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Chapter-1: A Study of Export Documentation at Visakhakapatnam Steel Plant
Chapter-1: A Study of Export Documentation at Visakhakapatnam Steel Plant
CHAPTER-1
INTRODUCTION
INTRODUCTION TO LOGESTICS
A. Definition
B. Role of Logistics
Helps to define a strategic direction to the company and also to get a clear
understanding the role of logistics in it.
Get a clear idea of the requirements of the various segments of customers.
Have a look at the various factors that would affect the strategy of the
company.
Define alternative strategies and also the scope of the planning effort.
Strategic analysis: this involves taking a look at the various components involved
in the process and selecting the best logistics process among the alternatives. These
components, which are to be reviewed, are revealed during he first step. This may
include revamping the entire process to assessing how a single component can be
used more effectively.
Planning: this involves the assembling of a plan that outlines the mission and
goals for the logistics function and the programs and activities to achieve these
goals. Logistics planning is an iterative process. The plans have to be redefined
every year to improve the quality of performance.
There are several factors that affect logistics. These issues need to be
anticipated, prepared for and taken advantage of for a company to be successful in
today’s market. They are
External:
Globalization
Technology
Workforce 2000
challenging nature of the work force
Environmental concerns
Internal:
Listed below are some of the steps that could be followed to mitigate the above
mentioned issues:
Performance:
System structure:
Technology integration:
MARKETING AT VSP
Being a major producer of steel, VSP is exploring both domestic and
foreign market. To have a proficiency and professionalism at work it has a separate
marketing department taking care of marketing activities at both the markets. VSP has
the marketing department headed by the general manager of marketing, responsible
for collection, compilation, updating and analyzing of the market information related
to the industry. It has its own broad branding products range to sell the market. The
marketing dept. also has the MIS department to supply it with relevant information as
and when required both in relation to domestic and foreign market. It has 3 major
wings under its marketing department i.e. domestic sells department and exports
department and by –products selling department.
PRIMARY OBJECTIVES:
To know the importance of the steel industry
To know the export procedure of VSP.
To know the sales performance of VSP
To find out problematic area in the marketing.
To know the process in export marketing.
To make an analytical study of the process followed by VSP.
To examine the role and responsibility of export department.
To find out and understand the export benefits provided by govt.
SECONDARY OBJECTIVES:
To know the functionality of the company.
To understand the interdependence of different departments.
To observe the changes in marketing activities after LPG policy
To study the company performance and reasons for growth.
METHODOLOGY OF STUDY:
“Methodology is a systematic procedure of collecting information in order to
analyze and verify a phenomenon”. The collection of information is done through
principal source like primary source and secondary source.
Primary Source:
Primary source are those from which information is collected for the first time
or directly. The source from which provide data collected are:
Personal interviews with the executive of export department.
Information provided by external guide.
By personal observation.
Secondary Source:
Secondary data are second hand information collected from
different source like
Company magazine and manuals.
Export documents.
Year wise and product wise statements collected from MIS department.
From official web site of the company.
CHAPTER -2
INDUSTRY PROFILE
INTRODUCTION:
Pre-independence
- Formation of TISCO.
Post-independence
No new steel plant came up .The Hindustan steel Ltd. was born on 19th
January, 1954 with the decision of setting up three steel plants each with one million
tone input steel per year in at Rourkela, Bhilai and Durgapur; TISCO stated its
expansion program.
A bold decision was taken up to increase the ingot steel output India to 6
Million tons per year & production at Rourkela, Bhilai and Durgapur steel plant
started.
During the third five year plan the three steel plants under HSL; TISCO &
HSCO were expanded as show. In January 1964 Bokaro steel plant came into
existence.
Recession Period
The entire expansion program was actively executed during this period.
Licenses were given for setting up of many mini steel plants and re-rolling
mills.
Govt. of India accepted setting up two more steel plants in south. One each at
Visakhapatnam and Hospet (Karnataka).
SAIL was formed during this period on 24th January, 1973. The total installed
capacity from 6 integrated plants was 106 Mt.
Work on Visakhapatnam steel plant was started with a big bang and top
priority was accorded to start the plant.
Scheme for modernization of Bhilai Steel Plant, Rourkela, Durgapur, TISCO were
initiated
Visakhapatnam steel plant had foreseen a 7% growth during the entire plan
period.
Steel industry registers the growth of 9.9 % Visakhapatnam steel plant high
regime targets achieved the best of them.
The steel industry has a bright future as the union government has announced
to create infrastructure worth Rs 50 lakh crore in Visakhapatnam steel plant.
The global steel industry has witnessed several revolutionary changes during
the last century. The changes have been in the realms of both technology & business
strategy. The ultimate object of all these changes is to remain competitive and open
global market.
The Indian steel industry is growing very rigorously with the major producers
like SAIL, RINL, TISCO, JVL and many others. Our steel industry has amply
demonstrated its ability of adopt to the changing scenario and to survive in the global
market that is becoming increasingly competitive. This has been possible to a large
extent due to the adoption of innovative operating practices and modern technologies.
industry has been restructured to meet challenges and a separate fund has been
established for modernization and future development of the industry. It is now being
proposed that Indian steel industry should Gear up to achieve a production level of
about 100 Mt by the year2000.
Global scenarios
The WSA (World Steel Association) has projected that in 2014, world steel
demand will grow further by 4.5% to around 1486 MT. China’s apparent steel use in
2014 is expected to increase by 4%. For India, growth in apparent steel use is
expected to grow by 9.4% in 2015.
Market scenarios
The year 2004-05 was a remarkable one for the steel industry with the
world crude steel production crossing the one billion mark for the first time in the
history of the steel industry. The world GDP growth about 4% lends supports to the
expectations the steel market is all set for strong revival after prolonged period of
depression .The Indian economy also become robust with annual growth rates of 7-8
% this will provide a major boost the steel industry. With the nations focus on
infrastructure development coupled with the growth in the manufacturing sector, the
Indian steel industry all set for north ward movement. The draft national steel police
envisage production of 60 Mt by 2012 and 110Mt by2020, and annual growth rate of
6-7%. All this should therefore augur well for the Indian steel industry.
