Professional Documents
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Siri Mba Final Project
Siri Mba Final Project
Siri Mba Final Project
3 Objective 1.4 Methodology Chapter 2: Company profile 2.1 Indias largest international trade 2.2 MMTC Mission 2.3 Corporate objectives 2.4 Infrastructure 2.5 Logistics & Customer servicing 2.6 Credentials 2.7 Board of directors Chapter 3: Indias trading industry 3.1 Indias trading industry Chapter 4: Export/Import procedure 4.1 Pre-requisites & exports 4.2 Export Procedure 4.3 Export financing 4.4 Import financing 4.5 Documentation 4.6 Recognition of exports Chapter 5: MMTC Imports 5.1 Gems & Jewellery Imports 5.2 Fertilizer Import 5.3 Metal Import 5.4 Coal & Hydrocarbons Import 5.5 General Imports PAGE NO 3 3 4 4 5 6 6 7 7 7 8 11 18 19 23 26 28 29 30 35 36 40 44
Chapter 6: MMTC Exports 6.1 Mineral Ore Exports 6.2 Agro Products 6.3 General Exports Chapter 7: Data Analysis 7.1 Product group wise composition 7.2 Business composition 7.3 Foreign Exchange Earnings 7.4 Competitors Chapter 8: SWOT Analysis Chapter 9: Achievements & Awards Chapter 10: Limitations, Findings, Suggestions Chapter 11: Bibliography
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1. INTRODUCTION
MEANING AND NATURE OF FOREIGN TRADE OPERATIONS STUDY. NEED FOR THE STUDY. OBJECTIVE OF THE STUDY. METHODOLOGY.
1.1 Meaning and nature of Foreign trade operations: As far as foreign trade is concerned, this meant large-scale import substitution through extensive protection of domestic industries, direct controls on imports and investments, and overvalued exchange rates. As far as export sector is concerned, it was marked by extreme pessimism. Most of the third world countries have a colonial past marketed by extensive and intensive exploitation of their economies by colonial powers. One of the important instruments of exploitation has been the instrument of foreign trade. 1.2 Need for the study: Raul Prebisch, Hans Singer, Gunnar Myrdal, Ragnar Nurkse and many other development economists in 1940s and 1950s pointed out that colonial powers have had the best of both worlds, both as consumers of primary commodities and as producers of manufactured articles while the colonies (the underdeveloped countries) have had the worst of both worlds, as consumers of manufactures and producers of raw materials. This was due to declining prices f primary goods and increasing prices of manufactured goods causing the terms of trade to deteriorate considerably over time for the underdeveloped countries which were exporters of primary goods. Therefore many underdeveloped countries that won independence in post world war 2 period viewed foreign trade and investment with a certain amount of suspicion. Accordingly, they turned their attention to the domestic markets. Many of them also adopted large-scale programmes of industrialization to Build up the industrial sectors of their economies and reduce their dependence for manufactured goods on developed countries.
To understand the INDIAs Trading Industry. To know the Export/Import procedures & documents. To know about MMTC Imports & Exports. Analyzing the changes taken place in the imports and exports of MMTC.
1.4 Methodology: To attain the objectives of studying trade operations of MMTC. The information has been collected in two ways:
1. 2.
Primary data:
In primary data the analysis of Indias trading industry, collection of Export/ Import procedures and documents required, collection of data regarding the MMTC import and export details and methodologys they following.
Secondary data:
The secondary data has been collected from annual reports of organization, internet and books.
CORPORATE PROFILE:
Established in 1963, MMTC, one of the two highest foreign exchange earners for India, is a leading international trading company with a turnover of over US$ 5 billion. It is the largest international trading company of India and the first Public Sector Enterprise to be accorded the status of "FIVE STAR EXPORT HOUSE" by Govt. Of India for long-standing contribution to exports. MMTC is the largest non-oil importer in India. MMTC's diverse trade activities encompass Third Country Trade, Joint Ventures, and Link Deals - all modern day tools of international trading. Its vast international trade network, which includes a wholly owned international subsidiary in Singapore, spans almost in all countries in Asia, Europe, Africa, Oceania and Americas, giving MMTC global market coverage. 2.1 MMTC-India's largest international trading house MMTC- where opportunities are explored consistently and continuously with dedication and persistence. The last four decades of MMTC's dedication has richly rewarded the company by placing in its present enviable position of Indias largest international trading house. With annual business turnover of over US$ 2 billion, MMTC contributes significantly to Indias international trade by opening export opportunities across the globe for Indian products and sourcing inputs required by the domestic industry, agriculture and for home consumption. MMTC is committed to continuously innovative business operations that support competitiveness across the larger value chain with models founded on market principles. The company's diverse core competencies provide robust competitive capabilities resulting into organization's ability to add value to its product and services. To adapt effectively to the era of globalization and liberalization, MMTC has been adopting new and innovative tools of trading for enhancement of productivity and efficiency. Provide robust competitive capabilities resulting into organization's ability to add value to its product and services. To adapt effectively to the era of globalization and liberalization, MMTC has been adopting new and innovative tools of trading for enhancement of productivity and efficiency. Providing end-to-end logistics, protecting customers from perceivable risks, supplying quick and reliable market information backed by dependable after
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sale service trough ERP solutions, are some of the strategic initiatives which have made the company truly market driven with enhanced customer satisfaction. As a leading player in fertilizers and fertilizer raw material, MMTC has become a major fertilizer marketing company in India, through planned forward integration of its import activities with the direct marketing of Urea, DAP, MOP, Sulphur, Rock Phosphate, SSP and other farming and agricultural inputs. 2.2 MMTC's MISSION: As major trading company in Asia (with special focus on international trading particularly in the field of bulk handling), MMTC aims at achieving sustainable and viable growth rate by achieving excellence in all its activities, generating optimum profits through total satisfaction of shareholders, customers, suppliers, employees and society. To achieve the Mission, MMTC has set objectives to consolidate its position as a leading international trading house with focus on 'bulk' operations. Besides keeping its position intact as the single largest international trader in the country for product lines like minerals, metals, fertilizers, precious metals and as a major operator in Agro, coal & hydrocarbon sectors, the company also associate itself in promotion and development of trade related infrastructure. 2.3 CORPORATE OBJECTIVES:
To be a leading international trading house operating in the competitive global trading environment, particularly specializing in bulk handling activities, and adequate returns on capital employed. To strive to become market leader in the most of its traditional product lines like Minerals, metals, Fertilizers and Gold, Gems & jewellers. To aim at becoming a major exporter of Agro products. To render high quality of service to all categories of customers professionalism and efficiency and to provide high quality of goods and services to all our customers. To put in place a streamlined and efficient system within the company for settlement of commercial disputes. To promote development of infrastructural facilities to facilitate trade related activities.
