Submitted by (as fulfillment of internship)

Rajashekhar Ballary

Student, M.F.Tech (Mngnt.)

National Institute Fashion Technology

Gandhinagar, Gujarat­382007, India.

Submitted to

Vrajesh Sitwala,

Marketing Manager

SINTEX INDUSTRIES LTD.,

Textile division: BHARAT VIJAY MILLS

Near Seven Garnala, Kalol, (N.Gujarat) 382 721, INDIA

BHARAT VIJAY MILLS (BVM) TEXTILE DIVISION

SINTEX INDUSTRIES LIMITED. KALOL, NORTH GUJARAT.

INTERNSHIP REPORT

DEDICATED TO MY

BELOVED PARENTS

ACKNOWLEDGEMENT

First and foremost, I would like to thank my dear Parents for their trust and

continuous support. I dedicate my hard work and success to them.

I would like to express my sincere thanks to Vrajesh Sitwal, Marketing

Manager and Venugopal Iyer, Export marketing manager SINTEX

INDUSTRIES LTD, Textile Division, BHARAT VIJAY MILLS for their

patience and professional guidance.

I would like to express my sincere thanks to Dr. Mahim Sagar Sharma,

Centre Coordinator, Dr. Binaya Bhushan Jena. and Prof. Ankush

Sharma, FMS department NIFT, Gandhinagar.

Last but not the least I thank all employees and the members of BVM, textile

division Sintex Industries ltd. And my entire friends who are directly or

indirectly helped me without whose cooperation this internship report would

not have been a success.

I believe that this Internship has been a great learning experience to me.

RAJASHEKHAR BALLARY FMS 0606

Ì

4

CERTIFICATE

I have the pleasure in certifying that Mr. Rajashekhar Ballary,

Student M.F Tech (Management), is a bonafide student of third

semester of National Institute of Fashion Technology. He has

successfully completed his Internship work under my supervision.

I certify that this is his original effort and respect to his tremendous

effort given to his Internship.

Signature

Vrajesh Sitwala

Marketing Manager

12.07.2007 Π

5

Table of Content:

ACKNOWLEDGEMENT:………………………………………………………………Ì

CERTIFICATE:…...…………………………………………………………………….Π

CHAPTER 1: INTRODUCTION:..................................................................................7

1.1 Purpose: ...............................................................................................................8

1.2 Background: ........................................................................................................8

1.3 Organization Structure........................................................................................9

1.3 Terms of reference:..............................................................................................9

1.4 Objectives of Internship report:........................................................................10

CHAPTER 2: EXPORT PROCEDURE AND DOCUMENTATION: ..........................11

2.1 Preamble: ...........................................................................................................12

2.2 Preparation to enter the international marketplace: .......................................12

2.2.1 Foreign sales agents: . ...................................................................................14

2.3 Terms of payments: ...........................................................................................18

2.3.1 Open account: ...............................................................................................18

2.4 Export Documents: ............................................................................................19

2.4.1 Overseas Sales Contract:...............................................................................19

2.4.2 Invoice:.........................................................................................................19

2.4.3 Packing List: .................................................................................................19

2.4.4 Certificate of Inspection: ...............................................................................20

2.4.5 Insurance Certificate: ....................................................................................20

2.4.6 Bill of Lading: ..............................................................................................20

2.4.7 Liner Bill of Lading: .....................................................................................21

2.4.8 Charter Party Bill of Lading (Cogenbill): ......................................................21

2.4.9 Certificate of Origin: .....................................................................................21

2.4.10 Bill of Exchange: ........................................................................................21

2.4.11 Shipment Advice:........................................................................................21

2.4.12 Proforma Invoice: .......................................................................................22

2.4.13 Shipping Instructions: .................................................................................22

6

2.4.14 Insurance Declaration:.................................................................................22

2.4.15 Intimation for Inspection: ............................................................................22

2.4.16 Shipping Order:...........................................................................................23

2.4.17 Dock Receipt or Mate’s Receipt:.................................................................23

2.4.18 Application for Certificate of Origin: ..........................................................23

2.4.19 Letter to the Bank for negotiation:...............................................................23

2.4.20 Exchange control Declaration GR form (Guaranteed Receipt):....................23

2.4.21 Insurance Premium Payment Certificate:.....................................................24

2.4.22 AR 4/4 form:...............................................................................................24

2.4.23 Shipping Bill: ..............................................................................................24

2.5 Incentives and Duty Drawback: .......................................................................24

2.5 Export terms of delivery:...................................................................................26

2.5.1 INCOTERMS: Terminology used by exporters:............................................26

2.5.2 The Structure of Incotrems:...........................................................................26

2.6 Steps involved in execution of export order in BVM: ......................................30

CHAPTER 3: TECHNICAL TEXTILES AND NEW PRODUCT IDENTIFICATION32

3.1 Introduction:......................................................................................................33

3.1.1 Industry Definition:.......................................................................................33

3.2 Plan to enter coated technical textile market: ..................................................35

3.2.1 Focus At Initial Stage....................................................................................35

3.2.2 Points need to consider at the time of Coating Inquiry...................................35

3.2.3 Market entry: ................................................................................................36

CONCLUSIONS: .........................................................................................................37

APPENDIX: .................................................................................................................39

REFERENCES: ...........................................................................................................41

7

CHAPTER 1: INTRODUCTION

8

1.1 Purpose: The purpose of this report is to outline objectives, process for defining steps followed in

execution of export and to identify new product under technical textiles (performance

fabrics) where company, BVM textile division, Sintex Industries Ltd. can acquire market

and perform better. All above purposes are executed while/after completion of Internship

at Sintex Industries Ltd., BVM textile division Kalol, North Gujarat from 21 st may to 13 th

of July as a process of pursuing the degree PGFMS at NIFT, Gandhinagar.