Production scenarios:-
(Tones/man year)
DEMAND-AVAILABILITY PROJECTION
COMPANY PROFILE
Introduction:
Steel comprises one of the most important inputs to all sectors of the
economy. Steel Industry is both a basic and a core Industry. The economy of any
nation depends on a strong base of Iron and Steel Industry in that nation. History has
shown that the countries having a strong potential for Iron and Steel Industry have
played a prominent role in the advancement in the civilization in the world. Steel is
such a versatile commodity that every object we see in our day-to-day life had use,
such as small items as nails, pins, needles etc., to surgical instruments, agricultural
implements, boilers, ships, railway materials, automobile parts. The great investments
that has gone into the fundamental research in Iron and Steel Technology has helped
both directly and indirectly many modern fields of today’s science and technology.
Steel is versatile and indispensable item. The versatility of steel can be traced mainly
of three reasons.
3. Its properties can be changed over a wide range. Its properties can be
manipulated to any extent by proper heat treatment techniques.
Iron and Steel making as a craft has been known to India for a long time.
However, its production is significant quantities only after 1900.
VSP by successfully installing & operating efficiently Rs. 460 cores worth of
Pollution Control and Environment Control Equipments and converting the barren
landscape by planting more than 3 million plants has made the Steel Plant, Steel
Township and surrounding areas into a heaven of lush greenery. This has made Steel
Township a greener, cleaner and cooler place, which can boast of 3 to 4° C lesser
temperature even in the peak summer compared to Visakhapatnam City.
VSP exports Quality Pig Iron & Steel products' to Sri Lanka, Myanmar,
Nepal, Middle East, USA, China and South East Asia. RINL-VSP was awarded "Star
Trading House" status during 1997-2000. Having established a fairly dependable
export market, VSP plans to make a continuous presence in the export market.
RINL has its integrated steel plant located in Vishakhapatnam, India. Iron ore
is sourced through 100% tie – up with National Mineral Development Corporation
(NMDC) from Bailadilla mines in Chhattisgarh State. The Company was allocated
iron ore mines in Chattisgarh State. The Company was allocated iron ore mines in
Bhilwara , Rajasthan. The company has no captive linkage for coking coal which is
sourced from international markets – mainly Australia.
The company has been consistently , surpassing its rated capacity of production
for the last 15 years and making net profits since 2001 -02. RINL with its 18000
strong workforce & quality products has already made a presence across the globe and
a leader in the Indian Market in long products.
5 RINL Russia
The Project was estimated to cost Rs.3, 897.28 cores based on prices as
on 4th Quarter of 1981. However, on completion of Construction of the whole Plant
in 1992, the cost escalated to around 8500 Cr. Unlike other integrated Steel Plants in
India, Visakhapatnam Steel Plant is one of the most modern Steel Plants in the
country. The plant was dedicated to the nation on 1st August 1992 by the then Prime
Minister, P.V.NarasimhaRao.
BF Dolomite Madharam, AP
Water supply:
Operational water requirement of 36 Mgd is being met from the Yeleru Water
Supply Scheme.
Power supply:
Major Units:
Annual
(‘000 T)
Sinter Plant 5,256 2 Sinter Machines of 312 Sq. Meters. grate area each
Squares HPNaphthalene
Flats Benzene
Rounds Toluene
Rebars Zylene
Vision
• Deliver high quality and cost competitive products and be the first choice of
customers.
• Be respected corporate citizen, ensure clean and green environment and develop
vibrant communities around us.
Mission:
Objectives:
Core Values:
With a view to running the business in a transparent manner meeting the needs
and expectations of the stake holders, it was felt desirable to give utmost importance
to the value system in the company. Accordingly RINL has finalized core values,
which are brought out below.
Commitment
Customer Satisfaction
Continuous Improvement
Concern for Environment
Creativity & Innovation
VISION 2025:
To be the most efficient Steel Maker having the largest single location shore
based steel plant in the country.
OBJECTIVES:
MAJOR DEPARTMENTS:
VSP annually requires quality raw materials viz. Iron Ore fluxes (Lime
stone, Dolomite); coking and non coking coals etc. to the tune of 12-13 Million Tones
for producing 3 Million Tones of Liquid Steel. To handle such a large volume of
incoming raw materials received from different sources and to ensure timely supply of
consistent quality of feed materials to different VSP consumers, Raw Material
Handling Plant serves a vital function. This unit is provided with elaborate unloading,
blending, stacking & reclaiming facilities viz. Wagon Tipplers, Ground & Track
Hoppers, Stock yards Crushing plants, Vibrating screens, Single/ twin boom stickers,
wheel on boom and Blender reclaimers. In VSP peripheral unloading has been
adopted for the first time in the country. The Raw Material Handling Plant (RMHP)
Department procures the different raw materials from various sources. The following
are the important raw material handled by the RMHP Department.
Number of batteries 4
Blast Furnace:
For production of pig iron/hot metal there are two blast furnaces named
Godavari and Krishna. They are of the largest and most modern furnaces in the
country.
There are three LD converters to convert hot metal in to steel, after the
conversion of hot metal in to steel, the steel is subjected to homogenization treatment
and cast in to blooms in continuous casting machines.
(MIS) department to supply it with relevant information as and when required both in
relation to domestic and foreign market. It has three major wings under its marketing
department i.e. Domestic Sells department and Exports department and By-products
selling department.
Planning:
Annual rolling plan (quantities required in various sizes and grade)
Annual dispatch plan (broad identification of quantities required)
Break-up of the above to activities into quarterly plans
Monthly rolling plan and dispatch plan
Collection of monthly material requisitions from all the branches
through the regions by 15th of the preceding month
Collection of special steel requirement from the SS section
Collection of the Export requirement from the Export section
Taking note of the stock position in various stockyards
PRODUCT
The product mix of the VSP comprises of wire rods, TMT bars, light and
medium structured, rounds, channels, squared, basic grade pig iron, blooms and
billets. The production of Iron & Steel results in many by products including
Ammonium Sulfate, Tar products, Benzol products, Nut coke and Slag.
By-products
At VSP a wide variety of by-products are produced some of which are
Fertilizer: - Pushpakala brand, Ammonium Sulfate
Coke Fractions: -Nut coke, Coke Dust
Coal Chemicals: - Coal Tar Pitch (soft and hard)
Tar Products: - Crude Anthacene, Anthracene oil, H.P.Napthalene, Cresote
oil, road tar
Sodium Phenolate Solution
Benzol products: - Caprolactum grade benzene
N.G Toulene, I.G.Xylene
Solvent Naptha LS and HS, Coal tar, Wash oil
Misc.products: - Granulated B.F. Slag, L.D.Slag, Fly Ash
ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 36
A study of Export documentation at Visakhakapatnam Steel Plant
PRICE
Pricing as practiced in espies cost plus profit where cost includes work cost
plus interest plus depreciation, which is variable cost. VSP sets base price on
production cost, size and composition and grade of the product. As the cost of the
Transportation from the factory to various branches, stock yards, are high VSP adds
freight charges to its factory price. VSP charges various duties to abroad customers.
PROMOTION
The advertisement of VSP is based on a comprehensive survey through a
professional market research agency. The company’s advertisement has been a
systematic approach, a building awareness in the 1st year. For a corporate image in the
next year through a campaign on the corporate-cum-brand promotion subsequently. It
launched the product advertising, which was directed towards builders, architects,
contractors and other industry. The media for the corporate image campaign was print
media, national and regional.
For any exporting firm, promotion is a very essential policy. But promotion
requires huge amounts for most of the exporting firms; resources that could be
allocated for promotion are strictly limited. Optimizing with the budget constraints an
export firm is essentially left with three options, which it can use singly or
collectively:
Sales tour with/without government subsidy
Participation in trade fairs and exhibitions
Direct mailing
PLACE
Place/distribution plays a vital role in the marketing of the organization. It
brings the organization and its products closer to the market. Distribution policy is
based on many factors such as market to be served, type of product etc. VSP
practices three levels of distribution, such as
Level – 1
The customer comes to the head quarter sale office and pays cost of the steel
and collects the material at BC gate.
Level – 2
The branch manager who gets the order from the customer maintain branches.
They send the message for the requirement of the products by fax or letter to
through the personnel of marketing and then marketing department will take the
needed action.
Level – 3
First the product goes to the branches maintained by the VSP or the
consignment stockyards maintained by the consignment agent, branches or the
consignment agent sells the product to the stockiest sells the goods to the retailer.
1. Production of comprehensive range of Iron and Steel products, Coke & coal
chemicals, other saleable products like liquid nitrogen, liquid oxygen, liquid argon,
ammonium sulphate and generation of power along with supporting & service
departments.
2. Marketing of Iron and Steel products in export and domestic markets through a
network of regional offices and branch offices.
3. Sale of power to state grid and sale of Coke & coal chemicals, other saleable
products like liquid nitrogen, liquid oxygen, liquid argon, ammonium sulphatein
domestic markets.
Golden Peacock (1st Prize) "National Quality Award - 96" 11M in the National
Quality
Competition – 1996
"Gold Award" at IIIE-National Productivity For Value Engineering case study 2015
Competitions 2015
Performance Excellence Award by QCFI For implementation of 5S 2015
"Performance Excellence Award 2014 by For overall excellence in performance 2015
IIIE"
ICQCC 2015 at South Korea - 1 Silver and For implementation of QC projects 2015
2 Bronze Illumination awards
"VishwakarmaRashtriyaPuraskar" by the Innovative suggestions for higher 2015
Ministry of Labor and Employment, GoI efficiency, productivity & process
improvements
"CIO-100 Award" by International Data For operational and strategic excellence 2015
Group in Information Technology
"Excellent Energy Efficient Award- 2015" For excellence in Energy Management 2015
& "Innovative Project Award" by CII
"Corporate Vigilance Excellence Award" For promoting transparency in 2015
by Institute of Public Enterprise procedures and awareness in combating
corruption
“Best Enterprise Award” under For outstanding contribution for the 2015
Maharatna&Navratna category by SCOPE betterment of women employees
Star Performer Award by Ministry of For outstanding exports performance 2015
Commerce & Industry
Best QC promoting Public Sector by QCFI For promoting Quality Circles 2014
'Excellence' Awards (Highest Category) in For implementation of QC projects 2014
ICQCC - 2014, Colombo, Sri Lanka
‘Excellent Energy Efficient Unit’ award by For Energy Efficiency 2014
Confederation of Indian Industry, Godrej
Green Business Center
Third prize of Indira Gandhi Rajbhasha For effective implementation of 2014
Shield Official Language
National Competition for Young Managers For competitive excellence and 2014
by All India Management Association leadership skills
Vishwakarma Awards - Innovative suggestions for higher 2014
VishwakarmaRashtriyaPuraskar for 2 efficiency, productivity & process
employees improvements
CIO-100 Award For excellence in IT & Special Award 2012
under the category ‘Networking
Pioneer’
Water Efficient Unit Award from CII For excellence in Water Management 2012
The above awards are besides a number of awards at the local, regional &
national level competitions in the area of Quality Circles, Suggestion Schemes
etc.
SWOT Analysis
The strengths and weaknesses of RINL brings forth the opportunities and
threats facing RINL, with a view to buildings up on the strengths, exploiting the
opportunities, improving upon the weaknesses and converting the threats into
opportunities. The strengths, weaknesses, opportunities and threats of RINL are
as under:
S-STRENGTHS:
State-of-the-art technology
High commitment to achieve capacity levels
Areas of excellence
Economies of scale
High expansion potential
Strong commitment to conserve environment
W-WEAKNESSES:
High capital rated charges
Low return product-mix
Productivity below international levels
Practices not as par with international standards
O-OPPORTUNITIES:
Shore based
Sizeable export markets
Access to import resources
Proximity to southern markets
Increasing domestic demand due to thrust on infrastructure development
T-THREATS:
Rising input costs
Increasing competition
Sensitive to exchange rate variation
Possibility of import duties declining further
Excise duties continue to be high
Lack of alternative sources for major raw materials
Major market place(North & West) located far off
Infrastructure continue to be inadequate
CHAPTER-3
EXPORT MARKETING
EXPORT BENEFITS
The international marketing deals essentially with the trade patterns i.e. export
and import patterns among the various countries in the world. It is basically
trade zones, is a recent trend that many countries had adopted to encourage and
facilitate international trade the development of a nation greatly depends on the
marketing. The purpose of industrialization depends on export marketing. The
balance of payments of a country is said to be equilibrium when exports are
equal to the imports. After a long time India had achieved a positive dis-
equilibrium where the exports are more than the imports. It in this situation the
country gains profits. Government has employed several incentive schemes to
encourage exports; they are DEPB, Advanced Licensing and DFRC etc.
For every exporter there are three indispensable elements for success: A
marketable product, efficient sales and distribution organization and a
marketing plan. One or other of these basic ingredients can obtain marketing
success.
EXPORT BENEFITS
Duty exemption schemes enable duty free import of inputs required for
export production. An Advance License is issued as a duty exemption scheme.
A Duty Remission Scheme enables post export replenishment/ remission of
duty on inputs used in the export product. Duty remission schemes consist of
(a) DFRC (Duty Free Replenishment Certificate)
(b) DEPB (Duty Entitlement Passbook Scheme).
ADVANCE LICENCE
An Advance Licence is issued to allow duty free import of inputs, which
are physically incorporated in the export product. Advance Licences are issued
on the basis of the inputs and export items given under SION. However, they
can also be issued on the basis of Adhoc norms or self-declared norms.
Advance Licence is issued for duty free import of inputs. Such licenses
(other than Advance Licence for deemed exports) are exempted from payment
of basic customs duty, additional customs duty, Educational Cess, anti-dumping
duty and safeguard duty, if any.
However, for exports for which payments are not received in freely
convertible currency, the same shall be subject to value addition. Advance
License shall be issued in accordance with the Policy and procedure in force on
the date of issue of licence and shall be subject to the fulfillment of a time
Export sales are exempted from central and state sales tax. For this
purpose, the exporter should register with the sales tax authorities.
7. Membership of Chamber of Commerce
An exporter should also become of the local chamber of commerce.
Among other things, a chamber of commerce issues a certificate of origin for by
many countries.
8. Registration with other Organization
An exporter should also seek affiliation with such organizations as the
national productivity councils (NPC) etc., with may be helpful in getting
information about new products, markets and process.
3. Receipt of order
If the potential buyer finds the term and conditions in the
quotation/Performa invoice acceptable, he may place an order with the exporter.
The importer may also open a letter of credit in favour of the exporter.
4. Export license
Generally, exporters do not require a license. But, in case of some items
like vegetable oils, pulses, seeds etc. It is compulsory to have an export license.
Such a license can be obtained by applying to the DGFT along with a copy of
the export order.
5. Obtaining quotas
The exporter of some items is subject to quantitative restriction by the
importing countries. In such case; the exporter should apply to his export
promotion council for allotment of quotas. Quotas may be allotted on the basis
of past performance or on first-come-first-serve basis.
6. Booking forward contract
As the Indian Rupee has been made convertible on current account, the
exporters are exposed to risk due to fluctuation in foreign exchange rates. To
insure against such risk, the exporter should book a forward contract with an
authorized dealer in foreign exchange.
7. Obtaining pre-shipment credit
The exporter may then approach his bank to sanction him pre-shipment
credit on the basis of the letter of credit or the export order to enable him to
procure the goods and to by raw material components, etc. required for
manufacture.
C) SHIPMENT PROCEDURE
1. Reservation of Space:
Every exporter must reserve the space at the port before shipment. It
gives easy ness to the exporter to load the material in the vessel. It is nothing
but storing the goods at the port before loading.
2. Transport of goods from Factory to the port:
After completion of the rolling of material in the factory, the material
should transport the goods from factory to port by road or by rail. It depends on
the cost, quantity of goods and demand.
3. Customs clearance:
The exporters should get customs clearance from customs department
before shipment. The customs department by examining the documents like
Commercial Invoice, Packing List, Original and duplicate copy of AR4 form,
Original of the inspection certificate, Duplicate GR form.
4. Let ship Order:
The exporter can get order for loading the material after examining the
goods.
The obligations in the agreement are between BUYER and SELLER and
unless otherwise agreed any BUYER’s representative in India is not
liable or obliged by/to SELLER under any agreement as per these terms
and conditions except that any communication to/from such
representative shall be deemed to be to/from BUYER.
PRICE BASIS:
Unless otherwise agreed, price of the material shall be free on board,
Viskhapatnam port, Visakhapatnam, India.
(Applicable for steel products only): The BUYER shall arrange at his
own cost and expense to provide materials including Dunn aging required
for stowing, Dunn aging, lashing, shoring and securing of the material
inside the hatches/ holds of the vessel at load port to the Master of the
vessel nominated by BUYER and accepted by SELLER for delivery as
per clause-5, herein below, labour charges involved in the work of
dunnaging/stowing/lasing/shoring and securing of the materials shall be
borne by SELLER.
SELLER shall under no circumstance be liable for navy
costs/charges/liabilities/insurance/freight/taxes or duties/levies/fees what
so ever nature, the country of Import, arising subsequent to the delivery
of the materials as per the agreement on the basis of FOB.
Marine Insurance to be covered by the BUYER.