2.4 INFRASTRUCTURE MMTC has a strong nationwide presence with 76 offices covering all the major consumption centres and port towns in India with deployment of over 2000 highly skilled and experienced manpower across the country. The company also has an international trading setup in Singapore serving clientele in china, south East Asia and countries in the Far East. With the state of art wide area network proving online information exchange throughout the country through ERP , the company has capability to proactively source items surplus, the company has capability to proactively source items surplus to domestic demand for exports from India and also to coordinate the demand of domestic users for import. It has its own warehouse, storage facilities, handling and transportation network and quality control mechanism in place to provide quick and quality services to its clientele. The company handles about 15 million tones of cargo annually and is the largest single user of the railways and port facilities for international trading operations in India. 2.5 LOGISTICS & CUSTOMER SERVING Headquartered in New Delhi with port regional offices providing the logistic support, the company services a large customer base in India. Every key requirement of the customers focused attention with a view to provide services to their utmost satisfaction. For details of company's products and services in core areas of its operations are available on its website www.mmtclimited.org. 2.6 CREDENTIALS With special focus on international trading of bulk items, MMTC has established its credentials as a major trading company in Asia. MMTC is the first international trading company to be given the coveted status of "Super Star Trading House" and the first public sector enterprise to be accorded "Golden Super Star Trading House" status by the government of India.
BOARD OF DIRECTORS:
Shri Sanjiv Batra - Chairman & Managing Director Smt Asha Swarup - Part Time Director (up to 21.5.2007) Dr Christy L Fernandez - Part Time Director (up to 8.6.2007) Dr S Behuria - Part Time Director (w.e.f.21.5.2007) Shri R Gopalan - Part Time Director (w.e.f. 8.6.2007) Shri S K Kar - Director (Finance) Shri Adarsh R Goyal - Director (Marketing) Shri A Mahapatra - Director (Personnel) Shri H S Mann - Director (Marketing) Shri Sunir Khurana Director (Marketing)(w.e.f.7.5.2007)
2.7 MMTCS ROLE IN INDIAS FOREIGN TRADE This corporation, known as the MMTC, was established by the government of India in 1963.It was expected to develop the export of mineral ores and such other products as assigned to it by the govt. from time to time. It was also given the responsibility of importing some essential raw materials from Indian industries Of all main products it concentrated on the export of iron ore, manganese ore, certain grades of coke and coal, Ferro-manganese, bauxite, etc. Iron ore occupies a predominant position in the exports. The total exports of the country in iron ore and concentrates are of the order of 28 million tones, fetching Foreign Exchange earnings of Rs. 543 crores in 1988-99. And also MMTC is responsible only for the export of Iron ore other than of Goan Origin. On the Import side, the corporation by non ferrous metals, fertilizers, certain categories of steel, etc. in bulk quantities at competitive rates for supply to Indian industries. The various subsidiaries of MMTC were established and expanded with the avowed Government objectives of placing the Export and Import trade, especially of the products which come under the purview of the organization, in the Public Sector with a view to giving a boost to Export Trade. With liberation, competition became severe and posed an immediate threat to the traditional lines of business as it became free for all. In this completely changed business scenario, MMTC quickly converged fits focus to consolidate the core business areas like minerals, metals and fertilizers. To complement consolidation and support expansion, diversification into new areas like agro, precious metals, coal and hydrocarbon were initiated with added emphasis on expanding trade related infrastructure like warehouse, distribution and retail outlets. No doubt increased competition means higher pressure on margins and business success rates, but to deal with the challenges the company has been putting greater emphasis on enhancing operational efficiencies and increased customer focus. To increase profit margins and tackle both global and domestic competition, MMTC has set forth processes to enhance their knowledge base , sharpen marketing skills, optimize internal systems and adopt a new IT driven mechanism to enhance responsiveness and have effective monitoring and control.
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Management focus is on improving efficiencies of all their resources including the key asset-human resources through innovative schemes. IT will be the key enabler, which will not only reinforce the core activities of the business transactions but would also broaden the range of the business opportunities. As an organization, MMTC will continue to be customer driven. Profits in future will be influenced by the intent of the company to give customer value for money, improved responsiveness and providing specific and most appropriate solutions to customer needs. MMTC has reinforced its business setting a strong foundation for an accelerated growth in these years ahead. Strategic initiatives and aggressive marketing efforts have been well rewarded with an all round growth in the companys performance amidst highly challenging operating environment driven by intense competition. MMTC is diversifying, establishing and expanding into new areas of core competency i.e. bulk handling. Coal& Hydrocarbon and Agro have been identified as promising and new business areas having potential to make MMTC bigger and more profitable. MMTC has made forays into various new products for value addition. In the area of mineral exports, value added product in the form of sized lumpy ore is now being exported to Japan and South Korea. MMTC promoted project in Orissa will provide value addition of nearly 6 times to the iron ore hitherto exported from the region. MMTC the public sector trading giant has successful transformed to adjust to the new economic order.
