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EXPORT PROCEDURE & DOCUMENTATION
 

EXPORT PROCEDURE & DOCUMENTATION

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  • Hey vikas Ashutosh this side,bro can you please do me a favour by sending this file to ashumotoming@gmail.com.Looking forward to hear from you.
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  • PRANAM SRI VIKAS CHAUHAN.MAY I REQUEST YOU SEND ME THIS DOC TO majsiva@gmail.com
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    faculty in textile marketing nad management
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    komarapalayam-638 183
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    EXPORT PROCEDURE & DOCUMENTATION EXPORT PROCEDURE & DOCUMENTATION Document Transcript

    • EXPORT PROCEDURE & DOCUMENTATION NANCY KRAFTS PVT. LTD. A report towards the partial fulfilment of the requirements of the two year full time Post Graduate Diploma in Management Submitted by: Vikas Chauhan Post Graduate Diploma in Management (General) Roll No: 2k11a38 2011-2013 ASIA PACIFIC INSTITUTE OF MANAGEMENT 3&4, Institunal Area, Jasola,New Delhi-110025 1
    • Preface. The purpose of industrial training is to acclimatize the students with the organization & the industry in which this organization exist. Summer training is the part of management study & it’s very important for each and every student. Management trainees are trained in such a way that after they come out they can manage the matter of organization in a planned and systematic manner. My project is aimed at understanding the basis of export procedure and documentation. It’s includes how an export order is processed & what all documents are required to complete the legalities of the export order. The training was the valuable experience in terms of understanding & learning & I believe that in future ,I will get fulfilled result. 2
    • Acknowledgement A project report seems to be an individual effort is in fact teamwork. Summer training at Nancy Krafts Pvt. ltd. was just like an opportunity to shake hands with the practical world of business. I indebted all the individual who helped me in gaining knowledge and insights into various aspects of export procedure and documentation. The sources of learning have been one to many and a complete list of individual references would become encyclopaedic. I want to express my deepest gratitude to Mr. Narinder Pal Singh ( Pali Singh) Managing Director and CEO , Nancy Krafts Pvt. Ltd., without whose help this summer internship in Nancy Kraft Pvt. Ltd. would not be possible. I am grateful to Mr. Jitin Pal Singh, Director , son of Mr Pali Singh and his wife Mrs. Harleen Chatwal for sharing his experience and knowledge and without whose help project would not have got any shape. I am very grateful to Mrs. Harpreet Dhaliwal, senior merchandiser, Mrs. Joli, merchandiser.. whose helped my a lot during my learning. I want to express my deepest gratitude to Prof. Arindam Banerjee who guided me to making my project. Vikas Chauhan (2K11A38) 3
    • DECLARATION I hereby declare that the project report entitled “EXPORT PROCEDURE & DOCUMENTATION” is the produce of my sincere efforts. This Summer Project is being submitted by me alone at Asia Pacific Institute of Management , New Delhi, for the partial fulfillment of the course PGDM , and the report is not submitted to any other educational institutions or for any other purpose whatsoever. Vikas Chauhan 4
    • CERTIFICATE This is to certify that the project “EXPORT PRODECURE AND DOCUMENTATION” is the bonafide work carried out by Mr. VIKAS CHAUHAN, student of PGDM (GENERAL), Asia Pacific Institute of Management, Delhi, during the year 20011-13, in partial fulfillment of the requirements for the award of the PGDM, and that the project has not formed the basis for the award previously of any degree, diploma, associate ship, fellowship or any other similar title. Signature of the Guide: (Prof. Arindam Banerjee) Place: New Delhi Date: 5
    • Table of contents: 1) Executive summary................................................................................................. 2) Introduction. Of the company.......................................................................... 3) Background of the problem task undertaken................................................... 4) Project objective................................................................................................. 5) Rationale of the study........................................................................................ 6) Scope of the study............................................................................................. 7) Methodology………………………………………………………………….. 8) Brief about the project........................................................................................ 9) Objective Description…………………………………………………………. 10) Merchandising and Role of Merchandiser in Nancy Krafts Pvt. Ltd………… 11) Documents procedure of Nancy Krafts Pvt. Ltd……………………………… FINDINGS AND INFERENCE............................................................................... Conclusion .................................................................................................. Recommendation to the company............................................................. Bibliography: 6
    • List of illustration Figure 1 The “T” angle of the apparel supply chain.......................................... Figure 2 Fabric process flow chart.................................................................. Figure 3 Garments process flow chart............................................................ Figure 4 The PPC link with other department................................................ 7
    • EXECUTIVE SUMMERY • This project is aim at understanding export procedure and documentation. It begins with the introduction of the company i.e. company profile. This part include introduction of the company its plant location, client base and some more information of Nancy krafts. • Next Chapter discuss the methodology used for the data collection. Exploratory research is used for data collection as it best suited for this fulfilling the project objective. • Next chapter provides the detail on the objective, apparel business process. It’s explained through the T angle apparel supply chain. Some slides of supply chain i.e. buyer, supplier and the manufacturer are discussed. • Next objective discusses a view of different department working in synchronization in order to process an export order. The role of each department is discussed in context of export procedure and documentation and what contribution they make towards it. • Next objective gives a brief idea on the merchandiser and what role they play. They are the one who interact with the clients and update the company with client’s requirements.They act as a liaison between company and the client. • In the final objective a brief summary of all the export documents used at Nancy Kraft Pvt Ltd. for legalizing an export order is given. Further the documents regarding pre and post shipment procedure are discussed. 8
    • Introduction of the company • Established in 1973 • A leading apparel export house in India. • Reputed for excellent product development and design capacity. • Narinder Pal Singh (Pali Singh) is the founder and CEO of the company. • A leading manufacturer and exporter specialized in ladies and children garments • Nancy Krafts Pvt.Ltd. manufacture and sell a wide range of highly fashionable garments for top end customer in international market. • the employs around 500 people. • Nancy Krafts Pvt.Ltd. is located in C-11 Uttam Uagar East, New Delhi, India, 110059 • Tunic , Kaftan , Shorts , Romper, Pants, Skirts etc. are manufactures in Nancy krafts • The company’s total turnover for the year ended 31 march 2011 was around 50 cr. LOCATION OF THE PLANTS The Company’s Plants are located at – 9
    • 1. Fabric Dyeing and processing plant – C-11 East Uttam nagar new delhi- 110059(India). 2. Garment manufacturing plant - C-11 East Uttam nagar new delhi-110059 (India) 3. printing plant - Plot -C-12 East Uttam nagar new delhi-110059 (India) 4. Finishing plant - C-24 East Uttam nagar new delhi-110059 (india) 5. Embroidery plant C-28 East Uttam nagar new delhi-110059 (india) NANCY KRAFT Capacities SECTION CAPACITY Dyed Fabric 10.5 Tons per day Mercerizing 2.5 Tons per day Garment Washing & Dyeing Printing Embroidery 5000 Pcs per day 7000 Mts per day 8000 mts per day 10
    • More brief about Nancy Krafts Pvt.Ltd. Team Nancy. Ably led from the front by Mr.pali Singh ,son of Mr. Durlabh Singh, a retired army officer, Nancy krafts has registered phenomenal growth over the last few years. That is largely because of his pro-active thinking and vision driven approach. Mr Pali Singh, a strict disciplinarian, is also the founder and the CEO of the company. His wife Balwinder Pal Kaur (kitty), has been the source of his strength and she shares his vision for his company. His son, Jitin Pal Singh has recently joined him to catapult the company towards success with his fresh and innovative ideas. From the very beginning, the development of in-house infrastructure, skills and competence has been the prime concern of the company and the focus of his attention, and that is the reason why Nancy Krafts has not only managed to consolidate its position worldwide but also stay at the forefront of the Indian garments export industry. The professionals who perform & deliver The middle management of the company consists of highly professional designers, merchandisers and experienced personnel. The well defined hierarchy of the company ensure smooth day-to-day operations. In Mr. Pali Singh, they have a live wire and dynamic professional who not only encourage them to perform and deliver but also bring out the best in them. His long innings in the international garment business has given him a tremendous insight and experience. 11
    • Redefining the dynamics of garment export Since its inception in the year 1973, Nancy Krafts has been actively involved in the manufacturing and export of high fashion quality garments for ladies and children to a diverse range of discerning & quality conscious clients all over the world. Today, it enjoys an enviable as well a formidable reputation in the fiercely competitive international garment industry. 1*Moving in tune with changing technology. The production line has the latest machines from the world known names like Juki, Eastman, Barudan, Pegasus, Suprema, Tukatech etc. A notable addition is highly sophisticated computerised embroidery machines in its embroidery section. In order to cut down production load time, Nancy Krafts has installed the latest Tukatech CAD/CAM System for accurate pattern making. The sampling section is co-ordinate by its designers and foreign associates who are invited every month to design garments in line with fashion forecasts. 2*Nancy Krafts workforce is the pillar of its strength. An organization that believes in the capabilities of its people and looks after their aspirations and is bound to succeed. At Nancy Krafts, its people are its prime motivators. Their dedication and skills have helped it grow and prosper. The 500 strong workforce is looked after well by the management . it is committed to stand by them through, thick and thin. It is because of the unflinching dedication of its people that the company has come this far. The company believes in rewarding its people when they walk that extra 12
