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Amity Directorate of Distance & online education

PROJECT REPORT
On
INDIAN TEXTILE INDUSTRY

FOR
THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF
MASTER OF BUSINESS ADMINSTRATION

From Amity University


BATCH: 2014-15

SUBMITTED BY:
PRINCE MALHOTRA

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Amity Directorate of Distance & online education

Amity Directorate of Distance & online education


2nd Floor, F2 Block, Amity University, Noida Campus, Sector 125, Noida201301
Telephone:1800-102-3434
E-mail:distancelearning@amity.edu

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Self Declaration
I, Mr. PRINCE MALHOTRA , Roll No. A19201142717 of MBA 2years in International
Business 2014-15 batch of Amity Directorate of Distance & online education, hereby declare that
all the information furnished in this PROJECT, is my original work containing authentic facts.
This piece of work is only being submitted to AMITY UNIVERSITY in the partial fulfillment
for the degree of MASTERS OF BUSINESS ADMINISTRATION.

Signature of the student:


PRINCE MALHOTRA
Date: 4 JAN 2016

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ACKNOWLEDGEMENT
I express my sincere thanks and deep sense of gratitude for the inspiring guidance
and support rendered by my research guide, Mr. ARJUN GARG, OWNER AT
PRIMA EXPORTS NOIDA
I am thankful to Mr. MANAV (MBA international business) who extended a
helping hand during the course of the project, whenever needed, to the success in
this project.
Finally, I am grateful to so many people & Friends who shared valuable
information that helped in the successful completion of this project.

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1.

INTRODUCTION

2.

POLICIES AND GOVERNEMNT INCENTIVES

3.

MAJOR & FOREIGN PLAYERS

4.

CHALLENGES AND FUTURE PROSPECTS

5.

INTRODUCTION TO THE COMPANY

6.

NEED,OBJECTIVE,SCOPE AND LIMITATION OF STUDY

7.

RESEARCH METHODOLGY

8.

ANALYSIS AND INTERPRETATION

9.

PRE-SHIPPING AND POST SHIPPING PROCEDURE

10.

FINDINGS AND INFERENCE

11.

SUGGESTIONS

12.

CONCLUSION

13.

BIBLIOGRAPHY

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Chapter 1:
Introduction

OVERVIEW OF TEXTILE INDUSTRY

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1.1 Background
India is the one of the world's largest producers of textiles and garments.
Abundant availability
of raw materials such as cotton, wool, silk and jute as well as skilled workforce
have made the
country a sourcing hub. It is the world's second largest producer of textiles and
garments. The
Indian textiles industry accounts for about 24% of the world's spindle capacity
and eight per
cent of global rotor capacity. The potential size of the Indian textiles and
apparel industry is
expected to reach US$ 223 billion by 2021.
The textiles industry has made a major contribution to the national economy in

terms of
direct and indirect employment generation and net foreign exchange earnings.
The sector contributes about 14% to industrial production, 4% to the gross
domestic product (GDP), and 27% to the country's foreign exchange inflows. It
provides direct employment to over 45 million people. The textiles sector is the
second largest provider of employment after agriculture. Thus, the growth and
all round development of this industry has a direct bearing on the improvement
of India's economy.
India has overtaken Italy, Germany and Bangladesh to emerge as the world's
second largest
textile exporter. India's share in Global Textiles increased by 17.5% in 2013
compared to 2012.
Textiles exports from India will touch US$ 300 billion by the year 2024-25.

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In 2012, apparel had a share of 69 per cent of the overall market; textiles
contributed the
remaining 31 per cent.

Various Categories
Indian textile industry can be divided into several segments, some of which can
be listed as
below:
Cotton Second largest cotton and cellulosic fibres producing country in the
world.
Silk India is the second largest producer of silk and contributes about 18%
to the total
world raw silk production.
Wool India has 3rd largest sheep population in the world, having 6.15
crores sheep,
producing 45 million kg of raw wool, and accounting for 3.1% of total world
wool
production. India ranks 6th amongst clean wool producer countries and 9th
amongst greasy
wool producers.
Man-Made Fibres- the fourth largest in synthetic fibres/yarns globally.
Jute India is the largest producer and second largest exporter of the jute
goods.
Market Size

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The Indian textiles industry, currently estimated at around US$108 billion, is

