Professional Documents
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Project On-: Export Import and Shipping Operations of Various Steel Industries in India
Project On-: Export Import and Shipping Operations of Various Steel Industries in India
Submitted by -:
guide-:
Suraj kumar
Ft-ib-10-854
steel
faculty
Table of Content
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3)
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10)
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12)
13)
Introduction
Steel industry in India
Steel production process
Steel producers in India
Type of steels
Major companies & their capacity
Review of previous year
Growth chart
International trade of steel
Export procedure
Aligned documentation system
Documentation related to shipment
Documentation related to payment
21)
22)
23)
24)
25)
1.
Objective
Methodology
Significance of the project
Recommendation
Bibliography
Introduction-:
Indias economic growth is contingent upon the growth of Indian steel industry.
Consumption of steel is taken to be an indicator of economic development. While
steel continues to have a stronghold in traditional sectors such as construction,
housing and ground transportations, special steels are increasingly used in
engineering industries such as power generation, petrochemicals, and fertilizers.
India occupies a central position on the global steel map, with the establishment of
new state-of-the art steel mills, acquisition of global scale capacities by players,
continuous modernization and up gradation of older plants. Improvingly energy
efficiency and backward integration into global raw material sources.
in India is projected to be higher than the world average, as the per capita
consumption of steel in India, at around 46kg , is well below the worlds
average(150kg) and that of developed countries (400kg). Indian demand is
projected to rise to 200 million tonnes by 2015. Given the strong demand scenario,
most global steel players are into a massive capacity expansion mode, either
through brownfield or Greenfield route. By 2013, steel production capacity in India
is expected to touch 124 million tones and 275 million tones by 2020. While
Greenfield projects are slated to add 28.7 million tones, brownfield expansions are
estimated to 40.5 million tones to the existing capacity of 55 million tones .
This however does not mean that there is no relevant or serious competition issue
in the steel industry. The growing consolidation in the steel industry worldwide
through merger and acquisition has already thrown up several significant concerns.
The fact that internationally steel has always been an oligopolistic industry,
sometimes has raised concerns about the anti-competitive behavious of large firm
that dominates this industry on the other hand the set of large firms that
characterize the industry have been changing over time.
Trade and other government policies have significant bearing on competitive issue.
Matter of subsidies, non tariff barriers to trade, discriminatory customs duty
(on export and import) etc. may bring in significant distortions in the domestic
market and in the process alter the competitive positioning of individual players in
the market. The specific role of the state in creating market distortion and thereby
the competitive conditions in the market a well-known issue in this country.
Background-:
The establishment of Tata Iron and Steel Company (TISCO) in 1907 was starting
point of modern Indian steel industry. Afterwards a few more steel companies
where established namely Mysore Iron and Steel Company, (later renamed
vivesvararya Iron & steel Ltd.) in 1923; Steel corporation of Bengal (later renamed
Martin Burn Ltd and Indian Iron and Steel Ltd.) in 1939. All these companies were
in private sector.
KEY EVENTS
1907*: Tata iron and Steel Company set up.
At the time of independence, India had a small Iron and Steel industry with
production of about a million tones (mt). In due course, the government was
mainly focusing on developing basic steel industry, where crude steel constituted a
major part of the total steel production. Many public sector units were established
and thus public sector has a dominant share in the steel production till early 1990s.
Most private players were in downstream production, which was mainly producing
finished steel using crude steel products. Capacity ceiling measure was introduced.
Basically, the steel industries were developing under a controlled regime, which
established more public sector steel companies in various segments.
Till Early 1990s when economic liberalization reforms were introduced, the steel
industry continued to be under controlled regime, which largely constituted
regulation such as large plant capacities were reserved only for public sector under
capacity control measure; price regulation; for additional capacity creation
producers had to take license from the government; foreign investment was
restricted; and there were restrictions on import as well as exports.
Undoubtedly there has been significant government bias towards public sector
undertakings. But not all government action has been beneficial for the public
sector companies. Freight equalization policies of the past were one example. The
current governmental moral- suasion to limit steel price increases is another.
As a result, the domestic steel industry has since then, become market oriented and
integrated with the global steel industry. This has help private player to expand
The Indian steel industry, with a production of about 1mt at the time of
independence, has come long way to reach production of about 57mt in 2006-07.
Moreover, the steel industry is showing promising future growth as major players
in the industry have announced their plans for establishing about 12mt production
units each in India.
With increasing need for large investments in the industrys private sectors role
would be crucial in the development of the steel industry. The future, it appears
will continue to be dominated by few large players and other industry will remain
oligopolistic- as it is internationally.
BF basically converts iron ore into liquid form of iron. Iron produced by BF
contains high amount of carbon and other impurities, this iron is called pig iron.
Pig iron due to its high carbon content has limited end use application such as
cover of mainholes. To make steel products out of pig iron is known as BOF where
its carbon contains and impurities are burnt and remove through slag separation.
Producer that use this technology includes SAIL,RINL,TSL AND JSWL.
Basic purpose of EAF is remelting sponge iron, melting scrap, its main inputs, to
produced finished steels. It uses electricity as much as 400-500kwh/ton. ISPAT
ESSAR, and the Jindal group are example of producers, which use this technology.
It is one of the most advance process of making steel. Like EAF it uses electricity
as main fuel. IAF is most environment friendly and efficient way of producing
steel. However its lack of refining capacity requires clean products as its inputs.
