EXIM PROCEDURE, DOCUMENTATION AND FOREX SENARIO IN TATA

INTERNATIONAL LTD
DEWAS

MASTERS OF BUSINESS ADMINISTRATION

In

FINANCIAL SERVICES

By
KEDAR MEHENDALE

Guided By
ROHIT UPADHYAY SIR
(MANGER ACCOUNTS)

SCHOOL OF ECONOMICS D.A.V.V. UNIVERSITY, INDORE, INDIA

BATCH 2016-18
 UNDERTAKING

I declare that the work presented in this project titled “EXIM PROCEDURE, DOCUMENTATION AND

FOREX SENARIO IN T.I.L. DEWAS”, submitted to the SCHOOL OF ECONOMICS D.A.V.V.

UNIVERSITY, INDORE, INDIA for the award of the MASTERS OF BUSINESS ADMINISTRATION in

FINANCIAL SERVICES is my original work.

JUNE, 2017
INDORE (KEDAR MEHENDALE)
 CERTIFICATE

Certified that the work contained in the project titled “EXIM PROCEDURE, DOCUMENTATION AND FOREX

SCENARIO IN T.I.L. DEWAS” by KEDAR MEHENDALE, has been carried out under my supervision and this

work has not been submitted elsewhere for a degree.

ROHIT UPADHYAY
MANAGER – ACCOUNTS
TATA INTERNATIONAL LTD
DEWAS
 PREFACE

In the present scenario of globalization, it has become mandatory to acquire practical

knowledge to fit in to the theory of survival of the fittest. With the up- gradation in technology

level and ever increasing competition one must have a practical view and experience of various

theories and concepts of management.

The theory books intend to develop a person conceptually, but the operational knowledge is

gained by practical training. Training not only prepares a person to face the actual situations but

also allows him to see the application of theoretical concepts.

I had the privilege of being a summer trainee at TATA INTERNATIONAL LTD, DEWAS

This training was important, as it is a vital part of our curriculum. During the course of my

training I had the opportunity to interact with many people from diverse fields which further

enriched my knowledge.
 ACKNOWLEDGEMENT

This project has received the immense support and contribution from several people. The most
awaited movement of the successful completion of this endeavor is to extend sincere gratitude
to all those who have been explicitly or implicitly involved in it.
First of all I would like to thanks Mrs. Anita chavhan & HR Department for granting me an
opportunity to pursue my summer training at TATA INTERNATIONAL LTD DEWAS
I take this opportunity to express my deep gratitude towards MR. ROHIT UPADHYAY,
MR. DEEPAK DUSIJA AND AJAY LAKKAD SIR who has played a key role at various stages.

Their inspiration, valuable comments and insightful guidance helped to complete this training
successfully.
I sincerely acknowledge the cooperation extended by all the staff members of TIL for
active support and guidance.
 INDEX

 INDUSTRY OVERVEIW

 PRODUCT OVERVEIW

 GOVT. INCENTIVE SCHEMES FOR EXPORTERS

 INCOTERMS

 TRADE FINANCE

 EXIM PROCEDURE AND DOCUMENTATION

 FOREX OVERVEIW

 CURRENCY RISK MANAGEMENT

 COSTING METHODS

 MIS & SAP

 INSURANCE AT TATA

 LEARNING

 DOCUMENTS COPY
PROFILE

Tata International is a pioneer in the Indian leather industry and a leading exporter of finished leather and
leather products. We are a significant global player in goat leather and are the only tannery in India producing
cow patent leather.

Servicing the complete leather and leather product needs of select clients, we have built enduring associations
with major global brands such as Marks & Spencer, Gabor, Aerosoles, Zara, Wolverine, Mango, and many
others. Providing specialized leather solutions, our forte is consistent quality and individualized service, honed
to suit specific clients and end products.