expected to reach
US $ 141 billion by 2021. The industry is the second largest employer after
agriculture, providing direct employment to over 45 million and 60 million
people indirectly. The Indian Textile Industry contributes
approximately 5% to GDP, and 14% to overall Index of Industrial Production
(IIP). The Indian textile industry has the potential to grow five-fold over the
next ten years to touch US$ 500 billion mark on the back of growing demand
for polyester fabric. The US$ 500 billion market figure consists of domestic
sales of US$ 315 billion and exports of US$ 185 billion. The current industry
size comprises domestic market of US$ 68 billion and exports of US$ 40 billion.
Apparel exports from India have registered a growth of 17.6% in the period
April September 2014 over the same period in the previous financial year.
Global vs Domestic Scenario
The global trade of textile and garments was approximately $781 billion in
2013. This is almost
4.6 per cent of the trade of all commodities, which is estimated at
approximately $17 trillion.
From 2008 to 2013, the global textile and garment trade has grown at a CAGR
of 4 per cent.
The current global garment market is estimated at approximately $1.15 trillion
which form nearly
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1.8 per cent of the world GDP. Almost 75% of this market is concentrated in
Europe, USA,
China and Japan. An analysis of per capita spend on garment in various
countries shows a
significant difference between numbers in developed and developing
economies. Within the
major markets, India has the lowest per capita spend on garment ($37) which
is only 3 per cent
of the highest one viz. Australia ($1,131).
The top five textile and garment exporting nations are China, India, Italy,
Germany and Turkey.
China is the single largest exporter with 39 per cent share while India stood at
a distant second
place with 5 per cent share.
The top five textile and garment importing nations are US, China, Germany,
Japan and United
Kingdom. USA is the largest importer with a share of 17 per cent of the total
global trade. The
Indian textile and garment industry has an important presence in the country's
economy through
its contribution to industrial output, employment generation, and the export
earnings. It
contributes almost 5% to the $ 1.8 trillion Indian economy whereas its share in
Indian exports stands at a significant 13 per cent. India is the second largest
exporter of textile and garment
goods with a global trade share of approximately 5 per cent.
The Indian domestic consumption of textile and garment is valued at US$ 63
billion in 2013.
Within this, garment retail has the highest share of 73 per cent contributing
$46 billion, technical
textile contributes $13 billion with a share of 21 per cent and home textiles
contribute $4 billion
with a 6 per cent share.
In 2013, India became second largest exporter of textile & garment in the
world surpassing Italy
and Germany. India exported textile and garment goods worth $40 billion, with
a share of about
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5 per cent of global textile and garment trade. In terms of value, Indian textile
and garment
exports is dominated by garment category which has a majority share of 40 per
cent followed by
yarn, fabrics, fibre, made-ups and other textiles including carpets, nonwovens,
etc.

POLICIES AND GOVERNEMNT INCENTIVES


Government Initiatives
The Indian government has come up with a number of export promotion
policies for the
textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector
under the
automatic route.
Sector Policy
Technology Upgradation Fund Scheme has infused investment of more than
INR 2500
Billion in the industry. Support has been provided for modernization and up
gradation by
providing credit at reduced rates and capital subsidies.
Scheme for Integrated Textile Parks provides world class infrastructure to
new textile units.
To date, 57 Textile Parks have been sanctioned with an investment of INR 60
Billion. By
2017, 25 more Textile Parks are to be sanctioned.
Integrated Processing Development Scheme for sanctioning processing
parks has been
initiated. INR 5 Billion has been earmarked for this scheme.
Integrated Skill Development Scheme has provided training to 1.5 Million
people to cover

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all sub-sectors of textiles such as Textile and Apparel, Handicrafts, Handlooms,
Jute and
Sericulture.
Key Provisions of Budget 2014-15:
Allocation of INR 500 Million towards the setting up of a trade facilitation
centre and a
crafts museum to develop and promote handloom products and carry forward
the rich
tradition of the handlooms of Varanasi.
Allocation of INR 2000 Million towards the proposed setting up of mega
textile clusters at
Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore and one in Tamil Nadu.
Allocation of INR 300 Million towards the setting up of Hastkala Academy
for the
preservation, revival and documentation of the handloom/handicraft sector in
PPP mode in
Delhi.
Allocation of INR 500 Million towards the setting up of Pashmina Promotion
Programme
(P-3) and a programme for the development of other crafts of Jammu &
Kashmir.
The duty-free entitlement for import of trimmings and embellishments used
by the
readymade textile garment sector for manufacture of garments for exports is
being increased
from 3% to 5%.
Non-fusible embroidery motifs or prints are being included in the list of
items eligible to be
imported duty-free for manufacture of garments for exports.
The list of specified goods required by handicraft manufacturer-exporters is
being expanded
by including wire rolls so as to provide customs duty exemption on import by
handicrafts
manufacturer-exporters.
Fusible embroidery motifs or prints, anti-theft devices, pin bullets for
packing, plastic tag
bullets, metal tabs, bows, ring and slider hand rings are being included in the
list of items eligible to be imported duty-free for manufacture of handloom
made ups or cotton made
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ups or manmade made ups for export.
Specified goods imported for use in the manufacture of textile garments for
export are fully
exempt from Basic Customs Duty (BCD) and Countervailing Duty (CVD) subject
to
conditions that the manufacturer produces an entitlement certificate from the
Apparel
Export Promotion Council or from the Indian Silk Export Promotion Council.
Basic Customs Duty (BCD) on raw materials for manufacture of spandex
yarn viz.
polytetramethylene ether glycol and diphenylmethane 4,4 di-isocyanate is
being reduced
from 5% to NIL.
Any of the following two deductions can be availed:
o Investment allowance (additional depreciation) at the rate of 15% to
manufacturing
companies that invest more than INR 1 Billion in plant and machinery acquired
and installed
between 01.04.2013 and 31.03.2015, provided the aggregate amount of
investment in new
plant and machinery during the said period exceeds INR 1 Billion.
o In order to provide a fillip to companies engaged in manufacturing, the said
benefit of
additional deduction of 15% of the cost of new plant and machinery, exceeding
INR 250
Million, acquired and installed during any previous year, until 31.03.2017.
Tax Incentives:
R&D Incentives: Industry/private-sponsored research programmes:
o A weighted tax deduction is given under Section 35 (2AA) of the Income Tax
Act.
o A weighted deduction of 200% is granted to assesses for any sums paid to a
national
laboratory, university or institute of technology, or specified persons with a
specific
direction that the said sum would be used for scientific research within a
program
approved by the prescribed authority.
Companies Engaged in Manufacture Having an In-House R&D Centre:
A weighted
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tax deduction of 200% under Section 35 (2AB) of the Income Tax Act for both
capital and
revenue expenditure incurred on scientific research and development.
State Incentives:
o Apart from the above, each state in India offers additional incentives for
industrial
projects. Some of the states also have separate policies for the textiles sector.
o Incentives are in areas like subsidized land cost, relaxation in stamp duty
exemption on
sale/lease of land, power tariff incentives, concessional rates of interest on
loans,
investment subsidies/tax incentives, backward areas subsidies and special
incentive
packages for mega projects
Export incentives:
o Export Promotion Capital Goods Scheme (PCGS)
o Duty Remission Scheme
o Focus Product Scheme, Special Focus Product Scheme, Focus Market
Scheme
Area-Based Incentives: Incentives for units in SEZ/NIMZ as specified in
respective acts
or the setting up of projects in special areas such as the North-east, Jammu &
Kashmir,
Himachal Pradesh & Uttarakhand

