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A report submitted towards the partial fulfillment of the requirements of the two years full-time Post Graduate Diploma in Management
Submitted by: Prashant Rampuria Post Graduate Diploma in Management (International Business) Roll No.: 2K81/IB/29 2008-2010
ASIA-PACIFIC INSTITUTE OF MANAGEMENT 3, Institutional Area, Jasola, New Delhi-110025
The purpose of industrial training is to acclimatize the students with the organization & the industry in which this organization exists. Summer training is a part of management study & is very important for each & every student. Management trainees are trained in such a way that after they come out, they can manage the matters of organization in a planned and systematic manner My project is aimed at understanding the basis of export procedure & documentation. It includes how an export order is processed & what all documents are required to complete the legalities of the export order. This training was a valuable experience in terms of understanding & learning & I believe that in future I will get fruitful results.
PRASHANT RAMPURIA PGDM (IB) 2K81/IB/29 2008-10
A project report seems to be an individual effort is in fact teamwork. Summer training at SPL Industries Ltd. was just like an opportunity to shake hand with the practical world of business. I am indebted to all those individuals who helped me in gaining knowledge & insight into various aspects of export procedure & documentation. The source of learning have been one too many & a complete list of individual references would become encyclopedic. I want to express my deepest gratitude to Mrs. Mona Malhotra, GM Marketing, SPL Industries Ltd, without whose help this summer internship in SPL Industries would not be possible. I am grateful to Mr. Jagmohan Chhibber, Export manager, SPLIL, for sharing his experience & knowledge & without whose help the project would not have got any shape. My deepest appreciation also extends to Dr. Tulika Chandra, Project guide, Faculty AIM, who critically reviewed my project report & provided suggestions. I would like to thank Dr. D. K. Banerjee, Director AIM, for his constant support & encouragement. Finally, I would express my gratitude towards Mr. Shailendra Tyagi, Sr. Manager, CCR AIM for facilitating my Summer Internship
PRASHANT RAMPURIA PGDM (IB) 2K81/IB/29
...............................................8 Scope of the study .......................................................................................................................7 Background of the problem task undertaken .......................................9 Chapter 2 Methodology ......................................................................................................................31 Bibliography ...............................................................16 Figure 2: Fabric Process Flow Chart ......................................................27 5|Page ........................................................................47 Annexure........................................28 To understand the export procedure ............21 To understand the role of merchandisers ..........................................14 To understand the apparel business process .....................................7 Rationale of the study ................................7 Project Objectives .........................................................................................................................................14 To understand the working of various departments .............................................................22 Figure 4: The PPC link with other departments ..............................................................................................................................................................................................................48 List of Illustrations Figure 1: The “T” angle of the Apparel Supply Chain .......................................................................Table of Contents Executive Summary ......................................................6 Chapter 1 Introduction ..........................................................................................8 Introduction of the company ..............................................................................................................................................................................................................................................................................................................................................21 Figure 3: Garment Process Flow Chart ...............................12 Chapter 3 Objective of the project ....................................
In the end Annexure are attached as supporting documents. Next chapter provides the detail on the objective: Apparel business process.EXECUTIVE SUMMARY This project is aimed at understanding export procedure & documentation. Next objective gives a brief idea on the merchandisers & what role they play. It is explained through the “T” angle apparel supply chain. The Buyer. This part includes introduction of the company. 6|Page . the client base & some export figures giving idea of Exports at SPL Industries Ltd. capacity. the Supplier & the Manufacturer. company profile. The role of each department is discussed in context of export procedure & documentation & what contribution they make towards it. Further the documents regarding pre & post shipment procedure are discussed. The three sides of the supply chain i. are discussed. They are the one who interacts with the clients & update the company with client’s requirement. its plant location. They act as a liaison between the company & the client. Exploratory research is used for data collection as is best suited for this fulfilling the project objective. In the final objective a brief summary of all the export documents used at the SPLIL for legalizing an export order is given.e.e. Chapter 2 discusses the Methodology used for the data collection. It begins with the introduction of the company i. Next objective discusses a view of different departments working in synchronization in order to process an export order.
b) To understand the working of various departments of SPL industries ltd. Learning the step-by-step processes & procedures to be followed in an export contract is a crucial activity in export procedure. contributing towards processing of an export order. Pre – Shipment procedure ii. As we know.2) Project Objectives a) To understand the Apparel Business Processes.1) Background of the problem task undertaken It is an opportunity to do the summer internship in SPL Industries Ltd which is a manufacturer & exporter of Knitted fabric and Knitted garments. Post – Shipment procedure 7|Page . 1. c) To understand the role of Merchandisers in SPL industries ltd. selecting a project on export procedure & documentation is an obvious & important decision. So. i.CHAPTER-1 Introduction 1. Project on Export house is uncommon & that on an Apparel Export House is rare. d) To study the Export Documentation in SPL industries ltd. exporting is complex and challenging activity in today’s dynamic world environment as it involves the performance of operations that determine existing and potential demand in a market.
process of manufacturing. So. packing and shipment of goods etc. Different departments work in synchronicity & various documents are prepared in the process. payment process.1. In order to complete an order for Knitted garment. selecting this project is a judicious decision. 1.4) Scope of the Study The aim of this project report is to unfold stepwise all complexities involved in the export business right from receiving an export order to final realization of export proceeds. many activities like communication between different departments. For the fulfillment of all the rules and regulations of different countries an exporting company has to maintain and fulfill different documentation requirements. The documentation procedure depends on the type of goods. It 8|Page . type of industry and the country to which goods is to be exported. it is very important to study the export procedure and documents involved in it. Hence. This field has a great scope because today each company whether it is small or big wants to engage in foreign trade. Hence. Each country has its own rules and regulations regarding the foreign trade. quality control.3) Rationale of the Study Export in simple words means selling goods abroad or Export refers to outflow of goods and services and inflow of foreign exchange. the process of outsourcing raw material. are undertaken. a single mistake or lack of proper planning can lead to the rejection of the whole order or increase the cost. Today’s world is the global village in which each country is trading with other countries in the form of export or import.