Large numbers of small steel companies use this technology.
The high weight of the product significantly pushes up the transportation and
movement cost. Therefore large integrated plants are the norms for cost efficient
production.
3. Tata Steel.
4. Visveswarayya Steels.
6. Bhilai Steels
-:
9. KVS Ispat
10. Jindal Steels Limited.
Some of the details regarding these top players in steel industry-:
Rounds
Beams
Wire rods
Squares
Billets
Channels
Blooms
Reabars or reinforcement bars.
Alloy steel
Stainless Steel
Rods and bars
Railway products
Structurals
Electrical Sheets
Galavanized steel
Cold and hot coils and rolled sheets
Tata steel:
Tata steel is a part of the India popular Tata group and they are one of the global
steel service and manufacturing companies in India. They have a balance presence
in the continent of Europe and developed countries in the continent of Europe and
they have manufacturing units in 26 different countries all over the world.
Visveswarayya Steels:
Visveswarayya Steel is actually a unit of the Steel Authority of India. And they are
dealing in the production of pig iron and alloy steels. The company began as a
separate entity in the year 1923 and it has now come under the SAIL.
Bokaro steel plant began its journey as a limited company in the year 1964 and the
company is situated in the Bokaro District of the state Jharkhand. The plant holds
the pride of being the countrys first Swadeshi Steel Plant. Even though, the
company began its journey as a separate entity, it is now merged with the Steel
Authority of India.
Bhilai Steels:
Bhilai steels are one of the leading suppliers, stockiest, exporter and importer of
hast alloy, inconel, monel, brass, copper, alloy steel, carbon steel and stainless
steel. They are also leader in a wide range of pipe fittings like compression type of
pope with ferrules, forges, screwed, SW and BW pipes. The steel product of this
company are being used in the different industries like cement, power, textile,
pharmaceuticals, sugar mills, petrochemicals, fertilizer and chemicals.
Jindal steel & power is leading player in different industries like infrastructure, gas
and oil, coal to liquid, mining, power and steel. They are continuously creating
new opportunities by leveraging their core capabilities to venture into new
business, diversifying investment and by increasing production capacity.
KVS Ispat:
KVS Ispat is flagship of KVS group of companies and the company enjoys a
legacy in the industry of steel for the past 22 years. This company is known for its
excellence right from its inception and they are consistently making great
contribution towards the development of society. They are dealing with different
types of steel products like:
Types of Steels:
The World Steel (World Steel Association) ranked top 80 steel producers in 2008,
by mmt (million metric tons of crude steel output). The Top 10 are listed like
below.
Ranking
Metric tonne
Company
Country
1st
103.3 mmt
ArcelorMittal
Luxembourg
2nd
37.5 mmt
Nippon Steel
Japan
3rd
35.4 mmt
Baosteel Group
China
4th
34.7 mmt
POSCO
South Korea
5th
33.3 mmt
Hebei Steel
China
6th
33.0 mmt
JFE Holdings
Japan
7th
27.7 mmt
China
8th
24.4 mmt
Tata Steel
India
9th
23.3 mmt
Jiangsu, China
10th
23.2mmt
U.S. Steel
United States
World crude steel production reached 1,414 million metric tons (mmt) for
the year of 2010. This is an increase of 15% compared to 2009 and is a new
record for global crude steel production.
All the major steel-producing countries and regions showed double-digit
growth in 2010. The EU and North America had higher growth rates due to
the lower base effect from 2009 while Asia and the CIS recorded relatively
lower growth.
In December 2010, world crude steel production for the 66 countries
reporting to the World Steel Association (world steel) was 116.2 mmt, an
increase of 7.8% compared to December 2009. The crude steel capacity
utilization ratio of the 66 countries in December 2010 declined slightly to
73.8% compared to 75.2% in November 2010. Compared to December
2009, the utilization ratio in December 2010 is 1.1 percentage points higher.
Growth Chart:
The ITD department then enquires about the availability of the stocks from
different plants and then replies to the enquiry regarding the various details.
Tender
The intended buyer visits the companys website, where the auctions are made for
the available goods for export. Then the regular procedure is applied to carry out
the export.
Export procedure:
Step 4: The TRANSPORT and SHIPPING Department checks the Letter Of Credit
and amends it.
Step 5: The plant then sends the goods to the delivery point which may be stock
yards, plants or the port.
Step 6: The goods are then inspected by the customs officer and then they are taken
to the port to be loaded on the vessel.
Step 7: The shipping agent then issues a Bill Of Lading
Step 8: The Customs officer then gives LET EXPORT order
Step 9: Then the exporter negotiates the L/C with its bank and realizes the amount
Step 10: The original copy of the shipping bill and the bank realization certificate
is send to the DGFTs office to obtain the DEPB license.
Step 11: After obtaining the DEPB license it has to be registered with the customs
and the port as well as the importing port from where the goods are dispatched.
The customs officer registers the license in its system and the benefit is availed
when the import is done.
Step 12: The importers bank releases the payment to the negotiating bank.
Step 13: The negotiating bank informs the RBI that foreign exchange has been
earned
IMPORTS: The same procedure is followed for imports. The plant finalizes the
contract and the documents are received through the banking channel. The
documents are sent to B.T.S.O to clear the goods from the port and to pay the
customs duty. The importer has to fixes the vessel from the shipping company.
