Project report on Bharat forge


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Project report on Bharat forge

  2. 2. ACKNOWLEDEMENTIt has been honour and privilege to do my project on the subjectIMPORT AND EXPORT OF BHARAT FORGE. I take this anopportunity to communicate my sincere thanks and regards toeveryone who had contribute to my project and helped mesuccessfully completion.This project report couldn’t have been completed without theguidance of my project guide PROF. APEKSHA SOMWNSHI.I express my sincere thanks and gratitude to the above stated personwho have helped in directly and also to those who have helped medirectly.At last I am thankful to honourable director DR. RUPALI JAIN togive us an opportunity to experience the concrete reality of theproject. ESHAN RASTOGI PGDIEM SIOM, PUNE
  3. 3. TABLE OF CONTENTSS.NO. CONTENTS 1 Registered name of company 2 Mission & Vision Statement 3 Year Of Establishment 4 Promoters 5 Current Turnover 6 Growth Statistics Over Past Five Year 7 Major Product Line 8 Major Brands Offered Under Each Product Line 9 Operation Location Of Subsidiaries, Branch Office, Corporate Office 10 Number of Employees 11 Recognition/Awards 12 Market share 13 Major Competitors 14 Corporate Strategy 15 Total Export F.Y 2010 – 2011 16 Major Importing/Exporting Countries 17 List Of Goods/Services Exported By The Company 18 Future Plans 19 Export Import Procedures 20 CSR Activities
  5. 5. REGISTERED NAME OF THE COMPANYBharat Forge Ltd., the flagship company of the US $ 1.25 billionKalyani Group, is a Full Service Supplier of engine & chassiscomponents. It is the largest exporter of auto components from Indiaand leading chassis component manufacturer in the world.With manufacturing facilities spread over 6 locations - two in India,three in Germany and one in North America, thecompany manufactures a wide range of safety and critical componentsfor passenger cars, commercial vehicles and diesel engines. Thecompany also manufactures specialized components for the railway,construction equipment, oil & gas and other industries. It is capable ofproducing large volume parts in both steel and aluminum. BharatForge has built up a strong capability in design and engineering,including a full fledged product testing and validation facility, whichgives Bharat Forge a Full Service Supply Capability -from product conceptualization to designing to manufacturingand product testing & validation.
  6. 6. MISSION & VISION STATEMENT Ø To be a world class organization and a leader in every aspect of our business Ø To aggressively grow business by accessing global markets Ø To deliver products and services of uncompromising quality and integrity consistent with the Kalyani brand and image Ø To be committed to listening and responding to the needs of our customers, associates and business partners and honoring their individual value Ø To be committed to an entrepreneurial spirit that fuels the growth of our companies and increases shareholder value.YEAR OF ESTABLISHMENTBharat Forge Limited established in the year 1961
  7. 7. PROMOTERSSr.No Name the Director Category B.N. Kalyani 1 Chairman & Managing Promoter, Executive and Managing Director Director 2 S.M. Thakore Non-executive, Independent 3 S.D. Kulkarni Non-executive, Independent 4 P.G. Pawar Non-executive, Independent 5 Dr. Uwe Loos Non-executive, Independent 6 P.C. Bhalerao Non-executive Director 7 Lalita D. Gupte Non-executive, Independent 8 P.H. Ravikumar Non-executive, Independent 9 Alan Spencer Non-executive, Independent 10 Naresh Narad* Non-executive, Independent 11 Dr. T. Mukherjee ** Non-executive, Independent G.K. Agarwal 12 Deputy Managing Executive Director Amit Kalyani 13 Executive Executive Director B.P. Kalyani 14 Executive Executive Director S.E. Tandale 15 Executive Executive Director Sunil Kumar Chaturvedi 16 Executive Executive Director
