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EXIM

PROJECT
HIND AND HIND BROS.
(Kaftan and Sarees Exporters)

GROUP A2
Shifa Dhorajiwala- 9
Dhruvi Doshi 10
Shamin Fernandes 12
Rohil Gandhi 13
SYBMS GROUP A2 EXIM PROJECT

Jay Gogri 14
Omkar Hinduja 15
CONTENT
1. EXECUTIVE SUMMARY
2.BUSINESS HISTORY
3.MARKET RESEARCH AND EXISTING DEMAND
4.MARKETING DECISIONS
5.LEGAL DECISIONS
6.MANUFACTURING AND OPERATIONS
7.PERSONNEL STRATEGIES
8. FINANCIAL DECISIONS

SYBMS GROUP A2 EXIM PROJECT

I.

EXECUTIVE SUMMARY:

Key elements of the companys export


business plan:
A government recognized manufacturer, wholesaler & exporter of
textiles with products ranging from Sarees to Arabic kaftans, operating
in Mumbai (India), Hind and Hind Bros. is a private limited company
established in 2008 with six active members. The firm also has a back
office in Mumbai consisting of Export Assistants and Executives.

Target markets:
Africa Nigeria and Senegal
These countries however pose some risks due to local currency rate
fluctuation, civil war threats and market fluctuations.

Brief description of management team:


Working with us, is an expert team of embroidery specialists who
showcase creativity and imagination in the entire line of garments.Our
team of professionals comprises of procurement agents, quality
controllers, logistics professionals, designer consultants and sales
experts. We have designed clear cut guidelines for each department
that has helped us in creating a hassle-free environment at our
workplace.
Our team also encompasses of production supervisors, marketing
professionals and warehousing & packaging experts. Our well trained
professionals team is technically skilled, which assists us in offering
product line with improvised quality and productivity

Summary of financial projections:


Net profit for the financial year is Rs. 3.9 crores.
Export turnover sales is Rs. 14.3 crores.

SYBMS GROUP A2 EXIM PROJECT

II. BUSINESS HISTORY:


A. History of the company
The members were initially retailers of textile clothing which included
Banarasi Sarees, Punjabi suits, & Embroidered Sarees. Mr. Mahesh
Doshi one of the members of the firm was a sole handler of exports and
wholesale business for the firm, hence he conceived an idea to
establish another firm which would cater to specific markets and a
specific genre of textiles hence Hind and Hind Bros. came into
existence in 2008.
The Companys main products are dress materials and readymade item
including Nylon Embroidered sarees and other types and one of their
most important products is Arabic Kaftans.
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Note: Arabic Kaftans are the most common form of clothing worn by the Arabs.
The unique advantage of Hind and Hind Bros. lies in its expertise in designing for
African countries, thus their core expertise lies in their workmen who are
specialists in embroidery and designing which caters to these markets.

B. Domestic-market & Foreign market


experience:

Before Mr. Mahesh Doshi started this company he had around 15


years of experience& knowledge about exports with which he
established this company and now the company has 7 years of
experience in the foreign market and has ventured into the
domestic market through retail sector.Hind and Hind Bros. has
registered its appreciable presence at the global market place. With
a widespread network of distributors, we are successfully offering
our entire line of garments to Senegal and Nigeria.

SYBMS GROUP A2 EXIM PROJECT

C. Production Facilities:
The firm is not a full-fledged manufacturing unit but rather a
manufacturing workshop which caters to embroidery. The workmen
(embroidery specialists) get the suits from their respective workshops
and bring it to the Byculla office which has an adjacent warehouse
wherein the goods are worked on andthen packed and made ready for
export. As soon as the consignment is ready for exporting, they are
dispatched and sent for storage to Mohatta Market warehouse. It is
then transported from the warehouse on the day of shipment and sent
to the Mumbai Port trust for shipping. After all the necessary
documentation has been done, the goods are shipped to their
destination. After arrival at the destination port, they are transported to
the importers warehouse. Hence, Hind and Hind Bros. does not store
the goods in warehouses of the importers country; the agent collects
the goods and delivers it to the importer.

Warehouses:Hind and Hind Bros. has a main office and workshop


in Byculla and once the consignment is ready, it is transferred to the
Mohatta Market warehouse, which offers a convenient location for
transporting the consignment to the Mumbai PortTrust. The partners
are the owners of the warehouse.

