“Export Procedure of Manufacturing Industry Study on Employee Opinion on Export Practice of D.L.W”
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Submitted By ramagrawal2012 Words 7407 Pages 30
SUMMER TRAINING PROJECT
Survey report on
“Export procedure of manufacturing industry study on employee opinion on export practice of D.L.W”
SUBMITTED BY:
Ram agrawal
ACKNOWLEDGEMENT
This Project Report is a combined effort of many people who have contributed in their own ways in making this report effective and purposeful. In my report, I would like to take the opportunity of thanking all those who have been instrumental in preparing this report.
Firstly I would like to thank God for bestowing upon me his kind blessing althroughout. I am extremely grateful to our Director- Pro, SHEKHAR GHOSH for providing us this opportunity to prove our skills in this summer training project.
I also extended my heartiest gratitude to my mentor for this project work, Pro, HEMLATA BHAT who provided me every bit of relevant information and guidance in making this project a success. It was a great experience working under her supervision.
I specially wish to thank Mr. Ashraf hussion (J.E) and K.K.shrivastava, D.L.W.Varanasi (Diesel Locomotive Workshop, Varanasi) for his valuable suggestions & continuous support.
Ram agrawal
DECLARATION
I hereby declare that the project report entitled, ‘Survey report on “Export procedure of manufacturing industry: Study on employee’s opinion on Export practice of Diesel locomotive works Varanasi”’ is a record of independent work which I have been carried out under the guidance of Mr. Asharaf hussaion. This has not been submitted for the award of any diploma, degree, associate ship or other similar title.
Ram agrawal
PREFACE
It is great privilege for me to place this report before the reader. The report is concern about. ‘Export procedure of manufacturing industry: Study on employee’s opinion on Export practice of Diesel locomotive works Varanasi.”’ This report is presented in very simple & understanding language on the basis of primary data.
Ram agrawal
INDIAN RAILWAY CONTENT TABLE
* COMPANY PROFILE
* About Company (DLW) * Brief History of DLW * Locomotive General information * Vision & mission * Marketing Dept... in DLW
* EXPORT PROCEDURE IN DLW
* About RITES * Service provided by RITES * RITES role in DLW * Contract between RITES & DLW * Details of Exported locomotives
* GENERAL PROCEDURE OF EXPORT * ANNEXURE
COMPANY PROFILE
DIESEL LOCOMOTIVE WORKSHOP
VARANASI
LOCATION
Diesel Locomotives Works situated in Varanasi in D.L.W.
ABOUT COMPANY
“DIESEL LOCOMOTIVE WORK”
Varanasi, one of the oldest populated cities in the world and has a promising place in the international ground both as a hub of traditions and technology. One side the humming of divine and holy bells of the temples brings the city to life; on other side Diesel Locomotive Works (DLW) Varanasi is one of the largest industrial units in eastern part of the nation. DLW catch the attention of lot of foreign tourist students to observe on going amazing locomotive manufacturing process in Varanasi. Diesel Locomotive works Varanasi is located at the North end of the city and about 8 Km away from the Holy River Ganges Ghats. DLW is an ISO 9002, ISO 14001 & OHS 18001 Certified Organization of diesel electric locomotive.
Diesel Locomotive Works, Varanasi (DLW) is one of the main manufacturing units run by the Indian Railways. This manufacturing unit came into existence in year 1961, as a “Green Field Project” in industrial association with ALCO, USA. This unit generates all the Diesel Electric Locomotives. In year 1964, the first locomotive was manufactured and it was devoted to the country. Diesel Locomotive Works, Varanasi produces only Electric Diesel locomotives and auxiliary parts of locomotives. Though it is an Indian corporation but it has supplied locomotives to some foreign countries also, includes Angola, Bangladesh, Malaysia, Myanmar, Sri Lanka, Vietnam and Tanzania.
Diesel Locomotive manufacturing Works, Varanasi works in three main sections viz:- 1) Engine section, 2) Vehicle section and 3) Block section
1) Engine section manufactures more than 2000 machinery, which comprises of ALCO turbo superchargers, cylinder heads, connecting rods, camshafts, lubricating oil pumps, chrome plated cylinder liners and many different types of gears.
2) Vehicle section of DLW unit works on different fields that include Bogie Manufacturing, Component Fabrication, Locomotive Assembly, under frame Fabrication, and many more.
Currently, Diesel Locomotive Works, Varanasi manufactures locomotives, DG sets. In locomotives section, again it manufactures two different types of products, one is EMD and another is ALCO.
GENERAL INFORMATION
* Workshop Land 219.997 acre * Township Area 520.6 acre * Covered Area in Shop 26.37 acre * Covered area of other service building 19.13 acre * Total No. of Staff Quarters 3666 * Total No. of staff on roll (as on 01.04.2009) 5926 * No. of beds in Hospital 105 * Water consumption 223.82 Lakh Litres/day
Electrical Power Requirement * Electrical Energy Consumption 262.07 Lakh Unit / Year * Workshop 4200 KVA * Colony 2600 KW * Administrative Building 1500 KW * Stand by Power Generation Capacity 5625 KW
EDM WDG4 - 4000 HP GOODS LOCOMOTIVE Broad Gauge freight traffic Co-Co diesel electric locomotive with 16 Cylinder 4000 HP engine, AC-AC transmission, microprocessor controlled propulsion and braking with high traction high speed cast steel trucks.