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B. IMPORTS
Imports during January, 2008-09 were valued at US $ 18455 million representing a decrease of 18.2 per cent over the level of imports valued at US $ 22566 million in January, 2007-08. In Rupee terms, imports increased by 1.4 per cent. Cumulative value of imports for the period April- January, 2008-09 was US$ 243358 million (Rs. 1090182 crore) as against US$ 194285 million (Rs. 782297 crore) registering a growth of 25.3 per cent in Dollar terms and 39.4 per cent in Rupee terms over the same period last year. C. CRUDE OIL AND NON-OIL IMPORTS: Oil imports during January, 2008-09 were valued at US $ 4463 million which was 47.5 per cent lower than oil imports valued at US $ 8505 million in the corresponding period last year. Oil imports during April- January, 2008-09 were valued at US$ 83290 million which was 32.4 per cent higher than the oil imports of US$ 62926 million in the corresponding period last year. Non-oil imports during January, 2008-09 were estimated at US $ 13992 million which was 0.5 per cent lower than non-oil imports of US$ 14061 million in January, 2007-08. Non-oil imports during April- January, 2009 were valued at US$ 160068 million which was 21.9 per cent higher than the level of such imports valued at US$ 131359 million in April- January, 2007-08.
EXPORTS & IMPORTS : (US $ Million) (PROVISIONAL) JANUARY EXPORTS(including re-exports) 2007-2008 2008-2009 %Growth 2008-09/2007-2008 IMPORTS 2007-2008 2008-2009 %Growth 2008-09/2007-2008 22566 18455 -18.2 194285 243358 25.3 14717 12381 -15.9 127454 144266 13.2 APRILJANUARY
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EXPORTS & IMPORTS : (Rs. Crore) (PROVISIONAL) JANUARY EXPORTS(including re-exports) 2007-2008 2008-2009 %Growth 2008-09/2007-2008 IMPORTS 2007-2008 2008-2009 %Growth 2008-09/2007-2008 TRADE BALANCE 2007-2008 2008-2009 Figures for 2007-08 are the latest revised whereas figures for 2008-09 are provisional F. No. 1(5)/2008-EPL Government of India Ministry of Commerce and Industry Department of Commerce Economic Division New Delhi, The 2nd March, 2009
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APRILJANUARY
-30904 -29665
-269352 -444610
D. TRADE BALANCE
The trade deficit for April- January, 2008-09 was estimated at US $ 99093 million which was higher than the deficit at US $ 66830 million during April- January, 200708.
Merchandise Trade
SDDS data category and Component Unit of description Observation s Percentage Data for Change Latest Previous from data period Previous to (2) (3) latest Period
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January, 2009
12381
14717
-15.9
January, 2009
18455
22566
-18.2
January, 2009
-6075
-7849
-22.6
1. Reference Month 2. Provisional data reported in the Press Note of the Current Month 3. Latest revised figures of the previous year reported in the Press Note of the current Month
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DEPARTMENT OF COMMERCE System on Foreign Trade Performance Analysis (FTPA) Export of Principal Commodities Groups Commodity A) PLANTATION B) AGRI & ALLIED PRDTS C) MARINE PRODUCTS D) ORES & MINERALS E) LEATHER & MNFRS F) GEMS & JEWELLERY G) SPORTS GOODS H) CHEMICALS & RELATED PRODUCTS I) ENGINEERING GOODS J) ELECTRONIC GOODS K) PROJECT GOODS L) TEXTILES M) HANDICRAFTS N) CARPETS O) COTTON RAW INCL WASTE P) PETROLEUM PRODUCTS Q) UNCLASSIFIED EXPORTS Total Apr-Nov 2007 2,440.34 31,141.47 5,160.61 20,255.63 9,213.77 53,753.53 348.63 56,356.25 84,176.67 8,936.36 371.39 47,873.15 1,615.91 2,593.80 2,543.07 69,888.30 10,990.24 407,659.13 Apr-Nov 2008(P) 3,395.95 45,281.10 4,961.88 22,367.97 10,925.95 60,435.80 446.33 73,126.26 121,118.59 13,663.93 531.44 54,729.49 1,010.08 2,379.41 1,999.79 95,570.60 11,297.88 523,242.47 %Growth 39.16 45.40 -3.85 10.43 18.58 12.43 28.03 29.76 43.89 52.90 43.09 14.32 -37.49 -8.27 -21.36 36.75 2.80 28.35 %Share 0.65 8.65 0.95 4.27 2.09 11.55 0.09 13.98 23.15 2.61 0.10 10.46 0.19 0.45 0.38 18.27 2.16 100.00
Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Import of Principal Commodities Groups
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Commodity A) BULK IMPORTS B) PEARLS, PRECIOUS & SEMIPRECIOUS STONES C) MACHINERY D) PROJECT GOODS E) OTHERS Total
Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Top 5 Countries of Export Rank 1 2 3 4 5 Country USA U ARAB EMTS SINGAPORE CHINA P RP HONG KONG Total Apr-Nov 2007 55,461.39 40,884.50 18,125.33 23,978.91 16,007.32 407,659.13 Apr-Nov 2008(P) 62,150.50 58,804.61 26,498.36 23,055.20 19,861.46 523,242.47 %Growth 12.06 43.83 46.20 -3.85 24.08 28.35 %Share 11.88 11.24 5.06 4.41 3.80 100.00 DOC-NIC Top of Form
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Bottom of Form Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Top 5 Countries of Import Rank 1 2 3 4 5 Country CHINA P RP SAUDI ARAB U ARAB EMTS USA IRAN Total Apr-Nov 2007 72,226.14 46,336.54 33,944.69 36,823.22 27,132.81 622,093.38 Apr-Nov 2008(P) 92,264.40 71,515.94 60,403.18 54,647.35 42,260.68 923,155.38 %Growth 27.74 54.34 77.95 48.40 55.75 48.39 %Share 9.99 7.75 6.54 5.92 4.58 100.00
OVERVIEW
4.1 Pre-requisites of Exporters The exporter must have the following requirements before he goes for an Export transaction 4.1.1 PAN from income tax For obtaining a PAN number one has to apply to the income tax department. This is a requirement to open the current account in the name of the proposed business firm and to apply for the allotment of the Importer-Exporter Code Number. 4.1.2 Importer-exporter code number It has been provided under sec-7 of the foreign trade act 1992 that business firms can enter into the business of exports-imports only if it has been allotted an importer-exporter code number by the competent licensing authority. The chief
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licensing authority of India is the office of the DGFT under ministry of commerce with its head quarters located at Udyog Bhavan, New Delhi.
