed to marine Perlis. Marine insurance is intended to protect
the insured against the risk of loss or damage to goods in transit due to marine perils.
Marine insurance payment or premium by the insured agrees to indemnify the latter
against loss incurred by him in respect of goods exposed to perils of the sea.
It is the basic instrument in marine insurance. The policy is a contract and legal
document. Its basic function is to serve or evidence of the agreement between the insurer
and assured. The policy must be produced to press a claim in a court of law.
RPL LTD. is give request for insurance, which has detail about goods such as: -
i) Name of the consignee
ii) Brief description
iii) C&F value of consignment
iv) Name of vessel
v) No. of packages
vi) B/L No. and date
vii) port of shipment
viii) port of destination
ix) Invoice No. and date
x) Size of container
WHERE IS INSURANCE DOCUMENT USED: -
Insurance are prepared for claim of goods, it is a legal paper which has a proof for
court when occurred any event. Insurance documents are two copies, these are following:
i) One copy-----------------for------------------------Insurance Company.
ii) One copy-----------------for---------------------RPL company Commercial dep’t.)
iii) One copy-----------------for----------------------Head office.
MERITS OF INSURANCE:- There are following merits of insurance for an exporter.
Insurance is a document for goods protections that give help to RPL when occur any
event in the ship or sea.
Insurance documents are also important for importers.
Insurance documents are prepared by the insurance company on the request of the
RPL. So there we can say that all responsibility is become of the insurance company.
It is important for all exporters take claim of goods.
CERTIFICATE OF ORIGIN
The exporter should obtain a certificate of origin from any recognized chamber of
commerce, Export Promotion council or Government department on payment of small
fee. So the Indian exporter should be obtaining a certificate of origin to the Indian Govt.
Chamber of commerce. This is also a declare certificate which tell that exports are made
what country and avoid to corruption such as Pakistan is not allowed to make trade with
each other. Therefore, we can say that these certificate of origin a proof of exporter,
which avoid him any problems that are checked by GOVT.
WHERE IS USED THIS CERTIFICATE: - There three copies of certificate of origin
is used or sent by RPL in export procedure: -
i) One copy---------------------for-----------------------overseas importer.ii) One copy---------------------for----------------------RPL LTD. (Commercial dept.)iii) One copy-------------------------for-------------------Head office.iv) One copy------------------------for------------------agent(logistic provider)
BILL OF LADING
The bill of lading is a document issued by the shipping company or its agent
acknowledging the receipt of goods mentioned in the bill for shipment on board the
vessel, and undertaking to deliver the goods like order and condition as received, to the
consignee or his order of assignee, provided the freight and other charges specified in the
bill of lading have been duly paid.
Each shipping company has its own bill of lading and as soon as the exporter
obtains the mate receipt, he should prepare the bill of lading in the forms obtained from
the shipping company or its agent. The exporter or his shipping agent has to fill up this
form with relevant details such as the name of the consignor, date and place of shipment,
name and destination of the vessel, the description, quantity and destination of the goods,
marks and numbers, invoice number, GR number, gross and net weight, number of
packages and amount of freight etc.
From the legal point of view, a bill of lading is:
i) A document of title of the goods
enabling the consignee to dispose off the goods by endorsement and delivery of the
bill of lading.
ii) A memorandum of the contract of
carriage, repeating in detail, the terms of the contract which was in fact concluded
prior to the signing of the bill; and
iii) A formal receipt by the ship-owner
or the master of the ship acknowledging that the goods of the stated specifications,
quantity and condition in a certain ship or at least received in the custody of the
shipment.
The exporter should submit the sets of bill of lading together with the mate receipt to
the shipping company, which would calculate the freight amount on the basis of
measurement or weight as certified by the recognized Chamber of Commerce. On
payment of the freight, the shipping company returns the bill of lading duly signed and
stamped. If required the export may prepare additional copies of the bill of lading. If the
contract provides for a Bill of Lading marked ‘Freight paid’, it should be ensured that all
the copies of the Bill of Lading are actually marked ‘Freight Paid’.