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MAJOR & FOREIGN PLAYERS


Chiripal Group
Chiripal Group laid foundations of ultra-modern 100 per cent cotton & blended
bottom wear
fabrics and the most modern & versatile denim manufacturing project called
Nandan Denim
Limited (NDL). NDL is one of the largest integrated Ahmedabad-based textile
player engaged in
the business of spinning and denim weaving. The company operates from
various offices in
India and across the world. It is in-housed with one of the most sophisticated
weaving plants
and other facilities to manufacture superior quality grey cotton fabrics, khakis
and denims. The
company is listed on the BSE and NSE stock exchanges
The Victoria Mills Ltd
The Victoria Mills Ltd was established in 1913. The Company started with a
small capital of Rs
400,000 (US$ 6,296.55) and had issued bonus shares from time to time and the
present paid up
capital is Rs 9,856,000 (US$ 155,147.06) and Reserves Rs 185,602,146 (US$
12.37 million).
Original mill was situated at Gamdevi, Mumbai and later shifted to Pandurang
Budhkar Marg,
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Lower Parel, Mumbai. It was a composite textile mill producing fabrics for local
as well as the
international market.
Digjam
As the leading textile company of India, manufacturing suiting fabrics, Digjam
has kept reinventing
itself keeping pace with the changing trends. DIGJAM has a high-end fabric
brand
presence in the domestic market, reputed for its finish and quality. The
company manufactures
over 3,000 design-shade combinations each year in Light Wool, Polyester Wool
and Woolen
fabrics for the DIGJAM brand alone. DIGJAM products and their ranges are
available at its
exclusive showrooms and over 4,000 other retail outlets across the country.
The Ruby Mills Ltd
Incorporated in the year, 1917 as a Composite Textile Mill mainly
manufacturing cottons. The
management of the unit was taken over by the late Mr C N Shah in 1946 and
thereafter the mill
has been regularly progressing and manufacturing a wide range of products.
The Ruby Mills Ltd,
has two plants located at Dadar, Central Bombay and Dhamni on Bombay-Pune
Highway. Since
1996, The Ruby Mills Ltd, is manufacturing micro dot fusible interlining &
basic interlining, in
technical collaboration with Gygli Textil AG, Switzerland. The Company has
been in operation
since 1921 with an Annual Income of Rs 680 million (US$ 10.95 million).

Foreign Investor in Indian Textile Industry


Rieter (Switzerland)
Trutzschler (Germany)
Soktas (Turkey)
Zambiati (Italy)
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Bilsar (Turkey)
Monti (Italy)
CMT (Mauritius)
E-land (S. Korea)
Nissinbo (Japan)
Marubeni (Japan)
Skaps (USA)
Ahlstorm (USA)
Terram (UK)
Strata Geosystems (USA)
Marks & Spencer (UK)
Zara (Spain)
Mango (Spain)
Promod (France)
Benetton (Italy)
Esprit (USA)
Levis (USA)
Forever 21 (USA)

CHALLENGES AND FUTURE PROSPECTS


Challenges faced by the Indian Textile Industry
In spite of immense factors fuelling the growth of the Indian textile industry,
there are certain
challenges faced by the country in terms of scarcity of trained manpower,
escalating energy
costs, high transportation costs, obsolete labor laws, low level of technology,
and lack of
economies of scale.
Future Prospects