1.2 Background: Established in the year 1931, Bharat Vijay Mills (BVM), is a composite textile mill,

initially operated on a very modest scale at Kalol, a town 30 Km in North of Ahmedabad,

(India). In 1956, the present management, Sintex Industries Limited took over, through

its textile division Bharat Vijay Mills Limited (“BVM”). Today, BVM is a vertically

integrated plant having its own spinning to finishing facilities. It has grown into 50

million US$ turnover group with a dedicated work force of 1600 people in the textile

division. BVM has already made a total capital investment of about USD 90 million for

the continuous modernization and capacity expansion in the last five years. This year it

has a planned capital outlay of USD 15 million for this year. BVM has been the

undisputed leader in varied product mix for the last 70 years with a continuous expansion

of its product range. Since last 20 years it has established a name in global market with its

Yarn Dyed, Piece Dyed Shirting, Corduroy and Bottom Weight. BVM’s 80% production

is catered to all the leading brands of the world through direct exports and indirect

deemed exports through garment exporters based in India. With the company well

equipped with fabric design and product development services it is able to provide high

level service to all the leading global brands associated with the company. BVM is also

having joint venture with the Italian fabric manufacturer M/s Canclini Tessile SPA, for

manufacturing and supplying high­end yarn­dyed shirting fabric. The vision and mission

statement of BVM textile division Sintex Industries Ltd., are,

9

1.3 Organization Structure

1.3 Terms of reference: This section includes who asked to write the report and when it should be submitted. As

per the guidance/syllabus of Fashion Management department of National Institute

Fashion Technology (NIFT) Gandhinagar, it is take industrial training and prepare report

on the company. Hence summer internship has been successfully completed from 21 st

May 2007 to 13 th July 2007 in BVM textile division Sintex Industries Ltd., Kalol,

Gujarat. Efforts are made to examine existing institutional framework of exports and new

product market under coated Technical textiles. The report has been submitted to the

department on date 11 th July 12, 2007.

Vision

To achieve global presence in Textile business, through continuous product,

technological innovation, customer orientation and a focus on cost effectiveness,

quality and services.

Mission

We believe in strong customer orientation. We know that the company knows one he

keeps, and we value your company.

Sintex Ind. Ltd.

Textile Div. Plastic Div. Corporate Div.

Admin Purchase &

Stores

Operations Finance & Accounts

Sales & Marketing

10

1.4 Objectives of Internship report: In order to deliver above said purposes the following objectives have been set and are

executed while/after completion of Internship.

Learning Objective 1: To learn the export procedures and documentations followed.

Learning Objective 2: Examine, become familiar with the present Export procedures,

list the steps followed by BVM textile division, Sintex Industries Ltd., perform them

and report on the outcome.

Learning Objective 3: To study and identify new textile product under Technical

textiles category where BVM textile division Sintex Industries Ltd., can do/cater

better.

11

CHAPTER 2: EXPORT PROCEDURE

AND DOCUMENTATION

12

2.1 Preamble: In economics, an export is any good or commodity, transported from one country to

another country in a legitimate fashion, typically for use in trade. Export is an important

part of international trade. Its counterpart is import. For an export it requires two parties

i.e., buyer and seller in there respective countries and an export contract or export order

for sale and purchase of goods between them. Goods should leave the customs frontier, of

exporting country involving load port and discharge port. Value of the goods should be

realized in freely convertible currency. Domestic marketing is concerned with the goods

exchanged with the currency of the country that is in Indian Rupee. But in export

marketing, the goods have to be sold in freely convertible currency; i.e. United States

dollar ($), European Euro, etc. The goods leave the customs frontier of India first and the

money or the value comes later on. In other words though it is also a sale of goods but the

value of the goods sold or the money practically comes in exchange of the shipping

documents and not in exchange of goods. Hence in technical terms it is termed as “sale of

documents”. It is, therefore, proved beyond doubt, that the sale of Documents is the

backbone of International Marketing whether it is export or import.

2.2 Preparation to enter the international marketplace: A step­by­step guide led the company BVM textile division Sintex Industries Ltd.

through the process of exporting product to an international market. Following steps are

maintained to succeed in highly competitive international market. Each step/section

completed before to start the next section.

STEP 1: Select the most exportable products to be offered internationally.

To identify products with export potential for distribution internationally, company need

to consider products that are successfully distributed in the domestic market. BVM as a

most renowned producer of corduroy entered international market and the product

targeted need for the purchaser in export markets according to price, value to

customer/country and market demand. And has consider to ask questions like,

ü What are the major products that business sells?

ü What products have the best potential for international trade?

STEP 2: Evaluate the products to be offered internationally.

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Identifying products with export potential that is list the products that believe to be have

export potential. Yarn­dyed and solid­dyed fabrics in different plain and textured weaves

including leno weaves which are already being produced for various high end fashion

labels both in Europe and USA, with an equally strong presence among the Indian

brands. BVM has recently added two new product lines to its already existing varied

product range. Coated fabrics – which covers Poly Urethane, Water repellent, Water

proofing and pigment coating to serve a variety of end­uses in fashion apparels like

outerwear, sportswear etc. and also few industrial applications like automobile covers,

soft luggage, canopies etc. Jacquard fabrics – in which BVM is producing designs both

in yarn­dyed and solid dyed shirting using Ne 50/1 as the main warp count. While

entering into these categories BVM has considered questions like,

ü What makes company products unique for an overseas market?

ü Why will international buyers purchase the products from our company?

ü How much inventory will be necessary to sell overseas?

STEP 3: Select the best countries to market company product.

While selecting a buying/exporting country market factor assessment of that country and

rating has to be made. While targeting Buyer/exporting market following checklist are

considered.

v Demographic/Physical Environment:

ü Population size, growth, density

ü Urban and rural distribution

ü Climate and weather variations

ü Shipping distance

ü Product­significant demographics

ü Physical distribution and communication network

ü Natural resources.

v Political Environment:

ü System of government

ü Political stability and continuity

ü Ideological orientation

ü Government involvement in business

14

ü Attitudes toward foreign business (trade restrictions, tariffs, non­tariff

barriers, bilateral trade agreements)

ü National economic and developmental priorities

STEP 4: Determine Method of Exporting

A firm can use direct export, indirect export or deemed export method. Since BVM is a

textile manufacturing company and it can use any method for exporting. BVM started

exporting its products to United States of America (USA), European Union market like

United Kingdom, France Italy, Germany and Asian countries include Srilanka,

Bangladesh, Turkey. Keeping in mind the strength and ability to produce a variety of

products for the fashion industry, BVM structured a supply arrangement with high­end

Italian fabrics manufacturer Canclini Tessile SPA.

