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In partial fulfilment of the Requirements for the award of Degree of Master of Business Administration Submitted To: School of Management Studies, Punjabi University, Patiala Submitted By: Ajay M.B.A. 2nd Year Roll No.5410
School of Management Studies Punjabi University, Patiala
ACKNOWLEDGEMENT Life interactions. No one of human beings is full of
is self-sufficient by himself
whenever & one less forget
anyone is doing some serious and important work a lot of help from the people concerned is needed specially obliged towards them. I acknowledging them in few words as without been possible. A large number of project. I am thankful encouragement. I would like my heartfelt thanks to Mr. Rajender Pal, PR & IR Manager of Vardhman Polytex Limited for giving me an opportunity to have training in the organisation. I would also like to thank Mr. Vijay Arora, Chief Manager for his guidance, inspiration, and constructive suggestions, which helped me in the Project . I must also thank the management of Vardhman Polytex Limited to provide excellent opportunity and environment to be able to pull my project through. Cooperation of the staff is also gratefully acknowledged. Ajay
& co-ordination of them in my project report would not have individual contributed to this and
to all of them
for their help
M.B.A. 2nd Year Roll No.5410 GUIDE CERTIFICATE TO WHOMESOEVER IT MAY CONCERN This is to certify that the project report titled “Export Process a and of Documentation” Offered by Vardhman Polytex Limited has been prepared by Ajay, Roll No.- 5410, student MBA 2 nd year of School of Management Studies, Punjabi University, Patiala Session (2010-12) with Marketing as major area of specialization. The study was conducted with special reference to Vardhman Polytex Limited, Bathinda. I recommend this project for evaluation.
INDIAN TEXTILE INDUSTRY - HISTORY The history of textiles in India dates back to nearly five thousand years to the days of the Harappan civilization. Evidences that India has been trading silk in return for spices from the 2nd century have been found. This shows that textiles are an industry which has existed for centuries in our country. Recently there has been a sizeable increase in the demand for Indian textiles in the market. India is fast emerging as a competitor to China in textile exports. The Government of India has also realized this fact and lowered the customs duty and reduced the restrictions on the imported textile machinery. The intention of the government’s move is to enable the Indian producers to compete in the world market with high quality products. The results of the government’s move can be visible as Indian companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have become prominent players in the world. The Indian textile industry is the second largest in the worldsecond only to China. The other competing countries are Korea and Taiwan. Indian Textile constitutes 35% of the total exports of our country. The history of apparel and textiles in India dates back to the use of mordant dyes and printing blocks around 3000 BC.
The foundations of the India's textile trade with other countries started as early as the second century BC. A hoard of block printed and resistdyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of large scale Indian export of cotton textiles to the Egypt in medieval periods. During the 13th century, Indian silk was used as barter for spices from the western countries. Towards the end of the 17th century, the British East India Company had begun exports of Indian silks and several other cotton fabrics to other economies. These included the famous fine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was widely practiced between India, Java, China and the Philippines, long before the arrival of the Europeans. India Textile Industry is one of the largest textile industries in the world. Today, Indian economy is largely dependent on textile manufacturing and exports. INDIAN TEXTILE INDUSTRY Textile Industry in India is the second largest employment generator after agriculture. It holds significant status in India as it provides one of the most fundamental necessities of the people. Textile industry was one of the earliest industries to come into existence in India and it accounts for more than 30% of the total exports. In fact Indian textile industry is the
second largest in the world, second only to China. The Indian textile industry has a significant presence in the economy as well as in the international textile economy. Its contribution to the Indian economy is manifested in terms of its contribution percent of to the industrial production, 9 employment of excise generation and foreign exchange earnings. It contributes 14 industrial production, percent collections, 18 percent of employment in the industrial sector, nearly 20 percent to the country’s total export earning and 4 percent to the Gross Domestic Product. It is closely linked with the agricultural and rural economy. It is the single largest employer in the industrial sector employing about 35 million people. If the employment in allied sectors like ginning, agriculture, pressing, cotton trade, jute, etc. are added then the total employment is estimated at 93 million. The net foreign exchange earnings in this sector are one of the highest and, together with carpet and handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion. Textiles, alone, account for about 25 percent of India’s total forex earnings. India’s textile industry since its beginning continues to be predominantly cotton based with about 65 percent of fabric consumption in the country being accounted for by cotton. The industry is highly localized in Ahmedabad and Bombay in the western part of the country though other centers exist including Kanpur, Calcutta, Indore, Coimbatore, and
Sholapur. The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanized mill sector on the one hand and the hand spinning and hand weaving (handloom) sector on the other. Between the two falls the small-scale power loom sector. The latter two are together known as the decentralized sector. Over the years, the government has granted a whole range of concessions to the non-mill sector as a result of which the share of the decentralized sector has increased considerably in the total production. Of the two sub-sectors of the decentralized sector, the power loom sector has shown the faster rate of growth. In the production of fabrics the decentralized sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent. Being an agro-based industry the production of raw material varies from year to year depending on weather and rainfall conditions. Accordingly the price fluctuates too. POSITION OF INDIAN TEXTILE INDUSTRY The Indian textile industry contributes about 14 per cent to industrial production, 4 per cent to the country's gross domestic product (GDP) and 17 per cent to the country’s export earnings, according to the Annual Report 2009-10 of the Ministry of Textiles. It provides direct employment to
