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A report submitted towards the partial fulfillment of the requirements of the

two years full-time Post Graduate Diploma in Management

Submitted by: Prashant Rampuria

Post Graduate Diploma in Management
(International Business)
Roll No.: 2K81/IB/29


3, Institutional Area, Jasola, New Delhi-110025

The purpose of industrial training is to acclimatize the students with the organization &

the industry in which this organization exists. Summer training is a part of management

study & is very important for each & every student.

Management trainees are trained in such a way that after they come out, they can manage

the matters of organization in a planned and systematic manner

My project is aimed at understanding the basis of export procedure & documentation. It

includes how an export order is processed & what all documents are required to complete

the legalities of the export order.

This training was a valuable experience in terms of understanding & learning & I believe

that in future I will get fruitful results.






A project report seems to be an individual effort is in fact teamwork. Summer training at

SPL Industries Ltd. was just like an opportunity to shake hand with the practical world of


I am indebted to all those individuals who helped me in gaining knowledge & insight into

various aspects of export procedure & documentation. The source of learning have been

one too many & a complete list of individual references would become encyclopedic.

I want to express my deepest gratitude to Mrs. Mona Malhotra, GM Marketing, SPL

Industries Ltd, without whose help this summer internship in SPL Industries would not

be possible.

I am grateful to Mr. Jagmohan Chhibber, Export manager, SPLIL, for sharing his

experience & knowledge & without whose help the project would not have got any


My deepest appreciation also extends to Dr. Tulika Chandra, Project guide, Faculty

AIM, who critically reviewed my project report & provided suggestions.

I would like to thank Dr. D. K. Banerjee, Director AIM, for his constant support &


Finally, I would express my gratitude towards Mr. Shailendra Tyagi, Sr. Manager,

CCR AIM for facilitating my Summer Internship




Table of Contents

Executive Summary ...........................................................................................................6

Chapter 1
Introduction ........................................................................................................................7
Background of the problem task undertaken ....................................................................7
Project Objectives ............................................................................................................7
Rationale of the study .......................................................................................................8
Scope of the study ............................................................................................................8
Introduction of the company ............................................................................................9

Chapter 2

Methodology .....................................................................................................................12

Chapter 3

Objective of the project ...................................................................................................14

To understand the apparel business process ...................................................................14
To understand the working of various departments .......................................................21
To understand the role of merchandisers .......................................................................28
To understand the export procedure ...............................................................................31

Bibliography .....................................................................................................................47

List of Illustrations
Figure 1: The “T” angle of the Apparel Supply Chain ..................................................16
Figure 2: Fabric Process Flow Chart .............................................................................21
Figure 3: Garment Process Flow Chart .........................................................................22
Figure 4: The PPC link with other departments ............................................................27


This project is aimed at understanding export procedure & documentation. It begins with

the introduction of the company i.e. company profile. This part includes introduction of

the company, its plant location, capacity, the client base & some export figures giving

idea of Exports at SPL Industries Ltd.

Chapter 2 discusses the Methodology used for the data collection. Exploratory research is

used for data collection as is best suited for this fulfilling the project objective.

Next chapter provides the detail on the objective: Apparel business process. It is

explained through the “T” angle apparel supply chain. The three sides of the supply chain

i.e. The Buyer, the Supplier & the Manufacturer, are discussed.

Next objective discusses a view of different departments working in synchronization in

order to process an export order. The role of each department is discussed in context of

export procedure & documentation & what contribution they make towards it.

Next objective gives a brief idea on the merchandisers & what role they play. They are

the one who interacts with the clients & update the company with client’s requirement.

They act as a liaison between the company & the client.

In the final objective a brief summary of all the export documents used at the SPLIL for

legalizing an export order is given. Further the documents regarding pre & post shipment

procedure are discussed.

In the end Annexure are attached as supporting documents.



1.1) Background of the problem task undertaken

It is an opportunity to do the summer internship in SPL Industries Ltd which is a

manufacturer & exporter of Knitted fabric and Knitted garments. Project on Export

house is uncommon & that on an Apparel Export House is rare.

As we know, exporting is complex and challenging activity in today’s dynamic world

environment as it involves the performance of operations that determine existing and

potential demand in a market. Learning the step-by-step processes & procedures to be

followed in an export contract is a crucial activity in export procedure.

So, selecting a project on export procedure & documentation is an obvious & important


1.2) Project Objectives

a) To understand the Apparel Business Processes.

b) To understand the working of various departments of SPL industries ltd.

contributing towards processing of an export order.

c) To understand the role of Merchandisers in SPL industries ltd.

d) To study the Export Documentation in SPL industries ltd.

i. Pre – Shipment procedure

ii. Post – Shipment procedure

1.3) Rationale of the Study

Export in simple words means selling goods abroad or Export refers to outflow of

goods and services and inflow of foreign exchange. Each country has its own rules and

regulations regarding the foreign trade. For the fulfillment of all the rules and regulations

of different countries an exporting company has to maintain and fulfill different

documentation requirements. The documentation procedure depends on the type of

goods, process of manufacturing, type of industry and the country to which goods is

to be exported. In order to complete an order for Knitted garment, many activities like

communication between different departments, the process of outsourcing raw material,

payment process, quality control, packing and shipment of goods etc. are undertaken.

Different departments work in synchronicity & various documents are prepared in the

process. Hence, a single mistake or lack of proper planning can lead to the rejection

of the whole order or increase the cost.

Today’s world is the global village in which each country is trading with other countries

in the form of export or import. This field has a great scope because today each company

whether it is small or big wants to engage in foreign trade.

So, it is very important to study the export procedure and documents involved in it.

Hence, selecting this project is a judicious decision.