STEP 5: Building A Distributor or Agent Relationship. Following descriptions talk more

about foreign sales agents/distributors and agents/distributors of BVM textile division

Sintex Industries Ltd.

2.2.1 Foreign sales agents: (selection and appointment between BVM and Overseas

sales agents:

Export success often depends on representation overseas. Picking the right sales agent,

distributor, or other business partner is not easy and yet, critical. Therefore, it pays to

look at the nature of overseas reps.

2.2.1. a Why sales agent?

“Products don’t sell themselves, however well designed and competitively priced they

may be,” writes O. Mary Hill 1 . The best­designed and most competitively priced

products do not sell, if not backed by an adequate sales force. Therefore, selecting

training and supervising a sales force has increasingly come to occupy an important place

in doing business. The appointment and maintenance of sales force on a company’s pay

roll is very expensive. Then, it is not always possible and economic to have sales force all

over the world. The natural solution lies in the people who work on commission basis,

1 Professor, department of trades and commerce, Ottawa.

15

they are known as sales agents (and/or distributor). However large a firm is or howsoever

ambitious its export plans are, the appointment of commission agents is essential for

successful selling. Overseas agents normally called Sales ambassadors cut the company’s

selling cost. Being always on or near the market, they help in obtaining latest market

information and marketing strategy. They are sales ambassadors available at a much

cheaper price. Overseas agents selected and appointed with care, may help company

grow in short span. The job of these agents is to advise the firm on the right methods and

strategy for selling in their territory.

2.2.1.b Types of agents:

The agents are of two types, the commission agents and distributors. Every export

company has to be cautious about selection of overseas agents. What type of seller agents

a firm should have depends upon the products it wishes to sell. The choice between the

two depends primarily on the type of product an exporter firm offer. If the product is one

that is sold mainly to consumers, an agent is probably the logical choice because he can

keep in close touch with local retailers and keep informed about changing consumer

tastes. The distributor, on the other hand is well set up to sell consumer durables and

other product that require servicing a those designed for industrial users.

Following table 2 differentiates commission agents and Distributors.

Sl. Commission agents Distributors

1 They are solicits orders and passes on to

exporters.

A distributor buys the product and sells at his

own account.

2 The agents neither takes title to the goods

nor does he assumes the credit.

The distributor maintains stocks, sets the

resale price and sells through outlet at his

own terms.

3 The agent gets agreed rate of commission The distributor purchases the products at

price or gets a higher rate discount than

agent’s commission.

4 An agent seldom provides any servicing

facility.

Distributor has invariably such arrangements.

2 Ram Paras, “EXPORT what, where, how” 29 th edn. Anupam publications 1998­99 pg no. 81­85.

16

2.2.1.c Sources of information:

Names of agents/Distributors for making the final choice can be had from different

sources, namely: ­

ü Country’s trade commissions abroad and/or the country’s trade representative in

the exporter’s country.

ü Manufacturers/exporters of related products but not directly competitive products.

ü Chamber of commerce and trade associations abroad.

ü Export promotion councils and Commodity boards.

ü Through advertisements in export trade and specialized international journals.

Agent and Distributor relationships are best governed by a binding contract or an

agreement. A competent attorney with international trade experience must draw it up.

This must be done carefully since most non Anglo­Saxon countries take a far looser

interpretation of contract terms.

2.2.1.d Checklist for Agent/Distributor Agreements:

The first and most important consideration textile company BVM made is to ensure that

the agreement clearly states what the relationship actually is agent or distributor. The

rights and duties of the two different relationships are very significant. Given this

distinction, the agreements should state very plainly and clearly, what relationship is

being established.

The following basic items are included in a foreign sales agreement:

ü Date when the agreement goes into effect

ü Duration of the agreement

ü Provisions for extending or terminating the agreement

ü Description of products included

ü Definition of sales territory

ü Establishment of a policy governing resale prices

ü Maintenance of appropriate service facilities

ü Restrictions to prohibit the manufacture and sale of similar and competitive

products.

ü Designation of responsibility for patent and trademark negotiations and/or

policing

17

ü The assign ability or non­assign ability of the agreement and any limiting factors

ü Designation of the country of contract jurisdiction in the case of dispute

ü Determine whether the relationship is exclusive versus non­exclusive

ü State which geographic regions are to be covered

ü Set forth issues of payment for the products (in the case of a distributor) and for

payments of commissions (in the case of agents)

ü Determine the currency in which payments are to be made and address currency

fluctuation issues

ü Provide specific provisions regarding renewal of the agreement, including specific

parameters for performance, promotional activity and notice of desire to renew

ü Establish a specific provision for termination of the agreement and for what

reasons, i.e., failure to perform to the terms of the contract. (Be careful with this

provision. Some foreign countries restrict or prohibit termination without just

cause or compensation.)

ü Outline the termination process for the end of the agreement period

ü Provide for workable and acceptable dispute settlement clauses

ü Assure that the agreement addresses whether or not intellectual property rights are

being licensed or reserved

ü Do not allow, without seller's consent, the contract to be assigned to another party

(sub­agents or sub­distributors) to be used to fulfill obligations in the contract or

the contract to be transferred with a change of ownership or control over the

agent/distributor

After all consideration company selected foreign sales agents/distributors in countries

like United Kingdom, Germany, United States of America (USA), Turkey, Bangladesh

Srilanka, Singapore and Malaysia. The value or product based commission is made

depending on total sales contract by agent/distributor. The commission percentages vary

between 3% to 5%. The above­mentioned steps are followed for all new country where

company BVM can cater. Once export order has been settled the company look upon

terms of payment for payment terms. In following paragraphs terms of payment for

export quotation, Export documentation and INCOTERMS used in export execution are

discussed.

18

2.3 Terms of payments: It is necessary to stipulate the terms of payment in the export quotations. The following

are basic methods of collecting payments for exports: ­

v Cash in advance­a remittance by the overseas buyer at the time or at some time

before shipment.

v Documentary letter of credit established by the buyer in favor of the exporter

enabling the payment to be collected immediately after presentation of the

required document.

v An irrevocable letter of credit cannot be cancelled or amended without the

consent of the beneficiary.

v A revocable letter of credit can be settled or cancelled by the buyer at any time

without the consent of beneficiary

v Bill of exchange

1. A D/P bill (document against payment) drawn “at sight” requiring the

bank to obtain payment before delivering the shipping document to the

buyer.