First turned out in 1999 with transfer of technology from General Motor (USA), this locomotive has exceptional fuel efficiency and very low maintenance requirements. It is specifically designed for heavy haul freight traffic requirements of Indian Railways for the 21st Century. The heart of loco Traction Control Converter uses the GTO devices (obsolete technology). Now the IGBT devices, has been introduced from Oct 2006. It is the latest technology and will be cost effective and gives higher reliability.
The locomotive power has been upgraded to 4500 BCV and the first Loco (Loco No 12114) was manufactured in May 07
Diesel Engine | Transmission | * 16 Cylinder 710 G3B, 2 stroke, turbocharged after cooled * Fuel Efficient Engine * Injection System Direct Unit Injector * Governor Woodward * Compression Ratio- 16:1 * Lube Oil Sump Capacity 950 Lts | * Electrical AC-AC * 6 Traction motor ( 3 in parallel per bogie) * Suspension Axle hung / taper roller bearing * Gear Ratio 90:17 | Truck | Brakes | * High adhesion HTSC ( High Tensile Steel Cast) truck of bogie * Adhesion 0.42 | * Electronic Air Brake System ( KNORR-NYAB-Computer Controlled Braking) * Air , hand , dynamic brake * Pure air brake |
General Characteristic | * Installed Power * Axle Load * Gauge * Wheel arrangement * Wheel diameter * Height * Width * Overall Length (Over Buffer Beam) * Weight * Max tractive effort * Maximum speed * Fuel tank capacity * Locomotive Control | * 4000 HP * 21 T * 1676 mm * Co-Co * 1092 mm * 4201 mm * 3127 mm * 19964 mm * 126 T * 54 T * 100 Kmph * 6000 lts * EM 2000 with SIBAS-16 Traction Control | | | WDG4-4000 HP GOODS LOCOMOTIVE | TRACTIVE EFFORT & POWER CHART |
ALCO
2300 HP CAPE GAUGE LOCOMOTIVE
TECHNICAL INFORMATION
2300 HP Main Line Locomotive, having fabricated cape gauge Co-Co bogies. These are provided with two drivers cabs, one at each end. These locomotives have been supplied to Angola and Sudan. Wheel Arrangement | Co-Co | Track Gauge | 1067 mm Cape Gauge | Weight | 102 t | Overall Length | 17620 mm | Wheel Diameter | 921 mm | Gear Ratio | 18 : 93 | Maximum Speed | 100 Kmph | Diesel Engine | Type: ALCO 251-B 12 Cyl. V- Engine | HP | 2300 | Transmission | Electrical AC/DC | Brake | IRAB-1 | Loco | Air, Dynamic, parking | Train | Air | Fuel Tank Capacity | 3000 Liters |
2300 HP METER GAUGE LOCOMOTIVE
TECHNICAL INFORMATION
2300 HP Main Line Locomotive, having fabricated meter gauge Co-Co bogies. These are provided with two drivers cabs, one at each end. These locos have been supplied to Malaysia, Senegal and Mali. Wheel Arrangement | Co-Co | Track Gauge | 1000 mm Meter Gauge | Weight | 102 t | Overall Length | 17620 mm | Wheel Diameter | 921 mm | Gear Ratio | 18 : 93 | Maximum Speed | 100 Kmph | Diesel Engine | Type: ALCO 251-B 12 Cyl. V- Engine | HP | 2300 | Transmission | Electrical AC/DC | Brake | IRAB-1 | Loco | Air, Dynamic, parking | Train | Air | Fuel Tank Capacity | 3000 Liters |
BROAD GAUGE MAIN LINE FREIGHT LOCOMOTIVE
WDG 3A
TECHNICAL INFORMATION
Diesel Electric main line,heavy duty goods service locomotive, with 16 cylinder ALCO engine and AC/DC traction with micro processor controls. Wheel Arrangement | Co-Co | Track Gauge | 1676 mm | Weight | 123 t | Length over Buffers | 19132 mm | Wheel Diameter | 1092 mm | Gear Ratio | 18 : 74 | Min radius of Curvature | 117 m | Maximum Speed | 105 Kmph | Diesel Engine | Type : 251 B,16 Cyl.- V | HP | 3100 | Brake | IRAB-1 | Loco | Air, Dynamic | Train | Air | Fuel Tank Capacity | 6000 liters |
BRIEF HISTORY OF DLW
Welcome to Diesel Locomotive Works, Varanasi
An ISO 9001,ISO 14001 & OHS 18001 Certified Organization.
