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SUBMITTED BY:
SANDEEP KUMAR
MBA (2008-2010)
SANDEEP KUMAR has successfully completed the project under the guidance of Mr.
Sushil Sharma (Sr. Manager Exports). He is a sincere and hard-working student with
pleasant manners.
Signature
I would like to express my thanks to Mr. Sushil Sharma ( Export ) for given me
an opportunity to a part of this esteemed organisation. I would like to express my deep
sense of gratitude to the entire international trade department. Specially Mr. Rahul
Singh, Mr.Nand kishore and Mr Vineet for their inspiring guidance, continuous
engorgement and valuable suggestion.
At last but not the least, I would like to thank my all faculties and personnel of
Bhushan Steels Ltd, for there corporation and help.
SANDEEP KUMAR
MBA
ROHINI
OBJECTIVE
PRIMARY OBJECTIVE
To describe all the documents used in international trade. And clearly show the
gravity of each document.
To analyze the key strategies of the company to reduce the discrepancies, and
try to explore the other strategies too, which are also useful for reducing
discrepancies.
SECONDARY OBJECTIVE
To analyze the factors which directly influence the various Logistics and
International Marketing procedures involved at Bhushan steels thereby selecting
the appropriate mode of transportation which effectively helps in reducing the
cost of transportation of goods through road and sea.
To analyze the latest trends and consumption pattern of various markets for
increasing the volume of sales in International market.
There are some exceptions, such as Saudi Arabia, but as a general rule, the local
customs authorities do not physically inspect most import shipments. If this
statistic is correct, then how do customs manage their affairs in all the gateways
of the world? How do customs authorities control the merchandise crossing the
border and entering into commerce?
They do this through the documentation provided by the importer and the
importer’s customhouse broker. The other documentation created —such as the
commercial invoice, packing list, certificate of origin, health and sanitary
certificate, bill of lading, certificate of conformance, and certificate of analysis
— are all for the account of the importer to meet the customs clearance
requirements in their country, thereby making export
documentation into import documents.
Customs clearance and required import documentation are governed by local laws
andvary from country to country. What Korean
customs may need to clear a pharmaceutical from the United States is
very different from what customs in Brazil, Nigeria or Germany may
require
To the U.S. exporter this means it is crucial to have more than one
set of criteria for your export documentation needs. The exporter must
implement a standard operating procedure (SOP). This SOP must be
flexible, particularly for those exporters that ship to numerous
destinations. This flexibility allows the exporter to meet and identify the
specific documentation requirements for each country to which it is
exporting
Here are the factors that can vary significantly depending on the country to
which you are shipping:
· Number of copies
· Notarization
· Legalization/consularization
· Language
· Format of documentation
· Valuation
· Commodity descriptions
· Product labeling
http://www.bhushan-
Website
group.org/
Bhushan Steel Limited (BSL) is India's 3rd largest Secondary Steel
Producer after SAIL and TISCO. It is ISO 9002, QS 9000 certified and
is a company of over Rs 4000 crores. The Company currently has
capacity to produce almost one million MT/Annum of Cold Rolled
Steel at Sahibabad and Khopoli Works.
The company has a full fledged Research & Development Center and
has many firsts to its credit including development of High Tensile
Steel for passenger car skin panel applications, development of panel
grade material for Visi Coolers & Chest Coolers of Coca-Cola & Pepsi,
ultra thin CR sheet for picture tube and battery applications etc.
The company has also provided an important substitute for EDD grade
extra width CRSS for the Indian Automobile and white good industry.
Power Plant 12 MW
Power Plant 12 MW
PLANTS
1. KHOPOLI PLANT
The Khopoli plant, commissioned in 2004 has been playing a
remarkable role not only in the growth of exports, but in the production
of a much wider variety of value added steel like Colour Coated Sheets,
High Tensile Steel Strappings, Hardened and Tempered Strips and
Precision Tubes. In addition to these, the Khopoli plant has recently
launched the Galume value added steel (Aluminium & Zinc Coated
Sheet) for the first time in the country.
Operating with the most advanced technology, expressed through a
large fleet of latest equipment, machinery and systems, the Khopoli
plant has given a tremendous boost of 425000 MT per annum to BSL's
total production capacity Including 240000 MT of galvanised steel,
which are further forward integrated into Colour Coated Sheet, Galume
and other value added products
2. SAHIBABAD PLANT
STEEL LTD
MARKETING SYSTEM
MARKETING
DIRECT TO MANUFACTURER
FOUR WHEELERS
HOME APPLIANCES
REFRIGERATORS
AIR CONDITIONERS
WASHING MACHINE
BEARINGS MANUFACTURE
Maruti Udyog,
Honda
Siel
Telco
Indica,
Hyundai Motors,
Ford Motors,
Ashok Leyland,
LG Electronics,
Whirlpool,
Videocon,
Daikin Shriram,
National Matsushita,
Samsung Electronics
Godrej,
Voltas,
IFB,
Fedders Lloyd,
Carrier Refrigeration,
Electrolux Group,
Hitachi Airconditioners,
KF Bearing,
BHEL
Aistom Limited,
L&T,
BPL,
GE Motors,
Jhonson Lift,
Kone Elevator,
Lucas TVS,
NRB Bearing,
Tecumseh, LML,
Scooters India Ltd.,
Bajaj Auto,
Honda Motorcycle,
Yamaha Motors,
• Attainment of Export House status in the very first year of its foray
into exports and consequently being honoured with Trading House
status (Export-Sales for 2005-2006 was Rs. 1006 crores).