2) As soon as the export order has been confirmed, preparations for the dispatch of goods are started. A delivery note (in duplicate) is sent to the works manager or the factory manager. This note should contain the description of goods as been given in the export order, along with a copy of the instructions given by the importer. The date by which the goods must be manufactured, the date by which the necessary formalities must be completed, the requisite time margin to be given and the shipment must be clearly intimated to the works manager. 3) As soon as the goods have been manufactured, the clearance of the excise authorities has to be obtained. The exporter has to prepare 2 important documents: ARE-1 form and invoice in lieu of gate pass. The other authority that is to be approached next is the export inspection agency for conducting quality control and pre-shipment and for assurances of inspection certificate. If the goods are sent to port of shipment by railway, a railway receipt is obtained. 4) After the good have been dispatched to the port town, the works manager sends a dispatch advice to export dept. soon after, an application is sent to the insurance company for marine insurance. The insurance policy is obtained in duplicate. At this stage all formalities in relation to floor price regulation, certificate of origin, ECGC cover and consular invoice, whatever necessary should be completed. Thereafter the export department sends the following documents to its C&F agents. The documents are * Commercial invoice * Original export order * Original letter of credit * GR form original showing the IE code number * ARE-1 form * Invoice/challan * Packing and weighting list * Certificate of inspection * Declaration form in triplicate * Consular invoice * Export license, where necessary * Endorsement regarding floor price * Purchase memo * Railway receipt 5) The C&F agent takes delivery of the consignment from the railways and arranges its storage in the warehouse .thereafter he prepares requisite copies of the shipping bill. The most important, which are to be filled in the shipping bill. The most important particulars, which are to be filled in the shipping bill, are: * Consignees name& address
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* Vessel's name * Rotation number allotted to the vessel by the customers. * Agent's name * Colour * Port of discharge * Final estimated * Exporters name address * Number of packages * Marks and number * Gross, net and tare weight * Description * FOB value * Country of origin * Code number of goods * Number of packages * Marks and numbers * Gross, net and tare weight * Description * FOB value. * Country of origin * Code number of goods * Number and name of the exchange control GR form * ARE-1 number and date. * Export license number. 6)After the shipping bill has been passed by the customers, the C&F Agents presents the port trust copy of the shipping bill to the shed superintendent of the port trust and obtained carting order, thereafter a Dock challan is prepared. 7) The passed shipping bill including the Dock challan, where submitted, Cart Ticket or Boat Ticket, in the case of over side Cargo, are carried by authorized licensing sircar making the cargo ready for shipment. 8)The ship's export clerk calls from shed or boat after loading prepares the Mate's receipt and in case of airways it issues Airway bill. The ship captain or agent signs the Mate's Receipt. It is then delivered to the port commissioners. the mste's receipt is presented to the shipping company and bill of lading is obtained. 9) The C&F Agent forwards the following documents to the exporter: * Full set of bill of landing or Airway bill * Export promotion copy of shipping bill * Copies of customs and attested invoices * ARE-1 form (duplicate copy)
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* Original export order * Original letter of credit. 10) As soon as the exporter receives the above documents from the C&F agents he completes the remaining formalities. The exporter files a claim with the maritime commissioner of central excise duty or for getting credit in bond account. Side by side, shipment advice is sent to the importer. The following documents are forwarded along with the shipment advice: * A Non-Negotiable copy of bill lading or airway bill * Customs invoice * Commercial invoice * Packing list 11) The following documents are presented to the negotiated bank: * GR Form (Duplicate) * Bill of exchange * Bill of lading/airway bill * Original letter of credit * Commercial invoice (2 copies) * Customs invoice * Certificate of origin (2 copies) * Packing list (4 copies) * Marine insurance policy (2 copies) * Bank certificate in the prescribed form (2 copies) * Additional copies of commercial invoice to be certified invoices to be certified by the bank and returned to exporter * Consular invoices where necessary 12) The negotiating bank scrutinizes all documents with reference to original letter of credit and set following documents are sending to the banker of importer: * Bill of exchange * Negotiable bill of landing/airway bill * Customs invoice * Insurance policy * Certificate of origin * Consular invoice where necessary * Packing list The negotiating bank transmits the duplicate copy of GR form to exchange control dept of RBI. The original copy of bank. Certificate, along with the attested copies of commercial invoice is returned to the exporter. The duplicate is forwarded to the DGFT.
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4.3 EXPORT FINANCING The survival and the growth of the business depends, among other things, on the continues availability of the required amount of the funds. This is true for both the exporters and domestic business. In the regard to export business funds are required at the time of business (long term funds) and for carrying on business (short term funds). The exporters in India have the facility to obtain both the long term and short term funds. Export -import bank of India and all financial institution as well as state level financial institutions to raise long-term funds needed to establish their business. 4.3.1 Pre-shipment Finance Pre shipment finance is a facility to provide working capital finance to an exporter for the purpose of export. The basic purpose of granting this facility is to enable the eligible exporters to procure raw materials, supplies, process or manufactured or warehouse is ship the goods meant for exports. This can be classified into the following three categories: * Packing Credit * Advance against incentives receivable from government covered by ECGC guarantee. * Advance against Cheque/ Drafts received as Advance payment. 4.3.1.1 Packing Credit This type if credit granted by a bank that enables an exporter to pack the goods meant for Exports. It includes the loan or advance or Credit granted by a Bank to an exporter for financing the purchase of raw-material supplies etc., required processing or manufacture of the goods as well as for their shipment to foreign country. It is granted on the basis of confirmed export order of an irrevocable letter of credit opened by an importer in favour of the exporter from India or any other evidence of an export order for export placed by a foreign buyer with an Indian exporter. 4.3.1.2 Pre-shipment credit in foreign currency (PCFC) Export import bank of India (EXIM Bank) has introduced a scheme for Indian exports to enable them to avail of pre-shipment credit in foreign currencies to finance cost if imported inputs for manufactures of expert products.
