S.No.

Particulars Page Nol

1. Objective of the project

2. The Indian Cotton Textile Industry

3. The Indian Terry Towel Industry (Export Performance Of India

& Welspun)
4. Welspun Group ( Profile, Background, Corporate Profile,
Strength, Awards & Certification)
5. Welspun India Ltd. (Background, Company research,
International exposure)
6. Company’s wise total export, Major Global Customer,
Highlight & Strength
7. Current Change , Market Response, Projection & Achivement

8. Planning for Sources of Funds, Made-Up Growth, Key Result

Area, Financial Creditintial, Financial Instrument
9. Pre-shipment Finance (Meaning, Scope & Importance, Features,
Procedure, Methods, Types & Forms)
10. Post-shipment Finance (Meaning, Scope & Importance,
Features, Procedure, Methods, Types & Forms)
11. Export Price Quotation ( F.O.B. , C.I.F., C & F) Seller’s &
Buyer’s Obligation. Cost Included in Export Price Quotation
12. Export Procedure ( Registration Stage, Pre-Shipment Stage,
Shipment Stage, Post-Shipment Stage)
13. Export Document (Letter of Credit, Proforma Invoice,
Commercial Invoice, Mate’s Receipts, Bills Of Ladding,
Airway Bill, Shipping Bill, Certificate of Origin, G.R. Form,
P.P. Form, Marine Insurance Policy, Bills of Exchange, Bills of
Entry.
14. Export Assitance & Incentives (Advantages & Role)

15. Export Promotions ( Importance , Advantages , Exim Policies ,

Background)
16. Export-Import Policies, Export Promotion Schemes, Tax
Incentives & Reliefs
17. Export Documents

18.

19. Bibliography
 Objectives of the Project

The main objective of the summer training is to get the practical working experience
in the finance department of the company. To study about the company’s export procedure in
within the country and between the country. And all those financial activities which are
essential for export finance.

The following steps are taken to fulfill the above stated objective.

1. Study of the Terry Towel industry and export market condition related to the industry.

2. To study all possible mode of payment which, the company is using for receiving of
payment.

3. To study about the export procedure which are used for delivery of goods.

4. To study about the all commercial paper which are used which are used for receiving of
payment.

5. To study about the company international exposure .

 THE INDIAN COTTON TEXTILE INDUSTRY

The Indian Textile Industry is one of the largest segments of Indian economy accounting for
over 20% of the industrial production as well as providing employment to around 65 million
persons. It enjoys the distinction of being the highest foreign exchange earner for the country,
accounting for nearly one third of the country’s total exports. Therefore, the sector shoulders a
major responsibility in enhancing the foreign exchange reserves.

Despite strong domestic demand-pull, textile exports have witnessed steady growth over the
years. The share of India's textile exports in the world has grown from 1.8% in the beginning
of 80's to around 3% at present. The advantages arising from a strong raw material base, a well
established yarn and fabric industry and relatively low labor cost has led to quick growth in
textile exports, from an insignificant base of less than US $3 million in the beginning of 70's to
nearly US $ 12-13 billion.

However, with the lowering of tariff barriers, removal of quantitative restrictions and the phase
out of MFA regime, the textile industry is poised to enter an era of fierce competition, not only
in exports but in the domestic market as well. All these developments are bound to have some
effects on Indian textile trade and industry. To meet the emerging competition, the Government
is continuously providing an enabling environment for the industry to be globally competitive.

Realizing the vast export and employment potential of textile and clothing industry on one hand
and the challenges it faces, a cohesive set of policy initiatives are being taken. The new Textile
Policy 2000 (NTxP-2000) has been announced to provide the policy direction for orderly and
sustained development and growth of the textile industry. One of the main aims of the policy is
to achieve an enhanced target of textiles and apparel exports from the present level of US $ 11.2
billion to US $ 50 billion by 2010.

The world scenario in the textiles and clothing trade is fast changing with the imminent
abolition of quota restrictions and emergence of trade blocks. Removal of restraints would
provide unrestricted access, but they would also result in unrestricted competition in the world
market. The industry in India needs to prepare itself for facing the challenges and exploiting
the opportunities that a quota free market would provide.

While, the industry can legitimately demand proper policy inputs from the Government, the
initiative for modernization and innovation for improving competitiveness has to come
essentially from the industry. The natural advantages in the form of abundant cotton availability
and low labor costs need to be skillfully combined with technology up gradation and quality
improvement to sharpen the competitive edge resulting in a quantum jump in the global share
of textile exports from India in the post quota regime.

The textile industry is the single largest foreign exchange earner for India. Currently it accounts
for about 8 % of GDP, 20 % of the industrial production and over 30 % of export earnings of
India and it has only 2-3 % import intensity. About 38 million people are gainfully employed
with the industry making it the second largest employment providing sector after agriculture.
 Currently India has the second highest spindleage in the world after China. Aggregate
production of cloth during 1996-97 was 34,265 million sq. metres, an increase of nine percent
over 1995-96. India's contribution in world production of cotton textiles was about 12 % a
decade back, while currently it contributes about 15 % of world cotton textiles. The production
of silk has increased from 9498 tonnes in 1987-88 to 14,093 tonnes in 1996-97. For wool,
which is another major raw material , India depends on imports, especially from New Zealand,
to meet its requirements.

Growth rate in exports of textiles/ clothing during 1996-97 was 11%. Introduction of a soft loan
scheme during the 7th plan called Textile Modernisation Fund Scheme (TMFS) facilitated the
process of modernising textile industry significantly. Indian textile industry has performed
remarkably well during the last one decade, but it still needs to carve a competitive edge
through quality output and high value addition especially when today India is on the fast track
of globalisation.

The textile industry undoubtedly will continue to grow and play a vital role to create more
employment, enhance per capita income and earn valuable foreign exchange for the country
in the coming years. Government is fully committed to restoring the glory of the textile
industry in the economy and I am sure with the dedicated efforts of the exporting community
the ambitious export target of US $ 50 billion set in the new textile policy will be achieved by
the year 2010

The process of economic liberalization begun in the last decade has seen the industry become
globally competitive, not only in terms of price, but also quality. Modernization, has not been
restricted to the installation of sophisticated processing machinery, wide width looms,
autoconers, electronic clearers, splicers etc. but also to the adaptation of quality systems
conforming to ISO 9000 standards.
India’s share

 Accounts for 4% of the world trade in textiles & clothing

 Ranks 6th / 7th in US/EU markets
 CAGR of 5.82% over the last 4 years

Performance of Indian Textile Exports

US$ Million 1999 - 00 2000 - 01 2001 - 02 2002 - 03 2003 - 04 CAGR

Readymade Garments $ 4,770.90 $ 5,577.98 $ 5,023.69 $ 5,704.68 $ 6,104.53 6.36%

Cotton Textile 3,111.21 3,514.80 3,092.36 3,370.16 3,510.22 3.06%
Man-made Textile 856.09 1,096.92 1,092.20 1,421.17 1,822.38 20.79%
Wool & W oolen Textiles 50.05 62.52 52.39 51.05 59.28 4.32%
Silk Textile 245.67 317.09 286.89 314.92 371.77 10.91%
Handicrafts 1,315.33 1,245.22 1,062.78 1,321.35 1,014.49 -6.29%
Coir & coir manufacturers 46.20 48.42 61.99 73.55 78.65 14.23%
Jute 125.83 151.49 128.74 188.06 233.03 16.66%
Total Export $ 10,521.28 $ 12,014.44 $ 10,801.04 $ 12,444.94 $ 13,194.35 5.82%

(India accounts for about 14% of Global Trade (US$ 31 bn) in Cotton Textile and
17% of the Global Trade in Made ups.
 Today, with over 1300 spinning units, over 275 composite mills and around 1.49 million
registered looms, the Indian Cotton Textile Industry is emerging globally, as a large force to
reckon With $6 Bn. in export garments could stitch up another software story. Most of the
global retailers have sourced form India. The sourcing bill of GAP is $ 500/600 Mn., Tommy
Hilfiger adds up to $100 million. Wal Mart sources a billion dollar worth of goods, or half of its
apparel, from India.

Though major markets for premium segment towel are in developed countries, the
manufacturing facilities have also lately developed in Asian countries especially India due to
the low production cost, indigenous availability of raw materials, easy availability of skilled
textile labor and benefit of currency exchange rate. The Terry Towel industry in India is
predominantly export oriented.

World Export and India – Cotton Textiles

Cotton textile India’s share India’s rank
1999 export market

$ billion Per cent

100% =31 14 2

Made-ups 2
17
9

5 10
13
Processed
fabric
11 3
3
Grey fabric
6 25 1
Yarn

The Indian Textile industry has jumped on the outsourcing bandwagon after IT and
Pharmaceuticals industry. The sector is likely to witness major change given phasing
out of the Quota Restriction early 2005. Some important facts about the Indian industry are:

Indian textile industry contributes 4% to the GDP of the country

The Industry accounts for 20% of India’s Industrial production and around 30% of
export earnings

The Industry provides employment to more than 35mn people, second to agriculture sector.

The size of Indian organized textile industry is Rs140bn

 THE INDIAN TERRY TOWEL INDUSTRY

The major markets for premium segment towel are in developed countries, the manufacturing
facilities have also lately developed in Asian countries especially India due to the low
production cost, indigenous availability of raw materials, easy availability of skilled textile
labor and benefit of currency exchange rate. The Terry Towel industry in India is
predominantly export oriented.

The global demand is growing rather slowly; at a pace of 1% p.a. so capacity addition is not
much possible. But global demand is constantly evolving in terms of product mix and designs.
The consumption is not restricted to just the top segment of the market but the same is
extending to middle class segment even in countries like India. Major countries catering to the
global market are Turkey, Brazil, India, Pakistan, China, Thailand and Indonesia.
India 痴 share in bath towels
is largest in US import
200 among competing
150 countries and
increasing over the years.
100

50

0
1998 1999 2000 2001 2002 2003 2004

India Brazil Pakistan China Turkey

Globally, India has 10% market share worth Rs.800 Crores, which is expected to double in next
5 years. About a decade back when Indian Industry was in nascent stage, India had only a share
of Rs.50 Crores, which has now quantum-jumped to Rs. 800 Crores. India is becoming a global
outsourcing hub. This will further require providing premium quality products at internationally
competitive rates.