SYBMS GROUP A2 EXIM PROJECT

Byculla Workshop Layout


Front
office
entrance

Jet Printing Machine


Area

Embroidery
Specialist
Workstations

Office

Packaging &
Storage Area

Back exit

Capital Intensive or Labor Intensive Company:Hind and Hind


Bros. are merchant exporters, and hence get their material cloth
manufactured or buy readymade cloth from the local market. The
material is then passed through textile jet printing machines which
print the basic outline of the design on the cloth. This is the most
crucial stage and it guides the embroidery specialists to complete
the embroidery design on it. Thus, the workshops where their goods
are produced are partlycapital and partly labor-intensive.

Technology:Textile jet printing machines are used for printing basic


designs on the material before it is worked upon by the embroidery

SYBMS GROUP A2 EXIM PROJECT

specialists. This machine has been purchased from India itself(from


Chennai), as we require only basic printing features.

D. Personnel-International Experience and


Expertise:

Hind and Hind Bros. mainly employs skilled embroidery specialists


who specialize in hand embroidery and machine embroidery. Their
expertise itself is a major reason for Hind and Hind Bros. exports to
the African nations of Nigeria and Senegal. They have recruited
trustworthy staff that used to work in their previous retail business.

Quality controllers: Before the material is worked on by the workers,


it is checked by quality experts to ensure that the products meet the
standards, only then it is sent to the workers.
Logistics professionals: All our consignments are transported to the
port by Mars Shipping Agency, who handles all our domestic
contracts. We mainly deal with ABC Cargo and take full advantage of
its diversity in portfolio of services- say air cargo or sea cargo and
also its worldwide cargo infrastructure, resources and expertise,
which always results in time and cost efficiency.

Design consultantsand sales experts: Design consultants keep


updating our designs according to latest fashion trends and usually
are people of great expertise in the design field. Sales experts are
generally linked with design consultants as they too usually know
what designs are most likely to be sold in large numbers.
Production supervisors: These are basically floor managers who
supervise the embroidery specialists(workers).
Marketing professionals: These professionals usually undertake
marketing activities in the African Nations and help to establish
Brand popularity for our products.
Warehousing & packaging helpers: These workers are usually
employees with low skill or unskilled profile, who do basic labour of
packing the end products.
Agent at the importers port: Hind and Hind Bros. has a pool of
agents in the destination port, who handles the consignment at the
destination port and undertakes the responsibility of delivering the
consignment to the importers warehouse. Agents commission is
generally 3%. Also agents charge Rs. 160 to Rs. 180 per kg
depending on the airlines thatis chosen for shipping. However they
also charge Rs. 200- 225 per kg for handling goods at shipping
ports.

SYBMS GROUP A2 EXIM PROJECT

E. Industry Structure, Competition:

Hind and Hind Bros. faces stiff competition in the foreign markets
from both, local as well as international players. In the embroidered
sarees and kaftans sector, their main foreign competitors are from
China and Thailand.

China has been a major player in the African textile market from
2005 onwards. But because of the Credit act and the global
economic crises during that time, the African economy slowed down
during the latter part of 2008 and during 2009, with the resultant
decline in demand for clothing products. China, however, is still the
major source of the clothing market to Nigeria.

As a result the quotas on imports of certain clothing items from


China during that time, led to a rise is demand for Indian imports to
Nigeria.

For the Senegal market, Thailand and China poses to be bigger


competitors for our firm. Senegal imports 64% from Thailand and
16.48% from China, whereas it imports only 7.53% from India. (Source:
Atlas media report 2012)

III. MARKET RESEARCH AND EXISTING


DEMAND :
A.

Target Market

Our Primary target market are the African countries of Nigeria and Senegal. 65%
of our Kaftans exports are to these markets. The secondary markets for our
products would be the Middle Eastern countries such as Dubai and Saudi Arabia.
Tertiary markets would be other Arabian countries or countries with a lot of
Islamic population as our product is most widely used only by them.

B.

Market Conditions in these countries:

Muslim population in the following country:


94 % - Senegal
50% - Nigeria
Therefore there will be a high demand for Arabic kaftans in these regions.

Nigeria imports approximately 25% of embroidered fabric and kaftans from


India. In Nigeria most of the competition faced is from Australia, South
Korea and China. In Senegal our major competitors are from Thailand from
where they export 64% of their embroidery products.

Strengths and weaknesses of the economy-barriers to entry, etc.

SYBMS GROUP A2 EXIM PROJECT

The products of Hind and Hind Bros. has a great demand, but at the same
time faces healthy competition from its rivals. The major foreign
competitors are from China and Pakistan.

PEST FACTORS

Political Factors There is high risk involved in exporting to Nigeria and


Senegal due to the unstable political scenario in these countries.