  8. 8. CURRENT TURNOVER Bharat Forge limited current turnover is 1.3$ millionGROWTH STATISICS OVER PAST FIVE YEARToday, Bharat Forge operates in three continents: Europe,North America and Asia. Over the last four years, theCompany has successfully made several acquisitions: Carl DanPeddinghaus and CDP Aluminiumtechnik (in Germany), ImatraKilsta AB (in Sweden), and Federal Forge in the USA. BFL alsohas a majority stake in a joint venture with First Auto Works(FAW) called FAW Bharat Forge (Changchun) Company Limitedthat operates in China.These businesses, along with Bharat Forge’s Indian operationsform the global BFL group — whose performance getsreflected in the consolidated accounts of Bharat ForgeLimited.The standalone & consolidated financial performance isdetailed below (figures in Rs Million)
  9. 9. STANDALONE FINANCIAL PERFORMACE OFTHE LAST 5 YEARS FY 2011 FY 2010 FY 2009 FY 2008 FY 2007 Total Income 29,935.47 18,887 21,064 22,849 19,453 EBIDTA 7,623.18 4,693 4,075 6,105 5,485 PBT 4,476.08 1,807 1,577 3,970 3,598 PAT 3,105.67 1,270 1,033 2,736 2,410FINANCIAL PERFORMANCE(CONSOLIDATED) FY FY 2010 FY 2009 FY 2008 FY 2007 FY 2006 2011Total Income 51,544.41 33,787 48,427 47,516 42,752 30,851EBIDTA 8,522.34 3,896 5,214 8,038 7,433 5,889PBT after 4,444.80 (645) 1,107 4,498 4,363 3,925Exceptional ItemPAT after 2,899.06 (634) 583 3,015 2,906 2,505Minority interest
  10. 10. MAJOR PRODUCT LINE Ø Closed Die Forging Ø Crankshaft Ø Front Axle Beams Ø Steering Knuckle Ø Connecting Rods Ø Rocker Arm Ø Transmission Parts Ø Hubs Ø Oil & Gas Ø Open Die Forging
  11. 11. MAJOR BRANDS OFFERED UNDER EACHPRODUCT LINEOPEN DIE FORGINGSThe company currently has one 1600T double column pull-down typepress with material handling, heat treatment facilities and supportingmachining facilities to address the forging needs of the followingsectors.Sugar Industry (Fully /Semi Machined)Steel PlantsMiningFan and PumpTools & Plastic Injection MouldingCement IndustryGear Manufacturing and Material HandlingMarineOil & GasForging IndustryWind Energy
  12. 12. The company is currently expanding its Open Die forging capabilitiesby installing a 4000T press line with material handling and heattreatment facilities.
  13. 13. SUGAR INDUSTRYFully / Semi-Machined · Mill Roller Shafts · Pinion Shafts · Tail Bars · Shredder Shafts · Cane Cutter Shafts · Fibrizor Shafts
  14. 14. STEEL INDUSTRY · Blooming Mill Rolls · Universal Couplings · Wobblers · Roll blanks for Cold Rolling Mills · Hardened Hot Rolling Mill Rolls for slab, plate mills, etc. · Trunnioms
  15. 15. GEAR INDUSTRY · Gear Blanks / Rims · Excavator Axles · Excavator / Shovel Components · Wheel and Gear Shafts
  16. 16. FANS AND PUMPS INDUSTRY · Integral Flange Shaft · Pump Casing · Stainless Steel Pump Shafts · Fluid End
  17. 17. OIL & GAS · Shafts · Casing / Tubing Spools · Open Forge Valve Body / Well Head Blocks · Tube Sheets · Interconnecting Blocks
  18. 18. TOOLS & PLASTIC INJECTION MODULING · P-20 Blocks for Plastic Injection Moulding · H-13 Tool Steel Blocks for Pressure Casting Tools
  19. 19. FORGING INDUSTRY · Die Blocks (DIN 2714 grade) · Crankshafts for upsetters · Container Assembly for Aluminium extrusion · Ready to assemble Hammer Spares like Rams / Tups / Sow Blocks