1.4) Scope of the Study

The aim of this project report is to unfold stepwise all complexities involved in the export

business right from receiving an export order to final realization of export proceeds. It

gives a detail idea of how different departments in an Apparel export house work in

synchronization so that an export order is processed.

This project would be helpful to fulfill many loopholes of manufacturing, processing and

analyzing the export order as well as documentation.

1.5) Introduction of the Company

1.5.1) About SPL Industries Ltd

 Established in 1994

 A leading Apparel Export House of India

 One of the largest vertically integrated Knitwear plants in India

 Reputed for excellent Product Development and Design capability

 Incorporated as Shivalik Prints Private Limited in 1991, name changed to

SPL Industries (SPLIL) in 1994

 Company promoted by Mr. H.R. Gupta and Mr. Vijay Jindal

 A leading manufacturer & exporter of Knitted fabric and Knitted garments

 SPLIL designs, manufactures and sells a wide range of outer wear – T shirts,

sweat shirts, polo shirts, etc. for top end customers in the international market

 SPLIL has five factories in Faridabad covering 500,000 square feet spread over

14 acres of prime land

 It employs about 6000 people including contract labour

The Company’s total turnover for the year ended March 31, 2009 was US $

66,263,537.1907 from the sale of 20,717,285 pieces.

“The vision of the Company is to become a leading manufacturer and exporter of

apparel by continuously excelling in quality, service, and customer satisfaction using

the best technology, processes and people.”


 IEC Code number: 0593027771 (See Annexure 1)

 AEPC Registration number: 101304 (See Annexure 2)


The Company’s Plants are located at –

1. Fabric Dyeing and processing plant - Plot No.21, Sector-6, Faridabad-121 006


2. Garment manufacturing plant - Plot No.22, Sector-6, Faridabad-121 006 (India)

3. Garment manufacturing plant - Plot No.128, Sector-24, Faridabad-121 006 (India)

4. Garment manufacturing plant - Plot No. 15/1, Mile Stone, Mathura Road,

Faridabad-121006 (India)

5. Garment manufacturing plant - Plot No. 7 Sector-6, Faridabad

All Locations are within 30 KM from New Delhi, and located within 10-12 km from

each other.

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1.5.4) SPLIL Capacities


Knitted Dyed Fabric 20 Tons per day

Mercerizing 05 Tons per day

Garment Washing & Dyeing 40,000 Pcs per day

Knitted Garments 750,000 Pcs month

Sweaters 100,000 Pcs per month

1.5.5) SPL Customers

SPLIL’s high profile customers are not only happy but also satisfied which has earned

them recognition and unflattering loyalty from prominent buyers worldwide.

Customers Countries

 Gap Inc.  USA

 J.C. Penney Company  Canada

 Kohl’s Corporation  Mexico

 Federated Department Store  UK

 Phillips-Van Heusen Corporation  Germany

 Hartmarx Corporation  Spain

 Sears, Roebuck and Co.  Netherlands

 Haggar Clothing Co.  Middle East

 Supreme International  Japan

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Our primary objective of doing this project is to get the first hand knowledge of

functioning of an export house. Since we are not comparing two different entities on the

basis of their financial results, rather we are learning the export procedure. Hence

Exploratory research design is the need of the hour.

Further there are few reasons which made me to use Exploratory Qualitative research:

 It is not always desirable or possible to use fully structured or formal methods to

obtain information from respondents.

 People may be unable & unwilling to answer certain questions or unable to give

truthful answers.

 People may be unable to provide accurate answer to question that tap their sub


Thus, project research methodology is as follows:

 In Primary data, Qualitative research through In-Depth Interviews has been

adopted. For interviews non–structured open-ended questions were used.

 In Secondary data, both internal & external research was done. For internal

research Ready to use documents available with the organization were used. For

external research Internet website & published books were consulted.

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Limitations of the Methodology

1. Concern about the validity: the issue arises from the fact that qualitative

research does not rely on tests for reliability & credibility that are external to data

collection & analysis.

2. Labour intensive data collection: it can be extremely time consuming. Data

collection is the labour intensive process the researcher immerses himself or

herself to build an understanding of the organization, through contact with the

employees, exposure to the norms & familiarity with their practices.

3. Conclusion & interpretation of qualitative research: they are primarily

communicated in the form of case studies. The case study is written after an

extensive process of data collection through interviewing & participant


4. Need for training in qualitative research: There is a need of training in

qualitative research methodology. Persons having low knowledge in this field

don’t go for such methodology.

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Objective of the project

2.1) To understand the Apparel Business Process

2.2) To understand the working of various departments of SPL Industries Ltd.

contributing towards processing of an export order.

2.3) To understand the role of Merchandisers in SPL Industries Ltd

2.4) To study the Export Documentation in SPL Industries Ltd

a) Pre – Shipment procedure

b) Post – Shipment procedure

2.1) To understand the Apparel Business Process

The textile and apparel supply chain accounts for a good share in terms of number of

companies and people employed. The apparel industry is divided into four main

segments. At the top of the supply chain, there are fibre (raw material) producers using

either natural or synthetic materials. Raw fibre is spun, woven or knitted into fabric by

second segment. The third segment of the supply chain is the apparel manufacturer

which converts fabric into garment with many processes involved. The final segment

is the retailers who are responsible for making apparels available to consumers.

The “T” angle of the apparel supply chain shows how buyer, suppliers and garment

manufacturer are linked to each other. There are two sides of the “T” i.e. left and right.

The left side is called the buyer to the manufacturer and the right side is called the

suppliers to manufacturer. The two horizontal sides are linked to each other through

the vertical side i.e. the buyer and suppliers are linked through apparel manufacturer.