Once the vessel arrives the B.T.S.O is informed about it. The duty is then paid and
the documents are sent to the doc for clearance of the goods. The goods are then
sent to the respective plants.
1.
COMMERCIAL DOCUMENTS:
Packing list
Certification of inspection/quality control (where required)
Bill of lading/Combined Transportation Documentation
Shipping Advice
Certificate of origin
Insurance Certificate/Policy (In case of CIF export sales contract)
Bill of Exchange.
Regulatory Documents:
Gate Pass-I/Gate Pass II: The Central Excise Authorities prescribe them.
ARE-1: These are Central Excise forms. Earlier, AR4 and AR5 Forms have
been used. In their place, ARE 1 form, now, is used.
Shipping Bill/Bill of Export: They are standardized and prescribed by the
Central Excise Authorities.
For export of goods.
For export of duty free goods.
For export of dutiable goods.
For export of goods under claim for duty drawback.
Export Application/Dock Challan: Standardized and prescribed by the Port
Trust Authorities.
Receipt for Payment of Port Charges: Standardized.
Vehicle Ticket.
Exchange Control Declaration Forms: GR/PP forms are standardized and
prescribed by RBI.
Freight Payment Certificate.
Commercial Invoice
Consular Invoice
Legalized Invoice
Certain Latin American countries like Mexico require this. It is just like consular
invoice, which requires certification from consulate or authorized mission,
stationed in the exporters country.
Customs Invoice
When the commercial invoice is prepared on the format prescribed by the customs
authorities of the importing country, it is called Customs Invoice. This is the
requirement of U.S.A, Canada and Australia.
There is a difference between packing note and packing list. Packing note refers to
the
particulars of contents of an individual pack while packing list is a consolidated
statement
of the contents of the total number of cases or packs.
Packing note is kept in each concerned case/pack. Packing note and packing list
are
sent to the importer along with other documents. If any case contains any shortfall,
importer can communicate to the exporter in which case there is shortage of goods
for making good.
Certificate of Origin
As the very name indicates, certificate of origin is a certificate that specifies the
name
Of the country where goods are produced. This is absolutely necessary where the
importing
Country has banned the entry of goods of certain countries to ensure that the goods
from
Those countries are not allowed to enter in. At the time of arrival of the goods in
the
importers country, this certificate is necessary for the customs to permit
preferential tariff.
Certain countries offer preferential tariff to goods produced and imported from
India. In
such a case, this is a must to the importer to claim preferential tariff and importer
insists
on this document from the exporter. This enables the importers country to regulate
the
concessional tariff only to select countries and deny to the rest of the countries.
A certificate of origin can be obtained from Chamber of Commerce, Export
Promotion
Council and various trade associations which have been authorized by Government
of India to issue.
1. Customs copy
2. Drawback copy
3. Export Promotion copy
4. Port Trust copy and
5. Exporters copy
Types of Shipping Bills
a.
b.
c.
d.
e.
d. Claused or Dirty B/L: It shows that the B/L is qualified which expressly
declares a defective condition of goods. The clause may state bale number
5 hook-damaged or package number 10 broken. By superimposing this
type of clause, the shipping company is limiting its responsibility at the time
of delivery of goods, at the destination.
e. Transshipment or Through B/L: When the journey covers several modes
of transport from the place of starting to the place of destination, this type of
B/L is taken. It indicates that transshipment would be en route. For example,
part of the journey is by ship and the rest of journey may be by road, rail and
air.
f. Stale B/L: According to international commercial practice, B/L along with
other documents must be presented to the bank not later than twenty one
days of the date of shipment as given in the B/L. In some cases, the importer
may indicate the number of days within which the documents are to be
presented from the date of shipment. Exporter has to comply with the
stipulation indicated. Otherwise, the B/L becomes stale and is not accepted
by the bank for payment. A stale bill is one which is tendered to the
presenting bank so late a date that it is impossible for the bank to dispatch to
the consignees place, in time, before the goods arrive at the destination port.
In other words, bank finds it impossible to see the documents reach before
the ship reaches the destination.
g. To Order B/L: In this case, the B/L is issued to the order of a specified
person.
h. Charter Party B/L: It covers shipment on a chartered ship.
i. Freight paid B/L: When the shipper pays the freight, then this type of B/L is
issued with the words Freight paid.
j. Freight Collect B/L: When the freight on the B/L is not paid and to be
collected at the point of destination, it is marked Freight Collect and this
B/L is known as Freight Collect B/L. Generally, the importer insists on the
clean on-board shipped bill of lading with the prohibition of transshipment
of goods as goods can suffer damage during transshipment. If transshipment
is allowed, even period of journey may take longer
Contents of B/L
Trust Receipt: In case of D/P bill, the importer has to make the payment to
take delivery of goods. If the importer is unable to make the payment, on
arrival of the shipment, and take possession of goods, he executes a Trust
Receipt to take delivery of goods. Importer will have the right to sell the
goods and would be acting as agent of the bank. Importer will be depositing
the sale proceeds with the bank, as and when sales are made. Till the
importer makes the final settlement, bank retains ownership for the
merchandise and the role of the importer is not that of owner but that of
agent to the bank.
Certificate of Inspection
It is a certificate issued by the Export Inspection Agency certifying that the
consignment has been inspected under the Export (Quality Control and Inspection)
Act, 1963 and found that the requirements relating to quality control and inspection
have been complied with, as applicable, and the goods are export worthy.
