Chapter-1: A Study of Export Documentation at Visakhakapatnam Steel Plant

A study of Export documentation at Visakhakapatnam Steel Plant
CHAPTER-1
INTRODUCTION
ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 1

INTRODUCTION TO LOGESTICS
A. Definition
LOGISTICS IS THE ART AND SCIENCE OF MANAGEMENT,

ENGINEERING AND TECHNICAL ACTIVITIES CONCERNED WITH
REQUIREMENTS, DESIGN AND SUPPLYING, MAINTAINING RESOURCES TO
SUPPORT OBJECTIVES, PLANS AND OPERATION.
--- SOCIETY OF LOGISTICS ENGINEERS (SOLE) 1974.
Fierce competition in today’s market has forced business

enterprises to invest in and focus on supply chains. The growth in
telecommunication and transportation technologies has led to further growth of
the supply chain. The supply chain, also known as the logistics network,
consists of suppliers, manufacturing centers, warehouses, distribution centers
and retail outlets, as well as raw materials, work-in-process inventory and
finished products that flow between the facilities.
The logistics management takes into consideration every facility

that has an impact on cost. It plays an important role in making the product
conform to customer requirements. Also it involves efficient integration of
suppliers, manufacturers, warehouses and stores and encompasses the firms’
activities at many levels, from the strategic level through the tactical to the
operational level.
Logistics is a challenging and important activity because it serves

as an integrating or boundary spanning function. It links suppliers with
customers and It integrates functional entities across a company. With the ever-
growing competition in today’s market place it becomes necessary for a firm to
use its resources to focus on strategic opportunities. This includes several
internal factors like management style, culture, human resources, facilities and

several external factors like technology, globalization and competition. This is

where the concept of logistics plays a major role, i.e. it helps to leverage certain
advantages the firm has in the marketplace.
B. Role of Logistics
Let us now have a look at how logistics works. It is important

to recognize the importance of a dynamic balance between the minute details
and the main elements involved in a product. The Role of Logistics is to
maintain that balance. Once the firm realizes the importance of logistics it is
necessary that the firm make full and efficient use of logistics. The first
step is to create a buyer value for the customer and a strategic value for the
firm.
The customer is the most important asset for a company. He

drives the entire supply chain including manufacturing, marketing and
logistics. Hence it is important for a firm to have a clear understanding of
what the customer demands and to keep up to the customers’ expectations.
Once a company has a clear understanding of its customer’s requirements it
must devise a strategy on how to use logistics to achieve it. This means that the
company has to have a clear understanding or assessment of company’s strategic
direction.
Now lets take a look at the various steps involved in a logistics

strategy development and planning process.

Visioning: This includes the systematic development of an organizational

consensus regarding the key inputs to the logistics planning process as well as
identification of the potential alternative logistics approaches. This is an
important step for the following reasons:
 Helps to define a strategic direction to the company and also to get a clear
understanding the role of logistics in it.
 Get a clear idea of the requirements of the various segments of customers.
 Have a look at the various factors that would affect the strategy of the
company.
 Define alternative strategies and also the scope of the planning effort.
Strategic analysis: this involves taking a look at the various components involved
in the process and selecting the best logistics process among the alternatives. These
components, which are to be reviewed, are revealed during he first step. This may
include revamping the entire process to assessing how a single component can be
used more effectively.
Planning: this involves the assembling of a plan that outlines the mission and
goals for the logistics function and the programs and activities to achieve these
goals. Logistics planning is an iterative process. The plans have to be redefined
every year to improve the quality of performance.
Managing change: this involves effective management to implement enhanced

ways of conducting business. The management should keeping changing the plans
in accordance with the change in the market and also coach the organization to
effectively embrace this change.

C. Current Logistics Related Issues
There are several factors that affect logistics. These issues need to be
anticipated, prepared for and taken advantage of for a company to be successful in
today’s market. They are
External:
 Globalization
 Technology
 Workforce 2000
 challenging nature of the work force
 Environmental concerns
Internal:
 Customer service and quality

 Third party networks
 Supply chain management
 Changes in management and organization style
Listed below are some of the steps that could be followed to mitigate the above
mentioned issues:
Performance:
 Better service for customers

 Improved productivity
 Assess just in time and quick response needs
System structure:
 Better relationship with vendors, customers and third parties to more

effectively manage the supply chain
 Better relationship within and across the organization

Technology integration:
 Better information systems that connect functions and organizations

 Combine information and material handling systems for increased efficiency
and effectiveness.
MARKETING AT VSP
Being a major producer of steel, VSP is exploring both domestic and
foreign market. To have a proficiency and professionalism at work it has a separate
marketing department taking care of marketing activities at both the markets. VSP has
the marketing department headed by the general manager of marketing, responsible
for collection, compilation, updating and analyzing of the market information related
to the industry. It has its own broad branding products range to sell the market. The
marketing dept. also has the MIS department to supply it with relevant information as
and when required both in relation to domestic and foreign market. It has 3 major
wings under its marketing department i.e. domestic sells department and exports
department and by –products selling department.
Domestic sales: Domestic market is segmented on geographic north, south and

regional. It has an extensive dealer network and customer counseling. Cells to
effectively serve the growing demand domestic market.Basis as east, west.
Export: VSP has an export group which is constantly on the lockout for export
marker and shipping etc., is fully updated with the information regarding export markets,
prices, ocean.
By-products: VSP also has the by-products marketing dept. which performs
the marketing functions, related to by-product during the production of steel.

NEED FOR STUDY
The existence of a need based philosophy like marketing resides with

the truth of self-insufficiency. In other words, as no individual is self-sufficient or
capable of satisfying all his/her needs with depending on any one, it’s the same in the
case of country. No country can live in complete isolation. Whenever inequality arises
there an opportunity is created for the resourceful person/country to encase the
opportunity. The changed scenario of business left us with a huge market to explore.
There is no restriction for place/market. It’s the same for an industry like steel.
Exports become essential the present world scenario as the form a pathway for
economic development of a country. Export is the easy way to enter the foreign
market. There is a continuous effort made by companies to expand markets by
increasing exports.
Steel industry being a major player in economic development need to be

facilitated and concentrated more. Plenty of opportunity available in this industry
that can be encased if planned and implemented properly. There is tremendous export
market potential for the products of VSP through out the globe. The analysis of
country wise exports during the last 5 years of VSP leaves to the conclusion that the
department is concentrating on short term transaction and does not seems to have laid
necessary emphasis on long term relation which are obviously for market standards of
any company internationally. In the international market there is a cutthroat
competition from the countries like CHINA, COMMON WEALTH OF
INDEPENDENT STATES, TURKEY etc.,. With a very strong positioning of price
advantage as the steel market provides to be very price sensitive in the global market
and with extensive price fluctuations, a strategic management approach essential for
successful performance. Hence there is need to undertake a comprehensive study on
various marketing operations of the export division of VSP. In this contest the study
becomes extremely important.

SCOPE OF THE STUDY
The scope of my study is to understand clearly about the “EXPORT

DIVISION” of RASHTRIYA ISPAT NIGAM LIMITED, Visakhapatnam. The study
was carried out in keeping in view all the aspects of export division and to know the
procedure , present strategies, the process of distribution channel and the effectiveness
of distribution.
The study is confined to only RASHTRIYA ISPAT NIGAM LIMITED,

Visakhapatnam. I cannot generalize my study to other branches of RASHTRIYA
ISPAT NIGAM LIMITED in Andhra Pradesh.

OBJECTIVES OF THE STUDY
PRIMARY OBJECTIVES:
 To know the importance of the steel industry
 To know the export procedure of VSP.
 To know the sales performance of VSP
 To find out problematic area in the marketing.
 To know the process in export marketing.
 To make an analytical study of the process followed by VSP.
 To examine the role and responsibility of export department.
 To find out and understand the export benefits provided by govt.
SECONDARY OBJECTIVES:
 To know the functionality of the company.
 To understand the interdependence of different departments.
 To observe the changes in marketing activities after LPG policy
 To study the company performance and reasons for growth.
METHODOLOGY OF STUDY:
“Methodology is a systematic procedure of collecting information in order to
analyze and verify a phenomenon”. The collection of information is done through
principal source like primary source and secondary source.
Primary Source:
Primary source are those from which information is collected for the first time
or directly. The source from which provide data collected are:
 Personal interviews with the executive of export department.
 Information provided by external guide.
 By personal observation.

Secondary Source:
Secondary data are second hand information collected from
different source like
 Company magazine and manuals.
 Export documents.
 Year wise and product wise statements collected from MIS department.
 From official web site of the company.

CHAPTER -2
INDUSTRY PROFILE

 HISTORY OF INDIA STEEL INDUSTRY
 GLOBAL STEEL SCENARIO
 PRESENT SCENARIO OF INDIA STEEL

INDUSTRY

INTRODUCTION:
Steel is an alloy of iron usually containing less than 1% carbon is a

versatile material with multitude of useful properties used most frequently in the
automotive and construction industries. Steel can be cast into bars strips, sheets, nails,
spikes, wire, rods or pipes as needed by the intended user. The consumption of steel is
regarded as the index of industrialization and the economic maturity any country has
attained.
The development of steel industry in India should be viewed in

conjunction with the type and system of government that had been ruling the country.
The production of steel in significant quantity started after 1990. The growth of steel
industry can be conveniently started by dividing the period in to pre and post-
independence era. In the period of pre independence, steel production was 1.5 million
tones per year, which was raised to 9 million tones of target. This is the result of the
bold steps taken by the government to develop this sector.
Growth of Steel Industry:
Pre-independence
1830 - Josiah, Marshall Health constructed the first manufacturing plant

at port Move in Madras presidency.
- James Erskin founded the Bengal iron works.
- Jamshedji Tata initiated the scheme for an integrated steel plant.
- Formation of TISCO.
- Tata iron & steel company started production.
1916 - TISCO was founded.

Post-independence
First Five Year Plan (1951-56)
No new steel plant came up .The Hindustan steel Ltd. was born on 19th
January, 1954 with the decision of setting up three steel plants each with one million
tone input steel per year in at Rourkela, Bhilai and Durgapur; TISCO stated its
expansion program.
Second Five Year Plan
A bold decision was taken up to increase the ingot steel output India to 6
Million tons per year & production at Rourkela, Bhilai and Durgapur steel plant
started.
Third Five Year Plan
During the third five year plan the three steel plants under HSL; TISCO &
HSCO were expanded as show. In January 1964 Bokaro steel plant came into
existence.
Recession Period
The entire expansion program was actively executed during this period.
Fourth Five Year Plan (1969-74)
Licenses were given for setting up of many mini steel plants and re-rolling
mills.
Govt. of India accepted setting up two more steel plants in south. One each at
Visakhapatnam and Hospet (Karnataka).
SAIL was formed during this period on 24th January, 1973. The total installed
capacity from 6 integrated plants was 106 Mt.

1979 - Annual Plan
The erstwhile Soviet Union agreed to help in setting up the Visakhapatnam

steel plant.
Sixth Five Year Plan
Work on Visakhapatnam steel plant was started with a big bang and top
priority was accorded to start the plant.
Scheme for modernization of Bhilai Steel Plant, Rourkela, Durgapur, TISCO were
initiated
1985-91 - Seventh Five Year Plan
Expansion work of Bhilai and Bokaro Steel Plants completed.
Progress on Visakhapatnam steel plant picked up and rationalized concept has

been introduced to commission the plant with 3.0Mt liquid steel capacity by 1990.
1991-96 - Eight Five Year plan
Vishakhapatnam steel plant started its production modernization of other steel

plants is also duly envisaged.
1997-02 - Ninth Five Year Plan
Visakhapatnam steel plant had foreseen a 7% growth during the entire plan
period.
2002-07 - Tenth Five Year Plan
Steel industry registers the growth of 9.9 % Visakhapatnam steel plant high
regime targets achieved the best of them.
2007-12 - Eleventh Five Year Plan
Cost of schemes/project original approved by Government of India is

Rs.9,569.18crores

2012-17 - Twelvth Five Year Plan
The steel industry has a bright future as the union government has announced
to create infrastructure worth Rs 50 lakh crore in Visakhapatnam steel plant.
The major steel and related companies in India
1. Bharat Refectories Ltd.
2. Hindustan Steel Works Construction Ltd.
3. Jindal Steel and Power Ltd.
4. Tata Iron Steel Company Metal Scrap Trade Corporation Ltd.
5. Metallurgical and Engineering Consultants India Ltd.
6. National Mineral Development Corporation Ltd.
7. RashtriyaIspat Nigam Ltd.
8. Sponge Iron India Ltd.
9. Steel Authority of India ltd.
The global steel industry has witnessed several revolutionary changes during
the last century. The changes have been in the realms of both technology & business
strategy. The ultimate object of all these changes is to remain competitive and open
global market.
The Indian steel industry is growing very rigorously with the major producers
like SAIL, RINL, TISCO, JVL and many others. Our steel industry has amply
demonstrated its ability of adopt to the changing scenario and to survive in the global
market that is becoming increasingly competitive. This has been possible to a large
extent due to the adoption of innovative operating practices and modern technologies.
Industrial Development in India has reached a high degree of self-reliance, and

the steel industry occupies a primary place in the strategy for future development. At
present the production of steel industry country is 34Mt. the public sector steel

industry has been restructured to meet challenges and a separate fund has been
established for modernization and future development of the industry. It is now being
proposed that Indian steel industry should Gear up to achieve a production level of
about 100 Mt by the year2000.
Global scenarios
World’s steel production grew to 1,548 MT in 2012, up from 1,341 MT in

2008, recording a growth of 15 per cent.
The WSA (World Steel Association) has projected that in 2014, world steel
demand will grow further by 4.5% to around 1486 MT. China’s apparent steel use in
2014 is expected to increase by 4%. For India, growth in apparent steel use is
expected to grow by 9.4% in 2015.
Market scenarios
The year 2004-05 was a remarkable one for the steel industry with the
world crude steel production crossing the one billion mark for the first time in the
history of the steel industry. The world GDP growth about 4% lends supports to the
expectations the steel market is all set for strong revival after prolonged period of
depression .The Indian economy also become robust with annual growth rates of 7-8
% this will provide a major boost the steel industry. With the nations focus on
infrastructure development coupled with the growth in the manufacturing sector, the
Indian steel industry all set for north ward movement. The draft national steel police
envisage production of 60 Mt by 2012 and 110Mt by2020, and annual growth rate of
6-7%. All this should therefore augur well for the Indian steel industry.
Production scenarios:-
a) Steel industry was de-licensed and decontrolled in 1991&1992

respectively.
b) India is the 8th largest producer of steel in the world.
c) In 2003-04 finished steel production was 36.193Mt.
d) Pig iron production in 2003-04 was 5.221Mt.

e) Sponge iron production was 80.85 Mt during the year 2015-16

f) The annual growth rate of crude steel production in 2002-03was 8% and
in 2003-04 was 6%.
Production Performance (‘000 Tones):
Year Hot Metal Liquid Steel Saleable Steel Labor Productivity
(Tones/man year)
2007-2008 3,913 3,322 3,074 389
2008-2009 3,546 3,145 2,701 359
2009-2010 3900 3399 3167 382
2010-2011 3830 3424 3077 358
2011-2012 3778 3410 2990 389
2012-2013 3998 3456 3010 359
2013-2014 3769 3390 3016 371
2014-2015 3780 3488 3017 318
2015-2016 3975 3826 3513 345
2016-2017 4235 3855 3945 347

Financial Performance (Rs.inCrs.)
Year Gross Margin Cash Profit Net Profit
2010-2011 1412 1247 670.8
2011-2012 1167 1455 749.4
2012-2013 1265 1250 845
2013-2014 1159 821 366
2014-2015 809 103 62
2015-2016 786 102 60
2016-2017 854 232 87
DEMAND-AVAILABILITY PROJECTION
1. Demand-Availability of iron and steel in the country is projected by

ministry of steel annually.
2. Gaps in availability are met mostly through imports.
3. Interface with consumers by way of Steel Consumer Council exists,
which is conducted on regular basis.
4. Interface helps in redressing availability problems, complaints related to
quality.