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The Indian textiles industry is set for strong growth, buoyed by both strong
domestic
consumption as well as export demand. The industry is expected to reach US$
220 billion by
2020.
With consumerism and disposable income on the rise, the retail sector has
experienced a rapid
growth in the past decade with several international players like Marks &
Spencer, Guess and
Next having entered the Indian market. The organised apparel segment is
expected to grow at a
compound annual growth rate (CAGR) of more than 13 per cent over a 10-year
period.
Growth Drivers
Rising per capita income, favourable demographics and a shift in preference
for branded
products is expected to boost demand
Favourable trade policies and superior quality will drive textile exports
Increase in domestic demand is set to boost cloth production
Pointed and favourable policies instituted by the government will give the
industry a fillip.
With consumerism and disposable income on the rise, the retail sector has
experienced rapid
growth in the past decade, with many global players entering the Indian
market
The centers of excellence focused on testing and evaluation as well as
resource centres and
training facilities have been set up
As per the plan for 2012-17, the Integrated Skill Development Scheme aims
to train over
2,675,000 people up to 2017, covering all sub-sectors of the textile sector
textiles and
apparel, handicrafts, handlooms, jute and sericulture
Changing lifestyles and increasing demand for quality products are set to
fuel the need for
apparel

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Investment Opportunities
Entire value chain of synthetics
Value added and specialty fabrics
Fabric processing set-ups for all kind of natural and synthetic textiles
Technical textiles
Garments
Retail brands

OUTLOOK FOR INDIAN TEXTILE INDUSTRY


The outlook for textile industry in India is very optimistic. It is expected that Indian textile
industry would continue to grow at an impressive rate. Textile industry is being modernized by an
exclusive scheme, which has set aside $5bn for investment in improvisation of machinery. India can also
grab opportunities in the export market. The textile industry is anticipated to generate 12mn new jobs in
various sectors.

TECHNOLOGY IN TEXTILE INDUSTRY


Textile technology, once considered a handicraft, has become a highly sophisticated, scientific
and engineering activity of new types of fibres and technologies. The field encompasses different areas of
engineering such as mechanical, electrical, computer, chemical, instrumentation, electronic and structural
engineering. Apparel and fashion technology, a part of textile technology has become an important
activity for the designing, fashioning and marketing of garments. All this requires knowledge of latest
technology and the present day textile-design students are poised to take up the challenge.

VISION OF INDIA 2010 FOR TEXTILES

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Textile economy to grow to $85billion by 2010

Creation of 12 million new jobs in textile sector.

To increase Indias share in world trade to six per cent by 2010.

Achieve export value of $40 billion by 2010.

Modernization and consolidation for creating a globally competitive industry.

INTRODUCTION TO THE COMPANY


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About the company

Set up as an SSI unit in the year 1992 with a minimum investment of Rs.1 Cr. Currently having a

net worth of Rs.7 Cr


Purely an Export Oriented Unit [EOU]
It is a Partnership firm promoted by Mrs. & Mr.Duraisamy with an equal share in the company
Located 13kms from the knit city Tirupur and 35kms away from the airport.
Well equipped with modern machines occupying an area of 25,000 sq. feet
Manufacturer and Exporter of knitted garments to top end customers in the International Market.
Produces styles for kids, children, ladies and mens outer wears, night wears and sports wears
Specialized in mercerized knitted fabric garments
It employs about 120 people including contract labour
Equipped with modern high-speed sewing machines, picoting & zig zag machines, button hole &
button stitch machines, Vacuum Steam Iron Tables, Stain removers and Fusing machines and others

which serve the purpose of completion of an order


Lead Time of 1,25,000 pieces in a month of the basic styles
It has a separate in-house stitching unit under the name of Sree Jayram Exports which is now

concentrating on the domestic sale of knitted garments


Imports raw material, knitted processed fabric from overseas, adds value to it and exports the same

Vision
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.
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Mission
To become the most preferred one-stop source for ready-made garments & ready to cut fabrics
To constantly update the technology and skill sets t`o cater to the ever changing needs of the
apparel & textile industry.

Quality Policy
The company is committed to achieve total customer satisfaction by producing
superior products at competitive price and timely delivery with total involvement and
excellence.

Details of PON SANGER EXPORTS

IEC Code Number : 3293006876


AEPC Registration Number : 202640

Organisation Structure of PON SANGER EXPORTS


PONN SANGER
EXPORTS

Managing
Sampling in Director
charge

Pattern Master
Cutting
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P acharge
ge
Manager
Time Officer
(Raw
Line Inspector
Stores
materials
&
Merchandiser
Supervisors
(checking, ironing,
packing)
General
Manager
Factory
Manager
Export
Department
Production
Manager
fabric)

Partne
r

Communicatio
n
Marketing

In-house
Quality

Development

Finished
&
Warehouse
In
Accounts

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Ponn Sanger Overseas Buyers and Suppliers share


Their high profile customers are not only happy but also satisfied which has
earned them recognition and unflattering loyalty from prominent buyers overseas.
Overseas Buyers of the firm

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Overseas Buyers:

SWC , USA
Design In Motion , USA
Henrich Opermayer , Germany
GMBH , Germany

Overseas Suppliers of the firm

Overseas Suppliers:

Taiwan and China are the main


Players of imports here
Upon the request of the specific
Buyer, Ponn Sanger imports the
Raw material, the fabric
Kind not manufactured in home Country

Domestic Suppliers
Share to Export

Domestic Suppliers of the firm

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NEED FOR THE STUDY


Export in simple words means selling goods abroad or it refers to the outflow of goods and
services and inflow of foreign exchange.
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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.