Economic Factors Most African countries are underdeveloped and hence


they have a very weak economy.

Socio-Cultural Factors Hind and Hind Bros. modify their products


according to the socio-cultural background of the people in the country
theyre exporting to. These cultural factors determine their taste in the
specific designs that they prefer. So we modify our products according to
their tastes.

Technological Factors The jet printing machine has a workable life of 10


years, which thus has to be updated after the specific time frame. Due to
better technology provided by ABC Cargo, exporting of goods becomes
faster, easier and more efficient. They have transportation centers across
Africa, Asian countries like India and other GCC countries.

Foreign Exchange Fluctuations:

There are high foreign exchange fluctuations. Hind and Hind Bros.
importers sell their goods in local currencies and invoicing is done in USD.
Thus Eurofluctuations versus the USD do impact sales, demand and the
local competition. Apart from this, recent fluctuation of the Indian Rupee
(INR) has also affected the companys costing.

Hind and Hind Bros. are given orders and paid in USD and in Euros. Hence,
if the exchange rate while placing the order is high, but during actual
payment is lower, then the company loses out on that difference. Suppose
the exchange rate during payment is higher than that at the time of order
placement, then the company earns more than they expected or were
supposed to get. Hence, exchange rate repatriations affect the companys
revenues.

IV. MARKETING DECISIONS:


A. DISTRIBUTION STRATEGIES
Direct or Indirect Exporting:

SYBMS GROUP A2 EXIM PROJECT

Hind and Hind Bros. uses two channels of distribution. it uses agents all over
Africa who use the DTH selling method. Its products are sold in a large
number of retail outlets including single stores.

Documentation:
The main documents used for exports are:
1. Commercial invoice
2. Packing list
3. Certificate of inspection
4. Insurance certificate
5. Bill of lading
6. Airway bill

Direct Investment & Strategic Alliances: The firm,


doesnt have any strategic alliances or direct investments.

B. PRICING STRATEGIES:

Hind and Hind Bros. uses a cost-plus pricing strategy. The percentage
profit on each item however varies from item to item depending on terms
or trade and costs of raw materials. However, profit on each product
ranges from 2-12%. The price elasticity of its products can be quite high,
since even though its products are of extremely high quality local as well
as international future competition is possible.

Hind and Hind Bros. uses a combination of both, market penetration as


well as market skimming while pricing their products. They use the market
penetration strategy in new markets or when launching new products or
varieties of products. When exporting to countries where the local import
duties are high or where there is excess exchange rate fluctuation, they
practice the market skimming strategy.

This is because their products are used by the masses in most countries.

C. PRODUCT STRATEGIES:
Raw materials are sourced from Bombay, Surat, and Varanasi. Embroidery is
done in the Mumbai workshops.

D.PROMOTION STRATEGIES:

Promotion is through employed agents and marketing professionals all


over Africa who use DTH-selling. These products are packed inside the
bales and given as free gifts and souvenirs to the importers. Also initially
the partners themselves visited the country and promoted their product
through product launches.

SYBMS GROUP A2 EXIM PROJECT

V. LEGAL DECISIONS:
A. AGENT/DISTRIBUTOR AGREEMENTS:
While exporting goods there is only one agreement with the distributor or the
agent and that is forward contract which is at the time of negotiation. 40% of
the agreements are done with Advance Payment terms, and 10% are done
with letter of Credit terms. Sometimes, on sight Documents against Payment
through banks is also used.

B. CERTIFICATIONS:
To export to Africa no certification is required whereas to export to MiddleEast a certificate of origin is required and also a legalized document from the
local consulate of the country in India is required. For example to export to
Dubai a legalized document is required form Dubai consulate in India and
same follows with many Arabic countries.

C. PATENT OR COPYRIGHT PROTECTION:


The company has not taken any patents or copyrights.

D.
EXPORT IMPORT REGULATIONs
Export Countries and EXIM Laws:
The company is into exports and its major exports cater to African Markets of
Nigeria and Senegal. 65% of the exports go to Western, Central and Eastern
parts of Africa which includes Nigeria and Senegal whereas 35% goes to
middle-eastern markets such as Dubai and Saudi Arabia. The EXIM laws
require payment of import duty on the product as well as the VAT. But it is the
responsibility of the importer to take care of the laws as terms of Forward
Contract states that all duty is to be paid by the importer.