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The “T” angle illustrates how information flows from the buyer to the apparel

manufacturer. The information normally, sketches of the garment given by the buyer,

are studied by the manufacturer and accordingly list of raw materials required is made.

The different swatch (standard for type of yarn, colour of the yarn and piece of

accessories) are sent to different suppliers for development. The supplier develops and

sends it to manufacturer and which is forwarded to buyer. Once approved by buyer,

the orders are placed with the suppliers with approved samples. When the raw

materials are received as per the specifications given to the supplier, in-house

manufacturing starts with the production. The different process of manufacturing

results in the final garment product which is finally dispatched to the Buyer. The

Buyer then retails the same through stores to the ultimate consumers.

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Figure 1: The “T” angle of the Apparel Supply Chain

2.1.1) Description of the Buyer Side of the Apparel Supply Chain

The buyer side is normally involved with designing of the garment, production of

samples, order collection, apparel retail.

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 Apparel Design

Designing of Apparel is either done in-house or contracted to design companies. The

first step in designing is the analysis of the consumer which the Company is targeting.

The apparel design is influenced by various parameters like other designer collection

presented in the fashion cities of the world, fashion reviews from earlier seasons,

fashion magazine also plays an important input for the design efforts and most

important is the feedback gained from the sales of the similar products that were

developed earlier.

Prototype garments are made for design approval which consumes considerable

amount of time.

 Production of samples and order collection

The next step after the design in apparel supply chain is the production of the samples.

Once the designs are developed, decisions regarding the fabric like cotton or polyester

and quantity etc are made. Based on fabric and quantity decided, decisions related to

country and manufacturers are made. Once decision is made, developed designs are

sent to different manufacturers and are asked to develop proto samples (the stage

brings design from paper to cloth for design appearance). Normally, during proto stage

manufacturer figure stands between 5 and 8. Once proto are developed, number of

manufacturers is reduced to 2 to 3 depending on the total quantity of the article and

also on selected manufacturer production capacity or volumes. The order quantities

are placed to different manufacturers and manufacturer is asked to develop size-sets

(alternate sizes of the garment are developed example S: Small, L: Large, XXL: Extra

Extra Large). Once size-set is approved, sale samples (samples developed for

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advertising and see the market response towards the article) are made. Finally, with

everything in place two identical pieces are developed one for the buyer and other for

the manufacturer called as sealer (sealer sample is identification or standard for

production). This sample is stamped by the buyers and the manufacturer can proceed

with the production.

 Apparel Retail

Apparel products are made available to consumers in a variety of retail outlets.

Specialty stores offer a limited range of apparel products and accessories specialising

in a specific market segment. Apparel sales also take place through wholesalers or

mass merchandisers such as Wal-Mart, Kmart and Target. These retailers offer a

variety of hard and soft goods in addition to apparel. Departmental stores like Macy’s,

Nordstrom offer a large number of national brands in both hard and soft goods

categories. Off-price stores, such as Marshall’s and T.J.Maxx buy excess stock of

designer- label and branded apparel from retailers and are able to offer lower prices

but with incomplete assortments. The apparel sale is also shared by mail order

companies, e-tailers through internet, and factory outlets etc.

2.1.2) Description of the Supplier Side of the Apparel Supply Chain

The suppliers in the apparel manufacturing are quite diversified. It involves suppliers

of different raw materials such as fibre and yarn producers, fabric manufacturers and

other raw-materials.

 Fibre and Yarn Production

Fibres are categorised into two groups: natural and man-made. Natural fibre includes

plant fibres such as cotton, linen, jute etc and animal fibre such as wool. Synthetic

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fibres include nylon, polyester, acrylic etc. Synthetic fibre production usually requires

significant capital and knowledge. Natural and synthetic fibres of short lengths are

converted into yarn by “spinners”, “throwsters” and “texturizers”. Different types of

fibres can also be blended together to produce yarn such as grindle etc.

2.1.3) Description of the Manufacturer Side of the Apparel Supply Chain

 Fabric production

This segment of supply chain transforms the yarn into fabric by different processes

such as weaving, knitting a non-woven process. In a weaving process, yarns are

looped together lengthwise and width wise at right angles. Grey Yarn may be woven

by a simple procedure to produce grey fabric and which are then dyed for a specific

colour. Instead, dyed yarns may also be woven but not dyed. In knitting, yarn is

interloped by latched and spring needles i.e. two different loops are mingled together

with needle adjustment.

Once the approvals regarding the raw-material are made by the buyer, the

manufacturer can proceed with the production.

 Apparel Production

The process proceeds once the fabric is produced; it is either dyed or washed. The

dyed (coloured) yarn fabric is washed and grey fabric is dyed into a specific colour.

After dyeing or washing, fabric is finished by removing water in the tumbler and later

pressed in stenter which also maintains width of the fabric. Now the fabric is ready

for garmentising i.e. it is ready to be cut and stitched into the garment. Garmentising

starts with the design of the garment to be made (usually on the paper called specs).

Patterns (usually made up of thicker and stronger paper) are made from the design

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which is then used to cut the fabric (cutting usually happens in the form of layers). An

efficient layout of the patterns on the layers of fabric is crucial for reducing the

wasted material.

CAD systems are used for pattern layout and are integrated together with cutting

systems. In apparel manufacturing, all the stages are labour intensive as they are not

suitable for any kind of automation. In the stitching section, garment is usually

assembled using the progressive bundle system (PBS). In PBS, the work is delivered

to individual work stations from the cutting department in bundles. Sewing machine

operators then process or sew them in batches i.e. first few are operation are joining

the different parts together and then further amendments related to design are carried

out. The supervisors direct and balance the line activities and check the quality. This

involves large work in progress (WIP) inventories and minimal flexibility. For faster

apparel production, use of unit production system which reduces the buffer sizes

between the operations or modular assembly systems and allows a small group of

sewing operators to assemble the entire garment.

