global supply chain in ranbaxy paonta sahib manufacturing facility
TRANSCRIPT
PROJECT REPORT
ON
“GLOBAL SUPPLY CHAIN MANAGEMENT IN RANBAXY
LABAROTARIES LTD., PAONTA SAHIB”
SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE MASTER’S IN INTERNATIONAL
BUSINESS
OF
H.N.B GHARWWAL CENTRAL UNIVERSITY,
SHRINAGAR
SUBMITTED TO:
INTERNAL GUIDE EXTERNAL GUIDE
PROF. PARVI BHARTI MR. NAVDEEP PAHUJA
ASST. PROFESSOR SUPPLY CHAIN ASSOCIATE
IMS RANBAXY LABS. LTD.
DEHRADUN PAONTA SAHIB, H.P.
SUBMITTED BY:
ANKUR SRIVASTAVA
MIB1022
INSTITUTE OF MANAGEMENT STUDIES-DEHRADUN BATCH 2010-12
ACKNOWLEDGEMENT
It is my profound joy to express my heartiest feelings to the organization Ranbaxy
Laboratories Ltd. as well as the whole team under whom I successfully able to
accomplish my training in an effective manner.
My deep gratitude goes to Mr. Navdeep Singh Pahuja for guiding me throughout my
project. His constant guidance and support has helped me to complete my project so
comprehensively. He has given me a new insight into the Global Supply Chain
Management and Export Import Process and Documentation. I really consider
myself fortunate to have experienced one of the irrefutable facts of a Supply Chain
Manager’s life today.
My very heartily gratitude to Ms. Parvi Bharti, Asst. Prof. MIB, IMS Dehradun
who was my internal guide and my torchbearer in this research under whom I
successfully able to accomplish my training in an effective manner. I find myself
better equipped to handle the transition from a management student to management
personnel due to her guidance.
CERTIFICATE
I have the pleasure in certifying that Mr. Ankur Srivastava is a bonafide student of
IIIrd
Semester of the Master’s Degree in International Business (Batch 2009-11), of
Institute of Management Studies, Dehradun under H.N.B. Garhwal University,
Srinagar Roll No. MIB1022.
He has completed his project work entitled “PRODUCTION PLANNING AND
GLOBAL SUPPLY CHAIN MANAGEMENT IN RANBAXY
LABORATORIES LTD.” Under my guidance.
I certify that this is his original effort & has not been copied from any other source.
This project has also not been submitted in any other Institute / University for the
purpose of award of any Degree.
This project fulfils the requirement of the curriculum prescribed by this Institute for
the said course. I recommend this project work for evaluation & consideration for
the award of Degree to the student.
Signature : Parvi Bharati
Name of the Guide : Parvi Bharti
Designation : Asst. Professor
Date : 28 Oct 2011
EXECUTIVE SUMMARY
Introduction
The research project is undertaken in one of India’s famous Generic Pharmaceutical
Drug Producer, Ranbaxy Laboratories Ltd. It is a Government Approved Four Star
Rating Export House with an annual turnover of approximately $1.619 billion
started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese
company Shionogi. The name Ranbaxy is a combination of the names of its first
owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from
his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh
joined the company in 1967, the company saw an increase in scale. In 1998,
Ranbaxy entered the United States, the world's largest pharmaceuticals market and
now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in
2005.
The objective of the study is to understand the Production Planning, its procedure,
Global Supply Chain, its processing and supply of finished pharmaceutical products
in the global market on due date. The another objective of this study was to know
the procedure and documentation process of Export and Import of the raw material
as well as finished goods.
The research conducted by me consisted of the study of global supply chain
management and its coordination with the production department, Production
planning and fulfillment of commitments to the global market on the due dates with
the coordination of the three departments “The Production Deptt., The G.S.C.
Deptt., and EXIM Deptt.”
The research was based on Primary Data accumulated by me from the company
bulletins, company brochures and documents provided by the company as well as
data collected from the internet, and orientation programmes organised by the
company.
5500+ SKUs , 1000+Raw Materials and 15000+ Packaging Materials
Country specific formulation with no scope of flexibility.
75% SKU demand is normally less than a specified batch size.
Frequency/Repetition of demand – More than 50 % required less than 4 times a year.
Conflicting Optimization objective – Set up Vs the SKU Delivery deadline
GMP / QC mandates in manufacturing like hold time for formulated bulks, storage
capacity on floor etc.
Complex manufacturing/Testing processes and lead times
Frequent input changes based on market dynamics leading to Complex Switchover
Planning and obsolescence
LIST OF CONTENT
SR.
NO.
CONTENT PAGE
NO.
TITLE PAGE
ACKNOWLEDGEMENT
INTERNAL GUDE CERTIFICATE
COMPANY CERTIFICATE
1 OBJECTIVE OF THE STUDY 1
2 INTRODUCTION 2-21
3 RESEARCH METHODOLOGY 23-24
4 FINDING ANALYSIS 24
5 CONCLUSION 78
6 ANNEXURE 79-81
REFERANCES 82
2
OBJECTIVES OF STUDY
The main objective of this report was to know more about the working and functionality
of the Production Planning Department and Global Supply Chain Department and the
coordination between these two departments resulting in the proper and timely supply of
the finished products into the global market.
1. To study the Global Supply Chain functions, it’s working and its
importance at the firm
2. Study of Documents used during the import and export process.
4
INTRODUCTION
RANBAXY LABORATORIS LIMITED. Ranbaxy Laboratories Limited (BSE: 500359) is
an Indian pharmaceutical company. Incorporated in 1961, Ranbaxy exports its products to
125 countries with ground operations in 46 and manufacturing facilities in seven
countries. The company went public in 1973 and Japanese pharmaceutical
company Daiichi Sankyo gained majority control in 2008.
Formation
Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a
Japanese company Shionogi. The name Ranbaxy is a combination of the names of its first
owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his
cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the
company in 1967, the company saw an increase in scale.
Trading
In 1998, Ranbaxy entered the United States, the world's largest pharmaceuticals market
and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 2005.
For the twelve months ending on 31 December 2005, the company's global sales were at
US $1,178 million with overseas markets accounting for 75% of global sales (USA: 28%,
Europe: 17%, Brazil, Russia, and China: 29%). For the twelve months ending on
December 31, 2006, the company's global sales were at US $1,300 million.
Most of Ranbaxy's products are manufactured by license from foreign pharmaceutical
developers, though a significant percentage of their products are off-patent drugs that are
5
manufactured and distributed without licensing from the original manufacturer because the
patents on such drugs have expired.
In December 2005, Ranbaxy's shares were hit hard by a patent ruling disallowing
production of its own version of Pfizer's cholesterol-cutting drug Lipitor, which has annual
sales of more than $10 billion. In June 2008, Ranbaxy settled the patent dispute with
Pfizer allowing them to sell Atorvastatin Calcium, the generic version of Lipitor(R)
and
Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet(R)
in
the US starting November 30, 2011. The settlement also resolved several other disputes in
other countries.
On 23 June 2006, Ranbaxy received from the United States Food & Drug
Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as
a generic drug at 80 mg strength. Ranbaxy competes with the maker of brand-name
Zocor, Merck & Co.; IVAX Corporation (which was acquired by and merged into Teva
Pharmaceutical Industries Ltd.), which has 180-day exclusivity at strengths other than
80 mg; and Dr. Reddy's Laboratories, also from India, whose authorized generic version
(licensed by Merck) is exempt from exclusivity.