2. A D/A bill (document against acceptance) drawn for payment within a

specified period e.g., 60 days after sight. In the case, the shipping

document is delivered to the buyer after his acceptance of bill. The

exporter is then relying on the credit worthiness of the buyer.

2.3.1 Open account:

Open account 3 is similar to the ordinary system of selling on credit in the domestic

market. No bill of exchange is drawn and the overseas buyer pays on the remittance on

receiving the goods or at a certain times afterwards, e.g., as sales are maid from a

consignment stock. This method is very riskier and is generally done between firms with

long established transaction business.

3 Ram Paras, “INCOTERMS 2000 Export costing and pricing”, 14 th 2000 edition, Anupam Publishers, New Delhi, pg. 48­49.

19

2.4 Export Documents: Following documents are required to be sent by a seller to the buyer in discharge of his

export obligations. Secondly it is only through the shipping documents that seller or

exporter is able to exchange the same for his Export sale proceeds or value of the goods;

The same documents are required by an importer from an exporter for taking physical

possession/delivery of goods from the ship or Airplane. Hence there lies the undoubted

importance of documents. Importance of Shipping Documents include, the documents are

the authenticated and valid proof of shipment in exports. They create the title of the

goods. The documents help a seller to realize export sale proceeds in exchange there of

through the bank.

2.4.1 Overseas Sales Contract:

It is a principle document that has to be prepared by exporter, after acceptance of an order

by Importer/Buyer.

2.4.2 Invoice:

It is a principal commercial document. An invoice is a Bill /Cash Bill or Cash Memo

through which the original owner of the goods creates and transfers their ownership to the

new owner (buyer) by showing as “sale”. This is the invoice through which the title of

the goods is passed on from seller to the buyer. As may be seen from Performa of invoice

(See appendix­1) name of the seller (exporters), buyers (consignee), goods sold, rate

applied and total amount are shown.

2.4.3 Packing List:

It is a principal commercial document. The list certifies the nature of packing of exported

goods with markings. They are on for easy identification, safer and smoother handling so

as to withstand hazards of sea and multiple handling involved in export shipment. (See

appendix­2).

20

2.4.4 Certificate of Inspection:

It is a principal commercial document. In order to ensure that the goods, so ordered, by

the buyer should conform to quality and quantity as per export order, a pre­shipment

inspection, at load port, takes places by the designated inspection agency or authority.

After this inspection the designated agency issues a certificate of inspection certifying

that the goods were inspected quantitatively and qualitatively at the load port and it

conform to the quality standards laid in export contract.

2.4.5 Insurance Certificate:

It is a Principal commercial document. In order to cover the risks involved in shipment

of export cargoes when the goods have been either put on board the vessel or when they

are on high seas. Marine insurance is taken either by the exporter or the importer

depending upon the payment negotiation. Following risk covers are taken:

a) Accidents, fire.

b) Riots

c) Rain or Flood.

d) Damage to the goods due to damage to the ship or ship when sinks

e) Piracy

f) Maritime Risks

The insurance company issues a Marine insurance policy covering above risks to the

goods as also insurance certificate. Hence the importance of insurance certificate.

2.4.6 Bill of Lading:

It is a principal commercial document. It is a valid and authenticated evidence of

shipment; it is a through bill of lading that the title of the goods is created from a seller to

the buyer. This the bill of lading, among other documents, which helps the buyer to claim

the value of the goods so exported in exchange there of. Bill of Lading carries certain

endorsements by master of vessel as, “freight to pay” in case of FOB terms “freight

prepaid “in case of C&F or CIF terms.

21

2.4.7 Liner Bill of Lading:

This Bill of Lading is used and issued by a shipping company for its vessel, which is

sailing on regular basis on specific points i.e. port to port.

2.4.8 Charter Party Bill of Lading (Cogenbill):

This bill of lading is issued by a vessel, which has been chartered (hired) specifically

from desired ports of loading to the desired ports of discharge. This is governed by

charter party terms on which it has been chartered involving rate or payment for charting,

rate of loading, discharge and demurrage or dispatch etc at respective ports.

2.4.9 Certificate of Origin:

It is a principal commercial document. This certificate is required for proving the origin

of the goods where they are produced for export. In view of bitter relations between two

neighboring or otherwise countries, importing countries make a stipulation that the

ordered goods or even packing material for the exportable goods should not have been

procured from one particular country i.e. enemy country. Hence lies the importance of

certificate of origin.

2.4.10 Bill of Exchange:

It is a Principal commercial document. This is the bill of exchange through which

negotiable. Documents are given or delivered in exchange of payment. A demand is

made on the bank/payee to make the payment as per the invoice or other documents. A

bill of exchange is made in 2­3 originals and presented as many times for realizing the

payments in case first bill of exchange remains unpaid.

2.4.11 Shipment Advice:

It is a Principal commercial document. After the shipment has been effected by the

exporter, the buyer become anxious to know the arrival of the goods at discharge port in

his country. Hence, he stipulates in the Letter of Credit that an exporter should advice

him suitably so that he keeps himself ready for receiving the cargo. As may be seen from

22

shipment advice following information is made available to the importer well before the

consignment arrives,

a) Name of the vessels (with voyage number),

b) Port of loading and port of unloading/discharge,

c) Final destination,

d) Name of the goods, number and kinds of packages, quantity, rate, amount etc.

e) Negotiation of documents if involved

2.4.12 Proforma Invoice:

It is an auxiliary document and can be termed as a “Kaccha Invoice”. This is the

proforma invoice through which the buyer is guided to open the letter of credit in favor of

the beneficiary i.e., exporter. Proforma invoice also guides the exporter to make the

invoice.

2.4.13 Shipping Instructions:

It is an Auxiliary document where by shipper or exporter notifies the shipping company,

about the shipment of his cargo. In other words through the shipping instruction the

shipper books suitable place on a particular vessel for his cargo.