 Finishing, Packaging and Dispatch of Apparel

Garments produced are labelled, packaged and usually shipped to a warehouse. The

garments are then shipped to the retailers’ warehouse. In an effort to reduce time from

placement of the product order to the consumer’s purchase of the apparel, several

practices are gaining popularity. There is increased automation and use of electronic

processing in the warehouses of both manufacturers and retailers.

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2.2) To understand the working of various departments of SPL Industries Ltd

contributing towards processing of an export order.

2.2.1) Manufacturing Process and Production

Figure 2: Fabric Process Flow Chart

Testing of Yarns
Count, knit ability,
100% fabric
wash ability, spirality,
strength, shade (if yarn Quality check

Yarn KNITTING – Trial Batch

Inhouse of 1st lot of fabric in Bulk Knitting Preparation

Knit Set (automatic
Approval color kitchen)


100 % Fabric Shade Color

Quality Checking Fastness Approval

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Figure 3: Garment Process Flow Chart

Fabric Audit Batch wise –

Physical Parameters, Trims

WAREHOUSE Automatic Fabric Issue to

Layering Batch Wise Stitching

CAD marker - As per 100% Panel

approved garment Inspection

100% Needle 100% Garment

Detection Checking


100% Garment
Final Checking

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The above two diagrams show detailed picture of SPLIL’s Apparel Manufacturing and

Supply Chain. The manufacturer supply chain starts when yarn is in-house and ends

when garment is produced and is ready for dispatch. The entire process is divided into

two segments i.e. the process and the production. The process involves yarn inspection,

knitting, dyeing or washing and finishing. In the process, the yarn is converted to fabric

then it is either dyed or washed and finally finished. The production involves fabric

cutting, stitching, and garment being finished and finally dispatched.

2.2.2) SPL: Departments Functions and Operations

Company mainly deals in two segments of the apparel supply chain i.e. one

manufacturing of fabric and other manufacturing of garment. These two segments are

two different processes but are very much linked in the supply chain. The Company

has different departments each having specified functions and responsibilities.

Description of each department will follow in respect to how they occur in supply


 Yarn Department

Yarn (thread) is one of the most important raw-materials for the garment

manufacturing. Company purchases yarn from other spinning mills across the country

and also sometimes from other countries such as China and Italy. Yarn department is

responsible for placing order of yarn to the mills. Their responsibility is to make sure

yarn is ordered from right supplier, delivered in right time with desired quality and

maintain stock listing of yarn. Yarn department is also responsible for checking the

quality i.e. strength, colour and quantity of the yarn delivered. The decision regarding

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the yarn quantity, quality and strength is decided by PPC i.e. production, planning

and control department. PPC places the order one month in advance.

 Knitting Department

Knitting department is responsible for producing knitted fabric i.e. fabric from yarn.

For fabric production, two types of machines are normally used i.e. circular knitting

machine and flat knitting machine. Knitting department receives orders from PPC

stating article or style number and quantity of fabric required. The knitting

department makes the production planning for all knitting machines based on request

from PPC and also calculates and orders required yarn from the yarn department.

Planning is usually done for every week.

 Washing and Dyeing Department

The department is responsible for two different stages in garment manufacturing. For

grey (not coloured) fabric, department is responsible for colouration of fabric and for

dyed (coloured) fabric, department is responsible for washing. The process of dyeing

is time consuming and as different colour checks are required. The department

receives order from the PPC stating article and quantity required. The department

makes the production plan for the dyeing and the washing machine based on order

from the PPC and also sends request to knitting department for the dispatch of the

fabric. Planning is done on weekly basis.

 Finishing Department

The department is responsible for finishing of the fabric with a proper procedure so

that it is ready for garment production. Whether the fabric is dyed or washed, it

follows the same process in the finishing department. Once the fabric is washed or

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dyed, it needs to be tumbled in tumbler (sort of big washing machine) responsible for

removing water and maintain the fabric width and shrinkage. After which fabric is

dried in a Stenter (dryer) and packed in layer and is ready for garment production.

The finishing departments receive orders from PPC again stating the article or style

number and the quantity.

The department sends the fabric to the mentioned cutting section.

 Cutting Department

The department is responsible for cutting of the fabric into different parts of the

garment. This department is mainly responsible for cutting and avoiding wastage. To

ensure minimum wastage, proper set of tools such as CAD and others are used in the

process. The PPC by using CAD and other tools issues article average with a draft or

diagram of how different patterns should be placed on to the layer. The cutting

department based on their experience and expertise either accepts the proposed

average or sometimes gives a better average by few percent. The department makes

production plan for all cutting stations based on article or style requested. This also

works on weekly basis. Once fabric is cut different parts of the same garment are

bundled together.

 Stitching Department

The department is responsible for stitching different parts of garment together. The

process takes place in the assembly line system. The assembly line system is the set

of many different stitching machines each for a specific purpose. These machines are

arranged in an orderly fashion depending on how different parts of garment should be

attached. Assembly line method is used for large production. PPC decides on the

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article or style to be produced with quantity. The stitching department makes

necessary production planning i.e. time line in accordance with each article. The

stitching process is the most time consuming and labour intensive process in the

entire garment production. The planning is done weekly.