• HSLA (High Strength Low Alloy) steel, remarkable for its greater
strength wrth lesser weight, ideal for critical carpanels
• IF Steel, crucial forcritical applications like Car Body Outer Panels and white goods Ultra
Thin Picture Tube shield, which has value addition of over 300%
PERFORMANCE AT A GLANCE
200 200
2003 2004 2006 2007
year 2001 2 5 2008
Gross Sales 1058 1139 1263 1745 2868 3070 4202 4673
Cash Accruals 105 108 133 203 317 312 580 707
Net Worth 481 528 573 664 805 960 1338 1822
Gross Block 940 989 1302 1529 2044 3091 4586 2927
OEM
EXPORT
EXPORT
TRADE
OEM
TRADE
Specification
News & Updates
Bhushan Steel Ltd will setup a two million tonnes per annum(mtpa) capacity integrated steel
plant with a captive power plant in Burdwan district of West Bengal. A 0.5 mtpa capacity cold
rolled and galvanizing plant for automobile grade steel will also be set up. An agreement to
this effect was jointly signed by Bhushan Steel, the government of West Bengal and the West
Bengal Industrial Development Corporation Ltd. The total investment in the projects on the
anvil has been pegged at Rs. 8,800 Crore. The projects will provide gainful engagement - direct
and indirect - to around 3,000 people.
While the proposed steel and power plant will come up in Burdwan Distt., the cold rolled and
galvanizing plant will be set up in North 24 Parganas Distt. The setting up of the steel plant
will require 2,500 acres of land which will be identified jointly by the state government and
Bhushan Steel. An additional 90 Acres of land will be required for cold rolled and galvanizing
plant. After the signing ceremony, Mr. Buddhadeb Bhattacharjee, Chief Minister of West
Bengal, and senior company officials, briefed news persons at Writers Buildings on the project.
TOR STEEL
Applications - The product finds its uses in various types of Construction activities like
Reinforcements. Other names for Tor Steel are twisted steel bar, CWD bar, CTD Bar, deformed
Our TOR Steel bars confirm to IS: 1786 in dimensional tolerances but in actual exceeds the
specification.
Steel Billets are semi finished length of Steel which can be worked in a rolling mill or for
forging operations. These are also known as bloom, slab, and sheet bar. Billets are available as
GI PIPES
The product finds its uses in a number of applications- domestic, agriculture and Industrial.
Galvanized Pipes are available in the sizes ranging from 10mm NB to 100 mm NB, Strip
Corrugated sheets are extensively used for Industrial sheds, housing, temporary structures etc.
Alloy Steel rounds are used for manufacturing seamless tubes. These are also used for general
CR COILS
Cold Rolled Coils are used in the manufacture of Automobiles, White Goods, Electrical Panels,
Furniture, Transformers, Oil barrels and drums and general Engineering products.
NARROW CR COILS
Narrow CR Coils are used in the manufacture of Automobiles, Precision Tubes, Cable Tapes,
White Goods, Electrical Panels, Furniture, Transformers, Oil barrels and drums and general
engineering products.
Cold Rolled Sheets are used in the manufacture of Automobiles, White Goods, Electrical
Panels, Furniture, Transformers, Oil barrels and drums and general engineering products.
GP COILS / SHEETS
Applications: Galvanized Coils and Sheets are used to make Boxes, Containers, Ducting,
These Tubes are widely used for Power and Industrial boilers, Transformers, Super heaters,
Applications etc
Cable tapes are used as Armour in Telephone and other Cables.Cable tapes are available in strip
width of 19mm to 65mm, thickness of 0.30 to 0.80mm, inner diameter 450-800 mm, Coil
BLACK PIPE
Black pipe is used for transportation of air, gas, fabrication of structure, automobiles, cycles
and general furniture industries. Varnished pipes are used for general engineering industries.
Black pipe is manufactured at our Kolkata plant, and Plot No.03, Chandigarh plant.
POWER
The excess power generated is being sold through state power grid.
SPONGE IRON
Applications: Sponge iron is a basic raw material for making primary steel products.
WIRE RODS
We are manufacturers of IS-2062 and Electrode Quality in our Plant located at 3, Industrial
Bhushan Steel Ltd. has recently successfully implemented SAP system at its Sahibabad works
along with its sales outlets with the help of Siemens Information Systems ltd. (SISL) in first
phase
List of Finished Products of Sahibabad Plant
TOR STEEL
Applications - The product finds its uses in various types of Construction activities like
Buildings, Roads, and Bridges etc where it is used for Concrete Reinforcements. Other names
for Tor Steel are twisted steel bar, CWD bar, CTD Bar, deformed steel bar etc. TOR Steel bars
confirm to IS:1786 in dimensional tolerances but in actual exceeds the specifications.
STEEL BILLETS
Steel Billets are semi-finished length of Steel which can be worked in a rolling mill or for
forging operations. These are also known as bloom, slab, sheet bar. Billets are available as
round bar, flat bar, wire rod etc.
GI PIPES
The product finds its uses in a number of applications- domestic, agriculture and Industrial.
Galvanized Pipes are available in the sizes ranging from 10mm NB to 100 mm NB, Strip
thickness 1.80 mm 5.40 mm
Alloy Steel rounds are used for manufacturing seamless tubes. These are also used for general
Engineering purposes.
CR COILS
Cold Rolled Coils are used in the manufacture of Automobiles, White Goods, Electrical Panels,
Furniture, Transformers, Oil barrels and drums and general Engineering products.
NARROW CR COILS
Narrow CR Coils are used in the manufacture of Automobiles, Precision Tubes, Cable Tapes,
White Goods, Electrical Panels, Furniture, Transformers, Oil barrels and drums and general
engineering products.
CR SHEETS
Cold Rolled Sheets are used in the manufacture of Automobiles, White Goods, Electrical
Panels, Furniture, Transformers, Oil barrels and drums and general engineering products.
CABLE TAPES
Cable tapes are available in strip width of 19mm to 65mm, thickness of 0.30 to 0.80mm, inner
diameter 450-800 mm, Coil weight 50-200 Kg.