  20. 20. SEAMLESS TUBE INDUSTRY · Piercing Mill Rows · Mandrel Bars and other toolings
  21. 21. WIND ENERGY · Wind Mill Shaft
  22. 22. CEMENT INDUSTRY · Pinion & Pinion Shafts · Kiln Support Rollers · Tie Rods · Crusher ShaftsMINNING · Conveyor Shafts · PinionsMARINE · Propeller Shafts · Rudder Stock
  24. 24. GLOBAL LOCATIONBranch (India)BFL Corporate / Head Office - PuneBFL DelhiBFL KolkataBFL JamshedpurBFL MumbaiBFL BangaloreBFL Chennai
  25. 25. BHARAT FORGE OFFICESHeadquarters - IndiaPune CantonmentMundhwaPune - 411 036INDIATel: +91-20-26702777Fax: + 91-20-26822387Email: info@bharatforge.comPlant at DaunCDP Bharat Forge GmbHJulius Saxler - Str.4D-54550 Daun / VulkaneifelPhone: ++ 49 (0) 6592 - 9501- 0Fax: ++ 49 (0) 6592 - 9501 -11Plant at EnnepetalCDP Bharat Forge GmbHMittelstr. 64D-58256 EnnepetalPhone: ++ 49 (0)2333-796-0Fax: ++ 49 (0)2333-796-388E-mail: Plant at Brand - Erbisdorf Bharat Forge Aluminiumtechnik GmbH & Co. KG Berthelsdorfer Str. 8 09618 Brand-Erbisdorf (Germany) Tel. 0049 37322 16389 Fax 0049 37322 16333 Email:
  26. 26. Bharat Forge America2807 South Martin Luther King Jr. BlvdLansing, MI 48910Telephone: 517.393.5300Fax : 517.393.6256Bharat Forge Scottish Stampings LimitedNeptune Works, East Park Road,Ayr Scotland KA8 9HRTelephone: ++ 44 (0) 1292 613400Fax : ++ 44 (0) 1292 6134333Bharat Forge Kilsta ABP.O. Box 428, SE-69127 Karskoga,SwedenTelephone: ++ 46 58663200Fax : ++ 46 58663209FAW Bharat Forge (Changchun) Company Ltd118-1 Dong Feng Da JieChangchun MunicipalityJilin ProvincePRC
  27. 27. BHARAT FORGE OFFICES IN INDIAChennai (Madras)Bharat Forge LimitedFagun Mansion 3rd Floor26, Ethiraj SalaiChennai- 600 105Tel : +91-44-28272116Fax: +91-44-28270921Email : bflmds@vsnl.comNew DelhiBharat Forge LimitedAntriksh Bhavan, 14th Floor22 Kasturba Gandhi MargNew Delhi-110 001Tel : +91-11-3312484 / 3312946Fax: / Forge LimitedMittal Towers, B Wing15th Floor, Opp. New Council HallNariman Point,Mumbai - 400 021Tel : +91-22-22830317/22830523Fax: +91-22-22040053Email :
  28. 28. Kolkata (Calcutta)Bharat Forge Limited20 Netaji Subash RoadKolkata - 700 001Tel : +91-33-22305976 / 22306592Fax: +91-33-28500017Email : bflcal@vsnl.netJamshedpurBharat Forge Limited61-A , Rajendra NagarSakchiJamshedpur - 831 001Tel / Fax : +91-657-2426732Email : jsr_bfljsr@sancharnet.inBangaloreBharat Forge Limited23/2, 2nd FloorKammanahalli Main RoadNext To Vinayak TempleOpp Libetrty Shoe MartSt Thomas Town PostBangalore 560084Tel: (080) 25806570Fax: (080) 25806570E-mail:
  29. 29. NUMBER OF EMPLOYEESEmployee Strength is over 10,000
  30. 30. RECOGNITION /AWARDS2011Bharat Forge receives the prestigious ‘Golden Peacock InnovativeProduct / Service Award – 2011’Bharat Forge Limited wins the 6th Annual CIO Awards 2011ITI Khed awarded Educational Excellence AwardBharat Forge receives the Golden Peacock Award for Best HRPractices – 2011Baba Kalyani receives the highest French civilian award : "Chevalierde l’Ordre de la Legion d’HonneurBharat Forge receives India Shining Star CSR AwardChairman, Mr. B N Kalyani honored with the Udyog Ratna Awardfor 2010-112010Bharat Forge Limited honoured with the INS Industrial ExcellenceAwardBharat Forge receives the EEPC India National Award for ExportExcellence 2009 - 2010BABA KALYANI DECORATED WITH COMMANDER FIRSTCLASS OF THE ROYAL ORDER OF THE POLAR STAR2009Bharat Forge receives National Award for Best HR Practices – 2009Bharat Forge receives the Golden Peacock Award for OccupationalHealth and Safety – 2009