 Finishing and Packaging Department

This is final stage before the garment is ready to be shipped. As the garment is

already finished, it requires a series of quality checks. The garment goes through the

quality checks like colour test, washing test, stitching test etc. After which it is steam

pressed, labelled, packed into garment bags and finally, put into the cartons. Once all

cartons are packed and labelled, external quality check takes place and goods are

shipped. The PPC department gives the details of the PO to be finished, packed and


 Production Planning and Control (PPC) Department

The department is responsible for making plans for the entire organization i.e. all the

departments. PPC being in the centre of all departments also controls their

functionality. The PPC sends production plan to different departments on weekly

basis and daily for any amendments. The PPC keeps check on different departments

by requesting planning and production reports for each day. PPC only receives orders

from the Management. With order quantity and dispatch date, it does the planning for

product cycle. The top management is in continuous contact with PPC.

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Figure 4: The PPC link with other departments


Yarn Knitting
Department Department

Packing & Dyeing &
Dispatch Washing
Planning &

Department Merchandising

Cutting Finance &

Department Accounting

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2.3) To understand the role of Merchandisers in SPL industries ltd.

2.3.1) Merchandising Department

The department acts as a liaison between the buyer and manufacturing division. On

one hand, the department is responsible for notifying changes in the product to the

PPC and also to make sure that article is produced as per planning by the PPC and

within dispatch time limits. On the other hand, it has to continually update buyer with

planning and production status. The department takes care of all correspondence with

buyer and is responsible for communicating it to PPC. The department also takes care

of necessary sampling such as proto, size set and final which is necessary prior to

production. (Plan Outline for Order Completion – See Annexure 3)

2.3.2) Marketing

 Design

Designing is an integral part of the marketing process. The Company’s ability to keep

abreast of the dynamic fashion trends enables it to showcase its capabilities and

understanding the buyers’ requirements. Being an export oriented apparel

manufacturer, tracking the changing fashion trends across different geographies for

various end customers is critical for success. The Company has a well equipped

design studio. SPLIL employs a team of designers who design and develop the

products as per the requirements of the customers. They regularly visit International


determine the latest trends in yarn / fabric and colours for the following season. The

design team regularly interacts with the customers which helps it to keep pace with

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their expectations. Besides, the Company has opened a Product Development and

Sales office at US.

The Apparel trade has four basic seasons;

 Spring

 Summer

 Fall/Autumn

 Holiday/Winter

2.3.3) Merchandising

The Company’s marketing team endeavours to enhance its share of the business with

existing customers as well as expand the customer base. The Company receives orders

from customers by:

 Growth in business from existing customers

 New customers developed through cold calls, trade fair meetings

 Walk-in customers.

The Company’s experienced marketing team has been able to devise different

strategies to suit the needs of both existing & new buyers. For the existing buyers, the

Company’s prime focus is to expand the product base and enhance volumes. By

leveraging the long standing relationships with the buyers, the Company strives to be a

preferred partner to the buyers. For the new buyers, based on the understanding of

their product range and brand identity / customer identity, the Company presents to

them the entire product range. This gives them a good idea of areas of the Company’s

expertise and capabilities.

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Sometimes the buyers come to SPLIL with their thoughts on designs, where they offer

their suggestion on modifications. In case where they come to SPLIL with a

predetermined design requirement, they also try to add value by suggesting

modifications to enhance functionalities or appeal, or to reduce costs while retaining

the existing design. SPLIL’s designers along with the sampling department provide

the client with prototypes, which undergo various alterations till the client, finalizes

the design. Once the buyer finalizes a particular style it is translated into samples as

quickly as possible because the entire season’s business depends on timely delivery of

samples. The costing exercise is done concurrently at this stage. SPLIL’s

manufacturing scale and efficiency and global sourcing ability enables SPLIL to

compete with international vendors effectively. This is proven by the growth of the

Company in non-quota categories, where competition has already been open without

any quota related barriers. Quality and ability to deliver the required products on time

and competitive pricing enables to enhance share with customers. The merchandising

teams are to service the requirements of different customers. On receipt of the enquiry,

the merchandiser coordinates with PPC to get an estimate of the raw material

consumption, likely suppliers and costs, accessories as well as the conversion efforts.

Based on this, the costing sheet is prepared. Modifications are also suggested on

apparel design or engineering, or fabric to try and bring the cost to the buyer within

their required range. The price setting process thus becomes a collaborative effort with

Company’s customers instead of just a negotiation process, with both the Company

and buyer working together to meet a common objective. Therefore, whenever a

prospective buyer places his requirement with the company, company can work out an

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optimal price-quality combination for him through permutation and combination of

quality & source of raw materials, along with design.

2.4) To understand the Export Procedure in SPL Industries Ltd.

It is essential that a person engaged in international trade be aware of the various

procedures involved. The business of exports is heavily document-oriented & one

must get acquainted with the entire procedure. Failure to comply with documentary

requirement may lead to financial loss.

2.4.1) Pre-Shipment Procedure

 On receiving the requisition & purchase order from merchant, documentation

department issues an invoice. Two invoices are prepared i.e. commercial invoice

& custom invoice. Commercial invoice is prepared for the buyer & Custom

invoice is prepared for the Custom authorities of both the countries.

 Packing list is prepared which details the goods being shipped.

 GSP certificate is prepared if the consignment is exported to EU or countries

mentioned in the GSP list.

 Buying house inspects the goods & issues an inspection certificate.

 Certificate of origin is also issued and attached, if required.

 Following documents are given to Customs for their reference:

 Custom Invoice

 Packing list

 IEC certificate

 Purchase Order or L/C, if required.

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 Custom annexure

 On receipt of above documents, customs will issue clearance certificate.

 After custom clearance a set of documents with custom clearance receipt are sent

along with the consignment to the forwarder. Forwarder books the shipment & as

per the size of the cartons calculates CBM & decides which container to be used.

 Following documents are sent to buying house for their reference, as per buyer’s


 Invoice

 Packing List

 GSP (if exports to Europe)

 Certificate of Origin (if required)

 Wearing Apparel sheet

 A copy of FCR/ Airway Bill/ Bill of Lading

Buying house then intimates the buyer about the shipment & gives the details

regarding it. Buying house will send a set of these documents to the buyer.