    • mile to deliver the goods. And that too on time. The management of Nancy krafts has taken initiative to provide airy, well-lit and air cooled working environment. 3*Concern for quality can be a catalyst for growth. Quality is an integral and vital part of any manufacturing process today. More so in garments because we tend to make a style and personality statement through them. Quality is a tangible aspect of garments today. Therefore, maintaining it in garments is vital. At Nancy Krafts, quality is what our garments are all about. Over the years, we have evolved our fool-proof QC system at all. 4*Compatibility through self reliance. Trained man-power, latest machinery, airy and well lit work environment and an efficient work culture together constitute a process called-Compatibility through self reliance. This process, at Nancy Krafts, has given it a head start over others in facing the challenges of the future and expand its operations all over the world. This process is a must for every company that seeks to stay ahead of the others. Moreover, the management of the company has chalked out a well defined strategy and blue print for the future. It has identified the markets to be tapped and more infrastructures that would need to be deployed. Meanwhile, more technological up gradation is just round the corner. 5*Quantity without compromising quality. It is often difficult to strike the right balance between quality and quantity. But for those who have a reputation to keep, it is not much of a dilemma. At Nancy Krafts... quality 13
    • comes first and foremost. Over the years, it has enhanced its production capacity as well as the quality of its goods. Besides the existing production capacity of the company, it’s newly commissioned state-of-the –art unit produces more than 5000 garments per day. The production process of this unit is governed by stringent quality control measures. 6*Nancy Krafts is shrinking the globe. Today, Nancy Krafts is one large and growing family. Its clientele that patronises its garments is spread across the world. The company is exporting its garments to Europe, North America, South America, Australia ,brazil and some of African and Spanish speaking country. Its clientele has now become a large family that shares good values of business and the right way of conducting it. For many years now. It has been ably supported by the State Bank of India. Its relations with its Bank have helped it expand and grow. But then a dynamic company like Nancy Krafts is hardly the one to sit on its laurels. It plans to grow more and shrink the globe even further. 14
    • 7* Nancy Krafts Customers. Nancy Krafts high profile customer are not only happy but also satisfied which has earned them recognition and unflattering loyalty from prominent buyer worldwide. Customers Countries el corte ingles Spain forever 21 USA Pink Apple USA Blue Port Brazil foschini South Africa Absolute German 15
    • Background about the problem task undertaken It’s an opportunity to do the summer internship in Nancy Krafts Pvt. Ltd. which is manufacturer & exporter of knitted fabric and knitted garments. Project on export house is uncommon and that on an Apparel Export House is rare. As we know , Exporting is complex and challenging activity in today’s dynamic worlds environment as it involves the performance or operation that determine existing and potential demand in a market. Learning the step-by-step process and procedure to be followed in an export contract is a critical activity in export procedure. So selecting a project on export procedure and documentation is an obvious and important decision. Project Objective a. To understand the garments business processes. b. To understand the working of various department of Nancy krafts Pvt. Ltd. contributing towards processing of an export order. c.To understand the role of merchandisers in Nancy Krafts Pvt.Ltd. d.To study of export documentation in Nancy Krafts Pvt.Ltd. 16
    • Rationale of the study Exporting in simple words means selling goods abroad or export refers to out flow of goods and service and inflow of foreign exchange. Each country has its own rule and regulations regarding the foreign trade. For the fulfilment of all the rules and regulations of different countries and exporting company has to maintain and fulfilled different documentation requirements. The documentation procedure depends on the type of goods, process of manufacturing, type of industry and the country to which goods is to be exported. In order to complete an order of making garments, many activities like communication between different departments, the process of outsourcing raw material , payment process, quality control, packing and shipment of goods etc. are undertaken. Different department work in synchronicity and various documents are prepared in the process. Hence, a single mistake or lack of proper planning can be lead to the rejection of the whole order or increase the cost. Today’s world is a global village in which each country is trading with other countries in form of export & import. This field has a great scope because today each company whether it’s small or big wants to engage in foreign trade. So, it is very important to study the export procedure and documents involved in it. 17
    • 1.4) Scope of the study The aim of this project is to unfold stepwise all complexities involved in the export business right from receiving and export order to final realization of export proceeds. It gives a detail idea of how different departments in an apparel export house work in synchronization so that export order is processed. The project would be helpful to fulfil many loopholes of manufacturing processing and analyzing the export order as well as documentation. 18
    • Methodology Our primary objective of doing this project is to get the first hand knowledge of functioning of export house. Since we are not comparing two different entities on the basis of their financial results, rather we are learning the export procedure. Hence exploratory research design is need of the hour. *Further there are few reasons which made me to use Exploratory Qualitative research. It’s not always desirable or possible to use fully structured or formal method to obtain information from respondent. * People may be unable and unwilling to answer certain questions or unable to give truthful answer. *People may be unable to provide accurate answer to question that tap their sub consciousness. Thus, project research methodology is as followed. *In primary data, Qualitative research through in-debt interview has been adopted. For interviews non structured open-ended questions were used. *In secondary data, both internal and external research was done for internal research ready to use documents available with the organization were used. For external research internet net website was consulted. 19
    • Limitations of the methodology: 1. Concern about the validity: the issue arises from the fact that qualitative research does not rely on tests for reliability or credibility that are external to data collection and analyses. 2. Labour intensive data collection: It can be extremely time consuming. Data collection is this labour intensive process the researcher immerses himself or herself to build an understanding of the organization, through contract with the employees, exposure to the norms and familiarity with their practices. 3. Conclusion and interpretation of qualitative research: They are primarily communicated in a form of case study. The case study is written after an extensive process of data collection through interviewing and participant observation. 4.Need for training in qualitative research: There is a need of training in qualitative research methodology. Person have low knowledge in this field don’t go for such methodology. 20
    • BRIEF ABOUT THE PROJECT:- The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in home country to other markets. Any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and e-Bay have largely bypassed the involvement of Customs in many countries because of the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. An export's counterpart is an import. In national accounts "exports" consist of transactions in goods and services (sales, barter, gifts or grants) from residents to non-residents. The exact definition of exports includes and excludes specific "borderline" cases. A general delimitation of exports in national accounts is given below: • An export of a good occurs when there is a change of ownership from a resident to a non-resident; this does not necessarily imply that the good in question 21
    • physically crosses the frontier. However, in specific cases national accounts impute changes of ownership even though in legal terms no change of ownership takes place (e.g. cross border financial leasing, cross border deliveries between affiliates of the same enterprise, goods crossing the border for significant processing to order or repair). Also smuggled goods must be included in the export measurement. • Export services consist of all services rendered by residents to non-residents. In national accounts any direct purchases by non-residents in the economic territory of a country are recorded as exports of services; therefore all expenditure by foreign • Tourists in the economic territory of a country are considered as part of the exports of services of that country. Also international flows of illegal services must be included. National accountants often need to make adjustments to the basic trade data in order to comply with national accounts concepts; the concepts for basic trade statistics often differ in terms of definition and coverage from the requirements in the national accounts: • Data on international trade in goods are mostly obtained through declarations to custom services. If a country applies the general trade system, all goods entering or leaving the country are recorded. If the special trade system (e.g. extra-EU trade statistics) is applied goods which are received into customs warehouses are not recorded in external trade statistics unless they subsequently go into free circulation in the country of receipt. 22
    • • A special case is the intra-EU trade statistics. Since goods move freely between the member states of the EU without customs controls, statistics on trade in goods between the member states must be obtained through surveys. To reduce the statistical burden on the respondents small scale traders are excluded from the reporting obligation. • Statistical recording of trade in services is based on declarations by banks to their central banks or by surveys of the main operators. In a globalized economy where services can be rendered via electronic means (e.g. internet) the related international flows of services are difficult to identify. • Basic statistics on international trade normally do not record smuggled goods or international flows of illegal services. A small fraction of the smuggled goods and illegal services may nevertheless be included in official trade statistics through dummy shipments or dummy declarations that serve to conceal the illegal nature of the activities. Our project was all about knowing export procedure, various documents involve in export procedure and various governmental and non-governmental authorities involve in export procedure. Our project also contained the process of manufacturing readymade garments, i.e. from fabric cutting to packaging. Manufacturing garments involves receiving the order of a garment till its shipment to end customer 23