On 10 June 2008, Japan's Daiichi Sankyo Co. agreed to take a majority (50.1%) stake in
Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's Malvinder Singh remained as
CEO after the transaction. Malvinder Singh also said that this was a strategical deal and
not a sell out.[
On 16 September 2008, the Food and Drug Administration issued two Warning Letters to
Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two
manufacturing plants in India.[5]
On February 25, 2009 the U.S. Food and Drug Administration said it has halted reviews of
all drug applications including data developed at Ranbaxy's Paonta Sahib plant in India
6
because of a practice of falsified data and test results in approved and pending drug
applications. "Investigations revealed a pattern of questionable data," the FDA said.
Acquisition
On June 11, 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy, for a value $2.4
billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from
the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in
Ranbaxy.
The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already
comprising businesses in 22 countries. The combined company is worth about $30 billion.
Current Scenario Of The Company
Ranbaxy Laboratories Limited operates as an integrated international pharmaceuticals
organization with businesses encompassing the value chain in the marketing, production
and distribution of pharmaceuticals products. It operates under two segments:
Pharmaceuticals and other business. Pharmaceuticals segment comprises the manufacture
and trading of Formulations, Active Pharmaceuticals Ingredients (API) and Intermediate,
Generics, Drug discovery and Consumer Health Care products. Other business comprises
rendering of financial services.
The Company manufactures products for anti-infectives, cardiovasculars, musculoskeletal,
gastrointestinal, dermatologicals, and central nervous system.
Ranbaxy Laboratories Limited encompasses the entire pharmaceutical value chain from
manufacturing to marketing generic pharmaceuticals, value added generic
pharmaceuticals, branded generics, Active Pharmaceuticals Ingredients (API) and
intermediates. As a research driven company, over 6% of its revenues are invested in
7
R&D. Among the pharmaceutical companies in India, Ranbaxy has the largest R&D
budget with an R&D spend of over U.S. $100 million.
The company has manufacturing operations in eight countries with a ground presence in
49 countries, and its products are available in over 125 countries. It has been aggressively
entering into joint ventures and strategically acquiring companies in the past few years.
Besides concluding its acquisition of Be-Tabs in South Africa, which makes Ranbaxy the
5th largest generic pharmaceutical company in South Africa, the Company acquired 13
Dermatology products from Bristol-Myers Squibb in the U.S in 2007. Ranbaxy acquired
RPG Aventis which has since been renamed Ranbaxy Pharmacie Generiques SAS. It also
has subsidiaries in Spain, Netherlands, Russia and Australia.
The Company manufactures products for anti-invectives, cardiovasculars,
musculoskeletal, gastrointestinal, dermatologicals, and central nervous system.
Ranbaxy Laboratories Limited encompasses the entire pharmaceutical value chain from
manufacturing to marketing generic pharmaceuticals, value added generic
pharmaceuticals, branded generics, Active Pharmaceuticals Ingredients (API) and
intermediates. As a research driven company, over 6% of its revenues are invested in
R&D. Among the pharmaceutical companies in India, Ranbaxy has the largest R&D
budget with an R&D spend of over U.S. $100 million.
The company has manufacturing operations in eight countries with a ground presence in
49 countries, and its products are available in over 125 countries. It has been aggressively
entering into joint ventures and strategically acquiring companies in the past few years.
Besides concluding its acquisition of Be-Tabs in South Africa, which makes Ranbaxy the
5th largest generic pharmaceutical company in South Africa, the Company acquired 13
Dermatology products from Bristol-Myers Squibb in the U.S in 2007.
8
Other subsidiary companies:
Solus Pharmaceuticals Limited
Rexcel Pharmaceuticals Limited
Vidyut Investments Limited
Ranbaxy Drugs and Chemicals Company
Ranbaxy Drugs Limited
Gufic Pharma Limited
Ranbaxy Life Sciences Research Limited
Ranbaxy SEZ Limited
Ranbaxy Malaysia Sdn. Bhd., Malaysia
Ranbaxy (Hong Kong) Ltd., Hong Kong
Ranbaxy GmbH, Germany
Ranbaxy (S.A.) (Proprietary) Ltd., South Africa
Sonke Pharmaceuticals (Pty.) Ltd., South Africa
Ranbaxy Egypt (L.L.C), Egypt
Rexcel Egypt (L.L.C), Egypt
Ranbaxy (U.K) Ltd., United Kingdom
Ranbaxy Poland S.P. Z.o.o., Poland
Ranbaxy Do Brazil Ltda, Brazil
Ranbaxy Nigeria Limited, Nigeria
Ranbaxy Unichem Company Ltd., Thailand
Ranbaxy Farmaceutica Ltda., Brazil
Ranbaxy-PRP (Peru) S.A.C, Peru
Ranbaxy Europe Ltd., United Kingdom
Ranbaxy Pharmaceuticals, Inc., USA
9
Ranbaxy Inc., USA
Ranbaxy USA, inc., USA
Ohm Laboratories, Inc., USA
Ranbaxy Laboratories, Inc., USA
Ranbaxy Signature LLC, USA
Ranbaxy (Netherlands) B.V
Ranbaxy Holdings (U.K.) Ltd., United Kingdom
Ranbaxy Ireland Ltd., Ireland
ZAO Ranbaxy, Russia
Ranbaxy Pharmacie Generiques SAS, France
Ranbaxy Portugal – Con E Desenvolv De ProdFarmaceuticos
Laboratories Ranbaxy, S.L., Spain
OPIH, France
Ranbaxy Australia Pty. Ltd., Australia
Ranbaxy Pharmaceuticals Canada INC., Canada
Ranbaxy Italia S.P.A., Italy
Ranbaxy Mexico S.A. De C.V., Mexico
Ranbaxy Mexico Servicios S.A. De C.V., Mexico
Terapia S.A., Romania
Terapia Distributie S.R.L., Romania
Ranbaxy Belgium N.V., Belgium
Ranbaxy Pharma AB, Sweden
Be-Tabs Pharmaceuticals (Proprietary) Ltd., South Africa
Be-Tabs Investments(Proprietary) Ltd., South Africa
10
Business and Financial Metrics
Second Quarter 2010 Results (ended June 30, 2010)
Ranbaxy reported sales for the second quarter of $458 million (Rs 21,029 million), a
growth of 22% over the second quarter of 2009. Earnings before interest, taxes,
depreciation & amortization (EBITDA) was $90 million (Rs. 4,168 million), a margin of
20%. Profit after tax was $72 million (Rs. 3,320 Million), a margin of 16%.
Operational Highlights of the Second Quarter 2010
To sharpen its focus on generics, the Company reached an agreement to transfer its
New Drug Discovery Research assets to Daiichi Sankyo India Pharma Pvt Ltd (DSIN).
Ranbaxy launched Atorvastatin in Canada and South Africa. The launch in
Canada, was under the Company’s global settlement with Pfizer. In South Africa,
Ranbaxy was the first to launch a generic version in the market.
Valacyclovir, an FTF product in the US, achieved a peak market share of 74%
before the end of exclusivity during the quarter.