 Buyer collects the consignment from the destination port by showing the following


o Invoice

o Packing List

o Bill of lading/ FCR/ Airway Bill

 On shipment of goods, exporter will send the documents to the importer’s bank.

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2.4.2) Post-Shipment Procedure

 A foreign buyer will make the payment in two ways:

 TT ( telegraphic transfer) i.e. Wire Transfer – (Advance payment, as per

the clause – 50% advance & remaining 50% on shipment)

 Letter of Credit

 If the payment terms are a confirmed L/C then the payment will be made by the

foreign bank on receiving the following documents:

 Invoice

 Packing list

 B/L

 Any other required by the buyer or the country of import.

 The payment terms can be:

 At Sight

 Within 15 days from Bill of Lading or Airway Bill date.

 Within 30 days from Bill of Lading or Airway Bill date.

 Within 60 days from Bill of Lading or Airway Bill date.

 Within 90 days from Bill of Lading or Airway Bill date.

 After shipment, exporter sends the documents to the buyer’s bank for payment. As

the buyer’s bank receive the documents it will confirm with the buyer for release

of payment. On confirmation, it will make the payment in the foreign currency.

The transaction will be Bank to Bank.

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 The domestic branch will credit the exporter’s account, as against the respective

purchase order or invoice, in Indian rupees by converting the foreign currency as

per the current bank rate.

 If the payment is through wire transfer, the payment will be made as per the terms

agreed by the exporter (Advance payment, as per the clause – 50% advance &

remaining 50% on shipment).

2.4.3) Export Documents: An export trade transaction distinguishes itself from a

domestic trade transaction in more than one way. One of the most significant variations

between the two arises on account of the much more intensive documentation work. The

documents mentioned in the pre & post shipment procedure are discussed below:

1. Invoice: It is prepared by an exporter & sent to the importer for necessary

acceptance. When the buyer is ready to purchase the goods, he will request for an

invoice. Invoice are of 3 types:

a. Commercial invoice: It is a document issued by the seller of goods to the

buyer raising his claim for the value of goods described therein, it

indicates description of goods, quantity, value agreed per unit & total

value to be paid. Normally, the invoice is prepared first, & several other

documents are then prepared by deriving information from the invoice.

(See Annexure 4)

b. Consular invoice: It is certification by a consul or Government official

covering an international shipment of goods. It ensures that exporter’s

trade papers are in order & the goods being shipped do not violate any law

or trade restrictions.

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c. Customs invoice: It is an invoice made on specified format for the

Custom officials to determine the value etc. as prescribed by the

authorities of the importing country. (See Annexure 5)

2. Packing list: It shows the details of goods contained in each parcel / shipment.

Considerably more detailed and informative than a standard domestic packing list, it

itemizes the material in each individual package and indicates the type of package,

such as a box, crate, drum or carton. Both commercial stationers and freight

forwarders carry packing list forms. (See Annexure 6)

3. Certificate of Inspection: – It is a type of document describing the condition of

goods and confirming that they have been inspected. It is required by some

purchasers and countries in order to attest to the specifications of the goods shipped.

This is usually performed by a third party and often obtained from independent

testing organizations. (See Annexure 7)

4. Certificate of Origin: Importers in several countries require a certificate of origin

without which clearance to import is refused. The certificate of origin states that the

goods exported are originally manufactured in the country whose name is mentioned

in the certificate. Certificate of origin is required when: - (See Annexure 8)

 The goods produced in a particular country are subject to’ preferential tariff

rates in the foreign market at the time importation.

 The goods produced in a particular country are banned for import in the

foreign market.

5. GSP: It is Generalized System of Preference. It certifies that the goods being

exported have originated/ been manufactured in a particular country. It is mainly

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useful for taking advantage of preferential duty concession, if available. It is

applicable in countries forming European Union. (See Annexure 9)

6. IEC Certificate: It is an Import-Export Code Certificate issued by DGFT,

Ministry of Commerce, Government of India. It is a 10 digit code number. No

exports or imports will be effected without the IEC code. It is mandatory for every

exporter. (See Annexure 1)

7. Wearing Apparel Sheet: It is like a check list which gives the detail regarding the

content & design of the garment packed. (See Annexure 10)

8. Bill of Lading: The bill of lading is a document issued by the shipping company or

its agent acknowledging the receipt of goods on board the vessel, and undertaking

to deliver the goods in the like order and condition as received, to the consignee or

his order, provided the freight and other charges as specified in the bill have been

duly paid. It is also a document of title to the goods and as such, is freely

transferable by endorsement and delivery.

9. Airway Bill: An 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, so each airline has its own airway bill. Airway Bill or Air Consignment

Note is not treated as a document of title and is not issued in negotiable form.

10. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of

the ship when the cargo is loaded on the ship. The mate's receipt is a prima facie

evidence that goods are loaded in the vessel. The mate's receipt is first handed over to

the Port Trust Authorities. After making payment of all port dues, the exporter or his

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agent collects the mate's receipt from the Port Trust Authorities. The mate's receipt is

freely transferable. It must be handed over to the shipping company in order to get the

bill of lading. Bill of lading is prepared on the basis of the mate's receipt. (See

Annexure 11)

11. Shipping Bill: Shipping bill is the main customs document, required by the

customs authorities for granting permission for the shipment of goods. The cargo is

moved inside the dock area only after the shipping bill is duly stamped, i.e. certified

by the customs. Shipping bill is normally prepared in five copies: (See Annexure 12)

 Customs copy.

 Drawback copy.

 Export promotion copy.