August | 1961 | DLW set up as a green field project in technical collaboration with ALCO, USA for manufacture of Diesel Electric Locomotives | January | 1964 | First Broad Gauge Locomotive (WDM-2) released by (Late) Shri Lal Bahadur Shastri. First Locomotive rolled out and dedicated to the Nation | November | 1968 | First Meter Gauge Locomotive (WDM-4) released by (Late) Shri Morarji Desai. | February | 1975 | First Broad Gauge shunting Locomotive (WDS-6) turned out. | January | 1976 | First Locomotive rolled out and dedicated to the Nation. Locos Exported to Tanzania | December | 1977 | First Diesel Generating Set commissioned | May | 1984 | Locos Exported to Vietnam | August | 1994 | First 3100 HP WDM-2C Loco turned out. | April | 1995 | First 2300 HP WDP-1 Passenger Loco turned out. | July | 1995 | First 3100 HP WDG-2 Freight Loco turned out. | December | 1995 | Locos Exported to Sri Lanka. | April | 1996 | Locos Exported to Bangladesh. | February | 1997 | Awarded ISO-9002 Certification. | October | 1997 | Locos Exported to M/s Puttalam Cement Company, Sri Lanka. | August | 1998 | First 3100 HP WDP-2C Passenger Loco turned out. | March | 1999 | Highest out turn of 161 locos (amounting to 230 units) | March | 1999 | 4000th Locomotive turned out. | August | 1999 | First PKW WDG-4 Locomotive turned out. | March | 2001 | Awarded ISO-14001 Certification. | March | 2002 | First DLW Built 4000 HP WDG-4 Freight Loco turned out. | April | 2002 | First DLW Built 4000 HP WDG-4 Loco turned out. | June | 2002 | First DLW Built 3300 HP WDG-3C Freight Loco turned out. | December | 2002 | DLW certified for ISO: 9001: 14001. | June | 2005 | 2.4MW Diesel Generating set commissioned. | September | 2005 | Certified by OHSAS- 18001: 1999. | November | 2006 | First IGBT based WDG-4 Loco turned out. | January | 2007 | 5000th Locomotive turned out. | November | 2008 | Locos Exported to Mozambique. | March | 2009 | Highest out turn of 257 locomotive. | November | 2009 | 5690 locomotives up to 30th Nov'2009(including 348 EMD locos) |
LOCOMOTIVE GENERAL INFORMATION
What does the designation such as “WDM-2” mean?
Locos,except for older stream ones have classification codes that identify them. This code is of the form [GAUGE] [POWER] [LOAD] [SERIES] [SUBTYPE] [SUFFIX]. In this the first item [GUAGE] is the single letter identifying the Gauge the loco runs on. : * W = Board Gauge * Y = Meter Gauge * Z = Narrow Gauge (2’6) * N = Narrow Gauge (2’)
The second item [Power] is one or two letter identifying the power source. : * D = Diesel * C = DC Traction * A = AC Traction * B = Dual- power AC/DC Traction * B = Battery electric (Rare) The third item [Load] is a single letter identifying the kind of load the loco is normally used for. : * B = Mixed Traffic * P = Passenger * G = Goods * S = Shunting * L = Light duty (Light Passenger) {No longer in use} * U = Multiple Unit [EDU/DEMU] * R = Railear [See below]
The fourth item [Series] is a digit identifying the model of the row. Unit recently, this series no. was simply assigned chronologically as new model of locos were introduce. The fifth item [Sub type] is an optional letter or no. or (two of them) that indicate some smaller variation in the basic model or series perhaps different motors, or different manufacture. With the new scheme for classifying Diesel locos. This item is a letter that further refines the horse power indication in 100 HP increment.
’A’ for 100 HP
‘B’ for 200 HP
‘C’ for 300 HP etc. So in this scheme, a WDM-3A refers to a 3100 HP loco, while a WDM-3F would be a 3600 HP loco. The last item [Suffix] is an optional indication that indicates something special about the loco such as different gearing ratio or brake system that usual. So, a WCM-2 is a broad gauge (W) DC electric (C) mixed traffic (M) engine, model 2.likewise WDS/5 is broad gauge diesel shunting engine, model 5 and ZDM-5 is a narrow gauge diesel mixed traffic-model 5 loco
Vision & Mission
Our Vision -”To be a world class manufacturer of Diesel - electric locomotives."
Our Mission - "We shall achieve our vision through Continuous Improvement in the areas of Product Quality, Research and Development, Supplier Partnership, Human Resource Development and Team Work with emphasis on Core Competence leading to Customer Satisfaction and Business Excellence."
MARKETING DEPARTMENT
IN DLW
Marketing Division was set up at DLW in August 1987 for sales and after sales service of locomotives to Non-Railway Customers. With the setting of this organization it has been possible to provide single window service to Non-Railway Customer for all activity connected with sale of locomotives, DG Sets and Spares.
The marketing Division maintains close liaison with different Non-Railway Customers. The formation of Marketing Division has greatly helped Non-Railway Customer in improving availability of spares & maintenance of locomotives.
Marketing Division is also responsible for submitting offers & following up cases of sales of locomotive & spares to NRCs and Export of locomotive & spares through agencies like RITES and IRCON. It is also the nodal department at DLW for DG sets.
DLW is registered with Engineering Export Promotion Council & can thus participate in Deemed Export orders directly and claim export benefits. For export order the demand is met through RITES/IRCON depending on the country of export.
Supply of Locomotive & Spares to Non-Railway Customer & Export
During the year 2008-09 DLW supplied 19 locomotives to Non-Railway Customers in India & 1 cape gauge 3000 HP, locomotive to Mozambique through RITES. Thus, total 20 locomotives (19 for NRC + 01 for export) were supplied during the year worth Rs. 122.55 crore.
DLW has so far supplied 374 locomotives to different Non-Railway Customers in India and 102 Locomotives exported to Countries like TANZANIYA, SRI LANKA, BANGLADESH, VIETNAM, MALAYSIA, MYANMAR, ANGOLA, SENEGAL, MALI, SUDAN, & MOZAMBIQUE.
SPARES
During the year 2008-09 spares parts worth Rs. 10.61 crore were supplied to Non-Railway Customer in India as well as Export.
EXPORT PROCEDURE IN DLW
ABOUT RITES RITES Ltd., a Government of India Enterprise was established in 1974, under the aegis of Indian Railways. RITES are incorporated in India as a Public Limited Company under the Companies Act, 1956 and are governed by a Board of Directors which includes persons of eminence from various sectors of engineering and management.