DELIVERY/SHIPMENT
The SELLER shall deliver the material free in the holds of the vessel(s)
nominated by BUYER and accepted by the SELLER as per these terms
and conditions in one or more safe berths reachable on arrival always
afloat at loading port which shall be at Visakhapatnam, India. Unless
financial arrangement is made by the BUYER as per clause 6 or
otherwise as agreed by SELLER, the SELLER is obliged to conform
delivery.
The BUYER shall nominate a vessel not more than 25 years with lay
date/cancellation date within 30 days of SELLER’S notice of readiness of
materials for shipment of within the lay days incase given by the
SELLER or acceptable to the SELLER whichever is earlier. The BUYER
shall take into account limitations of the port such as, maximum LOA of
182mts, maximum beam length of 30.48mts and maximum laden draught
of vessels as 9.448mts in some berths and 10.06mts in others.
In case there is a delay by the SELLER to conform notice of readiness of
materials and the BUYER has the option to cancel the contract or take the
delivery of the material at the contract price and terms within a period of
90 days beyond the originally agreed delivery period.
While nominating a vessel the BUYER shall communicate following
particulars for the nomination:
a) Name of the Vessel
b) Year of built and flag
c) Classification
d) LOA/Bean/Draft at max DWT
e) Loadable tonnage/nominal tonnage for delivery
f) Number of Decks (Single decker, tween decker (if tween),
the third deck if any)
g) Number of HOLDS/Hateches
The vessel nominated by the BUYER shall be geared and equipped with
cranes/derricks capable of lifting minimum specified tonnage at a time as
below from the wharf and placing the materials in the place of hatches
including wing spaces and having minimum 4 available hatches. The
SELLER shall guaranty a loading rate of 2000 MT pet weather working
date of 24 consecutive hours Sundays, holidays and non-weather working
days excepted even if used (2000MT PWWD SASHEXEIU) for steel
products and the rate of 4000 MT PWWD SASHEXEIU for pig iron
subject to these terms and conditions on the basis of 5 or more available
workable hatches or hooks which ever is less. The SELLER is not
obliged to accept vessel with gear capacities, less than what is specified
below or vessels offering less than 3 hooks. If due to any reason a vessel
of hatches/hooks, the load rate shall be reduced prorata. The rate of
demurrage/dispatch shall be as mentioned in the below table.
In case any/all vessel gears are NIT suitable for loading the cargo, due to
anti reason and incase BUYER provides shore crane berths and shore cranes at
his cost the same will be considered as gear for the purpose of lay time
calculations. In such an event waiting time for getting shore crane berth shall be
excluded from time used.
In case any hatch is doubled up, it shall be considered as double hatch
only when two cranes that are capable of being worked by two gangs
simultaneously are made available for not less than 75% of loading time of that
hatch.
Product Nom. Quantity Gear capacity Demurrage/dispatch
for delivery MT (MIN) USD per day
(MT)
Pig iron 9999 or below 15 Nil/nil
Pig iron 10000-19999 15 4000/2000
Pig iron 20000 & above 15 6000/3000
Steel 9000 or below 5 Nil/nil
Steel 9001-9999 5 4000/2000
Steel 10000-19999 5 5000/2500
Steel 20000 & above 10 6000/3000
NOTE: Union purchase type gear is not acceptable. The loading shall
be on CQD basis for cases of NIL demurrage/dispatch. It is preferable
to have tween decker for wire rods and single decker for pig iron.
Stacking below wing space will be three high for wire rods, ab ove the
coils will be rolled on plates below the wing space and drop stowed in
the hatch openings. Tank tops should be able to support for lift along
with materials for loading steel cargo. Tank top strength should be 10
T for 10 T for lift for 4 high stac king. All cargo except WRC will be
drop stowed in the hatch opening within the reach of vessel cranes
only. If one or more parties nominate a vessel for lifting part quantity
of pig iron in different sale contracts the dem / sis amount shall be
calculated as per the rates applicable for the total quantity loaded in
the vessel by all parties concerned and the dem / sis amount so arrived
shall be payable on prorata basis as per the quantities lifted by the
respective individual parties / in different sale con tracts.
In case party nominates part vessel for steel consignment, the
dispatch / demurrage calculations will be made based on per working
per hatch per day or per workable hatch per day basis as given below;
“PER WORKING HATCH PER DAY” or “PER WORKABLE H ATCH
PER DAY”. It means that lay time is to be calculated by dividing the
“quantity of cargo in the hold with the largest quantity by the result of
multiplying the agreed daily rate per working or workable hatch by
the number of hatches serving that hold.
Thus: Largest Quantity in one hold
=DAYS
Upon arrival of the vessel within the limits of the loading port or at any
time later till completion of loading, if the SELLER or the load port authorities
consider that the cranes/gears of the vessel are not capable of lifting the
materials of the weights and dimensions as agreed and placing the material
inside the hatches as required for loading, the SELLER has a right to reject the
vessel outright without any liability including dead freight and all other
consequences/losses arising thereof. In case it is considered that the gears are
not capable of maintaining the loading rate guaranteed, the SELLER has a right
to assessment by an independent marine surveyor to determine such load rate
and the same shall be binding on the BUYER. In case the surveyor find the
gears not capable of loading from wharf to any part of the hatches,
nomination/acceptance stands cancelled with no risks/costs to the SELLER and
the charges of the independent marine surveyor shall be borne by BUYER.
The BUYER shall ensure that the charter party governing the shipment
shall inter-alia, include following provisions;
The ship owners shall appoint their own agents at load port.
The ship owner shall bear all ports dues/charges/levies except port
loading charges, tonnage dues, light dues and other taxes,
assessments and charges that are customarily payable by shippers.
Ten days prior to ETA of vessel at a load port, the master of the
vessel shall give telex/cable/fax intimation to the SELLER.
Thereafter at the interval of 7 days/72 hrs./24 before the ETA of
the vessel to the SELLER and as well as to the port office of the
SELLER.