Strengths
Weakness
1. Plant Location
2. Single Location Plant
Opportunities
1. Expected increase in Demand of PIJCF in the Telecom Sector.
2. Opening of New Plants at other Locations where raw material is already produced.
Threats:
1. Worldwide slump on steel market.
2. Competition posed by other companies and competitors.
3. Dumping of steel by CIS countries.
4. Economic slowdown in India.
INTRODUCTION TO INTERNATIONAL TRADE
No country can possibly produce its requirements within its own geographical boundaries.
Thus, it has to look at international trade as the option to obtain those goods which it cannot
produce, or produce as cheaply as other countries. Technologies are changing and newer,
innovation products are being launched continuously the world over. For the consumer,
international trade is a means to satisfy their requirements and a means to ensure that he
gets supplies from very competitive sources. Foreign trade increases employment
both directly and indirectly. International trade has thus, increased the economics
interdependence of nations.
All countries have not been endowed by nature with the same
productive facilities. There are differences in climatic conditions and
geological deposits as also in the supply of labour and capital. Due to
these differences, each country finds it advantages to specialize in the
production of same specific commodities. Such specialization would not
be economically practicable but for the possibilities of exchange of
surplus production with other countries through international trade.
Infact, in the absence of international trade, it would be difficult to
utilized the surplus production properly. International trade will take
place when the buyers find foreign markets cheaper to buy in and sellers
find them more profitable to dispose off their products than the domestic
market. Thus a more effective use of world resources in made possible
through international trade.
India’s foreign trade (development and regulation) act 1992 defines export as taking any goods
out of India by land, sea or air. The Indian customs act 1962 defines export goods as any goods
which are to be taken from India to a place of outside India. These two definitions in reality,
deal only with physical exports. However in real term exports will also encompass the
following:
1. Project exports
2. Services exports
3. Software exports
4. Re-export
5. Deemed exports
6. Counter trade
7. Offshore trading
The liberalization of the economy in 1991 has opened up new avenues for
entrepreneurship and today; exports are regarded as a thrust area. There are a number of
reasons as to why an organization or even a proprietorship firm should consider export as an
opportunity to enter into
1. Larger market - for those people with a wider vision, who consider
not just India but the world as their market, export offer
tremendous opportunities.
9. Boost self-image.
INTRODUCTION
International market has always been a fascinating market among traders. Some loose and
some make heavy money. After witnessing recent boom in Indian in international market, it
has become the most favoured the trader to grow and developed them on this span.
Trade documentation and related procedures are an important component of the trade
facilitation system. They help identify the import and export items in terms of description;
value and ownership for both trade
as well as control purposes. They allow for the tracking of cargo so that the
importers and exporters know where their shipments are and when they will
arrive at the final destination. Trade documents are also important
evidence of goods clearance and are used for financing and the payment
for the goods especially if payment is made under Letter of Credit (LC)
terms. While trade documents are an integral and necessary part of
international trade, efforts should be made to simplify them, so that they do
not become an obstacle to international trade. Trade documentation
should therefore be reviewed regularly and improved so that it will facilitate
trade and at the same time to prevent any abuses to the trading system.
Documents fulfil the following functions:
Proof of contract
Information
Certain documents provide information on the price for the goods (invoice), the contents of
package units (packing list), etc.
Customs
The customs of the country of destination require documents that evidence the origin of
the goods, etc. in order to establish whether the goods are importable to the country and in
order to charge appropriate taxes and duties.
Proof of compliance
Certain documents serve as proof that the conditions stipulated in the contract of sale are
complied with, such as date of shipment (transport documents), the origin of the goods
(certificate of origin), etc.
The exporter should also procure an export order/consent from the foreign buyers. The
exporter intending to export any goods should file a document called Shipping Bill with the
Customs Department. All the columns in the Shipping Bill should be filled in properly,
which includes the name and address of the exporter., name and address of the foreign
buyers. Quantity and description of the goods., FOB value, etc. The documents to be
enclosed to the Shipping Bill are:
a) Invoice
b) Purchase order/contract
The Shipping bill so filed with the Customs is assigned with a serial
number with date by the noting clerk and then the Shipping Bill is
scrutinized by the Appraiser/Superintendent and after assessment it is
countersigned by the Assistant/Deputy Commissioner. The original copy
of the Shipping Bill is detached by the noting clerk when no export duty is
payable. If any export; duty is payable original copy of shipping bill is
detached by cash department after collecting duty and making
suitable endorsement on all the copies of shipping bill. The other copies
are then returned to the Exporter/CHA. Thereafter the Exporter/CHA
presents the duplicate and triplicate copies of shipping bill with other
documents and the goods to the Appraiser/Superintendent in charge of
examination. The Appraiser/Superintendent examines a percentage of
the consignment with reference to the documents and gives an order
called ‘LET EXPORT’ order on duplicate and triplicate copies of Shipping
Bill. The goods thereafter remain in the Customs area till they are loaded
into the conveyance (Ship/Aircraft/Container) under Custom supervision.
The main parties involved in the processing are the exporter, the foreign buyer, the negotiating
bank, the shipping company, the insurance company, the Reserve bank of India, the chief
controller of exports and imports, the collector of customs & clearing and forwarding agents.
Steps that’s need to be followed to process an export order:
Steps -1
Scrutinize the order with reference to the terms and conditions of the contract. The export order
must specify the mode of payment whether LIC, DIA, DIP or Advance Payment. The most
important document required by an importer are:
Steps-2
For a manufacturer, after the export order has been confirmed, a delivery note should be sent to
the works manager. This note should contain all relevant details pertaining to the requirement.