PRICING & DISTRIBUTION
 Price regulation of iron & steel was abolished on 16-01-1992.

 Distribution controls on iron& steel removed except 5 priority sectors,
viz. Defense, Railways, Small Scale Industries Corporations, Exporters
of Engineering Goods and North Eastern region.
 Allocation to priority sectors is made by Ministry of steel.
 Government has no control over prices of iron & steel.
 Open market prices are generally on rise.
 Price increases of late have taken place mostly in long products than flat
products.

COMPANY PROFILE
Introduction:
Steel comprises one of the most important resources of the economy.

History shows that, the strongest of civilizations have evolved quickly in the course of
time, because of the proper use of the iron and steel reserves they had. The huge iron
pillars at the entrance of New Delhi suggest that the history of iron and steel industry
in India is well over 2000 years old.
Steel comprises one of the most important inputs to all sectors of the
economy. Steel Industry is both a basic and a core Industry. The economy of any
nation depends on a strong base of Iron and Steel Industry in that nation. History has
shown that the countries having a strong potential for Iron and Steel Industry have
played a prominent role in the advancement in the civilization in the world. Steel is
such a versatile commodity that every object we see in our day-to-day life had use,
such as small items as nails, pins, needles etc., to surgical instruments, agricultural
implements, boilers, ships, railway materials, automobile parts. The great investments
that has gone into the fundamental research in Iron and Steel Technology has helped
both directly and indirectly many modern fields of today’s science and technology.
Steel is versatile and indispensable item. The versatility of steel can be traced mainly
of three reasons.
1. It is only metallic item, which can be conveniently and economically

produced in tonnage quality.
2. It has got very good strength coupled with malleability.
3. Its properties can be changed over a wide range. Its properties can be
manipulated to any extent by proper heat treatment techniques.
Iron and Steel making as a craft has been known to India for a long time.
However, its production is significant quantities only after 1900.

VSP by successfully installing & operating efficiently Rs. 460 cores worth of
Pollution Control and Environment Control Equipments and converting the barren
landscape by planting more than 3 million plants has made the Steel Plant, Steel
Township and surrounding areas into a heaven of lush greenery. This has made Steel
Township a greener, cleaner and cooler place, which can boast of 3 to 4° C lesser
temperature even in the peak summer compared to Visakhapatnam City.
VSP exports Quality Pig Iron & Steel products' to Sri Lanka, Myanmar,
Nepal, Middle East, USA, China and South East Asia. RINL-VSP was awarded "Star
Trading House" status during 1997-2000. Having established a fairly dependable
export market, VSP plans to make a continuous presence in the export market.
RINL has its integrated steel plant located in Vishakhapatnam, India. Iron ore
is sourced through 100% tie – up with National Mineral Development Corporation
(NMDC) from Bailadilla mines in Chhattisgarh State. The Company was allocated
iron ore mines in Chattisgarh State. The Company was allocated iron ore mines in
Bhilwara , Rajasthan. The company has no captive linkage for coking coal which is
sourced from international markets – mainly Australia.
The company has been consistently , surpassing its rated capacity of production
for the last 15 years and making net profits since 2001 -02. RINL with its 18000
strong workforce & quality products has already made a presence across the globe and
a leader in the Indian Market in long products.
The govt. of India has recognized the importance of steel in Indian

industry and established the following steel plants, before it actually set up
VSP/RINL. The details of those are tabulated below.

Sl. No. STEEL PLANT COLLABORATED BY
1 Durgapur steel plant Britain
2 Bhilai steel plant Erstwhile USSR
3 Bokaro steel plant Erstwhile USSR
4 Rourkela steel plant Germany
5 RINL Russia
Visakhapatnam Steel Plant profile:-
To meet the growing domestic needs of steel, Government of India

decided to set up an integrated Steel plant at Visakhapatnam. An agreement was
signed with erstwhile USSR in 1979 for cooperation in setting up 3.4 million tones
integrated Steel Plant at Visakhapatnam. The foundation was laid by the then Prime
Minister Mrs. Indira Gandhi on 20th January 1971.
The Project was estimated to cost Rs.3, 897.28 cores based on prices as
on 4th Quarter of 1981. However, on completion of Construction of the whole Plant
in 1992, the cost escalated to around 8500 Cr. Unlike other integrated Steel Plants in
India, Visakhapatnam Steel Plant is one of the most modern Steel Plants in the
country. The plant was dedicated to the nation on 1st August 1992 by the then Prime
Minister, P.V.NarasimhaRao.
New Technology, large-scale computerization and automation etc., are

incorporated in the Plant. To operate the plant at international levels and attain such
lab our productivity, the organizational manpower has been rationalized. The plant
has a capacity of producing 3.0 MT of liquid steel and 2,656Mt of saleable steel.

Visakhapatnam steel plant technology: State-of-the-art:
 7m tall Coke Oven Batteries with coke dry quenching.

 Biggest Blast Furnaces in the country.
 Bell less top changing system in Blast Furnace.
 100% slag granulation at the Blast Furnace cast house.
 Suppressed combustion—LD gas recovery system.
 100% continuous casting of liquid steel.
 ‘Tempcore’ and ‘Stelmor’ cooling process in LMMM & WRM.
 Extensive waste heat recovery systems.
 Comprehensive pollution control measure.

Major sources of raw materials:
Raw Materials Source
Iron Ore Lumps & Fines Bacheli, Chattisgarh/Gua, Jharkand
BF Lime Stone Jaggayyapeta, AP
SMS Lime Stone UAE
BF Dolomite Madharam, AP
SMS Dolomite Madharam, AP
Manganese Ore Chipurupalli, AP
Boiler Coal Talcher, Orissa
Coking Coal Australia
Medium Coking Coal (MCC) Gidi/Swang/Rajarappa/Kargali
Water supply:
Operational water requirement of 36 Mgd is being met from the Yeleru Water
Supply Scheme.
Power supply:
Operational Power requirement of 180 to 200 MW is being met through captive

Power Plant. The capacity of the power plant is 286.5 MW. Visakhapatnam Steel
Plant is exporting 60MW power to Andhra Pradesh State Electricity Board.

Major Units:
Annual
Department Capacity Units (3.0 MT Stage)
(‘000 T)
Coke Ovens 2,261 4 Batteries of 67 Ovens & 7 Meters. Height
Sinter Plant 5,256 2 Sinter Machines of 312 Sq. Meters. grate area each
Blast Furnace 3,400 2 Furnaces of 3200 Cu. Meters. volume each
Steel Melt Shop 3,000 3 LD Converters each of 133 Cu. Meters.
Volume and Six 4 strand bloom casters
LMMM 710 4 Strand finishing Mill
4 Strand high speed continuous mill with no twist

WRM 850
finishing blocks
MMSM 850 6 STAND FINISHING MILL

Main Products of VSP:
Steel Products By-Products
Blooms Nut Coke Granulated Slag
Billets Coke Dust Lime Fines
Channels, Angles Coal Tar Ammonium Sulphate
Beams Anthracene Oil
Squares HPNaphthalene
Flats Benzene
Rounds Toluene
Rebars Zylene
Wire Rods Wash Oil
Vision
• To be a continuously growing world class company we shall
• Harness our growth potential and sustain profitable growth.
• Deliver high quality and cost competitive products and be the first choice of
customers.
• Create an inspiring work environment to unleash the creative energy of people.
• Achieve excellence in enterprise management.
• Be respected corporate citizen, ensure clean and green environment and develop
vibrant communities around us.

Mission:
To attain 16 million ton liquid steel capacity through technological up-

gradation, operational efficiency and expansion; to produce steel at international
standards of cost and quality; and to meet the aspirations of the stakeholders.
Objectives:
1. Towards growth- Expand the plant capacity to 7 Mt by 2010-12 and 10 Mt by

2019-20.
2. Towards profitability- Achieve net profits from 2002-03 onwards with special
emphasis on enhancement of production of value added steels and cost
reduction.
3. Towards employees-Make RINL the employer of choice. Upgrade the skills
and efficiency of employees through training and development and maintain
high levels of motivation and satisfaction.
4. Towards customers- Promote branding of products for quality and customer
preference through effective customer relations management.
5. Towards suppliers- Develop a reliable and strong supplier base and ensure
effective supply chain.
6. Towards quality -Promote quality movement in all functions of the company
through quality management system.
7. Towards technology- up-gradation and productivity - Continuously upgrade
technology and practice benchmarking to achieve international efficiency
levels. Adopt latest developments in information and communication
technology.
8. Towards knowledge management - Become a knowledge based and a
knowledge sharing company.
9. Towards safety, environment, and society - Continue efforts towards safety of
employees, conservation of environment and be a good corporate citizen.

Core Values:
With a view to running the business in a transparent manner meeting the needs
and expectations of the stake holders, it was felt desirable to give utmost importance
to the value system in the company. Accordingly RINL has finalized core values,
which are brought out below.
 Commitment
 Customer Satisfaction
 Continuous Improvement
 Concern for Environment
 Creativity & Innovation
VISION 2025:
To be the most efficient Steel Maker having the largest single location shore
based steel plant in the country.
OBJECTIVES:
 Achieve Gross Margin to Turnover ratio > 10%

 Plan for finishing mill to integrate with 7.3 MT capacity and
commission the same by 2017-18.
 Achieve rated capacity of new & revamped units by 2017-18.
 Capture markets for high –end value added products by focusing on
sector specific applications and customer needs.
 Globalization of operations through acquisition of mines and setting up
of marketing network abroad.
 Diversify through operationalizing of Bhilwara Mines, setting up of
Pelletization Plant, DRI-EAF unit, Wheel & Axle Plants.
 Create high performance and safe work culture by nurturing talent and
developing leaders.
 To grow in harmony with the environment & communities around us.

MAJOR DEPARTMENTS:
Raw Material Handling Plant
VSP annually requires quality raw materials viz. Iron Ore fluxes (Lime
stone, Dolomite); coking and non coking coals etc. to the tune of 12-13 Million Tones
for producing 3 Million Tones of Liquid Steel. To handle such a large volume of
incoming raw materials received from different sources and to ensure timely supply of
consistent quality of feed materials to different VSP consumers, Raw Material
Handling Plant serves a vital function. This unit is provided with elaborate unloading,
blending, stacking & reclaiming facilities viz. Wagon Tipplers, Ground & Track
Hoppers, Stock yards Crushing plants, Vibrating screens, Single/ twin boom stickers,
wheel on boom and Blender reclaimers. In VSP peripheral unloading has been
adopted for the first time in the country. The Raw Material Handling Plant (RMHP)
Department procures the different raw materials from various sources. The following
are the important raw material handled by the RMHP Department.
The main function of this department is to convert the

coal in to coke, which is received from RMHP
Department.
Coke is a hard porous mass obtained by functional

distillation of coal in absence of air at a temperature
above 125oC for a period of 16-18 hours.

Number of ovens in batteries 67
31.6 tones Coke Oven Department
It is used as a fuel and reducing agent

for reduction of iron ore in blast
Coal handling capacity of ovens
furnace. The following are the
parameters of Coke Ovens:
Number of batteries 4
16m length x 7m height

Dimensions of oven
Besides coke production, a number of coal chemicals are being extracted in

coal chemical plants. The coal chemicals are tar, benzyl and ammonia based products.
The coal is not consumed directly because coke helps in reducing the pollution.
Sinter Plant Department:
Sinter is a hard and porous lump obtained by

agglomeration of lines of iron ore, coke, limestone
and metallurgical waster. This department by not
wasting the powder and small pieces of iron ore
coal manganese, dolomite and limestone makes
Sinter Cakes and put it for reuse. This increases the
productivity of Blast Furnace, improves the quality
of pig iron and decreases the consumption of coke
rate.

Blast Furnace:
Pig iron/hot metal is produced in blast furnace.

The furnace is named as blast furnace as it is
running with blast at high pressure with a
temperature of 1150oC.
Raw materials required for iron making are iron

ore, sinter coke and limestone. For one tone of
hot metal production, 310Kgs. iron ore, 1390Kgs.
sinter and 627Kgs. of coke with some other
additives.
For production of pig iron/hot metal there are two blast furnaces named
Godavari and Krishna. They are of the largest and most modern furnaces in the
country.
Steel Melt Shop:
Hot metal produced in blast furnace contains

impurities like carbon, sulphur, phosphorus,
silicon, etc.; these impurities will be removed in
steel making by oxidation process.
There are three LD converters to convert hot metal in to steel, after the
conversion of hot metal in to steel, the steel is subjected to homogenization treatment
and cast in to blooms in continuous casting machines.

MARKETING DEPARTMENT CHART
Function of marketing department

Even though, in the initial stages, decision has been taken to market VSP’s
products through Central Marketing Organization of Steel Authority of India Limited,
later during 1986, the decision was taken by the Visakhapatnam Steel Plant to market
its own products in the domestic as well as International markets. Accordingly
marketing department of Visakhapatnam Steel Plant was set up. General Manager
heads marketing department and reports to Director (Commercial).
Being a major producer of Steel, VSP is exploring both domestic and foreign
markets. To have a proficiency and professionalism at work it has a separated
marketing department taking care of marketing activities at both the markets. VSP
has the marketing for collection, compilation, updating and analyzing of the market
information related to the industry. It has its own broad branding products range to
serve the market. The marketing dept also has the Management Information System
(MIS) department to supply it with relevant information as and when required both in
relation to domestic and foreign market. It has three major wings under its marketing
department i.e. Domestic Sells department and Exports department and By-products
selling department.
Domestic Sales: Domestic market is segmented on geographic basis as East,

West, North, South and Divisional. It has an extensive dealer network and customer
counseling cells to effectively serve the growing demand of domestic market.
Export: VSP has an export group which is constantly on the lookout for
export markets and is fully updated with the information regarding export markets,
prices, ocean shipping etc.
By-products: VSP also has the by-products marketing dept, which performs
the marketing functions, related to the by-products during the production of steel. The
planning and dispatch section is based in the HQ at the Visakhapatnam and headed by
ACM (Mktg). There are three other team members such as a manager, an assistant
manager and a junior staff officer. There are two main functions of marketing
department:
 Planning:
 Annual rolling plan (quantities required in various sizes and grade)
 Annual dispatch plan (broad identification of quantities required)
 Break-up of the above to activities into quarterly plans
 Monthly rolling plan and dispatch plan
 Collection of monthly material requisitions from all the branches
through the regions by 15th of the preceding month
 Collection of special steel requirement from the SS section
 Collection of the Export requirement from the Export section
 Taking note of the stock position in various stockyards

With the above inputs a clear picture of requirement of different products in

month emerges. Based on this a roll advice is prepared by the 20th of preceding month
which is sent to PPM Dept. While preparing a rolling advice various parameters like
mill capacity, shutdown constraint etc., are kept in mind. This rolling advice is
discussed with all the plant officials.
 Dispatch:
A monthly dispatch plan is prepared by keeping the following parameters
into consideration;
 Production plan
 Stock available in the plant
 Stock available at the branches at particular time
 Previous sales performance
 Requisitions
 NSR
The monthly dispatch plan is further broken into Rail Dispatch Plan and
Road Dispatch Plan. The mode of transport is decided after comparing the freight
charges, requirement urgency of material at the branches and the volume of the
material to be dispatched.
The road and the rail dispatch plans are sent respectively to the marketing BC
Grade and the Traffic dept. for their further action. On an average 60,000 T of
material is dispatched through the road and 100,000 T of material by rail.
Daily road and rail dispatches are planned by the P&D section and executed by
the BC Gate and Traffic Dept. along with the lading bills.
MAEKETING STRATEGIES OF VSP

To achieve the broad goal of expediting desirable exchange the marketing
managers are responsible and required for developing & managing marketing strategy.
It includes selecting, analyzing a target group, creating and maintaining an appropriate
marketing mix that will satisfy those people. A marketing strategy is simply a plan for
the best economic use of the organization resources and tactics to meet its objectives.