537.5) Introduction of the Company 1. 9|Page .285 pieces. processing and analyzing the export order as well as documentation.5. etc.1) About SPL Industries Ltd Established in 1994 A leading Apparel Export House of India One of the largest vertically integrated Knitwear plants in India Reputed for excellent Product Development and Design capability Incorporated as Shivalik Prints Private Limited in 1991. polo shirts. 1. name changed to SPL Industries (SPLIL) in 1994 Company promoted by Mr.1907 from the sale of 20. sweat shirts. manufactures and sells a wide range of outer wear – T shirts. This project would be helpful to fulfill many loopholes of manufacturing. 2009 was US $ 66.263.gives a detail idea of how different departments in an Apparel export house work in synchronization so that an export order is processed.000 square feet spread over 14 acres of prime land It employs about 6000 people including contract labour The Company’s total turnover for the year ended March 31.R. Vijay Jindal A leading manufacturer & exporter of Knitted fabric and Knitted garments SPLIL designs. H.717. for top end customers in the international market SPLIL has five factories in Faridabad covering 500. Gupta and Mr.
Garment manufacturing plant . and customer satisfaction using the best technology. Faridabad-121 006 (India) 4.21. Faridabad-121006 (India) 5. and located within 10-12 km from each other. Sector-6. Garment manufacturing plant . Faridabad All Locations are within 30 KM from New Delhi.Plot No. 15/1. service.22.3) LOCATION OF THE PLANTS The Company’s Plants are located at – 1.” 1. Faridabad-121 006 (India) 3. Sector-24. Garment manufacturing plant . 10 | P a g e .Plot No. processes and people. Sector-6.2) DETAILS OF SPL INDUSTRIES LIMITED IEC Code number: 0593027771 (See Annexure 1) AEPC Registration number: 101304 (See Annexure 2) 1. 7 Sector-6.128.“The vision of the Company is to become a leading manufacturer and exporter of apparel by continuously excelling in quality.Plot No. Mile Stone. Mathura Road. Fabric Dyeing and processing plant .Plot No. Garment manufacturing plant .5. Faridabad-121 006 (India).Plot No. 2.5.
Customers Countries Gap Inc. Haggar Clothing Co.C. J.1. Roebuck and Co.5.000 Pcs month 100.4) SPLIL Capacities SECTION Knitted Dyed Fabric Mercerizing Garment Washing & Dyeing Knitted Garments Sweaters CAPACITY 20 Tons per day 05 Tons per day 40. Penney Company Kohl’s Corporation Federated Department Store Phillips-Van Heusen Corporation Hartmarx Corporation Sears.000 Pcs per day 750. Supreme International USA Canada Mexico UK Germany Spain Netherlands Middle East Japan 11 | P a g e .000 Pcs per month 1.5) SPL Customers SPLIL’s high profile customers are not only happy but also satisfied which has earned them recognition and unflattering loyalty from prominent buyers worldwide.5.
For external research Internet website & published books were consulted. Hence Exploratory research design is the need of the hour. Qualitative research through In-Depth Interviews has been adopted. For interviews non–structured open-ended questions were used. Further there are few reasons which made me to use Exploratory Qualitative research: It is not always desirable or possible to use fully structured or formal methods to obtain information from respondents. People may be unable to provide accurate answer to question that tap their sub consciousness.Chapter-2 Methodology Our primary objective of doing this project is to get the first hand knowledge of functioning of an export house. In Secondary data. Since we are not comparing two different entities on the basis of their financial results. Thus. project research methodology is as follows: In Primary data. For internal research Ready to use documents available with the organization were used. rather we are learning the export procedure. People may be unable & unwilling to answer certain questions or unable to give truthful answers. 12 | P a g e . both internal & external research was done.
through contact with the employees. Labour intensive data collection: it can be extremely time consuming. Data collection is the labour intensive process the researcher immerses himself or herself to build an understanding of the organization. Persons having low knowledge in this field don’t go for such methodology. Need for training in qualitative research: There is a need of training in qualitative research methodology. The case study is written after an extensive process of data collection through interviewing & participant observation. Conclusion & interpretation of qualitative research: they are primarily communicated in the form of case studies. 4. 2. 3. 13 | P a g e . exposure to the norms & familiarity with their practices.Limitations of the Methodology 1. Concern about the validity: the issue arises from the fact that qualitative research does not rely on tests for reliability & credibility that are external to data collection & analysis.
contributing towards processing of an export order. suppliers and garment manufacturer are linked to each other.CHAPTER-3 Objective of the project 2. woven or knitted into fabric by second segment. there are fibre (raw material) producers using either natural or synthetic materials. The final segment is the retailers who are responsible for making apparels available to consumers. the buyer and suppliers are linked through apparel manufacturer.4) To study the Export Documentation in SPL Industries Ltd a) Pre – Shipment procedure b) Post – Shipment procedure 2.e.e. At the top of the supply chain. The “T” angle of the apparel supply chain shows how buyer.1) To understand the Apparel Business Process 2. 14 | P a g e . left and right. There are two sides of the “T” i.3) To understand the role of Merchandisers in SPL Industries Ltd 2. The two horizontal sides are linked to each other through the vertical side i.1) To understand the Apparel Business Process The textile and apparel supply chain accounts for a good share in terms of number of companies and people employed.2) To understand the working of various departments of SPL Industries Ltd. The third segment of the supply chain is the apparel manufacturer which converts fabric into garment with many processes involved. 2. The left side is called the buyer to the manufacturer and the right side is called the suppliers to manufacturer. The apparel industry is divided into four main segments. Raw fibre is spun.