  31. 31. 2008Mr B N Kalyani, Chairman & Managing Director, Bharat Forgehonoured with the Prestigious Padma Bhushan Award2006Mr B N Kalyani, Chairman & Managing Director, Bharat Forgehonoured with the 7th Annual Ernst & Young Entrepreneur of theYear Award Manufacturing - 2005Bharat Forge receives the IGCC Award for the Year 2005Mr B N Kalyani, Chairman & Managing Director, Bharat ForgeLimited awarded the Global Entrepreneur of the Year Award.Mr. B N Kalyani Chairman and Managing Director, Bharat Forgereceives the Rashtra Bhushan Puraskar2005Bharat Forge awarded with the Outstanding Organization Award2004Bharat Forge receives the Best Value Creator Company Award at theThird Annual Outlook Money Awards 2004Mr B N Kalyani, Chairman & Managing Director, Bharat Forgereceives the Business Standard CEO of the Year 2004Bharat Forge included in Forbes Best under a Billion list for thethird consecutive year2004Bharat Forge included in Forbes ‘Best under a Billion’ list for thesecond consecutive year
  33. 33. MAJOR COMPETITORS v Aditya Forge Ltd v Ahmednagar Forgings Ltd v BCL Forgings Ltd v EL forge Ltd v Hilton Metal Forging ltd v Kalyani Forge Ltd v LGB Forge Ltd v M M Forgings Ltd v Mahindra Forgings Ltd v Micro Forge ( India) Ltd v Patheja Forgings & Auto Parts Manufactures Ltd v Pradeep Metal Ltd v Rajkumar Forge Ltd v Pamkrishna Forgings Ltd v SS Forging & Engineering Ltd
  34. 34. CORPORATE STRATEGYAt the Kalyani Group, the key to successful marketing is a thoroughunderstanding of the environment in which your business operates,your position in the market place, products and service opportunities,competition, and most of all changing customer need.With a business experience of 27 years, Group Chairman, Mr B NKalyani believes that the ability to innovate and change is critical tothe ongoing success of any business. Anticipating what the future maybring and predicting the needs of customers in a fast changingmarketplace can be extremely difficult; yet that really is the basis ofany strategy.POSITIONING“Kalyani Group Companies are positioned No.1 or No.2 in all mainbusinesses in the Indian Market and are also exporting to internationalOEM’s” Ø 1 in Forging & Machined components Ø 1 in Axle Aggregates in India Ø 1 in Wheels in India Ø 1 in Alloy Steel
  35. 35. TOTAL EXPORT F.Y 2010 – 2011Top‐line growth ahead of estimates: Bharat Forge (BFL) reported26.6% YoY growth in its top-line at Rs9.1bn (PLe-Rs8.7bn) onaccount of an improvement of 57.6% YoY in export revenues atRs4.3bn (Rs3.8bn in Q1FY12). Tonnage production for the quartergrew by 16.5% YoY to 53,740MT (52,959MT in Q1FY12). EBITDAwas in line with our estimate at Rs2.0bn, whereas EBITDA margindeclined by 60bps QoQ to 23.7%. However, EBITDA/kg grew by6.2% YoY to Rs40.1/kg (Rs39.4/kg in Q1FY12), thereby, leading to agrowth of 23.7% YoY in absolute EBITDA. Due to lower interestexpenses, PAT (adjusted for Rs65m one-time other income) grew by46.6% to Rs1bn (PLe: Rs949m). Non‐Auto revenues increased by 51.3%: Driven by highercontribution of the new non-auto facilities at Baramati, which grew by86.4% YoY in revenues at Rs1.8bn (Rs1.6bn in Q1FY12), the overallnon-auto business grew by 24.1% YoY to Rs 3.3bn (Rs2.8bn inQ1FY12). Non-auto contribution in standalone revenues now standsat ~40%. Overseas subsidiaries margins expand 170bps YoY: Top-line, ona consolidated basis, grew by 25.3% YoY, with EBITDAperformance improving by 29.2%. Overseas subsidiaries reported atop-line growth of 23.4% YoY to Rs6.5bn, with an EBITDA marginof 5.9% for the quarter. Adj. PAT, on a consolidated basis grewby 52.6% YoY at Rs1bn (Rs1bn in Q1FY12).