To develop and manage marketing activities, the marketing manager is

required to deal with two broad sets of variables. Those relating to the marketing mix
and that make up the marketing environment.
Marketing Mix of VSP

“Marketing mix is set of marketing tools, that the firm uses to achieve its
marketing objectives in the target market.”
Accounting to M.T. Carthy, who popularized a four-factor classification of
marketing tools called the “4-P’s”i.e.
 Product
 Price
 Place
 Promotion
PRODUCT
The product mix of the VSP comprises of wire rods, TMT bars, light and
medium structured, rounds, channels, squared, basic grade pig iron, blooms and
billets. The production of Iron & Steel results in many by products including
Ammonium Sulfate, Tar products, Benzol products, Nut coke and Slag.
By-products
At VSP a wide variety of by-products are produced some of which are
 Fertilizer: - Pushpakala brand, Ammonium Sulfate
 Coke Fractions: -Nut coke, Coke Dust
 Coal Chemicals: - Coal Tar Pitch (soft and hard)
 Tar Products: - Crude Anthacene, Anthracene oil, H.P.Napthalene, Cresote
oil, road tar
 Sodium Phenolate Solution
 Benzol products: - Caprolactum grade benzene
 N.G Toulene, I.G.Xylene
 Solvent Naptha LS and HS, Coal tar, Wash oil
 Misc.products: - Granulated B.F. Slag, L.D.Slag, Fly Ash
PRICE
Pricing as practiced in espies cost plus profit where cost includes work cost
plus interest plus depreciation, which is variable cost. VSP sets base price on
production cost, size and composition and grade of the product. As the cost of the
Transportation from the factory to various branches, stock yards, are high VSP adds
freight charges to its factory price. VSP charges various duties to abroad customers.
PROMOTION
The advertisement of VSP is based on a comprehensive survey through a
professional market research agency. The company’s advertisement has been a
systematic approach, a building awareness in the 1st year. For a corporate image in the
next year through a campaign on the corporate-cum-brand promotion subsequently. It
launched the product advertising, which was directed towards builders, architects,
contractors and other industry. The media for the corporate image campaign was print
media, national and regional.
For any exporting firm, promotion is a very essential policy. But promotion
requires huge amounts for most of the exporting firms; resources that could be
allocated for promotion are strictly limited. Optimizing with the budget constraints an
export firm is essentially left with three options, which it can use singly or
collectively:
 Sales tour with/without government subsidy
 Participation in trade fairs and exhibitions
 Direct mailing
Presently VSP is taking up only direct marketing only. The procedure is

simple and cost effective. It is preparing a well-drafted letter, introducing the firm as a
reliable exporter. Enclosed within the letter are various products that are available for
export. The quality and quantity available are clearly specified. The results of direct
marketing are very appreciative resulting in a flow of export orders.

PLACE
Place/distribution plays a vital role in the marketing of the organization. It
brings the organization and its products closer to the market. Distribution policy is
based on many factors such as market to be served, type of product etc. VSP
practices three levels of distribution, such as
Level – 1
The customer comes to the head quarter sale office and pays cost of the steel
and collects the material at BC gate.
Level – 2
The branch manager who gets the order from the customer maintain branches.
They send the message for the requirement of the products by fax or letter to
through the personnel of marketing and then marketing department will take the
needed action.
Level – 3
First the product goes to the branches maintained by the VSP or the
consignment stockyards maintained by the consignment agent, branches or the
consignment agent sells the product to the stockiest sells the goods to the retailer.
ACHIEVEMENTS & AWARDS

The efforts of VSP have been recognized at various forums. Some of the major
awards received by VSP are in the area of energy conservation, environment
protection, safety, quality, Circles,
Rajbhasha, MOU, sports and a number of awards at the individual level.
Some of the important awards received by VSP are
ISO 9001:2000 Certificate for
1. Production of comprehensive range of Iron and Steel products, Coke & coal
chemicals, other saleable products like liquid nitrogen, liquid oxygen, liquid argon,
ammonium sulphate and generation of power along with supporting & service
departments.

2. Marketing of Iron and Steel products in export and domestic markets through a
network of regional offices and branch offices.
3. Sale of power to state grid and sale of Coke & coal chemicals, other saleable
products like liquid nitrogen, liquid oxygen, liquid argon, ammonium sulphatein
domestic markets.
 Indira PriyadarshiniVrikshaMitra Award - 1992-93 Nehru Memorial National

Award for Pollution Control 1992-93 & 1993-94
 EEPC Export Excellence Award - 1994-95
 CII (Southern Region) Energy Conservation Award - 1995-96
 Golden Peacock (1st Prize) "National Quality Award - 96" 11M in the National
Quality
Competition – 1996
 Steel Minister’s Trophy for "Best Safety Performance" – 1996
 Selected for "World Quality Commitment Award - I997" of J* Ban , Spain
 Best Labor Management Award from the Govt. of AP
 SCOPE Award for Best Turnaround – 2001
 Gold Star Award for Excellent Performance in Productivity Udyog Excellence

Gold Medal Award for Excellence in Steel Industry. Excellence Award for
outstanding performance in Productivity Management, Quality & Innovation.
 IspatSurakshaPuraskar (1st Prize) for longest Accident Free Period 1991-94
 Environment Excellence Award from Greentech Foundation for Energy

conservation – 20Best Enterprise Award from SCOPE, WIPS - 2001-02
 Best Enterprise Award from SCOPE for surpassing MOU targets-2003-04

 ISTD Award for "Best HR Practices" – 2002

 Prime Ministers Trophy for "Best Integrated Steel Plant - 2002-03
 "World Quality Commitment International Star Award" in the Gold category

conferred by Business Initiative Directions, Paris.
Award Purpose Year

National Award for HR Best 2016-17
Practices, 2016 By National Institute
Of Personnel Management
“Gold Awards” For 5 Case Studies At 2016-17
ICQCC-2016
Prime Minister’s ShramVir And 2016-17
ShramShri Awards For 2 Employees
And 18 Employees got
ViswakarmaRashtriyaPuraskar
Awards
“5-S Performance Exellence Awards” 2016-17
By QCFI
“Performance Excellence Award” in 2016-17
Platinum Categories for The Fourth
Time in A Row
27 Awards At “30th National 2016-17
Convention” on Quality Concepts
2016
“Best Public-Sector Organization 2016-17
Award”-2016 By NCQC-2016
"Corporate Vigilance Excellence Award" For promoting transparency in 2016
by Institute of Public Enterprise procedures and awareness in combating
corruption
"Best Enterprise Award" under For outstanding contribution for the 2016
Maharatna&Navratna category by SCOPE betterment of women employees
– 2nd prize
Awards at INSSAN - for "Excellence in For implementation of Suggestions 2016
Suggestion Scheme"

"Gold Award" at IIIE-National Productivity For Value Engineering case study 2015
Competitions 2015
Performance Excellence Award by QCFI For implementation of 5S 2015
"Performance Excellence Award 2014 by For overall excellence in performance 2015
IIIE"
ICQCC 2015 at South Korea - 1 Silver and For implementation of QC projects 2015
2 Bronze Illumination awards
"VishwakarmaRashtriyaPuraskar" by the Innovative suggestions for higher 2015
Ministry of Labor and Employment, GoI efficiency, productivity & process
improvements
"CIO-100 Award" by International Data For operational and strategic excellence 2015
Group in Information Technology
"Excellent Energy Efficient Award- 2015" For excellence in Energy Management 2015
& "Innovative Project Award" by CII
"Corporate Vigilance Excellence Award" For promoting transparency in 2015
by Institute of Public Enterprise procedures and awareness in combating
corruption
“Best Enterprise Award” under For outstanding contribution for the 2015
Maharatna&Navratna category by SCOPE betterment of women employees
Star Performer Award by Ministry of For outstanding exports performance 2015
Commerce & Industry
Best QC promoting Public Sector by QCFI For promoting Quality Circles 2014
'Excellence' Awards (Highest Category) in For implementation of QC projects 2014
ICQCC - 2014, Colombo, Sri Lanka
‘Excellent Energy Efficient Unit’ award by For Energy Efficiency 2014
Confederation of Indian Industry, Godrej
Green Business Center
Third prize of Indira Gandhi Rajbhasha For effective implementation of 2014
Shield Official Language
National Competition for Young Managers For competitive excellence and 2014
by All India Management Association leadership skills
Vishwakarma Awards - Innovative suggestions for higher 2014
VishwakarmaRashtriyaPuraskar for 2 efficiency, productivity & process
employees improvements
CIO-100 Award For excellence in IT & Special Award 2012
under the category ‘Networking
Pioneer’
Water Efficient Unit Award from CII For excellence in Water Management 2012

HR Leadership award to Dir(Personnel), Outstanding contribution to the HR 2012

Sri. Y R Reddy by HRD Congress Profession
Green Manufacturing Excellence Award by Recognition for best Green 2012
Frost & Sullivan’s - Overall Leaders Manufacturing practices
Steel Minister’s Trophy for 2009-10 2nd prize for Best Integrated Steel Plant 2012
for 2009-10
First Prize - IIM Sustainability Award-2011 Overall performance 2011
by Indian Institute of Metals
Shram Awards by Ministry of Labour& 5 Shram awards for distinguished 2011
Employment, Govt. Of India record of performance
'Excellent and Distinguished awards at the Recognition for Quality Circle teams 2011
International Convention on Quality by Union of Japanese Scientists and
Control Circles (ICQCC’11) held at Engineers (JUSE).
Yokohama, Japan.
Indira Gandhi Rajbhasha Shield (First Effective implementation of Official 2011
Prize) by Department of Official Language, language Hindi
Ministry of Home Affairs, GOI
‘Excellent Energy Efficient Unit’ Award of Recgonition for Excellence in Energy 2011
Confederation of Indian Industry by CII Management
First in MoU Rating for 2009-10 among the Excellent MoU rating among all PSUs 2011
PSEs under MoS under Ministry of Steel (MOS) for the
year 2009-10
IspatRajbhasha Shield (First time) by For remarkable work in progressive use 2011
Department of Official Language, Ministry and implementation of Official
of Home Affairs, GOI Language for the year 2008-09
International Convention on Quality Seven ‘Quality Circle’ (QC) teams and 2010
Concept Circles (ICQCC) by ICQCC Four ‘5S’ teams bagged ‘Gold Medals.
UdyogRatan Award by Delhi Telugu For significant contribution in 2010
Academy preservation and promotion of Indian
Culture and for taking key initiatives
towards CSR.
1st Steel Minister's Trophy for the year VSP’s excellent Overall performance 2010
2006-07
'Best Management Practices' Award by In recognition of VSP’s performance in 2010
Govt. of AP the areas of Production, Productivity,
Labour Practices, Industrial Relations
and Corporate Social Responsibility
'Indira Gandhi Rajbhasha shield' given by For effective implementation of 2010

His Excellency Vice President of India Dr. ‘Rajbhasha’, Hindi in VSP

Hamid Ansari
5 No.s of the prestigious Prime Minister Given annually to the excellently 2010
Shram Awards, 1'Shram Bhushan' and 4 performing workers
'Shram Veer' awards, presented by Ministry
of Labour and Welfare
UdyogRatan Award for CMD of RINL By For his outstanding contribution in 2010
National Industrial Conclave-2010, Ranchi making VSP ‘turn around to a blue chip
company’ and for being the architect of
‘special purpose vehicle’ for global
acquisition of mines
Bagged third prize in ‘Public Relations In the ‘Event Management’ category at 2009
National Awards-2009’ the 31st All India Public Relations
conference held in Chandigarh
VishwakarmaRashtriyaPuraskar Awards for For the best suggestions 2009
the performance year 2007 5TH Time in a
row.
RINL ranked No.2 globally for the Global survey by Steel guru for the 2009
popularity of website among the global most popular website among steel
steel makers. makers all over the world
ISPAT RAJYA BHASHA TROPHY For popularising the usage of Hindi. 2009
QCFI-NMDC Trophy. For the ‘Best Quality Circle 2008
Implementing Organisation’ given by
QCFI
“IspatSurakshaPuraskar Award” For ‘No fatal accident’ in 2006 & 2007 2008
given by JCSSI (Joint Committee on
Safety, Health & Environment in Steel
industry)
Second Prize for Organisational Excellence. Efficient suggestion scheme operation 2008
given by INSSAN
National Award for e-Governance Exemplary usage of ICT by Public 2007-08
Sector Undertakings
Sri PK Bishnoi, CMD was presented For significant contribution to the 2007
Excellence Award by the Delhi Telugu industry.
Academy
Two QC teams, 'Samruddhi' from SMS and Best Quality Circles 2007
'Trishakti' from LMMM won GOLD
Medals at International Convention on

Quality Control Circles (ICQCC) 2008 at

Beijing, China in October 2007.
Sri PK Bishnoi, CMD was awarded the Indira Gandhi Memorial National 2007
Best Chief Executive Gold Award of 'Indira Awards
Gandhi Memorial National Awards-2007'
by Institution of Engineers (India)
Hyderabad.
Commendation prize for strong Overall Excellence in all activities of 2006
commitment to Excellence - CII Exim Bank the company
Award for Business Excellence 2006
Strong Commitment - CII HR Excellence Excellence in HR processes and 2006
Award 2006 practices
Prime Minister's Trophy Best integrated steel plant 2005-06
National Award for Excellence in Water Excellence in water management 2005,2004
Management by CII
Energy Conservation Award by AP Best organization in Energy 2005
Productivity Council conservation initiatives
Certificate of Appreciation by Institution of Excellence in energy conservation 2005
Engineers, AP chapter
Leadership & Excellence Award in SHE Excellence in SHE by CII South Zone 2004
(Safety, Health & Environment)
World Quality Commitment International Performance excellence, quality 2004
Star Award management & quality achievement
given by Business Initiative Directions,
Paris in the Gold category.
The above awards are besides a number of awards at the local, regional &
national level competitions in the area of Quality Circles, Suggestion Schemes
etc.