are studied by the manufacturer and accordingly list of raw materials required is made. Once approved by buyer. sketches of the garment given by the buyer. The Buyer then retails the same through stores to the ultimate consumers.The “T” angle illustrates how information flows from the buyer to the apparel manufacturer. 15 | P a g e . The supplier develops and sends it to manufacturer and which is forwarded to buyer. The different process of manufacturing results in the final garment product which is finally dispatched to the Buyer. the orders are placed with the suppliers with approved samples. The information normally. When the raw materials are received as per the specifications given to the supplier. colour of the yarn and piece of accessories) are sent to different suppliers for development. The different swatch (standard for type of yarn. in-house manufacturing starts with the production.
16 | P a g e .1) Description of the Buyer Side of the Apparel Supply Chain The buyer side is normally involved with designing of the garment. production of samples.Figure 1: The “T” angle of the Apparel Supply Chain 2.1. order collection. apparel retail.
Prototype garments are made for design approval which consumes considerable amount of time. fashion magazine also plays an important input for the design efforts and most important is the feedback gained from the sales of the similar products that were developed earlier. Once the designs are developed. Once decision is made. XXL: Extra Extra Large). Once size-set is approved. decisions regarding the fabric like cotton or polyester and quantity etc are made. The order quantities are placed to different manufacturers and manufacturer is asked to develop size-sets (alternate sizes of the garment are developed example S: Small. fashion reviews from earlier seasons. Normally. Based on fabric and quantity decided. number of manufacturers is reduced to 2 to 3 depending on the total quantity of the article and also on selected manufacturer production capacity or volumes. Apparel Design Designing of Apparel is either done in-house or contracted to design companies. during proto stage manufacturer figure stands between 5 and 8. developed designs are sent to different manufacturers and are asked to develop proto samples (the stage brings design from paper to cloth for design appearance). decisions related to country and manufacturers are made. L: Large. sale samples (samples developed for 17 | P a g e . The first step in designing is the analysis of the consumer which the Company is targeting. The apparel design is influenced by various parameters like other designer collection presented in the fashion cities of the world. Once proto are developed. Production of samples and order collection The next step after the design in apparel supply chain is the production of the samples.
linen. This sample is stamped by the buyers and the manufacturer can proceed with the production. e-tailers through internet.J. Finally.1. Natural fibre includes plant fibres such as cotton. Nordstrom offer a large number of national brands in both hard and soft goods categories. Apparel Retail Apparel products are made available to consumers in a variety of retail outlets. The apparel sale is also shared by mail order companies. Synthetic 18 | P a g e . 2. such as Marshall’s and T.label and branded apparel from retailers and are able to offer lower prices but with incomplete assortments. Off-price stores.Maxx buy excess stock of designer. and factory outlets etc. These retailers offer a variety of hard and soft goods in addition to apparel. It involves suppliers of different raw materials such as fibre and yarn producers. with everything in place two identical pieces are developed one for the buyer and other for the manufacturer called as sealer (sealer sample is identification or standard for production). Apparel sales also take place through wholesalers or mass merchandisers such as Wal-Mart. Fibre and Yarn Production Fibres are categorised into two groups: natural and man-made. Specialty stores offer a limited range of apparel products and accessories specialising in a specific market segment. Kmart and Target. Departmental stores like Macy’s.advertising and see the market response towards the article) are made.2) Description of the Supplier Side of the Apparel Supply Chain The suppliers in the apparel manufacturing are quite diversified. fabric manufacturers and other raw-materials. jute etc and animal fibre such as wool.
1. Patterns (usually made up of thicker and stronger paper) are made from the design 19 | P a g e . two different loops are mingled together with needle adjustment. After dyeing or washing. Now the fabric is ready for garmentising i.e. In a weaving process. Grey Yarn may be woven by a simple procedure to produce grey fabric and which are then dyed for a specific colour. Instead. Garmentising starts with the design of the garment to be made (usually on the paper called specs). yarn is interloped by latched and spring needles i. yarns are looped together lengthwise and width wise at right angles. acrylic etc. fabric is finished by removing water in the tumbler and later pressed in stenter which also maintains width of the fabric. the manufacturer can proceed with the production. Once the approvals regarding the raw-material are made by the buyer. Apparel Production The process proceeds once the fabric is produced. it is either dyed or washed.fibres include nylon. In knitting. “throwsters” and “texturizers”. Different types of fibres can also be blended together to produce yarn such as grindle etc. knitting a non-woven process. Synthetic fibre production usually requires significant capital and knowledge. dyed yarns may also be woven but not dyed.3) Description of the Manufacturer Side of the Apparel Supply Chain Fabric production This segment of supply chain transforms the yarn into fabric by different processes such as weaving. Natural and synthetic fibres of short lengths are converted into yarn by “spinners”. 2. The dyed (coloured) yarn fabric is washed and grey fabric is dyed into a specific colour. it is ready to be cut and stitched into the garment. polyester.e.