2.4.14 Insurance Declaration:

This is a sort of an offer from a shipper to take insurance cover or policy for the goods to

be shipped.

2.4.15 Intimation for Inspection:

After the L/C has been established by a buyer, as per the contractual terms, he desires the

pre­shipment export inspection at load port and he nominates an agency for getting this

inspection done from the designated agency. The shipper requests the agency through

this letter to carry out an inspection so that the goods are inspected and certificate of

inspection is received by him.

23

2.4.16 Shipping Order:

It is an auxiliary commercial document. The shipping company gives an offer to the

exporter for the shipment of their goods in his vessel. After accepting his offer exporter

gives him shipping instruction which contains all useful information regarding mode of

payment, shipment date, document enclosed, insurance etc.

2.4.17 Dock Receipt or Mate’s Receipt:

It is a valid proof given by master of vessel or the person in charge in vessel to whom an

exporter hands over his consignment or shipment. It is just as a supporting or an auxiliary

by which exporter gets the bill of lading from the shipping company in exchange of

mates receipt.

2.4.18 Application for Certificate of Origin:

As the name itself says applying for the certificate of origin. It is an application

submitted by an exporter addressed to secretary (chamber of commerce or any other

authority) requesting for the issuance of certificate of origin.

2.4.19 Letter to the Bank for negotiation:

After the shipment is made exporter wants to realize export sale proceeds of the goods

shipped as soon as possible. For that he has to enclose a number of shipping documents

including bill of lading, Invoice, bill of exchange, certificate of origin, packing list,

certificate of inspection, certificate of insurance etc. along with the letter of negotiation.

Through this letter exporter gives information to the bank regarding term of payment

whether D.A or D.P or any other mode or L/C. If it is L/C, type of L/C whether Payable

at Sight or Transferable L/C. This letter includes information on realization of value

facilitate banker and in turn helps exporter in getting faster payment.

2.4.20 Exchange control Declaration GR form (Guaranteed Receipt):

It is a regulatory document prescribed by Reserve Bank of India (RBI) the exporter, as

seller/consignor of the goods gives an undertaking to the RBI guaranteeing that he will

realize the value of the goods within a maximum period of 180 days.

24

2.4.21 Insurance Premium Payment Certificate:

It is a regulatory document required by government. As the proof that exporter has made

insurance of the goods shipped. It is a preventive measure; Government makes it

compulsory on the part of shipper to take insurance cover so that maritime risks are

covered.

2.4.22 AR 4/4 form:

It is a regulatory document through which shipper or exporter declares the export value of

excisable goods and excise duty payable etc. It is through this document that exporter

takes out the goods meant for export, out of his factory, after completion of central excise

formalities.

2.4.23 Shipping Bill:

Shipping bill is a regulatory document through which an exporter submits the goods

meant for exports to Customs authorities. On this document shipper declares the goods

as if dutiable or duty free ex­bond export duty if any etc. After satisfying himself the

customs officers at the port clears the goods for export and endorse as “let export”. Also

through the shipping bill the dock/port charges payable are paid for final shipment. At

some ports this document is called shipping bill at others it is called dock challan or at

others port trust copy.

2.5 Incentives and Duty Drawback:

Incentives and duty draw back schemes from foreign trade policy have provided support

for exporters. Normal incentives given by government for exporters and duty drawback

schemes are discussed here.

2.5.1 Incentives.

2.5.1 a General Incentives Several no tax incentives in the form of capital subsidies and

credits are offered by the central and state governments in the interest of developing

backward areas, exports or some specific industries. No distinction is made between

domestic and foreign investors.

25

2.5.1.b Regional Incentives Industrial units that are set up in specified backward districts

are eligible for a central government subsidy on their fixed capital investment and for

financing from national financial institutions. The central government also grants a

transport subsidy in certain selected areas. In addition, the state governments offer

various types of incentives and facilities, such as land on concessional terms, water and

power at reduced rates, concessions in sales tax and octroi (a levy of duty on entry of

goods.

2.5.1.c Special Industry Incentives Certain industries, example jute textiles, are eligible

for concessional credits in the form of soft loans. Some others, e.g., tea plantations.

2.5.1.d Export Credits Export incentives take the form of cash assistance or cash

compensatory support on exports of certain items, duty drawback, i.e., a refund of central

excise and customs duties levied on raw materials and components used in the

manufacture of exports, import replenishment to replace imported raw materials and

components used in the manufacture of exports, airfreight subsidy on the export of

certain products, special treatment for export­oriented units for import of raw materials,

and credit facilities from approved financial institutions at pre­shipment and post­

shipment stages.

2.5.2 Duty draw back.

Drawback means taking back or claiming back. It is an accepted proposition under the

customs legislations of all most all countries, and WTO compatible, that duties of

customs and other taxes like VAT, Excise, Sales Tax etc., as applicable, if paid, on

imported goods, re ­exported, on imported and/or domestic materials used in the

manufacture of the finished export goods, On indigenous goods exported has to be

granted as drawback, upon export/reexport so that it is only the goods that get

exported/reexported, from the country of export, and not the taxes on the

goods themselves or on inputs used in the manufacture of the export goods.

26

2.5 Export terms of delivery: Principle and approach to export should consider three important conditions viz.

1. What charges and expenses will be incurred by both the exporter i.e. seller and the

importer i.e. buyer.

2. When and where the delivery of goods will take place.

3. When and where the title of the goods passes from exporter to the importer

2.5.1 INCOTERMS: Terminology used by exporters:

International traders use a widely agreed­upon shorthand type of terminology called

INCOTERMS to define the basis for the sale. Once the buyer and seller agree on one of

these terms, it will clarify: (1) where in the journey the seller releases the goods to the

buyer; (2) what charges and documentation are the seller’s responsibility prior to that

point; and (3) what charges and documentation are the buyer’s responsibility after that

point. An INCOTERM is always paired with a location and is meaningless without it. For

instance, FCA Ahmedabad is quite a different price from DAF Bangalooru. The

International Chamber of Commerce released the first version of INCOTERMS in 1936.