SWOT Analysis
The strengths and weaknesses of RINL brings forth the opportunities and
threats facing RINL, with a view to buildings up on the strengths, exploiting the
opportunities, improving upon the weaknesses and converting the threats into
opportunities. The strengths, weaknesses, opportunities and threats of RINL are
as under:
S-STRENGTHS:
 State-of-the-art technology
 High commitment to achieve capacity levels
 Areas of excellence
 Economies of scale
 High expansion potential
 Strong commitment to conserve environment
W-WEAKNESSES:
 High capital rated charges
 Low return product-mix
 Productivity below international levels
 Practices not as par with international standards
O-OPPORTUNITIES:
 Shore based
 Sizeable export markets
 Access to import resources
 Proximity to southern markets
 Increasing domestic demand due to thrust on infrastructure development

T-THREATS:
 Rising input costs
 Increasing competition
 Sensitive to exchange rate variation
 Possibility of import duties declining further
 Excise duties continue to be high
 Lack of alternative sources for major raw materials
 Major market place(North & West) located far off
 Infrastructure continue to be inadequate
VSP’s state-of-the-art technology, high expansion potential and

economies of scale would be utilized for off setting the disadvantages of
low return product-mix and high capital related charges. Shore based
location of the company would promoted export and import of quality
raw materials. Proximity of VSP to southern markets can help in
capturing larger market share in south. VSP would meet the increasing
competition through its quality products and customer orientation.

CHAPTER-3
EXPORT MARKETING

 CONCEPT OF EXPORT MARKETING
 EXPORT BENEFITS
 GENERAL EXPORT MARKETING PROCEDURE
 VSP TERMS & CONDITIONS FOR EXPORTS
 EXPORT MARKETING PROCEDURES AT VSP
 FLOW CHART FOR EXECUTING EXPORT

ORDER

CONCEPT OF EXPORT MARKETING
The concept of export marketing arises when there is a chance of
international marketing, which is the result of the liberalization policies of
different governments. When the goods or services are provided to the
customer crossing the national boundaries it is called international marketing.
The international marketing deals essentially with the trade patterns i.e. export
and import patterns among the various countries in the world. It is basically
similar to the domestic marketing but differs in aspects like language,
geographical distance, government policies, climatic conditions, and
economical and social concepts.
The changing scenario demands an outward look. The extent of firm’s

involvement abroad is a function of its commitment to the pursuit of the foreign
markets. Export marketing not only enables to earn foreign exchange but also to
have an extensive market to serve. Export is treated as an easy way to enter a
foreign market. Few companies like VSP also export in order to show their
presence in the world market.
Export marketing is the selling of products produced in one country in

another country. Procedurally, exporting requires locating customers, obtaining
an export license from the government, collecting export documents (such as
bill of lading, commercial invoice, packing list etc.), packing and marking of
products, shipping products abroad, and receiving payment. Methods of
receiving payment include cash in advance, open account, letter of credit etc.
The provision of customs privileged facilities, via the establishment of free

trade zones, is a recent trend that many countries had adopted to encourage and
facilitate international trade the development of a nation greatly depends on the
marketing. The purpose of industrialization depends on export marketing. The
balance of payments of a country is said to be equilibrium when exports are
equal to the imports. After a long time India had achieved a positive dis-
equilibrium where the exports are more than the imports. It in this situation the
country gains profits. Government has employed several incentive schemes to
encourage exports; they are DEPB, Advanced Licensing and DFRC etc.
Steel market is subject to severe and frequent fluctuations. Since export

on short-term basis may create a lot of problems and also adverse economic
implications it will be preferable to have being in continuously exports and
during periods of surplus the quantum could be increased to take care of
domestic surplus. The export group is constantly on the lookout for export
markets and is fully updated with the information regarding export markets,
prices, ocean shipping etc.
For every exporter there are three indispensable elements for success: A
marketable product, efficient sales and distribution organization and a
marketing plan. One or other of these basic ingredients can obtain marketing
success.

EXPORT BENEFITS
In International market the prices of exports are lower than

domestic market. The government of India is giving some benefits or incentives
to an exporter so that the Government can encourage exports and earn foreign
exchange.
Duty exemption schemes enable duty free import of inputs required for
export production. An Advance License is issued as a duty exemption scheme.
A Duty Remission Scheme enables post export replenishment/ remission of
duty on inputs used in the export product. Duty remission schemes consist of
(a) DFRC (Duty Free Replenishment Certificate)
(b) DEPB (Duty Entitlement Passbook Scheme).
DFRC permits duty free replenishment of inputs used in the export

product.
DEPB allows drawback of import charges on inputs in the export
product.Goods exported under Advance Licence/DFRC/DEPB may be re-
imported in the same or substantially the same form subject to such conditions
as may be specified by the Department of Revenue from time to time.
Value Addition : Value Addition is calculated as follows-

V.A= (A-B) X 100, where
A. FOB value of the export realized / FOR value of supply
received.
B. CIF value of the imported inputs covered by the licence, plus
any other imported materials used on which the benefit of
duty drawback is being claimed.

ADVANCE LICENCE
An Advance Licence is issued to allow duty free import of inputs, which
are physically incorporated in the export product. Advance Licences are issued
on the basis of the inputs and export items given under SION. However, they
can also be issued on the basis of Adhoc norms or self-declared norms.
Advance Licence can be issued for:-

a) Physical exports: - Advance License may be issued for physical exports
to a manufacturer exporter or merchant exporter tied to supporting
manufacturers for import of inputs required for the export product.
b) Intermediate supplies: - Advance License may be issued for
intermediate supply to a manufacturer- exporter for the import of inputs
required in the manufacture of goods to be supplied to the ultimate
exporter/ deemed exporter holding another Advance License.
c) Deemed exports: - Advance License can be issued for import of inputs
required in the manufacture of goods to specified projects. An Advance
License for deemed export can also be availed by the sub-contractor of
the main contractor to such project provided the name of the sub-
contractors appears in the main contract.
Advance Licence is issued for duty free import of inputs. Such licenses
(other than Advance Licence for deemed exports) are exempted from payment
of basic customs duty, additional customs duty, Educational Cess, anti-dumping
duty and safeguard duty, if any.
However, for exports for which payments are not received in freely
convertible currency, the same shall be subject to value addition. Advance
License shall be issued in accordance with the Policy and procedure in force on
the date of issue of licence and shall be subject to the fulfillment of a time

bound export obligation as may be specified. The facility of Advance License

shall also be available where some or all of the inputs are supplied free of cost
to the exporter. In such cases, for calculation value addition, the notional value
of free of cost inputs along with value of other duty-free inputs shall be taken
into consideration.
DUTY FREE REPLENISHMENT CERTIFICATE

DFRC is issued to a merchant-exporter or manufacturer exporter for the
import of inputs used in the manufacture of goods without payment of basic
customs duty. However, such inputs shall be subject to the payment of
additional customs duty equal to the excise duty at the time of import.
DFRC shall be issued on minimum value addition of 25% except for
items in gems and jewellery sector. DFRC may be issued in respect of exports
for which payments are received in non-convertible currency. Such exports
shall, however, be subject to value addition.
DFRC shall be issued only in respect of products covered under the
Standard Input Output Norms as notified by DGFT. However, in respect of
SION which are subject to ‘actual user” condition or where the export proceeds
have not been realized or for import of fuel under the general norms, DFRC
shall be issued with actual used condition for these inputs.
DFRC shall be issued for import of inputs as per SION as indicated in the
shipping bills. The validity of such licences as shall be 24 months. DFRC and or
the materials(s) imported against it shall be freely transferable. However, DFRC
with actual user condition or the materials imported against it shall not be
transferable.
The export products, which are eligible for modified VAT, shall be
eligible for CENVAT credit/service tax credit.

DUTY ENTITLEMENT PASSBOOK SCHEME

The objective of DEPB is to neutralize the incidence of Customs duty on
the import content of the export product. The neutralization shall be provided by
way of grant of duty credit against the export product. The DEPB scheme will
continue to be operative until it is replaced by a new scheme that will be drawn
up in consultation with exporters.
Under the DEPB, an exporter may apply for credit, as a specified
percentage of FOB value of exports, made in freely convertible currency. The
credit shall be available against such export products and at such rates as may
be specified by the Director General of Foreign Trade by way of public notice
issued in this behalf, for import of raw materials, intermediates, components,
parts, packaging material etc.
The holder of DEPB shall have the option to pay additional customs duty,
if any, in cash as well. The DEPB shall be valid for a period of 24 months from
the date of issue. The DEPB and/or the items imported against it are freely
transferable. The transfer of DEPB shall however be for import at the port
specified in the DEPB, which shall be the port from where exports have been
made.
Import from a port other than the port of export shall be allowed under
Trade Regulation Act facility as per the terms and conditions of the notification
issued by Department of Revenue. Normally, the exports made under the DEPB
Scheme shall not be entitled for drawback. However, the additional customs
duty/excise duty paid in cash or through debit under DEPB shall be adjusted as
CENVAT Credit or Duty drawback as per rules framed by the Department of
Revenue.

GENRAL EXPORT MARKETING PROCEDURE

The procedure for export of goods from India can be divided into four
parts as given below:
A. Registration procedure
B. Pre-shipment procedure
C. Shipment procedure
D. Post-shipment procedure
A) REGISTRATION PROCEDURE
1. Opening a bank account:
The exporter should open an account with a bank, which is capable of
providing the range of services that will be required by him. Ideally the bank
should be
a) Authorized to deal in foreign currencies
b) Capable of providing loans and advances; and
c) Capable of providing guarantees on behalf of the exporter.
2. Income tax registration
The exporter should make an application to the income tax authorities for
getting a permanent account number (PAN). This registration will enable to him
to claim tax deductions in respect of export profits. The plan is also required for
registration with the reserve bank of India and the Director General of Foreign
Trade.
3. Registration with reserve bank of India

Under the exchange control regulation in force, all exporters should be
registered with the reserve bank of India and obtain a code number for exporters
(CNX).
For this purpose, an application should be made in CNX from, through an
authorized dealer in foreign exchange.

The application should be accompanied by:

a) Memorandum of association articles association, registration
certificate of the company, partnership deep, as applicable;
b) Permanent Account Number (PAN) issued by the income tax;
c) Confidential reports by the bank certifying the financial soundness of
the exporter;
d) Declaration that the exporter is not on the black list of the reserve
bank of India.
4. Registration with exports promotional council
The exporter should register with an appropriate export promotion
council and obtain a Registration-cum-Membership-Certificate (RCMC). If
there were no export promotional council for the type of product death with by
the exporter, then the application would be made to the regional licensing
authority.
Export housed, trading houses, star-trading houses, and super star
trading houses should register with the federation of Indian export
organizations.
5. Registration with the Director General of Foreign Trade
Under the foreign trade (regulation and development) act, 1992 every
exporter and importer should register them with the Director General of Foreign
Trade and obtain an importer exporter code number. The application should be
made to the regional licensing authority and should be accompanied by
a) RCMC issued by the EPC
b) CNX number issued by the reserve bank of India.
c) Permanent account number issued by the income tax dept.
d) Registration certificate of the firm or company

6. Registration with the Sales tax Dept.
Export sales are exempted from central and state sales tax. For this
purpose, the exporter should register with the sales tax authorities.
7. Membership of Chamber of Commerce
An exporter should also become of the local chamber of commerce.
Among other things, a chamber of commerce issues a certificate of origin for by
many countries.
8. Registration with other Organization
An exporter should also seek affiliation with such organizations as the
national productivity councils (NPC) etc., with may be helpful in getting
information about new products, markets and process.
B) PRE – SHIPMENT PROCEDURE

The pre-shipment procedure involves all the actions that are required to
be taken before the goods are sent abroad. These steps are as shown below:
1. Getting Enquiry
The potential buyer may come to know about the exporter from trade
references or from seeing in exhibitions or through advertisements. Sometimes,
the exporter may directly approach the potential buyer in response to tenders or
through agents.
2. Replying to enquiry
The reply in the form of a quotation or a Performa invoice. The reply
should clearly state the description of the goods, price, terms of payment, mode
of transport, time of shipment, period of delivery, etc. Sometimes, samples of
the goods may also be sent.

3. Receipt of order
If the potential buyer finds the term and conditions in the
quotation/Performa invoice acceptable, he may place an order with the exporter.
The importer may also open a letter of credit in favour of the exporter.
4. Export license
Generally, exporters do not require a license. But, in case of some items
like vegetable oils, pulses, seeds etc. It is compulsory to have an export license.
Such a license can be obtained by applying to the DGFT along with a copy of
the export order.
5. Obtaining quotas
The exporter of some items is subject to quantitative restriction by the
importing countries. In such case; the exporter should apply to his export
promotion council for allotment of quotas. Quotas may be allotted on the basis
of past performance or on first-come-first-serve basis.
6. Booking forward contract
As the Indian Rupee has been made convertible on current account, the
exporters are exposed to risk due to fluctuation in foreign exchange rates. To
insure against such risk, the exporter should book a forward contract with an
authorized dealer in foreign exchange.
7. Obtaining pre-shipment credit
The exporter may then approach his bank to sanction him pre-shipment
credit on the basis of the letter of credit or the export order to enable him to
procure the goods and to by raw material components, etc. required for
manufacture.

8. Procurement and production of goods

A merchant exporter would place 0rders with his orders with his suppliers
to manufacture the required goods, specifying the quality, quality and the date
of delivery. The date of delivery specified by the merchant exporter to his
supplier would be much in advance of the date on which he has to give delivery
to the foreign buyer. A manufacture exporter would arrange for production of
the goods. He specifying the dates, on which each stage in manufacture should
be completed, would prepare a production schedule, consideration should also
be given to the time required for pre-shipment inspection, customs formalities
and transport.
9. Pre-shipment inspection
Generally, the export order specifies the condition for pre-shipment
inspection. Sometimes a local agent of the buyer may carry out such inspection.
For this purpose the agent will have to intimated when the goods are ready.
Under the export act, 1963 the government has made it compulsory for some
categories of goods to be inspected for quality, before shipment. Such
inspection council and the export inspection agency have been set up are in
charge of administering such pre-shipment inspection.
10. Packaging, marketing and labeling
Once the goods are manufactured, they have to be packed appropriately.
The method of packaging will depend upon type of goods, mode of transport,
and period of voyage. The goods should pack ad marked according to export
order. Packing noted and packing wise should be prepared, as the same is;
needed by the foreign buyer customs and insurance’s authorities. A packing
note lists the contest of each packet or container, where as a packing list of
consolidated statement of content for the entire consignment.

11. Pay and refund method

Under this method, the exporter pays the excise duty at the time of
removal of removal of goods from the factory and alters when the goods are
exported, claims refund the same. When the exporter pays excise duty, send to
the central excise authorities five copies of AR4 form three copies of the gate
pass 1 form. Excise inspectors then visit the factory and inspect the goods on
the basis of the AR4 and GP1 form. If the inspectors are satisfied, AR4 and GP1
form are certified. The original copy of GP1 form and the first and second
copies of the AR4 forms are returned to the exporter.
C) SHIPMENT PROCEDURE
1. Reservation of Space:
Every exporter must reserve the space at the port before shipment. It
gives easy ness to the exporter to load the material in the vessel. It is nothing
but storing the goods at the port before loading.
2. Transport of goods from Factory to the port:
After completion of the rolling of material in the factory, the material
should transport the goods from factory to port by road or by rail. It depends on
the cost, quantity of goods and demand.
3. Customs clearance:
The exporters should get customs clearance from customs department
before shipment. The customs department by examining the documents like
Commercial Invoice, Packing List, Original and duplicate copy of AR4 form,
Original of the inspection certificate, Duplicate GR form.
4. Let ship Order:
The exporter can get order for loading the material after examining the
goods.