  36. 36. „ Outlook and Valuation: Operating leverage, coupled with higherutilization at the new non-auto facility in FY13E, will lead toEBITDA margins of ~25% on a standalone basis by FY13E. Wevalue the company on SOTP basis, with standalone business valued atRs309/share and subsidiaries/JVs valued at Rs26/share. Withimproving ROE and strong cash flows, we reiterate our ‘Accumulate’rating on the stock
  37. 37. MAJOR IMPORTING / EXPORTINGCOUNTRIES v France v India v Ireland v Singapore v United Kingdom v Spain v United States v Venezuela v Netherlands v Germany v Dubai v Madrid v Houstan v Oklahoma C v Mara Caibo v Amsterdam
  38. 38. LIST OF GOODS/SERVICES EXPORTED BYTHE COMPANYTOP EXPORT PRODUCT INFORMATION OF BHARATFORGE LIMITEDHS Code Product Description72249009 Alloy Steel Forging (rough)sion Sr No 36 1 Plug Forging10 150072249099 Sion 1001 Connecting Rod Forging S72284000 M/c Bonnet 2 9/16 10k Part No 140058-01-70-02(epcgLic No.03500 )73181500 Hexagonal Socket Bolt73261100 Alloy Steel Forging (rough) 2bonnet Nut 011775-09Sion Sr No C 361TOP IMPORT PRODUCT INFORMATION OF BHARATFORGE LIMITEDHS Code Product Description27100029 Gear Oil Zx-15 Lubricating Oil27101119 Lubricants Ar-1ep Grease (walt34039900 Graphite Based Die Lubricant (220 Kg Per Barrel)ga 32/cdp34039901 Graphite Die Lubricnt Sinolga
  39. 39. FUTURE PLANSBharat Forge, the Pune based forging firm, plans to invest Rs 1,200-1,500 crore in its non-automotive sector business over the next three-and-a-half years.This would mark the beginning of the company’s second phase ofexpansion in the non-automotive sector, primarily aerospace, marineand nuclear power plants.“In the last two years, the company has invested nearly Rs 400 crorefor expanding in the non-automotive business, and in the comingyears we will invest an additional Rs 1,200-1,500 crore to mainlymanufacture forgings of up to 500 tonnes needed for large powerplants and nuclear power plants,” Baba Kalyani, chairman andmanaging director, Bharat Forge, said at the inauguration of ringrolling facility at Baramati on Monday.The company, which currently manufactures forgings of 40-50tonnes, is targeting 40% of its total sales from the non-automotivesector by 2012 from the present 22%.The first phase of the non-automotive sector expansion includedsetting up of a 4,000 tonnes open die press facility at Pune and theCentre for Advanced Manufacturing at Baramati which includes an 80metric tonne counterblow hammer facility and the ring rolling facility.The proposed Rs 1,200 crore investment would be for expansion atBaramati and Pune and towards facility for making power plantequipment at Mundra in Gujarat under a joint venture with Alstom.The facility will manufacture 300-800 mw subcritical andsupercritical equipment with an annual capacity of 5,000 mw.The joint venture will also explore possibilities of manufacturingturbines and generators for gas-based plants and nuclear applications.Apart from this, Bharat forge would set up two more facilities atBaramati. While the first one to be inaugurated by June this yearwould make crankshafts of about 5 metre long and 4 tonne weight for
  40. 40. heavy locomotive industry,the second unit to be opened by end of2010 would make 12 metre and 35 tonne crankshafts, mainly to beusedfor large marine applications and aerospace industry.The Baramati facilithas been set up to primarily cater to the non-automotive sector.“India is still lagging behind in heavy industry componentmanufacturing to such an extent that we are highly dependent onoverseas companies for critical components. Therefore, in future wewould require facilities which can manufacture supercritical and ultra-supercritical technologies and Bharat Forge through its expansion ismaking a move in that direction,” Kalyani said
  41. 41. EXPORT IMPORT PROCEDURERS1. SALES CONTRACTAn agreement between the buyer and the seller stipulating everydetails of the transaction. It is a legally binding document. It istherefore advisable to seek legal advice before signing the contract. · Legally, there are four basic elements of a sales contract. o What is being sold. § Description of each item. o At what price. § Unit and total price. § Clearly specify the currency. o In what quantity. o Of what quality. § New, used, premium, standard, etc. · You may write up a formal contract of sale, or you may use: o A purchase order signed by the buyer. o An order acknowledgment countersigned by the buyer. o A pro forma invoice · An order acknowledgement should supplement a purchase order by: o Confirming terms and conditions of the sale not covered by the purchase order. § Delivery schedule § Product warranty § Payment schedule
  42. 42. · A pro forma invoice is a document prepared in advance of a sale to provide evidence of the final form and amount of invoice. o It is a form of a quotation. § Specify a time limit for the validity of the offer. o A pro forma invoice should be printed on letterhead stationery. o A pro forma invoice should contain: § Description of each item § Quantity of each item § Unit and total price § Terms of sale § Shipping and packing charges § Net and gross weight · A pro forma invoice should contain enough detail to help the buyer to: o Open a letter of credit. o Obtain an import permit. o Calculate the duty on the items.2. COMMERCIAL INVOICE:-It is a formal demand note for payment issued by the exporter to theimporter for goods sold under a sales contract. It should give detailsof the goods sold, payment terms and trade terms. It is also used forthe customs clearance of goods and sometimes for foreign exchangepurpose by the importer.