Todays 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.

Hence, it is very important to study the export procedure and documents involved in it. Hence,
selecting this project is a judicious decision.

OBJECTIVES OF THE STUDY

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a) To understand the Apparel Business Processes

b) To understand the working of various departments of PONN SANGER EXPORTS contributing


towards processing of an export order

c) To study the Export Documentation in PONN SANGER EXPORTS

i.

Pre Shipment procedure

ii.

Post Shipment procedure

SCOPE OF THE STUDY

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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 Apparel export firm are 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.

It will also look into the steps taken to manage risks in the point of the firm.

LIMITATION OF THE STUDY


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It takes into account only the practical implications of documentation

Only Knitwear exports have been analyzed

Disclosure of certain sensitive information, e.g. the commissions for the Post-Shipment formalities

Formalities at both the stages of shipment are subject to change by the home or foreign Countrys
norms

RESEARCH METHODOLGY
RESEARCH DESIGN

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Our primary objective of doing this project is to get the first hand knowledge of functioning of an
export unit. 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 consciousness.

RESEARCH TOOLS USED

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In Primary data, Qualitative research through In-Depth Interviews has been adopted. For
interviews nonstructured 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.

Using the sales turnover of past five years, simple percentage are calculated for basic
styles and for the companys buyers.

Using the statistical technique of least square method future trend for this concern has been
forecasted

ANALYSIS AND INTERPRETATION


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To understand the Apparel Business Process involved in PONN SANGER EXPORTS

The textile and apparel supply chain accounts for a good share in terms of number of companies
and people employed. The apparel industry here is divided into four main segments. At the top of the
supply chain, there are fiber (raw material) producers using either natural or synthetic materials. Raw
fiber is spun 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.

It has been explained using the T angle apparel supply chain. This shows how buyer, suppliers
and garment manufacturer are linked to each other. 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.
The T angle of the Apparel Supply Chain
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Description of the Buyer Side of the Apparel Supply Chain


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The buyer side is normally involved with designing of the garment, production of samples, order
collection, apparel retail.

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.

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 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 Macys, Nordstrom offer a large number of national brands in both hard and soft goods categories.
Off-price stores, such as Marshalls 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-tailors through internet, and factory outlets etc.

Description of the Supplier Side of the Apparel Supply Chain


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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.

Fiber 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 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.

Accessory Production
Surface embellishments have taken the apparel section to a great extent. A variety of buyers

desire to use different embellishment for their customers. Those traditional like buttons and hooks to
rubber prints and design made items. The manufacturer depends on these suppliers specializing in
accessory for the supply chain and order execution.

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Description of the Manufacturer Side of the Apparel Supply Chain

Fabric production
This segment of supply chain transforms the yarn into fabric by process of knitting. In knitting,

yarn is interloped by latched and spring needles i.e. two different loops are mingled together with needle
adjustment. Grey Yarn may be knitted by a simple procedure to produce grey fabric and which are then
dyed for a specific color. Instead, dyed yarns may also be knitted but not dyed.
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 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

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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 consumers 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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Working of various departments contributing towards processing of an export order
PON SANGER EXPORTS
Manufacturing Process and Production
Fabric Process Flow Chart

Testing of Yarns,
Count, knit ability,
wash ability,
spirality, strength,
shade (if yarn dyed)

Yarn Inhouse

100% fabric
Quality
check

KNITTING Trial of
1st lot of fabric in
Dyeing.

Knit Set
Approval

WAREHOUSE

100 % Fabric Quality


Checking

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FINISHING

Bulk
Knitting

Batch
Preparation

Recipe
formulation
(automatic
color kitchen)

Dyeing
Process

Shade Color Fastness


Approval

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Garment Process Flow Chart
Fabric Audit Batch
wise Physical
Parameters, Trims
Matching
Automatic Fabric
Layering Batch
Wise

WAREHOUSE

CAD marker - As
per approved
garment

SHIPMEN
T
Final Audit

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100% Garment
Checking
FINISHI
NG

100%
Garmen
t
Checkin

Issue to
Stitching

100% Panel
Inspection

100% Needle
Detection
PACKI
NG

CUTTI
NG

WASHI
NG

STITCHI
NG

Amity Directorate of Distance & online education


The above two diagrams show detailed picture of PON SANGER EXPORTS 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.

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PONN SANGER: 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
chain:

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 Taiwan. 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, color and quantity of the yarn delivered. The decision regarding 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.

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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

colored) fabric, department is responsible for coloration of fabric and for dyed (colored) fabric,
department is responsible for washing. The process of dyeing is time consuming and as different color
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. Dyeing is sent to the processing unit in Tirupur or Erode. Selection is based on the basis of
cost, finish, loyalty and credit terms. The processed fabric is imported from China and Taiwan incase
when it cannot be done in India. This is upon the request of the buyer specifically.

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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 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.

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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 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 color test, washing
test, stitching test etc. After which it is steam pressed, labeled, packed into garment bags and finally, put
into the cartons. Once all cartons are packed and labeled, external quality check takes place and goods are
shipped. The PPC department gives the details of the PO to be finished, packed and dispatched.