We are an industry leader in environmentally conscious leather production, from both Indian and global
perspectives. Through the activities of our extensive in-house R&D and the use of emerging technologies, we
have created and incorporated eco-friendly processes into our leather manufacturing processes. Our facilities
have received a number of awards in recognition of the work done in setting quality and sustainability
standards, including ISO accreditation and LWG Gold Rating. All our facilities are regularly audited to ensure
that they maintain the highest standards of corporate responsibility and social compliance, as we go above and
beyond basic requirements.

BRIEF HISTORY

Tata International started leather production, in 1975, as an effort to promote organized international leather
trade in India, focusing on production of leather for the fashion industry. Keeping in mind the Tata group’s
commitment to developing rural areas, the tannery was set up in Dewas, Central India. The business and the
region have grown symbiotically ever since. Having overcome the remoteness of its location and initial lack of
infrastructure in the surrounding area, our tannery in dewas is now the largest tannery in India and a hub for
world-class footwear and fashion leather production.

By 1979, we expanded our original product portfolio, adding value to products and services. The fashion leather
division started its brand associations in 1981, initially supplying Bally, to be followed quickly by others
including Gabor and Salamander. The turn of the millennium saw a further strengthening of our alignment with
the needs of the global fashion footwear markets.

Manufacturing of shoes and garments gained momentum with the acquisition of Graziella and Da-Vinci, which
were later regrouped under Tapti Leathers and Bachi Shoes India, Euro Shoe Components and Salco Shoes in
2010. International growth was fuelled by the acquisition of Move-On and the JV with Wolverine Worldwide.
July 2010 saw the completion of our new tannery and the start of production of a range of performance leathers
designed for use in the automotive, furniture and sports / lifestyle footwear markets. Our consistent superior
quality in this niche area has been endorsed by associations with major international brands.
PRODUCT OVERVIEW

FOOTWARE

GARMENTS

FASHION & LIFE STYLE LEATHER

PERFORMANCE LEATHER
EXPORTS FROM INDIA SCHEMES BY GOVT INDIA

The objective of schemes under this chapter is to provide rewards to exporters to offset infrastructural
inefficiencies and associated costs involved and to provide exporters a level playing field.

There shall be following two schemes for exports of Merchandise and Services respectively:
(i) Merchandise Exports from India Scheme (MEIS).
(ii) Service Exports from India Scheme (SEIS).

Nature of Rewards Duty Credit Scripts shall be granted as rewards under MEIS and SEIS.

The Duty Credit Scripts and goods imported / domestically procured against them shall be freely transferable.
The Duty Credit Scripts can be used for :
(i) Payment of Customs Duties for import of inputs or goods, except items listed in Appendix 3A.
(ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per
DoR notification.
(iii) Payment of service tax on procurement of services as per DoR notification. 58
(iv) Payment of Customs Duty and fee as per paragraph

Merchandise Exports from India Scheme (MEIS)

Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and
associated costs involved in export of goods/products, which are produced/manufactured in India, especially
those having high export intensity, employment potential and thereby enhancing India’s export competitiveness.

Service Exports from India Scheme (SEIS)

Objective of Service Exports from India Scheme (SEIS) is to encourage export of notified Services from India.

Effective date of schemes (MEIS and SEIS) The schemes shall come into force with effect from the date of
notification of this Policy, i.e. the rewards under MEIS/SEIS shall be admissible for exports made/services
rendered on or after the date of notification of this Policy.
INCOTERMS

EXW (‘Ex Works’) The seller makes the goods available to be collected at their premises and the buyer is
responsible for all other risks, transportation costs, taxes and duties from that point onwards. This term is
commonly used when quoting a price.

FCA (‘Free Carrier’) The seller gives the goods, cleared for export, to the buyer’s carrier at a specified place.
The buyer is then responsible for getting transported to the specified place of final delivery. This term is
commonly used for containers travelling by more than one mode of transport.

CPT (‘Carriage Paid To’) The seller pays to transport the goods to the specified destination. Responsibility for
the goods transfers to the buyer when the seller passes them to the first carrier.