 Port trust copy.

 Exporter's copy.

12. Letter of Credit: This method of payment has become the most popular form in

recent times; it is more secured as company to other methods of payment (other than

advance payment). (See Annexure 13)

A letter of credit can be defined as “an undertaking by importer’s bank stating that

payment will be made to the exporter if the required documents are presented to the bank

within the variety of the L/C”.

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Contents of a Letter Of Credit

A letter of credit is an important instrument in realizing the payment against exports. So,

needless to mention that the letter of credit when established by the importer must contain

all necessary details which should take care of the interest of Importer as well as

Exporter. Let us see shat a letter of credit should contain in the interest of the exporter.

This is only an illustrative list.

 Name and address of the bank establishing the letter of credit

 letter of credit number and date

 The letter of credit is irrevocable

 Date of expiry and place of expiry

 Value of the credit

 Product details to be shipped

 Port of loading and discharge

 Mode of transport

 Final date of shipment

 Details of goods to be exported like description of the product, quantity, unit rate,

terms of shipment like CIF, FOB etc.

 Type of packing

 Documents to be submitted to the bank upon shipment

 Tolerance level for both quantity and value

 If L/C is restricted for negotiation

 Reimbursement clause

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Steps in an Import Transaction with Letter of Credit

The importer includes a purchase contract for the buying of certain goods.

The importer requests this bank to open a LC in favor of his supplier.

The importer’s bank opens the LC as per the application.

The opening bank will forward the original LC to the advising bank.

The advising bank, after satisfying itself about the authenticity of the credit, forwards the
same to the exporter.

The exporter scrutinizes the LC to ensure that it confirms to the terms of contract.

In case any terms are not as agreed, the importer will be asked to make the required
amendments to the LC.

In case the LC is as required, the exporter proceeds to make arrangements for the goods.

The exporter will effect the shipment of goods.

After the shipment is effected, the exporter will prepare export documents, including
Bills of Exchange.

The exporter’s bank (negotiation bank) verifies all the documents with the LC.

If the documents are in the conformity with the terms of LC and all other conditions are
satisfied, the bank will negotiates the bill.

The exporter receives the payment in his bank account.

The LC Opening bank (Importer’s Bank) receives the bill and documents from the
exporter’s bank.

The importer’s bank checks the documents and informs the importer. The importer then
accepts/pays the bill (This would depend on the terms, Delivery against Acceptance or
Delivery against Payment). On acceptance/ payment, the importer gets the shipping
documents covering the goods purchased by him.

The LC issuing bank reimburses the negotiating bank, the amount, if the documents are
found in order.

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2.4.4) Terms of Shipments – Incoterms

The INCOTERMS (International Commercial Terms) is a universally recognized set of

definition of international trade terms, such as FOB, CFR & CIF, developed by the

International Chamber of Commerce (ICC) in Paris, France. It defines the trade contract

responsibilities and liabilities between buyer and seller. It is invaluable and a cost-saving

tool. The exporter and the importer need not undergo a lengthy negotiation about the

conditions of each transaction. Once they have agreed on a commercial terms like FOB,

they can sell and buy at FOB without discussing who will be responsible for the freight,

cargo insurance and other costs and risks.

The purpose of Incoterms is to provide a set of international rules for the interpretation of

the most commonly used trade terms in foreign trade. Thus, the uncertainties of different

interpretations of such terms in different countries can be avoided or at least reduced to a

considerable degree. The scope of Incoterms is limited to matters relating to the rights

and obligations of the parties to the contract of sale with respect to the delivery of goods.

Incoterms deal with the number of identified obligations imposed on the parties and the

distribution of risk between the parties.

More Clarification on Incoterms

EXW (At the named place)

Ex Works: Ex means from. Works means factory, mill or warehouse, which are the

seller’s premises. EXW applies to goods available only at the seller’s premises. Buyer is

responsible for loading the goods on truck or container at the seller’s premises and for the

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subsequent costs and risks. In practice, it is not uncommon that the seller loads the goods

on truck or container at the seller’s premises without charging loading fee. The term

EXW is commonly used between the manufacturer (seller) and export-trader (buyer), and

the export-trader resells on other trade terms to the foreign buyers. Some manufacturers

may use the term Ex Factory, which means the same as Ex Works.

FCA (At the named point of departure)

Free Carrier: The delivery of goods on truck, rail car or container at the specified point

(depot) of departure, which is usually the sellers premises, or a named railroad station or

a named cargo terminal or into the custody of the carrier, at seller’s expense. The point

(depot) at origin may or may not be a customs clearance centre. Buyer is responsible for

the main carriage/freight, cargo insurance and other costs and risks.

In the air shipment, technically speaking, goods placed in the custody of an air carrier are

considered as delivery on board the plane. In practice, many importers and exporters still

use the term FOB in the air shipment.

FAS (At the named port of origin)

Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship, on the

dock or lighter, within reach of its loading equipment so that they can be loaded aboard

the ship, at seller’s expense. Buyer is responsible for the loading fee, main

carriage/freight, cargo insurance, and other costs and risks In the export quotation,

indicate the port of origin(loading)after the acronym FAS, for example FAS New York

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and FAS Bremen. The FAS term is popular in the break-bulk shipments and with the

importing countries using their own vessels.

FOB (At the named port of origin)

Free on Board: The delivery of goods on the board the vessel at the named port of origin

(Loading) at seller’s expense. Buyer is responsible for the main carriage/freight, cargo

insurance and other costs and risks. In the export quotation, indicate the port of origin

(loading) after the acronym FOB, for example FOB Vancouver and FOB Shanghai.

Under the rules of the INCOTERMS 1990, the term FOB is used for ocean freight only.