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Under this scheme EXIM bank arranges short term loans of credit in foreign currency from lending agencies and lends the funds so raised to banks authorized to deal in foreign exchange. The banks re-lend these funds to their exporter customer for import of eligible items. While allocating PCFC limits to their customer's banks will assess the exporter's import requirement for export production. The credit period for an advance under PCFC will not exceed 180 days. The foreign currency pre-shipment credit will be made available in the major international currencies in which the EXIM bank raises funds. The facility for pre-shipment credit limit in foreign currency is available to the following categories of exporters: * Export Houses, trading houses with annual export turnover exceeding Rs.10 Crores. * Manufacturing units with minimum export orientation of 25% of production or export turnover of Rs.5 crores whichever is lower. For this purpose, only physical exports of commodities will be taken into account. Such exports could be made either directly or through trading houses. * The exporter should have satisfactory record.
Bank give post-shipment credit (short term) after the shipment of goods and submission of commercial documents to them for negotiation or collection. Postshipment credit is given for exports on deferred payment terms for respect of specified capital and producer goods as are approved by EXIM Bank of India, from time to time.
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* Requesting bank to open letter of credit. * Retiring documents under letter of credit. * Imports trust receipt facility. Bankers also grant import loans to their approved customers and undertake the clearance of goods on their behalf. in such cases, the bank retires the bills received under the letter of credit to debit of loan account of the customer and the relative documents forwarded to an approved clearing again for the clearance of the goods. after the goods are cleared, dispatched and railway receipts send to the bank, the relative goods or railway receipts are delivered to the importer after receiving the due amount. Where an arrangement exists, the goods may be stored in the bank's lock and released against proportionate payments as and when desired by the importer.
his own resources, which would cover bank's margin requirements. Import machinery has to be hypothecated to the bank and the importer should counter this transaction.
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Regulatory documents are prescribed by different government departments for compliance of formalities under relevant laws, rules and regulation governing export trade. The following are the main documents: * Proforma invoice * Export order * Commercial invoice (customer invoice, consular invoice, legalized invoice) * Packing list * Certificate of inspection * Insurance policy/certificate * Certificate of origin * Generalized system of preferences certificate * Mate's receipt * Transport documents (ocean freight, air freight, rail/road, post, courier) * Bill of exchange * Letter to bank for negotiation * Export declaration form (exchange control declaration/GR form, SDF form. PP Form, i.e., parcel post) * Freight payment certificate * ARE-1 Form * Shipping bill (duty drawback bill-green, duty free goods-white, export of goods under duty entitlement pass book scheme -blue, duty free goods ex bond-yellow, dutiable goods-yellow) * Port trust copy of shipping bill/export application/dock challan * Vehicle ticket * Antiquity certificate * Certificate of chemical analysis * Certificate of measurements * Bank certificate of export and realization * Bank realization certificate 4.6 Recognition of exporters The EXIM policy 2002-2007 provides for the recognition of export firms to further promote exports from India. An export firm i.e., merchant exporters, manufacturer exporter and trading companies having foreign equity, EOU, SEZ and EPZ units engaged in the export of merchandise can seek recognition as per the criteria laid down in EXIM policy as : * Export house * Trading house * Star trading house * Star trading house * Golden super star trading house
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Under EXIM Policy 2002-2007, the criteria for recognition are the FOB value of physical exporters or Net Foreign Exchange (NFE) earned at the option of the exporter. The cut off amounts for eligibility for recognition are: Category Average FOB value(3 licensing years)(Rs) 15 crores 75 crores 375 crores 1125 crores FOB value during the preceding licensing years(Rs) 22 crores 112 crores 560 crores 1680 crores Average NFE earnings(3 licensing years)(Rs) 12 crores 62 crores 312 crores 937 crores NFE value during the preceding licensing years(Rs) 18 crores 90 crores 450 crores 1350 crores
Export house Trading house Star trading house Super star trading house
5. MMTC IMPORTS MMTCs imports extend to a large product bases and makes a major share in the total Indian imports. These imports include Gems and Jewellery Fertilizers Metals Coal and hydrocarbons General imports (including chemicals, drugs and pharmaceuticals, timber) 5.1 Gems and Jewellery imports MMTC imports and supplies bullion to the exporters under various provisions of EXIM policy. Different schemes being followed are as under;
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Exporters wishing to avail gold on loan scheme from MMTC need to be registered by submitting information in the prescribed format. Loan facility is extended against bank guarantees of required values covering cost of gold and customs duty. To be repaid and exported within prescribed days as per EXIM policy by purchasing equivalent quantity of gold at LME price prevailing on the date of purchase along with fixing commission. CIP premium & Service charges etc. interest as applicable for the period of loan based on interest rates fixed by MMTC will be charged.
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B.
C.
The exporters who wish to procure gold from MMTC are required to submit bank guarantee from nationalized banks covering the value of gold/ custom duty as applicable. Bank guarantees issued by scheduled/ private banks are acceptable. The issuing bank should confirm to the following norms: 1. Minimum net worth of bank should be rs.100 crores. 2. Minimum capital adequacy ratio (CAR) should be 9%. For availing gold under loan scheme of MMTC the exporter is required to submit two bank guarantees (B.G s) from banks fulfilling above norms. The first bank guarantee, which is the main bank guarantee, shall cover the value of gold being taken on loan and the second or the differential bank guarantee shall be towards the value of custom duty with element of interest for the material being lent. The proforma B.Gs can be obtained from MMTCs office. The exporters who wish to avail gold under MMTCs outright purchase scheme have to submit B.G covering the cost of custom duty including interest for 120 days or the maximum period allowed for exports from banks.
Spot rate fixing with suppliers up to 11:00 PM working days. 2. Delivery of bullion beyond office hours up to 8:00 PM on working days and Saturdays.
MMTC has four duty free shops operational at: 1. Mumbais Sahar International airport at the departure lounge 11A. 2. Mumbais Sahar International airport at the departure lounge 11C. 3. Chennais Anna International Terminal, transit area, departure lounge, 1st floor, Meenumbukkam. 4. Thiruvananthapuram international airport, 1st floor, departure lounge. The showrooms have round the clock operations and showcase high quality designs at reasonable prices to the international travellers. The showroom has been able to promote studded jewellery (Diamonds, precious/ semi-precious stones) sales apart from traditional handmade plain gold items. The product mix also includes platinum jewellery and medallions. MMTCs brand of silverware SANCHI and other premium products are placed to appeal to the customers. Duty free shops help in promoting exports of jewellery from India.