For faster apparel production. first few are operation are joining the different parts together and then further amendments related to design are carried out. Finishing. Packaging and Dispatch of Apparel Garments produced are labelled. In an effort to reduce time from placement of the product order to the consumer’s purchase of the apparel. In the stitching section. Sewing machine operators then process or sew them in batches i. There is increased automation and use of electronic processing in the warehouses of both manufacturers and retailers. An efficient layout of the patterns on the layers of fabric is crucial for reducing the wasted material. 20 | P a g e . all the stages are labour intensive as they are not suitable for any kind of automation. This involves large work in progress (WIP) inventories and minimal flexibility. CAD systems are used for pattern layout and are integrated together with cutting systems. In PBS. The garments are then shipped to the retailers’ warehouse. several practices are gaining popularity.e.which is then used to cut the fabric (cutting usually happens in the form of layers). packaged and usually shipped to a warehouse. In apparel manufacturing. the work is delivered to individual work stations from the cutting department in bundles. garment is usually assembled using the progressive bundle system (PBS). The supervisors direct and balance the line activities and check the quality. use of unit production system which reduces the buffer sizes between the operations or modular assembly systems and allows a small group of sewing operators to assemble the entire garment.
2.2) To understand the working of various departments of SPL Industries Ltd contributing towards processing of an export order.
2.2.1) Manufacturing Process and Production Figure 2: Fabric Process Flow Chart
Testing of Yarns Count, knit ability, wash ability, spirality, strength, shade (if yarn dyed) KNITTING – Trial of 1st lot of fabric in Dyeing.
100% fabric Quality check
Knit Set Approval
Recipe formulation (automatic color kitchen)
100 % Fabric Quality Checking
Shade Color Fastness Approval
21 | P a g e
Figure 3: Garment Process Flow Chart
Fabric Audit Batch wise – Physical Parameters, Trims Matching
Automatic Fabric Layering Batch Wise
Issue to Stitching
CAD marker - As per approved garment
100% Panel Inspection
100% Needle Detection
100% Garment Checking
100% Garment Checking
22 | P a g e
The above two diagrams show detailed picture of SPLIL’s Apparel Manufacturing and Supply Chain. The manufacturer supply chain starts when yarn is in-house and ends when garment is produced and is ready for dispatch. The entire process is divided into two segments i.e. the process and the production. The process involves yarn inspection, knitting, dyeing or washing and finishing. In the process, the yarn is converted to fabric then it is either dyed or washed and finally finished. The production involves fabric cutting, stitching, and garment being finished and finally dispatched. 2.2.2) SPL: Departments Functions and Operations Company mainly deals in two segments of the apparel supply chain i.e. one manufacturing of fabric and other manufacturing of garment. These two segments are two different processes but are very much linked in the supply chain. The Company has different departments each having specified functions and responsibilities. Description of each department will follow in respect to how they occur in supply chain: Yarn Department
Yarn (thread) is one of the most important raw-materials for the garment manufacturing. Company purchases yarn from other spinning mills across the country and also sometimes from other countries such as China and Italy. Yarn department is responsible for placing order of yarn to the mills. Their responsibility is to make sure yarn is ordered from right supplier, delivered in right time with desired quality and maintain stock listing of yarn. Yarn department is also responsible for checking the quality i.e. strength, colour and quantity of the yarn delivered. The decision regarding
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e. The process of dyeing is time consuming and as different colour checks are required. department is responsible for colouration of fabric and for dyed (coloured) fabric. planning and control department. it follows the same process in the finishing department.the yarn quantity. Finishing Department The department is responsible for finishing of the fabric with a proper procedure so that it is ready for garment production. department is responsible for washing. Planning is usually done for every week. circular knitting machine and flat knitting machine. Planning is done on weekly basis. For fabric production. fabric from yarn. Whether the fabric is dyed or washed. production. two types of machines are normally used i. The knitting department makes the production planning for all knitting machines based on request from PPC and also calculates and orders required yarn from the yarn department. Knitting Department Knitting department is responsible for producing knitted fabric i. Washing and Dyeing Department The department is responsible for two different stages in garment manufacturing. The department receives order from the PPC stating article and quantity required. PPC places the order one month in advance. For grey (not coloured) fabric.e. Once the fabric is washed or 24 | P a g e . quality and strength is decided by PPC i. Knitting department receives orders from PPC stating article or style number and quantity of fabric required.e. The department makes the production plan for the dyeing and the washing machine based on order from the PPC and also sends request to knitting department for the dispatch of the fabric.
The department makes production plan for all cutting stations based on article or style requested. The department sends the fabric to the mentioned cutting section. This department is mainly responsible for cutting and avoiding wastage. PPC decides on the 25 | P a g e . Stitching Department The department is responsible for stitching different parts of garment together. These machines are arranged in an orderly fashion depending on how different parts of garment should be attached. proper set of tools such as CAD and others are used in the process. The assembly line system is the set of many different stitching machines each for a specific purpose. The PPC by using CAD and other tools issues article average with a draft or diagram of how different patterns should be placed on to the layer. The process takes place in the assembly line system. it needs to be tumbled in tumbler (sort of big washing machine) responsible for removing water and maintain the fabric width and shrinkage. The cutting department based on their experience and expertise either accepts the proposed average or sometimes gives a better average by few percent. This also works on weekly basis. Once fabric is cut different parts of the same garment are bundled together. The finishing departments receive orders from PPC again stating the article or style number and the quantity. Assembly line method is used for large production.dyed. After which fabric is dried in a Stenter (dryer) and packed in layer and is ready for garment production. Cutting Department The department is responsible for cutting of the fabric into different parts of the garment. To ensure minimum wastage.
PPC being in the centre of all departments also controls their functionality. As the garment is already finished. PPC only receives orders from the Management. Production Planning and Control (PPC) Department The department is responsible for making plans for the entire organization i.e. The PPC department gives the details of the PO to be finished. The top management is in continuous contact with PPC. stitching test etc. it does the planning for product cycle. packed into garment bags and finally. 26 | P a g e . it requires a series of quality checks. The PPC keeps check on different departments by requesting planning and production reports for each day. The garment goes through the quality checks like colour test.e. external quality check takes place and goods are shipped. The PPC sends production plan to different departments on weekly basis and daily for any amendments.article or style to be produced with quantity. packed and dispatched. With order quantity and dispatch date. After which it is steam pressed. The stitching process is the most time consuming and labour intensive process in the entire garment production. all the departments. time line in accordance with each article. labelled. put into the cartons. The stitching department makes necessary production planning i. Finishing and Packaging Department This is final stage before the garment is ready to be shipped. washing test. The planning is done weekly. Once all cartons are packed and labelled.