INDIA’s Export Performance

% % % % % %
Country 1999 2000 2001 2002 2003 2004
Share Share Share Shar Shar Share
Total US
Import 414.26 100% 495.73 100% 537.18 100% 636.17 100% 721.21 100% 871.66 100%

India 72.06 17% 90.50 18% 87.91 16% 120.69 19% 135.12 19% 181.74 21%
Brazil 41.06 10% 67.68 14% 79.95 15% 111.88 18% 120.46 17% 112.12 13%
Pakistan 58.30 14% 69.24 14% 84.78 16% 74.44 12% 87.59 12% 123.28 14%
Turkey 14.96 4% 30.06 6% 43.15 8% 59.62 9% 80.71 11% 97.25 11%
China 41.34 10% 54.80 11% 59.48 11% 69.32 11% 66.61 9% 70.81 8%
Thailand 22.42 5% 26.70 5% 28.86 5% 34.39 5% 39.10 5% 55.78 6%
Bangladesh 15.95 4% 15.81 3% 14.61 3% 17.66 3% 29.87 4% 35.38 4%
Canada 8.46 2% 8.19 2% 9.04 2% 21.02 3% 19.22 3% 31.10 4%
Egypt 7.98 2% 6.52 1% 8.58 2% 15.63 2% 19.07 3% 11.65 1%
Israel 12.82 3% 12.16 2% 14.85 3% 13.80 2% 17.19 2% 20.43 2%
Portugal 14.13 3% 13.36 3% 14.19 3% 17.18 3% 15.69 2% 19.37 2%
Sri Lanka 6.24 2% 8.32 2% 6.22 1% 5.46 1% 6.82 1% 8.69 1%
WELSPUN’s Export Performance

( In US$ Million )
Particulars 1999 2000 2001 2002 2003 2004

Toweling
USA Import VolumefromIndia 72.06 90.50 87.91 120.69 135.12 181.32
YOY Growth Rate 26% -3% 37% 12% 34%

Welspun's Export toUSA 15.75 22.25 25.10 31.00 44.12 51.46

Welspun's Export % 22% 25% 29% 26% 33% 28%

of Total VolumefromIndia

Sheeting-
USA Import VolumefromIndia 54.28 78.53 100.87 138.82 184.42 222.67
YOY Growth Rate 45% 28% 38% 33% 21%

Welspun accounts for 28% of towel exports

volume from India and
5.88% of total US Import.

Leading International Terry Towel Manufacturers:

Manufacturers Location
1. WestPoint Stevens USA
2. Pillowtex USA
3. Coteminas Latin America
4. Springs Industries USA
5. Welspun India Limited (Asia’s Largest Manufacturer) India
Note: WestPoint Stevens and Pillowtex have recently defaulted in repaying their debtors.

Leading Terry Towel Manufacturers in India:

Capacity
Manufacturers Location
(M.T.P.A.)
1. Welspun India Ltd. Vapi, Gujarat 10,000
2. Abhishek Spinfab Corp. Ltd. (Trident) Dhaula, (Barnala) 8,500
3. Modern Terry Towels Sanand, Gujarat 5,500
4. Vanasthali Textiles Shahjahanpur, Alwar NA
Brief profile of Group Companies are as follows:
About Welspun Group
The Welspun Group is a Rs20bn business house that has a presence in a variety of
businesses ranging from cotton yarn, made-up garments, poly-buttons to SAW pipe
manufacturing.

Welspun India Ltd. (WIL) - is today the fourth largest producer of towels in the world and the
largest in Asia. WIL has a presence in over 34 countries and caters to 12 out of the top 20
retailers in the world.. It has also tied with nautical brand, as it's sole licensee for the North
American markets. WIL is accredited with the Sepia registration for terry products and is a
certified user of the Egyptian cotton logo. Besides, WIL has also launched its new domestic
home linen brand SPACES. SPACES has been instrumental in licensing the Tommy Hillier
home textile brand for the domestic markets and to enhance it's suite of offerings, apart from a
strong retail focus with a wide range of products in bed & bath linen, living, dining & kitchen
linen category.

Welspun Gujarat Stahl Rohr Ltd. (WGSRL) - houses a steel pipe manufacturing mill at
Barouche, near Dane, Gujarat. The state-of-the-art LSAW plant was sourced from a world-
renowned supplier, Moneyman Damage, Germany. The Spiral plant technology was sourced
from Capello Tubi of Italy. WGSRL is the second largest manufacturer of SAW pipes in India.
It's products are approved by National / International agencies. The Company has the
distinction of having supplied pipes of various dimensions to USA, China, Columbia, Iran,
Egypt,etc.

Welspun Syntex Ltd. (WSL) - has a Specialty Polyester Filament Yarn manufacturing facility
at Silvassa , U.T. Dadra & Nagar Haveli and yarn processing units at Silvassa and Palghar.
WSL is the largest manufacturer of Specialty Polyester Filament Yarn in India. The product
range - Fully Drawn Yarn (Grey & Dope Dyed), Mono Filament Yarn, Air Textured Yarn, etc -
provides competitive edge in the market for achieving better realization.

Glofame Cotspin Industries Ltd. (GCIL) - is engaged in the manufacture of Cotton Yarn and
has a world-class manufacturing facility at Vapi, Gujarat The company's product range includes
high value-added specialty yarn like PVA yarns, Zero twist yarn and Slub yarn - catering to a
niche in the international markets. The Company is in the process of being merged with WIL
(pending High Court approval).

Welspun Zucchi Textiles Ltd. (WZTL) - a 50:50 Joint Venture between WIL and Vincenzo
Zucchi S.p.A, Italy, was established in 1997. WZTL has a plant to manufacture bathrobes at
Vapi, Gujarat. The foreign collaborator is the licensee of a large number of esteemed brands in
readymade garments like Ferrari, Pierre Cardin, Lacoste, Valentino, Chipie, etc. As the
bathrobes are produced from terry fabric mainly sourced from WIL (in the same premises),
both the companies enjoy synergy of operations and expertise of each other's management.

Welspun Power & Steel Ltd. (WPSL) - is a new initiative of the Group, which involves
setting up a Mini Steel Project to manufacture Sponge Iron, Billets, Thermo Mechanically
Treated (TMT) Bars and a Lignite based Power Plant for captive and external use. The
project is being implemented in Anjar, Dist. Kutch, Gujarat.
Welspun History
About Welspun Group
The Welspun Group is a Rs20bn business house that has a presence in a variety of
businesses ranging from cotton yarn, made-up garments, poly-buttons to SAW pipe
manufacturing.

Company Background

Exhibit 4: Profile of Welspun group companies

Company Category/Product Sales PAT
(Rs mn) (Rs mn)

Welspun India Ltd Manufacturer/ exporter 3,010 188

of terry towels

Welspun Syntex Ltd Specialty Polyester Yarn 3,058 12

Welspun Zucchi Textiles Ltd (JV with Vincenzo Bath robes 123 7
Zucchi)

GloFame Cotspin Industries Ltd Cotton yarn processing 1,843 33

Welspun Gujrat Stahl Rohren Ltd Manufacturer of SAW 3971 15

pipes

Eupec Welspun Pipecoatings India Ltd (JV with Pipe coating solutions 291 20
Eupec Pipecoatings Ltd, Germany)

(Source: Company)

Welspun Group OF Companies- A Corporate Profile

The Welspun Group is a 2000 crore business-house having interests spread across manufacture,
exports & domestic sales of Terry Towels, Bathrobes, Specialty Polyester Yarns, Cotton Yarns,
SAW Pipes & Pipe Coatings. The entire group operates in an SAP environment. Incorporating
cutting-edge technology and customizing products to the requirements (and even imaginations)
of clients, the quality of products engineered by us have been hailed and vouched for by
numerous companies and MNCs across the world. The entire work force of over 5000 people
continuously strive and excel in delivering against the most exacting and stringent benchmarks
in the world. Indeed, for us the maxim is 'Made in India and sold to the best in the world'.

Welspun Group – Strengths

•Turnover USD 450 mn (USD 255 mn as
exports),
•Net worth USD 180 mn
•Assets USD 350 mn
•Employees Rs 10,000
•Presence 50 countries
•Shareholders 50,000
•Market capitalization USD 400 mn

AWARDS & CERTIFICATIONS

Welspun India Limited
AWARDS
1996-97 - National Export Award for outstanding performance from the Govt. of India
1997-98 - Outstanding Export Performance Award from the Govt. of Gujarat
1999-00 - Gold Trophy for Special Achievement for outstanding performance in made- ups and
highest exporter from Texprocil
2000-01 - Gold Trophy for Outstanding Export Performance
Best Vendor of the Year Award from Shopko Stores Inc., USA (2002) at a global level
Outstanding Export Award for outstanding export performance by Ministry of Industry &
Commerce, Govt. of India.

CERTIFICATIONS
ISO series certification (ISO 9001 & ISO 14001)
Swiss Oekotex certification
License to use Egyptian cotton trademark
License to use Supima cotton trademark

Welspun Gujarat Stahl Rohren Limited

CERTIFICATIONS
ISO series certification (ISO 9001 & ISO 14001)
Certification from American Petroleum Institute (API) 5L, 5CT, 2B
Enlisted with major buyers in the pipe industry worldwide

Glofame Cotspin Industries Limited

CERTIFICATIONS
ISO series certification (ISO 9001 & ISO 14001)
Swiss Oekotex certification

Welspun Zucchi Textiles Limited

CERTIFICATION
Worldwide Responsible Apparel Production (WRAP)

Welspun Syntex Limited

CERTIFICATIONS
ISO series certification (ISO 9001)

Eupec Welspun PipeCoatings India Limited

CERTIFICATIONS
ISO series certification (ISO 9000)

J.C. Penney, which is one of the largest retailers in the US, has conferred the "Operational
Excellence Award" for 2003 on Welspun India. According to a press release, J.C. Penney
has adjudged Welspun India, as it's the best global vendor for terry towels. The company
was evaluated on quality, on-time delivery, costing, product development, flexibility,
management strength and technology. Welspun India Ltd is the largest exporter of terry
towels to the US from India and is the flagship company of the $440 million Welspun
Group. Over 90 per cent of the Welspun Indian turnover is from exports. This has helped
the company create a niche in the international market with its designs and innovations,
the release said. The company has already made its presence in the Indian home textile
market with the launch of "Spaces" to address the complete needs of the home furnishings
segment.
 Welspun India Limited

Board of Directors G.R.Goenka Chairman

B.K.Goenka Managing director
R.R.Mandawewala Executive Director
M.L.Mittal Director (Finance)
Kamal Kishor Nominee (IFCI)
S.Ravikumar Nominee (UTI)
P.K.Gupta Nominee (IDBI)
M.G.Diwan Independent Director
D.B.Engineer Independent Director

Company Secretary D.K. Patil

Auditors MGB & Co.