over 35 million workers directly and it accounts for 21% of the total employment generated in the economy and is the second largest provider of employment after agriculture. Some of the textile clusters in which productions happens are very huge and significant for the overall industry, for example Panipat produces 75% of all blankets produced in India Tirupur contributes 80% of the country’s cotton hosiery exports Ludhiana makes 95% of total woolen knitwear produced According to the Ministry of Textiles, Export target in textiles in 2010 at USD is 50 billion. the cumulative production of cloth during April’09- March’10 has increased by 8.3 per cent as compared to the corresponding period of the previous year. Moreover, total textile exports have increased to US$ 18.6 billion during April’09- January’10, from US$ 17.7 billion during the corresponding period of the previous year, registering an increase of 4.95 per cent in rupee terms. Further, the share of textile exports in total exports has increased to 12.36 per cent during April’09-January’10, according to the Ministry of Textiles. As per the Index of Industrial Production (IIP) data released by the Central Statistical Organisation, cotton textiles has registered a growth of 5.5 per cent during April March 2009-10, while wool, silk and man-made fibre textiles
have registered a growth of 8.2 per cent while textile products including apparel have registered a growth of 8.5 per cent. The textile sector has increased their investment in projects to upgrade their equipment amid fierce market competition and to meet the growing demand for more textile products. Total investment in the textile industry between 2004 and 2008 was around Rs.65,478 crore in India, which is expected to reach Rs.1,50,600 crore by 2012. This enhanced investment would generate 17.37 million jobs-12.02 million direct and 5.35 million indirect—by 2012. INDIA’S MAJOR COMPETITIORS IN THE WORLD To understand Indias position among other textile producing the industry contributes 9% of GDP and 35% of foreign exchange earning, Indias share in global exports is only 3% compared to Chinas 13.75% percent. In addition to China, other developing countries are emerging as serious competitive threats to India. Looking at export shares, Korea (6%) and Taiwan (5.5%) are ahead of India, while Turkey (2.9%) has already caught up and others likeThailand (2.3%) and Indonesia (2%) are not much further behind. The reason for this development is the fact that India lags behind these countries in investment levels, technology, quality and logistics. If India were competitive in some key
segments it could serve as a basis for building a modern industry, but there is no evidence of such signs, except to some extent in the spinning industry. INDIA’S ECONOMY: With 3.9 million handlooms, India is the highest handloom producing country in the World. 30% of the total export income is generated by textile alone, it is second largest Employer industry after agriculture. The textile industry constitutes approximately 14% of country's total industrial production. COMPETITIVENESS CONTRIBUTION TO
MARKET SHARE OF COUNTRIES IN TEXTILES INDUSTRY
CHINA VS INDIA IN TEXTILE MARKET The Indian Textile Industry has an overwhelming presence in the economic life of the country. It is the second largest textile industry in the world after China. Apart from providing one of the basic necessities of life i.e. cloth, the textile industry contributes about 14% to the country's industrial output and about 17% to export earnings. CHINA High Productivity Skilled Manpower Fashion awareness is not so high Labour is becoming expensive Net importer of cotton Caters for mass market Has huge installed capacities and economies of scale with competitive pricing INDIA Lower Productivity Skilled Workforce Fashion awareness is so high Labour is Relatively Cheap Is self sufficient in Cotton Is good at niche products Has smaller capacities
Exports have risen by 10% but at the same time China’s exports have risen by more than 20%, even countries like Pakistan and Bangladesh have done better india
SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY Strength:
• Strong cotton base • Growing Domestic Market • Strong entrepreneurial class • Flexibility in production of small order lots • Presence of integrated i.e. concept to consumer. • Ability to handle value additions, embellishments etc. • Adequate labour supply at relatively competitive wages • Good "cultural" comfort with US and Europe
• Technological obsolescence and lower efficiencies • Poor work practices resulting in higher labour cost Opportunities: component in many staple garments, in spite of low • Improvements in infrastructure and labour costs regulations. • Rigid government labour policy and lack • Research and product development rationalization of duties in MMF. • Buyers preference for India, after China • High transaction and power cost • Too much emphasis on cotton, synthetic fibre base not equally developed • Fabric/processing still to gear up to meet international standards
• Understanding advantage Threats:
• Rupee appreciation in last few months. • Trade blocs and partnerships at the exclusion of India. • Location disadvantage: long transit time to key markets. • Pricing pressure, following opening up of quotas • Enhanced competition from other countries
ANSHUPAT I LUDHIANA
F.M. HAMMERLAY KOLAPUR
OSWAL GROUP is a premier textile group of Northern India having its corporate office at Ludhiana Punjab. The group had existrance for last 40 years with core competency of spinning. We were earlier part of Vardhman Group but after family settlement between two brothers in 2003, we
have nemed ourselves as Oswal group. The group is mainly into spinning and dyeing of all types of yarn in differenet blends and manufacturing of garments. The group has plans to diversify in future but mainly in textiles related activitries.
Vardhman Polytex Limited Bathinda It is the oldest unit of the Company. This unit started its commercial production in 1986 with an installed capacity of 11,520 spindles. This unit is situated in the hub of the cotton belt and derives the advantage of procuring its basic raw material of best quality at lower cost from nearby locations.