Packing & Dispatch Production Planning & Control Stitching Department Dyeing & Washing Department Merchandising Department Cutting Department Finance & Accounting Department 27 | P a g e .Figure 4: The PPC link with other departments TOP MANAGEMENT Yarn Department Knitting Department Finishing.
1) Merchandising Department The department acts as a liaison between the buyer and manufacturing division.3. it has to continually update buyer with planning and production status.2) Marketing Design Designing is an integral part of the marketing process.3) To understand the role of Merchandisers in SPL industries ltd. EXPOFIL and PREMIERE VISION. size set and final which is necessary prior to production. The department also takes care of necessary sampling such as proto.3.2. tracking the changing fashion trends across different geographies for various end customers is critical for success. Being an export oriented apparel manufacturer. On one hand. On the other hand. (Plan Outline for Order Completion – See Annexure 3) 2. The Company’s ability to keep abreast of the dynamic fashion trends enables it to showcase its capabilities and understanding the buyers’ requirements. the department is responsible for notifying changes in the product to the PPC and also to make sure that article is produced as per planning by the PPC and within dispatch time limits. These fairs determine the latest trends in yarn / fabric and colours for the following season. They regularly visit International fairs like PITTI FILATI. SPLIL employs a team of designers who design and develop the products as per the requirements of the customers. The design team regularly interacts with the customers which helps it to keep pace with 28 | P a g e . The department takes care of all correspondence with buyer and is responsible for communicating it to PPC. 2. The Company has a well equipped design studio.
trade fair meetings Walk-in customers.3. the Company strives to be a preferred partner to the buyers. The Company receives orders from customers by: Growth in business from existing customers New customers developed through cold calls. The Apparel trade has four basic seasons. based on the understanding of their product range and brand identity / customer identity. the Company presents to them the entire product range. 29 | P a g e . For the existing buyers. Spring Summer Fall/Autumn Holiday/Winter 2. The Company’s experienced marketing team has been able to devise different strategies to suit the needs of both existing & new buyers.3) Merchandising The Company’s marketing team endeavours to enhance its share of the business with existing customers as well as expand the customer base. the Company’s prime focus is to expand the product base and enhance volumes.their expectations. By leveraging the long standing relationships with the buyers. For the new buyers. the Company has opened a Product Development and Sales office at US. Besides. This gives them a good idea of areas of the Company’s expertise and capabilities.
with both the Company and buyer working together to meet a common objective. SPLIL’s manufacturing scale and efficiency and global sourcing ability enables SPLIL to compete with international vendors effectively. Based on this. accessories as well as the conversion efforts. likely suppliers and costs. where they offer their suggestion on modifications. Quality and ability to deliver the required products on time and competitive pricing enables to enhance share with customers. where competition has already been open without any quota related barriers. finalizes the design. This is proven by the growth of the Company in non-quota categories. or to reduce costs while retaining the existing design. The costing exercise is done concurrently at this stage. company can work out an 30 | P a g e . The merchandising teams are to service the requirements of different customers.Sometimes the buyers come to SPLIL with their thoughts on designs. the merchandiser coordinates with PPC to get an estimate of the raw material consumption. Therefore. Once the buyer finalizes a particular style it is translated into samples as quickly as possible because the entire season’s business depends on timely delivery of samples. whenever a prospective buyer places his requirement with the company. they also try to add value by suggesting modifications to enhance functionalities or appeal. SPLIL’s designers along with the sampling department provide the client with prototypes. In case where they come to SPLIL with a predetermined design requirement. the costing sheet is prepared. which undergo various alterations till the client. or fabric to try and bring the cost to the buyer within their required range. On receipt of the enquiry. Modifications are also suggested on apparel design or engineering. The price setting process thus becomes a collaborative effort with Company’s customers instead of just a negotiation process.
documentation department issues an invoice. Failure to comply with documentary requirement may lead to financial loss. if required.1) Pre-Shipment Procedure On receiving the requisition & purchase order from merchant. It is essential that a person engaged in international trade be aware of the various procedures involved.e. along with design. Buying house inspects the goods & issues an inspection certificate.4) To understand the Export Procedure in SPL Industries Ltd. 2. 31 | P a g e . 2. commercial invoice & custom invoice.4. Commercial invoice is prepared for the buyer & Custom invoice is prepared for the Custom authorities of both the countries. Following documents are given to Customs for their reference: Custom Invoice Packing list IEC certificate Purchase Order or L/C. The business of exports is heavily document-oriented & one must get acquainted with the entire procedure. GSP certificate is prepared if the consignment is exported to EU or countries mentioned in the GSP list. Certificate of origin is also issued and attached. if required. Two invoices are prepared i. Packing list is prepared which details the goods being shipped.optimal price-quality combination for him through permutation and combination of quality & source of raw materials.
32 | P a g e . Following documents are sent to buying house for their reference. Buying house will send a set of these documents to the buyer. Forwarder books the shipment & as per the size of the cartons calculates CBM & decides which container to be used. as per buyer’s requirement: Invoice Packing List GSP (if exports to Europe) Certificate of Origin (if required) Wearing Apparel sheet A copy of FCR/ Airway Bill/ Bill of Lading Buying house then intimates the buyer about the shipment & gives the details regarding it. After custom clearance a set of documents with custom clearance receipt are sent along with the consignment to the forwarder. Buyer collects the consignment from the destination port by showing the following documents: o Invoice o Packing List o Bill of lading/ FCR/ Airway Bill On shipment of goods. exporter will send the documents to the importer’s bank. Custom annexure On receipt of above documents. customs will issue clearance certificate.