Each vessel shall hold a valid gear certificate in dispatched with
the International Dock Safety Convention, covering the duration
of each voyage and confirming that all the gears have been duly
tested. The master of the vessel shall make the gear certificate
available to the representative of the SELLER for verification
before/on berthing of the vessel at the loading port, in any case
prior to commencement of loading. Similarly, the hatch-wise
loading plan for the materials shall be furnished by the Master of
the vessel before/on it’s berthing.
The master of they vessel shall allow on board the vessel the
representative of the independent inspection agency appointed by
the SELLER and provide such information/ assistance as may be
required by such agency in connection with the performance of
their assigned duties.
The master of the vessel shall provide free use of light on board
the vessel as may be required for working the vessel at the loading
port at all times and in each case free of expense to the SELLER.
The master of the vessel shall make available all the hatches for
loading of the material throughout the period the vessel is worked
The opening and closing of the hatches of the vessel shall always be
done by the closing of the hatches of the vessel shall always be done by the
vessel’s crew and the cost involved therein shall be to the account of the
vessel.
The time lost due to shifting of the vessel within the port limits shall not
count as lay time. However, if the SELLER requires the shifting, the shifting
charges shall be to the account of the SELLER and time lost in shifting shall
count as lay time.
The overtime of the crew and officers shall be to the account of the vessel.
If any damage is caused to the vessel at the loading port at the time of
loading of the Materials by the Stevedores engaged by the SELLER, the
claim, if any, for such damage shall be settled directly between the ship
owners and stevedores. The master of the vessel shall lodge such claim,
if any, on the stevedores, promptly after the damage has been sustained
and then confirm in writing duly supported by the Third Party Damage
Reports, prior to the departure of the vessel from the loading port,
failing which the claim shall stand bared and the stevedores shall stand
absolved and relived of all responsibility. Subject to compliance with
the conditions enumerated in the clause, in case the stevedores fail to
settle the same, the SELLER shall be responsible for settlement of such
claim.
Statement of facts: Immediately after completion of loading of the
materials into vessel and before the sailing of the vessel from the
loading port(s) duly signed by and distributed amongst; (a) master of the
ADIKAVI NANNAYA UNIVERSITY MSN PG CAMPUS, KAKINADA Page 72
A study of Export documentation at Visakhakapatnam Steel Plant
TERMS OF PAYMENT
Unless agreed otherwise, financial arrangements shall be made within six
weeks of acceptance of offer by the SELLER or before nomination of the
vessel whichever is earlier, in USD by the BUYER in favour of SELLER
by means of a confirmed irrevocable without recourse to the drawer’s
letter of Credit (LC), governed by Uniform Customs and Practices for
Documentary Credits (as applicable on date of opening of LC conforming
to SELLER’S standard format), representing the value of the contract
quantity of the materials with positive tolerance, on the basis of FOBST,
established through any first class international bank in favour of
RashtriyaIspat Nigam Limited, Visakhapatnam Steel Plant,
Visakhapatnam, India. The LC should be advised through:
EITHER OR
13. Size.
14. Quality/Specification.
15. Unit Price / Price per MT
16. Packing : In coils of weight 1.2 MT Approx.
17. Marking : One label attached to each coil showing heat no.,
quality and size.
17A: Shipping Marks: .... (to be indicated on Proforma P/L)
18. Shipping from: Visakhapatnam Port, India
19. Shipment to:
20. Latest Date of Shipments : allowed
21. LC Expiry Date:
22. Place of Expiry: ---------.,India.
23. Partial Shipments :allowed
24. Transshipments :allowed
25. Freight clauses on B/L such as : Freight payable as per
Charter Party etc.
25(A) Deletion of the word “CLEAN” on Bill Of Lading.
26. Rust Clause/ Remarks on BL
27. Remarks: Material with Superficial / Surface / Atmospheric
Rust stored in open area prior to loading unprotected cargo
rust stained.
28. Remarks: Material with superficial/surface/atmospheric rust
stored in open area prior to loading unprotected cargo rust
stained.
29. This credit is available with any bank in India for negotiation
and payment.
30. Charter party bills of lading are acceptable.
31.Ocean Freight shall be settled by the LC applicant.
32. Marine insurance is to be covered Y the LC applicant.
In the event of :
i) The failure of the BUYER to nominate suitable vessel
within lay days given in SELLER’S notice of
readiness of cargo or otherwise acceptable to SELLER
or within 15 days from the N/R of cargo whichever is
earlier, or
ii) The vessel nominated by the BUYER and accepted by
the SELLER failing to arrive at the designated load
port within the agreed lay days for reasons other than
force major as defined under Clause No.10 herein
below, or
iii) The vessel (nominated by the BUYER and accepted
by the SELLER being found unsuitable after its arrival
at designated load port as certified by independent
marine surveyors,
This process is for export division .exports are very important to the
country as it will increase the countries GDP .the exports are been transported to
various countries by various transport systems .huge mount of steel is been
exported to Nepal by rail. 1st of all the origination would find the needs of the
domestic market and then if remains hen it exports.
If we are dealing with the exports then well be planning for the dispatch.
We will make sure to have min quality and max quantity.
In past it was done for 21 days physically. Next reduced to 15days .ext
declined to less than a week. And now it’s all made online. If we get the tenders
they have to follow some rules and conditions and have some qualifying
certificates. The other stage was the price bid. The initial price will be fixed by
the RINL finance, mkt comity Next as all the dealers submit the tenders they are
opened and the H1 bidder was given the priority as his cost of buying was near
to the BID PRICE . If the price was near to the fixed cost then he will be given
the tender This all process will be given by the HEADQUATER COMMITY .in
this wing we will be having the finance HOD and the cost holder . cost holder
deals will the initial price fixing of the products by checking the international
rates in $USD cost was fixed from some of 6the sources like
Products are been sent to the port and the LC will be given by the ship caption.
Once the products are reached then there will be a 3 rd party inspection to check
the products are been sent in a genuine way and quality and the quantity. After
this the LC was deposited in the bank and the money transfer take place.