Vinayaka Textile Mill, Ludhiana This unit was setup in 2004 with an installed capacity of 24,288 spindles. This unit has latest state of art technology imported from Rieter (Switzerland), Muratac (Japan) and Uster (Switzerland). The spinning capacity of this unit has now increased to 49,632 spindles. The Company has also installed a dye house at the same location having a capacity of 13 MT per day advanced machinery imported from China. Anshupati Textile Ludhiana This unit was set up by the Company in 1991 with an installed capacity of 8,000 spindles to manufacture grey/dyed acrylic yarn. The acrylic yarn is used in the
manufacturing of hosiery and knitted garments. This unit also manufactures the acrylic yarn which is used in the manufacturing of mink blankets.
F.M. Hammerle TextilesLtd. During the year, the Company entered into a joint venture agreement with F.M. Hammerle Group, Austria for setting up a green field project for manufacture of quality yarn and piece dyed name of shirting fabric with annual capacity of 12 million meters. For this purpose, a new company in the 'Oswal F.M. Hammerle Textiles Ltd.' has been floated which will set-up its plant at Village Kagal, Dist. Kolhapur (Maharashtra). The Company has 76% equity in the said joint venture company and 24% equity is held by F.M. Hammerle Group. The civil construction has towards the end of 2007. The F.M. Hammerle (FMH) Group of Austria is a well-known name in the international textile scene for more than 160 years now. Through this venture, VPL has entered into the field of manufacturing high-end shirting fabric. The subsidiary was set up by VPL in a technical and marketing collaboration with the FMH group. Vardhman Polytex Limited (VPL), Bathinda : It is a unit based at Bathinda in Punjab. Earlier this mill was known as Punjab Mohta Polytex Limited. Its foundation stone was laid already commenced. The plant is expected to be operational
on 12th June 1983 by the Chief Minister of Punjab Sardar Darbara Singh. The plant was commissioned on 4th December 1986 and inaugurated by sardar Surjit Singh Barnala. It was taken over and in corporated by Mahavir Spinning Limited in 1987. Thus it became the subsidiary of Mahavir Spinning Ltd. At the time of amalgamation it had 9000 spindles and 504 rotors making the total of 11520 spindles. In 1991 the name of the unit was changed to Vardhman Polytex Limited, as a separate company. But going on after the family settlements in 2003, the unit came under Oswal Group. This unit had been awarded with ISO-9002 certificate by the bureau of Indian Standards after the final audit, which took place in the unit on 26th July 1996. Presently the Chief Manager of Company is Mr. Vijay Arora. The Personal Relations & Industrial relation Manager is Mr. Rajinder Pal. Presently there are four manufacturing units running in Vardhman. Manufacture process goes on 24 hours in 3 shifts of 8 hours. There are about 1500 workers including employees. There is production of 104592 spindles i.e. 60 Tons/day. There is consumption of electricity near about 3 to 3.5 crores each month. The turnover of last year (2010-2011) was about 800 crores of Oswal Group. Cotton a raw material for the industry is require main cotton belts in India are Punjab, Haryana, Gujarat, Maharashtra. Raw material at this unit is purchased from the following places, Major from Punjab are: Abohar, Mansa,
Malout, Muktsar, Moga, Bathinda, Kotkapura, Jaitu, Rampura, Fazilka etc. From Haryana: Sirsa, Fatehbad, Hisar, Hansi, Bhiwani, Barwala, Kalanwali etc., From Rajsthan Ganganagar, Hanumangarh etc. YARN MANUFACTURING BY VPL BATHINDA
Products By VPL ( Yarns)
Grey Cotton Yarn( Carded) Grey Cotton Yarn( Combed) Compact Yarns Organic Cotton yarns Supima Cotton Yarns Polyster/ Cotton Yarns( Different Blends) 100% Modal and Cotton/ Modal blends 100% Bamboo and Cotton /Bamboo Blends Slub/Multicount
Ne 16s to 32s Ne 16s to 40s Ne 20s to 30s Ne 20s to 40s Ne 20s to 50s Ne 20s to 40s Ne 16s to 40s Ne 10s to 40s Ne 08s to 40s
Lycra/Spandex Blended Core Spum Yarns Polyester Cotton Yarn
Ne 10s to 30s Ne 20s to 40s
VPL has a strong marketing and sales presence in both the export and domestic markets. Domestic market has three major channels, namely
Agents Æ Brokers Æ Customers for receiving the have further
In this channel, agents are appointed by the Company to make arrangements for sale and also payments Recourse of Company is with the agents for both purposes. 2) Distributor Æ Brokers Æ Customers on time. These agents
arrangements of sale to different customers via brokers.
This kind of arrangement is followed when the payment is arranged by the trader. They can stock the material also and sell to different customers via brokers, if required. 3) Direct (which includes corporate customers
The Company deals with a few customers especially the corporate buyers directly as well. Names of a few of the corporate buyers are enlisted below:
FOR EXPORT CHANELS ARE 1) AGENTS(FORIEN/ INDIAN) This is the major channel for the Company’s export marketing. There are Indian as well as foreign agents for
this kind of set-up and a combination of them can also exist for export deals where Indian agents have foreign counterparts or vice-versa. 2) DIRECT VPL is dealing with some overseas customers directly as well like; a) b) c) d) Egyptian International (Egypt) CMT Lee (Mauritius) Yuki (Bulgaria) Ontario (Ukraine)
TOP CUSTOMERS Following tables give the sales percentage break-up from the top customers of the Company. EXPORT MARKET The top ten customers contribute to around 60% of the total exports of the Company, and the top three are listed below.