Chartered Accountants

Bankers Sumitomo Mitsui Banking Corporation (Lead Bank)

State Bank of Bikaner and Jaipur
State Bank of India
Canara Bank
Punjab National Bank
Bank of India
UTI Bank Ltd.
IndusInd Bank
Financial Institutions IFCI – Industrial Finance Corporation of India
IDBI – Industrial Development Bank of India
IIBI – Industrial Investment Bank of India
UTI – Unit Trust of India
Registered Office and Factory Survey No. 76, Village & P.O. Morai,
Vapi, Dist. Valsad, Gujarat – 396 191

Corporate Office B – Trade World, 9th Floor,

Kamla Mills Compound,
Senapati Bapat Marg, Lower Parel,
Mumbai – 400 013

Shares Listing The Stock Exchange, Ahmedabad

The Stock Exchange, Mumbai
National Stock Exchange, Delhi
Background of Welspun India Ltd (WIL)

WIL started its activities in 1994 and since then has become the largest exporters of terry
towels in Asia and 5th largest in the world. The plants are located at Vapi-Gujarat (Annual
Terry Towel capacity of 11500 tons) and Anjar- Gujarat (Annual Terry Towel Capacity
of 13000 Tons,, Bed Linen capacity of 35 mn mtrs). Currently WIL exports terry towels to
12 out of 20 top retailers in the World. The company has also entered into the domestic
market under the brand name ‘Spaces’, offering holistic home textile solutions. ‘Spaces’
has a retail presence in over 800 stores, leading malls and retails shops across the country.
We initiate coverage on Welspun India Ltd (WIL), a part of US$350mn Welspun group,
with a Long Term Buy recommendation at Rs108. Market
dominance, Capacity addition, New product offering, Opportunities post 2005’
coupled with boom in Global textile Industry makes this company a well spin
in one’s portfolio.

1) COMPANY RESEARCH
 Company has market dominance in terry towel segment, being the largest in Asia in
terms of capacity and exports.

 Expanded its current capacity from 10,000MTPA to 23,000MTPA and plans to offer
entire range of made-ups segment.

 1,10,000MTPA demand anticipated in US market due to bankruptcy filled by leading

players viz Pillowtex (50,000MTPA) and West Point Steves (60,000MTPA). This
augurs well as US accounts for 60% of WIL’s revenue and is well supported by its
100% subsidiary, Welspun USA.

 Current global trade size of made-ups is over US$9bn and expected to reach US$23bn
by 2010.

 Aggressive plans to tap the untapped domestic market under its recently launched
“SPACES” brand. WIL has revenue visibility of Rs240mn through this launch within 6
months.

 We expect the Indian made-ups segment to grow over 23% in the coming years.

 Major beneficiary of recent retail outsourcing boom as it shares long term relationship
with major retail chains like Wal-Mart, K-Mart and others.

 The stock is trading at 10 times FY04E of Rs10.9.We expect topline to grow by

33% in FY04E and by 36% in FY05E

2) COMPANY RESEARCH

The cotton price in last two years has been in the range of Rs40-50 per/kg.
The average price for year 2003 has been approximately Rs42 per/kg. The outlook for
cotton production is positive and cotton prices are expected to remain stable in the
coming months.
The company reported consistent growth of 33% in topline for first 2 quarters of
FY04. Operating margins have seen a dip because of increase in raw material (cotton)
prices. The margins are expected to improve going ahead as cotton prices stabilize
and raw material costs decrease. The EPS for H1FY04 stood at Rs5.9. In order to
avoid adverse price fluctuations in cotton prices the company has hedged its cotton
purchases in NYSE commodity exchange to the extent of 30-40%.

3) COMPANY RESEARCH
India has a large skill set that can produce handmade articles involving crafts like
embroidery in standard designs and formats. In made-ups segment, Asian countries
have a cost advantage of over 40% over US. Made-ups can easily be sourced through
imports, as their demand is not as fashion sensitive as garments. An interesting trend
is reflected in the Indian made-ups segment where India has achieved 100% of its
target in FY03 and is estimated to growth by 23% in FY04 Expected

Exhibit 2: Domestic growth in textiles

Sr. No. Textiles Target Achievem Achievement Estimated Growth
(2003) ent % (2004) (Expected)

1. Ready made 13.6%

Garment 6,000 5,500 91.7% 6,250
 Cotton Yarn, Fabrics, 3,700 3.329 90.0 4,200 26.2
Made-ups
2. Cotton Fabrics 550 550 100.0 575 4.6
Made-ups (HL)

3. Man made Textiles 1,500 1,520 101.3 1,750 15.1

4. Wool and Woolen 350 300 85.7 350 16.7

Textiles

5. Silk 450 449 99.8 500 11.4

Total 12,550 11,649 92.8 13,625 17.0

(Source: Textile Ministry of India and India Infoline Research)

4) COMPANY RESEARCH
SWOT analysis on the Indian textile industry

Strength Weakness

Raw material availability in plenty  Major portion of the industry is

Low labor cost unorganized
Presence across the entire value chain  Low labor cost advantage
Domestic demand seen with revival in suppressed by low labor productivity.
the economy Most plants use obsolete technology

Opportunities Threats

 Phasing out of MFA and Quota  Competition from China and other
restriction. Asian countries.
 Outsourcing opportunities by U.S.A.,
Europe and Asian Countries.
Technology Up gradation

Welspun International Exposure.

GLOBAL Market - Country wise Import
Trend

Category 363 – Cotton Terry

Category 361 – Cotton Sheets
INDIA INDIA
100 15
PORTUGL PORTUGL
Million Units

80
Million Units

60 PAKISTN 10 PAKISTN
40 CHINA P 5 CHINA P
20 TURKEY TURKEY
0
0 MEXICO
MEXICO 2002 2003 2004
2002 2003 2004
EGYPT EGYPT

2002 2003 2004 2002 2003 2004

PORT
INDIA
PORTU 77.7 74.2 83.06 INDIA
UG 7.54 11.39 10.9
GL
PAKIS 6 5.3 4.9 L
PAKIS 12.49 11.81 6.67
TN 65.8 68.8 69.2 TN
CHIN 9.79 10.25 8.1
CHINA
TURKE 25.8 22.3 21.7 AP
TURK 5.23 4.76 5.7
Y
MEXIC 25.9 31.5 30 EY
MEXI 2.74 2.75 3
O
EGYPT 7.6 3.1 2 CO
EGYP 2.5 1.8 2
4.3 6 3.73 T 0.96 1.71 1.73
 COUNTRY WISE BREAK UP OF TOTAL EXPORTS

Country Net FOB value (Rs. in Lakhs)

2003-2004 2002-2003 2001-2002
Afghanistan - - 16.56
Australia 551.9 34.77 99.51
Bahrain 65.27 -
BANGLADESH 34.58
Belgium 154.58 28.63 -
Canada 1107.05
COLOMBIA 305.09
Cyprus 22.32 27.14 20.57
Denmark 86.97 189.88 62.11
Dubai - - 146.83
France 12.2 18.94 7.9
Greece 0
Germany 1873.44 403.96 487.72
Hungary
Indonesia 15.63
Ireland 8.15 22.93 -
Israel 413.64 68.47 -
Italy 24.06 - 5.55
Japan 90.09
Latvia 36.14
Lebanon 22 62.25 16.89
Mauritius 379.7 256.42 244.95
Moscow - 14.79 -
New Zealand - 32.02 212.7
Norway 5.62 17.83 32.75
Oman 15.34 7.19 13.09
Philippines - 12.22 -
PORTUGAL 38.34
Russian Fed. - 47.83 10.38
Saudi Arabia - 8.78 -
SLOVENIA 16.66
Spain - 9.06 98.48
Sri Lanka 3.9 - 0.38
Sweden 48.05 174.46
TURKEY 15.07
United Kingdom 1652.47 1049.49 3251.1
U.S.A. 19802.82 17881.77 13492.95
Utd Arab Emir. 566.75 253.16 60.43
Total 27254.51 20560.85 18455.31
• MAJOR GLOBAL CUSTOMERS
 USA

 WALMART STOLRES : Well known and one of the largest Departmental Stores in
the U S. Over a period of 5 years the Sales has risen from 2-3 min USD to min USD.

 CALVIN KLEIN : A reputed brand name in the U S. Associated with them for past
4 years. Sales for the current year are around 0.5 to1 mln USD

 TOMMY HILFIGER : Reputed Brand name in the U S. Associated with them for
the past 5 years. Sales for the current year is around 6-6.5 mln USD.

 J. C. PENNY : Chain of Departmental Stores in US. Associated with them for the
past 4 years. Sales for the current year around 3 mln USD

 DILLARDS : Chain of Departmental stores catering to the top most segments in the
US . Associated with them for the past 2 years. Sales for the current year will be around 2.2 mln
USD

 SHOPKO
 TARGE
 COSTCO

 AUSTRALIA

 DAVID JONES
 WOOL WORTHS
 MEYERS

 U.K

 ASDA : Associated with them for more than 5 years Sales for the year 2002 was
around 8.5 mln USD.
 MATALAN
 WILKINGSON
 TEXTILEWOLRLD
 CHOLRTEX Sales around 1.5 man
 GUS
 GERMANY
 BETTERNWELT : A well-known Chain of stores in Germany. Associated with them
for more than 7 years. Sales in the current yr is around Rs 39 mln.

 SWEDEN

 LKEA : One of the leading Departmental Stores in Sweden. Associated

with them for more than 8 years. Sales in the current year is around WILs position
 PRODUCT RANGE

1 Plain Dyed – Ring Spun 7 Stripes

2 Egy. Cotton 8 Embroidered
3 Supima Tolwels 9 Beach Towels
4 Jaquard Ensembles 10 Kitchen Towels
5 Christmas Towels 11 Bath Mats
6 Sublistatic Printed Towels

MAJOR BUSINESS HIGHLIGHTS

 Higher Productivity
• Top class technology and Machineries
• Performance based incentive schemes for Employees.
• Global Benchmarking for performance

 Better Quality
Top class laboratory and quality control processes.
• Creating a quality mindset in the company
• Global benchmarking for standards.
• ISO-9002.

 Cost Cutting
Productivity linked wages and salaries +incentives.
• Implementation of ERP (SAP) to improve business process..

STRENGTHS OF THE COMPANY.

 MARKETING.

 Welspun as Brand
 Well established distribution Net work in international and Domestic market.
 Highest quota holders.
 Show room in the Textile building, New York (USA)

 FINANCIAL.

 High Net Worth

 Low Debt Equity ratio.
 Continuous increase in profits.