Steps-3
After goods have been manufactured the followed is to be done:
(a) Clearance from the central excise authorities by obtaining gate pass (GP-1) from if
goods are to be removed under claim for rebate of duty. (GP-2) FORM, if good are
to be removed under a bond i.e. as per terms and conditions of the collector of
customs or AR-4 A form if the exporter wishes to avail the services of central excise
officer for the purpose of physical verification at the factory & thereafter sealing of
packages.
(b) The concerned export inspection agency has to be approached for conducting
quality control and pre-shipment inspection.
(c) A receipt has to be obtaining, if the goods are dispatched by road to the port of
shipment.
Steps-4
Once the goods have been dispatched to the port, the works manager is supposed to send a
dispatch advice to the firms export department. Then insurance cover is solicited. At this
formalities regarding global price regulation, canalization, certificate of origin ECGC cover
needed to be completed. Thereafter the export department sends the following documents to its
clearing and forwarding agent:
Step-5
After the agent has taken control of the consignment he prepares a web. Three kinds of
shipping bills are to be prepared depending on the type of goods exported. These are free,
dutiable and drawback shipping bills.
Once the shipping bills are cleared by the customs, the agents forwards a copy of shipping bill.
Step-6
The agent then forwards the relevant documents to the exporter.
Step-7
After receiving the above documents from the agent, the exporter flees the claim with the
Maritime Collector of Central Excise duty. In the meantime a shipment advice should be sent to
the importer. Documents are then presented to the negotiating bank for negotiation. Thereafter
the documents are transmitted to the banker of the importer would take the custody of the
consignment once the goods reach the destination and other formalities at the end.
EXPORT DOCUMENTATION
Export documentation plays a very crucial role in the execution of an export contract. In
fact the process of export documentation begins when the order is placed by the foreign
buyer with the exporter. The formalities as regards various documents relate to:
(1) On the basis of requirement during and after shipment, Export documents can be
classified into Pre-shipment and Post-shipment.
PRE-SHIPMENT DOCUMENTATS
- Custom Invoice
- ARE1 (etc)
These all documents forward to Custom Clearing Agent for Custom Clearance at port
and release the Bill of Lading after Loading the Cargo at Ship (Vessel).
POST-SHIPMENT DOCUMENTS
- Original Shipping Bill (Exchange Control Copy, SDF & Exporter Copy)
(2) On the basis of functions to be performed pre-shipment export documents can be classified
as following:
Export documents
Principal Auxiliary
-The commercial Invoice -Proforma invoice
-Shipment Advice
-Insurance certificate
(a) Principal
(b) Auxiliary
(a) Principal Commercial Document
These documents are those documents which are required by the exporter for the purpose of;
• Effecting physical transfer of the goods and title there to from exporter to importer and
• Realization of export proceeds
These are also required in connection with procurement of the principal commercial
documents are as follows:
• Performa invoice
• Shipping Instruction
• Insurance Declaration
• Intimation for inspection shipping order
• Mate’s Receipt
• Letter of bank for negotiation
These are the documents which are required for copying with the rules and regulations
governing export trade transaction such as foreign exchange regulations, customs formalities,
export inspection etc.
NOTE:
In India there are thus 25 documents that are associated with the Pre-Shipment stage of
transaction. Of these 16 are Commercial Documents and 9 are Regulatory documents. Out of
the above 16 documents 14 have been standardized for the reason that they have different date
element.
Out of the 9 regulatory documents4 have been standardized. Out of these 4 documents the
receipts for payment for dock charges have been completely eliminated. Beside this there is no
further need of gate pass 1&2 of Excise any more.
INVOICE:
This is the basic document in the export transaction. Invoice may be of the following type:
PERFORMA INVOICE:
This invoice indicates the details of the good to be exported. It is an offer to sell made by and
other to the importer. Once the importer accepts the offer, the Performa invoice becomes an
export order. It is prepared after negotiations with the, buyer have been concluded.
COMMERCIAL INVOICE:
This is one of the most important documents in the export trade. It is the Exporters bill, which
the importer has to pay. There is no standard format, and each exporter may design his own
commercial invoice.
• The commercial invoice enables the exporter to collect payment from the importer
• The Exporter needs to submit copies of commercial invoice to customer for custom
clearance, to export inspection agency, to claim incentive such as DBK, excise refund,
and so on.
• It acts as documentary evidence in case of disputes between the exporter and the
importer.
• The commercial invoice helps the clearing agent to prepare shipping bill.
Commercial Invoice is a document showing the value of goods exported. It may take form
of:
• Custom Invoice
• Legalized Invoice
• Consular Invoice
Customs Invoice:
When the Commercial Invoice is prepared on the format prescribed by the customs authorities
of Importer’s country, it is called customs invoice. This is the requirement in U.S.A, Canada
and Australia. An exporter can obtain copies of this invoice form any shop selling government
publications and forms.
Legalized Invoice:
It is the same as consular invoice. This term is used in countries like Turkey, Liberia, Latin
American Countries etc, Commercial Invoice gives the description of the goods, priced
charged, the terms of shipment and the marks and the number on tile packages containing tile
merchandise. The date, name and address of both buyer and seller, name of Shipping Vessel
and the port of debarkation. There is no standard form of commercial invoice. Some countries
prescribe their own form. In such cases, the exporter has necessarily to use the form prescribed
by the importing country.
Consular Invoice:
It is a commercial invoice duly verified by the embassy consulate of the importer’s country
stationed in the Exporter’s country. Certain countries like Australia, New Zealand, Canada,
Arabian countries, Mexico and Middle East Countries etc. require the invoice to be certified by
their Embassy/Consulate in the Exporter’s country.
The consulate normally charges certain fees to certify the invoice. It is prepared in three copies
• It helps the Exporter to clear import restrictions, if any when the invoice is attested by
the consulate, the Exporter is sure that there are no import restrictions in the importer’s
country.