NAME OF CUSTOMER South Asia Textile PTE Ltd
COUNTRY Singapore & Sri Lanka
GME & Supplies K.N. Lee
Domestic market Some of the key customers in the domestic market are as below.
NAME OF CUSTOMER Silver Enterprises Ganpati Textile Kochhar Sung Up Acrylic Ltd. Vardhman Enterprises Gulati Exports Riba Textile Hem Knit Wear
LOCATION New Delhi New Delhi Ludhiana New Delhi Gurgaon Chidana Ludhiana
The different varieties of cotton are issued as per product mix from the raw material section in bale from. The different varieties of cotton and different lots are
mixed together as per the requirement of end product and standard recommended mixings. The material is conditioned in mixing for 24 hours.
2. BLOW ROOM
The cleaning and opening of fobers is done is aa sequence of beaters. Main purpose is to reduce tuft size , remove the trash particles abd foreign matter etc, ehich often comes in the bales
further cleaning of fibers is done and fibres are opened into single fibers extent i.e. main purpose is further removal of trash in cotton and the parrallaeziation of fibres. From the carding machine, the material is deleivered in the form of sliver.
4. DRAW FRAME
The purpose of this process is to reduce the wt/yard in the card sliver 6 to 8 end of card slivers are doubled together in this process to reduce variations and further drafting is done to reduce the wt/yard of sliver.
5. LAP FORMER
20-25 Precombed draw slivers are fed together to produce a lap sheets of fibres which is wound on the spools.
The laps prepared on lap former are fed to combers. The main purpose of combing process is to remove the short fibres from the material in the form of noil. The average noil percebtage carries from 15 to 18%. The material is deleivered in the form of sliver.
7. SPEED FRAME
The finisher draw frame sliver is fed to the speed frames for conversion into the roving form. In this process wt/yard of the sliver is reduced, slight twist is given to the fleece and the material deleivered in the form roving, wound on the plastic bobbins
8. RING FRAME
The roving is fed to ring frame for conversion into yarn. In the process the wt/yard of roving are reduced as per requirements of ultimate user and the deleivered yarn is wound on the plastic bobbins.
In this process, the yarn is wound on paper cones to produce bigger package as per requirement of market. The weight varies from 1.2 kg to 2.2. kg. during the process, in addition to the formation of bigger packages, the yarn faults are also removed with help of electronic yarn cleaner.
In case of type cord the process is same upto winding. After cone winding the yarn is fed into cheese winding.
In the process 2 ply or 4 ply is to be done as per requiremntets. After the yarn is fed into ring doubling and required is given in 2 or 4 ply yarn. In the next process in assembly cheese winding is get the package in the package in the required form to be fed into T.F.O. in T.F.O. final yarn is prepared in the form of cheese and required T.P.I. is given to the final yarn in process
In this process, the cones/cheese are packed in bags or cartoons as per the requirements of the market. In addition to the packing the material is checked thoroughly to avoid mixing of different materials.
OBJECTIVE OF THE STUDY
The main objectives of the research were:
mill(Vardhman Polytex Limited) in particular
To understand related aspects of exports.
SWOT analysis in particular context to exports in Vardhman Polytex Limited.
mill(Vardhman Polytex Limited) in particular The Department concerned shall be studied in detail. The relevant information shall be collected from company files and officials and of commercial department .
To understand related aspects of exports. This study can be divided as government organisation involved, technological upgradation and quality parameters.
Data shall be collected from the annual reports of Vardhman Polytex Limited and required visits to the requisite offices.
SWOT analysis in particular context to exports in Vardhman Polytex Limited. The information shall be collected by personal
observation and views of officials.
Export - Exporting is merely a selling but when it is selling
at home, it does not bother you because you are in personal contact with a buyer for which you do not need to comply with several procedural requirements including filling and
exchanging of a lot of documents. But the difference comes when you intend to sell to some one who is thousands of miles away from you, speaking different language, having different customs, preferences, currency and import regulations. In order to facilitate trade with other countries, certain sets of rules have been developed by the trading nations over the centuries, which are normally followed in foreign trade today. The International Trade is governed by rules made by the World Trade Organisation (WTO). Details on WTO can be obtained from Information Advisory Centre (IAC) of the EPB.
Policies Adopted by Export
Vardhman Polytex Limited for
With the support of rich industrial knowledge and sound infrastructure, we, Vardhman Polytex Limited, are able to supply and manufacture a premium quality range of products on time. Established in the year 1970, our company is known as a prominent manufacturer and supplier of Cotton Yarns, Carded & Combined Cotton Yarns, Fancy Yarns, Core Spun Yarns, and many more. Our range is available in a variety of colors and sizes that perfectly match the emerging market demands. Our flawless range of end products have helped us to achieve a leading position in the market.