USA
SOUTH AFRICA
BANGLADESH
DUBAI
SRI LANKA
THAILAND
PHILLIPINES
KENYA
TAIWAN
DJIBOUTI (AFRICA)
INDONESIA
VIETNAM
KOREA
ETHIOPIA
TANZANIA
SOUTH KOREA
INCOTERMS 2010:
EXW Ex Works
“Ex Works” means that the seller delivers when it places the goods at the
disposal of the buyer at the seller’s premises or at another named place
(i.e.,works, factory, warehouse, etc.). The seller does not need to load the goods
on any collecting vehicle, nor does it need to clear the goods for export, where
such clearance is applicable.
“Free Carrier” means that the seller delivers the goods to the carrier or
another person nominated by the buyer at the seller’s premises or another
named place. The parties are well advised to specify as clearly as possible the
point within the named place of delivery, as the risk passes to the buyer at that
point.
“Carriage Paid To” means that the seller delivers the goods to the carrier
or another person nominated by the seller at an agreed place (if any such place
is agreed between parties) and that the seller must contract for and pay the costs
of carriage necessary to bring the goods to the named place of destination.
“Carriage and Insurance Paid to” means that the seller delivers the goods
to the carrier or another person nominated by the seller at an agreed place (if
any such place is agreed between parties) and that the seller must contract for
and pay the costs of carriage necessary to bring the goods to the named place of
destination.
‘The seller also contracts for insurance cover against the buyer’s risk of loss of
or damage to the goods during the carriage. The buyer should note that under
CIP the seller is required to obtain insurance only on minimum cover. Should
the buyer wish to have more insurance protection, it will need either to agree as
much expressly with the seller or to make its own extra insurance
arrangements.”
“Delivered at Terminal” means that the seller delivers when the goods,
once unloaded from the arriving means of transport, are placed at the disposal of
the buyer at a named terminal at the named port or place of destination.
“Terminal” includes a place, whether covered or not, such as a quay,
warehouse, container yard or road, rail or air cargo terminal. The seller bears all
risks involved in bringing the goods to and unloading them at the terminal at the
named port or place of destination.
“Delivered at Place” means that the seller delivers when the goods are
placed at the disposal of the buyer on the arriving means of transport ready for
unloading at the named place of destination. The seller bears all risks involved
in bringing the goods to the named place.
“Delivered Duty Paid” means that the seller delivers the goods when the
goods are placed at the disposal of the buyer, cleared for import on the arriving
means of transport ready for unloading at the named place of destination. The
seller bears all the costs and risks involved in bringing the goods to the place of
destination and has an obligation to clear the goods not only for export but also
for import, to pay any duty for both export and import and to carry out all
customs .
“Free Alongside Ship” means that the seller delivers when the goods are
placed alongside the vessel (e.g., on a quay or a barge) nominated by the buyer
at the named port of shipment. The risk of loss of or damage to the goods passes
when the goods are alongside the ship, and the buyer bears all costs from that
moment onwards.
“Free On Board” means that the seller delivers the goods on board the
vessel nominated by the buyer at the named port of shipment or procures the
goods already so delivered. The risk of loss of or damage to the goods passes
when the goods are on board the vessel, and the buyer bears all costs from that
moment onwards.
“Cost and Freight” means that the seller delivers the goods on board the
vessel or procures the goods already so delivered. The risk of loss of or damage
to the goods passes when the goods are on board the vessel. the seller must
contract for and pay the costs and freight necessary to bring the goods to the
named port of destination.
or damage to the goods passes when the goods are on board the vessel. The
seller must contract for and pay the costs and freight necessary to bring the
goods to the named port of destination
‘The seller also contracts for insurance cover against the buyer’s risk of
loss of or damage to the goods during the carriage. The buyer should note that
under CIF the seller is required to obtain insurance only on minimum cover.
Should the buyer wish to have more insurance protection, it will need either to
agree as much expressly with the seller or to make its own extra insurance
arrangements.”
L/c. A backtoback credit which can also be referred as credit and counter credit
is actually a method of financing both sides of a transaction in which a
middleman buys goods from one customer and sells them to another.
The parties to a Back-to-back Letter of Credit are:
1. The buyer and his bank as the issuer of the original Letter of Credit.
2. The seller/manufacturer and his bank,
3. The manufacturer's subcontractor and his bank.
The practical use of this Credit is seen when L/c is opened by the ultimate buyer
in favour of a particular beneficiary, who may not be the actual supplier/
manufacturer offering the main credit with near identical terms in favour as
security and will be able to obtain reimbursement by presenting the documents
received under back to back credit under the main L/c
The need for such credits arise mainly when :
The ultimate buyer not ready for a transferable credit
The Beneficiary do not want to disclose the source of supply to the openers.
The manufacturer demands on payment against documents for goods but
the beneficiary of credit is short of the funds
6. Transferable Letter of Credit L/c
A transferable documentary credit is a type of credit under which the first
beneficiary which is usually a middleman may request the nominated bank to
transfer credit in whole or in part to the second beneficiary.
The L/c does state clearly mentions the margins of the first beneficiary and
unless it is specified the L/c cannot be treated as transferable. It can only be
used when the company is selling the product of a third party and the proper
care has to be taken about the exit policy for the money transactions that take
place. This type of L/c is used in the companies that act as a middle man during
the transaction but don’t have large limit. In the transferable L/c there is a right
to substitute the invoice and the whole value can be transferred to a second
(b)Retirement Charges
1. This would be payable at the time of retirement of LCs. LC opening bank
scrutinizes the bills under the LCs according to UCPDC guidelines , and levies
charges based on value of goods
2. The advising bank charges an advising fee to the beneficiary unless stated
otherwise The fees could vary depending on the country of the beneficiary. The
advising bank charges may be eventually borne by the issuing bank or
reimbursed from the applicant
3. The applicant is bounded and liable to indemnify banks against all
obligations and responsibilities imposed by foreign laws and usage
4. The confirming bank's fee depends on the credit of the issuing bank and
would be borne by the beneficiary or the issuing bank (applicant eventually)
depending on the terms of contract
5. The reimbursing bank charges are to the account of the issuing bank.
Risk Associated with Opening Imports L/cs The basic risk associated with an
issuing bank while opening an import L/care :
1. The financial standing of the importer As the bank is responsible to pay
the money on the behalf of the importer, thereby the bank should make sure that
it has the proper funds to pay.