• It ensures prompt clearance from the customs at the port of shipment.
Importance of Consular Invoice to the Importer:
• It helps to obtain easy clearance from the customs at tile port of estimation. The
customs normally do not check the goods, if it accompanies by consular invoice.
• It helps him to obtain preferential tariffs in his country.
CERITFICATE OF ORIGIN
This certificate is issued by authorized agencies certifying the origin of goods. It states the
country in which the goods have been manufactured and produced. Certain countries, such as
Middle East Countries, Common wealth countries and countries of European community and
others require this certificate of origin.
SHIPPING BILL
This is the most important basic document required by the customs authorities, for allowing
Exports. It contains all the details of the goods shipped. The C&F agent of the exporter
prepares the Shipping Bill in five copies:
• Customs Copy,
• Drawback Copy,
• Export Promotion Copy,
• Port Trust Copy,
• Exporter’s Copy.
•
The Shipping Bill contains the details such as:
MATE`S RECIEPT
The mate of the ship issues it, when the goods are loaded on the ship. It is an acknowledgement
that the goods have been received on board the ship. The mate of the ship indicates the
condition and the number of packages received on board the ship.
• The Exporter’s agent loads the goods on the ship. The mate the ship prepares the mate’s
receipt giving details regarding the number of packages and the condition of packages
at the time of loading.
• The mate sends the receipt to the port trust authorities. The Exporter’s agent has to pay
the port dues and collect mate’s receipt.
• The mate’s receipt is then handed over to CPO. The CPO records the shipment of goods
on the shipping bill and document. The mate’s receipt is then sent to the shipping
company.
• The shipping company then exchanges the mate’s receipt for sets of bill of lading. It is
to be noted that mate’s receipt is an acknowledgement and not a document of title of
goods. The Bill of lading is a document of title to goods.
• It acts as a proof for the goods that has to be lodged on the board of the ship.
• It helps the exporter to obtain attestation from CPO regarding shipment of goods on the
regarding shipment of goods on the required documents.
• It helps to make payment of port trust dues.
• The mate’s receipt is needed to obtain Bill of Lading from the shipping company.
BILL OF LADING
The Bill of Lading serves as a contract between the shipper (Exporter) and the shipping
company. The shipping company agrees to transport the goods from one port of shipment to the
port of destination.
It is a document title to goods. The importer can take the possession of goods on the basis of
Bill of Lading.
2. Negotiable set of Bill of Lading containing 2 to 3 copies. The negotiable copies of Bill
of Lading have title to goods. Anyone negotiable copy can give title to goods.
NOTE:
It is to be noted in the case of air transport, instead of Bill of LADING, airway bill is used. The
details of airway bill are more or less the same as that of tile Bill of Lading.
BILL OF EXCHANGE
Meaning of Bill of Exchange:
According to section 5 of Negotiable Instruments Act, 1881, a bill of exchange is “an
instrument in writing – containing an unconditional order, signed by the maker, directing a
certain person to pay a certain sum of money only to or the order of a person or the bearer of
the instrument’.
A bill of exchange contains an order from the creditor to the debtor to pay a specified amount to
a person mentioned therein. The maker of a bill is called the “drawee”. The person who is
entitled to receive payment is called “payee”.
When the goods are shipped by sea, the bills are drawn in sets and two sets of documents
including drafts are mailed to the foreign correspondent through an authorised dealer for
presentation to the drawee (importer). Each one bears a reference to the other.
1. Draft at Sight.
2. Usance Bill.
When the drawer i.e. exporter expects the drawee i.e. importer to make payment immediately
after the draft is presented to him, it is called a “sight draft”.
Unless and until this draft is retired, tile negotiating bank does not handover the shipping
documents and the buyer can’t take delivery of goods.
There the exporter has agreed to give credit to the foreign buyer, he draws a “Usance Bill” i.e.
draft is drawn is for payment at the date later than the date of presentation. A draft may be
drawn according to the period of credit such as 30 days sight, 60 days sight and so on, implying
thereby, that the drawee i.e. importer is to retire the draft 30 days or 60 days or as the case may
be ,after it is presented to the drawee who will retire it by writing upon it accepted with his
signature and date. Thereafter the documents are handed over to him for enabling him to take
delivery of goods.
As there is no aligned document for draft, the same can be prepared by the exporter in the usual
format.
OTHER DOCUMENTS
Black List Certificate: This is to certify that ship/aircraft carrying the good has not
touched a particular country on his journey or that his goods are not of particular country. This
certificate is usually called for where countries have stood political relation with another.
Weight Note: This document is used to confirm that the packets etc are of a particular weight
and not more than the stipulated weight as per contract. It may at times give the gross weight
and net weight of the whole consignment.
Certificate of Inspection: Inspection of thee goods have been inspected before shipment is
needed under some contracts or by some countries. This certificate is generally required to be
issued by one of the authorized independent inspection surveyors in the export country.
Language Certificate: Indian exporters should apply for this certificate simultaneously or
separately with the GSP certificate and application for pre-shipment inspection. The language
certificate is issued in in quadruplicate three copies are given to the exporters. He should
transmit one copy to his overseas importer, along with documents for realization of export
proceeds.
Trans Shipment Bill: This document is used for goods imported into a customs
port/airport intended for transhipment.
Trans Shipment permit: The Transhipment permit is the permission for transhipment of
goods from the vessel on which the same are booked originally to another for export.
Shipping Order: Shipping order is issued by the shipping line intimating the exporter,
about the reservation of space of shipment of cargo through a particular vessel from a specified
port and on a specified date.
Shut out Advance: It is a statement of packages shut out by a ship and is prepared by the
shad concerned and sends to the exporter showing the particulars of packages, for disposal
arrangement.