RITES Ltd., an ISO 9001-2000 company, is a multi-disciplinary consultancy organization in the fields of transport, infrastructure and related technologies. It provides a comprehensive array of services under a single roof and believes n transfer of technology to client organizations. In overseas projects, RITES actively pursues and develops cooperative links with local consultants / firms, as means of maximum utilization of local resources and as an effective instrument of sharing its expertise.
RITES are internationally recognized as a leading consultant with operational experience of 62 countries in Africa, South East Asia, Middle East and Latin America. Most of RITES foreign assignments are for National Governments and other apex organizations.
SERVICES BY RITES Facilities Planning for Rolling Stock Maintenance Technical Assistance for Workshop Modernization Supply & Commissioning of Workshop Machinery and Plant Supply, Commissioning and Maintenance of Locomotives & Rolling Stock Leasing of Locomotives and Passenger Coaches Supply of Spares Supply of Signaling Equipment Rehabilitation of Locomotives and Wagons Rehabilitation of Traction Machines & Railway Bridges | | |
RITES ROLE IN DLW
In DLW, RITES is the representative of Export Division in Marketing Department. Through RITES all the loco are Exported.
DLW is only the manufacture of loco, but the procedure of sending loco from DLW to another country is done by RITES Ltd. The conclusion is that all the Procedure of Export is done by RITES Ltd. On the behalf of DLW.
DLW provides free service to NRC and export locomotives up to warranty period and thereafter supplies spare parts and technical support on payment basis.
For Indian customers DLW directly deals with through marketing wing.
And For export locomotives, DLW deals through RITES ltd.
CONTRACT BETWEEN RITES & DLW
As we know that DLW has done export through RITES ltd. For maintaining this relationship, time to time as per requirement a contract made, name as BACK TO BACK CONTRACT between both the organizations.
This contract updates the relationship between RITES & DLW legally. It’s also include the related information about loco and export procedure for further process
DETAILED OF EXPORTED LOCO IN DLW DLW built Locomotives have been successfully exported to all this country as mention above with their no. & HP.:
SN | PERIOD | NO. OF EXPORT | HORSEPOWER | COUNTRY | 1 | 2002-03 | 10 | 1350 HP | Vietnam | 2 | 2003-04 | 03 | 2600 HP | Bangladesh | 3 | 2004-05 | 03 | 1350 HP | Sudan | 4 | 2005-06 | 11 | 1350 HP | Myanmar | 5 | 2006-07 | 010205 | 1350 HP2300 HP2300 HP | AngolaAngolaSudan | 6 | 2007-08 | 0301 | 2300 HP2300 HP | MaliSenegal | 7 | 2008-09 | 01 | 3000 HP | Mozambique |
| | | | | | | | | | | |
At INTERNATIONAL LEVEL the main competitors of DLW (Asia Largest manufacturing of Locomotive) are CHINA, JAPAN,
GENERAL PROCODURE OF
EXPORT
NOTE: In DLW, all the activity of EXPORT is done by the RITES LTD.
GENERAL PROCEDURE OF EXPORT TRADE Usually in any Export House following steps are followed to export The goods. These steps are:- * Receipt of Enquiry and sending Quotation. * Receipt of order or indent * Assessing Importer’s credit worthiness and securing a guarantee * Obtaining Export License * Obtaining Pre-finance License * Production or Procurement of goods * Pre Shipment Inspection * Excise Clearance * Obtaining Certificate of Origin * Reservation of shipping space * Preparation of Invoice * Packing and Forwarding * Insurance of Goods * Custom Clearance * Obtaining Mate’s receipt * Payment of Freight & Insurance of Bill of Lading * Securing Payment
EXPORT PROCEDURE IN SEVERAL STEPS
STAGE 1: Customer Search and Receiving of Order This work is assigned to the marketing persons of the company (RITES) they Establish the relationship with customer. Usually the company gets The order in three ways:- * Through Personal Visit: * Through International Trade Fair & Exhibition * Through Internet * Through Global Tender STAGE 2: ORDER IMPLEMENTED Once the order has been received, the export order is scrutinized with reference to the terms and condition of the export contract. This is the most crucial stage of any export process. All subsequent action and reaction will depend on the terms and condition of the export contract. It is ensured that contract has been entered into in accordance with the prevalent export policies of the country and foreign exchange regulations like FERA, FEMA. The export order must specify the mode of payments such as: * Letter of Credit [L/C] * Documents on Payment [D/P] * Documents against Acceptance [D/A] In this stage, the Company prepares all the necessary documents including Sales Contract required by the buyer and submits to the negotiating bank in exact specified format and manner. The most important documents demanded by the importer are:- * Bill of exchange * Commercial Invoice * Packing List * Marine Insurance Policy * Certificate of Origin Then Buyer Company sends the Sales Contract which is the declaration by them that all the terms and conditions of order are accepted to them. STAGE 3: PERFORMANCE OF MARKETING DEPT. As soon as the order has been confirmed the Buyer Company sends the Sales Contract putting their own seal which is the declaration by them that all the terms and conditions of order are accepted to them. After the contract, the marketing dept. places the Manufacturing Order on the Production Manager & advice the Material procurement. Department for insuring the availibity of purchase item required for the purchase of Goods. This note contains the description of the goods as has been given in export order along with the instructions given by importer. The date by which the goods must be ready is clearly indicated in Manufacturing Order. On the basis of work order Manufacture start. After receiving MO Production of the goods are started. STAGE 4: PACKING & SENDING OPTION Then as per the instructions given by importer goods are packed in Packing Department. Now these packed goods are sent to shipping agent through transporters or through Courier. STAGE 5: FINAL INSPECTION After the stage of inspection, it is carried out by the Quality assurance dept. of DLW & the final inspection is done by DLW, RITES & IMPORTER (If importer so desire)
WORKING OF COMMERCIAL DEPARTMENT i.e. EXPORT DOCUMENTATION Documentation Department is usually called as ‘Commercial Section’ AT DLW the export is done by the Marketing Dept. up to the stage of Manufacturing & Turning out from DLW then after the other export formalities are carried out by the RITES. Commercial Section can be shown by following figure:- COMMERCIAL SECTION COMMERCIAL MANAGER DEPUTY MANAGER ASSISTANT MANAGER CLERICAL STAFF & WORKERS The main function of the commercial section is to prepare and maintain the documents of each and every activity involved in the Export procedure. Documentation is mainly done to give justification before Reserve Bank of India of foreign exchange transaction which is carried out in Export Process. Thus, the Export Documents represents the total Export Procedures.