1. 2. 3.
4. 5. 6. 7. 8. 9. A. B.
IE Code: Latest ITC code no: Sales tax registration no: Custom registration no: PAN No: Constitution Proprietorship: name and address of the proprietor Partnership firm: (copy of partnership deed to be furnished. if registered, a copy of registration certificate to be attached) Name of the firm: 1. 2. 3. c. limited company (copy of memorandum of association/ articles of association, audited balance sheet for the last Name of the Directors: 1. 2. 3. Bankers with Address: 1. 2. Bankers Certificate/ Report Name of the Partner/ Proprietor/ Directors, authorized to sign application. (A set of their specimen signature, dully attested by their Bankers to be submitted) Affidavit to the effect that Exporter has not been Debarred/ Black
India is the 3rd largest Producer and consumer of Fertilizers in the world with an installed capacity of Nitrogen (N) and Phosphate (P) nutrients at 14 million tones p.a. The Indian Fertilizer industry is broadly divided into Nitrogenous, Phosphatic and Potassic Segments.
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Urea, a nitrogenous type of fertilizer, is mostly consumed in India. Currently the Urea capacity is 20.2 million tones while consumption is 21.7 million tones. The total production of Phosphate in country was 3.36 million tones p.a. in 200, which was a 6%, increase over 1999. Main Phosphatic fertilizers produced in India are Di ammonium Phosphate (DAP) and single super Phosphate (SSP). Entire requirement of Potassic fertilizer is imported .The major potassic fertilizer consumed in country is Muriate of potash (MOP).
5.2.2.2 Items of trade: MMTC imports following fertilizers and raw materials in bulk on full/part ship load basis:
Finished fertilizers
Urea Di Ammonium Phosphate (DAP) Muriate of potash (MOP)
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Base Non-ferrous Metals: Copper (min. 99.90% purity) in the form of Wire bars, Cathodes, CC rods Aluminium (min 99.70%) Zinc Ingots High Grade (min 99.95%) Zinc Ingots Spl. HG (min. 99.995%) Lead Ingots (min. 99.97%) Tin (min. 99.85% purity) Nickel (min. 99.80% purity) (Squares 4 x 4 and 10 x 10, Strips 4 x 24 and Briquettes)
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Copper Concentrates Minor Metals: Antimony (min. 99.65% purity) Silicon (Grade 4-4-1 and 5-53) Magnesium (min. 99.9% purity) Mercury (min. 99.9% purity) Industrial Raw Materials: Asbestos Steel and its products.
c.
Monthly average: LME cash settlement price for the month of shipment or prior to month of shipment or two/ three months after the month of shipment. Flexible Quotation Period: LME cash settlement price of any working day from the date of order till bill of lading date or till 5-15 days after Bill of Lading date. Sport LME cash settlement price.
5.3.5 Imports through Empanelled Suppliers MMTC imports its material through empanelled suppliers only. Criteria for empanelment of suppliers are as follows: Category A OR B OR
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C producer reference. D
Metal Traders linked to producers with exclusive Backing / selling rights, with satisfactory bank
OR If not ring members or associate members of LME / KLTM, then they should have handled non-ferrous metals for last three years with a turnover of at least USD 100 million per annum. The Company should be profit-making company in three out of immediate past five years with satisfactory Bank reference. OR Suppliers who have successfully supplied any NFM to MMTC as empanelled supplier during last one year would also be permitted to make offers and would be empanelled at their request for other metals provided they submit a satisfactory back up arrangement for new metal proposed to be supplied. OR The suppliers not fulfilling MMTCs criteria for empanelment and desirous to supply the material to MMTC be also enrolled subject to their accepting the conditions of payment being released after the receipt and acceptance of the material by MMTCs buyers with regard to quality and quantity. A third party inspection agency appointed by MMTC at the cost of MMTCs buyer should also be associated for getting reports on quality and quantity before material is allowed to be shipped from the Load port(s).
5.3.6 Three Types of Sales Customers have the following options for purchase: High Seas Basis Ex-Godown basis Ex-Bond basis MMTC can cater to all size lots from a low of 0.5 MT to as high as desired by the customer. Special incentives are given to regular (MOU customers). MMTC imports metals with split Bill of Lading to cater to the need of small customers who want to buy on high-seas basis.
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280 million. MMTC has also started importing coking coal and plans to import 1.4 million tons of coking coal annually. MMTC could with stand the stiff competition by its continuous and persistent efforts diversifying its markets, offering value added services to its existing customers, enlarging its product range and customer base, expanding extensively its infrastructure facilities, using its expertise in trading and by attaching utmost care and importance to its trade commitments as also the quality service and product. There are certain specific strengths of MMTC, which make it a strong player in this sector like: MMTC has a strong business relationship with the leading coal mines and reputed suppliers of various coal and hydrocarbon products. MMTC maintains a list of suppliers after ascertaining their credentials and this list is continuously updated. MMTC has comprehensive infrastructure for bulk cargo handling with well developed arrangements for rail and road transport, warehousing, port and shipping operations which gives MMTC complete control over trade logistics. MMTC is one of the biggest traders in bulk in the country. MMTC has been importing non-coking steam coal continuously for the power plants under long term contracts.
5.4.1 MAJOR END USERS OF COAL AND PETROLIUM PRODUCTS PRODUCTS non coking (steam) Coking coal Naphtha Coke Furnace oil Bitumen END USES Power plants, cement , paper industry Coke oven batteries Petrochemicals / Fertilizers Steel industry, foundries Power, fertilizer plants Road paving / insulation / paints
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MMTC is doing good business in non-coking (steam) coal, low ash metallurgical coke, naphtha etc. MMTC is catering to the requirements of various customers inclusive of state electricity boards and power utility companies. Most of the SEBs are nowadays going for imported steam coal because of the techno economic considerations the quality of imported coal is superior in terms of higher GCV and lower ash, which leads to several advantages such as lower costs and environment friendly power generation MMTC is one of the largest importers of LAM COKE in India. We have imported LAM COKE for various customers like NINL, SAIL, RINL, KIOCL, IDCOL etc. For NINL, Duburi, Orissa which is being promoted by MMTC, LAM COKE is being imported on regular basis for operations of its blast furnace. We have already started importing coking coal for captive use of another company M/s Konark Met Coal Limited, which is also promoted by MMTC. 5.4.2 TYPICAL SPECIFICATIONS OF IMPORTED NON-COKING (STEAM) COAL No 1 2 3 4 5 6 7 8 9 10 11 Specification parameter Total Moisture(AR) Inherent Moisture(AD) Ash content(AD) Volatile Matter(AD) FC / VM Ratio(AD) Total Sulphur(AD) HGI GCV(AR) GCV(AD) Size Ash Fusion Temp. (IDT/HT/FT) Unit % by Wt. % by Wt. % by Wt. % by Wt. --% by Wt. --Kcal/Kg Kcal/Kg MM Deg C. Typical requirement 7 to 10 % 2 to 5 % 10 to 15 % 26 to 35 % 1.4 to 2 0.2 to 0.6 45 to 55 6100 to 6800 6400 to 7000 0 to 50 +1300/+1390/+1480
TECHNICAL
TYPICAL
GUARENTEED
1 2 3 4 5 6 7 8 9 10 11
PARTICULARS MOISTURE(AS RECEIVED) ASH(DRY BASIS) VOLATILE MATTER(DRY BASIS) SULPHER(DRY BASIS) PHOSPHOROUS(DRY BASIS) MICUM 40 MICUM 10 CSR CRI +80 MM _30 MM
SPECIFICATIONS 5.0% MAX 12.5% MAX 1.0% MAX 0.60% MAX 0.030% MAX 82% MIN 7 %MAX 62% MIN 23% MAX 6% MAX 4% MAX
SPECIFICATIONS ABOVE 10% ABOVE 13.5% ABOVE 1.50% ABOVE 0.8% ABOVE 0.035% BELOW 78% ABOVE 9% ABOVE 60% ABOVE 26% ABOVE 8% ABOVE 8 %
5.4.4 Typical specifications of cooking coal (size 0 to 50 MM) S.N TECHNICAL PARTICULARS GUARENTEED SPECIFICATIONS ABSOLUTE MAXIMUM / ABSOLUTE MINIMUM TOLERANCE LIMITS 4 10% MAX 20.0% MIN 32.0% MAX 10.0% MAX 0.80% MAX 5.0% MIN 1.1% MIN 1.40% MAX 55% MIN 80% MIN
1 1 2
3 4 5
2 Total moisture(on A received basis) Proximate analysis (on Air dried basis ) a) Volatile matter b) Ash Sulphur Crucible Swelling number a) Mean max reflectance of Vitrinite b) Vitrinite % c) Vitrinite distribution
3 8.0% MAX 20.0% MIN 28.0% MAX 8.0% MAX 0.60% MAX 5.0% MIN 1.15% MIN 1.30% MAX 55% MIN 80% MIN
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300 MIN
300 MIN
5.4.5 TYPICAL SPECIFICATIONS FOR BITUMEN GRADE 60/70 TEST Specific Gravity @ 25/26 0C Penetration @ 25 0C Softening point@ 0C Ductility @ 25 0C, cm Loss on heating Drop in penetration after heating % Flash point 0C Solubility in CS2, % Wt. Spot test Typical source of supply SPECIFICATION 1.01/1.06 60/70 49/56 100 min 0.2 max 20 max 250 min 99.5 min -ve Iran
5.4.6 TYPICAL SPECIFICATIONS FOR NAPHTHA Test Density at 15 0C RVP @ 37.8 0C AROMATICS PARAFFINS Distillation -IBP -FBP HEAVY METALS- VANADIUM, SODIUM, CALCIUM, LEAD Unit Kg/I PSI Vol% Vol % 0 C 0 C PPM Range 0.66-0.74 7-15 10-20 65-80 25-45 125-180 50 MAX
MMTC aims to be leading world class company in coal , hydrocarbons and energy related sectors , achieve international standards of excellence with focus on customer delight through value of products and services.
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MMTC offers a wide range of chemicals produced in India in a most modern plants confirming to international standards. MMTC deals in Inorganic chemicals organic chemicals dyes and intermediates drugs and pharmaceuticals MMTC meets the requirements of local associates by way of imports of chemicals through overseas associates, as required by the local industries for sale on high seas basis as well as Ex-Godown basis. 5.5.2 TIMBER MMTC imports and supplies timber sawn lumbers from overseas and exports forest products. Major items are: teakwood Tectona-Grandis tropical hand woods- Salengan Batu, Keuring, Kapur, Meranti logs soft woods-spruce, Pine, Fir, Cedar sawn lumber-to specific size, specie and specifications Wood wastes, wood pulp and wood chips MMTC would consider joint ventures for both procurement and supply against government tenders and UN suppliers
6. MMTC EXPORTS
MMTCS Exports also extend to a large product bases and makes a major share in the total Indian exports. These exports include Mineral ores. Agro product General exports (including Textiles, Building material, engineering products).
MMTC Limited, Indias first super star trading house, continues to be the Countrys leader in mineral exports for four decades now. During the last decade, MMTC could withstand the stiff competition in the world market by its continues and persistent efforts in diversifying its markets, enlarging its product range, expanding extensively its infrastructure facilities and expertise in mineral operations, and by attaching utmost care and importance to its trade commitments as also the quality of service and products. During the year 2002-03 MMTC has achieved considerable success in mineral exports leading to an impressive turnover of 1244 crores. In quantitative terms, MMTC was able to export 13.02 million tones of iron ore, 2.31 lakh tones of manganese ore and 5.81 lakhs tones of crome ore during 2002-03. As recognition of above achievements during the year 2002-03, MMTC was awarded the highest export award for export of minerals once again for twelth time in a row. MMTC has been consistently strive into enhance its competitiveness in the area of value addition. It has setup a crushing and screening plant at Banehatti in Bellary Hospet sector not only to source higher value realization in the international market but also to compete with the international suppliers like Australia and Brazil in the markets like Japan and South Korea. Supply of iron ore, lumps and fines to the steel plant in Orissa. (NINL) promoted by MMTC. Would provide further fillip to value addition to minerals. The 1.1 million ton steel plant consumes about 2 million tons of various types of minerals annually being supplied by MMTC. The company has also taken an initiative to link import of capital equipments required for modernizing mining activities in the country to promote export minerals. The import of the earthmoving equipments was linked to export of iron ore under EPCG scheme.
MMTCPIONEERINGINFRASTRUCTURE DEVELOPMENT
MMTCs role in nations mineral export does not stop with increasing the volume. MMTC has been making certain strategic plans which would facilitate in not only sustaining the present level of exports but also equip the country to meet the challenges of larger volume of exports in future. One of the bottlenecks in increasing the Indian iron ore export is the deficiency in port facilities especially in the east coast where the operations are free the vagaries of weather like, closing of port operations during monsoon period in Goa,
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Mangalore, and Bellikari etc. In this direction, MMTC bas been successful in obtaining an exclusively right to develop a temporary Iron ore terminal at Ennore near Chennai. This facility is likely to be operational by May/June04 which all facilitates export of about 2.5 million tones iron ore per annum. This, in turn will decongest the Chennai port where presently the pre-berthing waiting time for iron ore vessels is more than a month. MMTC is also in dialogue with Ennore port for developing the permanent terminal at Ennore which will facilitate loading of super cape-size vessels to cater the increased demand for iron ore from Asian markets like, Japan, China, South Korea and Taiwan. This facility would be comparable to the International standards by presently now being operated from Australia and Brazil. MMTC is also in constant dialogue with the various ministers, Railways, ports and exporters to assess the development potential for a comprehensive infrastructure requirement for larger volume of exports. MMTC will continue to play a vital role in these directions.
Iron ore Manganese ore Chrome ore Others (Mud chemicals, Barytes etc,.).
MMTC limited is a global player in Agro trade, with its comprehensive infrastructural expertise to handle agro products. MMTC Limited provides full logistic support from procurement , quality control to guaranteed timely deliveries of agro products from different parts of India through a wide network of regional and port offices in India and its contracts abroad.
2 3 4 5 6 7 8 9 10
Moisture Damaged / discoloured Red / split kernels Foreign matter Paddy per kg Grain length Yellow kernels Chalky grains Milling degree
14% (max) 3% (max) 2% (max) 1% (max) 30 grains (max) upto 6 mm (max) 1% (max) 6% (max) well milled
6.3.1 TEXTILES
MMTC exports Ready Made Garments. This includes woven men's and ladies' wear. MMTC is one of the leading organizations for import of Mulberry Raw Silk, Wool & Cotton of different grades which is then sold to manufacturers in India.
7.Data analysis:
In 2009-2010 product group wise composition is mentioned in the above pie chart. Products in MMTC are having percentages: Precious metals-71%,Fertilizers6%,,Agro-3%,Minerals-6%,Metals-5%, Hydro carbons-9%
Table 7.1.2: Business composition 2009-10: 2009-2010 32,228 399,690 19,324 2010-2011(Rs in million) 36,934 633,008 18,603
Table 7.1.3: 2010 32228 399690 19324 3176 2009 45759 306951 15497 3209
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400000 350000 300000 250000 200000 150000 100000 50000 0 2009 2010 E xport Im port D omes tic T dingprofit ra
Table 7.1.4: Foreign exchange earning & outgo: Export Other Total Earning 32247.14 226.15 32473.29 Imports Interest Other Outgo 405703.64 362.63 877.03 406943.30
In the above table earnings and outgo of the company in exports and imports are mentioned clearly. Total Outgo is higher than the earnings.
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In 2008-09 highest ever turnover is Rs 36821in crores and in 2009-10 highest turnover is Rs 45124 crores. Compared with the year 2008-09 and 2009-10 turnover increase upto 23% in 2009-10.
As shown in the above table MMTC turnover is higher than the other competitors. Sales turnover as well as the market is also more.
8. SWOT ANALYSIS:
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STRENGTHS 1. Large supplier base, customer base 2. Wide product portfolio includes all base metals, precious metals, agro products. 3. Credit facility from foreign suppliers has specific import licences.
WEAKNESS 1. Thin margins due to heavy competition (like STC,PEC,MSTC) 2. Overhead expenses(excess man power)
OPPORTUNITIES 1. Scope to expand in new geographical markets. 2. Vertical & Horizontal integration 3. Investment into subsidiaries with own suppliers
THREATS 1. Iron ore base which is a cash cow, Recession 2. Extension of precious metals 3. Govt trade policies like decimalisations.
9. Achievements & Awards: 1. CAPEXILS award for highest export in minerals and ores sector for the year 2009-10. 2. Top exports for the year 2008-2009,gold trophy by EEPC 3. Dun & Bradstreet (D&B) and Rolta corporate Award 2010 in trading sector 4. Ranked 4th by business today in their publication BT 500-2010 public sector companies 5. Ranked 8th by Dun & Bradstreet in their publications Indias Top 500 companies 2010 and Indias Top PSUs 2011.
10. Limitations:
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1.
2. 3.
Since the study covers only bulk division ofs laboratories Dr.Reddys laboratories limited, it does not represent the over all scenario of the bulk industry. The period of the study is limited 45 days. All inventory management techniques were not studied, as some information is related to purchase department.
11. Findings:
1. 2. 3. 4.
Presently the company maintains low inventory turnover ratio. They are trying to expand their business in major cities. They are trying to add new products. Implementing new strategies to improve the business.
12. Suggestions: 1. Day to day they need to verify the margins. 2. They need to target more on new products. 3. They need to expand the business in various sectors. 4. They need to concentrate on more exports to generate revenue.
13.Bibliography:
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1. 2. 3. 4. 5.
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