EXPORT PROMOTION: -
Export promotion document is prepared for duty free SB and it is prepared same
way as well as DEPB. It also gives all information about product, exporter, and
consignee, Airway bill No. and detail of all items. This copy show all promotion of the
export and it is signed by authorized of custom. This document gives information of
dispatching date of the goods and this document is a part of the shipping bill. Export
promotion copy is sent on the port agent and one copy is used by the export.
BILL OF EXCHANGE: -
When a draft has made in foreign bank, it is known as foreign draft or Bill of
Exchange. Thus, a bill of exchange means, collecting payment from the foreign buyer
through the banking channel. The bill of exchange will be draws on the bank through
which the credit is opened or confirmed. This document is also a good way for payment
so we can say that document is provided facility many ways such as easily payment
through bank. Three copies have been made, one copy for bank, second copy for port
Agent and last copy is used by company.
METHODS OF PAYMENT IN INTERNATIONALTRADE IN RPL
Payments for exporting are more difficult and complex than for merely selling in
the home market because the customer lives in another country where different currency,
language, customs, rules and regulations of business and legal restriction etc. can be
obstacle to the exporter, unless he is aware of the correct procedures and knows when and
how to use them.
Methods of payment: -
1. Cash payment- The ideal form of payment for any exporter is to receive cash
with the order with this method of payment money is received before the goods
are delivered and no risk is involved. but it is unlikely that this method can be
used, unless the product being sold is in heavy demand.
2. Open account- The open account procedure is when the exporter dispatches the
goods, prepares the invoice, send them to the customer and then waits for
payment the exporter should get his money as specified in the terms of payment
but there is a very real risk if total loss this method is used only when parties have
close relationship and good understanding.
3. Shipment on consignment- In a shipment on consignment deal, the exporter
retains title of the goods and agrees to wait for payment until the goods have been
sold in the customer’s country. This method means that the goods are placed in
the foreign market, but the risks involved are considerable. Until the goods are
sold, the customer or consignee may return them at any time.
4. Documentary credit- It is a method of payment, which can ensure that an
exporter gets not when he dispatches his goods and not when they are received by
the customer. It also, ensures that the customer is assured of title to the goods
before he pays for them.
Types of L/C- There are four types of L/C
(1) Revocable- The credit can be revoked at a time and there is no protection for the
exporter. For example, he could ship the goods. Take the documents to the
advising bank, and find that the bank will not accept the documents and pay him
because the L/C has been revoked.
(2) Irrevocable-The opening bank can not revoke the credits the exporter has
reasonable protection. This is the most common type of L/C in use today.
(3) Confirmed-The advising bank guarantees payment, even if there are exchange
difficulties so the exporter is fully protected, provided no circumstances arise to
prevent him from complying with the conditions on the L/C.
(4) Unconfirmed-The advising bank does not guarantee payment, unconfirmed credit
is not so satisfactory to the exporter, but they are cheaper.
(5) Documentary Collection- It is means of ensuring that the goods are only handed
over to the buyer when the amount shown on a bill of exchange is paid or when
the customer accepted the bill as contract to pay by a specified date. A bill of
exchange is accepted by the customer putting his signature across it.
A bill of exchange is simply a written order to a bank to pay to someone on
demand or at a fixed time in the future, a certain sum of money .a bill is addressed by the
exporter to the customer and can be used as money.
There are three parties to a bill of exchange; -
1. The Drawer-The drawer is the person (exporter) who makes out the bill to a
certain person (customer) demanding a certain sum of money.
2. The Drawee- The drawee is the customer, he must sign the bill to indicate that he
has accepted the boll and terms only then he will be handed the shipping
documents, which give him ownership’s of the goods.
3. The Payee-The payee is the third party-the bank.
CHAPTER - 4
FINDINGS
1. Export license are only issued for the goods mentioned in the Schedule 2 of ITC
(HS) Classifications of Export and Import items. A proper application can be
submitted to the Director General of Foreign Trade (DGFT). The Export
Licensing Committee under the Chairmanship of Export Commissioner considers
such applications on merits for issue of export licenses.
2. For every first time exporter, it is necessary to get registered with the DGFT
(Director General of Foreign Trade), Ministry of Commerce, Government of
India. DGFT provide exporter a unique IEC Number. IEC Number is a ten digits
code required for the purpose of export as well as import. No exporter is allowed
to export his good abroad without IEC number.
3. The following documents are required for the export the goods, Air Waybill, Bill
of Lading, Certificate of Origin, Combined Transport Document, Draft or (bill of
exchange), Insurance Policy (or Certificate), Packing List/Specification,
Inspection Certificate, shipping bill/ bill of export, custom declaration form,
dispatch notes, commercial invoice, consular invoice, customs invoice, legalized/
visage invoice, certified invoice, packing list, certificate of inspection, black list
certificate, manufacture certificate, certificate of chemical analysis, certificate of
shipment, Health/ Veterinary/ Sanitary Certification, Certificate of Conditioning,
Antiquity Measurement, Shipping Order, Cart/ Lorry Ticket, Shut out Advice,
Short Shipment Form and other documents which are required by the buyer.
4. After getting the Order from the customer for goods, one copy of invoice will
send to the manufacturing unit and another to the finance department. From the
manufacturing unit goods are supplied by the container as mentioned in the
invoice of packaging. In the container goods are arranged in batch wise. As
mentioned by buyer it will supply by shipment or by air cargo.
5. Container is send by the rules of FOB or CIF or C&F or etc… at the time of
delivery of container shipment documents or air cargo documents are send which
are mentions above. At the port container is checked by customs officer and two
seal are sticker to container, one by customs officer and another by company
export port manager. Finance of goods is done by the company policy. At the time
of delivery of container buyer should check the seal, if seal is proper than he takes
the delivery of container otherwise he must inform to exporter, insurance
company and customs officer. In some country they need the documents first then
deliver the goods at destination.
SUGESSTIONS
1. The company should improve working conditions.
2. The company should have scope to prove itself in the domestic market.
3. More technical employees should be appointed in the company.
4. Target markets should be selected after careful consideration of various factors
like scope of exporters, selected products, demand stability, distance of potential
markets, transport problems, language problems, tariff and non-tariff barriers, and
sale and distribution channel.
5. Goods should be properly delivered to customers because customer does purchase
the products of company considering the price and after sale service.
6. The company should revise its pricing policy and marketing strategy time to time.
CONCLUSION
After discussion, all points of export procedure and documentation of Rana
Polycot Ltd. I come on the conclusion that the export management of RPL is very
effective and better to the legal point of view. Every exporter should follow all the export
procedure and their necessary documents under the condition of export on the
international level. The export management is very necessary for export.
Rana Polycot Ltd. is a 100% E.O.U. so it should be follow all the necessary
requirement procedure of export and maintain necessary documents in the company. And
maintain the combination of export department with the other department.
Export license are only issued for the goods mentioned in the Schedule 2 of ITC
(HS) Classifications of Export and Import items. A proper application can be submitted
to the Director General of Foreign Trade (DGFT). The Export Licensing Committee
under the Chairmanship of Export Commissioner considers such applications on merits
for issue of export licenses.
For every first time exporter, it is necessary to get registered with the DGFT
(Director General of Foreign Trade), Ministry of Commerce, Government of India.
DGFT provide exporter a unique IEC Number. IEC Number is a ten digits code required
for the purpose of export as well as import. No exporter is allowed to export his good
abroad without IEC number.
Certain documentation takes place while exporting from India. Special documents
may be required depending on the type of product or destination. Certain export products
may require a quality control inspection certificate from the Export Inspection Agency.
Some pharmaceutical product may require a health or sanitary certificate for export.
Shipping Bill/ Bill of Export is the main document required by the Customs Authority for
allowing shipment and other documents are also needed.
BIBLIOGRAPHY
1. Mahajan, M.L.: Do it your self, Show white Publications, Mumbai
2. Ram, Paras: Exports: What, Where and How? Anupam Publications’, Mumbai.
3. Hand book of Export Import Procedures, Ministry of Commerce, and Government
of India Vols. I & II
4. How to Export: Nabhi Publications