The growth of any organization as well as product is due to the complete effort of the team. We are also blessed by most hard working, stable and honest team that works for the promotion of our product. We are supported by a team of skilled and experienced members who make use of latest technologies to deliver reliable and qualitative range of yarns. Apart from this, they are highly familiar with the art of giving the perfect finishing to the product. We are able to maintain our leadership through setting new benchmarks in our field due to the following factors:
• • • • • • •
Excellent quality range Assured timely delivery of consignments Use of state-of-the-art technology Customer satisfaction Wide network of distribution Competitive prices Transparent business dealing
Quality Policy(TQM) Total Quality Management
The Company follows the quality policy as given under: Quality shall be built into the Company’s products to not only meet customer requirements continuously, but also exceed them. The Company shall achieve this through an interface with the market place, access to state of the art technology, research and development, process development and adoption of innovative manufacturing and marketing strategies. The quality policy shall be integrated with the Company’s main objectives: • • • • • To remain market leader in quality. Increase market share with focus on niche
segments. Improve productivity. Cost reduction. Reduction in percentage of seconds.
These objectives shall be reviewed from time to time. The management of the Company shall be committed to provide resources and comply with all requirements needed for fulfillment and continual improvement of the Company’s quality management system.
organization through training and motivation of people at all levels. The quality policy shall be implemented through a network of systems and procedures understood and followed throughout the Company Unmatched Quality Being a quality oriented organization, we always emphasize on maintaining higher standards of quality. This is the reason why we have always followed a stringent Quality Control Management. Our team of quality analysts make sure that each product that is dispatched from our end, meets the international standard of quality. For this, our quality analysts monitor every stage right from procurement to designing, production and dispatching. The range undergoes numerous tests on the following quality parameters set by the industry:
• • • •
Strength Finish Size Color.
Proper quality control policy help us in rendering every product flawless in terms of color, size, finishing, and application. The Main Reason Of best exporter (Vardhman Polytex Limited) in textile market in India is following 1. COMPANY'S PHILOSOPHY: • Total Customer Delight • Competing with the best • Total Quality People • Product Quality a way of life • Continued improvement through innovation & creativity • State of Art Technology with ultramodern R&D facilities • Respect of every VPL Parivar Member •Achieving Excellence through culture integration • Change a way of life • Act as responsible corporate citizen and discharge our social responsibilities
Cotton Yarn – KH Cotton Yarn – CH Cotton Yarn - Ch Fine Cotton YarnOrganic(100%) Cotton Yarn- Organic Blended Modal: CottonBlended Cotton Yarn – CH Supima Cotton: LycraCombed Cotton:Bamboo – Combed Total
17.53 60.26 21.16 2.6 11.58
29.88 37.37 69.36 7.61 11.91
83.34 1 3.87 79.56 40.82
1.76 1.78 1.52 0.86
Cotton Yarn – KH Cotton Yarn – CH Cotton Yarn - Ch Fine Cotton YarnOrganic(100%) Cotton Yarn- Organic Blended Modal: CottonBlended Cotton Yarn – CH Supima Cotton: LycraCombed Cotton:Bamboo – Combed Total Exports
491.13 4033.96 1107.01 132.04 81.65
Rate(Kg. Amount(Rs.) )
118.51 119.74 138.48 152.53 143.37 58202945 483017161 153297845 20140170 11705515
61.24 2.2 8.62 0.05
160.51 227.65 170.40 333.98
9828735 500094 1468579 16832.66
Cotton Yarn – KH Cotton Yarn – CH Cotton Yarn - Ch Fine Cotton YarnOrganic(100%) Cotton Yarn- Organic Blended Modal: CottonBlended Cotton Yarn – CH Supima Cotton: LycraCombed Cotton:Bamboo Combed Total
450.06 2727.55 614.76 -
Rate(Kg. Amount(Rs.) )
100.12 110.99 126.57 45060938 302730148 77811987 -
Cotton Yarn – KH Cotton Yarn - CH Cotton Yarn - Ch Fine Cotton YarnOrganic(100%) Cotton Yarn- Organic Blended Modal: CottonBlended Cotton Yarn - CH Supima Cotton: LycraCombed Cotton:Bamboo Combed Total
596.72 1885.95 720.50 -
95.44 103.70 117.83 -
56951246 195564642 84893686 -
Export procedure is a system or
methodology by which export trade transaction is completed. It involves the study of different steps that are to be taken by the two parties namely the exporter and the importer. The export procedure is lengthy & time consuming. It involves a number of steps right from the time an export order is received and it is completed with the realization of export proceeds. In between there are many formalities is required to be completed. In the export procedure various formalities need to be completed & various documents are required to be prepared by the exporter. Every exporter should have a thorough knowledge of the rules, regulations & procedure required abroad. The procedure of exporting involves the following stages:STAGE 1: First of all, searching of customer is done and then export order is received. Usually gets order in three ways: Through Internet. Through International Trade & Exhibition.and, Through Global Tender which is floated by the Importer. to be followed for exporting the goods
STAGE 2: The export order must specify the mode of payments such as: L/C (Letter of Credit) D/P (Document against Payment) D/A (Document against Acceptance) At this stage, the company prepares all the necessary documents including Sales Contract required by the buyer and submits to the negotiating bank in exact specified manner. The most important documents demanded by the importer are: Bill of Exchange Commercial Invoice Packing List Bill of Lading Marine Insurance Policy Certificate of Origin
STAGE 3: After getting export order from the desired country, VPL enters into a contract with it. Once the order has been received, the export order is scrutinized with reference to the terms & conditions of the export contract. This is the most crucial stage. All subsequent actions and reactions will depend on these terms & conditions.