 OTHERS
 International size- Integrated plant.
 UVR showing increasing trend
  Products well received in international market.
CURRENT CHANGE IN THE WELSPUN INDIA

Update on Company and benefit of merger between WIL and GCIL

EXPOSURE to the Welspun India stock can be considered. The stock trades at about 25 times
its expected FY-05 earnings per share, taking into consideration the expansion in the equity
base on account of the merger with Glofame Cotspin — a group company — and the
impending preferential allotment to Temasek, the Singapore-based private equity fund. The
valuation is at a premium to its peer, Abhishek Industries, which trades at about 15 times.

The premium, however, appears justified. Welspun is the only player that is wholly focussed on
home textiles. Welspun appears set to enjoy volumes-driven growth, with its capacity
expansion plans on schedule. Its aggressive expansion of the retail network in the growing
domestic market would improve visibility; Welspun would be retailing not only its own brand,
`Spaces', but also the premium products of Tommy Hilfiger.

Its merger with Glofame Cotspin — a spinning company from which Welspun sources more 60
per cent of its yarn requirements — would improve operational efficiencies and provide it with
a presence across segments, from yarn to retail.

The Salient benefits on account of merger between WIL and GCIL. are given
hereunder :

• Currently approx 64% of WIL’s yarn requirement is met by GCIL. The

merger enables WIL to become a fully integrated textile unit under single
location at Vapi, Gujarat

• Post FY 2005, local Tax exemption to GCIL would cease to exist thus
the merger shall prevent possibility of higher purchase price by WIL.
• Proximity between two plants would enable usage of common
infrastructure and shall result in better administration and operational
efficiencies viz cotton procurement.
• GCIL has accumulated losses (for income tax purposes) of Rs.892 mn
as on March 31, 2004. WIL would benefit from tax treatment of these.
• Merger shall result in annual Cost saving of approx Rs 50 mn.
• Merger shall have positive impact on key financial ratios viz EBIDTA
margin, ROCE.
• Merger would effectively extinguish –
o Illiquid investment of WIL i.e interest free loans and advances of
Rs.820 mn (Rs.620 mn of advances and Rs.200 mn towards
preference capital) to GCIL.
o Contingent liabilities on account of guarantees given on behalf of GCIL to term-
lenders of (Rs. 802 mn) and working capital bankers (Rs. 450 mn).
In another move, to bring the shareholding of WIL at par with its foreign
collaborator M/s. Vincenzo Zucchi SpA of Italy in their Joint venture,
Welspun Zucchi Textiles Limited (WZTL), the promoters of WIL have
agreed to transfer their holding (comprising of 0.75 million shares) in
WZTL to WIL. The valuation of shares of WZTL was conducted by ICICI
Securities and as per their report the share valuation is Rs.34.55 per
equity share. The promoters have however agreed to transfer the
aforesaid shares at book value i.e. approximately Rs.17/- per share as on
31st March, 2005.
WELSPUN INDIA LIMITED POSTS 19%. PBT GROWTH (Year on Year Basis)

Dateline: May 2nd, 2005, Mumbai

For the year ending March 31, 2005, Welspun India Limited (WIL), part of the Rs. 20
bn Welspun Group, reported Profit Before Tax (PBT) of Rs. 648.72 mn, up by 19% as
compared to PBT of Rs.543.96 mn in corresponding year, 2004.
The merger of Glofame Cotspin Industries Limited (GCIL) with the Company has been
sanctioned by The Hon’ble High Court of Gujarat on 15th April, 2005. Thus the financial
\results of the Company includes financials of GCIL for the year ended March, 04 and
March, 05.
(Rs. In Million)
Un-audited % increase
Year ended
(Merged)
2005 2004
Net Sales 4746.96 4299.72 10.40
EBIDTA 1183.72 1137.45 4.07
Profit Before Tax 648.72 543.96 19.26
Provision for Tax
- Current year 50.30 7.50
- Previous year 0.051 0.77
- Deferred Tax 235.80 173.62
PAT 362.57 362.07
Cash Profits 626.97 608.09 3.10

The PAT has been maintained almost at similar levels compared to Mthe last fiscal year.
This is mainly on account of Deferred tax plus MAT (total being 44%). However, Deferred
tax plus MAT would be reduced to levels of 33.60% during the next financial year as
announced during Budget by Finance Minster, GOI.

Some changes in the Welspun Group of Company

Old Name of Company New Name of Company

WELPLAN CONSTRUCTION CO.LTD. ALL METAL PROCESS INDUSTRIES LTD.

WELSPUN INTERNATIONAL LTD. G.D. GOENKA INDIA LTD.

WELSPUN POLYSTERS (INDIA) LTD. WELSPUN INDIA LTD.

MARKET RESPONSE

Volume-led growth

Welspun's earnings have risen at an impressive clip over the past three years. This growth was
helped by a spurt in `other income' and a reduction in the interest cost. Growth is likely to be
moderate. Stable cotton prices, higher operational efficiencies that could arise from the merger
with Glofame Cotspin, and increasing volumes should help maintain operating margins. With
the end of quantitative restrictions on textiles, there is reason to expect robust volume growth,
particularly in home textiles, as several manufacturing facilities in these products spaces in
countries such as the US have shut shop.

CMP Rs 108

52 week H/L Rs 137.4/15.9

Market Cap Rs 5.2 bn

As one of the larger exporters of home textiles, Welspun is set to benefit. It exports more than
85 per cent of its production; about 70 per cent of its exports are to the US. A part of its exports
is routed through its wholly-owned subsidiary, Welspun US. Retailers such as Wal-Mart
account for about 35 per cent of Welspun's sales. Revenues in the coming quarters are likely to
reflect higher volumes as these retailers scale up their imports although pricing may come under
pressure. The company, however, also caters to premium brands such as Tommy Hilfiger and
Polo Ralph Lauren, to name a few, where realisations are better. Welspun, operates at 110 %
capacity at its other plant at Vapi, Gujarat, is doubling its terry towel production capacity. It is
also setting up capacity in bed linen, which would mark its foray into the segment.

Capacity expansion
WIL currently has terry towel manufacturing capacity of 10,000TPA. Foreseeing the
growth in the segment, WIL is continuously upgrading its technology and adding to its
capacity. WIL plans to enter into sheeting business with estimated capacity of
1,00,000Meters Per Day.It plans to ramp up its terry towel capacity to 23,000TPA at a cost of
Rs4bn by endof December 2004. Funding for the expansion is planned through debt of Rs2.5bn
and balance by way of internal accruals and equity.

OUR NEXT GOAL FOR 2005-06

Exhibit 1: Project Details

 Project Details (Rs in Mn)
Cost of Expansion Rs.4000
Source of funding
Debt from TUFS Rs2,500
*Equity Funding (Assumed Rights Issue 1:2 in FY05E) Rs1,060
Internal Accruals Rs440
Rs.4000
(Source: India Infoline Research)

LAST FEW YEAR PROJECTION AND ACHIVEMENT

The topline of the company up by 5% to Rs900mn in Q3 FY05

Operating margin reported an increase of 100bps led by reduction in cost of

raw material.

Lower other income and higher tax burden depress net profit.

Period to 12/04 12/03 Growth 12/04 12/03 Growth

(3) (3) % (9) (9) (%)
Net Sales 900 856 5 2564 2,296 12
Export benefits 42 59 (29) 178 197 (10)
Expenditure (744) (731) 2 (2,118) (1,949) 9
Operating profit 198 184 8 624 544 15
Other Income 12 22 (45) 29 46 (37)
Interest (31) (59) (47) (139) (183) (24)
Depreciation (39) (39) 0 (116) (113) 3
PBT 140 108 30 398 294 35
Tax (62) (24) 158 (174) (74) 135
PAT 78 84 (7) 224 220 2
APAT 78 84 (7) 224 220 2
OPM(%) 22 21 - 24 24 -
Equity 565 460 - 565 460 -
EPS (Rs.) 5.5 7.3 - 5.29 6.38 -
P/E (x) 23.5 17.8 - 24.6 20.4 -

• Welspun India Limited (WIL) reported an increase in net sales by 5% yoy to Rs900mn in Q3
FY05 as against Rs856mn in Q3 FY04.

• OPM for the quarter increased by 100bps to 22% in Q3 FY05 as against 21% in Q3 FY04.
Decrease in cost of raw materials is the main reason for improvement in margin.

• The net profit for Q3 FY05 recorded a de growth of 7% yoy to Rs78mn despite a 5% growth
in topline due to a reduction in export incentives, and fall in interest income due to the
company’s expansion plans. Thus, there seems to be no operational problems with the
company. This translates into an annualized EPS of Rs5.5.

• For the nine months ended December 31, 2004, WIL reported a 12% increase in net sales of
Rs2,564mn as against Rs2,296mn during the same period last year. WIL reported net profit for
the nine months at Rs224mn as compared to Rs220mn in the corresponding period last year.

FOR THE SOURCES OF FUND THEIR PLAN

a allots 90.79 lakh shares to Temasek Holdings

Public
Foreign Holdings 9% Promoters
13% 32%

Mutual Funds
19%
FIIs
Bank & FIs
17%
10%

Our Bureau

Mumbai , April 4

WELSPUN India Ltd on Monday said it has allotted 90.79 lakh equity shares to Dunearn
Investments (Mauritius) Pte Ltd, a wholly owned subsidiary of Temasek Holdings of Singapore
at a price of Rs 130.25 per share, aggregating Rs 118.26 crore.

The company has also issued 16.81 lakh warrants to the Singapore firm, which will hold a 14
per cent stake in the company. According to a notice issued to stock exchanges, the company
has also allotted warrants to Welspun Wintex (7.73 lakh); Welspun Mercantile (8.40 lakh) and
Welspun Trading (4.03 lakh) — all three being group companies. The warrants would carry the
option to convert into equity shares at Rs 130.25 per share any time within 18 months from the
date of allotment . In this regard, Welspun Wintex was allotted 13.03 lakh equity shares and
Welspun Mercantile 12.76 lakh equity shares on conversion of existing warrants allowed on
May 14, 2004, at a face value of Rs 10 and at a premium of Rs 85.

According to a company official, post allotment, the conversion of all outstanding warrants as
also the merger with Glofame Cotspin Industries Ltd, the paid-up capital of Welspun India
would stand at Rs 76.79 crore. The promoters and associate companies would have a stake of
35.01 per cent and foreign institutional investors will hold 31.62 per cent. The company has
also inducted Mr Padmanabh Sinha as a nominee director representing Dunearn Investments
(Mauritius) Pte Ltd, while Mr G. Diwan resigned as director from the board. The board has also
approved the purchase of 7.5 lakh shares of Welspun Zucchi Textiles Ltd (WZTL, a joint
venture of the company) from the co-promoters of WZTL. It also announced that the company's
Rs 575 crore expansion project at Anjar, Gujarat, for terry towels, bed sheets and cotton
spinning is as per schedule.