2. PP Form:
It is required to be filled in for all export transactions, in duplicate, for all countries
to be made by post parcel, except when made on value payable or cash on
delivery basis.
3. VP/COD Form:
It is required to be filled for all export transactions to all countries by post where
the export proceeds are realized on value payable or cash on delivery basis.
3. SOFTEX Form:
It is required to be prepared, in triplicate, for export of computer software in
nonphysical form.
All the above documents serve the purpose of monitoring the realization of export
Proceeds in the stipulated manner.
the costs and up to what point? These issues are resolved by incorporating the
elements (general conditions) in export contracts. Most exporters have developed
standard general contracts. It simplifies the day to day operations and also reduces
the possibility of missing certain items. The complexity of the conditions depends
on what is exported. If the items exported are common items such as handicrafts,
garments or normally used consumption items, standard general conditions
contract is sufficient. However, if the goods exported are complex item such as
petrochemicals, the export contract has to be drafted with a great deal of care,
which may turn to be voluminous running into hundreds of pages. For a majority
of products being exported from India, the following elements have to be
incorporated in the export contracts:
1. Names of the Parties
2. Description of the Products
3. Quality
4. Price per unit
5. Total value
6. Currency
7. Tax and Charges
8. Packing
9. Marking and Labelling
10. Mode of Transport
11. Delivery: Place and schedule
12. Insurance
13. Inspection
14. Documentation
15. Mode of Payment
16. Credit period, if any
17. Warranties
18. Passing of risk
19. Passing of property
20. Availability/non-availability of export-import licence
21. Force Majeure (Factors beyond the control of the parties that makes the
performance of the contractual obligations impossible e.g. Wars, floods, fire, civil
war. Once this specific clause is incorporated, parties are relieved of their mutual
obligations, on the happening of the event. Contract comes to an end and no party
is liable for damages)
22. Settlement of Disputes
23. Proper Law of the Contract
24. Jurisdiction.
The Ministry of Commerce, Government of India, has set up Indian Council of
Arbitration.
It has developed a model set of Contracts for the benefit of exporters. These model
contracts are suitable, in case of most small and medium enterprises.
as it satisfies the claims of both the parties. In this system of payment, banks act as
a media to reconcile the conflicting requirements of the exporter as well as
importer.
Forms of Documentary Bills
Documentary Bills can be in the form of
a. Sight Bill and
b. Acceptance Bill.
Collection of Bill:
In this case, either D/P bill or D/A bill is sent to the correspondents bank for
collection of proceeds from the importer. In case of D/P bill, importer has to make
payment to get the documents. In case of D/A Bill, on receipt of advice from the
bank, importer accepts the usance bill by writing the words Accepted with his
signature on the usance draft. Then only, importer gets documents of title to goods
from the bank. He can get possession of goods and even sells the goods to get the
necessary funds to make payment on the due date. In this case, the exporter is
extending credit to the exporter, apart from assuming the commercial risk of
default in payment as the importer may not pay on the due date, after taking
delivery of goods. Soon after the payment is received from the correspondent bank,
exporters account will be credited when the bill is sent on collection basis.
Purchase/Discounting of Bill:
When the exporter is in need of funds, at the time of handing over the documents,
he can request the banker to purchase/discount the bill and allow the proceeds to be
credited to his account. If it is a sight bill, bank purchases and if it is usance bill,
bank discounts the bill. In both the cases, payment is made to the exporter, on
presentation of documents
Documentary Credit under Letters of Credit
Main Attraction: This method of payment has become highly popular in recent
times. The greatest attraction to the exporter is elimination of credit and payment
risks. Exporter is not concerned with the credit +worthiness of the borrower while
entering into the contract. In other words, the credit of the banker is substituted for
that of the importer. There is no payment risk as negotiating bank makes the
payment to him, once the stipulated conditions are complied with. Above all, an
important advantage from the viewpoint of the exporter, he can obtain the payment
from a bank, at his own centre. The documentary bills finance a large part of
overseas trade.
Definition:
According to Article 3 of Uniform Customs and Practices relating to Documentary
credits, Documentary Letter of Credit has been defined as any arrangement
whereby a bank acting at the request and in 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
terms and conditions.
Method:
At the request of the importer, bank makes a commitment to the exporter to make
payment, under certain circumstances and up to a limit, provided the stipulated
documents in the letter of credit, requested by the importer, are presented and
found to be in order. Exporter may draw the draft on the importer or importers
bank. The documents usually required are full set of bill of lading, invoice and
marine insurance policy.
Parties in Documentary Credits:
In a documentary credit, there should be at least four parties, applicant, beneficiary,
the issuing bank and the advising bank. The advising bank, confirming bank and
paying bank may be rolled into one.
that the local bank should add confirmation to the credit opened. Once
confirmation is added, the confirming bank, which is normally the
correspondent bank of the opening bank, adds a clause to the effect that:
The above credit is confirmed by us and we hereby irrevocably undertake to
honour the drafts drawn under this credit on presentation, provided that all the
terms and conditions of the credit are duly satisfied.
When the credit is irrevocable but not confirmed, the issuing bank asks the
correspondent bank to advise the credit and in such a case, the correspondent
bank will advise the credit with a clause stating that:
This credit is irrevocable on the part of the issuing bank but is not confirmed
by us and therefore it does not involve any undertaking on our part.