Mainly the Export Documents Can be divided into two types:-
(A) COMMERCIAL DOCUMENTS:- These documents are used by ‘Custom of Trade’ in International Commerce by exporters and importers in discharge of their respective legal and other incidental formalities under Sales contract. Commercial Documents can be further divided into two types of documents which are as follows:- * PRINCIPAL DOCUMENTS * AUXILLARY DOCUMENTS
1. PRINCIPAL DOCUMENTS:- These documents are required for effective physical transfer of goods and title thereto from exporter to importer. Following documents come under this category:- * Realization of Export Sale Proceeds * Commercial Invoice and Invoice prescribed by Importing Country * Packing List * Certificate of Inspection * Certificate of Insurance/Insurance Policy * Bill of Lading or Combined Transport Documents * Certificate of Origin * Bill of exchange * Shipping Advice 2. AUXILIARY DOCUMENTS:- These documents are required in connection with preparation or procurement of Principal Export documents. Following documents are Auxiliary documents:- * Proforma Invoice * Shipping Instruction * Insurance Declaration * Intimation for Inspection * Shipping Order * Mate’s Receipt * Application for Certificate of Origin * Letter to Bank for negotiation or collection of documents (B) REGULATORY DOCUMENTS:- These documents are prescribed by different Government Department/Bodies for compliance of formalities under relevant laws, rules and regulations governing export trade viz. FERA ,Import & Export (control) Act, Central Excise Rules, Export (Quality Control &Inspection) Act, Customs Act and Major Port Trusts Act etc. Following documents are of Regulatory nature: * Exchange Control Declaration-GR Forms * Freight Payment Certificate * Insurance Premium Payment Certificate * Gate Pass-I/II * ARE-1/ CT-1 Forms * Shipping Bill/Bill of Export * Port Trust Copy of Shipping Bill/ Export Application/ Dock Challan * Receipt for Payment of Port Charges * Vehicle Ticket Broadly we can classify the total working of Commercial Section in the three stages. They are:- 1) Pre Shipment Documentation 2) Shipment Documentation 3) Post Shipment Documentation 1. PRE-SHIPMENT DOCUMENTATION: Pre shipment procedure starts from the very beginning i.e. receiving the order and it ends with handling over the goods to the transporters. In the case of Advance payment following documents come under Pre shipment documents:- After receiving the export order, Sales Contract is sent to buyer his is resent by buyer after putting their seal along with the 30% of total Invoice value (in the case of advance payment) then after packing of goods, Packing Slip is sent from the Packing Department, with that Slip ,Packing list is prepared in Commercial section. After checking Packing List thoroughly, Invoice is prepared and then both Packing List as well as Invoice is sent to buyer to get the remaining 70% of the payment. When they make total payment goods are sent to them. In this procedure, first of all goods are handled over to the transporter. Then transporter gives whole goods to Clearing Agent.
2. SHIPMENT DOCUMENTATION: After taking over the whole goods by Clearing Agent, Shipment Procedure is started. If Consignment is going to be exported by Sea, goods are sent from the company to Mumbai. If goods are to be shipped by Air then goods are transported to Delhi Airport. Shipping Instruction (3 Copies) is sent to Clearing Agent which contains the information about consignment. For e.g. Dimension of Cartons i.e. No. and Size of Cases, Detail of items, Name of Transporter etc. When goods are loaded on to the Ship/Aero plane Challan is provided by the owner of Ship/Plane. Challan, Bill of Clearing agent (in the case of FoB), Invoice and ARE (Application for Removable of Excisable goods) are sent to Buyer. Terms of Delivery means in delivering the goods to the Buyer which cost will be included whether it will include only cost of production or it will also include transportation costs. Mainly there are three terms of Delivery: * FOB (Free on Board):- It is also called as Freight on to-pay Basis that means freight charges will be paid by Buyer. * C.I.F. (Cost including Insurance & Freight):- It is also called as Freight on Pre-Paid Basis that means Freight charges will be paid by Exporter and Goods will be insured.
* C&F (Cost including Freight):- It means only Freight charges will be paid by exporter and Insurances charges will be covered by buyer itself.