In the terry towel unit, all 96 looms have started commercial production and the company
claimed to have already shipped more than 1,000 tonnes to clients in the US. The sheeting and
spinning units are expected to be operational during this month.

The Made-up Growth

• 1999-2010, per cent

USD Billions 6
59

23 10
USD Billions
31
Made-ups
9
22 5

Processed 13 1
4
Greige 3
6 10 5
Yarn
1999 2010
Made-ups to emerge as the largest segment of cotton
textiles trade by 2010

Outlook
• Despite reduction in DEPB rates, the company has achieved growth by optimizing production
and enhancing operational efficiency. WIL plans to offer entire range of made-ups, which
includes bed linen, rugs and other products. Its Rs5.75bn expansion project at Anjar, Gujarat for
terry towels, bed sheeting and cotton spinning commenced trial production during the quarter
and will contribute positively to turnover from Q4 onwards.

• The company has entered into a licensee arrangement with global fashion brand Tommy
Hilfiger to market their premium range of home textiles.
 • The merger with Glofame Cotspin India Ltd (GCIL), a cotton yarn spinning unit, is expected
to be completed by March 2005. This will make Welspun a fully integrated textile unit under a
single location and is expected to translate into operational and tax benefits to the tune of
Rs50mn annually.The Indian Textile Industry is moving fast towards technological
upgradation. Large orders are flowing to India, as all time big exporter China has been
adversely affected by SARS. It is observed that many companies have received substantial
orders, which are to be shipped for the coming season in the US and Europe.

MAJOR THRUST AREAS TO ENHANCE EXPORTS:

• Technological up gradation
• Enhancement of Productivity
• Quality consciousness
• Strengthening Raw Material Base,
• Product Diversification,
• Innovation in Designs, Product
• Innovative marketing strategies,
• Financing Arrangements with new products at globally competitive interest rates and
charges,
• Hedging from exchange risks,
• Maximizing Employment Opportunities, Integrated Human Resource Development
(Source: Exim Policy 2002-04)
Welspun – Financial
Credentials
Un- AuditedExpected

31-Mar-01 31-Mar-02 31-Mar-03 31-Mar-04 31-Mar-05 31-Mar-06

Sales $ 43.87 $ 57.77 $ 66.90 $ 81.50 $ 107.67 $ 173.61
EBDIT $ 11.95 $ 15.19 $ 14.70 $ 18.39 $ 26.88 $ 39.70
Interest $ 8.56 $ 9.17 $ 5.52 $ 5.20 $ 6.17 $ 8.32
Cash Profit $ 3.39 $ 6.02 $ 9.18 $ 13.19 $ 20.71 $ 31.38
Depretiation $ 2.29 $ 2.86 $ 3.15 $ 3.27 $ 5.98 $ 12.79
PAT $ 1.10 $ 2.55 $ 4.17 $ 6.67 $ 8.23 $ 12.45

Source: Compendium of Textiles Statistics, 2004

 Expected

• INSTRUMENT INTRODUCED WHICH CAN BE USED

 Interest Rate Forward (IRF)

The NSE has opened up recently for the Interest Rate Forward. It is a financial contract
between two parties exchanging or swapping a stream of ‘notional principal’ amount on
multiple occasions during specified period.

 Interest Rate Swaps (IRS)

It is an agreement between two counter parties to exchange interest payments based upon a
‘notional principal’ on specified date over a specified period. Typically one party pays interest
based on agreed fixed rate and the other party pays interest linked to a floating benchmark rate.

Possible floating rate benchmarks in India are:

• Overnight Money or Call Money Rates
• Inter-Bank Term Money Rates yields
• Treasury Bills yields
• Commercial paper yields

 Overnight Index Swaps (OIS)

OIS is an Interest Rate Swap mechanism introduced by the RBI in 1998, wherein. It is to be
settled against a “Call” bench Mark and may be successfully used by the corporate sector in
times to come.

 Forward Rate Agreement (FRA)

A FRA is a financial contract between two parties to exchange interest payments based on a
‘notional principal’ for a specified period.

On the settlement date, the contract rate is compared to an agreed benchmark / reference rate as
reset on the fixed date.

 Issuing Commercial Papers (CP)

The company can think of issuing its commercial paper after building a good reputation and a
good rating.
 Commercial Paper (CP)

The RBI has introduced CP in the Indian money market in 1989. It is a form of unsecured
promissory note issued by the firm to raise short term. The eligible high rated company raise
the funds directly form the market (instead of borrowing directly form bank) comparatively at a
cheaper rate. The buyers of CP include banks, insurance Co. UTI and firms with surplus funds.
The borrowing period is 15 days to 1year.

The company can issue CP after getting good credit rating.

 Forward contract of foreign currency

A currency future is a contract for the sale or purchase of a standard quantity of one currency in
exchange for another currency at a specified rate of exchange and for delivery at a specified
future time.

Future can be used for hedging from currency exposures, as an alternative to a forward contract.
Hedging usually involves:

• Providing cushion against the fluctuations in the exchange rates of the foreign
currencies purchase or sale. This is done through the booking of forward contract to cover a
future currency transaction and unwinding the future position when the transaction occurs and
buying or selling the currency at the spot rate.

• The forward contract provides the exporter a cushion against the fluctuations in the
exchange rates of the currencies.

• The Reserve Bank of India allows the exporter to book a cross currency forward
contract.

• The exporter can forward book the foreign currency at the spot rate plus premium driven
by the market on that day, forward booking will help the exporter in realizing a assured rate if
the currency is expected to fall in future.

An example for USD forward booking.

Suppose the selling rate of USD today is Rs.46.45 and the USD is expected to fall in next 6
months, the USD exchange rate after 6 months turns out to be Rs. 46.00,
The exporter has booked a forward contract of 100,000 USD at 47.05. Had the exporter not
booked a forward contract he would have lost Re. 1.05 (47.05 – 46.00) per USD.

The forward rate is decided on the following basis.

Spot price of USD on booking day (01..07.03) 46.45

Premium on selling USD in future (for 6 Months) (21.12.03) + 0.63
Margin charged by bank - 0.03
Forward selling price of USD (after 6 Months) = 47.054
(A) Booked Rate 47.054 *100,000 4,7,05,400
 (B) Dollar Mkt. Price after 6 months 46.00 *100,000 4,600,000
(C) Profit due to forward booking of USD (A-B) 105,400

Booking the foreign currency in future contract could save the exporter from probable

 SCOPE/IMPORTANCE OF EXPORT FINCANCE AT PRE-SHIPMENT STAGE:

 To purchase or acquire supplies of raw materials, components, machinery, equipment

and technology for production.
 To consistently monitor product quality as per the international standards, product
adaptation and improvement, adding new uses to the product.
 For specialized export packing of goods according to the importer’s specifications and
to avoid damages in transit. & To pay for transportation charges.
 To store the goods in warehouses for timely shipment.
 To pay for transportation charges.
 To clear the goods out of inspection, customs, and excise formalities.
 To pay for insurance cover against perils of sea and other risks.
 To pay commission to overseas agents and distributors.
 To pay for export promotion and advertising expenses.
 To open and maintain foreign offices for export promotion.
 To extend easy payment terms to foreign buyers.
 To acquire export-oriented products.

• Remittance

Document Under Collection (DUC)

The supplier agrees to the company request to send the document directly to the bank, the
company can make payment to bank and release the documents. DUC is usually used when the
parties have a very high good will amongst themselves; in this exercise the company saves LC
charges and commission.
WIL is getting the DUC primarily from S.B.B.J. and P.N.B. The commission charges for
both S.B.B.J and PNB are 0.25% and Telex charges are Rs.500.

 Advance Remittance

If the purchase amount is comparatively low or the goods are to be procured immediately the
seller is sent the payment through advance remittance. Advance remittances are sent through
TT or IDD as per the requirements of the suppliers.

 Telegraphic Transfer (T.T.)

 To ensure quick delivery of money the buyer requests for money transfer through the use of
T.T. facility. T.T. is a telegram message by the buyer’s bank to the seller’s buyer’s bank to
credit the account of the seller’s by the amount mentioned in the T.T. The buyer has to pay
commission charges and telex charges to avail this service from the bank.
WIL is getting the T.T. issued primarily from IndusInd Bank. The commission charge is
0.125% and Telex charge is Rs.500.

 International Demand Drafts (IDD)

The buyer draws I.D.D. Drafts in favor of seller to procure the goods & services. Buyer has to
pay commission charges and postage expenses to avail this service from the bank.
WIL is getting the I.D.D. issued equally from IndusInd Bank and PNB. The commission
charged by IndusInd Bank & PNB is Rs.500 and Postage charges are Rs.500.
 PRE-SHIPMENTS FINANCE:

• Meaning:

Also popularly known as Packing Credit, pre shipment finance is advance credit facility
obtained by an exporter from a bank or financial institution .It define as “ any loan to an
exporter for financing the purchase, processing, manufacturing or packing of goods.”
Precisely, it is an interim advance provided by a bank for helping the exporter to purchase,
process, and pack and ship the goods. Packing credit is working capital extended to an
exporter.

Features of Pre-shipment Finance:

 Eligibility : As a rule, pre-shipment loan is granted only to those exporters who

actually export and produce a confirmed export order and /or a letter of credit
received in their own names.

 Purpose : Packing credit is granted for the specific purpose of procuring/

purchasing/ manufacturing/ processing/ storing/ packing and shipping the goods.

 Documentary Evidence : Pre-shipment finance is granted against the evidence of

irrevocable L/C established through a reputed bank or against a confirmed order for
export. The document of L/C or confirmed order must be deposited with the lending
institution.

 Security : The exporter is required to provide personal bond from sureties known
to the bank. Also compulsorily, relevant policy issued by ECGC.

 Form of Finance : Packing credit can be either in the form of funded or non-
funded advance. Red Clause/Green Clause L/Cs is the forms of funded finance.
Non-funded facilities include domestic L/Cs, back-to-back L/Cs and various
guarantees.

 Amount of Finance : There is no fixed limit for pre-shipment finance. It depends

on the amount of export order the credit-rating of the exporte done by the bank. The
 only guiding principle to be considers the percentage of exporter’s profit margin
depending on the nature of order, nature of goods, exporter’s ability to repay and
export incentives receivable such as IPRS, DBK, etc.

 Term of Credit : Packing credit, being a working capital is basically short term
finance. The maximum period is determined by the RBI. It is normally granted for a
period of 180 days. It can be further extended up to 90 days with prior permission of
the RBI.