Transferable and Non-Transferable Letter of Credit:
Under transferable letter
of credit, exporter can transfer the credit fully or partly to one or more parties. In
cases, when the product is to be fabricated by a third party, fully or partly, a portion
of the credit is made transferable to the third party.
When the credit is not transferable, it is non transferable credit.
Stand by Credit:
This is similar to a performance bond or guarantee, but in the nature of letter
of credit. The credit assures the beneficiary that in the event of nonperformance or non-payment of any obligation, the beneficiary may request
the issuing bank to make the payment. The beneficiary has to draw the claim
by drawing a bill on the issuing bank, accompanied with documentary
evidence in support of non-performance of contract. When the exporter
receives the advance payment from importer, importer may insist on
exporter to open Stand by credit in favour of the importer to protect the
latters interests.
Incoterms:
Introduction
On 1 January 2011, the ICCs Incoterms 2010 came into force. These are the eighth
revision of the Incoterm Rules, with the last revision dating back to 2000. The new
Rules have been revised to take into account developments in international trade
over the past ten years as the volume and complexity of global sales has increased,
to address security issues arising in recent times and to provide for the ongoing
changes in electronic communication. The new Rules also recognise the growth of
customs free areas.
One of the principal concerns with regard to the Incoterms has been that often the
wrong term is selected for use by the parties. The introduction to the new 2010
Rules stresses the need to use the term appropriate to the goods, to the chosen
means of transport and to whether or not the parties intend to impose additional
obligations on the seller or buyer. In addition, there are Guidance Notes (and a
diagram) at the front of each Incoterms Rule containing information to assist in
making a choice on which Rule to use.
Summarised below are the principal changes to the 2000 version.
Reclassification of Rules:
The new Rules have been separated into two classes:
i. Rules for use in relation to any mode or modes of transport,
which can be used where there is no maritime transport at all or
where maritime transport is used for only part of the carriage
and
ii. Rules for sea and inland waterway transport, where the point of
delivery and the place to which the goods are carried to the
buyer are both ports.
FAS, FOB, CFR and CIF belong to the second class of Rules. In respect of FOB,
CFR and CIF, reference to the ships rail has now been deleted and this has been
replaced with the goods being delivered when they are on board the vessel.
DAP (Delivered at Place) replaces DAF, DES and DDU. The arriving vehicle
under DAP could be a ship and the named place of destination could be a port.
Consequently, the ICC considered that DAP could safely be used instead of DES
and that it would make the Rules more user-friendly if they abolished terms that
were fundamentally the same. Again, a seller under DAP bears all the costs (other
than any import clearance costs) and risks involved in bringing the goods to the
named destination.
1. To interpret all commercial terms and abbreviations used herein and which have not been
otherwise defined, the rules of INCOTERMS 2000 shall apply.
1. Prices
2. Price(s) as agreed between the Seller and the Buyer are inclusive of the labour charges involved in
the work of dunnaging/ stowing/ lashing/ shoring and securing of the materials supplied by the
Buyer.
3. The Buyer shall arrange at his own costs and expenses to provide to the Master of the vessel at the
LOAD PORT all the materials including materials for dunnage required for stowing, dunnaging,
lashing, shoring and securing of the materials inside the hatches/ holds of the vessel.
4. The Seller shall under no circumstances be liable for any costs, charges, liabilities of whatsoever
nature arising subsequent to the delivery / loading of the materials on board the vessel on the basis
of FOB (Stowed) Load Port, such as ocean freight, insurance charges, port dues, taxes including
income tax, customs duties, unloading and handling charges, levies and fees, if any, of whatsoever
nature and kind, payable or leviable at the time of or by reason of importation of the materials in
the country of import.
3.0 Test Certificate and Inspection
3.1 The materials shall be covered by Works Test Certificate issued by Steel Plant(s) of the Seller. The Works Test
Certificate shall be furnished showing Heat / Cast Number, material, chemistry as per Ladle Sample Analysis,
mechanical properties as may be required in the specification mutually agreed to.
3.2 The materials will be inspected at the load port prior to loading by a Pre-shipment Inspection Agency, mutually
acceptable to the Seller and the Buyer. The Inspection Certificate shall certify (a) that the materials were inspected at
the load port prior to loading and the markings (except for pig iron) were as per the requirements of the Agreement
between the Seller and the Buyer (b) total number of pieces / bundles/ packets/ coils (except for pig iron) and weight
in Metric tonne (MT) and (c) that the materials loaded on board the vessel are without apparent damage, properly
lashed and secured (except for pig iron) inside the hatches/ holds of the vessel. The cost of such Pre-shipment
Inspection at the load port shall be borne and paid for by the Seller.
3.3 Remarks such as materials partly rust stained/ rusty edges/ wet before shipment/ rust stained/ some rusty edges
and/or stored in open area prior to loading and/or unprotected cargo appearing in the Pre-Shipment Inspection
Certificate shall be acceptable to the Buyer.
i.
Delivery/ Shipment
4.1 The shipment schedule will be subject to the condition that the Seller is in possession of the Letter of Credit
satisfactory in all respects to the Seller, within the time schedule.