Periodic revisions have been necessary due to innovations such as intermodal containers,

blended rail/sea cargo rates, roll on/roll off vehicles, and electronic data interchange. The

latest version is INCOTERMS 2000. Certain INCOTERMS in widespread usage tend to

persist despite the revision process. If a term that do not able recognize, such as C&F

Ahmedabad, then trading partner may simply be using an earlier version of

INCOTERMS. Trading partner might speak of a price that is CIF Bangalooru Airport,

although the current modern term is CIP New Delhi Airport.

2.5.2 The Structure of Incotrems:

Incotrems 4 are grouped into four different categories, starting with the term where by the

seller only makes the goods available to the buyer at the sellers own premises (the “E”: ­

term Ex works); followed by the second group where by the seller is called upon to

deliver \the goods to a carrier (CHA) appointed by the buyer (the “F”: ­ terms FCA, FAS

4 Ram Paras, “INCOTERMS 2000 Export costing and pricing”, 14 th 2000 edition, Anupam Publishers, New Delhi, pg.64­67.

27

and FOB); continuing with the “C” terms where the seller has to contact for the carriage,

but without assuming the risk of loss of or damage to the goods or additional cost due to

events occurring after shipment and dispatch (CFR, CIF, CPT and CIP); and finally the

“D” terms where by the seller has to bear all cost and risks needed to bring the goods to

place of destination (DAF, DES,DEQ, DDU and DDP). Accordingly, the four categories

are:

v “E”­ terms EX works where under the seller only makes the goods available to the

buyer at the sellers own premises.

v “F”­terms FCA, FAS and FOB where by the seller is called upon to deliver the

goods to a carrier appointed by the buyer.

v “C­terms CFR, CIF, CPT and CIP under which the seller has to contract for the

carriage, but without assuming the risk of loss of or damage to the goods or

additional cost due to events occurring after shipment and dispatch.

v “D”­ terms DAF, DES, DEQ, DDU and DDP whereby the seller has to bear all

Cost and risks needed to bring the goods to the place of destination.

Following are the few thumbnail examples for the Indian exporter’s perspective:

• EXW Ahmedabad means, "Here are the goods; come and get them." Any export

permits are the buyer’s concern; seller does not even have to load the truck.

• FCA Ahmedabad shows where goods properly cleared for export will be turned

over to the main carrier for shipment abroad. Whatever means of conveyance

picks up the goods from seller’s place of business, exporter pays any cost of

loading it aboard. If main carrier does not provide cargo pickup services free to

the exporter, he pays cost of inland delivery to that carrier’s terminal in

Ahmedabad. Overseas buyer is liable for transportation and insurance expenses

once main carrier receives the cargo.

• CPT Ahmedabad means the vendor’s price includes freight all the way there, but

insurance is up to the buyer. Seller has no stake in insuring anything past the point

where he turns the cargo over to the export carrier.

28

Table: The following table 5 sets out the above classification trade terms:

• CIP Ahmedabad means vendor’s price includes freight and insurance all the way

to Buyer destination. Once it comes over the ship’s side or down the plane’s ramp

at the other end, the buyer takes full possession.

• DAF Ahmedabad means vendor’s goods, properly cleared for export; will be at

border point ready to cross over to the other side. Vendor will bear all costs and

risks of moving goods across the border and beyond.

• DDU Ahmedabad means that transport of the goods all the way inland to buyer is

paid for by the seller, although the city is not the place of entry. Getting the goods

through customs is the buyer’s responsibility and at the buyer’s expense.

5 Ibid.

Group E Departure:

EXW Ex Works (…named place)

Group F Main carriage unpaid:

FCA Free Carrier (…named place)

FAS Free Alongside Ship (…named port of shipment)

FOB Free On Board (…named port of shipment)

Group C Main carriage paid:

CFR Cost and Freight (…named port of destination)

CIF Cost Insurance and Freight (…named port of destination)

CPT Carriage Paid to (…named port of destination)

CIP Carriage and Insurance Paid to (…named port of destination)

Group D Arrival:

DAF Delivered at Frontier (…named place)

DES Delivered Ex Ship (…named port of destination)

DEQ Delivered Ex Quay (…named port of destination)

DDU Delivery duty unpaid (…named port of destination)

DDP Delivery duty paid (…named port of destination)

29

• DDP Ahmedabad means the exporter’s delivered price includes customs duties

and surcharges in the country of destination. Exporter also bears the risk that his

goods may be rejected by customs for whatever reason (diseased fruit, inadequate

product labeling, banned ingredient, lower­than­expected quota, etc.).

• FAS Ahmedabad means the price includes delivery to a point alongside the

vessel, whereupon ownership of the cargo passes to the buyer. Any export permits

are the buyer’s concern. (Documentary evidence of FAS compliance is a clean

dock receipt, with no shortages or damage apparent.)

• FOB Ahmedabad means the vendor undertakes to get the cargo that is properly

cleared for export loaded onto the outbound vessel. (Documentary evidence of

FOB compliance is a clean on­board bill of lading.)

• CFR Ahmedabad means the vendor’s price includes ocean freight all the way

there, but the insurance is up to the buyer. Exporter has no stake in insuring

anything past the point where he turns the cargo over to the export carrier.

(Documentary evidence of CFR compliance is a clean on­board bill of lading

showing freight prepaid to the destination port.)

• CIF Ahmedabad means the vendor’s price includes freight and insurance all the

way there. Once the cargo passes the ship’s rail at the destination port, it belongs

to the buyer. (Documentary evidence of CIF compliance is a marine insurance

certificate plus a clean on­board bill of lading, showing freight prepaid to the

destination port.)

• DES Ahmedabad means the buyer will take ownership of the goods while they

are still on board the vessel in the destination port, before unloading.

• DEQ Ahmedabad obliges the vendor to get the export cargo offloaded onto the

quay or wharf at the other end before passing ownership to the buyer. Since goods

are normally liable for import duties as soon as they touch the wharf, DEQ

Ahmedabad duty unpaid is a modification that relieves the seller of responsibility

for getting the goods through customs.

Normally it is in the exporter’s interest to insure any portion of the cargo movement for

which he could be held liable under the INCOTERM. However, the CIF and CIP terms

are the only ones that assure the buyer that the exporter has obtained insurance.