However, in practice, many importers and exporters still use the term FOB in the air

freight. In North America, the term FOB has other applications. Many buyers and sellers

in Canada and the USA dealing on the open account and consignment basis are

accustomed to using the shipping terms FOB Origin and FOB destination.

FOB Origin means the buyer is responsible for the freight and other costs and risks. FOB

Destination means the seller is responsible for the freight and other costs and risks until

the goods are delivered to the buyer’s premises which may include the import custom

clearance and payment of import customs duties and taxes at the buyer’s country,

depending on the agreement between the buyer and seller. In international trade, avoid

using the shipping terms FOB Origin and FOB Destination, which are not part of the

INCOTERMS (International Commercial Terms).

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CFR (At the named port of destination)

Cost and Freight: The delivery of goods to the named port of destination (discharge) at

the seller’s expenses. Buyer is responsible for the cargo insurance and other costs and

risks. The term CFR was formerly written as C&F. Many importers and exporters

worldwide still use the term C&F.

CIF (At named port of destination)

Cost, Insurance and Freight: The cargo insurance and delivery of goods to the named

port of destination (discharge) at the seller’s expense. Buyer is responsible for the import

customs clearance and other costs and risks.

In the export quotation, indicate the port of destination (discharge) after the acronym CIF,

for example CIF Pusan and CIF Singapore. Under the rules of the INCOTERMS 1990,

the term CIFI is used for ocean freight only. However, in practice, many importers and

exporters still use the term CIF in the air freight.

CPT (At the named place of destination)

Carriage Paid To: The delivery of goods to the named port of destination (discharge) at

the seller’s expenses. Buyer assumes the cargo insurance, import custom clearance,

payment of custom duties and taxes, and other costs and risks. In the export quotation,

indicate the port of destination (discharge) after the acronym CPT, for example CPT Los

Angeles and CPT Osaka.

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CIP (At the named place of destination)

Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to the

named place of destination (discharge) at seller’s expense. Buyer assumes the importer

customs clearance, payment of customs duties and taxes, and other costs and risks.

DAF (At the names point at frontier)

Delivered at Frontier: The delivery of goods at the specified point at the frontier on

seller’s expense. Buyer is responsible for the import custom clearance, payment of

custom duties and taxes, and other costs and risks.

DES (At named port of destination)

Delivered Ex Ship: The delivery of goods on board the vessel at the named port of

destination (discharge) at sellers expense. Buyer assumes the unloading free, import

customs clearance, payment of customs duties and taxes, cargo insurance, and other costs

and risks.

DEQ (At the named port of destination

Delivered Ex Quay: The delivery of goods to the Quay (the port) at the destination on

the buyers expense. Seller is responsible for the importer customs clearance, payment of

customs duties and taxes, at the buyers end. Buyer assumes the cargo insurance and other

costs and risks.

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DDU (At the named point of destination)

Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the final point

of destination, which are often the project site or buyers premises at sellers expense.

Buyer assumes the import customs clearance, payment of customs duties and taxes. The

seller may opt not to insure the goods at his/her own risks.

DDP (At the named point of destination)

Delivered Duty Paid: The seller is responsible for most of the expenses which include

the cargo insurance, import custom clearance, and payment of custom duties, and taxes at

the buyers end, and the delivery of goods to the final point of destination, which is often

the project site or buyers premise. The seller may opt not to insure the goods at his/her

own risk.

“E”-term, “F”-term, “C”-term & “D”-term: Incoterms 2000, like its immediate

predecessor, groups the term in four categories denoted by the first letter in the three-

letter abbreviation.

 Under the “E”-TERM (EXW), the seller only makes the goods available to the

buyer at the seller’s own premises. It is the only one of that category.

 Under the “F”-TERM (FCA, FAS, &FOB), the seller is called upon to deliver

the goods to a carrier appointed by the buyer.

 Under the “C”-TERM (CFR, CIF, CPT, & CIP), the seller has to contract for

carriage, but without assuming the risk of loss or damage to the goods or

additional cost due to events occurring after shipment or discharge.

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 Under the “D”-TERM (DAF, DEQ, DES, DDU & DDP), the seller has to bear

all costs and risks needed to bring the goods to the place of destination.

All terms list the seller’s and buyer’s obligations. The respective obligations of both

parties have been grouped under up to 10 headings where each heading on the seller’s

side “mirrors” the equivalent position of the buyer. Examples are Delivery, Transfer of

risks, and Division of costs. This layout helps the user to compare the party’s respective

obligations under each Incoterms.

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Reference Site as retrieved on May 21, 2009 as retrieved on June 10, 2009

Reference book

 Puri, V. K., Exporters’ Guidelines, A Basic Book on How to Export as per Govt.

Policy & Procedures, 2nd Edition, JBA Publishers, 2008-09.

 Paul, Justin & Aserkar, Rajiv, Export Import Management, 2nd Edition, Oxford

University Press, 2009, Chapter – 2, pp. 17-29.

 Malhotra, Naresh K., Marketing Research, An Applied Orientation, Fourth

Edition, Pearson Prentice Hall, 2005, Part II, pp. 71-340.

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Interview Questions

Mr. Jagmohan Chhibber

Export Manager, SPL Industries Ltd

 How an export order is processed?

 What role the different departments play for the completion of the export order?

 What role does merchandising department play in an Apparel export house?

 What are the different documents prepared & used for the export?

 How important are these documents?

 What are the incoterms? How are they important?

 What is a Letter of credit? What is its significance?

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Annexure 1

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Annexure 2

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Annexure 3

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Annexure 4

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Annexure 5

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Annexure 6

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Annexure 7

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Annexure 8

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Annexure 9

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Annexure 10

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Annexure 11

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Annexure 12

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Annexure 13

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