Short Shipment Form: Short Shipment form is an application to the custom authorities at
post advising the short shipment of goods and for claiming.
Stamp Duty: There is no longer any Stamp duty on either the sight drafts or Usance draft on
or trade by or in favour of a commercial bank or co-operative and such bills of exchange are
raised out of benefited commercial or trade transactions.
LIST OF DOCUMENTS TO BE SUBMITTED BY THE EXPORTER TO
VARIOUS AUTHORITIES
1. Shipping bill
2. Commercial Invoice
3. G.R. Form (Original and Duplicate)
4. Shipper’s Declaration Form
5. Copy of Export Contract/LC/Export Order
6. Inspection Certificate
7. A.R. Form
8. Export Licence (whenever necessary)
9. Weight age Certificate (wherever necessary)
• TO THE BANK
• TO LICENCING AUTHORITY
1. Application for exporter/importer code number in duplicate.
# For advance licence
A. Application form
B. Copy of Invoice
C. Sales contract
D. Bill of lading
E. Inspection report
# To the export import bank
1. L/C
2. Balance Sheet of Exporter
1. Proforma Invoice
2. Copy of dispatch Invoice
3. L/C
The services provided could be classified into essential and optional services
1. ESSENTIAL SERVICES
These services comprise:
2. OPTIONAL SERVICES
FORMS OF SHIPPING
The forms of shipping represent the organization of shipping organization of shipping services.
There are three basic forms of shipping as explained below:
• Liner Shipping
• Tramp Shipping
• Conference Shipping
BHUSHAN STEELS basically deals with all forms of shipping. TRAMP SHIPPING basically
involves those ships which are usually used for the transportation of homogenous cargo which
is moved in bulk quantities .Such ships operate on single on single or consecutive voyages.
Such ships work on inducement basis and ply indiscriminately between the ports of the world
depending upon the laws of the demand and supply in the market. The rates in the tramp market
are determined purely by the free inter play of the forces of the demand and supply. the
shipping lines operating as tramps can operate on any route for which the freight cargo is
available .Thus, such shipping lines are not committed to any discipline in terms service
schedule and the freight rates. However Conference and Linear shipping are used in rare cases
or in the case of discrepancies.
LINER SHIPPING Involves the carriage of merchandise by regular shipping lines. These
shipping lines provide the service by calling regularly at specified ports irrespective of quantity
of cargo available. Such ships usually carry general cargo i.e., an accumulation of small loads
belonging to many shippers. Each shipper pays the freight in accordance with the tariff based
on volume, weight or the value of the cargo. The liner shipping companies provide commitment
of regular service on specified sea routes at specified freight rates.
TYPES OF SHIPS
There are primarily four types of ships and readily used for the shipment of various products
from BHUSHAN STEELS:
• MAERSK
• CMA
• APL
• IAL
PROMINENT PORT
• JNPT
• GTIL
• MUHDRA
• KANDLA
• MSKT
The freight rates charged by various shipping lines are fixed taking into consideration a
complex set of factors namely:
In practice, the various shipping lines follow a very practical approach and fix the rates taking
into consideration the following two aspects
CONTAINERISATION
Containerisation is the technique of stowing freight in reusable containers of uniform size &
shape for transportation.
The use of containers has revolutionized the carriage of goods through shipment. The
containers are carried by train or road to the sea ports where they are loaded on the ships for the
onward transportation to the destination. The exporters do not need to carry the cargo to the
seaports any longer rather they can approach the container freight station or the inland
container depot(ICD) to book the cargo there for the transportation to the destination. The
custom clearance of the cargo is provided at ICDs and in the process, the exporters are able to
save lot of time. The packing of the cargo in a container can be done either in the container
depot or in the factory of the exporter.
The type of container used in BHUSHAN STEELS is General Purpose containers which are
closed and are suitable for the carriage of all types general cargo both solids and liquid. Access
for loading and unloading is through full width doors. The dimensions of general purpose
container are as follows:
Based on the length of the container, the container is generally known as 20ft container or 40ft
container,20ft containers are specifically used in BHUSHAN STEELS although some times in
rare cases 40ft containers are used at some discrepancy.
=
load bearing / weight distribution
area
container
floor
steel
roll
full longitudinal support to provide guidance when pushing in the dunnage cradle
weight distributing dunnage in cradle form please note that the softer this dunnage is the more
it will succomb to the weight of the steel rolls solid steel bars could be considered with protective
hard plastic angle profiles or may be once in correct position additional support dunnage can be
placed on top of the longitudinal supports
chock blocks
after pushing from rear to front location it can be fixed in position with additional dunnage to prevent
longitudinal
movement
Methods of Payment
METHODS OF PAYMENT
1. Advance Payment
3. Letter of credit
ADVANCE PAYMENT
Under this method, the exporter receives payment from the overseas importer in advance in the
form of demand draft or cheque denominated in foreign currency or by way of direct
telegraphic transfer against the supply of goods to be made later on. In case of huge payments
in advance, the importer demands that an advance payment guarantee be provided through
bank. It is the safest mode of payment from the point of view of the exporter. The exporter may
ask for advance payment only when he is a strong trading position and able to dictate terms in
case when the particular product is not available elsewhere. However, the importer would be
willing to make advance payment if he can rely on the integrity of the exporter.
When an exporter receives advance payment then he must have an evidence of advance
payment in the form of Certificate of Foreign Inward Remittance (CFIR).This certificate is
issued by the exporter’s bank i.e. the authorized dealer in foreign exchange, where the advance
payment was deposited. This certificate is issued when the money is credited to the account of
the exporter.
1. The exporter i.e., he presents documents to his bank along with bill of exchange for
collection of payment/acceptance.
2. The Collecting Bank i.e., the bank which forwards the document for collection or
obtaining acceptance of the draft from the importer as per instructions of the exporter.