Within 90 days from Bill of Lading or Airway Bill date.2) Post-Shipment Procedure A foreign buyer will make the payment in two ways: TT ( telegraphic transfer) i. Wire Transfer – (Advance payment. exporter sends the documents to the buyer’s bank for payment.4. as per the clause – 50% advance & remaining 50% on shipment) Letter of Credit If the payment terms are a confirmed L/C then the payment will be made by the foreign bank on receiving the following documents: Invoice Packing list B/L Any other required by the buyer or the country of import. Within 60 days from Bill of Lading or Airway Bill date. it will make the payment in the foreign currency. On confirmation. Within 30 days from Bill of Lading or Airway Bill date. 33 | P a g e .2. The payment terms can be: At Sight Within 15 days from Bill of Lading or Airway Bill date. After shipment.e. The transaction will be Bank to Bank. As the buyer’s bank receive the documents it will confirm with the buyer for release of payment.
Invoice are of 3 types: a. 2. 34 | P a g e . If the payment is through wire transfer.4. Invoice: It is prepared by an exporter & sent to the importer for necessary acceptance. Consular invoice: It is certification by a consul or Government official covering an international shipment of goods.3) Export Documents: An export trade transaction distinguishes itself from a domestic trade transaction in more than one way. quantity. Normally. The domestic branch will credit the exporter’s account. & several other documents are then prepared by deriving information from the invoice. One of the most significant variations between the two arises on account of the much more intensive documentation work. When the buyer is ready to purchase the goods. as per the clause – 50% advance & remaining 50% on shipment). the invoice is prepared first. the payment will be made as per the terms agreed by the exporter (Advance payment. value agreed per unit & total value to be paid. as against the respective purchase order or invoice. Commercial invoice: It is a document issued by the seller of goods to the buyer raising his claim for the value of goods described therein. it indicates description of goods. It ensures that exporter’s trade papers are in order & the goods being shipped do not violate any law or trade restrictions. in Indian rupees by converting the foreign currency as per the current bank rate. The documents mentioned in the pre & post shipment procedure are discussed below: 1. he will request for an invoice. (See Annexure 4) b.
(See Annexure 6) 3. It is required by some purchasers and countries in order to attest to the specifications of the goods shipped. drum or carton. Considerably more detailed and informative than a standard domestic packing list.c. The certificate of origin states that the goods exported are originally manufactured in the country whose name is mentioned in the certificate. Customs invoice: It is an invoice made on specified format for the Custom officials to determine the value etc. GSP: It is Generalized System of Preference. This is usually performed by a third party and often obtained from independent testing organizations. 5. crate. Certificate of Origin: Importers in several countries require a certificate of origin without which clearance to import is refused. It is mainly 35 | P a g e . it itemizes the material in each individual package and indicates the type of package. The goods produced in a particular country are banned for import in the foreign market. Certificate of origin is required when: . Packing list: It shows the details of goods contained in each parcel / shipment. such as a box. Both commercial stationers and freight forwarders carry packing list forms. (See Annexure 7) 4.(See Annexure 8) The goods produced in a particular country are subject to’ preferential tariff rates in the foreign market at the time importation. (See Annexure 5) 2. Certificate of Inspection: – It is a type of document describing the condition of goods and confirming that they have been inspected. as prescribed by the authorities of the importing country. It certifies that the goods being exported have originated/ been manufactured in a particular country.
(See Annexure 9) 6. It is mandatory for every exporter. It is applicable in countries forming European Union. Airway Bill: An airway bill. so each airline has its own airway bill. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo is loaded on the ship. (See Annexure 10) 8. 10. No exports or imports will be effected without the IEC code. is freely transferable by endorsement and delivery. After making payment of all port dues. As each shipping company has its own bill of lading. is a receipt issued by an airline for the carriage of goods. The mate's receipt is a prima facie evidence that goods are loaded in the vessel. Government of India. Wearing Apparel Sheet: It is like a check list which gives the detail regarding the content & design of the garment packed. 9. also called an air consignment note. Bill of Lading: The bill of lading is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel. It is also a document of title to the goods and as such. provided the freight and other charges as specified in the bill have been duly paid. IEC Certificate: It is an Import-Export Code Certificate issued by DGFT.useful for taking advantage of preferential duty concession. The mate's receipt is first handed over to the Port Trust Authorities. and undertaking to deliver the goods in the like order and condition as received. the exporter or his 36 | P a g e . It is a 10 digit code number. Airway Bill or Air Consignment Note is not treated as a document of title and is not issued in negotiable form. if available. (See Annexure 1) 7. Ministry of Commerce. to the consignee or his order.
37 | P a g e . The mate's receipt is freely transferable. Port trust copy. Bill of lading is prepared on the basis of the mate's receipt. The cargo is moved inside the dock area only after the shipping bill is duly stamped. (See Annexure 11) 11. i. (See Annexure 13) A letter of credit can be defined as “an undertaking by importer’s bank stating that payment will be made to the exporter if the required documents are presented to the bank within the variety of the L/C”. it is more secured as company to other methods of payment (other than advance payment). It must be handed over to the shipping company in order to get the bill of lading. Shipping Bill: Shipping bill is the main customs document. required by the customs authorities for granting permission for the shipment of goods. Letter of Credit: This method of payment has become the most popular form in recent times.e.agent collects the mate's receipt from the Port Trust Authorities. Shipping bill is normally prepared in five copies: (See Annexure 12) Customs copy. Exporter's copy. Export promotion copy. 12. certified by the customs. Drawback copy.