 Rate of Interest : The present rates of interest for packing credit are as under:

 Up to 180 days……………….13% per annum

 For additional 90 days……….15% per annum

 Loan Agreement : The exporter has to sign a loan agreement with

the bank in order to get packing credit.

 Maintance of Accounts : As per the RBI directives, the banks are

required to segregate and maintain separately the accounts in respect of each
packing credit. However, running accounts are permitted in case of certain products
produced in FTZs/EPZs and by the 100% EOUs.

 Sanction of Loan : The lending bank monitors the use of finance

by the exporter to ensure that the amount is used for export purpose only. The bank
can impose penalty for misuse.

 Monitoring the use of Loan : The lending bank monitors the use
of finance by the exporter to ensure that the amount is used for export purpose only.
The bank can impose penalty for misuse.

 Repayment/ Liquidation of Loan : The exporter should repay the

amount of packing credit out of the proceeds of export bill.
 PROCEDURE FOR OBTAINNG PRE-SHIPMENT FINANCE:

 Submitting Application to the Bank : The exporter, who intends to obtain

packing credit, should apply in a prescribed form to his bankers, giving all details of
the credit requirements. The form must accompany the following documents:

 Confirmed export order or contract or letter of credit.

 An undertaking that the finance will be utilized for the purpose of exports.
 Copies of income tax and wealth-tax assessment orders for the past two
or three years in case of a sole proprietorship and partnership firm.
 Copy of Board resolution, in case of company, to open a bank account.
 Letter of authority to operate the account.& an appropriate ECGC policy
 Undertaking the shipment will be effected within a fixed time limit.
 Agreement of hypothecation or letter of pledge.
 Demand pro-note signed of behalf of the firm/company.
 Copy of Registration-cum-Membership Certificate held by Export
Trading or Star Trading House.

 Processing of Application : On submission of application

with necessary documents, the bank scrutinizes the same and if satisfied as regards
documentary evidence and credit-worthiness of the exporter, establishes the packing
credit limit depending on the merit of the case.

 Sanctioning of Loan : As a practice, the bank sanctions loan

equal to the F.O.B. value of export order or L/C or equal to market value of the
goods whichever is less. It also depends on the value of export incentives receivable
by the exporter.

 Loan Agreement : The bank executes a formal loan

agreement with the exporter before the actual disbursement of the loan.
 Manner of Payment : Packing credit advances aren’t
disbursed to the exporter in a lump sum but depending on as & when the amount is
actually needed by the exporter.

 Maintenance of Accounts : As per the RBI directives,

lending bank must maintain a separate account of each pre-shipment advance
sanctioned by it. However, running accounts are permitted in case of certain
products produced in FTZs/ EPZs and by the 100% EOUs.

 Monitoring of the use of Loan : The lending bank is required

to periodically monitor the use of packing credit advance by the exporter to ensure
that the same is used for export purpose only. Penalty may be imposed by the bank
for misuse, if any

 Repayment / Liquidation of Loan : The exporter is expected

to liquidate or repay the amount of advance together with interest charge as soon as
the export proceeds or incentives are realized.

METHODS/ TYPES/ FORMS OF PRE-SHIPMENT FINANCE:

 Extended Packing Credit Loan : This facility, though for a short period, is
granted to those exporters who are rated first class by the bank. Loan is granted for
making advance payment to suppliers for acquiring exportable goods.

 Packing Credit Loan ( Hypothecation ) : In this case packing credit is

extended for obtaining raw materials, work-in-process and / or finished goods. The
goods acquired are treated as security for the loan granted. Goods remain in the
possession of the exporter and he is required to execute hypothecation deed in favor
of the bank.

 Packing Credit Loan (Pledge) : This facility is availabled for seasonal goods
or those acquired by the exporter under odd lots. The documents relating to
acquisition of raw materials are pledged to the bank while possession of goods
remains with the exporter.
 Security Shipping Loan : Once the raw material is converted in to finished
goods, the same has to be handed over to transport operator or to the clearing and
forwarding agent. The security loan can be obtained only after this. This type of loan
is of short duration and is released against lorry receipt or railway receipt.

 Advances against Back-to-Bank Letter of Credit : An exporter, who has

received original of letter of credit from importer, requests his banker to open a
letter of credit in favour of his supplier. This L/C is known as back-to-back letter of
credit.
 Advances against Red Clause L/C : When the exporter receives red clause
L/C from the importer, it authorizes the exporter’s bank to provide advances to
complete production.
  Advances against Export Incentives : Advances against export incentives
such as DBK is provided by the bank both at pre-shipment and post-shipment stage.

 Packing Credit for Imports against Advance License Entitlement : This

credit facility is available to manufacturer exporters who are not in receipt of letter
of credit or confirmed export order. Finance is made available for imports against
license for manufacture of export goods.

 Advance against Cheques, Drafts etc. : Banks provide export credit at

concessional rate against the proceeds of cheques, drafts etc. received directly
towards advance payments for exports.

POST-SHIPMENT FINANCE:

Meaning:

When an advance or a loan is needed by an Indian exporter after completing the process
of shipment of goods, it is termed as “Post-Shipment Finance”. Thus it is the finance
needed in order to bridge the gap between shipment and realization of payment from
overseas buyers.

Definition:
The Reserve Bank of India defines post-shipment as “any loan or advance granted or
any credit provided by a bank to an exporter of goods from India from the date
extending the credit after shipment of the goods to the date of realization of the export
proceeds.”

SCOPE/ IMPORTANCE OF EXPORT FINANCE:

 To bridge the gap between the shipment of goods and the realization of payment.
 To pay ECGC premium.
 To pay freight and other shipping expenses.
 To pay insurance premium while submitting CIF quotation.
 To pay for participation in international fairs and exhibitions.
 To pay for advertising campaign abroad.
 To pay for getting market survey reports.
 To pay for stay of representatives in overseas markets.
 To pay to port and customs authorities.
 FEATURES OF POST-SHIPMENT FINANCE:

 Eligibility : This facility is available to the exporters who have actually

shipped the goods or an exporter in whose name the export documents are
transferred. In case of deemed exports, it is available to the supplier who
supplies goods to a designated agency.

 Purpose : Basically it is meant for providing the exporter with working

capital from the date of shipment to the date of realization of export proceeds.
Thus it is a short-term financial facility.

 Documentary Evidence : It is extended against the evidence of shipping

documents indicating the compliance of actual shipment of goods or other
necessary evidence in case of deemed and project exports.

 Forms of Post-shipment Finance : Banks provide post-shipment finance

under different forms such as:

 Discounting of Export Bill

 Advance against goods sent on Consignment Basis.
 Advance against Retention Money etc.
 Amount of Finance : The amount of post-shipment finance
can be to the extent of 100% of invoice value of goods. It depends on short term,
medium term and long term finance. It also depends on the value of capital
goods and equipment or the value of turnkey projects.Any loan up to Rs. 10
crores for financing export of capital goods is decided by a commercial bank
which can get refinanced itself by the EXIM Bank. In a contract above Rs. 10
crores but not more than Rs. 50 crores, the EXIM Bank decides whether the
facility can be given. Contracts above Rs. 50 crores need clearance from the
Working Group on Export Finance, consisting of the representatives of EXIM
Bank, RBI ECGC and Exporter’s Bankers. In case of large contracts,
representatives of the Ministries of Commerce and Finance are also members of
the Working Group.

 Period of Finance : The period of loan depends on:

 Short-term : The loan is provided by commercial banks

usually for 90 days.
 Medium-term : Commercial banks together with EXIM Bank
provide medium term finance for a period between 90 days and 5
years.
 Long-term : It is provided by EXIM Bank in case of export of
capital goods and turnkey projects for a period between 5 years.

 Rate of Interest : Post-shipment finance facility is granted at a

concessional rate of 13% p.a. for a period between 90 days. For medium term
 and long term loans the rates of interest are applicable as per the directives of
RBI issued for time to time.

 Loan Agreement : The exporter is required to execute a

formal loan agreement with the bank before the amount of loan is actually
disbursed.

 Maintenance of Accounts : As per the RBI directives, banks

must maintain a separate account in respect of each post-shipment advance.
However, running accounts are permitted in case of certain products produced in
FTZs/ EPZs and those produced by 100% EOUs.

 Disbursement of Loan Amount : Normally, post-shipment

credit advances are not given in lump sums. It is disbursed in installments as and
when required by the concerned exporter.

 Monitoring the use of Advances : The bank advancing post-

shipment credit facility should monitor the use of finance to ensure that it is used
for export purpose only. Penalty can be imposed for misuse.

 Repayment/Liquidation of Advances : The exporter is

expected to repay the amount of loan to the bank as soon as he receives export
proceeds. Generally, the lending bank itself realizes the export proceeds from the
importer’s bank.

PROCEDURE FOR OBTAINING POST-SHIPMENT FINANCE:

 Application to the Bank : An exporter willing to obtain this credit

facility has to submit an application together with relevant shipping documents
and necessary undertakings to the bank.

 Scrutiny of Application : The bank scrutinizes the application and the

documents to ensure that the applicant has complied with the following
conditions:

 The documents are to be submitted with in the time limit allowed by the bank
and the delay, if any must be explained.
 The period for which the advance is needed and the time to realize export
proceeds must be stated.
 The relevant GR/PP Certificate duly certified by the customs authorities is
submitted.
 Documents are prepared in permitted currencies a payment method is approved
by the RBI.

 Rate of Interest : The normal short-term loans are sanctioned 90 days

at concessional rate of interest of 13% p.a.
 Sanctioning of Advance : If the application is found to be proper, the
bank may sanction the amount of loan.

 Loan Agreement : The bank requires the exporter to execute a normal

loan agreement before disbursing the loan.

 Manner of Payment : Normally the amount of loan sanctioned is not

released in a lump sum but in a phased manner as and when needed by the
exporter.

 Maintenance of Accounts : As per the directives of the RBI, banks

are required to maintain a separate account for each post-shipment advance;
though running accounts are permitted in case of certain products produced
FTZs/ EPZs and those produced by the 100% EOUs.

 Monitoring the use of Loan : The bank extending post-shipment

credit facility should monitor the use of the credit by the exporter to ensure that
the amount is used for export purpose only. Penalty may be imposed for misuse,
if any

 Repayment/ Liquidation of Loan : The exporter is expected to repay

the amount of loan to the lending bank as soon as the export proceeds and/ or
incentives are received. Normally the lending bank itself realizes the export
proceeds and thus it becomes easy for it to make only an adjusting entry in the
exporter’s account.