4.2 Subject to acceptance by the Seller of vessel(s) nominated by the Buyer and subject to the arrival of such
vessel(s) at the load port within the agreed lay can with such extensions as may be mutually agreed upon in writing
(in which event the validity of the Letter of Credit for shipment and negotiation shall be promptly extended by the
Buyer), the Seller shall deliver the materials on FOB [(SLSD) stowed, lashed, secured and dunnaged} load port
terms.
ii.
5.1 With respect to each shipment, the risk shall pass from the Seller to the Buyer as soon as the materials cross the
ships rails at the LOAD PORT.
5.2 The title to the materials shall pass from the Seller to the Buyer only after the Seller has negotiated the
documents and has received payment of the full invoice value of the materials.
5.3 The clauses 5.1 & 5.2 shall be applicable in case of all overseas shipments.
5.4 Clause 5.2 shall also apply to documents under the Clause 9 hereunder, if such an eventuality has arisen.
iii.
Right of Transfer
1. Neither the Buyer nor the Seller shall be entitled to assign or transfer contract resulting from this
Agreement except to its successor or permitted assignee(s) and in the case of any such assignment
or transfer, the contract shall be binding upon such successor or transferee.
iv.
7.1 This Agreement cancels all previous negotiations/ agreements between the parties hereto. There are no
understanding(s) or agreement between the Buyer and the Seller which are not fully expressed herein and no
statement or agreement, oral or written, made prior to or at the signing hereof shall affect or modify the terms hereof
or otherwise be binding on the parties hereto. No change in respect of the contract covered by this Agreement shall
be valid unless the same is agreed to in writing by both the parties hereto specifically stating the same to be an
amendment to this Agreement.
v.
Waiver
8.1 Failure to enforce any condition herein contained shall not operate as a waiver to the condition itself or any
subsequent breach thereof.
vi.
Red Clause
(c) The vessel (nominated by the Buyer and accepted by the Seller) being found unsuitable after its arrival at the
designated loadport, as certified by independent marine surveyor(s),
the seller shall be entitled to negotiate their Commercial Invoice against the L/C opened by the Buyer and realise
100% of the value of the materials ready for shipment on the basis of certificate issued by the Pre- shipment
Inspection agency certifying that the contracted materials and quantity are ready for shipment and also that the
materials are in good condition.
Remarks such as materials partly rust stained/rusty edges/wet before shipment/rust stained/ some rusty edges
and/or stored in open area prior to loading and/or unprotected cargo appearing in the Pre-Shipment Inspection
Certificate are acceptable.
9.2 The title having already passed on to the buyer, the materials will thereafter be held in custody by the seller at
the risk and responsibility of the buyer at the storage yard of the seller. The materials will be covered by tarpaulin at
the buyers request and cost at the storage yard of the seller.
The cost of holding materials shall be as follows till the date of acceptance of vessels NOR, when the vessel finally
calls at the loadport : US $ PMT
i] For the first 15 days from the date of expiry of Sellers NOR Laycan Nil
ii] For any subsequent week(s) (7 days) or part thereof 1
Buyer to ensure that payment towards Ground Rent and/or Tarpaulin cost is remitted and remittance instruction duly
forwarded by SWIFT message, before actual shipment, against the debit invoice.
9.3 The Buyer shall however nominate [another] suitable vessel within reasonable time from the date of realisation
of payment, as mentioned above, for taking delivery of the cargo and subject to such vessel arriving at the
designated loadport, the seller shall at his cost deliver the materials FOB [SLSD] in terms of Contract.
9.4 The Letter of Credit * established by the buyer in favour of the seller shall make specific and unconditional
provision to the above [9.1 to 9.3] effect.
* L/C to be opened with First Class International Bank having Correspondent relationship with State Bank Of India. Name of the
Banks can be obtained by the buyer from SAIL
vii.
Force Majeure
1. If the Seller and/ or the Buyer be prevented from discharging its or their obligation under this
Agreement by reason of arrests or restraints of Princes or Rulers , Government of People , War,
Blockade, Revolution, Insurrection, Mobilization, Strikes, Riots, Civil Commotion, Lock Outs ,
Accidents, Acts of God, Plague or other epidemics, destruction of the materials by fire or flood or
other natural calamity or on account of any other cause beyond the Sellers or the Buyers control
and interfering with the production and/or delivery of the materials as herein above contemplated,
the time for delivery shall be postponed by the time or times during which production and/or
delivery is prevented by any such causes as herein above mentioned, provided that in the event of
such delay exceeding ninety days , the party other than the party which invokes the force majeure
may at their option, cancel this Agreement by Notice in writing to the other party in respect of the
undelivered quantity of the materials without , however, any right against or being responsible to
the other party for such cancellation. The party invoking force majeure shall within 15 days of the
occurrence of force majeure causes, put the other party on notice, supported by certificate from the
Chamber of Commerce or concerned governmental authority and shall likewise intimate the
cessation of such causes. If the force majeure condition continues beyond a period of six months,
the Seller or the Buyer may at his option cancel this Agreement by notice in writing to the other
party in respect of the undelivered quantity of the materials without, however, any right against or
being responsible to the other party for such cancellation.
11.0 Legal Interpretation
1. This contract shall be governed and construed in accordance with the Laws of India for the time
being in force.