5. Issue of Mate’s receipt:

After completion of loading the material into the ship, the master of the
vessel issues the MR certificate.
6. Issue of bill of lading:
It talks about the quantity of the material and weight of the material. This
certificate issued by the charter party or agent at the port.
POST SHIPMENT PROCEDURES
1. Dispatch of documents by Agent to the Exporter:
After shipment, the documents will be dispatched to the exporter by the
agent for further reference.
2. Sending shipment advice to the importer:
The exporter should send the shipment advice to the importer after
completion of the shipment at the port. The exporter should send these
following documents. They are:
a) Anon-negotiable copy of the bill of leading
b) Commercial list
c) Packing list
d) Customs invoice
3. Negotiations and Collection:
Every exporter must send the documents to the bank for negotiation and
collection after completion of the shipment procedure. By our look of the
documents, the bank will issue the amount to the exporter.
4. Claming Duty Drawback / DEPB:
The exporter should claim either duty draw back/DEPB for export
benefits. These benefits issued by the government through DGFT.

VSP Terms and conditions for exports

RashtriyaIspat Nigam Limited, Visakhapatnam Steel Plant, a Company
incorporated in India under the Companies Act 1956 having its registered office
at Administrative Building, Visakhapatnam Steel Plant, Viskhapatnam – 530
031 herein after referred to as SELLER (which term or expression unless
excluded by or repugnant to the context shall include its successor and
permitted assignee) is the SELLER.
The SELLER is an independent legal entity with power and authority to
Enter into contracts solely in its own behalf under applicable laws of India and
general principles of contract laws, Government of India is not a party to any
agreement as per these terms and conditions and is not and shall not be liable
for any acts, omissions, commissions breaches or other wrongs arising out of an
agreement as per these terms and conditions and the BUYER shall waive,
release and forego any and all actions for claims including loss claims, imp
leads claims or counter claims against Government of India arising out of this
contract and shall not sue the Government of India as to any manner, cause of
action or thing whatsoever arising of or under this agreement.
The person/company/firm identified, as BUYER in the agreement
including his/its successor/permitted assignee shall be herein after referred to as
BUYER.
 The obligations in the agreement are between BUYER and SELLER and
unless otherwise agreed any BUYER’s representative in India is not
liable or obliged by/to SELLER under any agreement as per these terms
and conditions except that any communication to/from such
representative shall be deemed to be to/from BUYER.

PRICE BASIS:
 Unless otherwise agreed, price of the material shall be free on board,
Viskhapatnam port, Visakhapatnam, India.
 (Applicable for steel products only): The BUYER shall arrange at his
own cost and expense to provide materials including Dunn aging required
for stowing, Dunn aging, lashing, shoring and securing of the material
inside the hatches/ holds of the vessel at load port to the Master of the
vessel nominated by BUYER and accepted by SELLER for delivery as
per clause-5, herein below, labour charges involved in the work of
dunnaging/stowing/lasing/shoring and securing of the materials shall be
borne by SELLER.
 SELLER shall under no circumstance be liable for navy
costs/charges/liabilities/insurance/freight/taxes or duties/levies/fees what
so ever nature, the country of Import, arising subsequent to the delivery
of the materials as per the agreement on the basis of FOB.
 Marine Insurance to be covered by the BUYER.
MATERIALS AND QUANTITY

 The SELLER is obliged to sell material of technical specifications as
agreed and the buyer is obliged to buy the same.
 (Applicable for steel products only): Size wise and specification wise
break up shall be as agreed. Unless other wise agreed, SELLER has right
to sell/dispatch/ship the material as per agreement with quantity variance
of +5 or –5 % on total quantity with +or- 10% for each size and
specification at SELLER. Unless otherwise agreed, SELLER shell
invoice on the basis of actual net weight. Quantity and quality shell be
certified in inspection certificate by an independent inspection agency, at
load port. BUYER has freedom to nominate their own agency at
BUYER’s cost to co-jointly carryout survey with the independent
inspection agency appointed by SEELLER, in accordance with

international standards, regarding the physical conditions and packaging
of the cargo at the transit storage yard port on a lot wise basis.
 (Application for pig iron material): unless otherwise agreed the tolerance
on quantity to be delivered shell be +/-10% at BUYER’S option. The
option shell is exercises by the buyer at the time of nomination of the
vessel.
Weight (quantity) shell is established by draft survey at loading
port by as independent inspection agency, and the quantity and quality
established at load port shell be final. Weight of deleterious impurities such
as nonferrous dirt, dust, moisture over 0.5% (1/2%) shall be deductible from
the final weight. BUYER has freedom to nominate their own agency at
buyers cost to co-jointly carryout quality and quantity survey with the
independent inspection agency appointed by the SELLER, and the inspection
is to be carried out in accordance with international standards applicable for
pig iron for quality inspection and draft survey.
 The cost of inspection by the independent inspection agency appointed by
the SELLER shall be borne by the SELLER. The inspection certificate
issued by them shall certify, inter-alias. That the materials were inspected
at the loading port prior to loading and that the marking work as per
requirements of the agreement between the SELLER and the BUYER;
the size wise break-up of quantity loaded onboard the cesses indicating
the number of bundles/coils (Applicable for steel products only); and that
the materials were found to be in good order and that the materials were
properly lashed and secured inside the hatches/holds of the vessel.

DELIVERY/SHIPMENT
 The SELLER shall deliver the material free in the holds of the vessel(s)
nominated by BUYER and accepted by the SELLER as per these terms
and conditions in one or more safe berths reachable on arrival always
afloat at loading port which shall be at Visakhapatnam, India. Unless
financial arrangement is made by the BUYER as per clause 6 or
otherwise as agreed by SELLER, the SELLER is obliged to conform
delivery.
 The BUYER shall nominate a vessel not more than 25 years with lay
date/cancellation date within 30 days of SELLER’S notice of readiness of
materials for shipment of within the lay days incase given by the
SELLER or acceptable to the SELLER whichever is earlier. The BUYER
shall take into account limitations of the port such as, maximum LOA of
182mts, maximum beam length of 30.48mts and maximum laden draught
of vessels as 9.448mts in some berths and 10.06mts in others.
 In case there is a delay by the SELLER to conform notice of readiness of
materials and the BUYER has the option to cancel the contract or take the
delivery of the material at the contract price and terms within a period of
90 days beyond the originally agreed delivery period.
 While nominating a vessel the BUYER shall communicate following
particulars for the nomination:
a) Name of the Vessel
b) Year of built and flag
c) Classification
d) LOA/Bean/Draft at max DWT
e) Loadable tonnage/nominal tonnage for delivery
f) Number of Decks (Single decker, tween decker (if tween),
the third deck if any)
g) Number of HOLDS/Hateches

h) Hatch openings (weather deck/tween deck)

i) Type of hatch covers (deather deck/tween deck)
j) Cargo gear capacity (cranes-single swinging Dericks-
configuration Hatch wise-Derricks working in union
purchase-not acceptable.
k) ETA/lay date/cancellation date at load port the SELLER is
entitled to following additional information if required:
l) Original name of vessel if changed at present
m) Whether despondently owned
n) Owners P & I Club
o) Despondent owners P & I club
p) Last special survey
q) Last dry docking
r) Position of engines
 The vessel nominated by the BUYER shall be geared and equipped with
cranes/derricks capable of lifting minimum specified tonnage at a time as
below from the wharf and placing the materials in the place of hatches
including wing spaces and having minimum 4 available hatches. The
SELLER shall guaranty a loading rate of 2000 MT pet weather working
date of 24 consecutive hours Sundays, holidays and non-weather working
days excepted even if used (2000MT PWWD SASHEXEIU) for steel
products and the rate of 4000 MT PWWD SASHEXEIU for pig iron
subject to these terms and conditions on the basis of 5 or more available
workable hatches or hooks which ever is less. The SELLER is not
obliged to accept vessel with gear capacities, less than what is specified
below or vessels offering less than 3 hooks. If due to any reason a vessel
of hatches/hooks, the load rate shall be reduced prorata. The rate of
demurrage/dispatch shall be as mentioned in the below table.

In case any/all vessel gears are NIT suitable for loading the cargo, due to
anti reason and incase BUYER provides shore crane berths and shore cranes at
his cost the same will be considered as gear for the purpose of lay time
calculations. In such an event waiting time for getting shore crane berth shall be
excluded from time used.
In case any hatch is doubled up, it shall be considered as double hatch
only when two cranes that are capable of being worked by two gangs
simultaneously are made available for not less than 75% of loading time of that
hatch.
Product Nom. Quantity Gear capacity Demurrage/dispatch
for delivery MT (MIN) USD per day
(MT)
Pig iron 9999 or below 15 Nil/nil
Pig iron 10000-19999 15 4000/2000
Pig iron 20000 & above 15 6000/3000
Steel 9000 or below 5 Nil/nil
Steel 9001-9999 5 4000/2000
Steel 10000-19999 5 5000/2500
Steel 20000 & above 10 6000/3000
NOTE: Union purchase type gear is not acceptable. The loading shall
be on CQD basis for cases of NIL demurrage/dispatch. It is preferable
to have tween decker for wire rods and single decker for pig iron.
Stacking below wing space will be three high for wire rods, ab ove the
coils will be rolled on plates below the wing space and drop stowed in
the hatch openings. Tank tops should be able to support for lift along
with materials for loading steel cargo. Tank top strength should be 10

T for 10 T for lift for 4 high stac king. All cargo except WRC will be
drop stowed in the hatch opening within the reach of vessel cranes
only. If one or more parties nominate a vessel for lifting part quantity
of pig iron in different sale contracts the dem / sis amount shall be
calculated as per the rates applicable for the total quantity loaded in
the vessel by all parties concerned and the dem / sis amount so arrived
shall be payable on prorata basis as per the quantities lifted by the
respective individual parties / in different sale con tracts.
In case party nominates part vessel for steel consignment, the
dispatch / demurrage calculations will be made based on per working
per hatch per day or per workable hatch per day basis as given below;
“PER WORKING HATCH PER DAY” or “PER WORKABLE H ATCH
PER DAY”. It means that lay time is to be calculated by dividing the
“quantity of cargo in the hold with the largest quantity by the result of
multiplying the agreed daily rate per working or workable hatch by
the number of hatches serving that hold.
Thus: Largest Quantity in one hold
Largest quantity in one hold

Lay time = ---------------------------------------------------- -----------------
Daily rate per hatch X Number of hatches serving that hold
=DAYS
Lay time used shall be corresponding to the hold in which largest

quantity is loaded with allowable exceptions as per our standard terms and
conditions. The time spent for loading cargo in all other holds will not count as
lay time.

 The SELLER shall communicate acceptance / non-acceptance within

next working day and with reasons in case of non-acceptance. However,
the SELLER is not obliged to consider any nomination of the vessel
unless financial arrangement is made by the BUYER as agreed.
 Ensuring that the vessel is ready the master of vessel shall serve the
notice of readiness of the vessel to load the materials i.e. Master’s N/R
on the port office of the SELLER at the loading port, during normal
office hours which are 9.30 AM to 4.30 PM from Monday to Saturday.
The Master’s N/R shall not be served on Sunday / port holidays / charter
party holidays / non-weather working days.
Upon arrival of the vessel within the limits of the loading port or at any
time later till completion of loading, if the SELLER or the load port authorities
consider that the cranes/gears of the vessel are not capable of lifting the
materials of the weights and dimensions as agreed and placing the material
inside the hatches as required for loading, the SELLER has a right to reject the
vessel outright without any liability including dead freight and all other
consequences/losses arising thereof. In case it is considered that the gears are
not capable of maintaining the loading rate guaranteed, the SELLER has a right
to assessment by an independent marine surveyor to determine such load rate
and the same shall be binding on the BUYER. In case the surveyor find the
gears not capable of loading from wharf to any part of the hatches,
nomination/acceptance stands cancelled with no risks/costs to the SELLER and
the charges of the independent marine surveyor shall be borne by BUYER.
 The BUYER shall ensure that the charter party governing the shipment
shall inter-alia, include following provisions;
 The ship owners shall appoint their own agents at load port.

 The ship owner shall bear all ports dues/charges/levies except port
loading charges, tonnage dues, light dues and other taxes,
assessments and charges that are customarily payable by shippers.
 Ten days prior to ETA of vessel at a load port, the master of the
vessel shall give telex/cable/fax intimation to the SELLER.
 Thereafter at the interval of 7 days/72 hrs./24 before the ETA of
the vessel to the SELLER and as well as to the port office of the
SELLER.
 Each vessel shall hold a valid gear certificate in dispatched with
the International Dock Safety Convention, covering the duration
of each voyage and confirming that all the gears have been duly
tested. The master of the vessel shall make the gear certificate
available to the representative of the SELLER for verification
before/on berthing of the vessel at the loading port, in any case
prior to commencement of loading. Similarly, the hatch-wise
loading plan for the materials shall be furnished by the Master of
the vessel before/on it’s berthing.
 The master of they vessel shall allow on board the vessel the
representative of the independent inspection agency appointed by
the SELLER and provide such information/ assistance as may be
required by such agency in connection with the performance of
their assigned duties.
 The master of the vessel shall provide free use of light on board
the vessel as may be required for working the vessel at the loading
port at all times and in each case free of expense to the SELLER.
The master of the vessel shall make available all the hatches for
loading of the material throughout the period the vessel is worked

for loading of the materials except in such hatches where the

materials have been completely loaded.
 Lay time and excepted period: lay time shall commence at 1300 hrs
if master’s N/R is served in the forenoon and at 0800 hrs of the next
working day if the master’s N/R is served in the afternoon.
Time between noon on Saturday 0800 hrs on Monday and/or port

holidays/charter party holidays and 0800 hrs in the next working day shall not
count as lay time even if used, unless the vessel is on demurrage.
After berthing, if the port authorities or representative of the SELLER
find that the vessel is not ready in all respects to load, the laytime will not
commence until the vessel is in fact ready in all respects to load. The time used
by the vessel in proceeding from the anchorage to the berth shall not count as
laytime unless the vessel is on demurrage.
In the event of breakdown of vessel gear or other equipment of the
vessel by reason such as insufficient power etc. not attributable to shipper, the
period of such breakdown shall not count as laytime.
Time lost due to any of the following reasons shall not count as lay time
unless the vessel is on demurrage:
o Non weather working days declared by the port authorities even if
the vessel is worked.
o War, rebellion, Tumult, Political disturbances, Insurrection.
o Lockout, Strikes, Riots, Civil commotions.
o Epidemics, Quarantine, Land-ships, Floods, Frost or Snow, Bad
Weather.
o Stoppage of work, whether partial or general by workmen/long
shore men/tug-boatmen or other hands essential to the working of
the vessel or loading of the material into the vessel.
o Accidents at Wharf.