3) POST SHIPMENT DOCUMENTATION:- Post shipment Documentation start when goods are reached at their destination then to clear the goods from the customs in the Importer Country some documents are needed. Which are as follows:- Shipping Advice: - It is sent as covering letter. it contains details of Consignment and clearing agent . * Invoice (2 copies) * Packing List (3 copies) * Bill of Lading (1 original & 1 Xerox) * Airway Bill (1 Xerox & 1 original copy) * Shipping Bill (Original):- Shipping Bill is provided by Customs of India to the Clearing Agent of the Company after checking of goods. Without Clearance of Customs no export can take place. It has all the details of Export Order like details of items, Invoice value of total consignment, Foreign Currency involved, Exchange Rate, Draw back details, Date of Export etc. This shipping Bill is needed at the customs of Importer’s Country as well as Bank of Exporters to get the Payment. It is divided in the two sections: 1. Exchange Control Copy: - First two Pages of Shipping Bill in which Exchange Rates and Freight charges, Insurance Charges (if applicable) are indicated, are called exchange control copy. 2. Export Promotion Copy: - Govt. give export incentive on certain items so, in Shipping Bill all details are given regard in Drawback like their rates and amounts.
DOCUMENTS SENT TO BANK:- * Invoice (2 Copies) * Packing List (original) * Exchange Control Copy of Shipping Bill (original) * Bill of Lading (2 Copies) * Copy of Original FIRC (Foreign Inward Remittance Certificate) When all the documents are sent to bank, whole transaction is justified and then Bank sends Reference No. with that Ref. No. Bank Realizations Certificate is made in the Company which is again sent to Bank after 6-8 months Bank sends that Certificate to the Company by putting their own seal. This is the last document in any Export Order.
DOCUMENT USED IN PRE-SHIPMENT SALES CONTRACT
PROFORMA INVOICE
COMMERCIAL INVOICE
MARINE INSURANCE POLICY
SALES CONTRACT
It is a legal contract of exchange of goods, services or property to be exchanged from seller to buyer (in case of export: from exporter to importer) for a pre-decided value in money or money equivalent paid or promised to pay same. It is a specific type of legal contract in which all details regarding trade which is going to take place between any two countries. It contains:- * Contract No. * Invoice of * Delivery Period * Date * Port of Loading * Port of Destination * Mode of Payment * Exchange Rate * Invoice * Packing Description * Freight Charges * Insurance Charges * Name of Seller’s Bank * Description of Goods
PROFORMA INVOICE
A proforma invoice is a very common international document; despite its name, it is not an invoice at all but a quote. An international transaction includes so many variables that it is sometimes difficult for importer to have a good grasp of final cost of goods. For e.g. the cost of goods is increased by the cost of shipping, insurance and so forth. In order to determine these costs the import may request for a proforma invoice which helps in determining the accurate and precise preview of actual invoice which is usually prepared when a transaction is going to take place. In those cases when exporter requests payment on a ‘letter of credit basis, the information contained in proforma invoice is used by issuing bank to open the letter of credit. It contains:- * Name & Address of the Seller * Name & Address of the buyer * Date * Delivery Time * Terms & Conditions * Port of Loading * Port of Discharge * Terms of Trade * Freight to be covered by * Insurance to be covered by * Banker’s Name * Mode of Transport * Currency used * Description of Goods * Signature
COMMERCIAL INVOICE
Commercial invoice is the basic document in any trade. It is also called ‘document of contents’ because it generally contains all the information required for preparation of all other documents.
A commercial invoice is the seller’s bill of merchandise. There is no standard format for commercial invoice but usually it contains the following:- * Exporter’s Name & Address * Invoice No. * Date * Buyer order No. * Consignee Name * Buyer Name and Address * Country of origin of goods * Country of final destination * Terms of Delivery & Payment * Pre Carriage by * Vessel/Flight No. * Port of Loading * Port of Discharge * Final Destination of Goods * Marks & Nos. * Number of Packages * Description of Goods * Container No. * Quantity * Rate * Amount * Declaration * Signature of Authority
MARINE INSURANCE POLICY
It provides cover against perils of sea and other connected risks to which goods are exposed to. It is same as any other insurance and usually done to minimize the risk related to shipment of goods. It contains:- * Certificate No. * Open Cover No. * Open Cover Date * Assured Name * Address of the Assured * Receipt Date * Effective From * Issued at * Net Premium * Name of the Issuing Company * Total Sum insured * Sum Insured in Foreign Currency * Basis of Valuation * Country of Destination * Mode of Transport * Packaging Description * Commodity Description * Terms of Insurance
DOCUMENT USED IN SHIPMENT .PACKING LIST
.CERTIFICATE OF ORIGIN
.CERTIFICATE OF INSPECTION
.MATE’S RECEIPT
.BILL OF LADING
PACKING LIST
It is a document which shows nature and the number of goods etc.put in each package/container with distinctive number of marks. This is generally needed by the importer when he is importing different types or sizes of merchandise so that he may identify the nature of goods in each package. It is also used by custom for checking the goods on random basis or otherwise.
Thus, packing list is mainly used to facilitate easy identification of goods in each package/container by the importer or custom. It generally contains:- * Exporter’s Name & Address * Invoice No. * Date * Buyer order No. * Consignee Name * Buyer Name and Address * Country of origin of good * Country of final destination * Terms of Delivery & Payment * Pre Carriage by * Vessel/Flight No. * Port of Loading * Port of Discharge * Final Destination of Good * Marks & Nos. * Container No. * No. & Kind of Packages * Description of Goods * Quantity of Goods * Remarks, if any
CERTIFICATE OF ORIGIN
This is a document which is mostly required by Common wealth Countries. It is a certificate of declaration by the shipper regarding origin of goods. The certificate is generally attested or certified by the Chamber of Commerce for industry or other agency designated for this purpose. The main aim of this certificate is to enable the importer to get concessional tariffs.