30

2.6 Steps involved in execution of export order in BVM textile division

Sintex Industries Ltd : The following flow chart shows the steps followed by Sintex Industries Ltd., BVM textile division

(If Sample confirms)

(If order confirms)

(Continued in next page..)

Spec sheet (sample spec) from buyer

Sample preparation (seller, BVM)

Approval/Negotiation stage (Marketer BVM)

Overseas sales contract (OSC), if need more information for LC prepare Perfoma Invoice

And order for Production (PPC)

Pre shipment invoice (PI), Package list, Weight cum packing list are transferred

to custom house agent (CHA)

Payment terms 100% advance (TT), Cash against document

(CAD) or against letter of credit (LC)

Preparation of Application for Removal of Excise (ARE) form Excise extension

The products are now transferred from BVM warehouse to CHA warehouse.

31

Continued.

No. of documents to be prepared In case of

Bill of Lading – 3 original documents

Air way bill – 1 original documents

After custom clearance CHA transfers goods to Air/Ship line to export on receipt of Airway bill/Bill of Lading.

All the documents (Shipping bill, PI, Packing list, Wright cum pkg list, Airway Bill, etc.) are to be forwarded to bank for payment

Exporter Bank transfers above documents to Importers Bank for verification and transfer of negotiated amount to A/c of Exporter

Mean time Exporter, BVM prepares BANK CERTIFICATE for Incentives by Govt.

Execution of Export Order.

Exporter BVM prepares post shipment invoice (By informing buyer, Importer.)

Shipping bill (Airway bill/Bill of lading) are prepared for custom clearance by CHA

32

CHAPTER 3: TECHNICAL

TEXTILES AND NEW PRODUCT

IDENTIFICATION

33

3.1 Introduction: “Technical” or “industrial” textiles represent a significant proportion of total textile

activity. In 2006, estimates suggest it accounted for some 30% of end­use fiber

consumption. Because of the industry’s strong growth, demanding technical requirements

and close working relationships between suppliers and customers, many segments offer

long­term potential for all companies.

3.1.1 Industry Definition:

“Technical textiles” comprises a diverse range of manufacturing activities tied to broad

end­use markets. The industry embraces products ranging from the mundane, such as

wiping cloths to the spectacular such as heart valves, aerospace composites and

architectural fabrics. The supply chain that connects fiber producers with end­use markets

is a long and complex one. It embraces companies vast and small from fiber producers

through yarn and fabric manufacturers, finishers, converters, and fabricators who

incorporate technical textiles into their own products or use them as an essential part of

their business operations. The common characteristic that unify all technical textile

applications, activities and companies is the use of fibers, often engineered in fiber, yarn

and fabric form, to provide specific technical performance characteristics to meet the

final customer/ market requirements, either as a final product in themselves or as a

component in another product. Below are two definitions of technical textiles and

industrial textiles:

Technical textiles:

Textile materials 6 and products intended for end­uses other than non­protective clothing,

household furnishing and floor covering, where the fabric or fibrous component is

selected principally but not exclusively for its performance and properties as opposed to

its aesthetic or decorative characteristics.

Industrial textiles:

A category of technical textiles called industrial textiles 7 used either as part of an

industrial process or incorporated into final products.

6 Textile Terms and Definitions, TI, Manchester, 10 th Ed… 7 Textile Terms and Definitions, TI, Manchester, 10 th Ed.

34

3.1 Table: Technical textiles sector and markets:

SECTOR EXAMPLES MARKRTS

Earth Work Linings, Netting, Insulation,

Artificial grass (GEO TECH)

Roads, Water Engg, Tunnel,

Stabilization, Soil etc.

Constructions Insulation, Roofing Mat

(BUILD TECH)

Building firms, Architect etc.

Agriculture Sun protection or Green house

fishing nets (AGRO TECH)

Farming, Horticulture, Fishing

etc.

Transport Car mats, Linings, Airbags, Fire

resistant, Seat covers (TRANS

TECH)

Cars, Aero planes, Boats etc.

Medical and health care Bandages, Medical sutures

(MED TECH)

Hospitals, Nursing house,

House hold (first aid) etc.

Protection Safety nets, Tapes, Fire

resistance, Seat covers (PRO

TECH)

Industry, Children ware,

Public procurement etc.

Packaging Twines & Cordages, Sacks &

Bags, Tarpaulins (PACK

TECH)

Distribution, Household etc.

Military & Public

services

Fire services, Bullet proof Army

tents, Parachutes (MILI ECH)

Military, Security, Forestry,

Off shore industry etc.

Specialized Clothing Sports, Skiing, Leisure, (SPEC

TECH)

Active sports, Mountaineering

etc.

Communication Optical fibers, Image conductor,

Image cables, (COMM. TECH)

Communication sector, Media

entertainment etc.

Industry Filter, Auto mobile, Conveyer,

Abrasive belts (INDO TECH)

Engineering, Plastics,

Textiles, Mining, Energy etc

Furnishing Inter lied, braiding, curtains,

umbrella’s, textile wallpapers

(FURN TECH)

Decoration, Household etc

35

In identifying a product under broad area of Technical textiles Sector, company searched

carefully all the available methods of producing/manufacturing technical textiles. After

thorough research company decided to cater in to flame retardant performance technical

textiles for defense use under coated textiles. Since company has already on to coated

textiles it become competitive advantage to produce the cost effective performance

technical textiles. In the present scenario company has installation to do coating on all

types of different fabrics like Cotton, Polyester, Denim, Canvas, Poplin, Sheeting’s,

Nylon etc. With facility to coat from thin to very thick i.e. 5 GSM to 1000 GSM and will

coat up to 1800 mm. width (180 ms) with different type of designs.

3.2 Plan to enter coated technical textile market: BVM textile division Sintex Industries Ltd., to cater in to new segment, performance

technical textiles under coated textiles will maintain following steps to enter coated

technical textile market.

3.2.1 Focus At Initial Stage

As above, company understood that it will do different kind of coatings and will cater

different industry also but initially we have to focus few specific targets only and put our

efforts in below applications initially.

1) Rainwear (coated Raincoats, Jackets, Auto Covers etc.)

2) Fashion &Apparel (Coating on any fabric including Sports Wear, Shirting, Jackets

etc.)