    • To understand the apparel business process. The textile and apparel supply chain accounts for a good share in terms of number of companies and people employed. The apparel industry divided in to three main segments. At the top of supply chain there are fibre (raw material) producers using natural or synthetic material. Second segment of supply chain is the apparel manufacturing in which fabric convert into garments with many process involved. The final segment is the retailer who is responsible for making apparels available to consumers. The “T” angle of apparel supply show how buyer, supplier and garments manufacturer are linked to each other. There are two sides of the “T” i.e. left and right. The left side called the buyer to the manufacturer and the right side is called the supplier to manufacturer. The two horizontal are linked to each other through the vertical side i.e. the buyer and supplier are link through apparel manufacturer. The “T” angle demonstrates how information flows from buyer to apparel manufacture. The information normally, sketches of the garments given by the buyer, are studied by the manufacturer and according list of raw material required is made. The different watch(standard for type of yarn, colour of the yarn and piece of accessories) are sent to different supplier for development. The supplier developed and sends it to manufacturer and which is forwarded to buyer. Once approved by buyer, the orders are placed with the suppliers with approved samples. When the raw materials are received as per the specifications given to the supplier, in house manufacturing starts with the production. The different process of manufacturing results in the final garment product which is 24
    • finally dispatched to the buyer. The buyer then retails the same through stores to the ultimate consumers. Figure 1: The “T” angle of Apparel Supply Chain. Apparel Development of raw Design Material Samples and Yarn Orders Retail Accessories Production Fabric The Finishing Production Manufacturer Packaging Dispatch 25
    • Dyeing and Washing Cutting and Stitching Description of the Buyer Side of the Apparel Supply Chain. The buyer side is normally involved with designing of garments, production of samples, order collection, apparel retail. Apparel Design Designing of Apparel is either done in-house or contracted to design companies. The first step in designing is the analysis of the consumer which the Company is targeting. The apparel design is influenced by various parameters like other designer collection presented in the fashion cities of the world, fashion reviews from earlier seasons, fashion magazine also plays an important input for the design efforts and most important is the feedback gained from the sales of the similar products that were developed earlier. Prototype garments are made for design approval which consumes considerable amount of time. Production of samples and order collection The next step after the design in apparel supply chain is the production of the samples. Once the designs are developed, decisions regarding the fabric like cotton or polyester and quantity etc are made. Based on fabric and quantity decided, decisions related to country and manufacturers are made. Once decision is made, developed designs are sent to different manufacturers and are asked to develop proto samples (the stage brings design from paper to cloth for design appearance). Normally, during proto stage 26
    • manufacturer figure stands between 5 and 8. Once proto are developed, number of manufacturers is reduced to 2 to 3 depending on the total quantity of the article and also on selected manufacturer production capacity or volumes. The order quantities are placed to different manufacturers and manufacturer is asked to develop size-sets (alternate sizes of the garment are developed example XS: Extra small, S: Small, M: medium , L: Large, XXL: Extra Extra Large). Once size-set is approved, sale samples (samples developed for advertising and see the market response towards the article) are made. Finally, with everything in place two identical pieces are developed one for the buyer and other for the manufacturer called as sealer (sealer sample is identification or standard for production). This sample is stamped by the buyers and the manufacturer can proceed with the production. Apparel Retail Apparel products are made available to consumers in a variety of retail outlets. Specialty stores offer a limited range of apparel products and accessories specializing in a specific market segment. Apparel sales also take place through wholesalers or mass merchandisers such as Wal-Mart, Kmart and Target. These retailers offer a variety of hard and soft goods in addition to apparel. Departmental stores like Macy’s, Nordstrom offer a large number of national brands in both hard and soft goods categories. Off-price stores, such as Marshall’s and T.J.Maxx buy excess stock of designer- label and branded apparel from retailers and are able to offer lower prices but with incomplete assortments. The apparel sale is also shared by mail order companies, e-tailers through internet, and factory outlets etc. 27
    • 2.1.2) Description of the Supplier Side of the Apparel Supply Chain The suppliers in the apparel manufacturing are quite diversified. It involves suppliers of different raw materials such as fibre and yarn producers, fabric manufacturers and other raw-materials. Fabric and Yarn Production Fabric are categorized into two groups: natural and man-made. Natural fabric includes plant fabric such as cotton, linen, jute etc and animal fabric such as wool. Synthetic fabric includes nylon, polyester, acrylic etc. Synthetic fabric production usually requires significant capital and knowledge. Natural and synthetic fabrics of short lengths are converted into yarn by “spinners”, “thrusters” and “texturizers”. Different types of fabrics can also be blended together to produce yarn such as grindle etc. 2.1.3)Description of the Manufacturer Side of the Apparel Supply Chain Fabric production This segment of supply chain transforms the yarn into fabric by different processes such as weaving, knitting a non-woven process. In a weaving process, yarns are looped together lengthwise and width wise at right angles. Grey Yarn may be woven by a simple procedure to produce grey fabric and which are then dyed for a specific colour. Instead, 28
    • dyed yarns may also be woven but not dyed. In knitting, yarn is interloped by latched and spring needles i.e. two different loops are mingled together with needle adjustment. Once the approvals regarding the raw-material are made by the buyer, the manufacturer can proceed with the production. Apparel Production The process proceeds once the fabric is produced; it is either dyed or washed. The dyed (coloured) yarn fabric is washed and grey fabric is dyed into a specific colour. After dyeing or washing, fabric is finished by removing water in the tumbler and later pressed in stenter which also maintains width of the fabric. Now the fabric is ready for garmentising i.e. it is ready to be cut and stitched into the garment. Garmentising starts with the design of the garment to be made (usually on the paper called specs). Patterns (usually made up of thicker and stronger paper) are made from the design which is then used to cut the fabric (cutting usually happens in the form of layers). An efficient layout of the patterns on the layers of fabric is crucial for reducing the wasted material. CAD systems are used for pattern lay out and are integrated together with cutting systems. In apparel manufacturing, all the stages are labour intensive as they are not suitable for any kind of automation. In the stitching section, garment is usually assembled using the progressive bundle system (PBS). In PBS, the work is delivered to individual work stations from the cutting department in bundles. Sewing machine operators then process or sew them in batches i.e. first few are operation are joining the different parts together and then further amendments related to design are carried out. The supervisors direct and balance the line activities and check the quality. This involves large work in progress (WIP) inventories and minimal flexibility. For faster apparel production, use of 29
    • unit production system which reduces the buffer sizes between the operations or modular assembly systems and allows a small group of sewing operators to assemble the entire garment. Finishing, Packaging and Dispatch of Apparel Garments produced are labelled, packaged and usually shipped to a warehouse. The garments are then shipped to the retailers’ warehouse. In an effort to reduce time from placement of the product order to the consumer’s purchase of the apparel, several practices are gaining popularity. There is increased automation and use of electronic processing in the warehouses of both manufacturers and retailers. To understand the working of various departments of NANCY KRAFTS PVT LTD contributing towards processing of an export order. Manufacturing Process and Production ( Garment Process Flow Chart) Fabric Audit Batch wise – Physical Parameters, Trims Matching 30
    • The above two diagrams show detailed picture of NANCY KRAFTS PVT LTD Apparel Manufacturing and Supply Chain. The manufacturer supply chain starts when yarn is in- house and ends when garment is produced and is ready for dispatch. The entire process is divided into two segments i.e. the process and the production. The process involves yarn inspection, dyeing or washing and finishing. In the process, the yarn is converted to fabric then it is either dyed or washed and finally finished. The production involves fabric cutting, stitching, and garment being finished and finally dispatched. 2.2.2) NANCY KRAFTS PVT LTD: Departments Functions and Operations Company mainly deals in two segments of the apparel supply chain i.e. one manufacturing of fabric and other manufacturing of garment. These two segments are 31
    • two different processes but are very much linked in the supply chain. The Company has different departments each having specified functions and responsibilities. Description of each department will follow in respect to how they occur in supply chain: Yam Department Yarn (thread) is one of the most important raw-materials for the garment manufacturing. Company purchases yarn from other spinning mills across the country and also sometimes from other countries such as China and Italy. Yarn department is responsible for placing order of yarn to the mills. Their responsibility is to make sure yarn is ordered from right supplier, delivered in right time with desired quality and maintain stock listing of yarn. Yarn department is also responsible for checking the quality i.e. strength, colour and quantity of the yarn delivered. The decision regarding the yarn quantity, quality and strength is decided by PPC i.e. production, planning and control department. PPC places the order one month in advance. Washing and Dyeing Department The department is responsible for two different stages in garment manufacturing. For grey (not coloured) fabric, department is responsible for colouration of fabric and for dyed (coloured) fabric, department is responsible for washing. The process of dyeing is time consuming and as different colour checks are required. The department receives order from the PPC stating article and quantity required. The department makes the production plan for the dyeing and the washing machine based on order from the PPC 32