2. The goods Bankers need to do a detail analysis against the risks associated
with perishability of the goods, possible obsolescence, import regulations
packing and storage, etc. Price risk is the another crucial factor associated with
all modes of international trade.
3. Exporter Risk There is always the risk of exporting inferior quality goods.
Banks need to be protective by finding out as much possible about the exporter
using status report and other confidential information.
4. Country Risk These types of risks are mainly associated with the political
and economic scenario of a country. To solve this issue, most banks have
specialized unit which control the level of exposure that that the bank will
assumes for each country.
5.Foreign exchange risk Foreign exchange risk is another most sensitive risk
associated with the banks. As the transaction is done in foreign currency, the
traders depend a lot on exchange rate fluctuations.
Export Operations Under L/c
Export Letter of Credit is issued in for a trader for his native country for
the purchase of goods and services. Such letters of credit may be received for
following purpose:
1. For physical export of goods and services from India to a Foreign
Country.
2. For execution of projects outside India by Indian exporters by supply of
goods and services from Indian or partly from India and partly from
outside India.
3. Towards deemed exports where there is no physical movements of goods
from outside India But the supplies are being made to a project financed in
foreign exchange by multilateral agencies, organization or project being
executed in India with the aid of external agencies.
4. For sale of goods by Indian exporters with total procurement and supply
from outside India. In all the above cases there would be earning of Foreign
Exchange or conservation of Foreign Exchange.
Banks in India associated themselves with the export letters of credit in
various capacities such as advising bank, confirming bank, transferring bank
and reimbursing bank In every cases the bank will be rendering services not
only to the Issuing Bank as its agent correspondent bank but also to the exporter
in advising and financing his export activity.
Below mention are some of the necessary precaution that should be taken by
authorized dealers While issuing a stands by letter of credits:
1. The facility of issuing Commercial Standby shall be extended on a
selective basis and to the following category of importers
i. Where such standby are required by applicant who are independent
power producers/importers of crude oil and petroleum products
ii. Special category of importers namely export houses, trading
houses, star trading houses, super star trading houses or 100% Export Oriented
Units.
2. Satisfactory credit report on the overseas supplier should be obtained by
the issuing banks before issuing Stands by Letter of Credit.
3. Invocation of the Commercial standby by the beneficiary is to be
supported by proper evidence. The beneficiary of the Credit should furnish
a declaration to the effect that the claim is made on account of failure of the
importers to abide by his contractual obligation along with the following
documents.
i. A copy of invoice.
ii. Nonnegotiable set of documents including a copy of non negotiable bill
of lading/transport document.
iii. A copy of Lloyds /SGS inspection certificate wherever provided for as
per the underlying contract.
4. Incorporation of a suitable clauses to the effect that in the event of such
invoice /shipping documents has been paid by the authorized dealers
earlier, Provisions to dishonor the claim quoting the date / manner of
earlier payments of such documents may be considered.
5. The applicant of a commercial stand by letter of credit shall undertake to
provide evidence of imports in respect of all payments made under
standby. (Bill of Entry)
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
Qty Val Qty Val Qty Val Qty Val Qty Val
(MT) (CR) (MT) (CR) (MT) (CR) (MT) (CR) (MT) (CR)
STEEL
200000
150000
100000
MT
CR
50000
0 CR
2013-14 MT
2014-15
2015-16
2016-17
2017-18
450000
400000
350000
300000
WRC
250000 ROUNDS
200000 BILLETS
BLOOMS
150000
FLATS
100000
50000
0
2013-14 2014-15 2015-16 2016-17 2017-18
54.07(CR)
31.59(CR)
TOTAL PROFIT
2013-14 2014-15 2015-16 2016-17 2017-18
2000
1800
1600
1400
2103-14
1200
2014-15
1000
2015-16
800 2016-17
600 2017-18
400
200
0
TOTAL
CHAPTER-5
FINDINGS
SUGGESTIONS
CONCLUSION
BIBLIOGRAPHY
FINDINGS:
SUGGESTIONS:
After analyzing the data and information collected from various sources
during the source of project work and the limitations and problems found, some
suggestions are given which may be helpful to the organization in shot run and
long run.
As VSP is producing iron and steel products of high standards and
company has given a major thrust to exports, it has to take promotional
activities in large scale.
As in the present marketing situation where customers hold the key it is
important to influence the customers. It has bound to take promotional activities
at the national level in a big way; similarly the company has to go for global
promotional campaign.
VSP can conduct seminars and customer counseling at international level
so as to make foreign customer award of quality product available in India at a
competitive price.
VSP has only office in the export division. This makes it difficult for
procuring orders directly from the customers. So it will be better for the
company to open international branch in regions where VSP exports its large
share.
CONCLUSION:
In the past the customer had no choice. The government policy and the main
producer’s options were prevailing in the market. Today with the liberalization the
steel industry decontrolled of freight reduced drastically. So the compulsory licensing
of the steel industry has been repelled. As a result a lot of secondary producers with
variable product mix are coming up in the steel industry. All these have threatened the
status quo of all the major producers.
In such a situation “customers holds the key”; unlike yesterday, he is not
dependent On a few main producers. Thus “customer oriented marketing”
should be adopted.
All the suggestions given are directed towards the twin objective of strengthen
the market and improving the customer relationship between the company and its
customers. Both should care for each other without suffering a lot. Then VSP can face
all the competitions and challenges in the market. VSP have their valuable customers
with them for all times. VSP has yet to do a lot towards “customer oriented
marketing” to attract more and more customers because today’s steel market belongs
to customer only.
www.vizagsteel.com
www.indiansteelindustry.com
www.wikipedia.com
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QUESTIONNAIRE
A. Yes ( ) B. No ( )