METHODS/ TYPES / FORMS OF POST-SHIPMENT FINANCE:

 Export Bills negotiated under L/C : An exporter can avail of post-

shipment credit by drawing bills or drafts under the L/C. The bank insists on
production of the necessary documents as stated in the L/C. If documents are in
order, the bank negotiates the bill and advance is granted to the exporter.

 Purchase/ Discounting of Export Bills under Confirmed Orders: If L/C

is not available as security; bank financing depends upon the credit-worthiness
of the exporter. At the request of the exporter, the bank will purchase or discount
the export bill and pay the equivalent rupees to the exporter.

 Advances against Bills sent for Collection : Advances against such bills
that are sent for collection is granted under a separate account called ‘post-
shipment loan’. This type advance is not very popular.

 Advance against Goods sent on Consignment Basis : An exporter may

sent goods to his foreign agent on consignment basis. Post-shipment finance in
this case is subject to the customer enjoying specific credit limit fixed by the
 bank. Advances are given against the documents of consignment. These
documents are forwarded by the overseas bank to the importer only against a
Trust Receipt. The Trust Receipt is the undertaking given by the agent abroad to
send the amount of sale proceeds by a specified date.

 Advance against Duty Drawback Entitlement : DBK or drawback

means refund of custom duties paid on the import of raw materials, components
and packing material used for export products. Banks offer pre-shipment
advances against DBK entitlements.

 Advance against Undrawn Balance of Bills : In some cases bills are not
drawn for the full invoice value of goods. Certain amount remains undrawn,
which is due for payment after adjustments on account of differences in rates,
weight, quality etc. to be ascertained after inspection and approval of the goods.
Banks offer advances against such undrawn balances up to 5% of the value of
export on an undertaking from the exporter to surrender the balance proceeds to
the bank.

 Advances against Retention Money : In respect of certain exports of

capital goods and project exports, the importer retains a part of the price towards
guarantee of performance or completion of the project. Bank provide advance
against such retention money. The advance is repayable within one year from the
date of shipment or when the importer release the payment of retention money,
whichever is earlier.

 Advance against Deemed Exports : Certain specific sales or supplies

made in India are considered as ‘Deemed Exports’ although they are not exports
in real sense, such as sales to foreign tourists during their stay in India and
supplies made in India to IBRD/ IDA/ ADB aided projects. Credit is given for
maximum of 30 days in case of such Deemed Exports.

 Advances against Deferred Payments : In case of project exports or

large-scale construction contracts, the exporter receives payment from the
importer in statements spread over a period of time. Commercial banks together
with the EXIM Bank offer advances against Deferred Payment at concessional
rates of interest for 180 days.

DOLLAR DENOMINATED CREDIT FOR EXPORTERS:

Introduced with effect from 1st January, 1992, the post-shipment credit is denominated in
foreign currency and the exporters pay interest at rates applicable to the foreign currency i.e.
dollar. It enables an exporter to enjoy post-shipment credit in denominated foreign currency and
pay interest at the rates applicable to foreign currency. The denominated foreign currency is
U.S. dollars. The loan has to be repaid again in U.S. dollars only. The rate of interest on U.S.
dollars is fixed by the Reserve Bank of India from time to time.
 This scheme is known as PSCFC Scheme (Post-Shipment Credit Denominated in Foreign
Currency). The scheme is simple in its working. The exporter first receives an order from the
importer. The exporter first receives an order from the importer. The amount of the order is
denominated in U.S. dollars. The exporter may obtain pre-shipment or post-shipment credit,
which is denominated in terms of dollars. Thereafter, the product is exported and the payment is
realized. The foreign exchange so realized is denominated in U.S. dollars to offset/ liquidate the
credit. However, the exporter has to bear the risk of exchange fluctuations, if any, between the
time he obtains the loan and the time of liquidation.
The lending rate of interest in case of dollar denominated credit should not exceed 2% over
LIBOR (London Inter-Bank Offered Rate), which at present works out to 6.5% p.a. as against
9% charged on pre-shipment and post-shipment credits (on short term basis) in Indian currency.

 EXPORT PRICE QUOTATION:

Quotation is an offer or proposal made by an exporter in reply to the enquiry from an importer.
The quotation should clearly state the price and other terms and conditions. It may be in the
form of a proforma invoice that gives a clear idea to the importer about the price to be paid by
him in case the deal in struck. It also states the terms of credit, delivery schedule, terms of
payment and as to which party will bear the cost of freight, cost of insurance and in the absence
of insurance, loss or damage to the goods in transit, if any.

Types of Quotations:

The important types of quotation are as follows:

 FOB QUOTATION ( FREE ON BOARD ):

Under FOB quotation, the seller quotes a price which includes all expenses incurred till
the goods are actually loaded on board the ship. This means packing charges, local
transport charges and dock dues are covered in the price quoted. Even the expected
profit is included in the FOB price.
 In short, FOB price can be summed up as follows:

 He has to load the goods on board the ship named by the buyer.
 He has to obtain bill of lading from the shipping company and forward it to the
buyer to enable him to take delivery of goods.
 He must inform the buyer certain details like the name of the ship and the
possible date of delivery.
 He has to arrange for the necessary space in the vessel.
 He must inform the buyer without delay that the goods have been delivered on
board the vessel of aircraft.

In short, FOB price can be summed up as follows:

FOB Price = Cost of Production + Profit margin + Expenses up

to on board the ship – Export Incentives

 Seller’s Obligations under FOB Quotation:

 He has to load the goods on board the ship named by the buyer.
 He has to obtain bill of lading from the shipping company and forward it
to the buyer to enable him to take delivery of goods.
 He must inform the buyer certain details like the name of the ship and the
possible date of delivery.
 He has to arrange for the necessary space in the vessel.
 He must inform the buyer without delay that the goods have been
delivered on board the vessel or aircraft.

 Buyer’s obligations under FOB Quotation:

 He should inform the seller the name of the ship by which the goods
are to be sent and also the expected date of delivery.
 He has to bear the risk when goods are loaded on the ship.
 He should make payment to the exporter as per the terms of contract.

Under FOB Quotation the seller has no right of lien on goods and that of
stoppage in transit, because the shipping company is deemed to be the agent
of the buyer. As per the law, delivery to the buyer’s agent is treated as
delivery to the buyer himself.

 C & F QUOTATION ( COST AND FREIGHT )

 C & f means cost plus freight. The price quoted includes total cost of goods, packing,
carriage, loading charges and the payment of freight up to the port of destination. The
other expenses like cartage, unloading charges and expenses of carrying the goods from
the port of delivery to the warehouse are to be borne by the importer. Insurance charges
are also to be borne by the importer.

In short, C & F price can be summed up as:

C & F Price = F.O.B. Price + Freight

 Seller’s Obligations under C & F Quotation :

 In addition to the obligations mentioned under FOB quotation, the

seller must pay freight charges to the shipping company that undertakes
to carry the goods from the port of shipment to the port of destination.

 Buyer Obligations under C & F Quotation :

He has to arrange and pay for insurance.

He has to pay clearing charges, import duties etc.
He has to make payment as per the commercial invoice.
 He has to bear the loss or damage to the goods, if
any, from the time and place at which the seller’s obligations are over.

 CIF QUOTATION ( COST INSURANCE AND FREIGHT ) :

CIF means Cost, Insurance and Freight. It includes FOB price plus freight plus marine
insurance up to the port of destination. In other words, CIF price includes cost of
production and all other expenses till the goods reach the port of destination in the
buyer’s country. The unloading charges at the buyer’s port, custom duties etc. are to be
paid by the importer.

In short, CIF price can be determined up as:

C.I.F. Price = F.O.B. Price + Freight + Insurance

 Seller’s Obligations under CIF Quotation:

 In addition to the obligations mentioned under FOB quotation, the
seller must pay for freight and insurance cover also.

 Buyer’s Obligation:
 He has to pay clearing charges, import duties etc.
  He has to make payment as per the commercial invoice.

VARIOUS ITMES OF COST INCLUDED IN EXPORT PRICE QUOTATIONS:

 Ex-factory cost : Ex-factory cost includes all

expenses incurred on production till the output leaves the factory premises.

 Factory overheads : It consists of all indirect

expenses of the factory and includes cost of indirect labour, depreciation of machinery,
cost of lubricants, oil and consumables and lighting expenses.

 Materials costs : It varies with production orders

and includes cost of raw materials and consumables.

 Labour costs : It includes cost of labour directly

related to the production of goods

 Packaging cost : In export trade packaging is of

great importance. It should not only protect the goods in transit but should also act as an
advertising aid. Designing an attractive packaging involves charges and port dues.

 Cargo handling charges : It includes commission

to forwarding agent, loading charges and port dues.

 Selling and distribution cost : This is regular

expenses and does not vary widely. It includes sales promotion expenses and
transportation expenses from factory to the warehouse.

 Freight charges : It includes freight payable to

the shipping/airline company from the port of departure to the port of destination.

 Commission or service charges : When an

exporter appoints an agent abroad, he has to pay commission or service charges to look
after sales and distribution.

 Marine insurance : The exporter gets cargo

insured against perils on high sea and such charges are included in export price
quotation.

The following is the specimen of an exporter’s Cost Sheet.

Prime Cost + Factory Overheads

=
 Ex-Factory Cost
+
Packaging Cost + Quality Inspection Charges + Transportation Charges from Warehouse to
the port + Port Handling Charges + Documentation Charges + Commission
=
F.O.B. Cost
+
Freight Charges
=
C & F Price
+
Marine Insurance Charges
=
C.I.F. Price
+
Export Incentives
=
Exporter’s Revenue
+
Unloading and clearing charge sat the importer’s port + Import Duties if any,
+
Transport charges from port to Importer’s Warehouse
=
Landed Cost
+
Importer’s Expenses + Intermediarie’s margin + Importer’s Profit margin
+
Other Expenses of the Importer
=
Importer’s Selling Price

MEANING OF EXPORT PORCEDURE:

Export procedure means the method, the system or the manner in which various formalities in
the case of export trade transaction. It refers to execution or follow-up of an order received
from an overseas buyer and includes everything that the exporter is required to do right from
the receipt of confirmed order upto the last stage of realization of payment. It may be easy to
 receive an export order but extremely difficult to successfully and satisfactorily implement the
same. This is because the procedure involves numerous formalities to be completed by the
exporter or his agent.

EXPORT PROCEDURE

Registration Pre- Shipment Post-

Stage Shipment Stage Shipment
Stage Stage

Every export bu- The exporter has to The exporter has The exporter has
-suiness needs procure/manufacture to put the goods to take steps to
various registr- goods and get through the cu- realize payments
ation without completed inspect- -stoms and fulfill from abroad.
which the -ion and excise documentary
business is formalties. requirement.
not legally
recognized.