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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.

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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The PPC link with other departments

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To understand the Export Procedure in PONN SANGER EXPORTS

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.

The procedural aspect of export operations are quite formidable and for that matter even an
experienced exporter is overwhelmed by the magnitude of procedural requirements at every stage of
export execution right from the time an export order is obtained until the realization of export procedures
and the benefits thereof.

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Export procedure flow chart

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Pre-Shipment Procedure

On receiving the requisition & purchase order from merchant (See Annexure 3 and 4),
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.

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 buyers requirement:

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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 documents:
Invoice
Packing List
Bill of lading/ FCR/ Airway Bill

On shipment of goods, exporter will send the documents to the importers bank.

Post-Shipment Procedure

A foreign buyer will make the payment in two ways:

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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 buyers bank for payment. As the buyers 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.

The domestic branch will credit the exporters account, as against the respective purchase order or
invoice, in Indian rupees by converting the foreign currency as per the current bank rate.

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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).

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 is 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.

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


shipment of goods. It ensures that exporters trade papers are in order & the goods being shipped
do not violate any law or trade restrictions.
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.

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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:

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 useful for taking advantage of

preferential duty concession, if available. It is applicable in countries forming European Union. It


has total of 12 columns to be declared by the exporter. They are:
1. Exporters name, address and country
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2. Importers name, address and country
3. Means of transport and route
4. For official use(to be filled by the officials)
5. Item no.
6. Marks and no. packages
7. No. and kind of packages and description of goods
8. Origin criterion
9.Gross weight or quantity
10. No. and date of invoice
11. For certification of competent authority- in this column the competent authority will stamp and sign
for the certification of the form.
12. Declaration by the exporter in this column the exporter declares the above details
correct and country where the goods produced for export and name

mentioned

are

of the importing country and

then stamped and signed by the authorized representative of exporter with place an date.
This form A GSP is sent between the countries, which have bilateral agreements. This certified
original form will be used by importing country to import the consignment with deduction in import
duty.

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


Commerce, and 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.

7. Wearing Apparel Sheet: It is like a check list which gives the detail regarding the content &
design of the garment packed.

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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.
A bill of lading normally contains the following details:

The name of the company


The name and address of the shipper / exporter
The name and address of the importer / agent
The name of the ship
Voyage number and date
The name of the ports of shipment and discharge
Quality, quantity, marks and other description
The number of packages
Whether freight paid or payable
The number of originals issued
The date of loading of goods on the ship
The signature of the issuing authority.

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
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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 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. It contains information
relating to ;
Description of packages.
Condition of goods / packages loaded on the vessel.
Name of the vessel
Date of loading
Port of delivery
Name of the address of the shipper exporter
Name and address of the importer / consignee.
Other required details.

Importance of Mates receipt:The main importance of mates receipt is that is serves as an acknowledgement of the goods
loaded on the ship. After loading, the goods remain in the custody of the captain / mate of the ship.
1. It enables the agent of the exporter to pay port trust dues. After making payment of port dues, the
agent collects the mates receipt and submits it to the customs preventive officer.

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2. It enables the shipping agent of the exporter to present the mates receipt to the customs
preventive officer to record the certificate of shipment of all copies of shipping bill and other
documents.
3. The export agent can obtain bill of lading on the basis of mates receipt from the shipping
company.

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:

Customs copy

Drawback copy

Export promotion copy

Port trust copy

Exporter's copy

Types of Shipping Bill


1. Manual Shipping Bill
2. Computer generate EDI shipping bill

Manual Shipping Bill:

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It will be prepared in quadruplicate and two additional copies in the prescribed format. It contains
exporters name and address, Invoice no. and date, shipping bill no., Number and description of packages,
Quantity, weight and value of goods, Name of vessel in which goods are to be shipped, Country of
destination, total amount of duty, port at which goods to be discharged, and any other details if applicable.
It will be filled by the customs agent and signed by both the exporter and customs agent. This document
used for the customs clearance of the exporting goods. After customs clearance the shipping bill will be
numbered with date and duly stamped and signed with Let export permission by the customs official.
After this only customs agents will allow the goods to clear through sea or air.
Computer Generated EDI
It also contains the same details as that of manual shipping bill prepared by customs, which is
having an on line EDI (Electronic Data Interchange) system. This will be signed by the CHA (Customs
House Agent) and customs official with Let export permission.
When goods are manufactured in India on which drawback duty is allowed, the shipping bill used
is called the drawback shipping bill.

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). A letter of
credit can be defined as an undertaking by importers 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

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Reimbursement clause

Steps in an Import Transaction with Letter of Credit

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Realisation of Export Proceeds

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Once the goods have been physically loaded on board the ship, the exporter should arrange to
obtain his payment for the exports made by submitting relevant documents.
A complete set of documents normally submitted for the purpose of negotiation is called a
negotiable set of documents, which usually consist of the following:
1.

Bill of exchange

2.

Bill of lading

3.

Commercial invoice

4.

Packing list

5.

Inspection certificate

6.