It is ensured that contract has been entered into in accordance with the prevalent export policies of the country and Foreign Exchange Regulations like FERA and FEMA.
STAGE 4: As soon as the export order has been confirmed, preparations for the dispatch of Yarns are started. After Agreement, the manufacturing order is sent to the production manager by the marketing department of VPL. This order contains the description of Yarns as has been given in the export order, alongwith the copy of the instructions given by the importer. The date by which the Yarns must ready is clearly intimated to the production manager and advice the material procurement for assuring the availability of the items required for the Yarns on the basis of work order, manufacturing starts. STAGE 5 : After manufacturing, inspection is carried out by the quality assurance deptt. of VPL, as final inspection is done by the IMPORTER, if the importer so desires. STAGE 6 : As soon as the yarns are manufactured, production manager informs the marketing department that
the goods are ready to dispatch. At this stage, two important documents are to be prepared : ARE 1 form CT 1 form ARE 1 form is prepared in quantiplicate and CT 1 form is prepared in quadra duplicate. CT forms are issued by the exise department. ARE1 forms are presented to the Range Superintendent of Central Exise , who after necessary formalities signs all the copies. The original & duplicate copies are given back to the exporter. The triplicate copy is sent to the maritime collector, fourth copy is sent to the Chief Accounts Officer & the remaining copy is kept by the office of Range Superintendent. The other authority which the export department approaches immediately at this stage is the Export Inspection Agency for conducting Quality & Pre-Shipment Inspection. An inspector is deputed by the Inspection Agency to inspect the consignment. If the Yarns are confirmed to the prescribed specifications, an Inspection Certificate is issued. The Yarns are then dispatched to the port of shipment. STAGE 7: After the Yarns have been dispatched to the port of loading, a dispatch advice is sent to the export department. Soon after an application is sent to the Insurance Company
for Marine Insurance Cover. The Insurance policy is obtained in duplicate. At this stage all formalities in relation to ECGC cover, Certificate of Origin, Consular Invoice etc. wherever necessary is completed. There after the export department sends the following documents to its clearing & forwarding agent along with detailed instructions: Commercial Invoice Original Export Order Original Letter Of Credit ARE1 form (original & duplicate copies) Excise Gate Pass Packing List Certificate of Inspections Declaration Form in Triplicate Consular Invoice Export License Railway Receipt STAGE 8: The Clearing & forwarding agent takes the delivery of the consignment from the railways & arranges its storage & warehouse. Thereafter the agent prepares the requisites copy of shipping bill.
STAGE 9: After the shipping bill has been prepared & passed by the customs, the Clearing & forwarding agent presents the port trust copy of the shipping bill to the shed superintendent of the port trust & obtain carting order for bringing the export cargo in the transit shed for physical examination. Thereafter, in the case of shed cargo, the dock challan is prepared. The following details are given in the dock challan: Consignee’s name & address Vessel name Port of destination Exporter’s name Mark & No. of packages Gross weight Port charges payable Other details as necessary STAGE 10: The ship clerk calls for cargo from shed & after loading prepares the mate’s receipt. The mate’s receipt is signed by the captain of the ship. It is then delivered to the port commissioner’s shed. The clearing & forwarding agent pays the port charges & takes the delivery of the mate’s
receipt. This mat’s receipt is then presented to the shipping company along with the requisite no. of Bill of Lading. STAGE 11: The clearing & forwarding agent forwards the following documents to the exporter:Full set of Bill of Lading Shipping Bill Copies of Custom Invoice ARE1 form One copy of commercial Invoice duly attested by the customs Original Export order Original Letter of Credit Railway concession form duly attested by the customs STAGE 12: As,soon as the exporter (VPL) receives the above documents from the clearing& forwarding agent, completes the remaining formalities. The exporter files a claim with maritime collector of Central Excise in the port town for rebate of Central Excise duty, side by side, shipment advice is sent to the importer. The following documents are forwarded along with the shipment advice: A non negotiable copy of the Bill of Lading Customs Invoice
Commercial Invoice Packing list Certificate of Origin Single country declaration
STAGE 13: The following documents are presented to the negotiating bank: ARE 1 form (Duplicate copy) Bill of Exchange Full set of Bill of Lading (All the negotiating copies) Letter of Credit (original) Commercial Invoice (Two copies) Custom Invoice (2 copies) Packing list (2 copies) Certificate of Origin (2 copies) Marine Insurance certificate (2 copies) Bank Realisation Certificate (2 copies) STAGE 14: This is the last stage of export procedure. At this stage the bank processes & negotiation is done in the following manner:-
The entire documents are scrutinized with reference to yhe terms & conditions of the original Letter of Credit (In case of L/C payment terms) Thereafter a set of following documents is transmitted to the banker of the importer by the first air mail followed by the second set of it by the second air mail to ensure that in case the first is lost, the importer can take the delivery of the consignment on the basis of second set of documents. These set of documents are: Bill of Exchange Negotiable bill of lading Commercial Invoice Customs Invoice Insurance policy Certificate of Origin Consular Invoice Packing list The original copy of the bank certificate along with the attested copies , the commercial invoice is returned to the exporter. The duplicate copy of the bank certificate is forwarded to the office of the Director General of foreign trade in the area.