The Company introduced Daiichi Sankyo’s innovative anti-platelet drug Prasita
(Prasugrel) in India. During the quarter, Ranbaxy launched 31 new products in India,
including 3 in-licensed products.
The Company made 32 filings and received 35 approvals for dosage forms during
the quarter.
During the quarter, emerging markets recorded sales of $230 million, a growth of
6%, and contributed about 50% to global sales. Sales in developed markets amounted
to $203 million, a growth of 63%.
11
Business Segments
Anti-Infective
This segment launched Valacyclovir Hydrochloride in the United States. The product was
also launched in United Kingdom and France.
Cardiovascular
This segment introduced the drug Simvastatin. The Company launched Olvance
(Olmesartan, Medoxomil) and its fixed dose combination with Amlodipine (Ol-Vamlo), in
India. Further expanding its portfolio in Canada, Ranbaxy launched two products, Ran-
Simvastatin (Simvastatin) and Ran-Amlodipine (Amlodipine).
Musculoskeletal
In the Musculoskeletal segment, Ketorolac was the primary contributor to sales. In the
United States, Ranbaxy entered into an agreement with Validus Pharmaceuticals to market
and distribute an Authorized Generic version of Rocaltrol (Calcitriol). Ranbaxy's flagship
brand in this segment is Volini.
Central Nervous
The key products in Central Nervous System segment are Gabapentin and Sertraline. The
two other products include Oxcarbazepine Suspension and Sumatriptan tablets.
Gastrointestinal
The Company launched Pantoprazole in the Gastrointestinals segment. Ondansetron
tablets were launched in Canada.
Dermatological
The Company received Dermatological franchises through the acquisition of brands and
marketing rights from Ochoa Laboratories in India for their range of Dermatological
products.
12
MAJOR PRODUCTS OF RANBAXY LABORATORIES LTD.
Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited
manufactures and markets generic pharmaceuticals, value added generic pharmaceuticals,
branded generics, active Pharmaceuticals (API) and intermediates.
The Company remains focused on ascending the value chain in the marketing of
pharmaceutical substances and is determined to bring in increased revenues from dosage
forms sales.
Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries
worldwide encompasses a wide therapeutic mix covering a majority of the chronic and
acute segments. Healthcare trends project that the chronic treatment segments will outpace
the acute treatment segments, primarily driven by a growing aging population and
dominance of lifestyle diseases. Our robust performance in Cardiovasculars, Central
Nervous System, Respiratory, Dermatology, Orthopedics, Nutritionals and Urology
segments, clearly indicates that the Company has strengthened its presence in the fast-
growing chronic and lifestyle disease segments.
13
Top 10 Molecules (2010)
•Valacyclovir
•Simvastatin
•Donepezil
•Atorvastatin and Combinations
•Co-amoxyclav and Combinations
•Ciprofloxacin and Combinations
•Ketorolac and Tromethamine
•Imipenem and Cilastatin
•Ginseng and Vitamins
• Loratadine and Combinations
Trends and Forces
Gaining First-to-File exclusive rights to a generic through patent challenges
Generic drug companies can challenge a patent's validity or argue that their version does
not infringe on the existing drug's patent even before patent expiration. The first company
to apply for FDA Approval for a generic, in spite of an existing patent, receives a 180-day
period of exclusivity to produce and sell the generic version.
Ranbaxy has been filing more than 20 ANDAs to the U.S. Food and Drug Administration
(FDA) each year. It has one of the largest product pipeline in the US that includes 18
potential First-To-File opportunities with a market size of around US $27 billion, at
innovator prices
Pricing Pressures in US & European generic markets affect Ranbaxy's revenue
Due to an increase in number of pharmaceutical companies forging into the generics
market, there has been downward pricing pressure on generics in the U.S. The generics
market in Europe, which had become a safe haven for Indian pharmaceutical companies
after competition pulled down margins in the US, has come under pricing pressure too,
14
especially in countries like Germany, the UK and France, the top three generics markets
on the continent. These countries have seen margins in the generics segment erode as
much as 80-90%. The pricing pressure has been adversely affecting revenue as both US &
Europe occupy Ranbaxy's majority market share.
Regulatory issues raised by regulators in various countries where Ranbaxy operates pose a risk to its markets
On September 16, 2008 the U.S.Food and Drug Administration (FDA) issued warning
letters to Ranbaxy Laboratories Ltd., and an Import Alert for Drugs from Two Ranbaxy
Plants in India affecting over 30 different generic drugs and citing serious manufacturing
deficiencies. Following this the World Health Organisation (WHO) observed that several
inspections of Ranbaxy's Paonta Sahib site, in June 2008, revealed noncompliance with
WHO good manufacturing practices standards. Further, India's business daily Mint quoted
the Canadian health ministry as saying a "regulatory letter" was sent to Ranbaxy
Pharmaceuticals Canada requesting an action plan and a response to the FDA's move.
Impending healthcare reforms in Romania, Ranbaxy's largest market in the EU, is leading
to a delay in the government's product and price approval list, and adding to uncertainty
amongst customers and suppliers. The outcome of these regulatory issues pose a risk to
the company's image as global generic player as well a risk to its markets worldwide.
15
Competition
The pharmaceutical industry is characterized by rapid advances in scientific knowledge.
The industry is therefore led by large manufacturers and marketers of drugs investing
heavily in research & development, having clinical testing, marketing and distribution
capabilities. Some of Ranbaxy's main competitors are:
Sun Pharmaceuticals Industries is No. 1 in India in specialty therapy
areas like psychiatry, neurology, cardiology, gastroenterology, diabetology and
respiratory. . It has brands in 30 markets worldwide and also has a generic presence in
the U.S. with Caraco Pharm Labs, Sun Pharmaceutical Industries Inc (subsidiary).
Cipla is a leader in the domestic retail pharmaceutical market. It also exports raw
materials, intermediates, prescription drugs, over-the-counter products, and veterinary
products to some 180 countries around the world.
GlaxoSmithKline is one of the oldest pharma companies in India and with a
turnover of Rs. 1500 crore is one of the market leaders in India with a share of
6.2%. Its main portfolios consist of anti- infectives, dermatologicals and pain
management drugs.
Dr. Reddy's Laboratories is a global pharmaceutical company with its
headquarters in India and a presence in more than 100 countries. In India it the largest
drug maker by sales.
19
Ranbaxy Indian manufacturing Sites
Ranbaxy has 8 manufacturing plants all over India
Toansa - API
Mohali - Dosage form
Goa - Dosage form
Delhi - EVT plant major products pep-fiz and F-cal
Poanta Sahib – Dosage form & API
Bhaddi - Dosage form
Batamandi - Dosage form
Dewas - API & dosage form
20
DEWAS PLANT
Dewas, plant was established in 1983 and manufactures both API and DF.
It consists of 6 API Plant and 4 production block.
API plants
- Plant 1 - Ciprofloxacin, Gabapentin, Ganciciclovir,Toyoma, Valacyclovir, Cetalopram,
Valgancicyclovir, Orlistat, Cleptromycin
- Plant 2 - Clarithromycin, Carbomer
- Plant 3 - Cilastitan
- Plant 4 - Imipenem
- Plant 5 - Imipenem+Cilastatin (I+C); Sterile block
- Plant 6 - Wurster coating
DF Blocks
- Semi synthetic penicillin block
- General tablet block
- Cephalosporin block
- Penem block
21
CGMP Guidelines
cGMP is defined as a set of principals and procedures which when followed by
manufacturers helps ensure that the product manufactured will have the required quality,
safety and efficacy.
GMP began in the year 1962
First issued in 1963
Todays version is 1978
Ten commandments of cGMP
Write procedures – e.g.SOP’s, Process order, Master formula & temp.
specifications
Follow the written procedures.
Record & document the work.
Validate the work.
Design & build proper facilities & equipments.
Maintain proper facilities & equipments.
Competent as a result of education, training & experience.
Clean and protect against contamination.
Quality approach
All time ready for audits.
22
QUALITY POLICY:
Management
- Quality risk management implementation
- Management reviews
Personnel
- Adequate qualifications and expierience
- Continuous training and development
Control procedures & specifications
Validation
- Process validation, should be carried out by executing at least
three consecutive batches.
- Cleaning validation
Manufacturing & process control
- No plant deviations from SOP or STP without prior approval of QA ……manager
- Batch production records initiates manufacturing activities.
- OOS & OOT products, report to dept. head.
Stability
- Stability testing program is carried out.
Review process
- Internal quality audit and annual product review is carried out.
Contract manufacturing/Repackaging sites.
Market complaints and recalls.
QA, qualified persons shall play role in evaluating; investigating and resolving
NDD Research / Clinical Pharmacology & pharmacokinetics.
24
The Research Methodology used by me was to collect data, primary and secondary
data and the analysis of the collected data to understand the current and past
scenario of the company’s production and supply in the global market of the world.
The collection of data was done by me in the company premises by meetin the
company executives working in the relative departments, study of company
leaflets, company booklets, journals and financial reports.
The Data Collected were:
1. Primary Data
a. Meetings with company executives.
b. Company Orientation Programmes
2. Secondary Data
a. Company Leaflets
b. Company Journals and booklets
c. Company balance sheets
d. Documents provided by the EXIM Deptt. Of the company
27
Planning hurdles
5500+ SKUs , 1000+Raw Materials and 15000+ Packaging Materials
Country specific formulation with no scope of flexibility.
75% SKU demand is normally less than a specified batch size.
Frequency/Repetition of demand – More than 50 % required less than 4 times a
year.
Conflicting Optimization objective – Set up Vs the SKU Delivery deadline
GMP / QC mandates in manufacturing like hold time for formulated bulks, storage
capacity on floor etc.
Complex manufacturing/Testing processes and lead times
Frequent input changes based on market dynamics leading to Complex
Switchover Planning and obsolescence.
28
NEW PRODUCT DEVELOPMENT
Identification of
the new moleculePDL & DRA
Pilot Plant
Scale up batch
Exhibit batch
Filing & approval Validation
Manufacturing
Art work is an
important part of
new prod. developt.
The process of art
work is started
atleast 4 to 5 months
before the product
has to be
manufactured
29
CONCEPT OF PRODUCTIVITY
Productivity is defined as the ability of an organization or company to convert availabl resources
into profitable services or goods.
Productivity = Output / Input ratio
Productivity in the work place allows you to apply your skills, technology and innovative ideas to
achieve maximum output with the inputs and process that are already in place.
Importance of Productivity
Productivity increases the rate of low cost per unit and results in lower price.
It helps in retaining whatever competitive advantage that you may have.
It also increases the standard of living since more and more products can be
purchased, if product production is more.
Consumers will benefit from a higher productivity from your business.
Productivity increases profits for businesses and will lead to salary increases for
laborers
31
Detailed Supply Planning Process
NDR Receipt – Unconstrained Demand (4 Months)
Product Plant Allocation
Leveling of Plan based on Capacities and known constraints
Batch Sizing and Prioritization
Rough cut Capacity Planning
Material (RMs and APIs) Indent
Material Commits
Detailed Scheduling
Market Commits
S & OP
Revised Commits
Current Month Execution and Monitoring.
32
Planning System
NDR consolidation and leveling -- Excel Based
RCCP and Detailed Scheduling – APO/MRP Based
Planning Process through APO under validation for Dewas Plant
For other plants – RCCP through VB tool and MRP in R3
Manual Scheduling for other plants
Batch Sizing – APO Based for Dewas Plant. Others VB based
Commits to Markets – Excel Based
MIS – Excel Based
Execution in R/3 for all the Plants .
33
Budget 2011-12 Directives for Production & Supply
Sea to Air ratio for EU to be 80 : 20
Suggest a CFT led by Pranit . Members – Rakesh/Ganesh/Hemant
Injectable Planning - A new approach
Suggest a CFT lead by Sanjay Sinha
Potential implementation – I Plus C and Ceph block
30 days plan to be completed in 27 Days.
APO implementation
Stabilization at Paonta
Implementation of weekly scheduling at Dewas.
Goa Implementation
Double testing of APIs.
34
Key Success Factors
R Vs C – 80 % plus.. Current level 65 t0 68 %.. 2010 Beginning not encouraging
C Vs A -- 95 % Plus Current level 80 to 85 %.. Jan is also not encouraging for a
few plants
Planning calendar timelines and manufacturing participation
Freezing the commits on 13th
/14th
.
Viewing GMS commits realistically against scheduling requirement to
maximize R Vs C
Frequent change in commit. Plant head commitment.
India DIFOT Vs M2 SFS by design.
Exploring revised calendar options - Pranit
35
S.W.O.T. Analysis of DF Supply Planning.
STRENGTHS Experienced and system Savey Managers
Strong leadership skills
Globally acknowledged , Standardized
processes.
Special focus on New
products/MTOs/Tenders
The compressed and efficient planning
calendar
First company /Team in Indian Pharma to
manage/.Stabilize APO
Strong on MIS/ Data Backup/ Data
retrieval/Analysis
Young Team /Team leads
Manage Multiple
geographies/Cultures/Diversities/time zones
Process driven work culture/Not personality
Driven
GSC – Internal Team Synergy
WEAKNESSES Communication infrastructure
Team strength – Headcount
Attrition /Trained resources joining
competition.
Techno regulatory updates/Skills.
Business dynamics Vs Mfg processes
rigidity
Supply alignment meeting between
GMS/API GSC
OPPORTUNITIES GATP – Global Availability to Promise
India supply chain practices to be taken
/implemented in global plants.
Global uniform planning calendar
Synchronization with DS Supply chain
practices
ARV Servicing
NP Planning – Single Target
THREATS Need dynamic supply chain policy
attuned with business dynamics.
One size fits all – will this approach be
god in a longer run..
Talent Retention
Long term planning Vs Capacity
utilization
36
KEY SUCCESS FACTOR
Jan'11 R vs C Root Cause Analysis
SSP
Block
GEN
Block
Ceph
Block
Dewas Paonta Goa EVT Solrex LL Total DF
Categoryòò No. No. No. No. No. No. No. No. No. No.
Req no of SKU's ð 57 340 136 533 300 90 12 119 186 1240
Frontend Constraints (Demand
less than filed Batch Size/Market
related/ NDR Infidelity)
11(19%) 76(22%) 37(27%) 124(23%) 32(11%)
15(17
%)
5(42%) 8(7%) 10(5%) 194(16%)
Backend Constraintsò
Remaining SKU's 46 264 99 409 268 75 7 111 176 1046
Hit 43(93%) 223(84%) 76(77%) 342(84%) 206(77%)
57(76
%)
7(100%
)
94(85
%)
145(82%) 851(81%)
Technical 14(4%) 1(1%) 15(3%) 1 1(1%) 17(1%)
RM - In-house 11(3%) 3(2%) 14(2%) 1 1(1%) 4(2%) 20(2%)
RM - Out-source 5(1%) 4(3%) 9(2%) 8(3%) 2(2%) 1(1%) 6(3%) 26(2%)
PM 0 2(1%) 2
PDL/DRA/Quality 2(4%) 4(1%) 2(1%) 8(2%) 26(9%)
11(12
%)
4(3%) 4(2%) 53(4%)
Manufacturing/Capacity 1(2%) 6(2%) 10(7%) 17(3%) 26(9%) 3(3%) 6(5%) 9(5%) 61(5%)
Others 1 3(2%) 4(1%) 6(5%) 6(3%) 16(1%)
Total R vs C 75% 66% 56% 64% 69% 63% 58% 79% 78% 69%
37
PURCHASE
Purchasing refers to a business or organization attempting for acquiring goods or services
to accomplish the goals of the enterprise.In pharmaceutical industries these goods are
divided into three categories.
Packaging material (PM).
40
Important points concerning purchase
GMS structure
GMS is headed by VP (GMS & GSC) who reports to the president, Head
API GBU.
DOA (Delegation of authority):
Purchase without PO:
Any purchase transaction upto INR 5000 or $110 US will not require PO except all
inventory items and imported items.
QCF not required if PO documents not exceed INR – 10,000.
Retention & review of documents by GMS is done in a 8 yr period.
Emergency Purchase:
If any breakdown, location head has the authority to purchase goods of up to INR
50,000 without any QCF.
41
LOGISTICS
The process of planning, implementing, and controlling the efficient, cost effective flow
and storage of raw materials, in-process inventory, finished goods and related information
from point of origin to point of consumption for the purpose of meeting customer
requirements.
42
60% exports – Sea 40% exports – Air
Goods are exported to more than 145 destinations, core are 40-45.
10-12 thousand tonnes goods are exported annually.
Major challenge is to maintain the cool chain (Data logger used)
Dewas, Goa & LL (Gujarat, hyderabad & Bomabay) accounts for 60%, 5-8 and
15-18% of exports.
INTENTIVES BY GOVERNMENT
Licence Exemption
Advance Licence Reclaim on import-
export
DEPP Indigineous goods
Drawback Cotton, yarn products
Focus market scheme Free on board
44
CONTRACT MANUFACTURING
Contract manufacturing is a process that established a working agreement between two
companies. As part of the agreement, one company will custom produce parts or other
materials on behalf of their client.
Loan license means that getting manufactured the finished good in some other company
but the raw material & method is provided by the hiring company. The liability is of the
hiring company and only the address of the hired company would be mentioned on the
label.
P to P (Principal to principal) means getting the finished goods manufactured by some
other company and the responsibility of the method & raw material lies with the
manufacturing company itself and will also hold the liability. Both the name & address of
the Mfg. Company would be reflected on the label.
45
RANBAXY’S CONTRACT MANUFACTURERS
Location Company
Hyderabad, Nagarujna
Aurangabad
NATCO Pharma, ESPI Industries &
Chemicals Pvt. Ltd
Mediscare (Volini spray)
Madras Madras Pharma
Paonta sahib Kilitch drugs (India) Ltd,
Zeon Lifesciences,
Baddi Ankur Pharma
Biodeal
Delhi Mega Internationa
Bombay M J Pharma (Insulin), Kilitch (Inj.)
Gujarat Linken P’ceuticals, Nirma chemical, Vita
Lab
Jaipur Amol Pharma
Indore Plethico Pharma
46
INVENTORY MANAGEMENT
Inventory is a list for goods and materials, or those goods and materials themselves, held
available in stock by a business.
Objective
Hold enough inventory to satisfy customer demand, without holding too much.
Just the right quantities of stock to satisfy demand will minimize cost.
Mismanagement of inventory leads to -
Facility Costs: Inventory holding costs which includes rental on warehousing,
mobile and static equipment, utilities, compliance costs e.g. for dangerous goods.
Human Capital: Cost of labor to manage the stock move it, handle it and count it.
Finance costs: When capital is tied up in inventories the cost of finance
(interest), and/or lost opportunity cost of gaining returns elsewhere must be
counted
Management Costs: White collar personnel and IT costs
Procurement Costs: Cost of purchase, including transport
Stock Accuracy: if stock records are wrong, large amounts of time and expense
can be absorbed sorting them out.
Pillage: Theft of goods. Unfortunately this occurs and is a cost to be factored in.
51
PACKAGING
Packaging means of ensuring safe delivery of product to ultimate consumer in sound
condition at minimum cost.
Or
It is an art, science and technology for safe delivery of product to consumer.
52
Packaging development
Retention of control sample is done till 1 year after expiry
Pantone guide is used for colour differentiation & communication.
53
Testing of Packaging Material
SAMPLING
No of boxes Boxes to be open
2-8 2
9-15 3
16-25 5
26-50 8
51-90 13
151-300 32
Testing equipments Test performed for Cartons
Infra-red and UV Description
Scrub group rub tester Grammage
Torque tester Size
Incinerator Grain direction
Polarimeter Construction
Injection rubber piercer Printing
55
IMPORT AND EXPORT DOCUMENTS
Pre-shipment documents:
Commercial documents :
The commercial documents are those which, by customs of trade, are required for
affecting physical transfer of goods and their title from the Importer to the importer and
the realization of Import sale proceeds.
14 out of 16 commercial documents have been standardized and aligned to one another.
Shipping order and bill of exchange could not be brought within the fold of the aligned
documentation system because of their very different data elements and having a very
little in common with other commercial documents.
The commercial documents may be classified into principal documents and auxiliary
documents.
Principal documents:
Out of the 16 commercial documents mentioned above, the Importer is required to send
the following eight documents to the importer. These are known as the principal Import
documents.
1. Commercial invoice
2. Packing list
3. Bill of lading
4. Combined transport documents
5. Certificate of inspection/quality control
6. Insurance certificate/policy
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7. Certificate of origin
8. Bills of exchange and shipment advice
Auxiliary documents:
The remaining eight commercial documents are known as auxiliary documents.
1. Proforma invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance declaration
5. Shipping order
6. Mate receipt
7. Application for certificate of origin
8. Letter to the bank for collection/negotiation of documents
Regulatory documents:
Regulatory pre-shipment Import documents are those which have been prescribed by
different government departments/bodies in compliance of the requirements of various
rules and regulations under relevant laws governing Import trade such as Import
inspection, foreign exchange regulations, Import trade control, customs etc.
There are 9 regulatory documents associated with the pre-shipment stage of an Import
transaction and are as follows:
1. Gate pass-I/Gate pass-II (prescribed by central excise authorities)
2. AR4/AR4A form (prescribed by central excise authorities )
3. Shipping bill/bill of Import (prescribed by central excise authorities )
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For Import of goods
For Import of duty free goods
For Import of dutiable goods
For Import of goods under claim for duty drawback
4. Import application (prescribed by port trust)
5. Receipt for payment of port charges
6. Vehicle ticket
7. Exchange control declaration prescribed by RBI GR/PP forms
8. Freight payment certificate
9. Insurance premium payment certificate
The different commercial regulatory documents may be classified into documents related
to shipments, documents related to payment; documents related to inspection, documents
related to excisable goods and documents related to foreign exchange regulations.
Documents related to goods:
(i) Invoice
CUSTOMS INVOICE
The customs invoice is used in lieu of the commercial invoice in a few importing countries
for customs purposes, but the importer often needs a commercial invoice too. The customs
invoice can be in a form called the certificate of value. The invoices vary in format but
they contain essentially the same data as in the commercial invoice and packing list. The
blank customs invoice is available from the customs broker or forwarder and specialized
printer. Certain importing countries may require their importers, not the Importers in the
Importing country, to provide the completed customs invoice for customs clearance.
58
CONSULAR INVOICE
As the name implies, the consular invoice is a specific invoice issued by the Consul of the
importing country. Many importing countries, mainly less developed countries, have
already phased out this invoice. It is used for customs clearance and other purposes; as
such any errors or omissions on the invoice may cause problems and fines at the customs
in the importing country. The consular invoice is a form of non-tariff barrier. The format
of the consular invoice form varies greatly, but it contains essentially the same data as in
the commercial invoice and packing list. The invoice form is either in the language of the
importing country (e.g. Spanish usually) or bilingual, that is, a combination of English and
Spanish usually. The Importer's declaration normally is included in a consular invoice.
The consular legalization and payment of a consular fee is required. The consular fee can
be a percentage of the FOB invoice value.
(i) Packing list:
The packing list is the detailed list of contents of the shipment, including quantities, items,
model numbers, dimensions and net and gross weights. A packing list should specify per
carton or crate the number and type of units of material inside. The shipper gets the
packing list ready at the time the goods are being is prepared for shipping. There is no
standard format for packing lists.
Although it is not a required customs document, the packing list is often used by the
customs broker to obtain additional information about the shipment.
(ii) Certificate of origin:
The Certificate of Origin is only required by some countries. In many cases, a statement of
origin printed on company letterhead will suffice. Special certificates are needed for
countries with which the United States has special trade agreements, such as Mexico,
59
Canada and Israel. More information about filling out these special certificates is available
from the
Certificates related to shipment:
(i) Mate receipt: – mate receipt is a receipt issued by the commanding office of
the ship when the cargo is loaded on the ship, and contains information about the
name of the vessel, berth, date of shipment, description of packages, marks and
numbers, condition of the cargo at the time of receipt on board the ship etc.
(ii) Shipping Bill: -Shipping bill is the main document for obtaining custom permission
for shipping goods. This document is of four types: -
Free shipping bills
Drawback shipping bills
Ex-bond shipping bills
Dutiable shipping bills- are filled up where the consignment is subject to Import duty and
where duty drawback is to be claimed. Whereas free shipping bills is filled up when the
consignment is subject to Import duty and no duty drawback is to be claimed. Ex-bond
shipping bills is needed in case of shipment from the customer bounded warehouse.
(iii) Airway bill: - Airfreight shipments are handled by air waybills, which can never be
made in negotiable form.
(iv) Bill of lading: - is a contract between the owner of the goods and the carrier (as with
domestic shipments). For vessels, there are two types: a straight bill of lading which is
non-negotiable and a negotiable or shipper's order bill of lading. The latter can be bought,
sold, or traded while the goods are in transit. The customer usually needs an original as
proof of ownership to take possession of the goods
60
DOCUMENTATION: -
Generally documentation is perceived to be the most complex, difficult and critical
activity of Import marketing particularly in India. Successful consummation of an Import
order needs innovative skills and meticulous planning including proper compliance and
subsequent documentary provision.
One may categorize Import documents into three dimensions on the basis of their role in
smooth flow of trade.
REGULATORY CONTROL IN INDIA
After becoming an Importer company it is required to obtain a (RCMC) from the relevant
Import promotion council, commodity board or any other designated body. This
certificate is needed for getting some more Import incentives given by the govt.of India.
Next step in becoming an Importing unit is to obtain importer-Importer code number from
director general of foreign trade.
a) GR FORM / PP FORM: -
GR FORM / PP FORM in duplicate is required for every consignment for obtaining
customs clearance. This form is needed as a legal requirement under the Foreign
Exchange Regulation Act of India. GR FORM is needed for all consignments other than
ones being shipped by post, while PP FORM is needed for goods going by post.
b) DOCUMENTATION: -
Various documents originated during Import marketing activities of Moser Baer are
defined below: -
SALE ORDER / CONTRACT: -
It is a premiere document that has to be generated in any transaction. It is an agreement
between buyer and seller, in which seller has agreed to buy them, at an agreed price with
specified delivery terms. Delivery terms may be F.A.S, F.O.B, and C&F etc.
61
F.A.S (Free Along Side)
In this seller has the obligation to deliver the goods alongside the vessel on the quay. The
buyer has to bear all the cost and risk of loss or damage to the goods.
62
Dutiable shipping bills
F.O.B (Free On Board): -
When the delivery condition is F.O.B, the seller has the liability to load the goods /
materials on the vessel specified by the buyer. The transportation, insurance and other
agreements are to be made by the buyer.
C & F (Cost and Freight): -
The seller must pay the costs and freight necessary to bring goods to the named port of
designation but the risk of loss and damage to the goods is transferred from the seller to
the buyer.
In case of “International Trade” the buyer and seller separated by distant boundaries.
Hence it becomes less viable for the parties to come together to form a contract. Thus it
so happens the buyer or seller initiates the formation of contract by sending purchase order
or sale order respectively. Sometimes the buyer intimates the seller by sending the
purchase order, or if seller finds the initiative lucrative, he sends his sale order to the
buyer. Thus in this way the parties enter into a contract with each other. Such type of
contract is known as “Constructed Contract”.
Various contents of sale order are listed below:-
a. Price of the product
b. Quantity and quality of the product
c. Period of delivery
d.Port of delivery
e. Standard terms and condition
f. Types of financial arrangements
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g. Payment terms
Documents related to payment:
(i) LETTER OF CREDIT: -
L /C are the most popular method of payment / receipt in foreign trade transaction as well
as it the mother document which give rise to all other documents. Under L/C the buyer
promise to pay the seller on due date. In this type of credit, the buyer’s liable to pay. It is
thus also known as banker’s commercial or documentary credit.
It is commonly referred as commercial L/C as it a means to opening a credit in favour of
someone, under which payment will be made provided that certain conditions are fulfilled
within given time.
PARTIES INVOLVED IN L/C: -
1. Buyer or importer
2. I) Issuing or opening Bank
II) Reimbursing Bank
3. Seller or Importer or beneficiary
4. I) Advising / confirming Bank
II) Paying Bank
III) Negotiating Bank
Based on security, L/C can be classified into 3 types: -
1. Revocable or irrevocable: -
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A revocable L/C can be cancelled or modified, by the buyer at any time without any notice
to the seller. But an irrevocable L/C cannot be cancelled without prior notice to the seller
of Importer.
2. Confirmed or Unconfirmed: -
When the bank authorized by opening bank confirms an irrevocable L/C, it becomes
confirmed. Otherwise the L/C is unconfirmed.
3. Recourse or without recourse: -
If the advising bank pays the seller but does not get reimbursing from the opening bank,
then this bank can recover the whole money with interest from the seller.
But in case of without recourse, the liability of the Importer ends after he has deposited the
required documents and received payments.
(ii) BILLS OF EXCHANGE: -
It is a document for the goods Imported. It is the means of collecting money through
banking channels and also a method of payment by credit. A bill of exchange is also
referred as “Draft”. It is a legal document. In India, Section 5 of Negotiable Act, 1881,
defines bill of exchange as:-
“An instrument in writing containing an unconditional order, signed by the maker,
directing the person to pay certain amount”.
It has the following characteristics:-
a. It is an instrument in writing
b. It is an unconditional order signed by Maker (Drawer)
c. It is a direction given to a specific person (Drawee)
d. It is a direction to make payment of specific or fixed amount.
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A bill of exchange performs the following functions: -
i. Means for collecting payment
ii. Means for demanding payments
iii. Means for extending credit
iv. It is a promise of payment
v. It is a receipt of payment
Various documents are required for custom clearance. Importer or his agent
submits the following documents to the custom department so as to get custom
clearance for Import.
(iii) BANK CERTIFICATE OF PAYMENT
It is a certificate issued by the negotiating bank of the Importer, certifying that the bill
covering particular consignments has been negotiated and that the proceeds received in
accordance with exchange control regulation in the approved manner.
DISPATCH INSTRUCTION: -
Dispatch instruction is almost like sale order. It is an instruction or order given by the
company’s marketing department to the plant to dispatch specified goods to the port of
any other designations.
Contents of dispatch instruction are given below:-
a. Specification and quantity of materials to be transported
b. Port of dispatch
c. Shipment schedule
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d. Place and port of schedule
e. Name of the buyer
A.R.4 FORM: -
It is an application, by the company to the central excise department of custom, for excise
relief.
In India Importable goods are exempted from duty. Hence if the company Imports goods
to foreign countries, to gain foreign exchange, it applies to central excise department to get
exemption, from excise duty, by giving application in a prescribed format under rules –
158, 185, 1730. This application is known as the A.R.4 FORM.
The contents of A.R.4 FORM are listed below:-
a) Name and address of range officer
b) Name of the company
c) Port of loading
d) Country of loading
e) Central excise regd. No.
f) Number and description of goods
g) Gross weight / net weight
h) Value of goods
i) Weight and quantity of goods
j) Duty rate and amount
k) Amount of rebate claimed
l) Remarks
67
m) Declaration of the company
DELIVERY INVOICE: - The plant prepares it at the time of removal of goods from the
plant. It is meant for excise purpose. It contains the following: -
a. Quantity of goods dispatched
b. Price of goods
c. Mode of dispatch
d. Port of dispatch
e. Buyer’s details
f. A.R.4 reference
PROFORMA INVOICE: -
It is basically a form of quotation by the seller to the buyer. It is a sort of invitation to the
buyer from the seller to place a firm order to him. It is deposited with the custom
clearance for estimation of excise duty. It helps in getting custom clearance.
A Proforma invoice contains:-
a. Importer’s name
b. Consignee’s name
c. Notify’s name
d. Buyer’s name
e. Country’s of origin
f. Designation
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TEST CERTIFICATE: -
It is a verification certificate that shows that the goods shipped have the required cast no.
and percentage composition.
INSPECTION CERTIFICATE: -
It is a document which certifies that the goods have been inspected (prior to shipment).
This certificate is generally desired by the importer so that he can be sure that right types
of goods ordered are being sent by the Importer. In India certain goods are subjected to
quality control. For this purpose an agency called (EIC) was created.
G.R FORM: -
It is one of the most important documents in international business. This form is obtained
from R.B.I. This form is filled by the Importer and is endorsed by the customs. This form
is one kind of guarantee given by Importer to R.B.I. The Importer gives guarantee that
within “six” months of transaction the foreign currency involved will be realized.
G.R FORM contains: -
a. Importer’s name and address
b. Invoice no. And date
c. Consignee’s name and address
d) Port of loading and discharge
e) Country of designation
f) Exchange rate
g) Currency of invoice
69
h) Net & gross weight, particulars, description
SHIPPING BILL: -
It is the main document on which custom permission for Import is given. It is custom
document. It is a document, which is necessary for loading the cargo on ship.
It contains the following: -
a. Importer’s name and address
b. Invoice no. And date
c. Port of loading
d. Port of designation
e. Details of packages and goods
f. Analysis of Import value; currency; amount
MATE RECEIPT: -
When the cargo is loaded on the ship, the commanding officer / captain of the ship will
issue the receipt called the “mate receipt” for goods loaded.
It contains the following information:-
a. Name of the vessel
b. Berth
c. Date of shipment
d. Description of packages etc
BILL OF LADING: -
70
It is a document which is issued by the shipping company acknowledging the receipt of
goods mentioned there / in and undertaking that the goods are in condition and will be
delivered to the consignee, provided that the freight specified therein is duly paid.
It serves the following 3 purposes: -
It is a document of title of goods shipped,
It is a receipt for goods, received by the steamship company,
It contains the terms of the contract between the shipper and shipping company
MARINE INSURANCE: -
When the goods are transported from one place to another there is always risk involved.
Hence to avoid such transit losses, marine insurance is taken up. In India there are various
insurance companies, such as General Insurance Company. Insurance Policy is normally
done through agents.
Marine insurance contains the following:-
a. Name and address of the subsidiary of insurance company
b. Claim payable
c. Name of the insured
d. Vessel no.
e. Place of dispatch
f. Port of loading and dispatch
g. Destination
h. Insured value
i. Terms of insurance
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j. Particulars and description of goods
100% E.O.U. -
Import Oriented Units means an industrial unit offering for its entire production, excluding
rejects and items otherwise specifically permitted to be supplied to the domestic Tariff
Area (DTA). Such units may be set up under the Import Oriented Unit (EOU) scheme or
Import Processing Zone (EPZ), Electronic Hardware Technology Park (EHTP). Such units
may be engaged in manufacture/production or trading of any goods, like Hardware.Units
engaged in service activities may also be considered on merits.
The scheme of 100% Import Oriented Units (EOUs) was introduced in the year 1980 with
the objective of generating of production capacity for Imports by providing an appropriate
policy frame work, flexibility of operations and incentives. In order to enable them to
operate successfully in the international markets, such units are allowed to import
machinery, raw materials and components and consumables free of customs duties, and if
procured indigenously, full exemption of excise duty is available. These units have to
operate under customs bond and are expected to achieve the levels of net foreign exchange
earnings fixed by the Board of Approval as a percentage of their Imports.
EOUs are governed by the following basic terms and conditions:
It may be established anywhere in India subject to locational criteria, local zoning laws
and environmental regulations.
The unit will undertake to manufacture in bonded area and to Import its entire period
ordinarily of five years.
If a unit approved under this scheme is unable for any reason, to fulfill its Import
obligations, the Board of Approval will review the case and recommend the future
course of action to be taken in regard to that unit.
72
Once a 100% EOU is de-bonded, it would have to pay the following duties.
Customs duty on capital goods on the depreciated value but at the rate prevailing at
time of import.
Customs duty on unused raw materials, components, consumables and spares of value
at the time of import at rates in force at the time of clearance.
In respect of excisable goods, excised duty without any depreciation and at rates
applicable at the time of clearance.
EOUs established any where in India and Import 100% its products except certain fixed
percentage of sales in the domestic Tariff Area as may be permissible under the policy.
IMPORT DOCUMENTATION
Documentary Requirements:
Customs documents are the set of documents required by a customs authority to accurately
and completely identify goods which are being imported. Every country has its own
specific rules and regulations governing information and documentary requirements.
The minimum documentation required to be submitted with customs import entries or
Informal Clearance Documents includes:
Air way-bill or bill of lading
Invoices
73
Any other papers (including packing lists, insurance documents, etc) relating to the
shipment.
The Customs Act 1901 requires importers to retain commercial documents relating to a
transaction for five years from the date of entry. These documents may be required for
Customs audit purposes. Failure to meet the requirement may attract a penalty of $2000.
Airway Bill:
Any airway bill, also called, an air consignment note, is a receipt issued by an airline for
the carriage of goods. As each shipping company has its own bill of lading, each airline
has its own airway bill.
Bill of lading:
The bill of lading is a document, issued to a consignee, by a carrier that describes the
goods to be shipped, acknowledges their receipt and states the terms of the contract for
their carriage. The shipper is responsible for completing the bill of lading and providing
the completed document to the carrier at the time the shipment is sent.
The carrier provides a copy of the bill of lading to the Importer before departure, as
evidence of the transfer of goods from the Importer to the carrier. A copy of the bill of
lading is also forwarded to the importer, to arrange for the pick-up of the goods, and a
third copy is kept for the carrier’s records.
Original bill of lading:
- The original bill of lading always stipulates the contract of carriage.
74
- Possession of the original bill of lading at destination entitles the bearer to the goods.
- The original bill of lading is sometimes sent to a financial institution that represents
the shipper. The financial institution remits the original bill of lading to the importer
once all financing and other obligations are met.
Manifest:
A manifest is an itemized list of the contents of the shipment, to be shown to officials for
customs clearance. Another name for the manifest is cargo control document (CCD). The
most commonly used manifest is a Form A8A.
The carrier prepares the manifest based on the information provided by the shipper. The
carrier must provide the customs broker with a manifest in order for the broker to obtain a
release from Customs.
A manifest or CCN has its own identifier, called the cargo control number. Once
submitted and accepted by Customs, the manifest and cargo control number are monitored
by Customs to ensure the proper clearance and closure of the shipment.
Packing list:
The packing list is the detailed list of contents of the shipment, including quantities, items,
model numbers, dimensions and net and gross weights. A packing list should specify per
carton or crate the number and type of units of material inside. The shipper
gets the packing list ready at the time the goods are being is prepared for shipping. There
is no standard format for packing lists.
75
Although it is not a required customs document, the packing list is often used by the
customs broker to obtain additional information about the shipment.
Commercial Invoice:
A commercial invoice is the basic document from which the buyer or importer pays the
vendor or Importer.
On import shipments, the commercial invoice generally serves a dual purpose: to enable
the Importer to collect his/her money and to assist the importer in clearing the goods
through Customs.
The commercial invoice does not need to conform to a rigid format. The Importer or
manufacturer is free to set out the information in any manner they choose, provided that
the prescribed data elements found on the invoice are included. Specifically, the following
information must be included and be clear, accurate and precise:
- Importer name and address
- Consignee name and address
- Description of the goods
- Net and gross weights
- Unit price
- Extended price
- Currency of settlement
- Terms of delivery and terms of payment
- Date
- Reference numbers
- Import licenses
- Freight included or excluded
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Import permits and special certificates:
The goods subject to government department requirements need special permits,
certificates or other paperwork, in addition to the standard customs documentation. In
some cases, shipments may require examination by customs officers to verify marking or
proper labeling. In others, qualified inspectors, working on behalf of the OGD in question,
must review the documentation and/or examine the goods prior to release.
Often the data needed to satisfy OGD requirements is not normally provided with the
shipment. It must then be supplied by the importer to the customs broker at the time of
customs entry.
OGDs are becoming more stringent with regard to imports. What’s more, new, additional
OGD requirements are being implemented all the time. It is crucial that your customs
broker be aware of these regulations to ensure correct processing and compliance of your
shipments subject to OGD requirements.
Moserbaer prepares all appropriate certificates and import permits on a duty free-per-
permit basis as it is a 100% E.O.U. and present these to the OGDs and Customs, in order
to secure the release of the shipment.
Import documentation procedure is as follows:
The papers and documents required before starting the steps and procedures of clearing
goods imported for companies and establishments or others in general
Copy of the commercial register and a form of the business activity issued by the
Ministry of Commerce and Industry
Certificate of membership with the Chamber of Commerce and Industry
77
Certificate of origin for imported goods certified by the competent authorities in the
Importing or producing country
Original invoice of purchase certified by the competent authorities in the Importing or
producing country
Bill of Lading for goods imported by sea or air
Manifest papers of goods imported by sea or air
Delivery order by the shipping agent of goods imported by sea or air
Letter of Authority certified party concerned with custom clearance in case of inability
to appear in person.
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CONCLUSION
By observation and research done in Ranbaxy plant situated at Paonta Sahib, Sirmour,
Himachal Pradesh on their Production, Global Supply Chain and EXIM & Custom Deptt.
I reached to a conclusion that all the three departments work together with a great
coordination and rhythm to perform their jobs and fulfill the market commitment on the
due dates given by the company. The company has a global market in more than 70
countries and is efficiently fulfilling the demands of the global market with a fabulous
coordination of all the three departments which leads to a sustainable multinational
pharmaceutical giant
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Import-Export Documents Used for Global Supply of Products as well as imports of Raw
Material & Packaging Material, as per the formats issued by the Govt. of India.
1. Master Document
2. Master Document 2nd
3. Performa Invoice
4. Invoice
5. Packing List
6. Bill Of Loading
7. Mate’s Reciept
8. GSP Form’A’
9. Application For Certificate Of Origin
10. Certificate Of Origin
11. Intimation Of Inspection
12. Certificate Of Inspection
13. Marine Insurance Declaration
14. Marine Insurance Certificate
15. Shipment Advice
16. G.R. Form
17. S.D.F. Form
18. Exporter’s Declaration Form
19. SOFTEX Form
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20. Shipping Bill
21. Shipping Bill For Export Of Duplicate Goods
22. Shipping Bill For Export Of Duty Free Goods
23. Bill Of Goods Under Claims Of Duty Drawbacks
24. Bill Of Entry For Home Consumption
25. ARE-1 Form
26. Rebate Order
27. ARE-2 Form
28. Form CT-1
29. Format Of Importer-Exporter Code Number
30. Shipping Instructions
82
BIBLIOGRAPHY
Hindustan Times
The Times Of India
The Economic Times
Business Standard
www.ranbaxy.com
www.wikipedia.org
www.britannicaonline.com