Type of packing Documents to be submitted to the bank upon shipment Tolerance level for both quantity and value If L/C is restricted for negotiation Reimbursement clause 38 | P a g e . Name and address of the bank establishing the letter of credit letter of credit number and date The letter of credit is irrevocable Date of expiry and place of expiry Value of the credit Product details to be shipped Port of loading and discharge Mode of transport Final date of shipment Details of goods to be exported like description of the product. terms of shipment like CIF. Let us see shat a letter of credit should contain in the interest of the exporter. unit rate. FOB etc. quantity. So. needless to mention that the letter of credit when established by the importer must contain all necessary details which should take care of the interest of Importer as well as Exporter.Contents of a Letter Of Credit A letter of credit is an important instrument in realizing the payment against exports. This is only an illustrative list.
↓ The exporter scrutinizes the LC to ensure that it confirms to the terms of contract. ↓ The exporter will effect the shipment of goods. forwards the same to the exporter. ↓ The LC Opening bank (Importer’s Bank) receives the bill and documents from the exporter’s bank. ↓ In case any terms are not as agreed. ↓ The opening bank will forward the original LC to the advising bank.Steps in an Import Transaction with Letter of Credit The importer includes a purchase contract for the buying of certain goods. The importer then accepts/pays the bill (This would depend on the terms. the exporter proceeds to make arrangements for the goods. ↓ The exporter’s bank (negotiation bank) verifies all the documents with the LC. ↓ After the shipment is effected. the importer gets the shipping documents covering the goods purchased by him. ↓ In case the LC is as required. ↓ The importer requests this bank to open a LC in favor of his supplier. ↓ The advising bank. 39 | P a g e . the amount. if the documents are found in order. the importer will be asked to make the required amendments to the LC. ↓ The LC issuing bank reimburses the negotiating bank. On acceptance/ payment. Delivery against Acceptance or Delivery against Payment). including Bills of Exchange. the exporter will prepare export documents. after satisfying itself about the authenticity of the credit. ↓ If the documents are in the conformity with the terms of LC and all other conditions are satisfied. ↓ The exporter receives the payment in his bank account. ↓ The importer’s bank opens the LC as per the application. the bank will negotiates the bill. ↓ The importer’s bank checks the documents and informs the importer.
It defines the trade contract responsibilities and liabilities between buyer and seller. Incoterms deal with the number of identified obligations imposed on the parties and the distribution of risk between the parties. Works means factory. It is invaluable and a cost-saving tool. Once they have agreed on a commercial terms like FOB. Buyer is responsible for loading the goods on truck or container at the seller’s premises and for the 40 | P a g e .4) Terms of Shipments – Incoterms The INCOTERMS (International Commercial Terms) is a universally recognized set of definition of international trade terms. mill or warehouse. CFR & CIF. Thus. the uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree. More Clarification on Incoterms EXW (At the named place) Ex Works: Ex means from. The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. developed by the International Chamber of Commerce (ICC) in Paris. cargo insurance and other costs and risks. which are the seller’s premises. they can sell and buy at FOB without discussing who will be responsible for the freight.4. France. such as FOB.2. The exporter and the importer need not undergo a lengthy negotiation about the conditions of each transaction. EXW applies to goods available only at the seller’s premises. The scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods.
indicate the port of origin(loading)after the acronym FAS. and other costs and risks In the export quotation. which means the same as Ex Works. technically speaking. cargo insurance and other costs and risks. The term EXW is commonly used between the manufacturer (seller) and export-trader (buyer). Buyer is responsible for the main carriage/freight. cargo insurance. goods placed in the custody of an air carrier are considered as delivery on board the plane. FAS (At the named port of origin) Free Alongside Ship: Goods are placed in the dock shed or at the side of the ship. at seller’s expense. In the air shipment. within reach of its loading equipment so that they can be loaded aboard the ship. Buyer is responsible for the loading fee. many importers and exporters still use the term FOB in the air shipment. Some manufacturers may use the term Ex Factory. on the dock or lighter. FCA (At the named point of departure) Free Carrier: The delivery of goods on truck. In practice. The point (depot) at origin may or may not be a customs clearance centre. main carriage/freight.subsequent costs and risks. which is usually the sellers premises. for example FAS New York 41 | P a g e . and the export-trader resells on other trade terms to the foreign buyers. rail car or container at the specified point (depot) of departure. or a named railroad station or a named cargo terminal or into the custody of the carrier. In practice. at seller’s expense. it is not uncommon that the seller loads the goods on truck or container at the seller’s premises without charging loading fee.
for example FOB Vancouver and FOB Shanghai. Under the rules of the INCOTERMS 1990. the term FOB has other applications. In international trade. FOB Destination means the seller is responsible for the freight and other costs and risks until the goods are delivered to the buyer’s premises which may include the import custom clearance and payment of import customs duties and taxes at the buyer’s country. FOB (At the named port of origin) Free on Board: The delivery of goods on the board the vessel at the named port of origin (Loading) at seller’s expense. which are not part of the INCOTERMS (International Commercial Terms). indicate the port of origin (loading) after the acronym FOB. many importers and exporters still use the term FOB in the air freight. Many buyers and sellers in Canada and the USA dealing on the open account and consignment basis are accustomed to using the shipping terms FOB Origin and FOB destination. cargo insurance and other costs and risks. In North America. In the export quotation. the term FOB is used for ocean freight only. depending on the agreement between the buyer and seller. in practice. avoid using the shipping terms FOB Origin and FOB Destination. Buyer is responsible for the main carriage/freight. The FAS term is popular in the break-bulk shipments and with the importing countries using their own vessels. FOB Origin means the buyer is responsible for the freight and other costs and risks.and FAS Bremen. However. 42 | P a g e .