  43. 43. 3. BILLS OF ENTRY.A declaration by an importer or exporter of the exactnature, precise quantity and value of goods that have landed or arebeing shipped out. Prepared by a qualified customs clerk or broker, itis examined by customs authorities for its accuracy and conformitywith the tariff and regulations. See also customs entry.The different kinds of bills of entry are used for followingpurpose:1. Bills of entry for goods imported for home consumption (whitecoloured).2. Bills of entry for warehouse (yellow coloured).3. Bills of entry for ex-bond clearance for home consumption(greencoloured).A bill of entry is a formal declaration describing goods which arebeing imported or exported. The bill of entry is examined by customsofficials to confirm that the contents of a shipment conform with thelaw, and to determine which taxes, tariffs, and restrictions may applyto the shipment. This document must be prepared by the importer orexporter, with many companies hiring a clerk specifically to handlethe process of preparing bills of entry.A typical bill of entry includes a description of the goods in theshipment, including details and the quantity of the goods, along withan estimate of their value. Customs officials reserve the right toinspect the shipment to determine whether or not it is consistent withthe bill of entry, and discrepancies can be grounds for legalproceedings. Once a bill of entry has been reviewed and the shipmenthas been inspected, it can be cleared for sale or transfer. If there is aproblem, customs may opt to confiscate the goods.
  44. 44. Many nations have specific laws about how bills of entry should beformatted and presented. It is important to have accuratedocumentation, or goods can be held up in customs. This can cause aninconvenience in some cases, and spoilage or destruction of the goodsin others; a shipment of fruit, for example, will not hold up through alengthy retention by customs while details of the shipment are workedout.4. PERFORMA INVOICEAn invoice provided by a supplier prior to the shipment ofmerchandise, informing the buyer of the kinds and quantities of goodsto be sent, their value, and importation specifications (weight, sizeand similar characteristics). This is not issued for demanding paymentbut may be used when applying for an import license/permit orarranging foreign currency or other funding purposes. · Contents of Performa invoice Ø Name and address of the exporter. Ø Name and address of the importer. Ø Mode of transportation. Ø Name of the port of loading. Ø Name of the port of discharge and final destination. Ø Provisional invoice number and date. Ø Exporter’s reference number. Ø Buyer’s reference number and date. Ø Name of the country of origin of goods. Ø Name of the country of final destination. Ø Marks and container number. Ø Number and packing description. Ø Description of goods giving details of quality. Ø Signature of the exporter with date.
  45. 45. Documentary Letters Of CreditDOCUMENTARY credit is frequently the agreed method ofsettlement for international trade. The buyers bank reimburses theseller against presentation of documents drawn in compliance withconditions stipulated in the documentary credit by the buyer.There are advantages to both the buyer and seller when settlement isarranged by documentary letter of credit. First, the buyer knows thatpayment will only be made if the documents received comply strictlywith the terms and conditions of the credit as stipulated by the buyer.Second, the seller knows that payment will be received provided theterms and conditions of the credit are strictly complied with.Documentary letter of creditA documentary credit can be defined as a conditional undertaking ofpayment given by a bank. Expressed more fully, it is a writtenconditional undertaking issued on behalf of the importer (applicant)by the issuing bank to the exporter of goods (beneficiary) to pay forthe goods or services, provided the documents submitted conformstrictly to terms and conditions of the credit.From this definition it can be seen that there are basically three partiesto a documentary credit: a) the buyer/importer, who requires that acredit be issued in his favour; b) the beneficiary (the supplier ofgoods); and c) the issuing bank which issue s the credit at the requestof the buyer or importer. The credit is usually (but not always)advised to the beneficiary through a bank in the beneficiarys country(the advising bank).All documentary letters of credit are subject to the provisions ofUniform Customs and Practices (UCP) for Documentary Credits,Brochure No. 500 issued by International Chamber of Commerce,wherever it is incorporated into the text of the credit as such.
  46. 46. BILLS OF LADINGA legal document between the shipper of a particular good and thecarrier detailing the type, quantity and destination of the goodbeing carried. The bill of lading also serves as a receipt ofshipment when the good is delivered to the predetermineddestination. This document must accompany the shipped goods,no matter the form of transportation, and must be signed by anauthorized representative from the carrier, shipper and receiver.CERTIFICATE OF ORIGINA Certificate of Origin (often abbreviated to CO or COO) isa document used in international trade. It is a printed form, completedby the exporter or its agent and certified by an issuing body, attestingthat the goods in a particular export shipment have been whollyproduced, manufactured or processed in a particular country.The “origin” does not refer to the country where the goods wereshipped from but to the country where they were made. In the eventthe products were manufactured in two or more countries, origin isobtained in the country where the last substantial economicallyjustified working or processing is carried out. An often used practiceis that if more than 50% of the cost of producing the goods originatesfrom one country, the "national content" is more than 50%, then, thatcountry is acceptable as the country of origin.When countries unite in trading agreements, they may allowCertificate of Origin to state the trading bloc, for example,the European Union (EU) as origin, rather than the specific country.Determining the origin of a product is important because it is a keybasis for applying tariff and other important criteria. However, not allexporters need a certificate of origin, this will depend on thedestination of the goods, their nature, and it can also depend on thefinancial institution involved in the export operation.