CIP (‘Carriage and Insurance Paid’) The seller pays for insurance as well as transport to the specified
destination. Responsibility for the goods transfers to the buyer when the seller passes them to the first carrier.
CIP (‘Carriage and Insurance Paid’) is commonly used for goods being transported by container by more
than one mode of transport. If transporting only by sea, CIF is often used (see below).

DAT (‘Delivered at Terminal’) the seller pays for transport to a specified terminal at the agreed destination.
The buyer is responsible for the cost of importing the goods. The buyer takes responsibility once the goods are
unloaded at the terminal.

DAP (‘Delivered at Place’) The seller pays for transport to the specified destination, but the buyer pays the cost
of importing the goods. The seller takes responsibility for the goods until they’re ready to be unloaded by the
buyer.

DDP/DTP (‘Delivered Duty Paid’) The seller is responsible for delivering the goods to the named destination
in the buyer’s country, including all costs involved.

FAS (‘Free alongside Ship’) The seller puts the goods alongside the ship at the specified port they’re going to
be shipped from. The seller must get the goods ready for export, but the buyer is responsible for the cost and
risk involved in loading them. This term is commonly used for heavy-lift or bulk cargo (e.g. generators, boats),
but not for goods transported in containers by more than one mode of transport (FCA is usually used for this).

FOB (‘free on Board’) The seller must get the goods ready for export and load them onto the specified ship.
The buyer and seller share the costs and risks when the goods are on board. This term is not used for goods
transported in containers by more than one mode of transport (FCA is usually used for this).

CFR (‘Cost and Freight’) The seller must pay the costs of bringing the goods to the specified port. The buyer
is responsible for risks when the goods are loaded onto the ship.

CIF (‘Cost, Insurance and Freight’) The seller must pay the costs of bringing the goods to the specified port.
They also pay for insurance. The buyer is responsible for risks when the goods are loaded onto the ship.
Mainly in Tata international Dewas they works on FOB & CIF basis.

TRADE FINANCE

TIL have various methods of financing their international trade and transactions. Some of these methods for
export transactions are

Letter of credit (L/C) : TIL usually insists its importer to open a letter of credit in favor of the company ( i.e.
TIL ) through the buyers bank , in order to ensure TIL of receiving its payment in case the buyer defaults. If the
buyer fails to pay within the credit period, the aforesaid bank is liable to make the payment. Thus this
arrangement passes the risk of TIL to the bank.

Advance Payment: In the scenario where TIL has an upper hand in the contract, it would insist the other party
to make an advance payment and the goods are shipped once the payment is received. Any changes in format of
the transaction are bound by terms of the contract.

ECGC: Another method of financing TIL’s trade transactions is through the Export Credit Guarantee
Corporation (ECGC). The company has to deposit a certain percentage of the premium with ECGC every time
they undertake an export transaction. ECGC on the other hand, Provides a guarantee for credit to TIL in case of
default.

Post Shipment Credit in Foreign Currency [Loan taken by the corporate in foreign currency from foreign
bank]. This is provided by enabling TIL to fund its procurement, manufacturing, processing or packing
requirement. TIL can avail of this very competitive international rates covering the cost of both domestic as well
as import contents of the exports. TIL is eligible for PCFC against company’s export order confirmed letter of
credit [L/C] provided it meet the credit requirement of its bank in which it maintain a running account i.e. SBI
and ICICI.

On sight Payment: This mode of payment is adopted for goods whose payment is received the moment the
goods are handed over to the importer.
Import Export Procedure & Documentation

IMPORT PROCEDURE

The C&F agent submits the documents to the exporter who then gives them back to the importer in order to take
the ownership of goods. Shipment advice is being given to the importer regarding the arrival schedule of the
goods at the port and also the vessel in which the goods are being shipped necessary advice regarding the date
of the arrival of the goods is being communicated the arrangement of the payment according to the prior
contract.