indicate the port of destination (discharge) after the acronym CIF. 43 | P a g e .CFR (At the named port of destination) Cost and Freight: The delivery of goods to the named port of destination (discharge) at the seller’s expenses. indicate the port of destination (discharge) after the acronym CPT. Buyer is responsible for the cargo insurance and other costs and risks. In the export quotation. CIF (At named port of destination) Cost. for example CIF Pusan and CIF Singapore. many importers and exporters still use the term CIF in the air freight. payment of custom duties and taxes. for example CPT Los Angeles and CPT Osaka. Many importers and exporters worldwide still use the term C&F. In the export quotation. Buyer is responsible for the import customs clearance and other costs and risks. Buyer assumes the cargo insurance. the term CIFI is used for ocean freight only. CPT (At the named place of destination) Carriage Paid To: The delivery of goods to the named port of destination (discharge) at the seller’s expenses. in practice. Insurance and Freight: The cargo insurance and delivery of goods to the named port of destination (discharge) at the seller’s expense. The term CFR was formerly written as C&F. Under the rules of the INCOTERMS 1990. However. and other costs and risks. import custom clearance.
payment of customs duties and taxes. payment of customs duties and taxes. cargo insurance. payment of customs duties and taxes. and other costs and risks. Buyer assumes the cargo insurance and other costs and risks. DES (At named port of destination) Delivered Ex Ship: The delivery of goods on board the vessel at the named port of destination (discharge) at sellers expense. Buyer is responsible for the import custom clearance. import customs clearance. at the buyers end. 44 | P a g e . Buyer assumes the unloading free. DEQ (At the named port of destination Delivered Ex Quay: The delivery of goods to the Quay (the port) at the destination on the buyers expense. DAF (At the names point at frontier) Delivered at Frontier: The delivery of goods at the specified point at the frontier on seller’s expense. and other costs and risks. payment of custom duties and taxes. and other costs and risks. Buyer assumes the importer customs clearance. Seller is responsible for the importer customs clearance.CIP (At the named place of destination) Carriage and Insurance Paid To: The delivery of goods and the cargo insurance to the named place of destination (discharge) at seller’s expense.
Under the “F”-TERM (FCA. which is often the project site or buyers premise. and the delivery of goods to the final point of destination. but without assuming the risk of loss or damage to the goods or additional cost due to events occurring after shipment or discharge. CIF. Buyer assumes the import customs clearance. the seller only makes the goods available to the buyer at the seller’s own premises. and taxes at the buyers end. FAS. &FOB). The seller may opt not to insure the goods at his/her own risks. the seller has to contract for carriage. Under the “E”-TERM (EXW). 45 | P a g e . and payment of custom duties. “F”-term. which are often the project site or buyers premises at sellers expense. groups the term in four categories denoted by the first letter in the threeletter abbreviation. like its immediate predecessor. payment of customs duties and taxes. import custom clearance. It is the only one of that category. Under the “C”-TERM (CFR. & CIP). CPT. DDP (At the named point of destination) Delivered Duty Paid: The seller is responsible for most of the expenses which include the cargo insurance.DDU (At the named point of destination) Delivered Duty Unpaid: The delivery of goods and the cargo insurance to the final point of destination. “C”-term & “D”-term: Incoterms 2000. “E”-term. the seller is called upon to deliver the goods to a carrier appointed by the buyer. The seller may opt not to insure the goods at his/her own risk.
Transfer of risks. DDU & DDP). DEQ. Under the “D”-TERM (DAF. All terms list the seller’s and buyer’s obligations. This layout helps the user to compare the party’s respective obligations under each Incoterms. The respective obligations of both parties have been grouped under up to 10 headings where each heading on the seller’s side “mirrors” the equivalent position of the buyer. and Division of costs. 46 | P a g e . the seller has to bear all costs and risks needed to bring the goods to the place of destination. Examples are Delivery. DES.
. 2008-09.Bibliography Reference Site http://www.. Exporters’ Guidelines.spllimited. Malhotra.com/index. 17-29. K. 2nd Edition. Justin & Aserkar.htm as retrieved on June 10. pp. Chapter – 2. 47 | P a g e . Export Import Management. Part II. Naresh K. pp. An Applied Orientation. 2009 Reference book Puri.gov. 2009. 2nd Edition.in/dp/splfinal. 2009 http://www. Rajiv. Marketing Research. Paul. Oxford University Press. Policy & Procedures. JBA Publishers. Pearson Prentice Hall. 2005. Fourth Edition. 71-340. V.sebi.pdf as retrieved on May 21. A Basic Book on How to Export as per Govt.
Annexure Interview Questions Mr. Jagmohan Chhibber Export Manager. SPL Industries Ltd How an export order is processed? What role the different departments play for the completion of the export order? What role does merchandising department play in an Apparel export house? What are the different documents prepared & used for the export? How important are these documents? What are the incoterms? How are they important? What is a Letter of credit? What is its significance? 48 | P a g e .
Annexure 1 49 | P a g e .
Annexure 2 50 | P a g e .
Annexure 3 51 | P a g e .
Annexure 4 52 | P a g e .
Annexure 5 53 | P a g e .
Annexure 6 54 | P a g e .
Annexure 7 55 | P a g e .
Annexure 8 56 | P a g e .
Annexure 9 57 | P a g e .
Annexure 10 58 | P a g e .
Annexure 11 59 | P a g e .
Annexure 12 60 | P a g e .
Annexure 13 61 | P a g e .