It contains:- * Exporter’s business Name, Address & country * Consignee’s Name, Address & country * Means of Transport & Route * Item No. * Marks & Nos. of Packages * No. & Kind of Packages, description of goods * Origin of country * Gross Weight & other quantity * No. & Date of Invoices * Certification & Signature by Chamber of Commerce * Declaration & Signature by Exporter
CERTIFICATE OF INSPECTION
For ensuring the quality government has made it compulsory for certain products that these should be inspected by some authorized agency. EXPORT INSPECTION COUNCIL OF INDIA (EICI) is one such agency which carries out such inspections and issues the certificate that the consignment has been inspected as required under the Export Quality Control and Inspection Act, 1963 and satisfies the conditions relating to quality control and inspections as applicable to it and is export worthy. Some countries have made it mandatory for the goods being imported to their countries
It contains:- * Beneficiary Name & Address * Applicant * Description of the Goods * Bill of Lading quantity * For Transportation to * Remarks * Item wise/Size wise Break up of Quantity
MATE’S RECEIPT
It is issued by the chief of vessel after cargo is loaded and it is duly signed and stamped by Chief Officer or Master of vessel. The shipping company does not issue the bill of lading unless it receives the Mate’s receipt.
It contains:- * Mate Receipt No. * Shipping Bill No. * Date * Voyage * Exporter’s Name * CHA Name * Marks * Quantity of Goods * Description of Goods * Cargo Weight * Consignee Name * Terminal or Chief Officer signature
BILL OF LADING
The Bill of Lading is a document issued by the shipping company or the agent acknowledging the receipt mentioned in the bill for shipment on board of vessel and undertaking to deliver the goods as per the order and condition as received by the consignee or according to his order. The Bill of Lading is issued in standardized aligned document format.
It contains:- * Shipper’s Name * Consignee * Notifying Party * Pre Carriage by * Place of Receipt by Pre Carrier * Ocean Vessel * Port of Loading * Port of Discharge * Marks & Nos. * No. of Packages or Units * Kind of Packages, description of Goods * Weight of Goods
POST SHIPMENT DOCUMENT
1-SHIPPING BILL
2-BILL OF EXCHANGE
3-BANK CERTIFICATE OF EXPORT & REALISATION
1-SHIPPING BILL\
The shipping bill is the main document on the basis of which customs office grants the permission for export. After loading the goods on ship it is prepared by clearing agent but it is mainly needed to justify the goods going to be exported.
It contains:- * CHA Name * Date * State of Origin * Exporter’s Details * Consignee * Port of Loading * Port of Discharge * Gross Weight * Total Packages * Net Weight * Country of Destination * Nature of Cargo * Marks & Nos. * Foreign Exchange Bank A/C No. * RBI Waiver No. * Invoice Details * Exchange Rate * Insurance Charges * Freight Charges * Discount * Commission * Packing Charges * Draw Back Description * Nature of Payment * Buyer Name & Address
2- BILL OF EXCHANGE
It is a written instrument whereby the person issuing it directs the other party to pay a specified amount to a certain person or to bearer of the instrument i.e. bill of exchange.
In the context of an export-import transaction, bill of exchange is drawn by the exporter. According to which importer are to pay a certain amount to a certain person or to the bearer of bill of exchange. Export consignment is passed on to the importer only when the importer’s order contains bill of exchange.
It contains:- * Amount of bill * Place * Name & Address of the Bank in which amount is to be paid * Order by exporter * Invoice No. * Name & Address of the import * Exporter’s Signature
4- BANK CERTIFICATE OF EXPORT & REALISATION
This certificate contains the information of export consignment and as to be submitted to the bank for each and every consignment.
The information required for making bank certificate is obtained by various shipment documents named as Invoice, Shipping Bill, Bill of Lading, Airway bill, Insurance bill, Freight Memo etc Three copies of ‘bank certificate’ addressed to the “JOINT DIRECTOR OF FOREIGN TRADE” is prepared and submitted to bank. Copies of Export Invoice, custom attested EP (Export Promotion) copy of Shipping Bill and other relevant documents are also submitted along with the Bank Certificate
The Bank Certificate is declaration by the exporter that they have forwarded the documentary export bill to its bank for the collection or negotiation or purchase as per particular given in Bank Certificate. The bank verifies the information given by the exporter and certifies the same. The bank passes the original copy with the relevant copy of attested documents to the exporter and duplicate copy to the Licensing Authority. Bank retains the triplicate copy for its record.
It contains:- * Invoice No. * Export Promotion Copy of Shipping Bill duly-authenticated by custom * Description of Goods as given in Custom Authenticated-Shipping Bill * Bill of Lading No. * Destination of Goods * Bill Amount * Foreign Exchange used * Freight Amount as per Bill of Lading * Insurance amount as per Bill receipt * Date of Realization of export proceeds * SDF (Sales Declaration Form) Form No. & Signature of Exporter
MODES OF PAYMENT
There is a no. of different payment methods that can be used when importer deals with exporter. Mostly three of them are used. Which are as follows? * DOCUMENTS AGAINST PAYMENT * LETTER OF CREDIT
DOCUMENTS AGAINST PAYMENT
The exporter makes the shipment and sends the shipping documents to the exporter’s bank for collection. The bank then sends the shipping documents along with a collection letter to the importer’s bank, which then sends a collection notice to the importer. The importer makes payment upon receiving the notice, and only after payment the importer receive the original shipping documents with which they take the physical possession of the goods.