  47. 47. · CONTENT OF CERTIFICATE OF ORIGIN1. Name and the address of the exporter.2. Name and the address of the consignee.3. Name and the address of the notify.4. Name and logo of the chamber of commerce.5. Name of the port of lading.6. Name of the port of discharge and place of delivery.7. Mark and container number.8. Packing and container description.9. Total number of container and package.
  49. 49. PACKING LISTItemized list of articles usually included in each shipping package,giving the quantity, description, and weight of the contents. Preparedby the shipper and sent to the consignee for accurate tallying of thedelivered goods. Also called bill of parcels, packing slip, orunpacking note.The exporter prepares the packing list to facilitate the buyer tocheck the shipment. it contents the detailed description of thegoods packed in each case, their gross and net weight etc. thedifference between a packing note and a packing list is that thepacking note contains the particulars of the contents of anindividual pack, while the packing list is a consolidated statementof the contents of a number of cases or packs. The contents ofpacking list and commercial invoice are same but in packing listnumber and packing description are mentioned. Normally, ten copies of thepacking list/note should be prepared. The first is to be sent withthe shipping documents , two copies in advance to the buyer , oneto the shipping agent and the remaining retained by the exporter.
  50. 50. SHIPPING BILLA shipping list, packing list, waybill, packing slip (also knownas a bill of parcel, unpacking note, packaging slip, (delivery)docket, delivery list, manifest or customer receipt), isa shipping document that accompanies delivery packages, usuallyinside an attached shipping pouch or inside the package itself. Itcommonly includes an itemized detail of the package contents anddoes not include customer pricing. It serves to inform all parties,including transport agencies, government authorities, andcustomers, about the contents of the package. It helps them dealwith the package accordingly.Shipping bill is the main customs documents, required by thecustoms authorities for granting permission for the shipment ofgoods. The cargo moves inside the dock area only after shippingbill is duly stamped, i.e., certified by the customs. Shipping bill isnormally prepared in five copies:- 1. Customs copy. 2. Drawback copy. 3. Export promotion copy. 4. Port trust copy. 5. Exporter’s copy.Based on the incentives offered by the government, customsauthorities have introduced three types of shipping bills:- · Drawback shipping bill(green) · Dutiable shipping bill (yellow) · Duty-free shipping bill(white)
  51. 51. BILLS OF EXCHANGEA non-interest-bearing written order used primarily ininternational trade that binds one party to pay a fixed sum ofmoney to another party at a predetermined future date.An unconditional order issued bya person or business which directs the recipient to pay a fixed sumof money to a third party at a future date. The future date may beeither fixed or negotiable. A bill of exchange must be in writingand signed and dated also called draft.Bills of exchange are similar to checks and promissory notes.They can be drawn by individuals or banks and are generallytransferable by endorsements. The difference between apromissory note and a bill of exchange is that this product istransferable and can bind one party to pay a third party that wasnot involved in its creation. If these bills are issued by a bank,they can be referred to as bank drafts. If they are issued byindividuals, they can be referred to as trade drafts.
  52. 52. SHIPPING BILL OF EXPORTShipping bill of export is the main document by the customsauthority for the allowing shipment. A shipping bill is used by theshipping agent and represents some kind of certificate.For all parties, included ship’s owner, seller, buyer and someother parties for each one represent a kind of certificatedocuments.
  53. 53. PAYMENT · MODE OF PAYMENTThere are different methods of payment in international trade. Thefact that the buyer and seller are located in different counties,minimizing risk becomes a crucial part of the transaction. Some ofthe popular modes of payment are: Ø Prepayment via telegraphic transfer. Ø Open account. Ø Documentary collection. Ø Document against payment (D/P)- sight. Ø Document against acceptance (D/A)-after sight.
  54. 54. · LETTER OF CREDITTHE L/C is a guarantee given by the buyer’s bank that it will payfor the goods provided the exporter provides a set of documentssuch as bill of lading and freight documents . the technical termfor L/C is documentary credit. L/C deals with document , notgoods. Thus it works in favor or both the buyer and the seller. · Transferable L/C And Non-Transferable L/CWith a transferable L/C, a beneficiary (exporter/seller) has theright to give the instruction to the paying or accepting bank tomake the credit (funds) available to one or more third parties,sometimes referred as secondary beneficiaries . A non –transferable L/C is when the bank makes credit available to thebeneficiary only and cannot be transferred to any other party. · Back –To-Back Letter Of CreditThe parties involved in a back-to-back L/C are the buyer and hisbank, the seller / manufacturer and his bank and themanufacturer’s subcontractor and his bank. This type of credittransaction is used when a seller/manufacturer has to buy acomponent or farm out part of production, but may not have thecash flow to do so. What is apply to his bank for a L/C, identicalto the original L/C he received from the buyer – but of a lesservalue. This second L/C, called a back-to-back, is sent to thesubcontractor’s bank , assuring the subcontractor of payments.
  55. 55. CSR ACTIVITIESEDUCATIONAs part of its Corporate Social Responsibility, Bharat Forge activelysupports Pratham Pune Education Foundation (PPEF). PPEF helps inimparting primary education to children of economically challengedand migrant workers, mainly in the age group of 3-14 years. Mr. B. N.Kalyani is the Founder and Chairman of PPEF. This initiative isactively funded by BFL and over the past 4 years, has touched thelives of over 50,000 children in Pune, and has become an importantcatalyst for women empowerment.PPEF operates through an extensive network of Balsakhis, Balwadis,Bridge Courses and Outreach Programmes. PPEFs contributions haveresulted in Pune achieving almost 100% literacy.COMMUNITY INITIATIVEAs a socially responsible employer, the Kalyani Group has a strongsense of community responsibility, and encourages its businesses toenhance their relationships with the communities in which theyoperate.Bharat Forge Ltd., sponsors community centres for 250 families inand around Pune. Of these, 80 employee families are involved inincome-generating activities such as hand-glove stitching, stitchinguniforms and making of incense sticks. After vocational training thesemembers then use financial assistance from self help groups (SHGs)to start their own small businesses. BFL is involved in developingmicro credit savings groups within these families. The company
  56. 56. continues to remain engaged with the members for any assistance thatnewly formed ventures may need. In addition, BFL also conductsawareness activities vocational training, personality camps and socio-cultural activities for these families, which are greatly appreciated bythem.The staff at Bharat Forge America, also engage themselves incommunity services in the local Lansing community. These effortsinclude home rebuilding and refurbishing to help the local disabledand elderly couples. A group of 18 BFA employees spend an entireafternoon on a week end replacing doors, repairing roofs and doingdrywall replacement.ENVIRONMENTAs a corporate entity, we are committed to good environmentalpractices and are conscious of our responsibility towards creating,maintaining and ensuring a safe and clean environment.All Kalyani Group businesses are at the forefront of improving theirperformance while enhancing the environment. They are uniquelypositioned to use their resources to grow their organizations in anenvironmentally sound and responsible manner.We as a group believe that environmental quality is a key ingredientfor long-term profitability. Environmental Best Practices are beingemployed increasingly within the group to improve businessproductivity, cut waste and reduce costs.The Group is committed to minimizing any adverse effects of itsactivities on the environment, while continuously improving itsenvironmental performance.Bharat Forge has invested in Renewable Energy Project generatingGreen Energy. Added to this it is buying Green Energy power, whichput together is approx. 30% of Bharat Forge, Mundhwa plant
  57. 57. consumption.This usage of Green Energy is considered to be a reduction of CarbonEmission to the extent of approx. 30,000 tons per annum and this isrecognized & certified by United Nations Framework Convention onClimate Change (UNFCCC) under Kyoto Protocol.As an active participant in the process of promoting theenvironmental awareness and in the process of beautifying andmaintaining the civic infrastructure of Pune, BFL maintains severalgardens across the city.HEALTH AND SAFETYThe group is committed to having a safe and pleasant workingenvironment. Health & safety best practices form an integral part ofthe group’s business activities.We believe that our employees are the key to our companys successand it is our moral responsibility to ensure that they have a safe &healthy working environment Safety is a top priority in all ouroperations across the group. All group companies have a safetycommittee that meets regularly to provide updates on safety issues,conduct rehearsals of safety procedures and onsite emergency actionplan and training programs on safety related issues. Our goal is todrive injuries, occupational illnesses and operational incidents asclose to zero as possible. To realize our zero-accident goal, we aretaking further measures to reduce risks by undertaking riskassessment of our manufacturing facilities. Operation manuals areprepared and each operation unit also educates its employees on laborsafety.
  58. 58. The group also continues its drive of Keep Fit which it started in2002. The purpose of this drive is to reduce absenteeism due to illnessand to encourage individuals to follow a healthy lifestyle. The KeepFit drive includes regular health check-ups including health, diet and afitness test.