3. The Remitting Bank i.e., the bank which presents documents to thee importer for the
collection of the payment/acceptance of the draft as per instruction of the collecting
bank.
4. The importer i.e., the party entitled to receive documents against payment/acceptance.
Documentary collection may take either of the two forms detailed below:
Informs
Exporter
Exporter’s
Bank (forward Makes
(forwards Importer’s Payments
Credit the document to) Sends Importer
documents to) Bank
In the first stage, the sequence of steps is the same as outlined above for D/P Mode of payment
with the only difference being that importer conveys his acceptance on the Usance Draft
instead of making payment, and the documents are released to him. The remitting bank sends
the acceptance to the collecting bank and the same is given to the exporter. The exporter waits
for the expiry of the Usance period and then submits the acceptance to his bank for the
collection of payment.
After the expiry of the Usance period, the exporter submits the acceptance to the bank for the
collection of payment. The collecting bank credits the account of the exporter upon realization.
The procedure for the acceptance and collection in case of D/A mode of payment is explained
in the figure
Informs
Exporter Exporter’s
Sends Bank Sends
Accepts Usance
(forwards (forward Importer’s Draft Importer
documents to) document Bank
to) Hands over
acceptance acceptance
documents
Exporter’s
Exporter Asks for
Bank
Credit the (forwards Remittance payment
(forwards Importer’s
acceptance Importer
documents to) Bank
to)
LETTER OF CREDIT
According to article 3 of uniform customs and practices relating to the documentary credits,
Documentary letter of credit has been defined as any “arrangement whereby a bank acting at
the request and in the accordance with the instructions of a customer (the importer) undertakes
to make payment to or to the order of a third party (the exporter) against stipulated documents
and compliance with stipulated documents and compliance with stipulated terms and
conditions”.
DOCUMENTARY CREDIT & CONFIRMATION CYCLE
(1) Applicant/Importer
(2) Applicant`s/Importer`s Bank
(3) Exporter
(4) Intermediary/Confirming Bank
(5) Paying/ negotiating bank
(2) Issuing Bank - The issuing bank gives a conditional undertaking and reimburses the
negotiating bank against submission of the prescribed documents. It should verify the
documents presented under the credit within seven banking days following the day of
receipt of the documents and if it observed any discrepancy in the documents it will
refuse reimbursement.
(3) Advising Bank - The bank advising the Letter of Credit acts without any engagement
on its part but will take reasonable care to check the authenticity of the credit. If
incomplete or unclear instructions are received, it will give the preliminary information
to the Beneficiary without any responsibility on its part
(4) Confirming Bank - When the confirmation to accredit is added by a confirming bank
at the specific request of the opening bank it constitutes a definite, equitable
undertaking on the part of the confirming bank in addition to the opening bank,
provided the stipulated documents are presented in accordance with the terms and
conditions of the credit with the due date
(5) Negotiating Bank - The nomination of bank by the opening bank for negotiation of the
documents under a credit does not constitutes any undertaking on the nominated bank
unless the credit is confirmed by it. Negotiating Bank may be the bank of the
beneficiary of the credit. Issuing Bank will reimburse the nominated bank if it had
negotiated the documents as per the letter of credit.
(6) Reimbursing Bank- Reimbursing bank will reimburse the claim made by the
negotiating bank under a credit. It need not insist for submission of any certificate of
compliance from the negotiating bank along with their claim. The Issuing Bank will
have prior arrangement or provide sufficient funds with the reimbursing bank for
honouring the reimbursement claim as and when it is made.
Step 1
The Sales and Credit Departments agree that a irrevocable letter of credit is necessary prior to
communicating financial terms to the customer. Sales and Credit must also agree whether to
The Credit Department will communicate the letter of credit terms to the customer, forward a
letter of credit checklist to the customer and try to select the issuing bank. Selecting the issuing
The Credit Department will also request that the customer forward a copy of the letter of credit
on receipt. The customer generally receives its copy before our advising bank. Getting an early
copy allows all parties at (your company) to begin the review process.
Step 3
The customer arranges with its bank for the issuance of the letter of credit.
Step 4
The issuing bank sends copies of the letter of credit to the customer and to seller’s advising
bank. Both, the customer and seller’s advising bank will send a copy to the Credit Department.
Step 5
Once the Credit Department receives a copy of the letter of credit, it will send copies to
Customer Service Representatives, Sales, and Traffic within one business day of receipt. Traffic
personnel will forward the letter of credit to the forwarder. In addition, the Credit Department
Step 6
Credit, Sales, and Traffic will review the letter of credit looking for necessary amendments
within one day of receipt. Reviewing parties will forward all amendments to the Credit
Department via Fax or E-mail. A Fax or E-mail is still necessary should Sales or Traffic require
no amendments.
Step 7
If amendments are necessary, the Credit Department will forward all required changes to the
customer. Should the necessary amendments lie outside Credit's realm of expertise, it will seek
the needed assistance from other areas within the Company. If the customer agrees, it will
forward requests to its issuing bank, which in turn will forward an amended letter of credit to
seller’s advising bank. Seller’s advising bank will fax a copy of the amended letter of credit to
Credit, who in turn will send it to Sales and Traffic. Credit, Sales, and Traffic will review the
When making amendments and reviewing an amended letter of credit, it is important to keep
the letter of credit's expiration date in mind. Credit should approximate the number of days
taken up by the amendment process and amend the expiration date by the same number of days.