3) Flexible Luggage & Umbrella

4) Defense (Military Tent, Uniforms etc.).

3.2.2 Points need to consider at the time of Coating Inquiry

It is important to consider following four points at the time of buyer and supplier inquiry.

­ Type of coating require

­ Coating Grams per Square Meter (GSM)

­ End use of the product and

­ Customer’s swatch & Parameters.

36

3.2.3 Market entry:

To target all three segment (Fashion Apparel, Industrial & Defense), company has

developed few verities and will develop new qualities for potential customers on a

regular basis. For buyers coating details in excel sheet of Cotton and Synthetic verities,

company prospectus and details about development in coated fashion apparel are sent to

put into the market. For defense company has started internal procedure for registration.

Once the target market has decided company will use will maintain following steps to

enter technical textile market.

Identify chemical suppliers for coating

Find the technical intelligence required for R&D

Design a product catalogue

Design website/web design for product

Identify/search prospective buyer

Source nominated fabric suppliers of nylon and polyester

37

Conclusions:

38

At each and every aspect we require some kind of theoretical knowledge as well as

practical knowledge. It means only classroom lecture may not be enough to get proper

knowledge, either in business field or in a social corporate world. Theoretical lecture and

classroom discussion of various kinds are not enough for a student and that is why from

the practical point of view an industrial internship and preparing a report on analysis is a

practical learning for a student. Hence, after successful completion of industry internship

in BVM, textile division Sintex Industries Ltd., Kalol, Gujarat following conclusions are

made.

Ø Export marketing division of BVM, Textile division, Sintex Industries Ltd.,

follows all the export documents that are required for export execution. The

company utilizes its production at three fronts, domestic supply constitutes 20%,

direct export 20% and deemed export constitutes other 60%.

Ø For Coated technical textiles Fabric Company is at Infant stage (Introductory) in

PLC (Product Life Cycle) of BVM, textile division Sintex Industries Ltd., and

need to nurture every step with proper planning. Company focusing on Defense

and Industrial/Technical fabric also along with Fashion apparel verities and so

require more concentration to get success and to trap diversified business in a

long run.

39

APPENDIX:

40

APPENDIX­1: PROFORMA INVOICE

Manufacturer / Exporter Invoice No.& Date Exporter's Ref. SINTEX INDUSTRIES LTD., PI/TEX/03/2003­04 IEC NO:­0888003447 Textile Division : BHARAT VIJAY MILLS 12.03.2004 RBI CODE NO:­AS 001989 Near Seven Garnala, Buyer's Order No. & Date : Kalol, (N.Gujarat) 382 721, INDIA Tel.: 00 91 2764 223 731 ­ 36,220 246, 220793 Other references (if any) : Fax : 00 91 2764 220 436 E­Mail : bvm@sintex.co.in Buyer (if other than consignee)

Consignee

Country of Origin of Goods Country of final Destination INDIA

Terms of Delivery and payment

Pre­Carriage by Place of Receipt by pre­carrier

Vessel/Flight No. Port of Loading :

Port of Discharge : Final Destination:

Marks & Nos. No. & Kind of Pkgs. Description of Goods Quantity Rate Amount

/Container No. (Specification) MTRS (Price) (VALUE) USD

PAYMENT :

OUR BANK DETAIL

OUR BANK A/C NO. TOLLERANCE

Amount Chargeable

(in words)

PACKING : FOR BHARAT VIJAY MILLS

Declaration : Signature & Date We declare that this invoice shows the actual price of the goods described and that all particulars are true and correct. AUTHORISED SIGNATORY

41

REFERENCES:

42

Internship Company:

Bharat Vijay Mills (BVM), textile division Sintex Industries Ltd., Kalol, Gujarat

Export documentation and Technical textiles:

1. Albaum Gerald, Jesper Stranskov and Edwin Duerr. “International Marketing and

Export Management”, 3 rd ed. MA: Addison­Wesley, 1998.

2. Baker, James. C. “International Finance: Management, Markets, and Institutions”,

NJ: Prentice Hall, 1998.

3. Berry, Brian J., Edgar C. Conkling and D. Michael Ray. “The Global Economy in

Transition”, 2 nd ed., NJ: Prentice Hall, 1997.

4. Daniels, John D. and Lee H. Radenbaugh. “International Business”, 8 th ed. MA:

Addison­Wesley, 1998.

5. Eiteman, David K., Arthur I. Stonehill, and Michael H. Moffett. “Multinational

Business Finance”, 8th ed. MA: Addison­Wesley, 1998.

6. Fatehi, Kamal. “International Management: A Cross­Cultural and Functional

Perspective”, NJ: Prentice Hall, 1996.

7. Gibson, Heather D. “International Finance: Exchange Rates and Financial Flows in

the International System”, NY: Longman, 1996.

8. Gerald Albalm, Edwin Dueer and Jesper Strandstov, “International Marketing and

Export management”. 2 nd edition. 2001. Pg 42.

9. Hill, Charles W.L. International Business: Competing in the Global Marketplace. 2 nd

ed. IL: Irwin, 1997.

10. Koshy O Darlie,” Garment Exports: Winning Strategies”, 1st edition, 1997 Pg. 35­

50.

11. Melvin, Michael. International Money and Finance. 5 th ed. MA: Addison­Wesley,

1997.

12. Quelch, John A. and Christopher A. Bartlett. “Global Marketing Management”, 4 th

ed., MA: Addison­Wesley, 1999.

13. Ram Paras, “Export­Import finance and Letter of Credit (L/C)”, 1999 edition, abc

Anupam publications. New Delhi.

43

14. Ram Paras, “Incoterms 2000, Export costing and Pricing”, 14th 2000 edition, abc

Anupam publications. New Delhi.

15. Shukla R.S, “How to Export Garment Successfully”, 2 nd edition, 1997.

16. “The stitch Time”, Vol. 3 issue, July 2005, Pg. 24­28.

17. Vernon, Raymond, Louis T. Wells, Jr. and Subranian Rangan. “The Manager in the

International Economy”, 7 th ed. NJ: Prentice Hall, 1996.

Other references:

www.sintex.co.in

www.google.co.in

www.rollyo.com

www.ldec.org

www.vivisimo.com

www.grokker.com