    • and also sends request to knitting department for the dispatch of the fabric. Planning is done on weekly basis. Printing Department This department is responsible for printing different designs of print and different type of prints i.e. permanent print or ordinary print. Ditsy print and khadi print is also used for printing fabric. Finishing Department The department is responsible for finishing of the fabric with a proper procedure so that it is ready for garment production. Whether the fabric is dyed or washed, it follows the same process in the finishing department. Once the fabric is washed or dyed, it needs to be tumbled in tumbler (sort of big washing machine) responsible for removing water and maintain the fabric width and shrinkage. After which fabric is dried in a Stenter (dryer) and packed in layer and is ready for garment production. The finishing departments receive orders from PPC again stating the article or style number and the quantity. The department sends the fabric to the mentioned cutting section. Cutting Department The department is responsible for cutting of the fabric into different parts of the garment. This department is mainly responsible for cutting and avoiding wastage. To ensure minimum wastage, proper set of tools such as CAD and others are used in the process. The PPC by using CAD and other tools issues article average with a draft or diagram of 33
    • how different patterns should be placed on to the layer. The cutting department based on their experience and expertise either accepts the proposed average or sometimes gives a better average by few percent. The department makes production plan for all cutting stations based on article or style requested. This also works on weekly basis. Once fabric is cut different parts of the same garment are bundled together. Stitching Department The department is responsible for stitching different parts of garment together. The process takes place in the assembly line system. The assembly line system is the set of many different stitching machines each for a specific purpose. These machines are arranged in an orderly fashion depending on how different parts of garment should be attached. Assembly line method is used for large production. PPC decides on the article or style to be produced with quantity. The stitching department makes necessary production planning i.e. time line in accordance with each article. The stitching process is the most time consuming and labour intensive process in the entire garment production. The planning is done weekly. Finishing and Packaging Department This is final stage before the garment is ready to be shipped. As the garment is already finished, it requires a series of quality checks. The garment goes through the quality checks like colour test, washing test, stitching test etc. After which it is steam pressed, 34
    • labeled, packed into garment bags and finally, put into the cartons. Once all cartons are packed and labeled, external quality check takes place and goods are shipped. The PPC department gives the details of the PO to be finished, packed and dispatched. Production Planning and Control (PPC) Department The department is responsible for making plans for the entire organization i.e. all the departments. PPC being in the centre of all departments also controls their functionality. The PPC sends production plan to different departments on weekly basis and daily for any amendments. The PPC keeps check on different departments by requesting planning and production reports for each day. PPC only receives orders from the Management. With order quantity and dispatch date, it does the planning for product cycle. The top management is in continuous contact with PPC. To understand the role of Merchandisers in NANCY KRAFTS PVT LTD. 2.3.1) Merchandising Department The department acts as a liaison between the buyer and manufacturing division. On one hand, the department is responsible for notifying changes in the product to the PPC and also to make sure that article is produced as per planning by the PPC and within dispatch time limits. On the other hand, it has to continually update buyer with planning and production status. The department takes care of all correspondence with buyer and is 35
    • responsible for communicating it to PPC. The department also takes care of necessary sampling such as proto, size set and final which is necessary prior to production. 2.3.2) Marketing  Design Designing is an integral part of the marketing process. The Company’s ability to keep abreast of the dynamic fashion trends enables it to showcase its capabilities and understanding the buyers’ requirements. Being an export oriented apparel manufacturer, tracking the changing fashion trends across different geographies for various end customers is critical for success. The Company has a well equipped design studio. NANCY KRAFTS employs a team of designers who design and develop the products as per the requirements of the customers. They regularly visit International fairs like PITTI FILATI, EXPOFIL and PREMIERE VISION. These fairs determine the latest trends in yarn / fabric and colours for the following season. The design team regularly interacts with the customers which helps it to keep pace with their expectations. Besides, the Company has opened a Product Development and Sales office at US. The Apparel trade has four basic seasons;  Spring  Summer  Fall/Autumn  Holiday/Winter 2.3.3) Merchandising 36
    • The Company’s marketing team endeavors to enhance its share of the business with existing customers as well as expand the customer base. The Company receives orders from customers by:  Growth in business from existing customers  New customers developed through cold calls, trade fair meetings  Walk-in customers. The Company’s experienced marketing team has been able to devise different strategies to suit the needs of both existing & new buyers. For the existing buyers, the Company’s prime focus is to expand the product base and enhance volumes. By leveraging the long standing relationships with the buyers, the Company strives to be a preferred partner to the buyers. For the new buyers, based on the understanding of their product range and brand identity / customer identity, the Company presents to them the entire product range. This gives them a good idea of areas of the Company’s expertise and capabilities. Sometimes the buyers come to NANCY KRAFTS with their thoughts on designs, where they offer their suggestion on modifications. In case where they come to NANCY KRAFTS with a predetermined design requirement, they also try to add value by suggesting modifications to enhance functionalities or appeal, or to reduce costs while retaining the existing design. NANCY KRAFTS designers along with the sampling department provide the client with prototypes, which undergo various alterations till the client, finalizes the design. Once the buyer finalizes a particular style it is translated into samples as quickly as possible because the entire season’s business depends on timely delivery of samples. The costing exercise is done concurrently at this stage. NANCY 37
    • KRAFTS manufacturing scale and efficiency and global sourcing ability enables NANCY KRAFTS to compete with international vendors effectively. This is proven by the growth of the Company in non-quota categories, where competition has already been open without any quota related barriers. Quality and ability to deliver the required products on time and competitive pricing enables to enhance share with customers. The merchandising teams are to service the requirements of different customers. On receipt of the enquiry, the merchandiser coordinates with PPC to get an estimate of the raw material consumption, likely suppliers and costs, accessories as well as the conversion efforts. Based on this, the costing sheet is prepared. Modifications are also suggested on apparel design or engineering, or fabric to try and bring the cost to the buyer within their required range. The price setting process thus becomes a collaborative effort with Company’s customers instead of just a negotiation process, with both the Company and buyer working together to meet a common objective. Therefore, whenever a prospective buyer places his requirement with the company, company can work out an optimal price-quality combination for him through permutation and combination of quality & source of raw materials, along with design. Role of merchandiser What is merchandiser? Merchandiser is an integral part of the fashion domestic and export industry, and It plays a vital role at every level right from product development to marketing and to 38
    • commercialisation of fashion apparel, which creates required volumes and business growth for the industry. What is the role of merchandiser? Product development and designing is mainly done in interaction with designers, buyers and fashion consultants, fabric and accessories suppliers. Product commercialisation is the main key role and is mainly done in interaction with buyers to make product reach up to the level of retail industry which makes fashion product successful. Detailed role of fashion merchandiser? A fashion merchandiser (also referred to as a buyer or merchant) plays an important role in any industry. A merchandiser occupies both creative and financial roles. Although it is subjective different companies may assign different types of responsibilities to a merchandiser. Some of the role as below:- (A)Product buying responsibilities A fashion merchandiser is responsible for selecting the merchandise that will sell in domestic and export market. This merchandise must be in alignment with the company’s brand image. The merchandiser must choose trend-right merchandise that is also appropriate for the target customer’s fashion level. This requires knowledge of current and future fashion trends both high-fashion from the runway and mass-market trends. (B) Financial accountability 39
    • Meeting financial objective (given budget) is the primary component of a fashion merchandiser’s jab. The merchandiser must maintain at least maximum profitability by meeting certain financial plans set for each season or each order. All merchandise bought must be appropriate for the customer and offered at a reasonably good yet profitable price. A merchandiser’s performance review will be partially based on the profit margin reached, rates of merchandise turnover and successful sales volume. (C) Customer knowledge In order to offer an appealing product, a merchandiser must be intimately familiar with the needs and wants of the target customer. This is accomplished by spending time with the buyers visit in stores. A merchandiser should research fashion trends, read trend newspaper, and follow the semi-annual runway shows. A merchandiser should also spend time in competitor’s stores, study other retailer’s merchandise and track when they deliver new product in the market. (D) Visual merchandising Visual merchandising means the display of product in stores, including presentation. When buying goods, a merchandiser must Always think of how items will be shown in stores. This involves determining which type of fixtures and folding methods will be necessary to properly house merchandised. Visual merchandising is important because sales can be negatively affected if items are not displayed correctly. (E) Administration 40
    • Administrative work isn’t the most exciting of tasks that a merchandiser must perform, but it is essential. A great deal of people management and proper paperwork is necessary to take a product from its initial concept of arrival to buyers place and finally in the store to the consumer. A buyer may file product specification with measurements sheet, buy sheets, purchase orders, price ticket information and marketing materials. All must be completed with an extreme attention within given time frame. (f) Communication It is essential for a merchandiser to communicate with the buyers regarding the product or the order. Merchandiser should to go through the message received from the buyer and reply on time. In many cases, merchandisers have to provide the status report to the buyers. Also, merchandiser has to communicate with the people that are in house, vendors, contractors and job workers. Only through the right communication and with time management merchandiser can meet deadline for the concerned product and the orders. To understand the Export Procedure in NANCY KRAFT PVT LTD. It is essential that a person engaged in international trade be aware of the various procedures involved. The business of exports is heavily document-oriented & one must get acquainted with the entire procedure. Failure to comply with documentary requirement may lead to financial loss. 41