The major advantage of the use of DP is the low cost as compared to use a Letter of Credit. But this is offset by the risk that the importers sometimes reject the documents for some reasons (or when they are not in order).Since the cargo has already been loaded (to generate the documents) exporters have little recourse against the importer in case of non-payment. So a document against payment (DP) arrangement involves a high level of trust between the exporters and importers.
LETTER OF CREDIT
A Letter of credit is very common and familiar document in setting payment between buyer and seller. It is a signed instrument embodying an undertaking by the bank of the buyer to pay the seller a certain sum of money on presentation of documents evidencing shipment of specified goods and subject to compliance with stipulated terms and conditions. The International Chamber of Commerce (ICC) has a published a set of universal recognized guidelines governing the issue of a Letter of Credit in Uniform Custom and Practice of Documentary Credit (UCPDC).
Following parties are involved in issuing a letter of credit:- 1. APPLICANT: - The firm asking for a Letter of Credit is applicant. Usually the applicant is importer who is going to import goods but it is not in position to pay for the goods currently. 2. BENEFICIARY: - The firm named in a letter of credit as the firm to whom the bank is insuring payment if the importer does not pay. Usually, the beneficiary of a letter of credit is the exporter.
3. ISSUING BANK: - It is that bank which provides the letter of credit to the importer. It has the contractual obligation to pay the beneficiary (exporter) on the presentation of necessary documents by them when importer is unable to pay.
4. ADVISING BANK: - In a Letter of Credit transaction, the bank that determines whether the issuing bank is a legitimate bank and the terms of the Letter of Credit offered by the issuing bank on behalf of the importer are appropriate. Generally, the advising bank is the exporter’s regular bank. But in some cases the exporter’s bank will delegate this role to another bank which is more experienced.
LETTER OF CREDIT
(PAYMENT PROCEDURE)
The Letter of Credit (L/C) payment procedure is usually as follows:- * The Importer applies to open the L/C to exporter through A bank that can open the L/C in their country. * The opening Bank will inform the exporter that L/C has been established.
* Exporter checks all the terms and conditions listed in the
L/C. If all the terms and conditions are acceptable the will arrange the shipment within the time specified in the Letter of Credit. * After the goods are loaded onto the ship without any damage, the captain of the ship will issue clean Bill of Lading to the exporter. With clean Bill of Lading only they can claim the ownership of goods. * Clean Bill of Lading and other relevant documents will be submitted to their bank to gather the irrevocable Letter of Credit. It is an often used payment method. This is a formal payment method that offers a lot of protection to the parties. In simple words, a Letter of Credit is a letter written by the importer’s bank to the exporter. It verifies that the payment will be guaranteed when bank is presented with concrete documents (Bill of Lading, Freight documents etc.). Mostly Letters Of Credit are irrevocable once the importer has sent them.
* A Letter of Credit usually includes applicant (the importer), beneficiary (I/E agent), opening bank, negotiating bank, specification and quantity of the goods, amount of money, loading port and destination port, shipment date, the validity date of the L/C, terms and conditions agreed by both the importer and exporter and details of the documents required by the importers (Bill of Exchange, Commercial Invoice, Packing List, Insurance Certificate etc.) * The exporter’s bank will send the clean Bill of Lading and relevant documents to opening bank. * Opening bank will inform them that all documents are received.
* Then importer will go to the bank to make the payment to get the clear Bill of Lading and relevant documents.
* With all of these documents, they can clear the import customs and pick up the goods after the goods have arrived on the destination sea port.
* L/C is used for the larger quantity order shipped by the sea. * The typical L/C scenario takes 14-21 days to complete.
STEPS IN PROCESSING OF A LETTER OF CREDIT
The main steps in the processing of a Letter of Credit are as follows:- * Issuance of a Letter of Credit * Shipment under a Letter of Credit * Payment under a Letter of Credit
1. ISSUANCE OF A LETTER OF CREDIT:-
We can understand the first and foremost step of processing of a Letter of Credit with the help of following diagram:-
EXPORTER
IMPORTER
IMPORTER’S BANK EXPORTER’S BANK
a. First of all the exporter and the importer agree on a sale under “Letter Of Credit” terms. The exporter sends a proforma invoice to importer.
b. Then importer takes the proforma invoice to its bank and requests for a Letter of Credit.
c. The importer’s bank issues a Letter of Credit and sends it to the exporter’s bank. d. The exporter’s bank receives and revises the Letter of Credit. Then it notifies the exporter that it is ready to ship the merchandise to the importer.
2. SHIPMENT UNDER A LETTER OF CREDIT:-
EXPORTER’S BANK
IMPORTER’S BANK
IMPORTER
EXPORTER
a. The exporter sends the merchandise to the importer but gathers all the documents and sends them to the exporter’s bank.
b. The exporter’s bank checks that whether the documents fulfill the requirement of Letter of Credit or not and then sends them to the importer’s bank. c. The importer’s bank also verifies the documents that they match with the requirement of Letter of Credit and notifies the importer that everything is in order.
3. PAYMENT UNDER A LETTER OF CREDIT: IMPORETR’S BANK
EXPORTER’S BANK
IMPORTER
EXPORTER
a. The importer pays the importer’s bank in order to collect the documents that will be needed to collect the merchandise and clear the customs.
b. The importer’s bank sends the importer’s payment to exporter’s bank.
c. The exporter’s bank notifies the exporter that they have been paid by importer.