Step 8
If no changes are necessary, all the affected parties approve the amended letter of credit by
notifying the Credit Department of the approval via Fax or E-mail within one day of receiving
the amended letter of credit. If changes are necessary, go back to Step 6. Once the Credit
Department receives the approval notifications from all parties, it will immediately advise all
Step 9
Sales send a copy of the amended letter of credit to the plant with instructions to ship the
product to the customer. Sales will do this on the same day it receives the notification from the
Step 10
The Freight forwarder and Traffic Department ship the material and send all the documentation
required in the letter of credit along with a draft for payment to seller’s advising bank via
Step 11
Our advising bank reviews all documentation to ensure that it complies with the letter of
credit's requirements. If there are any correctable discrepancies, the advising bank will correct
them. It is important to note that your advising bank may charge you for each discrepancy
found and corrected. If there are non-correctable discrepancies, our advising bank will try to get
However, getting the customer to waive non-correctable discrepancies is no guarantee that the
issuing bank will agree to the changes. This is especially true if the financial condition of the
customer deteriorates. The advising bank's review process should take three days or less.
Step 12
Seller’s advising bank forwards all the documents to the location specified in the letter of
Step 13
The issuing bank honors the letter of credit and forwards the funds to seller’s
advising bank. Should the issuing bank not honor the letter of credit, it must tell
Step 14
Seller’s advising bank will credit his account minus applicable fees. All advising fees are
absorbed by the division making the sale. The advising bank will contact the Credit Department
The issue of who will pay for the associated fees should be resolved prior to accepting the letter
of credit. The Buyer and the Seller should all be in accord. Although the seller typically pays
1. Complete and correct name and address of the beneficiary i.e. exporter.
2. Complete and correct name and address of the applicant i.e. importer.
3. Type of the letter of Credit/Documentary Credit
4. Amount of credit
5. How the credit shall be available e.g., by sight payment, deferred payment, acceptance
or negotiation
6. Name of the nominated bank, that is, the bank with which the credit is available or
whether it is available with any bank
7. The name of the drawee of the draft and the tenor of the draft.
8. List of the documents required to be submitted by the beneficiary.
9. Port of discharge and the place of final destination.
10. Terms of delivery i.e., FOB, CFR, CIF etc.
11. Status of transhipment i.e, whether allowed or not.
12. Status of partial shipment i.e, whether allowed or not.
13. The last date of sending shipment.
14. Time period for the presentation of the document for negotiation by the beneficiary after
the dispatch of the shipment.
15. The date and place of expiry of the letter of credit.
16. Transfer of the letter of credit allowed or not.
17. Mode of advice of the letter of credit i.e. by mail or teletransmission.
Documents
Released Importer
to
Informs
Beneficiary Beneficiary
Issuing Bank
ce
Account (exporter) Remittance
(L/C opening
advi
(Exporter) Bank
Bank)
For
of exporter forwards
Submits them to Discrepant
Credited Sent
Documents
sent
t Scrutiny of
Sen Documents
e
anc
mitt Non-
Re Discrepant
Documents
FINDINGS
Bhushan steel limited doing fairly well business wise in regards to handling of the documents
related to international trade. The complete department plays an important role and gels
together firmly in case of encounter with any discrepancies. Day by day many ways is
invented to produce the documents and it reduced the discrepancies and mistakes.
Company is taking relevant steps towards generating international trade documents. Under
international trade documents each and every field is important but more stress is laid
on “LETTER OF CREDIT”, because every field is affected from the same. Therefore letter of
credit is the important term which includes all the other documents. Company’s steps started
with making of Performa invoice and ends with BRC’s.
All the departments must use some step to prevent the crises. Company used following
term to prevent any losses.
BSL focuses on the Contract in very careful manner. BSL makes its own contract format and
try to convince the buyer to accept it.
They careful examine the letter of credit when it’s come. And if they found and problem in L/C
then they preferred to take the Amendment on it. Its is useful when the buyer want to make
some complication in documents such as put another unit in L/C and contract other unit. Which
make difficulties of the exporter and make some gain to buyer (advance payment discount etc).
Therefore they take some precaution and take some amendment in L/C if necessary. And after
the amendment they again examine the L/C.
Company used some simple format towards creating the documents and this format
is also universal acceptable. This gives more and more effectiveness in documentation
department.
BSL in one of the very big company and the international trade make more complicate when,
there are no coordination, but in BSL the coordination is very good. They all together used
the benefit of license such as DUTY DRAWBACK, DEPB or DFRC.
They all are very active and specially remittance department which make easier and
faster end of export and able to take the benefits.
These all are the KEY STRATEGIES of the Bhushan steel limited to handle the documents in
the proper manner.
SUGGESTIONS
Bhushan steel and strips limited may be used some other strategies such as:
They use same technique which they used in the making of CONTRACT, such as they must be
make some format and try to convince the buyer to accept it. Under it they must clarify the
terms and condition of the L/C and the way of getting L/C. that’s make some problem but to
prevent some losses we need to take some that kind of step. Because many time we see
the buyer asking some of those clause in letter of credit which is not possible to fulfilled. And
the discrepancy may be arise therefore we need to standardized the company policy towards
letter of credit.
Documents asking in the letter of credit make difficultly to give them and also take some of the
important time. Therefore we need to standardize the letter of credit under it we give one of the
lists which show we are able to give only these documents (list of the documents showing).
And then we sign the contract.
BSL must have SAP software to making documents which make it less mistake. BSL having
big market in the INTERNATIONAL and that’s make more work load to the Employee and
take some error in making the documents which is resolve by using SAP software. In
the current they also used the software but that is used only in Sahibabad plant not in Khopoli
plant. So it must be used in
both plants.
All these are the other strategies which must be used in the BSSL.
OTHER SUGGESTIONS
BIBLIOGRAPHY
DATA OF THE REPORT IS TAKEN FROM THE FOLLOWING WEBSITES:
WWW.EXIMBANK.COM
WWW.BHUSHANSTEEL.COM
WWW.GOOGLE.CO.IN
WWW.TRADEPORT.ORG
AND THE BOOKS USED ARE: