Vardhman Polytex Limited Bathinda Project for Mba
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Transcript of Vardhman Polytex Limited Bathinda Project for Mba
of
In partial fulfilment of the Requirements for the
award of Degree of Master of Business Administration
Submitted To: Submitted By:
School of Management Studies, Ajay
Punjabi University, M.B.A. 2nd Year
Patiala Roll No.5410
School of Management Studies
Punjabi University, Patiala
2010-2012
ACKNOWLEDGEMENT
Life of human beings is full of
interactions. No one is self-sufficient by himself whenever
anyone is doing some serious and important work a lot of
help from the people concerned is needed & one less
specially obliged towards them. I cannot forget
acknowledging them in few words as without the guidance
& co-ordination of them in my project report would not
have been possible.
A large number of individual contributed to this
project. I am thankful to all of them for their help and
encouragement.
I would like my heartfelt thanks to Mr. Rajender
Pal, PR & IR Manager of Vardhman Polytex Limited for giving
me an opportunity to have training in the organisation.
I would also like to thank Mr. Vijay Arora, Chief
Manager for his guidance, inspiration, and constructive
suggestions, which helped me in the Project . I must also
thank the management of Vardhman Polytex Limited to
provide excellent opportunity and environment to be able to
pull my project through. Cooperation of the staff is also
gratefully acknowledged.
Ajay
2
M.B.A. 2nd Year
Roll No.5410
GUIDE CERTIFICATE
TO WHOMESOEVER IT MAY CONCERN
This is to certify that the project report titled “Export
Process and Documentation” Offered by Vardhman
Polytex Limited has been prepared by Ajay, Roll No.- 5410,
a student of MBA 2nd year of School of Management
Studies, Punjabi University, Patiala Session (2010-12) with
Marketing as major area of specialization. The study was
conducted with special reference to Vardhman Polytex
Limited, Bathinda. I recommend this project for evaluation.
Place:
Date:
3
INDIAN TEXTILE INDUSTRY - HISTORY
The history of textiles in India dates back to nearly five
thousand years to the days of the Harappan civilization.
Evidences that India has been trading silk in return for spices
from the 2nd century have been found. This shows that
textiles are an industry which has existed for centuries in our
country. Recently there has been a sizeable increase in the
demand for Indian textiles in the market. India is fast
emerging as a competitor to China in textile exports. The
Government of India has also realized this fact and lowered
the customs duty and reduced the restrictions on the
imported textile machinery. The intention of the
government’s move is to enable the Indian producers to
compete in the world market with high quality products. The
results of the government’s move can be visible as Indian
companies like Arvind Mills, Mafatlal, Grasim; Reliance
Industries have become prominent players in the world. The
Indian textile industry is the second largest in the world-
second only to China. The other competing countries are
Korea and Taiwan. Indian Textile constitutes 35% of the total
exports of our country.
The history of apparel and textiles in India dates back to the
use of mordant dyes and printing blocks around 3000 BC.
4
The foundations of the India's textile trade with other
countries started as early as the second century BC. A hoard
of block printed and resistdyed fabrics, primarily of Gujarati
origin, discovered in the tombs of Fostat, Egypt, are the
proof of large scale Indian export of cotton textiles to the
Egypt in medieval periods.
During the 13th century, Indian silk was used as barter
for spices from the western countries. Towards the end of
the 17th century, the British East India Company had begun
exports of Indian silks and several other cotton fabrics to
other economies. These included the famous fine Muslin
cloth of Bengal, Orissa and Bihar. Painted and printed
cottons or chintz was widely practiced between India, Java,
China and the Philippines, long before the arrival of the
Europeans.
India Textile Industry is one of the largest textile industries in
the world. Today, Indian economy is largely dependent on
textile manufacturing and exports.
INDIAN TEXTILE INDUSTRY
Textile Industry in India is the second largest employment
generator after agriculture. It holds significant status in India
as it provides one of the most fundamental necessities of the
people. Textile industry was one of the earliest industries to
come into existence in India and it accounts for more than
5
30% of the total exports. In fact Indian textile industry is the
second largest in the world, second only to China. The Indian
textile industry has a significant presence in the economy as
well as in the international textile economy. Its contribution
to the Indian economy is manifested in terms of its
contribution to the industrial production, employment
generation and foreign exchange earnings. It contributes 14
percent of industrial production, 9 percent of excise
collections, 18 percent of employment in the industrial
sector, nearly 20 percent to the country’s total export
earning and 4 percent to the Gross Domestic Product.
It is closely linked with the agricultural and rural economy. It
is the single largest employer in the industrial sector
employing about 35 million people. If the employment in
allied sectors like ginning, agriculture, pressing, cotton trade,
jute, etc. are added then the total employment is estimated
at 93 million. The net foreign exchange earnings in this
sector are one of the highest and, together with carpet and
handicrafts, account for over 37 percent of total export
earnings at over US $ 10 billion. Textiles, alone, account for
about 25 percent of India’s total forex earnings.
India’s textile industry since its beginning continues to be
predominantly cotton based with about 65 percent of fabric
consumption in the country being accounted for by cotton.
The industry is highly localized in Ahmedabad and Bombay
in the western part of the country though other centers exist
6
including Kanpur, Calcutta, Indore, Coimbatore, and
Sholapur.
The structure of the textile industry is extremely
complex with the modern, sophisticated and highly
mechanized mill sector on the one hand and the hand
spinning and hand weaving (handloom) sector on the other.
Between the two falls the small-scale power loom sector. The
latter two are together known as the decentralized sector.
Over the years, the government has granted a whole range
of concessions to the non-mill sector as a result of which the
share of the decentralized sector has increased considerably
in the total production. Of the two sub-sectors of the
decentralized sector, the power loom sector has shown the
faster rate of growth. In the production of fabrics the
decentralized sector accounts for roughly 94 percent while
the mill sector has a share of only 6 percent.
Being an agro-based industry the production of raw material
varies from year to year depending on weather and rainfall
conditions. Accordingly the price fluctuates too.
POSITION OF INDIAN TEXTILE INDUSTRY
The Indian textile industry contributes about 14 per cent to
industrial production, 4 per cent to the country's gross
domestic product (GDP) and 17 per cent to the country’s
export earnings, according to the Annual Report 2009-10 of
7
the Ministry of Textiles. It provides direct employment to
over 35 million workers directly and it accounts for 21% of
the total employment generated in the economy and is the
second largest provider of employment after agriculture.
Some of the textile clusters in which productions happens
are very huge and significant for the overall industry, for
example
Panipat produces 75% of all blankets produced in India
Tirupur contributes 80% of the country’s cotton hosiery
exports
Ludhiana makes 95% of total woolen knitwear
produced According to the Ministry of Textiles, Export target
in textiles in 2010 at USD is 50 billion.
the cumulative production of cloth during April’09- March’10
has increased by 8.3 per cent as compared to the
corresponding period of the previous year. Moreover, total
textile exports have increased to US$ 18.6 billion during
April’09- January’10, from US$ 17.7 billion during the
corresponding period of the previous year, registering an
increase of 4.95 per cent in rupee terms. Further, the share
of textile exports in total exports has increased to 12.36 per
cent during April’09-January’10, according to the Ministry of
Textiles.
As per the Index of Industrial Production (IIP) data
released by the Central Statistical Organisation, cotton
textiles has registered a growth of 5.5 per cent during April
8
March 2009-10, while wool, silk and man-made fibre textiles
have registered a growth of 8.2 per cent while textile
products including apparel have registered a growth of 8.5
per cent.
The textile sector has increased their investment in
projects to upgrade their equipment amid fierce market
competition and to meet the growing demand for more
textile products. Total investment in the textile industry
between 2004 and 2008 was around Rs.65,478 crore in
India, which is expected to reach Rs.1,50,600 crore by 2012.
This enhanced investment would generate 17.37 million
jobs-- 12.02 million direct and 5.35 million indirect—by 2012.
INDIA’S MAJOR COMPETITIORS IN THE WORLD
To understand Indias position among other textile producing
the industry contributes 9% of
GDP and 35% of foreign exchange earning, Indias share in
global exports is only 3% compared to Chinas 13.75%
percent. In addition to China, other developing countries are
emerging as serious competitive threats to India. Looking at
export shares, Korea (6%) and Taiwan (5.5%) are ahead of
India, while Turkey (2.9%) has already caught up and others
likeThailand (2.3%) and Indonesia (2%) are not much further
behind. The reason for this development is the fact that India
lags behind these countries in investment levels, technology,
9
quality and logistics. If India were competitive in some key
segments it could serve as a basis for building a modern
industry, but there is no evidence of such signs, except to
some extent in the spinning industry.
INDIA’S COMPETITIVENESS CONTRIBUTION TO
ECONOMY:
With 3.9 million handlooms, India is the highest handloom
producing country in the World. 30% of the total export
income is generated by textile alone, it is second largest
Employer industry after agriculture. The textile industry
constitutes approximately 14% of country's total industrial
production.
MARKET SHARE OF COUNTRIES IN TEXTILES
INDUSTRY
10
CHINA VS INDIA IN TEXTILE MARKET
The Indian Textile Industry has an overwhelming presence
in the economic life of the country. It is the second largest
textile industry in the world after China. Apart from
providing one of the basic necessities of life i.e. cloth, the
textile industry contributes about 14% to the country's
industrial output and about 17% to export earnings.
CHINA INDIA
High Productivity Lower Productivity
Skilled Manpower Skilled Workforce
Fashion awareness is not so high
Fashion awareness is so high
Labour is becoming expensive
Labour is Relatively Cheap
Net importer of cotton Is self sufficient in Cotton
Caters for mass market Is good at niche products
Has huge installed capacities and economies of scale with competitive pricing
Has smaller capacities
11
Exports have risen by 10% but at the same time China’s
exports have risen by more than 20%, even countries like
Pakistan and Bangladesh have done better india
SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY
Weakness:
Strength:
Strong cotton base
Growing Domestic Market
Strong entrepreneurial class
Flexibility in production of small order lots
Presence of integrated i.e. concept to consumer.
Ability to handle value additions, embellishments etc.
Adequate labour supply at relatively competitive wages
Good "cultural" comfort with US and Europe
12
Technological obsolescence and lower efficiencies
Opportunities:
Understanding buyers need because of language
advantage
Threats:
Enhanced competition from other countries
Poor work practices resulting in higher labour cost
component in many staple garments, in spite of low
labour costs
Rigid government labour policy and lack
rationalization of duties in MMF.
High transaction and power cost
Too much emphasis on cotton, synthetic fibre base
not equally developed
Fabric/processing still to gear up to meet
international standards
Improvements in infrastructure and regulations.
Research and product development
Buyers preference for India, after China
Rupee appreciation in last few months.
Trade blocs and partnerships at the exclusion of
India.
Location disadvantage: long transit time to key
markets.
Pricing pressure, following opening up of quotas
13
OSWAL GROUP
14
VPLBATHINDA VPLBATHINDA
ANSHUPATILUDHIANAANSHUPATILUDHIANA
VTMLUDHIANAVTMLUDHIANA
F.M.HAMMERLAYKOLAPUR
F.M.HAMMERLAYKOLAPUR
OSWAL GROUP OSWAL GROUP
OSWAL GROUP is a premier textile group of Northern
India having its corporate office at Ludhiana Punjab. The
group had existrance for last 40 years with core competency
of spinning. We were earlier part of Vardhman Group but
after family settlement between two brothers in 2003, we
have nemed ourselves as Oswal group. The group is mainly
into spinning and dyeing of all types of yarn in differenet
blends and manufacturing of garments. The group has plans
to diversify in future but mainly in textiles related activitries.
Vardhman Polytex Limited Bathinda
It is the oldest unit of the Company. This unit started its
commercial production in 1986 with an installed capacity of
11,520 spindles. This unit is situated in the hub of the
cotton belt and derives the advantage of procuring its
basic raw material of best quality at lower cost from nearby
locations.
Vinayaka Textile Mill, Ludhiana
15
This unit was setup in 2004 with an installed capacity of
24,288 spindles. This unit has latest state of art technology
imported from Rieter (Switzerland), Muratac (Japan) and
Uster (Switzerland). The spinning capacity of this unit has
now increased to 49,632 spindles. The Company has also
installed a dye house at the same location having a
capacity of 13 MT per day advanced machinery imported
from China.
Anshupati Textile Ludhiana
This unit was set up by the Company in 1991 with an
installed capacity of 8,000 spindles to manufacture
grey/dyed acrylic yarn. The acrylic yarn is used in the
manufacturing of hosiery and knitted garments. This
unit also manufactures the acrylic yarn which is used in
the manufacturing of mink blankets.
F.M. Hammerle TextilesLtd.
During the year, the Company entered into a joint venture
agreement with F.M. Hammerle Group, Austria for setting
up a green field project for manufacture of quality yarn
and piece dyed shirting fabric with annual capacity of 12
million meters. For this purpose, a new company in the
name of 'Oswal F.M. Hammerle Textiles Ltd.' has been
floated which will set-up its plant at Village Kagal, Dist.
Kolhapur (Maharashtra). The Company has 76% equity in
the said joint venture company and 24% equity is held by
16
F.M. Hammerle Group. The civil construction has already
commenced. The plant is expected to be operational
towards the end of 2007.
The F.M. Hammerle (FMH) Group of Austria is a
well-known name in the international textile scene for
more than 160 years now. Through this venture, VPL has
entered into the field of manufacturing high-end shirting
fabric. The subsidiary was set up by VPL in a technical
and marketing collaboration with the FMH group.
Vardhman Polytex Limited (VPL), Bathinda : It is a unit
based at Bathinda in Punjab. Earlier this mill was known as
Punjab Mohta Polytex Limited. Its foundation stone was laid
on 12th June 1983 by the Chief Minister of Punjab Sardar
Darbara Singh. The plant was commissioned on 4th
December 1986 and inaugurated by sardar Surjit Singh
Barnala. It was taken over and in corporated by Mahavir
Spinning Limited in 1987. Thus it became the subsidiary of
Mahavir Spinning Ltd. At the time of amalgamation it had
9000 spindles and 504 rotors making the total of 11520
spindles. In 1991 the name of the unit was changed to
Vardhman Polytex Limited, as a separate company. But
going on after the family settlements in 2003, the unit came
under Oswal Group. This unit had been awarded with ISO-
9002 certificate by the bureau of Indian Standards after the
final audit, which took place in the unit on 26th July 1996.
17
Presently the Chief Manager of Company is Mr. Vijay
Arora. The Personal Relations & Industrial relation Manager
is Mr. Rajinder Pal. Presently there are four manufacturing
units running in Vardhman. Manufacture process goes on 24
hours in 3 shifts of 8 hours. There are about 1500 workers
including employees. There is production of 104592 spindles
i.e. 60 Tons/day. There is consumption of electricity near
about 3 to 3.5 crores each month. The turnover of last year
(2010-2011) was about 800 crores of Oswal Group.
Cotton a raw material for the industry is require
main cotton belts in India are Punjab, Haryana, Gujarat,
Maharashtra. Raw material at this unit is purchased from the
following places, Major from Punjab are: Abohar, Mansa,
Malout, Muktsar, Moga, Bathinda, Kotkapura, Jaitu, Rampura,
Fazilka etc. From Haryana: Sirsa, Fatehbad, Hisar, Hansi,
Bhiwani, Barwala, Kalanwali etc., From Rajsthan
Ganganagar, Hanumangarh etc.
YARN MANUFACTURING BY VPL BATHINDA
Products By VPL ( Yarns) Count Range
Grey Cotton Yarn( Carded) Ne 16s to 32s
Grey Cotton Yarn( Combed) Ne 16s to 40s
18
Compact Yarns Ne 20s to 30s
Organic Cotton yarns Ne 20s to 40s
Supima Cotton Yarns Ne 20s to 50s
Polyster/ Cotton Yarns( Different Blends)
Ne 20s to 40s
100% Modal and Cotton/ Modal blends
Ne 16s to 40s
100% Bamboo and Cotton /Bamboo Blends
Ne 10s to 40s
Slub/Multicount Ne 08s to 40s
Lycra/Spandex Blended Core Spum Yarns
Ne 10s to 30s
Polyester Cotton Yarn Ne 20s to 40s
Marketing Channels
VPL has a strong marketing and sales presence in both the
export and domestic markets. Domestic market has three
major channels, namely
19
1) Agents Æ Brokers Æ Customers
In this channel, agents are appointed by the Company to
make arrangements for sale and also for receiving the
payments on time. These agents have further
arrangements of sale to different customers via brokers.
Recourse of
Company is with the agents for both purposes.
2) Distributor Æ Brokers Æ Customers
This kind of arrangement is followed when the payment is
arranged by the trader. They can stock the material also
and sell to different customers via brokers, if required.
3) Direct (which includes corporate customers
The Company deals with a few customers especially the
corporate buyers directly as well. Names of a few of the
corporate buyers are enlisted below:
20
FOR EXPORT CHANELS ARE
1)AGENTS(FORIEN/ INDIAN)
This is the major channel for the Company’s export
marketing. There are Indian as well as foreign agents for
this kind of set-up and a combination of them can also
exist for export deals where Indian agents have foreign
counterparts or vice-versa.
2)DIRECT
VPL is dealing with some
overseas customers directly as
well like;
a) Egyptian International (Egypt)
b) CMT Lee (Mauritius)
c) Yuki (Bulgaria)
d) Ontario (Ukraine)
21
TOP CUSTOMERS
Following tables give the sales percentage
break-up from the top customers of the
Company.
EXPORT MARKET
The top ten customers contribute to around 60% of the
total exports of the Company, and the top three are listed
below.
NAME OF CUSTOMER COUNTRY (%)
South Asia Textile PTE
Ltd
Singapore & Sri Lanka 21
GME & Supplies USA 10
K.N. Lee Malaysia 5
Domestic market
Some of the key customers in the domestic market are as
below.
NAME OF CUSTOMER LOCATIONSilver Enterprises New DelhiGanpati Textile New DelhiKochhar Sung Up Acrylic Ltd. LudhianaVardhman Enterprises New DelhiGulati Exports GurgaonRiba Textile Chidana
22
Hem Knit Wear Ludhiana
Manufacturing Process
23
1.MIXING
The different varieties of cotton are issued as per
product mix from the raw material section in bale from.
The different varieties of cotton and different lots are
mixed together as per the requirement of end product
and standard recommended mixings. The material is
conditioned in mixing for 24 hours.
2.BLOW ROOM
The cleaning and opening of fobers is done is aa
sequence of beaters. Main purpose is to reduce tuft size
, remove the trash particles abd foreign matter etc,
ehich often comes in the bales
3.CARDING
further cleaning of fibers is done and fibres are opened
into single fibers extent i.e. main purpose is further
removal of trash in cotton and the parrallaeziation of
fibres. From the carding machine, the material is
deleivered in the form of sliver.
24
4.DRAW FRAME
The purpose of this process is to reduce the wt/yard in
the card sliver 6 to 8 end of card slivers are doubled
together in this process to reduce variations and further
drafting is done to reduce the wt/yard of sliver.
5.LAP FORMER
20-25 Precombed draw slivers are fed together to
produce a lap sheets of fibres which is wound on the
spools.
6.COMBERS
The laps prepared on lap former are fed to combers.
The main purpose of combing process is to remove the
short fibres from the material in the form of noil. The
average noil percebtage carries from 15 to 18%. The
material is deleivered in the form of sliver.
7.SPEED FRAME
The finisher draw frame sliver is fed to the speed
frames for conversion into the roving form. In this
process wt/yard of the sliver is reduced, slight twist is
given to the fleece and the material deleivered in the
form roving, wound on the plastic bobbins
8.RING FRAME
The roving is fed to ring frame for conversion into yarn.
In the process the wt/yard of roving are reduced as per
25
requirements of ultimate user and the deleivered yarn
is wound on the plastic bobbins.
9.WINDING
In this process, the yarn is wound on paper cones to
produce bigger package as per requirement of market.
The weight varies from 1.2 kg to 2.2. kg. during the
process, in addition to the formation of bigger
packages, the yarn faults are also removed with help of
electronic yarn cleaner.
10. DOUBLING
In case of type cord the process is same upto winding.
After cone winding the yarn is fed into cheese winding.
In the process 2 ply or 4 ply is to be done as per
requiremntets. After the yarn is fed into ring doubling
and required is given in 2 or 4 ply yarn. In the next
process in assembly cheese winding is get the package
in the package in the required form to be fed into T.F.O.
in T.F.O. final yarn is prepared in the form of cheese
and required T.P.I. is given to the final yarn in process
11. PACKING
In this process, the cones/cheese are packed in bags or
cartoons as per the requirements of the market. In
addition to the packing the material is checked
thoroughly to avoid mixing of different materials.
26
OBJ ECTIVE OF THE STUDY
The main objectives of the research were:
To know export procedure in general and spinning
mill(Vardhman Polytex Limited) in particular
To understand related aspects of exports.
Actual Export performance of Vardhman Polytex
Limited
SWOT analysis in particular context to exports in
Vardhman Polytex Limited.
27
RESEARCH METHODOLOGY
To know export procedure in general and spinning
mill(Vardhman Polytex Limited) in particular
The Department concerned shall be studied in detail. The
relevant information shall be collected from company files and
officials and of commercial department .
To understand related aspects of exports.
This study can be divided as government organisation
involved, technological upgradation and quality
parameters.
Actual Export performance of Vardhman Polytex
Limited
28
Data shall be collected from the annual reports of
Vardhman Polytex Limited and required visits to the
requisite offices.
SWOT analysis in particular context to exports in
Vardhman Polytex Limited.
The information shall be collected by personal
observation and views of officials.
Export - Exporting is merely a selling but when it is selling
at home, it does not bother you because you are in personal
contact with a buyer for which you do not need to comply
with several procedural requirements including filling and
exchanging of a lot of documents. But the difference comes
when you intend to sell to some one who is thousands of
miles away from you, speaking different language, having
different customs, preferences, currency and import
regulations. In order to facilitate trade with other countries,
certain sets of rules have been developed by the trading
nations over the centuries, which are normally followed in
foreign trade today. The International Trade is governed by
rules made by the World Trade Organisation (WTO). Details
on WTO can be obtained from Information Advisory Centre
(IAC) of the EPB.
29
Policies Adopted by Vardhman Polytex Limited for
Export
With the support of rich industrial knowledge and sound
infrastructure, we, Vardhman Polytex Limited, are able to
supply and manufacture a premium quality range of
products on time. Established in the year 1970, our company
is known as a
prominent manufacturer and supplier of Cotton Yarns,
Carded & Combined Cotton Yarns, Fancy Yarns, Core
Spun Yarns, and many more. Our range is available in a
variety of colors and sizes that perfectly match the emerging
market demands. Our flawless range of end products have
helped us to achieve a leading position in the market.
The growth of any organization as well as product is due to
the complete effort of the team. We are also blessed by
most hard working, stable and honest team that works for
the promotion of our product. We are supported by a team of
skilled and experienced members who make use of latest
technologies to deliver reliable and qualitative range of
yarns. Apart from this, they are highly familiar with the art of
giving the perfect finishing to the product.
We are able to maintain our leadership through
setting new benchmarks in our field due to the
following factors:
Excellent quality range
30
Assured timely delivery of consignments
Use of state-of-the-art technology
Customer satisfaction
Wide network of distribution
Competitive prices
Transparent business dealing
Quality Policy(TQM) Total Quality Management
The Company follows the quality policy as given under:
Quality shall be built into the Company’s products to not
only meet customer requirements continuously, but also
exceed them. The Company shall achieve this through
an interface with the market place, access to state of the
art technology, research and development, process
development and adoption of innovative manufacturing
and marketing strategies.
The quality policy shall be integrated with the Company’s
main objectives: -
31
• To remain market leader in quality.
• Increase market share with focus on niche
segments.
• Improve productivity.
• Cost reduction.
• Reduction in percentage of seconds.
These objectives shall be reviewed from time to time.
The management of the Company shall be committed
to provide resources and comply with all requirements
needed for fulfillment and continual improvement of the
Company’s quality management system.
Quality culture shall be created throughout the
organization through training and motivation of people
at all levels.
The quality policy shall be implemented through a
network of systems and procedures understood and
followed throughout the Company
Unmatched Quality
Being a quality oriented organization, we always emphasize
on maintaining higher standards of quality. This is the reason
why we have always followed a stringent Quality Control
32
Management. Our team of quality analysts make sure that
each product that is dispatched from our end, meets the
international standard of quality. For this, our quality
analysts monitor every stage right from procurement to
designing, production and dispatching.
The range undergoes numerous tests on the following
quality parameters set by the industry:
Strength
Finish
Size
Color.
Proper quality control policy help us in rendering every
product flawless in terms of color, size, finishing, and
application.
The Main Reason Of best exporter (Vardhman Polytex
Limited) in textile market in India is following
1. COMPANY'S PHILOSOPHY:
• Total Customer Delight
• Competing with the best
• Total Quality People
• Product Quality a way of life
33
• Continued improvement through innovation & creativity
• State of Art Technology with ultramodern R&D facilities
• Respect of every VPL Parivar Member
•Achieving Excellence through culture integration
• Change a way of life
• Act as responsible corporate citizen and discharge our
social responsibilities
Export 2010-2011 (VPL)
Particulars Quantity (Tons)
Value (Crores)
Cotton Yarn – KH 29.88 17.53
Cotton Yarn – CH 37.37 60.26
Cotton Yarn - Ch Fine 69.36 21.16
Cotton Yarn- Organic(100%)
7.61 2.6
Cotton Yarn- Organic Blended
11.91 11.58
Modal: Cotton-Blended
83.34 1.76
34
Cotton Yarn – CH Supima
1 3.87 1.78
Cotton: Lycra- Combed
79.56 1.52
Cotton:Bamboo – Combed
40.82 0.86
Total 119.05 Crores
Export 2009-2010
Particulars Quantity(Tons)
Rate(Kg.)
Amount(Rs.)
Cotton Yarn – KH 491.13 118.51 58202945
Cotton Yarn – CH 4033.96 119.74 483017161
Cotton Yarn - Ch Fine 1107.01 138.48 153297845
Cotton Yarn- Organic(100%)
132.04 152.53 20140170
Cotton Yarn- Organic Blended
81.65 143.37 11705515
35
Modal: Cotton-Blended
61.24 160.51 9828735
Cotton Yarn – CH Supima
2.2 227.65 500094
Cotton: Lycra- Combed
8.62 170.40 1468579
Cotton:Bamboo – Combed
0.05 333.98 16832.66
Total Exports 738177877
Export 2008-2009
Particulars Quantity(Tons)
Rate(Kg.)
Amount(Rs.)
Cotton Yarn – KH 450.06 100.12 45060938
Cotton Yarn – CH 2727.55 110.99 302730148
Cotton Yarn - Ch Fine 614.76 126.57 77811987
Cotton Yarn- Organic(100%)
- - -
Cotton Yarn- Organic Blended
- - -
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Modal: Cotton-Blended
- - -
Cotton Yarn – CH Supima
- - -
Cotton: Lycra- Combed
- - -
Cotton:Bamboo - Combed
- - -
Total 425603072
Export 2007-2008
Particulars Quantity (Tons)
Rate Amount
Cotton Yarn – KH 596.72 95.44 56951246
Cotton Yarn - CH 1885.95 103.70 195564642
Cotton Yarn - Ch Fine 720.50 117.83 84893686
Cotton Yarn- Organic(100%)
- - -
Cotton Yarn- Organic Blended
- - -
37
Modal: Cotton-Blended
- - -
Cotton Yarn - CH Supima
- - -
Cotton: Lycra- Combed
- - -
Cotton:Bamboo - Combed
- - -
Total 84893686
Export Procedure Export procedure is a system or
methodology by which export trade transaction is
completed. It involves the study of different steps that are to
be taken by the two parties namely the exporter and the
importer. The export procedure is lengthy & time consuming.
It involves a number of steps right from the time an export
order is received and it is completed with the realization of
export proceeds.
In between there are many formalities is required
to be completed. In the export procedure various formalities
need to be completed & various documents are required to
be prepared by the exporter. Every exporter should have a
38
thorough knowledge of the rules, regulations & procedure
required to be followed for exporting the goods
abroad.
The procedure of exporting involves the following stages:-
STAGE 1:
First of all, searching of customer is done and then export
order is received. Usually gets order in three ways:-
Through Internet.
Through International Trade & Exhibition.and,
Through Global Tender which is floated by the Importer.
STAGE 2:
The export order must specify the mode of payments
such as:
L/C (Letter of Credit)
D/P (Document against Payment)
D/A (Document against Acceptance)
At this stage, the company prepares all the necessary
documents including Sales Contract required by the buyer
and submits to the negotiating bank in exact specified
manner. The most important documents demanded by the
importer are:-
Bill of Exchange
39
Commercial Invoice
Packing List
Bill of Lading
Marine Insurance Policy
Certificate of Origin
STAGE 3:
After getting export order from the desired country,
VPL enters into a contract with it. Once the order has been
received, the export order is scrutinized with reference to
the terms & conditions of the export contract. This is the
most crucial stage. All subsequent actions and reactions will
depend on these terms & conditions.
It is ensured that contract has been entered into in
accordance with the prevalent export policies of the country
and Foreign Exchange Regulations like FERA and FEMA.
STAGE 4:
As soon as the export order has been confirmed,
preparations for the dispatch of Yarns are started. After
Agreement, the manufacturing order is sent to the
production manager by the marketing department of VPL.
This order contains the description of Yarns as has been
given in the export order, alongwith the copy of the
instructions given by the importer. The date by which the
40
Yarns must ready is clearly intimated to the production
manager and advice the material procurement for assuring
the availability of the items required for the Yarns on the
basis of work order, manufacturing starts.
STAGE 5 :
After manufacturing, inspection is carried out by the
quality assurance deptt. of VPL, as final inspection is done by
the IMPORTER, if the importer so desires.
STAGE 6 :
As soon as the yarns are manufactured,
production manager informs the marketing department that
the goods are ready to dispatch. At this stage, two important
documents are to be prepared :-
ARE 1 form
CT 1 form
ARE 1 form is prepared in quantiplicate and CT 1 form is
prepared in quadra duplicate. CT forms are issued by the
exise department. ARE1 forms are presented to the Range
Superintendent of Central Exise , who after necessary
formalities signs all the copies. The original & duplicate
copies are given back to the exporter. The triplicate copy is
sent to the maritime collector, fourth copy is sent to the
Chief Accounts Officer & the remaining copy is kept by the
office of Range Superintendent.
41
The other authority which the export department
approaches immediately at this stage is the Export
Inspection Agency for conducting Quality & Pre-Shipment
Inspection. An inspector is deputed by the Inspection Agency
to inspect the consignment. If the Yarns are confirmed to the
prescribed specifications, an Inspection Certificate is issued.
The Yarns are then dispatched to the port of shipment.
STAGE 7:
After the Yarns have been dispatched to the port of
loading, a dispatch advice is sent to the export department.
Soon after an application is sent to the Insurance Company
for Marine Insurance Cover. The Insurance policy is obtained
in duplicate.
At this stage all formalities in relation to ECGC cover,
Certificate of Origin, Consular Invoice etc. wherever
necessary is completed.
There after the export department sends the following
documents to its clearing & forwarding agent along with
detailed instructions:-
Commercial Invoice
Original Export Order
Original Letter Of Credit
ARE1 form (original & duplicate copies)
Excise Gate Pass
42
Packing List
Certificate of Inspections
Declaration Form in Triplicate
Consular Invoice
Export License
Railway Receipt
STAGE 8:
The Clearing & forwarding agent takes the delivery of
the consignment from the railways & arranges its storage &
warehouse. Thereafter the agent prepares the requisites
copy of shipping bill.
STAGE 9:
After the shipping bill has been prepared & passed by
the customs, the Clearing & forwarding agent presents the
port trust copy of the shipping bill to the shed
superintendent of the port trust & obtain carting order for
bringing the export cargo in the transit shed for physical
examination. Thereafter, in the case of shed cargo, the dock
challan is prepared. The following details are given in the
dock challan:-
Consignee’s name & address
Vessel name
Port of destination
43
Exporter’s name
Mark & No. of packages
Gross weight
Port charges payable
Other details as necessary
STAGE 10:
The ship clerk calls for cargo from shed & after loading
prepares the mate’s receipt. The mate’s receipt is signed by
the captain of the ship. It is then delivered to the port
commissioner’s shed. The clearing & forwarding agent pays
the port charges & takes the delivery of the mate’s
receipt. This mat’s receipt is then presented to the shipping
company along with the requisite no. of Bill of Lading.
STAGE 11:
The clearing & forwarding agent forwards the
following documents to the exporter:-
Full set of Bill of Lading
Shipping Bill
Copies of Custom Invoice
ARE1 form
One copy of commercial Invoice duly attested by the
customs
Original Export order
Original Letter of Credit
44
Railway concession form duly attested by the customs
STAGE 12:
As,soon as the exporter (VPL) receives the above
documents from the clearing& forwarding agent, completes
the remaining formalities. The exporter files a claim with
maritime collector of Central Excise in the port town for
rebate of Central Excise duty, 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 the Bill of Lading
Customs Invoice
Commercial Invoice
Packing list
Certificate of Origin
Single country declaration
STAGE 13:
The following documents are presented to the
negotiating bank:-
ARE 1 form (Duplicate copy)
Bill of Exchange
Full set of Bill of Lading (All the negotiating copies)
Letter of Credit (original)
45
Commercial Invoice (Two copies)
Custom Invoice (2 copies)
Packing list (2 copies)
Certificate of Origin (2 copies)
Marine Insurance certificate (2 copies)
Bank Realisation Certificate (2 copies)
STAGE 14:
This is the last stage of export procedure. At this stage
the bank processes & negotiation is done in the following
manner:-
The entire documents are scrutinized with reference to yhe
terms & conditions of the original Letter of Credit (In case of
L/C payment terms)
Thereafter a set of following documents is transmitted to the
banker of the importer by the first air mail followed by the
second set of it by the second air mail to ensure that in case
the first is lost, the importer can take the delivery of the
consignment on the basis of second set of documents. These
set of documents are:-
Bill of Exchange
Negotiable bill of lading
Commercial Invoice
Customs Invoice
Insurance policy
46
Certificate of Origin
Consular Invoice
Packing list
The original copy of the bank certificate along with the
attested copies , the commercial invoice is returned to the
exporter. The duplicate copy of the bank certificate is
forwarded to the office of the Director General of foreign
trade in the area.
EXPORT DOCUMENTATION
There are a number of documents, which have to be
prepared by the exporter in order to arrange export of his
consignments.
These documents can be mainly classified into two i.e.
(a) Commercial Documents and
(b) Regulatory Documents
47
Commercial documents: There are 15 commercial
documents. Out of the 15 commercial documents, eight
are principal and the rest are auxiliary.
Principal documents are required for effecting physical
transfer of goods and transferring of title of goods from
an exporter to an importer. There are eight principal
documents:
1. The Commercial Invoice: It is a formal demand note
for payment issued by the exporter to the importer for
goods sold under a sales contract. It should give details
of the goods sold, payment terms and trade terms. It is
also used for the customs clearance of goods and
sometimes for foreign exchange purpose by the
importer. It is prepared by exporter.
2. Packing List: A list with detailed packing information of
the goods shipped.
3. Bill of Lading/Air Waybill: An evidence of contract
between the shipper of the goods and the carrier. The
customer usually needs the original as proof of
ownership to take possession of the goods. A kind of
waybill used for the carriage of goods by air. This serves
as a receipt of goods for delivery and states the
48
condition of carriage but is not a title document or
transferable/ negotiable instrument.
4. Certificate of Inspection/Quality control: A report
issued by an independent surveyor (Inspection
Company) or the exporter on the specifications of the
shipment, including quality, quantity, and/or price, etc;
required by certain buyer and countries.
5. Certificate of origin: It is a document certifying the
country in which the product was manufactured and in
certain cases may include such information as the local
material and labor content of the product. A popular
example of its is Form A which is often called the GSP
form A.
6. Bill of Exchange: An unconditional written order, in
which the importer addressed to and required by the
exporter to pay on demand or at a future date a certain
amount of money to the order of a person or bearer.
7. Shipment Advice: The documents related to Shipment
discussed further in detail.
8. Insurance Certificate: An insurance policy is an
insurance document evidencing insurance has been taken
out on the goods shipped, and it gives full details of the
insurance coverage. An insurance certificate certifies that
the shipment has been insured under a given open policy
and is to cover loss of or damage to the cargo while in
transit.
49
Auxiliary Documents: TheSe are required for
preparation and procurement of principal export documents.
The seven auxiliary documents are
1. Performa Invoice
2. Intimation for inspection
3. Shipping instructions
4. Insurance Declaration
5. Application for certificate of origin.
6. Mate's Receipt: A mate receipt is issued by the
commanding officer of the ship when the cargo is loaded
on the ship and contains information about the name of
the vessel, berth, date of shipment, description of
packages, marks and members etc. it is first handed over
to the Port Authorities that all the port dues may be paid
by the exporter. After paying all the dues, the agent may
collect the receipt from the port authorities. Bill of loading
is prepared by the shipping agent after the mate receipt
has been obtained.
7. Letter to bank of collection/negotiation of
documents
Regulatory Documents
These are those documents which have been prescribed
by different govt. departments for the requirements of
various rules and regulations under relevant laws
governing by export trade such as foreign exchange
regulations. There are seven regulatory documents
50
associated with the pre-shipment stage of the export
transaction. They are:
1. ARE Form (By Central Excise Authorities): It is used
for claiming excise rebate / duty drawback.The different
copies of ARE.1/AR4 forms should be of different colors
indicated below:
Original---- White (Returned to Exporter)
Duplicate--- Buff (Do)
Triplicate--- Pink (Rebate sanctioning
authority )
Quadruplicate---Green (Chief Accounts Officer
at Collectorate Head Quarters)
Quintuplicate---- Blue (Central Excise Officer)
Sixtuplicate- Yellow (optional copy to
exporter)
2. Shipping Bill/Bill of Export (Central Excise
Authorities): It is the main document required by the
Custom Authority for allowing shipment. Basically shipping
bills are of four types. The major distinction between one
type and another lies with regard to the goods being
subject to:
A. Export Duty
B. Free of Duty
C. Entitlement to Duty Drawback
51
D. Entitlement of Credit of duty under DEPB scheme
E. Re Export of importing goods.
3. Port Trust Copy of Shipping Bill/ Export
Application/Dock Challan: The exporter has to fill up
a form in duplicate for the payment of dock charges.
This form is known as ‘Dock Challan’. It is after
completion of this process that the exporter can bring
the goods for loading in the ship. For this purpose, a
document is issued permitting the goods to be brought
to the docks for loading. This document is known as
Dock Warrant. After the goods are actually brought to
the docks and handed over to the dock authorities for
loading in the ship, the document issued as a proof of
delivery is known as Dock Receipt.
4. Vehicle ticket: It is prepared by the exporter and
includes detail of the export cargo in terms of the
shipper’s name, the number of packages, the shipping
bill number, the port of destination and number of items
carrying the cargo. The cargo driver should posses the
ticket and the when the vehicle is brought to the port
gate, it should be presented to the gate warden along
with other shipping documents. After that he is allowed
to pass the gate.
5. Exchange Control Declaration/GR/PP forms (By
RBI): It is Prescribed by the RBI under FEMA to ensure
52
that the Forex receipts in respect of exports are
repatriated to India. Prepared in duplicate. Both copies
submitted to customs at port of shipment along with
shipping bill. Customs gives ten no. running serial no. on
both copies Customs returns duplicate copy and retains
original. Exporter submits GR form and other documents
to his bank/authorized dealer for collection of export bills
within 21 days
6. Freight Payment Certificate -Steamer Agents: It is
like receipt for payment of freight
7. Insurance Premium Payment Certificate -
Insurance Co.: It is like receipt for payment of
insurance premium.
Some Main Documents Related to Payment
1. Letter of Credit: it is an arrangement whwreby
the importer requests and instructs the issuing bank
2. Bill of Exchange (Draft)
Related Aspects of Export
As per the government rules and policies a company
involved in the process of export has to complete a number
of formalities before starting the actual exports. The
formalities related with export process of Vardhman Polytex
Limited are:
53
o The company has to get an export code by registering
itself with the Director General Foreign Trade
o After registering the company gets a RBI Code.
o Various export promotion councils have been set up for
various products and a company involved in export has
to register with it. Vardhman Polytex Limited has
registered with TEXPROCIL (Textile Export Promotion
Council).
o The Company has to notify central excise department.
After notification the range Office regularly checks the
records of the exports and taxes etc.
o The company involved in exporting a product receives
certain benefits. For these the company has to inform
and authentify the exports made by it to the concerned
export promotion zone head.
o Finally the company has to tie up with a commercial
bank for maintenance of accounts, Loans etc.
Quality Policy
A product known for better quality always stands a
class above its competitors. It is on the basis of quality that
Vardhman can afford to charge higher prices than the
competitors. A constant check is maintained during various
54
stages manufacturing process by R & D department of
Vardhman Polytex. In pursuit of better quality and to
maintain present level of quality, a quality policy has been
incorporated into the system.
Quality shall be built into the company’s products to not
only meet customers’ requirements continuously but exceed
them. The company shall achieve this thought an
interface with the market place, R&D, Process development
and adoption of innovative manufacturing and marketing
strategies.
The quality policy shall be implemented through a
network of systems and procedures understood and followed
throughout the company. The quality policy shall be
integrated with the company’s main objectives:
a. to Remain market leader in quality
b. Increase market share with focus on each segment
c. Improve Productivity
d. Cost Reduction
e. Reduction in Percentage of wastage
The management is committed to provide capital
and human resources to achieve above objectives. A
companywide quality culture shall be created through
training and motivation of people at all level in
organization.
55
SWOT ANALYSIS OF
VARDHMAN POLYTEX LIMITED
From the study undertaken at Vardhman Polytex Limited the
following are observed:
56
Strengths
a) The Company is a professionally managed
company and all the departments are being
headed by professionals.
b) The Company was earlier a part of Vardhman Group
and a follower of new management concepts like
Kaizen, Quality Circles, Five Ss, etc., and as such is
continuously upgrading the skill level of the workers
for better product quality.
c) The Company is already in the line of spinning yarn
and as such is having the requisite technology
/personnel.
d) The technology used by the Company is comparable
to its peer and as such is capable of supplying quality
products.
e) The expansion projects will improve the productivity
and profitability of the Company and consequently
competitiveness.
f) The existing units will add to the cash generation
of the Company resulting into improved repayment
capacity of the unit.
g) The Company is better equipped to face the world
competition in view of the State of the art machinery
and improved productivity.
h) The Companys’ Bhatinda unit is ISO 9000 certified,
whereby its quality manufacturing is at par with its
57
competitors.
i) The Companys’ dyeing facility has been certified
by Oekotex Switzerland, which is top certification.
j) The Company has been awarded status of Star
Trading House.
k) Bhatinda is the hub for cotton procurement, as the
unit is located in Bhatinda itself, thus, the Company
has the advantage of economies of procurement.
l) The Company has raised the term funds at very
favourable interest rates, which are either lower
then its peers or at par with its peers.
Weaknesses
a) The basic raw material of the Company is cotton,
which is an agriculture produce. The cotton prices
are thus dependent on the production of cotton
(demand / supply) in the country/international
market.
b) The Company is also in acrylic yarn segment where
the margins are thin.
c) The Company is manufacturing grey cotton yarn
(70%), while the diversification / entry to other
cotton yarns like mélanges, higher counts is still to
be made.
58
Opportunities
a) The Company can import cotton at competitive rates
and better quality at any time in case of need due to
rupee appreciation.
b) The Company can explore international markets as
the potential is high.
c) With the closing down of textile units in Europe, the
advantage of foreign acquisition can be explored.
Threats
a) Trade blocs and partnerships at the exclusion of
India.
b) Location disadvantage: long transit time to key
markets.
c) Pricing pressure, following opening up of quotas
d) Enhanced competition from other countries similarly
constrained by quotas
Vardhman Polytex Limited has a strong hold in the market
due to dominance of its brand and it has opportunities like
technology and quality Upgradation which it is continuously
in pursuit of.
It’s only the policies of GOI like promotion of 100% EOU
and exchange rates of other competing countries which offer
a major threat to Vardhman Polytex Limited.
59
But with pursuance for quality and technology Vardhman
Polytex Limited is trying to convert most of opportunities into
strength and reduce its weaknesses.
Conclusion
From the present study conducted at Vardhman Polytex
Limited , it can be concluded that
60
Vardhman Polytex Limited has a strong position in the
market due to the quality and variety of cotton yarn supplied
by it. VPL mainly deals with export of production. All the
exporters follow the same process for exporting their things.
Export process is rigid as well as flexible. The documents
used in export procedure are standardized.
Vardhman Polytex Limited is trying its best to improve
the present level of quality of yarn being manufactured and
to upgrade the technology its continuously in the process of
modernization. All the efforts are done by the top
management to boost up the exports.
BIBLOGRAPHY
International Marketing
- B.S. Rathor, B.M. Jain, J.S. Rathor
61
International Trade & Export Management
- R.L. Varshney, B.Bhattacharya
www.texprocil.com
www.export911.com
www.eximguru.com
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