o Intervention of security, customs and/or other constituted

authorities.
o Stoppage, whether partial or total, due to any other causes beyond
the control of the SELLER.
The opening and closing of the hatches of the vessel shall always be
done by the closing of the hatches of the vessel shall always be done by the
vessel’s crew and the cost involved therein shall be to the account of the
vessel.
The time lost due to shifting of the vessel within the port limits shall not
count as lay time. However, if the SELLER requires the shifting, the shifting
charges shall be to the account of the SELLER and time lost in shifting shall
count as lay time.
The overtime of the crew and officers shall be to the account of the vessel.
 If any damage is caused to the vessel at the loading port at the time of
loading of the Materials by the Stevedores engaged by the SELLER, the
claim, if any, for such damage shall be settled directly between the ship
owners and stevedores. The master of the vessel shall lodge such claim,
if any, on the stevedores, promptly after the damage has been sustained
and then confirm in writing duly supported by the Third Party Damage
Reports, prior to the departure of the vessel from the loading port,
failing which the claim shall stand bared and the stevedores shall stand
absolved and relived of all responsibility. Subject to compliance with
the conditions enumerated in the clause, in case the stevedores fail to
settle the same, the SELLER shall be responsible for settlement of such
claim.
 Statement of facts: Immediately after completion of loading of the
materials into vessel and before the sailing of the vessel from the
loading port(s) duly signed by and distributed amongst; (a) master of the
vessel/Agent of the vessel at the loading port (b) Agents/Representative

(s), if any of the BUYER at the loading port and (c) representative of the
SELLER at the loading port.
 The master of the vessel shall deliver a stowage plan in triplicate duly
signed by him before loading and immediately after completion of
loading and sailing of the vessel, if sought by the SELLER.
 The ship owners shall instruct their Agents at the loading port to issue
the Bill(s) of lading with marking as per LC to the representative of the
SELLER, immediately but within one day from the date of completion
of loading of the materials into the vessel.
Freight enquiries shall be notified in advance to:
Ministry of Surface Transport, Chartering Wing (Transchart), Transport
Bhavan, SansadMarg, New Delhi 110 001 (INDIA), telex: 011-
261147,261158,261159 VAHANND.
TERMS OF PAYMENT
 Unless agreed otherwise, financial arrangements shall be made within six
weeks of acceptance of offer by the SELLER or before nomination of the
vessel whichever is earlier, in USD by the BUYER in favour of SELLER
by means of a confirmed irrevocable without recourse to the drawer’s
letter of Credit (LC), governed by Uniform Customs and Practices for
Documentary Credits (as applicable on date of opening of LC conforming
to SELLER’S standard format), representing the value of the contract
quantity of the materials with positive tolerance, on the basis of FOBST,
established through any first class international bank in favour of
RashtriyaIspat Nigam Limited, Visakhapatnam Steel Plant,
Visakhapatnam, India. The LC should be advised through:

EITHER OR
State bank of India, Bank of Baroda
Steel project branch Vadlapudi Branch
Branch Code No. 6318
TLX: 0495 518 SWAT IN 0495 259 BBVA IN
SWIFT : SBINIBNBBA 145 0495 266 RODA IN
As per the negotiating documents negotiable at the counters of any

branch or any bank of India.
CHECK LIST FOR ASKING L/C AMENDMENTS
1. Name of LC Opening Bank / LC Advising Bank.
2. LC Applicant.
3. Beneficiary.
4. Confirmed Irrevocable Documentary Credit.
5. Payable at sight for 100% Value of Invoice.
6. Confirmation Clause – By any Bank in India.
7. Bank Charges – As per VSP’s STD Format.
8. TT Reimbursement – As per VSP’s STD Format.
8.A) In case of any delay in remittance interest charged by the
Negotiating Bank shall be paid by us.
9. Credit Amount – should be equal to quantity X unit price.
10.Credit amount tolerance +/- 5% allowed.
11.Quantity tolerance +/- 5% sizewise/lotwise/total.
12. Material

13. Size.
14. Quality/Specification.
15. Unit Price / Price per MT
16. Packing : In coils of weight 1.2 MT Approx.
17. Marking : One label attached to each coil showing heat no.,
quality and size.
17A: Shipping Marks: .... (to be indicated on Proforma P/L)
18. Shipping from: Visakhapatnam Port, India
19. Shipment to:
20. Latest Date of Shipments : allowed
21. LC Expiry Date:
22. Place of Expiry: ---------.,India.
23. Partial Shipments :allowed
24. Transshipments :allowed
25. Freight clauses on B/L such as : Freight payable as per
Charter Party etc.
25(A) Deletion of the word “CLEAN” on Bill Of Lading.
26. Rust Clause/ Remarks on BL
27. Remarks: Material with Superficial / Surface / Atmospheric
Rust stored in open area prior to loading unprotected cargo
rust stained.
28. Remarks: Material with superficial/surface/atmospheric rust
stored in open area prior to loading unprotected cargo rust
stained.
29. This credit is available with any bank in India for negotiation
and payment.
30. Charter party bills of lading are acceptable.
31.Ocean Freight shall be settled by the LC applicant.
32. Marine insurance is to be covered Y the LC applicant.

33. Red Clause.

34. Third party documents acceptable.
35. Documents to be negotiated within 21 days from the date of
B/L but before the expiry of the LC.
36. This LC is subject to UCPDC 1993 revision international
chamber of commerce brochure No. 500.
37. This telex is operative instrument and no mail confirmation
shall follow.
PAYMENT AGAINST L/C
 The LC shall be available for payment of 100% of value of invoice (less

if any advance is already paid by the BUYER), covering the material
shipped against presentation of the SELLER draft drawn at slight
accompanied by following Bank documents (and also against Clause No.
6.8 herein below).
a) 3/3 original on board Ocean or charter Party Bill(s) of lading.
b) SELLER’S signed Commercial Invoices
c) Works test certificate(s) issued by the SELLER
d) Pre-shipment Inspection Certificate-issued by the independent
inspection agency appointed by the SELLER.
NOTE: One copy each of the aforesaid documents shall be dispatched by

courier by the SELLER to the BUYER within 7 working days from the
date of BL.
 The LC shall also be available for payment against 100% of Invoice
value as per Clause No. 6.8 herein below.
 In case the LC opening bank does not pay the due amount as per the LC
within specified time in the LC to the beneficiary’s bank in India, the

BUYER shall be liable to the SELLER for payment of interest charged

by; the negotiating bank for the delay in such remittances.
 The LC shall specifically provide that Bill(s) of lading and Pre-shipment
Inspection Certificate with remarks such as;
 Some ties broken/missing
 Atmospheric/surface/superficial rust/edge rust unprotected cargo,
 Stored in open area prior to loading
 Rust stained/partly rust stained.
Shall be accepted for negotiation.
 The LC should provide for shipment of materials with quantity tolerance
as specified in clause 4 herein above or as otherwise agreed. It should be
valid from date of opening upto date of shipment as per the agreement
and
upto actual date of completion of shipment in the vessel nominated by
BUYER and 21 days beyond that for negotiations of documents.
 All bank and other charges incurred outside the territory of India shall
be borne and paid for by the BUYER.LC confirmation charges, if
required shall be borne and paid for by the seller.
 The financial arrangement required to be made by the BUYER shall be
deemed to be made only on receipt of L/C at the bank as specified in
clause 6.1 above unless agreed otherwise. In case the financial
arrangement is not made by the BUYER within the agreed time, the
SELLER may forfeit the EMD if any with the SELLER.
 If any advance is made by the BUYER against any contract, in part or
full, if the BUYER is not able to indicate size wise breakup of the
material atleast 4 weeks prior to the expiry of contractual delivery
period.
a) In case of fall in prices, the SELLER is entitled to recover
difference in contract price and the weighted average price and
the weighted average price realized by SELLER for the

deliveries made in the last month within the contract delivery
period and return the balance and EMD to the buyer without
interest.
b) The SELLER will return the advance without interest in case
the weighted average prices realized for the last month of
delivery as per contract is more than the contract price.
In the event of :
i) The failure of the BUYER to nominate suitable vessel
within lay days given in SELLER’S notice of
readiness of cargo or otherwise acceptable to SELLER
or within 15 days from the N/R of cargo whichever is
earlier, or
ii) The vessel nominated by the BUYER and accepted by
the SELLER failing to arrive at the designated load
port within the agreed lay days for reasons other than
force major as defined under Clause No.10 herein
below, or
iii) The vessel (nominated by the BUYER and accepted
by the SELLER being found unsuitable after its arrival
at designated load port as certified by independent
marine surveyors,
The SELLER shall be entitled to negotiate his commercial Invoice

against the LC opened by the BUYER and realize 100% of the value of
the Materials ready for shipment on the basis of certificate issued by the
independent inspection agency appointed by the SELLER, certifying the
quantity of the materials ready for shipment and also certifying that the

materials are in good condition. The materials will thereafter be held in

custody by the SELLER at the risk and responsibility of the BUYER at
the storage yard of the SELLER at the load port. While the SELLER shall
hold the materials free of ground rent for a period of 15 days from the
date of payment, for a storage extending beyond 15 days from the date of
payment BUYER shall pay to the SELLER ground rent calculated at the
rate of USD 1.00 per metric ton per week or part thereof. The BUYER
shall however nominate another suitable vessel within reasonable time for
taking delivery of the cargo for which payment has been realized by the
SELLER as aforesaid and subject to such vessel arriving at load port
within the agreed lay-days the SELLER shall at his cost deliver FOB
(Stowed) the materials for which payment has been realized by the
SELLER as aforesaid. The LC established by the BUYER in favour of
the SELLER shall make specific and unconditional provision to the above
effecs
FLOATING A E-TENDER
This process is for export division .exports are very important to the
country as it will increase the countries GDP .the exports are been transported to
various countries by various transport systems .huge mount of steel is been
exported to Nepal by rail. 1st of all the origination would find the needs of the
domestic market and then if remains hen it exports.
If we are dealing with the exports then well be planning for the dispatch.
We will make sure to have min quality and max quantity.
Next step is TENDER FLOATING
We will be dealing with the TEARMS and CONDITIONS called

as TECH BID.

In past it was done for 21 days physically. Next reduced to 15days .ext
declined to less than a week. And now it’s all made online. If we get the tenders
they have to follow some rules and conditions and have some qualifying
certificates. The other stage was the price bid. The initial price will be fixed by
the RINL finance, mkt comity Next as all the dealers submit the tenders they are
opened and the H1 bidder was given the priority as his cost of buying was near
to the BID PRICE . If the price was near to the fixed cost then he will be given
the tender This all process will be given by the HEADQUATER COMMITY .in
this wing we will be having the finance HOD and the cost holder . cost holder
deals will the initial price fixing of the products by checking the international
rates in $USD cost was fixed from some of 6the sources like
 CIS (metal bulletin ) it was a news committee channel

 Steel Milton
 Cross check with the china prices.
The cost was considered with the domestic profit and approve the list based
on it .
DELIGATION OF POWER (they have a ability to reduce the cost to some
extent according to the bidder.
 STEPS IN THE CONTRACT:
As soon as the contract was issued to H1 bidder the contract will be issued
next the work progress will be done in 7 international working days .as we
get the (BG) bank guaranty (it gives the assurance on the bidder ) that
means he have to deposit 6X of the money on the price he buys in the bank
on the name of RINL as a guaranty . once the product was been exported and
reached the destination he will be getting back his money excluding the main
cost .the minimum cost of the blooms are nearly 525 to 600$ per ton.
The next step will be the LC (LETTER OF CREDIT) the m

Products are been sent to the port and the LC will be given by the ship caption.
Once the products are reached then there will be a 3 rd party inspection to check
the products are been sent in a genuine way and quality and the quantity. After
this the LC was deposited in the bank and the money transfer take place.
MAJOR EXPORTING COUNTRIES
 USA
 SOUTH AFRICA
 BANGLADESH
 DUBAI
 SRI LANKA
 THAILAND
 PHILLIPINES
 KENYA
 TAIWAN
 DJIBOUTI (AFRICA)
 INDONESIA
 VIETNAM
 KOREA
 ETHIOPIA
 TANZANIA
 SOUTH KOREA
INCOTERMS 2010:
The Incoterms® rules have become an essential part of the daily

language of trade. They have been incorporated in contracts for the sale of
goods worldwide and provide rules and guidance to importers, exporters,
lawyers, transporters, insurers and students of international trade.

RULES FOR ANY MODE OR MODES OF TRANSPORT
 EXW Ex Works
“Ex Works” means that the seller delivers when it places the goods at the
disposal of the buyer at the seller’s premises or at another named place
(i.e.,works, factory, warehouse, etc.). The seller does not need to load the goods
on any collecting vehicle, nor does it need to clear the goods for export, where
such clearance is applicable.
 FCA Free Carrier
“Free Carrier” means that the seller delivers the goods to the carrier or
another person nominated by the buyer at the seller’s premises or another
named place. The parties are well advised to specify as clearly as possible the
point within the named place of delivery, as the risk passes to the buyer at that
point.
 CPT Carriage Paid To
“Carriage Paid To” means that the seller delivers the goods to the carrier
or another person nominated by the seller at an agreed place (if any such place
is agreed between parties) and that the seller must contract for and pay the costs
of carriage necessary to bring the goods to the named place of destination.
 CIP Carriage And Insurance Paid To
“Carriage and Insurance Paid to” means that the seller delivers the goods
to the carrier or another person nominated by the seller at an agreed place (if
any such place is agreed between parties) and that the seller must contract for
and pay the costs of carriage necessary to bring the goods to the named place of
destination.

‘The seller also contracts for insurance cover against the buyer’s risk of loss of
or damage to the goods during the carriage. The buyer should note that under
CIP the seller is required to obtain insurance only on minimum cover. Should
the buyer wish to have more insurance protection, it will need either to agree as
much expressly with the seller or to make its own extra insurance
arrangements.”
 DAT Delivered At Terminal
“Delivered at Terminal” means that the seller delivers when the goods,
once unloaded from the arriving means of transport, are placed at the disposal of
the buyer at a named terminal at the named port or place of destination.
“Terminal” includes a place, whether covered or not, such as a quay,
warehouse, container yard or road, rail or air cargo terminal. The seller bears all
risks involved in bringing the goods to and unloading them at the terminal at the
named port or place of destination.
 DAP Delivered At Place
“Delivered at Place” means that the seller delivers when the goods are
placed at the disposal of the buyer on the arriving means of transport ready for
unloading at the named place of destination. The seller bears all risks involved
in bringing the goods to the named place.
 DDP Delivered Duty Paid
“Delivered Duty Paid” means that the seller delivers the goods when the
goods are placed at the disposal of the buyer, cleared for import on the arriving
means of transport ready for unloading at the named place of destination. The
seller bears all the costs and risks involved in bringing the goods to the place of
destination and has an obligation to clear the goods not only for export but also

for import, to pay any duty for both export and import and to carry out all
customs .
RULES FOR SEA AND INLAND WATERWAY TRANSPORT
 FAS Free Alongside Ship
“Free Alongside Ship” means that the seller delivers when the goods are
placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer
at the named port of shipment. The risk of loss of or damage to the goods passes
when the goods are alongside the ship, and the buyer bears all costs from that
moment onwards.
 FOB Free On Board
“Free On Board” means that the seller delivers the goods on board the
vessel nominated by the buyer at the named port of shipment or procures the
goods already so delivered. The risk of loss of or damage to the goods passes
when the goods are on board the vessel, and the buyer bears all costs from that
moment onwards.
 CFR Cost and Freight
“Cost and Freight” means that the seller delivers the goods on board the
vessel or procures the goods already so delivered. The risk of loss of or damage
to the goods passes when the goods are on board the vessel. the seller must
contract for and pay the costs and freight necessary to bring the goods to the
named port of destination.
 CIF Cost, Insurance and Freight

“Cost, Insurance and Freight” means that the seller delivers the goods on
board the vessel or procures the goods already so delivered. The risk of loss of

or damage to the goods passes when the goods are on board the vessel. The
seller must contract for and pay the costs and freight necessary to bring the
goods to the named port of destination
‘The seller also contracts for insurance cover against the buyer’s risk of
loss of or damage to the goods during the carriage. The buyer should note that
under CIF the seller is required to obtain insurance only on minimum cover.
Should the buyer wish to have more insurance protection, it will need either to
agree as much expressly with the seller or to make its own extra insurance
arrangements.”
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (UCP)
The Uniform Customs and Practice for Documentary Credits (UCP)

is a set of rules on the issuance and use of letters of credit. The UCP is utilized
by bankers and commercial parties in more than 175 countries in trade finance.
Some 11-15% of international trade utilizes letters of credit, totaling over a
trillion dollars (US) each year.
Historically, the commercial parties, particularly banks, have developed

the techniques and methods for handling letters of credit in international trade
finance. This practice has been standardized by the ICC (International Chamber
of Commerce) by publishing the UCP in 1933 and subsequently updating it
throughout the years. The ICC has developed and moulded the UCP by regular
revisions, the current version being the UCP600. The result is the most
successful international attempt at unifying rules ever, as the UCP has
substantially universal effect. The latest revision was approved by the Banking
Commission of the ICC at its meeting in Paris on 25 October 2006. This latest
version, called the UCP600, formally commenced on 1 July 2007.

Types of Letter of Credit:

1. Revocable Letter of Credit L/c
A revocable letter of credit may be revoked or modified for any reason, at
any time by the issuing bank without notification. It is rarely used in
international trade and not considered satisfactory for the exporters but has an
advantage over that of the importers and the issuing bank There is no provision
for confirming revocable credits as per terms of UCPDC, Hence they cannot be
confirmed. It should be indicated in LC that the credit is revocable. if there is no
such indication the credit will be deemed as irrevocable.
2. Irrevocable Letter of Credit L/c
In this case it is not possible to revoked or amended a credit without the agreement of
the issuing bank, the confirming bank, and the beneficiary. Form an exporters point of view it
is believed to be more beneficial. An irrevocable letter of credit from the issuing bank insures
the beneficiary that if the required documents are presented and the terms and conditions are
complied with, payment will be made.
3. Confirmed Letter of Credit L/c
Confirmed Letter of Credit is a special type of L/c in which another bank
apart from the issuing bank has added its guarantee. Although, the cost of
confirming by two banks makes it costlier, this type of L/c is more beneficial
for the beneficiary as it doubles the guarantee.
4. Sight Credit and Usance Credit L/c
Sight credit states that the payments would be made by the issuing bank
at sight, on demand or on presentation. In case of usance credit, draft are drawn
on the issuing bank or the correspondent bank at specified usance period. The
credit will indicate whether the usancedraft are to be drawn on the issuing bank
or in the case of confirmed credit on the confirming bank.
5. Back to Back Letter of Credit L/c
Back to Back Letter of Credit is also termed as Countervailing Credit. A credit
is known as back-to-back credit when a L/c is opened with security of another

L/c. A backtoback credit which can also be referred as credit and counter credit
is actually a method of financing both sides of a transaction in which a
middleman buys goods from one customer and sells them to another.
The parties to a Back-to-back Letter of Credit are:
1. The buyer and his bank as the issuer of the original Letter of Credit.
2. The seller/manufacturer and his bank,
3. The manufacturer's subcontractor and his bank.
The practical use of this Credit is seen when L/c is opened by the ultimate buyer
in favour of a particular beneficiary, who may not be the actual supplier/
manufacturer offering the main credit with near identical terms in favour as
security and will be able to obtain reimbursement by presenting the documents
received under back to back credit under the main L/c
The need for such credits arise mainly when :
The ultimate buyer not ready for a transferable credit
The Beneficiary do not want to disclose the source of supply to the openers.
The manufacturer demands on payment against documents for goods but
the beneficiary of credit is short of the funds
6. Transferable Letter of Credit L/c
A transferable documentary credit is a type of credit under which the first
beneficiary which is usually a middleman may request the nominated bank to
transfer credit in whole or in part to the second beneficiary.
The L/c does state clearly mentions the margins of the first beneficiary and
unless it is specified the L/c cannot be treated as transferable. It can only be
used when the company is selling the product of a third party and the proper
care has to be taken about the exit policy for the money transactions that take
place. This type of L/c is used in the companies that act as a middle man during
the transaction but don’t have large limit. In the transferable L/c there is a right
to substitute the invoice and the whole value can be transferred to a second

beneficiary The first beneficiary or middleman has rights to change the

following terms and conditions of the letter of credit:
1. Reduce the amount of the credit.
2. Reduce unit price if it is stated
3. Make shorter the expiry date of the letter of credit.
4. Make shorter the last date for presentation of documents.
5. Make shorter the period for shipment of goods.
6. Increase the amount of the cover or percentage for which insurance
cover must be effected.
7. Substitute the name of the applicant (the middleman) for that of the first
beneficiary (the buyer).
Standby Letter of Credit L/c
Initially used by the banks in the United States, the standby letter of credit
is very much similar in nature to a bank guarantee. The main objective of
issuing such a credit is to secure bank loans. Standby credits are usually issued
by the applicant’s bank in the applicant’s country and advised to the beneficiary
by a bank in the beneficiary’s country.
Unlike a traditional letter of credit where the beneficiary obtains payment
against documents evidencing performance, the standby letter of credit allow a
beneficiary to obtains payment from a bank even when the applicant for the
credit has failed to perform as per bond.
A standby letter of credit is subject to "Uniform Customs and Practice for
Documentary Credit" (UCP), International Chamber of Commerce Publication
No 500, 1993 Revision, or "International Standby Practices" (ISP), International
Chamber of Commerce Publication No 590, 1998.

Import Operations Under L/c

The Import Letter of Credit guarantees an exporter payment for goods or
services, provided the terms of the letter of credit have been met.
A bank issue an import letter of credit on the behalf of an importer or buyer
under the following Circumstances
When an importer is importing goods within its own country.
When a trader is buying good from his own country and sell it to the another
country for the purpose of merchandizing trade.
When an Indian exporter who is executing a contract outside his own country
requires importing goods from a third country to the country where he is
executing the contract.
The first category of the most common in the day to day banking Fees
And Reimbursements The different charges/fees payable under import L/c is
briefly as follows:
1. The issuing bank charges the applicant fees for opening the letter of credit.
The fee charged depends on the credit of the applicant, and primarily comprises
of :
(a) Opening Charges
This would comprise commitment charges and usance charged to be
charged upfront for the period of the L/c. The fee charged by the L/c opening
bank during the commitment period is referred to as commitment fees.
Commitment period is the period from the opening of the letter of credit until
the last date of negotiation of documents under the L/c or the expiry of the L/c,
whichever is later Usance is the credit period agreed between the buyer and the
seller under the letter of credit. This may vary from 7 days usance (sight) to
90/180 days. The fee charged by bank for the usance period is referred to as
usance charges

(b)Retirement Charges
1. This would be payable at the time of retirement of LCs. LC opening bank
scrutinizes the bills under the LCs according to UCPDC guidelines , and levies
charges based on value of goods
2. The advising bank charges an advising fee to the beneficiary unless stated
otherwise The fees could vary depending on the country of the beneficiary. The
advising bank charges may be eventually borne by the issuing bank or
reimbursed from the applicant
3. The applicant is bounded and liable to indemnify banks against all
obligations and responsibilities imposed by foreign laws and usage
4. The confirming bank's fee depends on the credit of the issuing bank and
would be borne by the beneficiary or the issuing bank (applicant eventually)
depending on the terms of contract
5. The reimbursing bank charges are to the account of the issuing bank.
Risk Associated with Opening Imports L/cs The basic risk associated with an
issuing bank while opening an import L/care :
1. The financial standing of the importer As the bank is responsible to pay
the money on the behalf of the importer, thereby the bank should make sure that
it has the proper funds to pay.
2. The goods Bankers need to do a detail analysis against the risks associated
with perishability of the goods, possible obsolescence, import regulations
packing and storage, etc. Price risk is the another crucial factor associated with
all modes of international trade.
3. Exporter Risk There is always the risk of exporting inferior quality goods.
Banks need to be protective by finding out as much possible about the exporter
using status report and other confidential information.
4. Country Risk These types of risks are mainly associated with the political
and economic scenario of a country. To solve this issue, most banks have

specialized unit which control the level of exposure that that the bank will
assumes for each country.
5.Foreign exchange risk Foreign exchange risk is another most sensitive risk
associated with the banks. As the transaction is done in foreign currency, the
traders depend a lot on exchange rate fluctuations.
Export Operations Under L/c
Export Letter of Credit is issued in for a trader for his native country for
the purchase of goods and services. Such letters of credit may be received for
following purpose:
1. For physical export of goods and services from India to a Foreign
Country.
2. For execution of projects outside India by Indian exporters by supply of
goods and services from Indian or partly from India and partly from
outside India.
3. Towards deemed exports where there is no physical movements of goods
from outside India But the supplies are being made to a project financed in
foreign exchange by multilateral agencies, organization or project being
executed in India with the aid of external agencies.
4. For sale of goods by Indian exporters with total procurement and supply
from outside India. In all the above cases there would be earning of Foreign
Exchange or conservation of Foreign Exchange.
Banks in India associated themselves with the export letters of credit in
various capacities such as advising bank, confirming bank, transferring bank
and reimbursing bank In every cases the bank will be rendering services not
only to the Issuing Bank as its agent correspondent bank but also to the exporter
in advising and financing his export activity.

1.Advising an Export L/c

The basic responsibility of an advising bank is to advise the credit
received from its overseas branch after checking the apparent genuineness of the
credit recognized by the issuing bank. It is also necessary for the advising bank
to go through the letter of credit, try to understand the underlying transaction,
terms and conditions of the credit and advice the beneficiary in the matter.
The main features of advising export LCs are:
1. There are no credit risks as the bank receives a onetime commission for the
advising service.
2. There are no capital adequacy needs for the advising function.
2. Advising of Amendments to L/Cs
Amendment of LCs is done for various reasons and it is necessary to fallow all
the necessary the procedures outlined for advising. In the process of advising
the amendments the Issuing bank serializes the amendment number and also
ensures that no previous amendment is missing from the list. Only on receipt of
satisfactory information/ clarification the amendment may be advised.
3. Confirmation Of Export Letters Of Credit
It Constitutes a definite undertaking of the confirming bank, in addition to that
of the issuing bank, which undertakes the sight payment, deferred payment,
acceptance or negotiation. Banks in India have the facility of covering the credit
confirmation risks with ECGC under their “Transfer Guarantee” scheme and
include both the commercial and political risk involved.
4. Discounting/Negotiation of Export LCs
When the exporter requires funds before due date then he can discount or
negotiate the LCs with the negotiating bank. Once the issuing bank nominates
the negotiating bank, it can take the credit risk on the issuing bank Or
Confirmingbank.
However, in such a situation, the negotiating bank bears the risk
associated with the document that sometimes arises when the issuing bank

discover discrepancies in the documents and refuses to honor its commitment

on the due date.
5.Reimbursement of Export LCs
Sometimes reimbursing bank, on the recommendation of issuing bank
allows the negotiating bank to collect the money from the reimbursing bank
once the goods have been shipped. It is quite similar to a cheque facility
provided by a bank.
In return, the reimbursement bank earns a commission per transaction and
enjoys float income without getting involve in the checking the transaction
documents. Reimbursement bank play an important role in payment on the due
date ( for usance LCs) or the days on which the negotiating bank demands the
same (for sight LCs)
Regulatory Requirements
Opening of imports LCs in India involve compliance of the following main
regulation:
Trade Control Requirements
The movement of good in India is guided by a predefined se of rules and
regulation. So, the banker needs to assure that make certain is whether the
goods concerned can be physically brought in to India or not as per the current
EXIM policy.
Exchange Control Requirements
The main objective of a bank to open an Import LC is to effect settlement of
payment due by the Indian importer to the overseas supplier, so opening of LC
automatically comes under the policies of exchange control regulations.
UCPDC Guidelines
Uniform Customs and Practice for Documentary Credit (UCPDC) is a set of
predefined rules established by the International Chamber of Commerce (ICC)
on Letters of Credit. The UCPDC is used by bankers and commercial parties in
more than 200 countries including India to facilitate trade and payment through

LC UCPDC was first published in 1933 and subsequently updating it

throughout the years. In 1994, UCPDC 500 was released with only 7 chapters
containing in all 49 articles.
The latest revision was approved by the Banking Commission of the ICC at its
meeting in Paris on 25 October 2006. This latest version, called the
UCPDC600, formally commenced on 1 July 2007. It contain a total of about 39
articles covering the following areas, which can be classified as 8 sections
according to their functions and operational procedures
ISBP 2002
The widely acclaimed International Standard Banking Practice(ISBP) for
the Examination of Documents under Documentary Credits was selected in
2007 by the ICCs Banking Commission.
First introduced in 2002, the ISBP contains a list of guidelines that an examiner
needs to check the documents presented under the Letter of Credit. Its main
objective is to reduce the number of documentary credits rejected by banks.
FEDAI Guidelines
Foreign Exchange Dealer's Association of India (FEDAI) was established
in 1958 under the Section 25 of the Companies Act (1956). It is an association
of banks that deals in Indian foreign exchange and work in coordination with
the Reserve Bank of India, other organizations like FIMMDA, the Forex
Association of India and various market participants.
FEDAI has issued rules for import LCs which is one of the important area
of foreign currency exchanges. It has an advantage over that of the authorized
dealers who are now allowed by the RBI to issue stand by letter of credits
towards import of goods
As the issuance of stand by of letter of Credit including imports of goods
is susceptible to some risk in the absence of evidence of shipment, therefore the
importer should be advised that documentary credit under UCP 500/600 should
be the preferred route for importers of goods

Below mention are some of the necessary precaution that should be taken by
authorized dealers While issuing a stands by letter of credits:
1. The facility of issuing Commercial Standby shall be extended on a
selective basis and to the following category of importers
i. Where such standby are required by applicant who are independent
power producers/importers of crude oil and petroleum products
ii. Special category of importers namely export houses, trading
houses, star trading houses, super star trading houses or 100% Export Oriented
Units.
2. Satisfactory credit report on the overseas supplier should be obtained by
the issuing banks before issuing Stands by Letter of Credit.
3. Invocation of the Commercial standby by the beneficiary is to be
supported by proper evidence. The beneficiary of the Credit should furnish
a declaration to the effect that the claim is made on account of failure of the
importers to abide by his contractual obligation along with the following
documents.
i. A copy of invoice.
ii. Nonnegotiable set of documents including a copy of non negotiable bill
of lading/transport document.
iii. A copy of Lloyds /SGS inspection certificate wherever provided for as
per the underlying contract.
4. Incorporation of a suitable clauses to the effect that in the event of such
invoice /shipping documents has been paid by the authorized dealers
earlier, Provisions to dishonor the claim quoting the date / manner of
earlier payments of such documents may be considered.
5. The applicant of a commercial stand by letter of credit shall undertake to
provide evidence of imports in respect of all payments made under
standby. (Bill of Entry)

Fixing limits for Commercial Stand by Letter of Credit L/c

1. Banks must assess the credit risk in relation to stand by letter of credit
and explain to the importer about the inherent risk in stand by covering
import of goods.
2. Discretionary powers for sanctioning standby letter of credit for import
of goods should be delegated to controlling office or zonal office only.
3. A separate limit for establishing stand by letter of credit is desirable
rather than permitting it under the regular documentary limit.
4. Due diligence of the importer as well as on the beneficiary is essential.
5. Unlike documentary credit, banks do not hold original negotiable
documents of titles to gods. Hence while assessing and fixing credit limits
for standby letter of credits banks shall treat such limits as clean for the
purpose of discretionary lending powers and compliance with various
Reserve Bank of India's regulations.
6. Application cum guarantee for stand by letter of credit should be
obtained from the applicant.
7. Banks can consider obtaining a suitable indemnity/undertaking from the
importer that all remittances towards their import of goods as per the
underlying contracts for which stand by letter of credit is issued will be
made only through the same branch which has issued the credit.
8. The importer should give an undertaking that he shall not raise any
dispute regarding the payments made by the bank in standby letter of
credit at any point of time howsoever, and will be liable to the bank for all
the amount paid therein. He importer should also indemnify the bank from
any loss, claim, counter claims, damages, etc. which the bank may incur on
account of making payment under the stand by letter of credit.
9. Presently, when the documentary letter of credit is established through
swift, it is assumed that the documentary letter of credit is subject to the
provisions of UCPDC 500/600 Accordingly whenever standby letter of

credit under ISP 98 is established through SWIFT, a specific clause must

appear that standby letter of credit is subject to the provision of ISP 98.
10. It should be ensured that the issuing bank, advising bank, nominated
bank. etc., have all subscribed to SP 98 in case stand by letter of credit is
issued under ISP 98.
11. When payment under a stand by letter of credit is effected, the issuing
bank to report such invocation / payment to Reserve Bank of India.
Prices for representative steel products wef 1st May'18
Pro item grade VZG LUD CNI MUM CAL

1 Billet 125x125mm IS 2830 36660 39430 37680 38300 39280
2 Channel 200x75mm IS2062 Gr.A 41780 44360 42730 43080 41490
3 Rebar 8mm IS1786 Fe500D 46830 48690 46950 47600 46630
4 Round 20.64 mm 55Si7 45220 45220 45220 45220 45220
5 Round 40mm SAE1018 39510 42390 39760 41060 39760
6 Wire rod 5.5mm HC 50 - HC85 46300 49860 47280 48185 47570
7 Wire rod 7 mm PC115 45900 49460 46880 47785 47170
8 Wire rod 8 mm EQ 45020 48580 46000 46905 46290
9 Pig Iron LSB 30500
The above prices are Branch Level Prices excluding GST

CHAPTER-4
DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTERPRETATION
Product 2013-14 2014-15 2015-16 2016-17 2017-18
Qty Val Qty Val Qty Val Qty Val Qty Val
(MT) (CR) (MT) (CR) (MT) (CR) (MT) (CR) (MT) (CR)
PIG IRON 195721 (453.44)CR 93000 43000 47000 50000

(218.72)CR (71.65)CR (94.11)CR (106.71)CR
STEEL
WRC ---------------- 2630(MT) 28735(MT) 33850(MT) 104111(MT)

7.01(CR) 72.80(CR) 86.73(CR) 342.64(CR)
ROUNDS ---------------- ---------------- --------------- -------------- 11472(MT)

32.26(CR)
BILLETS 95360(MT)293.28(CR) 89308(MT) 91617(MT) 115588(MT) 190720(MT)

265.17(CR) 214.04(CR) 267.67(CR) 575.25(CR)
BLOOMS ----------------- 130898(MT) 405259(MT) 263217(MT) 214778(MT)

375.49(CR) 833.16(CR) 599.05(CR) 658.90(CR)
FLATS ----------------- ---------------- --------------- --------------- 2762(MT)

7.95(CR)

200000
150000
100000
MT
CR
50000
0 CR
2013-14 MT
2014-15
2015-16
2016-17
2017-18
PIG IRON EXPORTS FROM (2013-18)
NOW THE EXPORTS OF STEEL (WRC, ROUNDS , BILLETS, BLOOMS , FLATS)
450000
400000
350000
300000
WRC
250000 ROUNDS
200000 BILLETS
BLOOMS
150000
FLATS
100000
50000
0
2013-14 2014-15 2015-16 2016-17 2017-18
THESE ARE THE EXPORTS OF FINISHEDPRODUCTS

PIG IRON EXPORTS
Country 2013-14 2014-15 2015-16 2016-17 2017-18
Indonesia 10000 (MT) -------------- ------------- --------------- ---------------

22.71(CR)
Korea 91469(MT) ------------- -------------- --------------- ---------------

213.63(CR)
Sri lanka -------------- -------------- ------------- ----------------- ---------------
Thailand 64252(MT) 63000(MT) 43000(MT) ---------------- ----------------

147.38(CR) 147.92(CR) 71.65(CR)
Taiwan 3000(MT) -------------- -------------- --------------- ----------------

69.73(CR)
Ethiopia --------------- -------------- -------------- -------------- --------------
Kenya -------------- -------------- -------------- --------------- -------------
Tanzania -------------- ------------- -------------- --------------- --------------
Bangladesh --------------- -------------- -------------- 25000(MT) -------------

54.07(CR)
South Korea -------------- 30000(MT) --------------- -------------- ---------------

70.80(CR)
USA ---------------- -------------- 47000(MT) 25000(MT) -------------

52.64(CR) 52.64(CR)
South ------------ ------------- -------------- -------------- --------------

Africa
Vietnam ------------- --------------- -------------- --------------- --------------
Djibouti -------------- --------------- ------------- -------------- -------------
Philippines ------------- --------------- --------------- -------------- --------------

TOTAL STEEL EXPORTS
Country 2013-14 2014-15 2015-16 2016-17 2017-18
Indonesia -------------- ------------- 19783(MT) 25755(MT)

51.47(CR) 76.36(CR)
Korea ------------- -------------- --------------- ---------------
Sri lanka 5002(MT) 124289(MT) 60722(MT) 40652(MT) 117545(MT)

15.08(CR) 353.73(CR) 139.25(CR) 92.49(CR) 363.10(CR)
Thailand 79672(MT) 34033(MT)

189.88(CR) 93.84(CR)
Taiwan -------------- -------------- --------------- 5225(MT)

17.59(CR)
Ethiopia 2999(MT) -------------- 17900(MT0 -------------- --------------

9.02(CR) 45.60(CR)
Kenya 77964(MT) 19157(MT) -------------- --------------- 42359(MT)

240.60(CR) 56.44(CR) 139.95(CR)
Tanzania 4000(MT) ------------- -------------- --------------- --------------

12.71(CR)
Bangladesh --------------- 60855(MT) 354352(MT) 148097(MT) -------------

185.90(CR) 718.75(CR) 320.49(CR)
South Korea -------------- --------------- -------------- ---------------
USA ---------------- -------------- 55264(MT)

178.80(CR)
South Africa ------------ ------------- -------------- 10017(MT) --------------

26.01(CR)
Vietnam ------------- --------------- -------------- --------------- 9543(MT)

31.59(CR)
Djibouti -------------- --------------- ------------- -------------- 14967(MT)

47.64(CR)
Philippines ------------- --------------- --------------- -------------- 94200(MT)

292.09(CR)
TOTAL PROFIT
2013-14 2014-15 2015-16 2016-17 2017-18
746.72 CR 866.39 CR 1191.65 CR 1047.56 CR 1723.71 CR
2000
1800
1600
1400
2103-14
1200
2014-15
1000
2015-16
800 2016-17
600 2017-18
400
200
0
TOTAL

















CHAPTER-5

 FINDINGS
 SUGGESTIONS
 CONCLUSION
 BIBLIOGRAPHY

FINDINGS:
The findings of the study are:

VSP is making alliances with some trading companies aboard. This may
strengthen the market of VSP in the foreign market.
VSP has no branch offices aboard. Generally exports orders are booked at
VSP’s main office at Visakhapatnam.
Price settings are through open tenders.
VSP exports their products on FOB price only.
Presently VSP is spending nearly Rs.90 crores per year as transportation
charges.
VSP mainly exports their products to the neighboring countries only.
VSP exports only ISO 9002 certified products.
Being a public sector unit it is all the more growth oriented not profit oriented.

SUGGESTIONS:
After analyzing the data and information collected from various sources
during the source of project work and the limitations and problems found, some
suggestions are given which may be helpful to the organization in shot run and
long run.
As VSP is producing iron and steel products of high standards and
company has given a major thrust to exports, it has to take promotional
activities in large scale.
As in the present marketing situation where customers hold the key it is
important to influence the customers. It has bound to take promotional activities
at the national level in a big way; similarly the company has to go for global
promotional campaign.
VSP can conduct seminars and customer counseling at international level
so as to make foreign customer award of quality product available in India at a
competitive price.
VSP has only office in the export division. This makes it difficult for
procuring orders directly from the customers. So it will be better for the
company to open international branch in regions where VSP exports its large
share.

CONCLUSION:
In the past the customer had no choice. The government policy and the main
producer’s options were prevailing in the market. Today with the liberalization the
steel industry decontrolled of freight reduced drastically. So the compulsory licensing
of the steel industry has been repelled. As a result a lot of secondary producers with
variable product mix are coming up in the steel industry. All these have threatened the
status quo of all the major producers.
In such a situation “customers holds the key”; unlike yesterday, he is not
dependent On a few main producers. Thus “customer oriented marketing”
should be adopted.
All the suggestions given are directed towards the twin objective of strengthen
the market and improving the customer relationship between the company and its
customers. Both should care for each other without suffering a lot. Then VSP can face
all the competitions and challenges in the market. VSP have their valuable customers
with them for all times. VSP has yet to do a lot towards “customer oriented
marketing” to attract more and more customers because today’s steel market belongs
to customer only.
REFERENCE (Websites Visited):
 www.vizagsteel.com
 www.indiansteelindustry.com
 www.wikipedia.com
 www.google.com

QUESTIONNAIRE
This questionnaire is entirely for the purposes of educational research; its

contents will be kept strictly confidential, will not be made known to anyone
known outside of the research study, and will not otherwise be disclosed or
published except in an aggregated form in which individuals cannot be
identified
1. NAME OF THE DISTRIBUTORS:

2. ADDRESS:
3. WHICH STEELDEALERSHIP DO YOU HAVE?
A.. ROURKELA STEEL PLANT ( )
B.BHILAI STEEL PLANT ( )
C.DHURGAPUR STEEL PLANT ( )
D.BOKARO STEEL PLANT ( )
E.VISKHAPATNAM STEEL PLANT ( )
4. WHICH COMPANY GETS HIGH SALES VOLUME IN STEEL
INDUSTRY?
A.ROURKELA STEEL PLANT ( )

5. IN YOUR POINT OF VIEW WHO IS THE MOST VALUABLE
SUPPLIERS?
6. WHAT ISYOUR OPNION ABOUT VIZAG STEEL?
A. EXCELLENT ( ) B. VERYGOOD ( ) C. GOOD ( ) D. AVERAGE ( ) E. POOR ( )

7. KINDLY GIVE YOUR SUGGESTION RELATED TO THE PRICE OF VIZAG

STEEL?
A. HIGHLYSATISFIED ( ) B. SATISFIED ( ) C. AVERAGE ( )

D. DISSATISFIED ( ) E. HIGHLY DISSATIFIED ( )
8. WHICHIS THE FAST MOVINGBRAND IN YOUR TOWN?

9. PLEASE RATE THE ORDER AND REPLACEMENT OF VIZAGSTEEL?
10. PLEASE RATE THE AVAILABILITY OFVIZAG STEEL?
11. ARE YOU SATISFIED WITH THE MARGINS OFFERED BY VIZAG STEEL?
A. HIGHLYSATISFIED ( ) B. SATISFIED ( ) C. AVERAGE( )
D..DISSATISFIED ( ) E.HIGHLY DISSATIFIED ( )
12. ARE YOU SATISFIED TO TAKE THE VIZAG STEEL DEALERSHIP?
A. Yes ( ) B. No ( )
13 .PLEASEMENTION ADVERTISEMENT OFFERED BY VIZAG STEEL?
A. TOOHIGH ( ) B. HIGH ( ) C. MODERATE ( ) D. LOW ( ) E. TOOLOW ( )
14. PLEASE MENTION SALES PROMOTIONAL EFFORTS OF THE VIZAG STEEL?
15. WHICH STEEL GIVES MORE LIFE TIME FROM OTHERS?

16. WHAT DO YOU UNDERSTAND THE RELIABILITY OF THE VIZAG STEEL?
17. HOW DOYOU RATE PAYMENT TERMS OFFERD BY VIZAGSTEEL?
A. EXCELLENT ( ) B.VERYGOOD ( ) C. GOOD ( ) D.AVERAGE ( ) E. POOR ( )

Chapter-1: A Study of Export Documentation at Visakhakapatnam Steel Plant

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A study of Export documentation at Visakhakapatnam Steel Plant

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 1

LOGISTICS IS THE ART AND SCIENCE OF MANAGEMENT,

--- SOCIETY OF LOGISTICS ENGINEERS (SOLE) 1974.

Fierce competition in today’s market has forced business

The logistics management takes into consideration every facility

Logistics is a challenging and important activity because it serves

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 2

several external factors like technology, globalization and competition. This is

Let us now have a look at how logistics works. It is important

The customer is the most important asset for a company. He

Now lets take a look at the various steps involved in a logistics

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 3

Visioning: This includes the systematic development of an organizational

Managing change: this involves effective management to implement enhanced

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 4

C. Current Logistics Related Issues

 Customer service and quality

 Better service for customers

 Better relationship with vendors, customers and third parties to more

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 5

 Better information systems that connect functions and organizations

Domestic sales: Domestic market is segmented on geographic north, south and

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 6

NEED FOR STUDY

The existence of a need based philosophy like marketing resides with

Steel industry being a major player in economic development need to be

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 7

SCOPE OF THE STUDY

The scope of my study is to understand clearly about the “EXPORT

The study is confined to only RASHTRIYA ISPAT NIGAM LIMITED,

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 8

OBJECTIVES OF THE STUDY

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 9

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 10

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 11

 HISTORY OF INDIA STEEL INDUSTRY

 GLOBAL STEEL SCENARIO

 PRESENT SCENARIO OF INDIA STEEL

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 12

Steel is an alloy of iron usually containing less than 1% carbon is a

The development of steel industry in India should be viewed in

Growth of Steel Industry:

1830 - Josiah, Marshall Health constructed the first manufacturing plant

- James Erskin founded the Bengal iron works.

- Jamshedji Tata initiated the scheme for an integrated steel plant.

- Tata iron & steel company started production.

1916 - TISCO was founded.

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 13

First Five Year Plan (1951-56)

Second Five Year Plan

Third Five Year Plan

Fourth Five Year Plan (1969-74)

ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 14

1979 - Annual Plan

The erstwhile Soviet Union agreed to help in setting up the Visakhapatnam

Sixth Five Year Plan

1985-91 - Seventh Five Year Plan

Expansion work of Bhilai and Bokaro Steel Plants completed.

Progress on Visakhapatnam steel plant picked up and rationalized concept has

1991-96 - Eight Five Year plan

Vishakhapatnam steel plant started its production modernization of other steel

1997-02 - Ninth Five Year Plan