EXPORT DOCUMENTATION There are a number of documents, which have to be prepared by the exporter in order to arrange export of his consignments. These documents can be mainly classified into two i.e. (a) Commercial Documents and (b) Regulatory Documents
Commercial documents: There are 15 commercial documents. Out of the 15 commercial documents, eight are principal and the rest are auxiliary.
Principal documents are required for effecting physical transfer of goods and transferring of title of goods from an exporter to documents: an importer. There are eight principal
1. The Commercial Invoice: It is a formal demand note for payment issued by the exporter to the importer for goods sold under a sales contract. It should give details of the goods sold, payment terms and trade terms. It is also used for the customs clearance of goods and sometimes for foreign exchange purpose by the importer. It is prepared by exporter. 2. Packing List: A list with detailed packing information of the goods shipped. 3. Bill of Lading/Air Waybill: An evidence of contract between the shipper of the goods and the carrier. The customer usually needs the original as proof of ownership to take possession of the goods. A kind of waybill used for the carriage of goods by air. This serves as a receipt of goods for delivery and states the condition of carriage but is not a title document or transferable/ negotiable instrument. 4. Certificate of Inspection/Quality control: A report issued by an independent surveyor (Inspection Company) or the exporter on the specifications of the shipment, including quality, quantity, and/or price, etc; required by certain buyer and countries. 5. Certificate of origin: It is a document certifying the country in which the product was manufactured and in certain cases may include such information as the local material and labor content of the product. A popular
example of its is Form A which is often called the GSP form A. 6. Bill of Exchange: An unconditional written order, in which the importer addressed to and required by the exporter to pay on demand or at a future date a certain amount of money to the order of a person or bearer. 7. Shipment Advice: The documents related to Shipment discussed further in detail. 8. Insurance Certificate: An insurance policy is an insurance document evidencing insurance has been taken out on the goods shipped, and it gives full details of the insurance coverage. An insurance certificate certifies that the shipment has been insured under a given open policy and is to cover loss of or damage to the cargo while in transit.
preparation and procurement of principal export documents. The seven auxiliary documents are 1. Performa Invoice 2. Intimation for inspection 3. Shipping instructions 4. Insurance Declaration 5. Application for certificate of origin. 6. Mate's Receipt: A mate receipt is issued by the commanding officer 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 members etc. it is first handed over to the Port Authorities that all the port dues may be paid by the exporter. After paying all the dues, the agent may collect the receipt from the port authorities. Bill of loading is prepared by the shipping agent after the mate receipt has been obtained. 7. Letter to bank of collection/negotiation of documents • Regulatory Documents These are those documents which have been prescribed by different govt. departments for the requirements of various rules and regulations are seven under relevant laws governing by export trade such as foreign exchange regulations. There regulatory documents associated with the pre-shipment stage of the export transaction. They are: 1. ARE Form (By Central Excise Authorities): It is used for claiming excise rebate / duty drawback.The different copies of ARE.1/AR4 forms should be of different colors indicated below: Original---- White (Returned to Exporter) Duplicate--- Buff (Do) Triplicate--- Pink (Rebate sanctioning authority )
Quadruplicate---Green (Chief Accounts Officer at Collectorate Head Quarters) Quintuplicate---- Blue (Central Excise Officer) Sixtuplicate- Yellow (optional copy to exporter)
2. Shipping Bill/Bill of Export
Authorities): It is the main document required by the Custom Authority for allowing shipment. Basically shipping bills are of four types. The major distinction between one type and another lies with regard to the goods being subject to:
A. Export Duty B. Free of Duty C. Entitlement to Duty Drawback D. Entitlement of Credit of duty under DEPB scheme E. Re Export of importing goods.
Application/Dock Challan: The exporter has to fill up a form in duplicate for the payment of dock charges.
This form is known as ‘Dock Challan’. It is after completion of this process that the exporter can bring the goods for loading in the ship. For this purpose, a document is issued permitting the goods to be brought to the docks for loading. This document is known as Dock Warrant. After the goods are actually brought to the docks and handed over to the dock authorities for loading in the ship, the document issued as a proof of delivery is known as Dock Receipt. 4. Vehicle ticket: It is prepared by the exporter and includes detail of the export cargo in terms of the shipper’s name, the number of packages, the shipping bill number, the port of destination and number of items carrying the cargo. The cargo driver should posses the ticket and the when the vehicle is brought to the port gate, it should be presented to the gate warden along with other shipping documents. After that he is allowed to pass the gate. 5. Exchange Control Declaration/GR/PP forms (By RBI): It is Prescribed by the RBI under FEMA to ensure that the Forex receipts in respect of exports are repatriated to India. Prepared in duplicate. Both copies submitted to customs at port of shipment along with shipping bill. Customs gives ten no. running serial no. on both copies Customs returns duplicate copy and retains original. Exporter submits GR form and other documents
to his bank/authorized dealer for collection of export bills within 21 days 6. Freight Payment Certificate -Steamer Agents: It is like receipt for payment of freight 7. Insurance Premium Payment Certificate Insurance Co.: It is like receipt for payment insurance premium. Some Main Documents Related to Payment
Letter of Credit:
it is an arrangement whwreby the
importer requests and instructs the issuing bank 2. Bill of Exchange (Draft)
Related Aspects of Export As per the government rules and policies a company involved in the process of export has to complete a number of formalities before starting the actual exports. The formalities related with export process of Vardhman Polytex Limited are: o The company has to get an export code by registering itself with the Director General Foreign Trade
o After registering the company gets a RBI Code. o Various export promotion councils have been set up for various products and a company involved in export has to register with it. Vardhman Polytex Limited has registered with TEXPROCIL (Textile Export Promotion Council). o The Company has to notify central excise department. After notification the range Office regularly checks the records of the exports and taxes etc. o The company involved in exporting a product receives certain benefits. For these the company has to inform and authentify the exports made by it to the concerned export promotion zone head. o Finally the company has to tie up with a commercial bank for maintenance of accounts, Loans etc.
Quality Policy A product known for better quality always stands a class above its competitors. It is on the basis of quality that Vardhman can afford to charge higher prices than the
competitors. A constant check is maintained during various stages manufacturing process by R & D department of Vardhman Polytex. In pursuit of better quality and to maintain present level of quality, a quality policy has been incorporated into the system. Quality shall be built into the company’s products to not only meet customers’ requirements continuously but exceed them. adoption strategies. The quality policy shall be implemented through a network of systems and procedures understood and followed throughout the company. The quality policy shall be integrated with the company’s main objectives: a. to Remain market leader in quality b. Increase market share with focus on each segment c. Improve Productivity d. Cost Reduction e. Reduction in Percentage of wastage The management is committed to provide capital and human resources to achieve above objectives. A companywide quality culture shall be created through training and motivation of people at all level in organization. The company shall achieve this thought an interface of innovative manufacturing and marketing with the market place, R&D, Process development and
SWOT ANALYSIS OF VARDHMAN POLYTEX LIMITED
From the study undertaken at Vardhman Polytex Limited the following are observed:
Strengths a) The Company and is all a the professionally departments managed are being company
headed by professionals. b) The Company was earlier a part of Vardhman Group and a follower of new management concepts like Kaizen, Quality Circles, Five Ss, etc., and as such is continuously upgrading the skill level of the workers for better product quality. c) The Company is already in the line of spinning yarn and as such is having the /personnel. d) The technology used by the Company is comparable to its peer and as such is capable of supplying quality products. e) The expansion projects will improve the productivity and profitability of the Company and consequently competitiveness. f) The existing units will add to the cash generation of the Company resulting into improved repayment capacity of the unit. g) The Company is better equipped to face the world competition in view of the State of the art machinery and improved productivity. h) The Companys’ Bhatinda unit is ISO 9000 certified, requisite technology
whereby its quality manufacturing is at par with its competitors. i) The Companys’ dyeing facility has been certified by Oekotex Switzerland, which is top certification. j) The Company has been awarded status of Star Trading House. k) Bhatinda is the hub for cotton procurement, as the unit is located in Bhatinda itself, thus, the Company has the advantage of economies of procurement. l) The Company has raised the term funds at very favourable interest rates, which are either lower then its peers or at par with its peers. Weaknesses a) The basic raw material of the Company is cotton, which is an agriculture produce. The cotton prices are thus dependent on the production of cotton (demand market. b) The Company is also in acrylic yarn segment where the margins are thin. c) The Company is manufacturing grey cotton yarn (70%), while the diversification / made. entry to other cotton yarns like mélanges, higher counts is still to be / supply) in the country/international
Opportunities a) The Company can import cotton at competitive rates and better quality at any time in case of need due to rupee appreciation. b) The Company can explore international markets as the potential is high. c) With the closing down of textile units in Europe, the advantage of foreign acquisition can be explored.
Threats a) Trade blocs and partnerships at the exclusion of India. b) Location disadvantage: long transit time to key markets. c) Pricing pressure, following opening up of quotas
Enhanced competition from other countries similarly constrained by quotas
Vardhman Polytex Limited has a strong hold in the market due to dominance of its brand and it has opportunities like technology and quality Upgradation which it is continuously in pursuit of.
It’s only the policies of GOI like promotion of 100% EOU and exchange rates of other competing countries which offer a major threat to Vardhman Polytex Limited. But with pursuance for quality and technology Vardhman Polytex Limited is trying to convert most of opportunities into strength and reduce its weaknesses.
Conclusion From the present study conducted at Vardhman Polytex Limited , it can be concluded that Vardhman Polytex Limited has a strong position in the market due to the quality and variety of cotton yarn supplied by it. VPL mainly deals with export of production. All the exporters follow the same process for exporting their things. Export process is rigid as well as flexible. The documents used in export procedure are standardized. Vardhman Polytex Limited is trying its best to improve the present level of quality of yarn being manufactured and to upgrade the technology its continuously in the process of modernization. All the efforts are done by the top management to boost up the exports.
BIBLOGRAPHY International Marketing - B.S. Rathor, B.M. Jain, J.S. Rathor International Trade & Export Management - R.L. Varshney, B.Bhattacharya www.texprocil.com www.export911.com www.eximguru.com
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