    • Figure5. 42
    • 2.4.1) Pre-Shipment Procedure 43
    • • On receiving the requisition & purchase order from merchant, documentation department issues an invoice. Two invoices are prepared i.e. commercial invoice & custom invoice. Commercial invoice is prepared for the buyer & Custom invoice is prepared for the Custom authorities of both the countries. • Packing list is prepared which details the goods being shipped. • GSP certificate is prepared if the consignment is exported to EU or countries mentioned in the GSP list. • Buying house inspects the goods & issues an inspection certificate. • Certificate of origin is also issued and attached, if required. • Following documents are given to Customs for their reference: • Custom Invoice • Packing list • IEC certificate • Purchase Order or L/C, if required. • Custom annexure • On receipt of above documents, customs will issue clearance certificate. • After custom clearance a set of documents with custom clearance receipt are sent along with the consignment to the forwarder. Forwarder books the shipment & as per the size of the cartons calculates CBM & decides which container to be used. 44
    • • Following documents are sent to buying house for their reference, as per buyer’s requirement: • Invoice • Packing List • GSP (if exports to Europe) • Certificate of Origin (if required) • Wearing Apparel sheet • A copy of FCR/ Airway Bill/ Bill of Lading • Buying house then intimates the buyer about the shipment & gives the details regarding it. Buying house will send a set of these documents to the buyer. • Buyer collects the consignment from the destination port by showing the following documents: • Invoice • Packing List • Bill of lading/ FCR/ Airway Bill • On shipment of goods, exporter will send the documents to the importer’s bank. Post-Shipment Procedure • A foreign buyer will make the payment in two ways: 45
    • • TT ( telegraphic transfer) i.e. Wire Transfer – (Advance payment, as per the clause – 50% advance & remaining 50% on shipment) • Letter of Credit • If the payment terms are a confirmed L/C then the payment will be made by the foreign bank on receiving the following documents: • Invoice • Packing list • B/L • Any other required by the buyer or the country of import. The payment terms can be: • At Sight • Within 15 days from Bill of Lading or Airway Bill date. • Within 30 days from Bill of Lading or Airway Bill date. • Within 60 days from Bill of Lading or Airway Bill date. • Within 90 days from Bill of Lading or Airway Bill date. • After shipment, exporter sends the documents to the buyer’s bank for payment. As the buyer’s bank receive the documents it will confirm with the buyer for release of payment. On confirmation, it will make the payment in the foreign currency. The transaction will be Bank to Bank. 46
    • • The domestic branch will credit the exporter’s account, as against the respective purchase order or invoice, in Indian rupees by converting the foreign currency as per the current bank rate. • If the payment is through wire transfer, the payment will be made as per the terms agreed by the exporter (Advance payment, as per the clause – 50% advance & remaining 50% on shipment). 2.4.3) Export Documents: An export trade transaction distinguishes itself from a domestic trade transaction in more than one way. One of the most significant variations between the two arises on account of the much more intensive documentation work. The documents mentioned in the pre & post shipment procedure are discussed below: 1. Invoice: An invoice or bill is a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment terms. The buyer has a maximum amount of days to pay these goods and are sometimes offered a discount if paid before. In the rental industry, an invoice must include a specific reference to the duration of the time being billed, so rather than quantity, price and discount the invoicing amount is based on quantity, price, discount and duration. Generally speaking each line of a rental invoice will refer to the actual hours, days, weeks, months, etc being billed. 47
    • From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice. The document indicates the buyer and seller, but the term invoice indicates money is owed or owing. In English, the context of the term invoice is usually used to clarify its meaning, such as "We sent them an invoice" (they owe us money) or "We received an invoice from them" (we owe them money).Invoice are of 3 types: a. Commercial invoice: A commercial invoice is a document used in foreign trade. It is used as a customs declaration provided by the person or corporation that is exporting an item across international borders. Although there is no standard format, the document must include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the Harmonized System codes for those goods. A commercial invoice must also include a statement certifying that the invoice is true, and a signature. A commercial invoice is used to calculate tariffs, international commercial terms (like the Cost in a CIF) and is commonly used for customs purposes. Normally, the invoice is prepared first, & several other documents are then prepared by deriving information from the invoice b. Consular invoice: It is certification by a consul or Government official covering an international shipment of goods. It ensures that exporter’s trade papers are in order & the goods being shipped do not violate any law or trade restrictions. 48
    • c. Customs invoice: It is an invoice made on specified format for the Custom officials to determine the value etc. as prescribed by the authorities of the importing country. 2. Packing list: A shipping list, packing list, waybill, packing slip (also known as a bill of parcel, unpacking note, packaging slip, (delivery) docket, delivery list, manifest or customer receipt, is a shipping document that accompanies delivery packages, usually inside an attached shipping pouch or inside the package itself. It commonly includes an itemized detail of the package contents and does not include customer pricing. It serves to inform all parties, including transport agencies, government authorities, and customers, about the contents of the package. It helps them deal with the package accordingly. It shows the details of goods contained in each parcel / shipment. Considerably more detailed and informative than a standard domestic packing list, it itemizes the material in each individual package and indicates the type of package, such as a box, crate, drum or carton. Both commercial stationers and freight forwarders carry packing list forms. 3. Certificate of Inspection: – Pre-shipment inspection, also called pre shipment inspection or PSI, is an important and reliable quality Control method for checking goods' quality while clients buy from the suppliers. After ordering a number of articles, the buyer lets a third party control the ordered goods before they are dispatched to him. Normally an independent inspection company is assigned with the task of the PSI, as it is in the interest of the buyer that somebody not 49
    • connected with the deal in any way verifies the amount and quality. This way the buyer makes sure, he gets the goods he paid for. Although increasing numbers of clients would like to collect suppliers' information from the Internet, this contains high risks because it is not a face-to-face transaction, and Internet phishing and fraud can corrupt it. Pre-shipment inspection can greatly avoid this risk and ensure clients get quality products from suppliers. The pre-shipment inspection is normally agreed between a buyer, a supplier, and a bank, and it can be used to initiate payment for a letter of credit. A PSI can be performed at different stages:  Checking the total amount of goods and packing  Controlling the quality and/or consistency of goods  Verifying compliance with the standards of the destination country (e.g. ASME or CE mark) The first stage is often performed by the transport company, but for the latter two stages a proper inspection company is needed. Similarly, if between the buyer and seller money transfer via a letter of credit is agreed upon, it is necessary to assign a reputable inspection company. In case of the letter of credit, after inspection of the goods, an inspection certificate is sent to the bank issuing the letter of credit and the buyer, initiating the money transfer. Inspection companies are classified in two classes: 50
    • - Free-market companies: These are privately owned companies, which sell their services to the market. Danger with these might be, especially if it is a smaller company, that they might be paid as well by the manufacturer, thus working in his interest. - State owned inspection companies: Only very few companies operating on the market are state-owned or partly state-owned. The shareholding of governmental institutions guarantees the independence and objectivity. A higher form of the PSI is called expediting, in this the dates of delivery and the production are controlled as well. Some countries, like Botswana require PSIs for all goods entering the country in order to fight corruption. In these cases the PSI must be performed by the company designated by the country. 4. Certificate of Origin:- A Certificate of Origin (often abbreviated to CO or COO) is a document used in international trade. It traditionally states from what country the shipped goods originate, but "originate" in a CO does not mean the country the goods are shipped from, but the country where the goods are actually made. This raises a definition problem in cases where less than 100% of the raw materials and processes and added value are not all from one country. An often used practice is that if more than 50% of the cost of producing the goods originate from one country, that country is acceptable as the country of origin (then the "national content" is more than 50%). In various international agreements, other percentages of national content are acceptable. This 51
    • document has a dedicated equivalent for the (international) trade in the economic service of electricity called Guarantee of origin. When countries unite in trading agreements, they may allow Certificate of Origin to state the trading bloc as origin, rather than the specific country. The document may be issued by the exporter or be confirmed by another party in the exporting country, such as a notary, a chamber of commerce, or a local consulate of the destination country. In many cases specific government-issued documents are required, such as for shipments under the North American Free Trade Agreement, or for preferential customs treatment in importing countries for shipments of processed/manufactured goods from less developed countries to developed ones (often referred to as the green CO form "A", or GSP (Generalized System of Preferences) Form A CO). The CO is primarily important for classifying the goods in the customs regulations of the importing country, thus defining how much duty shall be paid. But it may also be important for import quota purposes and for statistical purposes, and especially for food shipments, it may also be important for health regulations. Before concluding a transaction, the exporter and importer should always clarify whether a CO is required, and if so, agree on exactly the form and content of the CO. A preferential certificate of origin is a document attesting that goods in a particular shipment are of a certain origin under the definitions of a particular bilateral or multilateral free trade agreement (FTA). This certificate is required by a country's customs authority in deciding whether the imports should benefit from 52
    • preferential treatment in accordance with special trading areas or customs unions such as the European Union or the North American Free Trade Agreement (NAFTA) or before anti-dumping taxes are enforced. The definition of "Country of Origin" and "Preferential Origin" are different. The European Union for example generally determines the (non-preferential) origin country by the location of which the last major manufacturing stage took place in the products production (in legal terms: "last substantial transformation"). Whether a product has preferential origin depends on the rules of any particular FTA being applied, these rules can be value based or tariff shift based. The FTA rules are commonly called "Origin Protocols". The Origin Protocols of any given FTA will determine a rule for each manufactured product, based on its HTS (Harmonized Tariff Schedule) code. Each and every rule will provide several options to calculate whether the product has preferential origin or not. Each rule is also accompanied by an exclusion rule that defines in which cases the product cannot obtain preferential status at all. A typical value based rule might read: raw materials, imported from countries that are not members of this FTA, used in production do not make up for more than 25% of the Ex- Works value of the finished product. A typical tariff shift rule might read: none of the raw materials, imported from countries that are not members of this FTA, used in production may have the same HTS code as the finished product. 53
    • The certificate of origin must be signed by the exporter, and, for a small number of countries, also validated by a Chamber of Commerce or local consulate of the destination country and notarized. Chambers of Commerce offer certificate of origin services, but their letterhead certificate is still only legalized by another person, such as a notary public. Companies may consult the WCN Chamber of Commerce Directory to find their nearest chamber who may offer this service. . Certificate of origin is required when: - • The goods produced in a particular country are subject to’ preferential tariff rates in the foreign market at the time importation. • The goods produced in a particular country are banned for import in the foreign market. 5. GSP:- The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization (WTO), (formerly, the General Agreement on Tariffs and Trade or GATT). Specifically, it's a system of exemption from the most favored nation principle (MFN) that obliges WTO member countries to treat the imports of all other WTO member countries no worse than they treat the imports of their "most favored" trading partner. In essence, MFN requires WTO member countries to treat imports coming from all other WTO member countries equally, that is, by imposing equal tariffs on them, etc. 54
    • GSP exempts WTO member countries from MFN for the purpose of lowering tariffs for the least developed countries (without also doing so for rich countries). The idea of tariff preferences for developing countries was the subject of considerable discussion within UNCTAD in the 1960s. Among other concerns, developing countries claimed that MFN was creating a disincentive for richer countries to reduce and eliminate tariffs and other trade restrictions with enough speed to benefit developing countries. In 1971, the GATT followed the lead of UNCTAD and enacted two waivers to the MFN which permitted tariff preferences to be granted to developing country goods. Both these waivers were limited in time to ten years. In 1979, the GATT established a permanent exemption to the MFN obligation by way of the enabling clause. This exemption allowed contracting parties to the GATT (the equivalent of today's WTO members) to establish systems of trade preferences for other countries, with the caveat that these systems had to be "generalized, nondiscriminatory and nonreciprocal' with respect to the countries they benefited (so-called "beneficiary" countries) Countries were not supposed to set up GSP programs that benefited just a few of their "friends.' From the perspective of developing countries as a group, GSP programs have been a mixed success. On one hand, most rich countries have complied with the obligation to generalize their programs by offering benefits to a large swath of beneficiaries, generally including nearly every non-OECD member state. Certainly, every GSP program imposes some restrictions. The United States, for instance, has excluded countries from GSP coverage for reasons such as being communist (Vietnam), being placed on the U.S. State Department's list of countries that support terrorism (Libya), and failing to respect U.S. intellectual property laws. 55
    • But more significant is that most GSP programs are not completely generalized with respect to products. That is, they don't cover products of greatest export interest to low- income developing countries lacking natural resources. And this is by design. In the United States and many other rich countries, domestic producers of "simple" manufactures, such as textiles, leather goods, ceramics, glass and steel, have long claimed that they could not compete with large quantities of imports. Thus, such products have been categorically excluded from GSP coverage under the U.S. and many other GSP programs. Unfortunately, these excluded products are precisely the kinds of manufactures that most developing countries are able to export. (Most developing countries cannot efficiently produce things like locomotives or telecommunications satellites, but they can make shirts.) Even in the face of its limitations, it would not be accurate to conclude that GSP has failed to benefit developing countries. Rather, it is the case that GSP has benefited some developing countries a lot and others very little. Specifically, for most of its history, GSP has benefited "richer developing" countries - in early years Mexico, Taiwan, Hong Kong, Singapore, and Malaysia, more recently Brazil and India - while providing virtually no assistance to the world's least developed countries, such as Haiti, Nepal, and most countries in sub-Saharan Africa. The U.S., however, has closed some of these gaps through supplemental preference programs like the African Growth and Opportunity Act and a newer program for Haiti, and Europe has done the same with Everything But Arms. More generally, since the early 1990s a historic change affecting developing countries has occurred within the WTO. Namely, WTO rules have been extended to cover both 56
    • textiles and agricultural products. For nearly all of the WTO's (and GATT's) existence, which started in 1948, textiles and agricultural products were excluded from WTO/GATT coverage because they were so sensitive to GATT's primary promoters, the United States and Europe. But now that situation has changed. Under new WTO rules, many textiles tariffs and quotas already have been eliminated, and liberalization of trade policy also is occurring on the complex agricultural front. Given that textiles and agricultural products - especially processed agricultural products, such as flour as opposed to wheat - are the main products that many of the world's least developed countries are able to export competitively and lucratively, these and similar changes at the WTO may someday mean that the limitations of GSP programs will be resolved - outside of the rubric of GSP itself. It certifies that the goods being exported have originated/ been manufactured in a particular country. It is mainly useful for taking advantage of preferential duty concession, if available. It is applicable in countries forming European Union. 6. IEC Certificate: It is an Import-Export Code Certificate issued by DGFT, Ministry of Commerce, Government of India. It is a 10 digit code number. No exports or imports will be effected without the IEC code. It is mandatory for every exporter. 7. Wearing Apparel Sheet: It is like a check list which gives the detail regarding the content & design of the garment packed. 8. Bill of Lading: A bill of lading (BL - sometimes referred to as BOL or B/L) is a document issued by a carrier to a shipper, acknowledging that non specified goods have been received on board as cargo for conveyance to a named place for delivery to the consignee who is usually identified. A through bill of lading involves the use of at 57
    • least two different modes of transport from road, rail, air, and sea. The term derives from the verb "to lade" which means to load a cargo onto a ship or other form of transportation. A bill of lading can be used as a traded object. The standard short form bill of lading is evidence of the contract of carriage of goods and it serves a number of purposes: • It is evidence that a valid contract of carriage, or a chartering contract, exists, and it may incorporate the full terms of the contract between the consignor and the carrier by reference (i.e. the short form simply refers to the main contract as an existing document, whereas the long form of a bill of lading (connaissement integral) issued by the carrier sets out all the terms of the contract of carriage; • It is a receipt signed by the carrier confirming whether goods matching the contract description have been received in good condition (a bill will be described as clean if the goods have been received on board in apparent good condition and stowed ready for transport); and • It is also a document of transfer, being freely transferable but not a negotiable instrument in the legal sense, i.e. it governs all the legal aspects of physical carriage, and, like a cheque or other negotiable instrument, it may be endorsed affecting ownership of the goods actually being carried. This matches everyday experience in that the contract a person might make with a commercial carrier like FedEx for mostly airway parcels, is separate from any contract for the sale of the goods to be carried; however, it binds the carrier to its terms, irrespectively of who the actual holder of the B/L, and owner of the goods, may be at a specific moment. 58
    • The BL must contain the following information:  Name of the shipping company;  Flag of nationality;  Shipper's name;  Order and notify party;  Description of goods;  Gross/net/tare weight; and  Freight rate/measurements and weighment of goods/total freight While an air way bill (AWB) must have the name and address of the consignee, a BL may be consigned to the order of the shipper. Where the word order appears in the consignee box, the shipper may endorse it in blank or to a named transferee. A BL endorsed in blank is transferable by delivery. Once the goods arrive at the destination they will be released to the bearer or the endorsee of the original bill of lading. The carrier's duty is to deliver goods to the first person who presents any one of the original BL. The carrier need not require all originals to be submitted before delivery. It is therefore essential that the exporter retains control over the full set of the originals until payment is effected or a bill of exchange is accepted or some other assurance for payment has been made to him. In general, the importer's name is not shown as consignee. The bill of lading has also provision for incorporating notify party. This is the person whom the shipping company will notify on arrival of the goods at destination. The BL also contains other details such as the name of the carrying vessel and its flag of nationality, the marks 59
    • and numbers on the packages in which the goods are packed, a brief description of the goods, the number of packages, their weight and measurement, whether freight costs have been paid or whether payment of freight is due on arrival at the destination. The particulars of the container in which goods are stuffed are also mentioned in case of containerized cargo. The document is dated and signed by the carrier or its agent. The date of the BL is deemed to be the date of shipment. If the date on which the goods are loaded on board is different from the date of the bill of lading then the actual date of loading on board will be evidenced by a notation the BL. In certain cases a carrier may issue a separate on board certificate to the shipper. . 9. Airway Bill: The Air Waybill (AWB) is the most important document issued by a carrier either directly or through its authorized agent. It is a non-negotiable transport document. It covers transport of cargo from airport to airport. By accepting a shipment an IATA cargo agent is acting on behalf of the carrier whose air waybill is issued. AWBs have eleven digit numbers which can be used to make bookings, check the status of delivery, and current position of the shipment. The number consists of: 1. The first three digits are the airline prefix. Each airline has been assigned a 3-digit number by IATA, so from the prefix we know which airline has issued the document. 2. The next seven digits are the running number/s - one number for each consignment 3. The last digit is what is called the check digit. It is arrived at in the following manner: 60
    • The seven digit running numbers are divided by 7, by using a long division calculation. The remainder becomes the check digit. That is why no AWB number ends with a figure greater than 6. Air waybills are issued in sets of different colours. The first three copies are classified as originals. The first original, blue in color, is the shipper’s copy. The second, colored blue, is retained by the issuing carrier. The third, colored orange, is the consignee’s copy. A yellow copy acts as the delivery receipt, or proof of delivery*. The other copies are all white There are several purposes that an air waybill serves, but its main functions are: *Contract of Carriage. Behind every original of the AWB are conditions of contract for carriage *Evidence of Receipt of Goods When the shipper delivers goods to be forwarded, he will get a receipt. The receipt is proof that the shipment was handed over in good order and condition and also that the shipping instructions, as contained in the Shipper's Letter of Instructions, are acceptable. After completion, an original copy of the air waybill is given to the shipper as evidence of the acceptance of goods and as proof of contract of carriage *Freight Bill The air waybill may be used as a bill or invoice together with supporting documents since it may indicate charges to be paid by the consignee, charges due to the agent or the carrier. An original copy of the air waybill is used for the carrier's accounting *Certificate of Insurance 61
    • The air waybill may also serve as an evidence if the carrier is in a position to insure the shipment and is requested to do so by the shipper *Customs Declaration Although customs authorities require various documents like a commercial invoice, packing list, etc. the air waybill too is proof of the freight amount billed for the goods carried and may be needed to be presented for customs clearance The format of the air waybill has been designed by IATA and these can be used for both domestic as well as international transportation. These are available in two forms, viz. the airline logo equipped air waybill and the neutral air waybill. Usually, airline air waybills are distributed to IATA cargo agents by IATA airlines. The air waybills show:  the carrier's name  its head office address  its logo  the pre printed eleven digit air waybill number It is also possible to complete an air waybill through a computerized system. Agents all over the world are now using their own in-house computer systems to issue airlines' and freight forwarders' own air waybills. IATA cargo agents usually hold air waybills of several carriers. However, it gradually became difficult to accommodate these pre- numbered air waybills with the printed identification in the computer system. Therefore a neutral air waybill was created. Both types of air waybills have the same format and 62
    • layout. However, the neutral air waybill does not bear any pre-printed individual name, head office address, logo and serial number. 10. Mate's Receipt: Mate's receipt is a receipt issued by the Commanding Officer of the ship when the cargo is loaded on the ship. The mate's receipt is a prima facie evidence that goods are loaded in the vessel. The mate's receipt is first handed over to the Port Trust Authorities. After making payment of all port dues, the exporter or his agent collects the mate's receipt from the Port Trust Authorities. The mate's receipt is freely transferable. It must be handed over to the shipping company in order to get the bill of lading. Bill of lading is prepared on the basis of the mate's receipt. 11. Shipping Bill: Shipping bill is the main customs document, required by the customs authorities for granting permission for the shipment of goods. The cargo is moved inside the dock area only after the shipping bill is duly stamped, i.e. certified by the customs. Shipping bill is normally prepared in five copies: • Customs copy. • Drawback copy. • Export promotion copy. • Port trust copy. • Exporter's copy. 63
    • 12. Letter of Credit: This method of payment has become the most popular form in recent times; it is more secured as company to other methods of payment (other than advance payment). A letter of credit can be defined as “an undertaking by importer’s bank stating that payment will be made to the exporter if the required documents are presented to the bank within the variety of the L/C”. Realisation of Export Incentives: The incentives the exporter will get in today’s context and the manner in which they can be obtained are as follows: Duty Drawback: This refers to a rate fixed by the government based on the customs duty and excise duty components which go into the production of an export product. This does not refer to the finished product excise duty, but to the excise and customs duty paid on all the raw materials and components which go into the production. Every year the Department calls for latest data on these through the Export Promotion Councils, determines the drawback rate and publish it for the exporters by June of the year. When the shipping bill is submitted to the customs for the shipping of goods, it consists of a set of five copies. The duplicate copy is known as the Drawback copy’, and this will contain all the 52 details like description of the product, the port of destination, the total amount of drawback as per government notification etc. this copy is endorsement by customs and sent directly by them to the drawback cell in the customs department situated in the port from which goods were exported. The exporter can approach this cell for his drawback payment with any additional details they may ask for. 64
    • Excise Rebate: Finished goods which are subject to excise duty for home consumption are exempt from the duty when they are exported. The scheme is also applicable where the exported goods contain excisable goods in their manufacture. The exporter can avail of this facility in either of the following methods, where finished goods are excisable: i. Export under Bond: Under this method, the exporter has to execute a bond in favour of Central Excise Authorities. The amount of the bond will be equal to the duty on the estimated maximum outstanding of goods leaving the factory without paying the duty and pending acceptance of their proof of export by excise authorities. No excise need to be paid by the exporter. ii. Refund of Duty: If the duty is already paid, after export is made, the exporter should make a claim with the Central Excise Authorities. After verification of the claim, the excise authorities will arrange for the refund of the central excise. Where the excisable materials have been used in the manufacture, similar to the above arrangement, the exporter can avail of the facility of manufacturing under bond or he can claim refund after duty is paid. Contents of a Letter Of Credit 65
    • A letter of credit is an important instrument in realizing the payment against exports. So, needless to mention that the letter of credit when established by the importer must contain all necessary details which should take care of the interest of Importer as well as Exporter. Let us see shat a letter of credit should contain in the interest of the exporter. This is only an illustrative list.  Name and address of the bank establishing the letter of credit  letter of credit number and date  The letter of credit is irrevocable  Date of expiry and place of expiry  Value of the credit  Product details to be shipped  Port of loading and discharge  Mode of transport  Final date of shipment  Details of goods to be exported like description of the product, quantity, unit rate, terms of shipment like CIF, FOB etc.  Type of packing  Documents to be submitted to the bank upon shipment  Tolerance level for both quantity and value  If L/C is restricted for negotiation  Reimbursement clause 66
    • 67
    • Terms of Shipments – Incoterms The International Chamber of Commerce (ICC ) has published revisions to its International Commercial Terms, also known as INCOTERMS®, that take effect on January 1, 2011. The revised rules, designated "INCOTERMS 2010", contain a series of changes, such as a reduction in the number of terms to 11 from 13. The DAF, DES, DEQ, and DDU designations have been eliminated, while two new terms, Delivered at Terminal (DAT) and Delivered at Place (DAP), have been added. INCOTERMS 2010 also attempt to better take into account the roles cargo security and electronic data interchange now play in international trade. WHAT INCOTERMS ARE - INCOTERMS are a set of three-letter standard trade terms most commonly used in international contracts for the sale of goods. First published in 1936, INCOTERMS provide internationally accepted definitions and rules of interpretation for most common commercial terms. In the US, INCOTERMS are increasingly used in domestic sales contracts rather than UCC shipment and delivery terms. WHAT INCOTERMS DO - INCOTERMS inform the sales contract by defining the respective obligations, costs and risks involved in the delivery of goods from the Seller to the Buyer. 68
    • WHAT INCOTERMS DO NOT DO - INCOTERMS by themselves DO NOT: • Constitute a contract; • Supersede the law governing the contract; • Define where title transfers; nor, • Address the price payable, currency or credit terms. These items are defined by the express terms in the sales contract and by the governing law. INCOTERMS 2010 are grouped into two classes: 1. TERMS FOR ANY TRANSPORT MODE • EXW - EX WORKS (... named place of delivery)  The Seller's only responsibility is to make the goods available at the Seller's premises. The Buyer bears full costs and risks of moving the goods from there to destination. • FCA - FREE CARRIER (... named place of delivery)  The Seller delivers the goods, cleared for export, to the carrier selected by the Buyer. The Seller loads the goods if the carrier pickup is at the Seller's premises. From that point, the Buyer bears the costs and risks of moving the goods to destination. 69
    • • CPT - CARRIAGE PAID TO (... named place of destination)  The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage. • CIP - CARRIAGE AND INSURANCE PAID TO (... named place of destination)  The Seller pays for moving the goods to destination. From the time the goods are transferred to the first carrier, the Buyer bears the risks of loss or damage. The Seller, however, purchases the cargo insurance. • DAT - DELIVERED AT TERMINAL (... named terminal at port or place of destination)  The Seller delivers when the goods, once unloaded from the arriving means of transport, are placed at the Buyer's disposal at a named terminal at the named port or place of destination. "Terminal" includes any place, whether covered or not, such as a quay, warehouse, container yard or road, rail or air cargo terminal. The Seller bears all risks involved in bringing the goods to and unloading them at the terminal at the named port or place of destination. • DAP - DELIVERED AT PLACE (... named place of destination)  The Seller delivers when the goods are placed at the Buyer's disposal on the arriving means of transport ready for unloading at the names place of destination. The Seller bears all risks involved in bringing the goods to the named place. 70
    • • DDP - DELIVERED DUTY PAID (... named place)  The Seller delivers the goods -cleared for import - to the Buyer at destination. The Seller bears all costs and risks of moving the goods to destination, including the payment of Customs duties and taxes. 2. MARITIME-ONLY TERMS • FAS - FREE ALONGSIDE SHIP (... named port of shipment)  The Seller delivers the goods to the origin port. From that point, the Buyer bears all costs and risks of loss or damage. • FOB - FREE ON BOARD (... named port of shipment)  The Seller delivers the goods on board the ship and clears the goods for export. From that point, the Buyer bears all costs and risks of loss or damage. • CFR - COST AND FREIGHT (... named port of destination)  The Seller clears the goods for export and pays the costs of moving the goods to destination. The Buyer bears all risks of loss or damage. • CIF - COST INSURANCE AND FREIGHT (... named port of destination)  The Seller clears the goods for export and pays the costs of moving the goods to the port of destination. The Buyer bears all risks of loss or damage. The Seller, however, purchases the cargo insurance. 71
    • PRACTICE POINTS • BE SPECIFIC:  If you use INCOTERMS in the Sales Contract or Purchase Order, you should identify the appropriate INCOTERM Rule [e.g. FCA, CPT, etc.], state "INCOTERMS 2010" and specify the place or port as precisely as possible. • RECOGNIZE WHERE THE RISK OF LOSS TRANSFERS:  A common misconception when the Seller pays the freight is that the Seller has the risk of loss until the goods are delivered to the place or port specified on the bill of lading or airway bill. Actually, when using INCOTERMS CPT, CIP, CFR or CIF, risk transfers to the Buyer when the Seller hands the goods over to the carrier at origin, not when the goods reach the place or port of destination.  Understand that under CIP and CIF, the Seller is only obliged to obtain • UNDERSTAND WHO HAS RESPONSIBILITY FOR LOADING AND UNLOADING CHARGES. FOR EXAMPLE:  DAT obliges the Seller to place the goods at the Buyer's disposal after unloading at the named terminal at port or place of destination. 72
    •  DAP obliges the Seller to place the goods at the Buyer's disposal on the delivering carrier ready for unloading at the named place of destination.  CPT, CIP, CFR or CIF on the other hand, require the parties to identify as precisely as possible the point at the agreed port of destination because the costs up to that point are for the account of the Seller. • UNDERSTAND WHO HAS RESPONSIBILITY FOR U.S. CUSTOMS ENTRY DECLARATIONS:  DDP is the only INCOTERM where the Seller has responsibility for U.S. Customs entry declarations.  IMPORTANT NOTE: An important factor to be considered when asking the Seller to be responsible for international carriage, is if the goods ship by Ocean Freight, an Importer Security Filing (ISF) must be electronically submitted to Customs 24 hours before the cargo is laden on the vessel bringing the cargo to the U.S. The Buyer should specify in the contract either (a) the shipper is responsible for the ISF or (b) the Seller is responsible for providing the required data in a timely manner (i.e. 72 hrs before lading) to the Buyer’s appointed agent (e.g. Customs Broker). In our experience, when the broker and the international forwarder are unrelated parties, this requirement is honored more in the breach than in the observance. The Buyer should indemnify against the penalties (US$5,000) for filing a late, inaccurate or incomplete ISF. The ISF does not apply at this time to airfreight shipments. 73
    • • DETERMINE THE IMPORTANCE OF SUPPLY CHAIN VISIBILITY  When CPT, CIP, CFR or CIF are used the Seller fulfils its obligation to deliver When it hands the goods over to the carrier, not when the goods reach the place of destination. INCOTERMS FLOW CHART [FIGURE 6.] 74
    • FINDINGS AND INFERENCE • The documentation paper works are simplified than the previous years. • This has led to the emergence of a business environment ,widening both the scope and scale of opportunities open to sellers • Though many documents prevail in documentation, only certain documents play a vital part in the company. • It uses the Inco terms as FOB, EXW and C&F mostly. • From the company’s procedure, the following has been inferred; 75
    • Forward System followed in NANCY KRAFTS PVT LT 76
    • • Europe Countries offer tax benefits for the imports. This is not provided by the U.S. • 8-10% is kept as the profit margin. • The firm pays a tax of 33% for the imports from Taiwan and China. • The shipment carry days are 18days to Europe and 26-30days to U.S. • The firm pays its bank – Canara Bank, an amount of $25 for each FOREX conversion. • There seem to be a relative increase in the sales turnover of PON SANGER EXPORTS up to 2008 and a noticeable fall during the year 2009. • the product wise sales turn over and variations are fluctuating year by year. • From the past export analysis for the country United States, the export variations are positive with an increase of Rs.9.64 crores from the year 2008. • From the past export analysis for the country Europe, the export has drastically reduced from the year 2008 to 2009 with the variation of Rs.9.13 crores. • From the past export analysis for the country Canada, the exports reduced year by year except for the year 2008 which increased with the variation of Rs.5.66 crores. • As an overall study, we can find that the firm has enjoyed more benefits and sought more • profits in the year 2008. • Year 2009 has been seen as less profitable than the year 2007 and 2008. 77
    • • From the future trend analysis, the export of the company increases year by year. CONCLUSION The study was conducted to know the process involved in an apparel firm and to study about The various departmental functions which coordinates to complete the export cycle. The export Procedure of the firm has been seen clearly and other related aspect has been known.From the analysis it is found that the performance of the company is satisfactory, but the company is facing problem regarding excess of documents which causes delay in transportation. Therefore necessary steps should be taken to limit the number of documents so that the company can make distribution at right for the company and it helps the company to have competitive advantage over its competitors. There are signs of good future for NANCY KRAFTS PVT LTD, because of growing demand for Indian garments in the world market. 78
    • RECOMMENDATION TO THE COMPANY • As only certain documents are put in use, the other documents have no power in the company which will be supportive to reduce the export procedures. • As many of the documents are part in the use of documentation and procedures which may • delay and tend to loss the customers. • The company has to speed up the paper work. • Update of available export incentives. • The company should check the exchange rates before entering into particular markets which will help in achieving more profits. • The company can improve its sales by improving its quality and promotional activities. • The company has to improve their infrastructure facilities which will increase the exports. 79
    • • If all the processing units are brought under one roof, it will reduce the processing time of • goods and it will lead to timely delivery of goods to the customers. try for ISO certifications, which will value the company higher. • Require more knowledge on the incentives offered by the Government. • Can opt for Market Development Assistance from the Government of India, for Exhibition • and Stalls overseas. BIBLIOGRAPHY Books 1. Balagopal T.A.S, “Export Management”, Himalaya Publishing House, nineteenth edition 2007 2. Jeevanandam.C., “Foreign Exchange- practice, concepts and control”, Sultan Chand and Sons, tenth edition 2007 3. Kothari C.R., “Research Methodology, Method & techniques”, New Age International. Pvt.Ltd, Second Edition, 1985 4. Mahajan M.I.,” A guide on export policy, procedure and documentation”, Tata McGraw hill publishing company ltd, Third Edition 2005 5. Dr.Varma.M.M. & Aggarwal R.K, “Foreign Trade Management”, King Book, second edition 2006 80
    • 6. Puri, V. K., “Exporters’ Guidelines, A Basic Book on How to Export as per Govt. Policy & Procedures”, 2nd Edition, JBA Publishers, 2008-09 7. Paul, Justin & Aserkar, Rajiv, “Export Import Management”, 2nd Edition, Oxford University Press, 2009, Chapter – 2, pp. 17-29. 8.Malhotra, Naresh K., Marketing Research, An Applied Orientation, Fourth Edition, Pearson Prentice Hall, 2005, Part II, pp. 71-340. 9.Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, CII, Business Standard Reference Site  http://www.sebi.gov.in/dp/splfinal.pdf as retrieved on April 20, 2010  Overcoming the obstacles to export documentation1, Thomas A. Cook.  http://search.barnesandnoble.com/Export-Import-Procedures-and- Documentation/Thomas-E-Johnson  Export Documentation Made Easy2, Laurel Delaney  http://www.allbusiness.com/business-planning-structures/starting- a- business/3878207-1.html  Export Trade Sector Using Available Trade Finance Tools and Resources5, Koch and John.  http://www.allbusiness.com/trade-development/trade-development- finance/8890466-1.html  True cost of export documentation7, Corinne Campbell.  http://www.dynamicbusiness.com/articles/articles-export/true-cost-of-export- 81
    • documentation2043.html  Guide to Inco terms 2000, Posner and Martin8.  http://www.allbusiness.com/legal/international-law-foreign-investmentfinance/ 918569-1.html  All Industry Rates of Duty Drawback, 2008-099.  http://www.cmai.in/download/circulars/Pre_Budget_Memorandum.pdf  Foreign Trade Policy 27th August 2009 - 31st March 2014  http://dgftcom.nic.in/exim/2000/policy/ftp-plcontent0910.pdf  http://www.sebi.gov.in/dp/splfinal.pdf as retrieved on june 21, 2011  http://www.spllimited.com/index.htm as retrieved on July 10, 2011  http://en.wikipedia.org  http://www.citiindia.com/  http://www2.miq.com/cms/resource_library/files/7f52c8f0b02d4aff/incoterms_20 10.pdf  http://nisearch.com/search/pdf/supply+chain+management+in+retail+industry+ literature+review 82
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