12.0 Settlement of Disputes
12.1 All disputes or differences whatsoever between the parties hereto arising out of or relating to the construction,
meaning or operation or effect of this contract or the breach thereof shall unless amicably settled between
the parties hereto, be settled by arbitration in accordance with the Rules of Arbitration of the Indian Council
of Arbitration (ICA) ,New Delhi, India by a sole Arbitrator appointed by the Arbitration Committee of the
Indian Council of Arbitration, New Delhi, India and the Award made in pursuance thereof shall be binding
on both the parties. The venue for the arbitration proceedings shall be New Delhi, India.
13.0 Import/ Export License: It shall be the responsibility of the Seller to arrange export license(s), if any, required
and it shall be the responsibility of the Buyer to arrange for the import license(s) , if required, in the country into
which the materials are intended to be imported.
14.0 General Clause
14.1 It is expressly understood and agreed by and between the Buyer and the Seller that the Seller is entering into
this Agreement solely on its own behalf and not on behalf of any other person or entity. In particular, it is
expressly understood and agreed that the Government of India is not a party to this Agreement and has no
liabilities, obligations or rights hereunder. It is expressly understood and agreed that the Seller is an
independent legal entity with power and authority to enter this contract solely in its own behalf under the
applicable laws of India and general principles of Contract Law. The Buyer expressly agrees, acknowledges
and understands that the Seller is not an agent, representative or delegate of the Government of India. It is
further understood and agreed that the Government of India is not and shall not be liable for any acts,
omission(s), commission(s), breaches or other wrong(s) arising out of the contract. Accordingly, the Buyer
hereby expressly waives, releases and foregoes any and all actions or claims including cross claims,
impleader claims or counter claims against the Government of India arising out of this contract and
covenants not to sue the Government of India as to any manner, claim, and cause of action or thing
whatsoever arising out of or under this Agreement.
15.0 Changes in Destination
15.1 The contracted cargo has to be taken to the designated station only. Any change in destination shall be made
through a formal agreement to this Agreement and on the mutually agreed terms and conditions.
FOR AND ON BEHALF OF FOR AND ON BEHALF OF THE SELLER THE BUYER STEEL
AUTHORITY OF INDIA LTD.
M/S -----------------------------Hindustan Times House, 13th Floor, - ----------------------------------18-20 Kasturba Gandhi Marg, -----------------------------------New Delhi - 110001 INDIA -----------------------------------SIGNATURE : SIGNATURE
NAME : NAME
DESIGNATION : DESIGNATION
COMPANY : SAIL COMPANY
PLACE : NEW DELHI PLACE
DATE : DATE
1. Prices
2.1 The Seller shall under no circumstances be liable for any costs, charges, liabilities of whatsoever
nature arising subsequent to the delivery /loading of the materials on board the vessel on the basis of
CFR (FO/LT) Port, such as insurance charges, port dues, taxes including income tax, customs duties,
unloading and handling charges, levies and fees, if any, of whatsoever nature and kind payable or
leviable at the time of or by reason of importation of the materials in the country of import.
3.0 Test Certificate and Inspection
3.1 The materials shall be covered by Works Test Certificate issued by Steel Plant of the Seller. The
Works Test Certificate shall be furnished showing Heat/ Cast Number, material, chemistry as per Ladle
Sample Analysis, mechanical properties as required in the specification.
3.2 The materials will be inspected at the load port prior to loading by a Pre-shipment Inspection Agency,
mutually acceptable to the Seller and the Buyer. The Inspection Certificate shall certify (a) that the
materials were inspected at the load port prior to loading and the markings ( except for pig iron) were as
per the requirements of the Agreement between the Seller and the Buyer (b) total number of pieces/
bundles/ packets/ coils (except for pig iron) and weight in MT and (c) that the materials loaded on board
the vessel are without apparent damage, properly lashed and secured (except for pig iron) inside the
hatches/ holds of the vessel. The cost of such Pre-shipment Inspection at the load port shall be borne and
paid for by the Seller.
3.3 Remarks such as materials partly rust stained/ rusty edges/ wet before shipment/rust stained/ some
rusty edges and/or 'stored in open area prior to loading' and/or unprotected cargo' appearing in the PreShipment Inspection Certificate and Bills of Lading shall be acceptable to the Buyer.
4.0 Delivery/Shipment
4.1 The shipment schedule will be subject to the condition that the Seller is in possession of the Letter of
Credit, within the time schedule, satisfactory in all respects to the Seller.
5.O Risk and Title
5.1 With respect to each shipment, the risk shall pass from the Seller to the Buyer as soon as the
materials cross the ship's rails at the port of loading and the title to the materials shall pass from the Seller
to the Buyer only after the Seller has negotiated the documents and has received payment of the full
invoice value of the materials shipped.
6.0 Right of Transfer
6.1 Neither the Buyer nor the Seller shall be entitled to assign or transfer contract resulting from this
Agreement except to its successor or permitted assignee/ s and in the case of any such assignment or
transfer, the contract shall be binding upon such successor or transferee.
7.0 Modification of the Contract
7.1 This Agreement cancels/ supersedes all previous negotiations/ agreements between the parties
hereto. There are no understandings or agreement between the Buyer and the Seller which are not fully
expressed herein and no statement or agreement, oral or written, made prior to or at the signing hereof
shall affect or modify the terms hereof or otherwise be binding on the parties hereto. No change in respect
of the contract covered by this Agreement shall be valid unless the same is agreed to in writing by both
the parties hereto specifically stating the same to be an amendment to this Agreement.