GSP certificate

Negotiation
A complete set of negotiable documents is presented to the negotiating bank through whom the
documentary letter of credit has been advised. Where the exporter has complied with all the terms and
conditions of the letter of credit while submitting his documents to the negotiating bank, the documents
are deemed to be clean. The letter of credit opened by the buyer through his bank (opening bank)
authorizes drawing a bill of exchange against which payment will be made by the opening bank on behalf
of the buyer, provided the terms and conditions specified in the letter of credit are complied with.
Bill of exchange
It is the negotiable instrument through which the amount of export invoice / invoices will be
collected from the corresponding bank specified by the importer through exporters bank. It contains

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number and date drawn on, credit no., corresponding bank address, the amount to be collected , terms of
payment, importers name and address with invoice no. and bill of lading or airway bill no. the drafts
drawn are of two types.
1. Sight draft
2. Usance draft
If the letter of credit stipulates payment at sight, the exporter draws a sight draft on the buyer or
his bank. When sight drafts are drawn by the exporter, he expects the buyer to arrange for payment
immediately on presentation of the draft. Until payment for the draft is made, shipping documents will
not be handed over to the buyer to enable him to clear the goods. (See Annexure 10)
When the exporter has offered credit terms for payment, a Usance draft is usually drawn by the
negotiating bank of the exporter. It is drawn for the payment after a specified period. The buyer on whom
the draft is drawn retires the draft after 30days, 60days or 90days as agreed between him and the exporter
at the time of concluding the contract. The letter of credit opened by the buyer will clearly specify the
credit period which has been agreed upon and would mention that the draft should be drawn for 30,60 or
90 days, as the case may be.
For a credit period beyond 180 days, the exporter has to obtain the prior permission of the
exchange control authorities in India. The bill of exchange drawn should correspond to the conditions
stipulated in the letter of credit.
Besides the negotiation of the documents, the banker has to perform other formalities. As part of
the negotiation set of documents, the exporter has submitted the duplicate copy of the GR-1 form. After

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negotiation are complete, and payment is physically received by the bank, the duplicate copy of the GR-1
form is sent to the RBI after due checks.
The exporter requires a commercial invoice attested by the bank for his use in claiming
incentives. The bank attests the extra copies of the commercial invoice supplied by the exporter and
returns them to him.
To enable the exporter to claim incentives applicable for exports, a certificate known as Form I or
Bank Certificate is required. The Form I or Bank certificate describes the product exported, its value,
the details of the invoice, the bill of lading against which the export was made, the rate of conversion for
the exchange for the exchange used, etc. the case of CIF contracts, the bank certificate specifies the fob
value, freight and insurance under separate headings as evidenced in the bill of lading, insurance policy
and invoice. The bank certificate also indicates the GR-1 form number against which the export was
made. The original copy of the bank certificate is furnished to the exporter and the duplicate copy is sent
to the JDGFT of the area. A third copy may be kept for its official records.

Realisation of Export Incentives:

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The incentives the exporter will get in todays context and the manner in which they can be
obtained are as follows:
3.3.6.1. Duty Drawback:
This refers to a rate fixed by the government based on the customs duty and excise duty
components which go into the production of an export product. This does not refer to the finished product
excise duty, but to the excise and customs duty paid on all the raw materials and components which go
into the production.
Every year the Department calls for latest data on these through the Export Promotion Councils,
determines the drawback rate and publish it for the exporters by June of the year.
When the shipping bill is submitted to the customs for the shipping of goods, it consists of a set
of five copies. The duplicate copy is known as the Drawback copy, and this will contain all the details
like description of the product, the port of destination, the total amount of drawback as per government
notification etc. this copy is endorsement by customs and sent directly by them to the drawback cell in the
customs department situated in the port from which goods were exported. The exporter can approach this
cell for his drawback payment with any additional details they may ask for.

Excise Rebate:
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Finished goods which are subject to excise duty for home consumption are exempt from the duty
when they are exported. The scheme is also applicable where the exported goods contain excisable goods
in their manufacture.
The exporter can avail of this facility in either of the following methods, where finished goods are
excisable:

i.

Export under Bond:


Under this method, the exporter has to execute a bond in favour of Central Excise

Authorities. The amount of the bond will be equal to the duty on the estimated maximum outstanding of
goods leaving the factory without paying the duty and pending acceptance of their proof of export by
excise authorities. No excise need to be paid by the exporter.
ii.

Refund of Duty:
If the duty is already paid, after export is made, the exporter should make a claim with the Central

Excise Authorities. After verification of the claim, the excise authorities will arrange for the refund of the
central excise.
Where the excisable materials have been used in the manufacture, similar to the above
arrangement, the exporter can avail of the facility of manufacturing under bond or he can claim refund
after duty is paid.

TURN OVER OF PON SANGER EXPORTS

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Turn Over of PON SANGER EXPORTS
(In crores)
YEAR

SALES (RS)

VARIATION (RS)

PERCENTAGE

2005

21.74

2006

24.94

3.2

15.27

2007

40.67

15.73

24.90

2008

48.63

7.96

29.77

2009

27.33

-21.3

16.735

13.31

Interpretation
The above table indicates the total export position from the year 2005-2009. The sales turn over
increases from the year 2006 -2008 and reduce in the year 2009 with the variation value of 21.3
Turn Over of PON SANGER EPORTS

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FINDINGS AND INFERENCE
The documentation paper works are simplified than the previous years.
This has led to the emergence of a business environment ,widening both the scope and scale of
opportunities open to sellers
Though many documents prevail in documentation, only certain documents play a vital part in the
company.
It uses the Inco terms as FOB and C&F mostly.
From the companys procedure, the following has been inferred;
Forward System followed in PON SANGER EXPORTS

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Europe Countries offer tax benefits for the imports. This is not provided by the U.S.
8-10% is kept as the profit margin.
The firm pays a tax of 33% for the imports from Taiwan and China.
The shipment carry days are 18days to Europe and 26-30days to U.S.
The firm pays its bank Canara Bank, an amount of $25 for each FOREX conversion.
There seem to be a relative increase in the sales turnover of PON SANGER EXPORTS up to
2008 and a noticeable fall during the year 2009.

The product wise sales turn over and variations are fluctuating year by year.

From the past export analysis for the country United States, the export variations are positive with
an increase of Rs.9.64 crores from the year 2008.

From the past export analysis for the country Europe, the export has drastically reduced from the
year 2008 to 2009 with the variation of Rs.9.13 crores.

From the past export analysis for the country Canada, the exports reduced year by year except for
the year 2008 which increased with the variation of Rs.5.66 crores.
As an overall study, we can find that the firm has enjoyed more benefits and sought more profits
in the year 2008.
Year 2009 has been seen as less profitable than the year 2007 and 2008.
From the future trend analysis, the export of the company increases year by year.

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SUGGESTIONS

As only certain documents are put in use, the other documents have no power in the company
which will be supportive to reduce the export procedures.
As many of the documents are part in the use of documentation and procedures which may delay
and tend to loss the customers.
The company has to speed up the paper work.
Update of available export incentives.
The company should check the exchange rates before entering into particular markets which will
help in achieving more profits.
The company can improve its sales by improving its quality and promotional activities.
The company has to improve their infrastructure facilities which will increase the exports.
If all the processing units are brought under one roof, it will reduce the processing time of goods
and it will lead to timely delivery of goods to the customers.
Try for ISO certifications, which will value the company higher.
Require more knowledge on the incentives offered by the Government.
Can opt for Market Development Assistance from the Government of India, for Exhibition and
Stalls overseas.

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CONCLUSION

The study was conducted to know the process involved in an apparel firm and to study about the
various departmental functions which coordinates to complete the export cycle. The export procedure of
the firm has been seen clearly and other related aspect has been known.

From the analysis it is found that the performance of the company is satisfactory, but the
company is facing problem regarding excess of documents which causes delay in transportation.
Therefore necessary steps should be taken to limit the number of documents so that the company can
make distribution at right for the company and it helps the company to have competitive advantage over
its competitors.

There are signs of good future for PON SANGER EXPORTS, AVINASHI because of growing
demand for Indian knitwear in the world market.

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BIBLIOGRAPHY
Books
1. Balagopal T.A.S, Export Management, Himalaya Publishing House, nineteenth edition 2007
2. Jeevanandam.C., Foreign Exchange- practice, concepts and control, Sultan Chand and Sons,
tenth edition 2007
3. Kothari C.R., Research Methodology, Method & techniques, New Age International. Pvt. Ltd,
Second Edition, 1985
4. Mahajan M.I., A guide on export policy, procedure and documentation, Tata McGraw hill
publishing company ltd, Third Edition 2005
5. Dr.Varma.M.M. & Aggarwal R.K, Foreign Trade Management, King Book, second edition
2006
6. Puri, V. K., Exporters Guidelines, A Basic Book on How to Export as per Govt. Policy &
Procedures, 2nd Edition, JBA Publishers, 2008-09
7. Paul, Justin & Aserkar, Rajiv, Export Import Management, 2nd Edition, Oxford University
Press, 2009, Chapter 2, pp. 17-29.

Reference Site

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http://www.sebi.gov.in/dp/splfinal.pdf as

Overcoming the obstacles to export documentation1, Thomas A. Cook.

http://search.barnesandnoble.com/Export-Import-Procedures-and-Documentation/Thomas-E-

Johnson

Export Documentation Made Easy2, Laurel Delaney

http://www.allbusiness.com/business-planning-structures/starting-

a- business/3878207-

1.html

Export Trade Sector Using Available Trade Finance Tools and Resources 5, Koch
and John.

http://www.allbusiness.com/trade-development/trade-development-finance/8890466-1.html
True cost of export documentation7, Corinne Campbell.
http://www.dynamicbusiness.com/articles/articles-export/true-cost-of-exportdocumentation2043.html

Guide to Inco terms 2000, Posner and Martin8.


http://www.allbusiness.com/legal/international-law-foreign-investment- finance/9185691.html
All Industry Rates of Duty Drawback, 2008-099.
http://www.cmai.in/download/circulars/Pre_Budget_Memorandum.pdf
Foreign Trade Policy 27th August 2009 - 31st March 2014
http://dgftcom.nic.in/exim/2000/policy/ftp-plcontent0910.pdf

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