Segregation of documents

The documents which are thereby received by the importer is being separated accordingly where all the original
copies are being kept by the importer for the clearance and the second copies are kept for filing.
 On receiving the information regarding the arrival of the goods to the port the importer sends the agent
to the port to file the bill of entry.

 Arrival of the goods IGM presentation of B/E for appraisal after the B/E is noted it is presented to
appraising counters with the documents. Documents like Invoice, Letter of Credit, packing list, test,
certificate of origin, marine insurance.

Clearance of the goods

Clearance of the goods is done by the customs house and the duty is then levied and the warehousing is being
done to arrange the pickup of goods. Generally concur provides 14 day of free time at the port the time for
which the container has to be picked up in order to avoid the detention.

Payment of duty

After the assessment of duty by the appraisers and examiners of the customs the TR26 challan needs to be
prepared. The officer preparing the TR26 challan will make an endorsement on the challan that the challan is
valid for the payment of duty up to the specified date which should be 7 th day from the date of the return of the
bill of entry. If any delay in the payment of the duty occurs BSID have to reach to the assessing officer for
indicating the interest due up to the date of the payment and preparing fresh challan.
EXPORT PROCEDURE

Step 1. Receipt of an entry-

Exporter track a trade inquiry i.e. he comes across the details of a foreign buyers who is willing to import the
items. On receipt of the trade inquiry, the exporter sends his company profile and the promotional literature of
his product range to know the interest of the buyer. The buyer may like to have the details of a product of
interest to the buyer. On the receipt of his basic information, the foreign buyer puts forward his requirements.

Once the product has been identified, then the process of negotiations of other terms and condition begins.
Export sends the proforma invoice to the foreign buyers setting out in detail the terms and conditions negotiated
between the two parties. This invoice represents the “Offer to Sell” made by the exporters. The importer
conveys his ‘acceptance’ of “Offer to Sell” to the exporters. It may be on the other documents also

Step 2. Acknowledge of the Export Order-

Exporter should send an acknowledgement letter to the importer. Stress should be laid on building of long term
business relationship based on mutual trust.

Step 3. Security of the export order-

Before sending the confirmation order, exporter should check for all terms and condition including:

Procedure specification, size, quality, quantity

Terms of payment
Delivery of schedule
Inspection
Documents like commercial invoice, bill of lading etc.
Insurance etc.
Labeling, packaging, marking
Price (FOB value)

Step 4. Arranging the goods-export production

As soon as the export has been confirmed or finalized, preparation is made for the production of procurement of
the goods to be exported. Goods manufactured must comply with the description of the goods given in the
export order, together with a copy of instruction given by the export.

Step 5. Export License\Quota requirements-

If the item being exported requires an export license, the exporter from the licensing
Authority should procedure the same.

Step 6. Central Excise Clearance-

Excisable goods can be imported either:

Under claim for rebate of excise duty

Under bond

In case of former, the duty is first paid and its refund is claimed after exportation and in the later case the goods
are allowed to be exported without payment of duty provided a bond in executed. Before excisable goods are
removed from the factory with an application in the form ARE for claiming rebate of excise duty.

The exporter then presents when the goods have been removed from the factory a copy of this application
together with the goods to the custom collector at the port who will certify that the goods have been actually
exported.

Step 7. Apply to Export Inspection Council for the Inspection

EIC will depute an inspector for carrying out quality control and inspection of exportable products. If
consignment found is according to the prescribed specification, inspecting officer seals each packet. A
certificate of inspection is issued by the inspection agency. Original is valid for custom purpose, which ensure
that only the consignment whose details are given on the certificate is permitted for shipment.

Step 8. Apply For Marine Insurance (if CIF)

The exporter should obtain insurance policy in duplicate. At this stage, all the formalities in relation to the
certificated of origin, ECGC etc. Should be completed.

Step 9. Issue Instruction to the C&F Agent

A detailed note is prepared for the clearing and forwarding agent, giving instruction regarding the shipment of
the consignment. A master document and form of bank guarantee should be forward to the forwarding agent.

Step 10. CHA/CFA’S role for shipping and Customs at the port (Custom Clearance Procedure)

CHA prepares the shipping bill and presents them along with other documents to the export department of the
custom house. The custom appraisal examines the documents and appraisal the value of the goods. If everything
is in order, he endorses the duplicate copy of the Shipping Bill and indicates the extent of physical examination
to be carried out the docks. Then all the document except the GR-I form, original Shipping Bill and a copy of
Master Documents are returned to the CHA for presentations to the appraisal. CHA presents the port Trust copy
of the shipping Bill to the shed superintendent of the port trust and obtain a creating order. This enables him to
cart the cargo to the transit shed for physical examination.
If satisfied, the dock appraisal makes “Out of Change”

Step 11. Documents returned by CHA-.

1. Shipping Bill
2. Original Letter of Credit
3. Full set of Bill of Lading and number of non- negotiable copies.
Step 12. Shipment Advices to Importer-

Intimation is sent to the importer, indicating the date of dispatch and the name of the ship by which they have
been sent along with the non-negotiable copies of Bill of Lading and Master Document.

Step 13. Presentation of Documents by the Export to Bank-

1. Master Document
2. GR-1 (Duplicate and Triplicate)
3. Full set of Bill of Lading and non-negotiable copies
4. Original L/C
5. Bank Certificate
6. Export Contract
7. Marine Insurance (duplicate)
8. Bill of Exchange

Step 14. Processing of Document by Bank-

Bank examines the document with reference to the terms and conditions of the original order and also the L/C,
Exporter’s Bank screens the above document and sends a set of the following document the Importer’s Bank:

1. Master Document (original copy)

2. Marine Insurance Policy
3. Negotiation Bill of Lading (original copy)
4. Bill of Exchange ( original copy)

The bank sends GR-1 form (duplicate) to the ECD of the RBI. Triplicate copy is sent to the RBI on receipt of
Payment from abroad.

Bankers return the following documents to the exporter:

1. Original copy of Bank certificate

2. Attested copies of Master Documents

The exporter receives payment against the above document. The bankers also send to the concerned Joint Chief
Controller of Import and Export, a duplicate copy of the bank certificate.
 FOREX EXPOSURES AND COVERS IN TIL
FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are recorded at the exchange rates prevailing on the date of the transactions.
Monetary items are translated at the rates of exchange prevailing at the date of the balance sheet. Gain/Loss
arising out of differences in foreign exchange rates on settlement/translation of monetary items is recognized in
the statement of profit and loss.

The premium or discount arising at the inception of the forward exchange contract is amortized as expenses or
income over the life of the contract. Exchange differences on such contract are recognized in the statement of
profit and loss in the reporting period in which the exchange rate changes. A profit or loss arising in cancellation
or renewal of such a forward exchange contract is recognized as income or as expenses for the period.

Even though it is assured that transaction costs are greater for individuals rather than firms, it is still important
for TIL to manage its foreign exchange risk. It does so by broadly two methods:

1. External hedging through exposure netting or currency invoicing

2. Internal hedging through forward contracts or futures and options.

At the end of every month, TIL prepares exposure of net realizable amount from the customers, the outstanding
amount to be recovered from the parties to whom the final dispatch of goods has been made and documents
have been sent to the banks. TIL exposures prepared have been enclosed , which describes the whole procedure
in a very befitting its costing for the year. This rate may differ from the rate at the end of the current year, but
that change cannot be predicted or accounted for.

At the end of every year, at the time of auditing, a statement of division wise currency wise actual foreign
exchange realization is prepared for the financial year, in order to analyses the export transactions and the
difference between the budget rates and the spot rates. This statement is prepared separately for the three units
of TIL. Dewas namely, Finished Leather Unit, Leather Garments Unit and the Foot wear Division. Also each
unit’s transactions are calculated for accounting in USD, Euro and GBP.

INR FORWARD PREMIUM BID AND ASK RATES

Sometimes, TIL books the export and import with the bank at spot rates depending on the market volatility and
then the bank books it with its head office after deducting its discount.

BUYER’S CREDIT

It is a form of short-term borrowing taken at the time of import from overseas Lander such as banks and other
financial institute for goods they are importing. This helps achieve loans at lower rates i.e. rates that are closer
to the LIBOR rates as against domestic sources of financing which are costlier. These stood at Rs. 6,764.37
lakhs as on 31st March 2013, out of which 4,034.95 were secured and the remaining unsecured. The secured
buyer’s credit is against first charge by way of hypothecation
Of the Company’s entire stock of raw material, semi-finished and finished goods, consumable stores and spares
and such movables including book debts, bill weather documentary or clean, outstanding monies, receivable,
both present and future, in a form and manner satisfactory by the bank, ranking pari-passu with other
participating banks.

CURRENCY RISK MANAGEMENT

Foreign exchange, risk is the possibility of a gain or loss to a firm that occur due to unanticipated changes in
exchange rate. For example, if an Indian firm, imports goods in foreign currency (say dollars) its outflow is in
dollars, thus it is exposed to foreign exchange risk. If the value of the foreign currency rises (i.e. dollar is
appreciates) the Indian Firm has to pay more domestic currency to dollar the , wired amount of foreign
currency. The most frequently used financial instruments by companies in India. And abroad for hedging the
exchange rate risk are discussed below:-

Forward contract A forward contract is one where counterparty agrees to exchange a specified currency at an
agreed price 'for delivery on a fixed maturity date. Forwards contracts are one of the most common means of
hedging transactions in foreign exchange.

Futures contracts Futures are same as forward contract except that it is standardized in term of contract size is
traded on future exchanges and is settled daily. In practice, futures differ from forwards is

• Forward can be of any amount while futures are of standard amount

• Forwards are traded on phone while futures are traded in organized exchanges
• Forward contract transfer of fund only take once in futures cash transactions takes place particularly every day
during the life of the contract the default risk is largely avoided in the futures.

Options Contact: An option contract is one where the customer has the right but not the obligation to contract
on maturity date. Options have the advantage as compared to forward contracts as the customer has no
obligation to excise the option in case it is not in his favor.

TIL also uses the hedging process to mitigate the currency risk here are key highlights of the use hedging
process by TIL

 Pending orders are unheged.

 Hedging is done for both export and import.
 Data is maintained of the currency requirement for every month and accordingly amount of required
currency is hedged.
 TIL uses only forward contract to mitigate the risk
 The banks which are involved in the process of hedging at TIL are SBI and ICICI.
 Apart from advance payment all the other type of order are hedged that includes sight draft & letter of
credit
 According to the due date hedging is done
 60% of the currency required at TIL is hedged.
COSTING METHOD’s

System of computing cost of production or of running a business. By allocating expenditure to various stages of
production or to different operation of a firm.

Different industries follow different method to establish the cost for their product. This varies by the nature and
specifies of each business. There are different principles and procedure for performing the costing. However the
basic principles and procedure for the costing remains the same. But in TIL basically procedure of costing
remains the same. But in TIL basically process costing used.

PROCESS COSTING

It is an accounting methodology that traces and accumulates direct costs. And all allocates indirect costs of a
manufacturing process. Costs are assigned to products, usually in a large batch which might include an entire
month’s production. Eventually, costs have to be allocated to individual unit of job costing which attempts to
measure individual costs of production of each unit. Process costing is usually a significant chapter; it is a
method of assigning costs to unit of production in companies producing large quantities of homogenous
product.

Example of Process Cost Accounting: - As a process costing example, TATA International produces leather &
leather products. Which require processing through multiple production departments? The first department in
the process is the shaving yard department incurs $50,000 of direct material costs and $120,000 of conversion
costs (comprised of direct labor and factory overhead). The department processes 10,000 wet blue leather
passing through the shaving yard department during that time period is %5.00 for direct materials and $12.00
for conversion costs. The wet blue leather then moved to the dye house department for further work, and these
per-unit costs will be carried along with the leather into that department, where additional costs will be added.

ACTIVITY-BASED COSTING (ABC)

It is a costing methodology that identifies activities in an organization and assigns the cost of each activity with
resources to all product and services according to the actual consumption by each. This model assign more
indirect costs (overhead) into direct costs compared to conventional costing. ABC is a secondary and somewhat
complementary (or better, supplementary) method to the two traditional costing techniques. Whereas traditional
methods might classify costs in generic categories like direct materials, labor, and other overhead, ABC cluster
all the costs associated with the single manufacturing task, regardless of whether they fall under the heading of
labor or materials or something else. So in the bottling example activity-based costs might include operating
the dispensing machines, performing quality checks, pallets of bottles, and so forth. Each of these activities may
involve human labor, equipment costs, energy and expandable resources, and materials, but for analytic
purposes the costs are all lumped together under single activity concepts. The advantages of this approach is
that management can then observe which tasks cost the most versus which add the most value: this analysis
may indicate that a disproportionate amount of money is being spent on low-value activities, signaling a need
for process changes or for outsourcing to a vendor that can perform the tasks less expensively. ABC as an
approach to the costing and
monitoring of activity which involve tracing resources consumption and costing final out puts. Resources are
assigned to activities, and activities to cost objects based on consumption estimates.

VARIANCE ANALYSIS

In accounting, is the difference between an expected or planned amount and an actual amount. For Example, a
variance can occur for items contained in a department’s expanses report. Variance Analysis attempts to identify
and explain the reason for the difference between a budgeted amount and an actual amount. Variance analysis is
usually associated with a manufacturer’s product costs. In this setting, variance analysis attempts to identify the
causes of the differences between a manufacturer’s 1) standard costs of the inputs that should have occurred for
the actual products it manufactured, and 2) the actual costs of the inputs used for the actual products if
manufactured. To illustrate let’s assume that a company manufactured 10,000 units of product (output). The
company’s standard indicate that it should have used $40, 0000 of materials (an input), but it actually used
$48,000 of materials. This unfavorable variance needs to be analyzed. A common variance analysis will divided
the $8,000 into a price variance and a quantity variance. The price variance identifies whether the company paid
too much for each unit of input. (Perhaps it paid more per pound for the input than it had planned).

SENSITIVE ANALYSIS

A sensitivity analysis is a technique used to determine how different values of an independent variable impact a
particular dependent variable under a given set of assumptions. This technique is used within specific
boundaries that depend on one or more input variables, such as the effect that changes in interest rates have on
bond prices. Sensitivity analysis is the study of how the uncertainty in the output of a mathematical model or
system (numerical or otherwise) can be apportioned to different sources of uncertainty in its inputs. A related

practice is uncertainty analysis, which has a greater focus on uncertainty quantification and propagation of
uncertainty; ideally, uncertainty and sensitivity analysis should be run in tandem.
MIS and SAP

MIS

Management information system, or MIS, broadly refers to a computer-based system that provides managers
with the tools to organize evaluate and anciently manage departments within an organization. In order to
provide past, present and prediction information, a management information system can include software that
helps in decision making, data resources such as databases, the hardware resources of a system, decision
support systems, people management and project management applications, and any computerized processes
that enable the department to run efficiently.

The role or the management information system (MIS) manager is to foots °n she organization's information
and technology systems. The MIS manager typically analyzes business problems and then designs and
maintains computer applications to solve the organization's problems. It helps the managers of different levels
m making decision so as for smooth running of business.

SAP

SAP stands for system, application and products which is a German software designed to integrate all areas of
business. SAP is used for recording activities occurring in a business.

Here in TIL in finance department, SAP is used for recording all transactions, helping in maintaining and
formation of documents related to export & import, etc., reconciling the party's accounts, etc.

This software allows the printing of papers like MARINE INSURACE, BILLS OF EXCHANGE, SHIPPING
BILLS, AIRWAY BILLS, etc. it works according to the Invoice of the given purchase order, if it is combines
that is it consist of various Invoice no it is worked out differently than from a single invoice document.

Allocation of SAP code number:

1) Company code
2) Plant Code
3) Profit Centre Code
4) Cost Centre Code
INSURANCE:-

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or
reimbursement against losses from an insurance disc,. I company. The company pools clients' risks to make
payments more affordable for the insured. Insurance policies are used to hedge against the risk of financial
losses, both big and small, that may result from damage to the insured or her property, or from liability for
damage or injury caused to a third party. There are a multitude of different types of insurance policies available,
and virtually any individuals or businesses can find an insurance company willing to insure them, for a price.
The most common types of personal insurance policies are auto, health, homeowners and life insurance policies.

• Following items shows list for which TIL has taken insurance:

1. Assets (current and non-current): It includes raw material, WIP and finished goods, spares and tools,
machines and equipment’s, office furniture, office tools like computers, laptops, fax, printer, photo-copy
machines, etc.
2. In case of insuring cash, it includes: >Cash in Transit >Cash in Hand
3. Employees life insurance and Medi-claim.

• Following are the risk involved in TIL against which insurance has been taken:

Accidents like fire, lightning, earthquake. storm. Flood, cyclone. Bush Fire etc.
1) Impact by aircraft damage, rail / road, animal, etc.
2) Incidents of Fidelity. Theft.
3) Subsidence/ landslide including rockslide.
4) Bursting of tanks, apparatus.
5) Leakage from automatic sprinkler installation.
6) Missile testing operation.
7) Incidents created by humans like riots, strike, malicious damage, etc.
8) Any pollution or contamination resulting from above perils,
9) Any peril resulting from pollution or contamination.

• Normally, the policy can be taken in two ways: Standard a. Floater.

 Let’s take an example of Medi-claim for 4 persons of Rs 10,000.

 Standard: in this ease, when insurance is claim by all 4 persons or less, each person will receive Its
10,000. So, total amount claimed could be maximum Rs 40,000.

 Floatation: In this case, total insurance amount 1)0 can he claimed (whether all 4oe less) is Rs 10,000
(Maximum).
Flotation is generally also used I, insuring the goods in. several warehouse,: (Insurance is taken combined for
various warehouse). This is generally done because the number of goods supply in

Warehouse is not fixed and varies according to demand and supply. So normally as an estimation of goods is
evaluated and insurance is taken for that amount.

Important things to remember: • When a claim is made, the intimation has to be given within 24 hours for
smooth facilitation of process

According to Section 64 VB, we need to pay insurance premium in advance otherwise insurance may lapse.
In medi-claim, bills of pre 30 days and post 60 days are claimable.

Documents required for Import / Export marine Insurance claim

 Duty filled / signed Claim form

 Claim Bill
 Monetary claim logged on carrier
 Shortage Certificate issued by carrier
 Policy certificate
 Commercial invoice
 Packing list
 Bill of lading / Airway bill

Claim form Prepared by me during my internship is attached.

LEARNING

1. The TIL provided me insights about how the organization work culture in the firm, decision making in the
hierarchy
2. Provided me with the knowledge about Forex track, method payments in the Forex market, Incoterms which
define the way goods arc to be shipped, letter of credit and bill of discounting.
3. Learnt about export documentation process & the way these documents are maintained.
4. Increased my understanding about currency risk management. The way hedging process takes.
5. Internship at TIL also enhanced my knowledge about Govt. schemes for exporter.
6. TIL made me familiar with insurance schemes they take.

REFERENCES

. 1. www.tatainternational.com
. 2. Project of previous trainees