8.0 Waiver
8.1 Failure to enforce any condition herein contained shall not operate as a waiver of the condition itself
or any subsequent breach thereof.
9.0 Force Majeure
9.1 If the Seller and/or the Buyer be prevented from discharging its or their obligation under this
Agreement by reason of arrests or restraints of Princes or Rulers, Government of People , War, Blockade,
Revolution Insurrection, Mobilization, Strikes, Riots, Civil Commotion, Lock Outs, Accidents, Acts of God,
Plague or other epidemics, destruction of the materials by fire or flood or other natural calamity or on
account of any other cause beyond the Seller's or the Buyer's control and interfering with the production
and/or delivery of the materials as herein above contemplated, the time for delivery shall be postponed by
the time or times during which production and/or delivery is prevented by any such causes as herein
above mentioned, provided that in the event of such delay exceeding ninety days, the party other than the
party which invokes the force majeure may at their option, cancel this Agreement by Notice in writing to
the other party in respect of the undelivered quantity of the materials without, however, any right against
or being responsible to the other party for such cancellation. The party invoking force majeure shall within
15 days of the occurrence of force majeure causes, put the other party on notice, supported by certificate
from the Chamber of Commerce or concerned governmental authority and shall likewise intimate the
cessation of such causes. If the force majeure condition continues beyond a period of six months, the
Seller or the Buyer may at his option cancel this Agreement by notice in writing to the other party in
respect of the undelivered quantity of the materials without, however, any right against or being
responsible to the other party for such cancellation.
10.0 Legal Interpretation
10.l This contract shall be governed and construed in accordance with the Laws of India for the time being
in force.
viii.
Settlement of Disputes
11.1 All disputes or differences whatsoever between the parties hereto arising out of or relating to the
construction, meaning or operation or effect of this contract or the breach thereof shall unless amicably
settled between the parties hereto, be settled by arbitration in accordance with the Rules of Arbitration of
the Indian Council of Arbitration (lCA) ,New Delhi, India by a sole Arbitrator appointed by the Arbitration
Committee of the Indian Council of Arbitration, New Delhi, India and the Award made in pursuance thereof
shall be binding on both the parties. The venue for the arbitration proceedings shall be New Delhi, India.
ix.
Import/ Export Licence
12.1 It shall be the responsibility of the Seller to arrange export licence(s), if any, required and it shall be
the responsibility of the Buyer to arrange for the import licence(s), if required, in the country into which the
materials are intended to be imported.
x.
General Clause
13.1 It is expressly understood and agreed by and between the Buyer and the Seller that the Seller is
entering into this Agreement solely on its own behalf and not on behalf of any other person or entity. In
particular, it is expressly understood and agreed that the Government of India is not a party to this
Agreement and has no liabilities, obligations or rights hereunder. It is expressly understood and agreed
that the Seller is an independent legal entity with power and authority to enter this contract solely in its
own behalf under the applicable laws of India and general principles of Contract Law. The Buyer
expressly agrees, acknowledges and understands that the Seller is not an agent, representative or
delegate of the
Government of India. It is further understood and agreed that the Government of India is not and shall not
be liable for any acts, omissions, commissions, breaches or other wrongs arising out of the contract.
Accordingly, the Buyer hereby expressly waives, releases and foregoes any and all actions or claims
including cross claims, impleader claims or counter claims against the Government of India arising out of
this contract and covenants not to sue the Government of India as to any manner, claim, cause of action
or thing whatsoever arising out of or under this Agreement.
FOR AND ON BEHALF OF FOR AND ON BEHALF OF THE SELLER THE BUYER STEEL
AUTHORITY OF INDIA LTD. M/S -----------------------------Hindustan Times House, 13th Floor, - ----------------------------------18-20 Kasturba Gandhi Marg, -----------------------------------New Delhi - 110121 INDIA -----------------------------------SIGNATURE : SIGNATURE
NAME : NAME
DESIGNATION : DESIGNATION
COMPANY : COMPANY
PLACE : PLACE
DATE : DATE
Contract
Letter of Credit
Materials as per contract
Documents related to material
Export documentation ( bill of export for land export, shipping bill for sea
export and airway bill for export by air )
A.R.E / Nepal Invoice for Nepal
Test certificate of materials
Transport document
Physical movement of goods across border.
EXPORT NEGOTIATION
Negotiation at bank
Bank Realization Certificate (B.R.C)
IMPORT
a.
b.
c.
d.
Import contract
Letter of credit
Receipt of documents
Bill of lading
Packing list
Test certificate
Certificate of origin
Processing of Bill Of Entry
Port formalities
Customs examination of goods ( restricted items , green channel items )
Customs Pass out
Objectives:-
1. To study the current export scenario of steel industry which is used to import
and export of steel in India.
2. To study the shipping operations during Export-Import.
3. To study the Documentation and its process.
4. To explore the future perspective which help the company to increase their
Exports?
METHODOLOGY:I will use the secondary data that is available, and will look to focus on those
data and will do a time series analysis to predict the future growth of the
steel industries. I will use the current growth statistics to predict the future
growth. I will also try to look in to the aspects about how the Industry is
working to save their money & risk during exports of the steel.
RECCOMENDATIONS
The full value of exports should be realized after negotiation that is no delay
should be made at the time of receiving payments
No clearance charges should be there at the time of discharging the container
from the port. It should be rent free
Privatization should be adopted
BIBLIOGRAPHY