Customs duty and freight charges:


Customs duty & Freight charges is not paid by Hind and Hind Bros., it is
paid by the importer. This is according to the agreement that is signed
between Hind and Hind Bros. with the importers. For air cargo the firm
pays Rs. 160-180 per kilo as freight charges.

E. DISPUTE RESOLUTION:
There have been no disputes so far, however if at all they occur, they are first
resolved through mutual understanding. If not resolved through mutual
understanding, an arbitration clause is available in the agreement signed by both
parties, which can be done through the Indian Merchants Chamber (IMC).

SYBMS GROUP A2 EXIM PROJECT

VI. MANUFACTURING AND OPERATIONS:


A. Location of the manufacturing capability:
Hind and Hind Bros. are merchant exporters, who have their main office and
workshop at Byculla and their warehouse at Mohatta market, Mumbai, which
is in close proximity of the Mumbai port trust.

B. Capacity of the existing facility:


As Hind and Hind Bros. are merchant exporters and manufacturers, they have
manufacturing workshops. However their sales turnover for FY 14 (April 14
March 15) was Rs. 14.3 Crores.

C. Plans for expansion:


Mr. Doshi director of Hind and Hind Bros. said, We are looking African
countries like Algeria and Morocco. The textiles market hasnt been fully
exploited yet. We have several connections in both these countries. We have
an established network of dealers and therefore aim to take advantage of the
same.

D. Product modification necessary to adapt to


the local environment:
Hind and Hind Bros. modify their products according to the socio-cultural
background of the people in the country theyre exporting to. These cultural
factors determine their taste in the specific designs that they prefer. So we
modify our products according to their tastes.

E.Transportation
. All our consignments are transported to the port by Mars Shipping
Agency, who handles all our domestic contracts. Hind and Hind Bros.
export their goods to the following places:
Africa Nigeria, Senegal
Hind and Hind Bros. exports their goods by ABC Cargo services which offer air
and sea cargo services which always results in time and cost
efficiency.After the goods have arrived at the destination port, they are
transported to the importers warehouse.

F. Government incentives given to the exporter:

SYBMS GROUP A2 EXIM PROJECT

Hind and Hind Bros. gets the normal incentives that the Government gives to
all exporters.

Duty drawback : cotton based sarees - 7.1%

artificial materials - 9.1%


silk 7.8%

Standard policy under Export Credit Guarantee Corporation is used.


Export bills negotiated under Letter of Credit
Pre- shipment finance by way of advance against hypothecation.
The company also receives incentives from the government through Duty
Entitlement Pass Book (DEPB) Scheme. DEPB is a pass book in which the
Government writes the duty (local taxes, etc.) claimed by the export
company on the credit side. They also get 6.5% incentives on cotton dress
materials they export.

VII. PERSONNEL STRATEGIES:


A. Personnel needed to manage the exports:
Hind and Hind Bros. is a private limited company with 6 members. Since Hind
and Hind Bros. is into manufacturing, there are embroidery specialists
(workmen) who are involved in designing and embroidering of sarees and
kaftans. They are the whole and soul of Hind and Hind Bros. and without their
support exports would be futile.

B. Training needed by the existing personnel:


The firm has been in existence for 7 years and the six members managing it
have been there since the beginning. Hence they have the experience require
to run the business. The other employees are required to have basic exportimport knowledge which are generally briefed to them during their induction
training.

C. Hiring needs both short term and long


term:
The staff is all employed locally, from Mumbai.

VIII. FINANCIAL DECISIONS:


SYBMS GROUP A2 EXIM PROJECT

A.
Pro forma financial statements and
projected cash flows assuming export activity

B.

Identification of key assumptions


Our product possesses ready demand because of our fixed customer
who continuously deals with us year after year.

C.Current sources of funding-private and bank


funding

Pre shipment finance from banks


On members already had an ancestral property through which they
invested money in the business so funds were through private
contributions from the members.

D. Tax consequences of export activity

Tax paid for the current year is Rs. 1.92 crores


VAT at zero rate is available to a dealer who sells to us, provided we
export the same goods. Thus cost of raw materials is reduced. Certain
documents like Export Contract, Custom Clearance Certificate,
commercial invoice issued to foreign buyer, Bill of Lading and proof of
payment of letter of credit must be provided as evidence in order to
avail this incentive provided by the government.

E.Potential risk and sources of protection


All goods are 100% insured. There is always a risk that the importer may not
collect the goods from their port and in such a scenario we try to find another
importer and calculate the entire cost and profitability and compare the same
with the results of a scenario where we bring the goods back to India. The
better of the 2 options is then acted upon.

SYBMS GROUP A2 EXIM PROJECT