 REGISTRATION STAGE:

 Deciding the nature of business : First of all, a newcomer in export business must
decide the nature of business. His choice will be one of the following;
  Sole Proprietary Business.
 Partnership.
 Joint Stock Company

This will help him to decide seed capital requirements and amount of bank finance needed.

 Opening of Bank Account : An exporter has to select a bank which undertakes to

fulfill all banking formalities connected with negotiation of documents and realization
of export proceeds. A current account is operated for export business. The bank must be
authorized to deal in foreign exchange.

 Fixing Credit Limit : The exporter must apply to the bank and get pre-shipment and
get pre-shipment and post-shipment credit limit fixed.

 Obtain Fax Facility : It is necessary for every exporter to have Fax facility but a
newcomer can settle for this facility provided by Fax Agents.

 Registration with Export Promotion Council (EPC) : The Government of India has
set up many export promotion councils for different types of commodities. Every
exporter is required to register his firm with the concerned council meant for his
commodity. For example, an exporter of textiles must register with the Textile Export
Promotion Council for securing various benefits under the Government’s Export-Import
policy. The concerned EPC issues the following three forms for the exporter’s
convenience:

 Application for Registration

 Application for Membership
 Application for Registration-cum –Membership Certificate (RCMC).

These forms duly filled in together with the prescribed registration fee and necessary
documents such as bank certificate showing the applicant’s financial soundness and a
copy of industrial license, if any, should be submitted to the EPC. The Council verifies
the forms and documents and, if the exporter. From the date receipt of the RCMC, the
exporter or his firm is known as “Registered Exporter”. In case of export houses and
trading houses, RCMC is issued by the Federation of Indian Export Orgs. (FIEO).

 Obtaining Membership Of Chambers of Commerce : An exporter must

become member of regional chamber of commerce. Membership of such organization is
useful for securing ‘ Certificate of Origin ‘

 Obtaining GIR No./ PAN : Income from exports is exempted from income
tax, for which the exporter is required to register his firm with Income Tax authorities.
For this purpose, he has to first obtain General Index Registration (GIR) number which
 is a temporary allotted by the income tax authorities to a new entrant in the field of
export trade. Such GIR No. is then replaced by the Permanent Account Number (PAN)
in due course of time.

 Obtaining Code Number from DGFT : this is another formality which every
exporter has to complete, without which he cannot export any commodity. The code
number is known as “Importer-Exporter Code (IEC) Number”. This code number
granted by Director General of Foreign Trade.

For obtaining IEC Number, the exporter has to apply to the Regional Licensing
Authority in duplicate with the following documents:

 CNX Number
 Photocopy of PAN
 RCMC from EPC
 Photocopy of industrial license
 Certificate of Incorporation issued by the Registrar of Companies

Every firm wanting to export or import must have this IEC code number. Recently RBI
has dispensed with the requirement of CNX and instead has adopted IEC number issued
by DGFT to monitor export of goods. Exporters are required to mention IEC number in
their correspondence with RBI.

 Obtaining Sales Tax Registration Number : The exporter has to apply to

sales tax authority for getting sales tax registration number. It is compulsory to get
benefit of sales tax exemption.

 Obtaining Membership of IIFT and NPC : An exporter is also advised to

become member of Indian Institute of Foreign Trade (IIFT) New Delhi. IIFT provides
very useful info about foreign markets, export potential etc. It also gives timely
guidance to the exporters regarding various procedures and guidance to the exporters
regarding various procedures and guidance to the exporters regarding various
procedures and documents . In addition, the exporter may obtain membership of the
National Productivity Council (NPC) and local productivity council such as Bombay
Productivity Council.

 Registration with FIEO : It helps exporters to et certificate of origin and visa for
export promotion tours.

 PRE-SHIPMENT STAGE :
  Receipt of Confirmed Order : When the exporter’s offer or proforma invoice is
accepted by the overseas buyer, he sends a confirmed order called “indent” to the
exporter. Export order contains all details regarding the type of goods required and all
other instruction regarding packing, shopping, insurance, the name of the port of
delivery etc. The exporter is expected to scrutinize the order received before formally
accepting the same. After acceptance of the order, he sends an acknowledgment of the
same to the importer and informs him that the goods will be sent as per the terms and
conditions of the order. The exporter should check foreign exchange regulations of the
buyer’s country.

 Obtaining a Confirmed Letter of Credit : Together with the acknowledgement letter

confirming the receipt of an export order, the exporter may send a formal request to the
exporter to open a letter of credit in his (exporter’s) favor. At the same time, The receipt
of L/C from the importer’s bank clears off the foreign exchange restrictions.

 Obtaining Export License, if necessary : Export control is exercised to a limited

extent in India. The problem of obtaining export license arises only in the case of a few
controlled items. Otherwise, export business has been delincenced.

 Obtaining Pre-Shipment Finance : As soon as the exporter receives a confirmed

order and the Letter of Credit, he should approach his bank for securing pre-shipment
finance to meet his working capital requirements.

 Production / Procurement of Goods : After securing the pre-shipment advance from

bank, the exporter has to arrange for production and / procurement of goods for
shipment. A manufacturer-exporter himself undertakes the entire process of production
whereas a merchant-exporter either purchases the goods from the open market or places
an order for the same with a domestic manufacturer.

 Packing and Marking : After procuring the goods meant for export, the exporter has
to arrange for proper packing and marking of the goods. Packaging must ensure proper
protection of the goods. The packing material should be selected after considering the
distance to be covered, mode of transportation, type of handling of the goods at ports
etc. In this case, the specifications as laid down by the Indian Bureau of Standards (BIS)
and Export Inspection Council (EIC) must be taken into account. If necessary,
assistance can be obtained from the Indian Institute of Packing (IIP).Packing is followed
by marking. Packages are marked for easily identifying and distinguishing the same
from others during shipment. Marking is usually in the form of triangles, rectangles or
circles in which exporter’s name, importer’s name, name of the country of origin, gross
and net weight of the goods, port of entry/ destination, port of shipment, warning signs
such as ‘highly inflammable goods’ or ‘handle with care’ etc. are mentioned.

 Pre-shipment Inspection : If the export cargo is subject to quality control and pre-
shipment inspection, the exporter get in touch with EIA to obtain Inspection Certificate.

 ECGC Cover : The exporter must take appropriate policy to protect himself from
credit risk.
  Central Excise Clearance : Goods meant for export are exempted from the payment
of excise duty. Excise clearance is obtained by two methods.
 Export Under Rebate
 Export Under Bond

 Marine Insurance Policy : In order to protect the cargo from perils on high sea, the
exporter has to obtain marine insurance policy, Payment of insurance premium depends on the
type of price quotation accepted by the importer.

QUALITY CONTROL AND PRE-SHIPMENT INSPECTION :

Once the goods are ready for shipment , the exporter should prepare for their pre-shipment
inspection. For confirm of high quality standards.. No export of any such notified
commodity can be made unless accompanied by Inspection Certificate issued by a
recognized inspection agency. The Govt. has established five Export Inspection Agencies,
one each at Mumbai, Kolkata, Cochin, Chennai and Delhi exclusively for export inspection.
There are 60 offices of EIAs in India & all enjoys jurisdiction for inspection purpose e.g.,
EIA at Mumbai looks after inspection work not only in Maharashtra but also in
Gujarat.Under the scheme of pre-shipment inspection, the emphasis is on quality rather than
inspection of goods. Pre-shipment inspection is compulsory in case of the following items:

 Chemical and allied products.

 Engineering goods.
 Food and agricultural products.
 Textiles
 Jute, Coir and leather products such as footwear etc.

TYPES OF PRE-SHIPMENT INSPECTION/ SYSTEMS OF QUALITY CONTROL:

EIC has recognized three system of inspection which are:

 Self Certification Scheme : The units having proper reputation and adequate
testing facility and fulfilling the stringent norms prescribed for product quality,
design and development are eligible to get the facility of self-certification scheme.
To get the benefit of this scheme, the unit has to apply to the Director (Inspection
and Quality Control), Export Inspection Council of India, New Delhi and pay
prescribed fees.

 In-Process Quality Control : The inspection of products like chemicals and

engineering goods is done at various stages of manufacture which include raw
materials and components, process, product and packaging control. Manufacturers
adequate in-process quality control are allowed to export their products.

 Consignment-wise Inspection : Under this, each individual consignment is

inspected by the Export Inspection Agency prior to its export and certificate of
inspection is issued accordingly.
PROCEDURE OF PRE-SHIPMENT INSPECTION;

Exporter who are not covered under the system of Self-Certification and In-Process
Quality Control, must settle for consignment-wise inspection procedure which is
explained below:

 Application : The exporter should inform EIA sufficiently in advance to

complete inspection formalities. The exporter has to apply to EIA in prescribed form
in duplicate. The original copy is sent to EIA and the duplicate to EIC. The
application must include the following documents.

 A crossed cheque / DD in favour of EIA towards inspection fee

 A copy of export contract detailing importer’s specifications.
 A copy of commercial invoice.

 Visit of Inspector : EIA sends an inspector to the factory

premises of the exporter to inspect the goods.

 Inspection and Testing : Inspector may conduct either random

inspection or cent percent inspection work on the premises, he will send the sample
to independent laboratories. He will give his report only after obtaining the lab
report.

 Packing of Goods : When the inspector is satisfied with the

quality of goods, he will instruct to get the goods packed in his presence. Later the
consignment is marked and sealed with the official EIA seal.

 Submitting Report to EIA : Having completed the inspection

formality and convinced about the quality of goods, the inspector submits a
favorable report to EIA.

 Issue of Inspection Certificate : Based on the favorable report

of the inspector, EIA issues an inspection certificate in triplicate: original for the
customs, duplicate to the importer and triplicate for the exporter.

 Rejection Note : If the report of the inspector is unfavorable, the

Deputy Director of EIA will issue a rejection note. Now the exporter cannot ship his
consignment.

 Appeal against Rejection Note : When the exporter receives

rejection note, he can appeal against the rejection note within 10 days to a panel of
experts. They will review the report and their decision is final.

EXPORT WORTHY UNITS:

The Export Inspection Council (EIC) Conducts rigorous periodical checks of an

exporter’s own system of process control in his factory through a panel of experts. Such
manufacturing units approved by the Panel are declared as “Export-Worthy” units.
 Exports of such units are permitted without much formalities. It is thus in the interest of
manufacturers to get their firms recognized as “Export-Worthy” units. The following
procedure is adopted by the EIC for recognition as Export-worthy units:

 A manufacturer willing to obtain Export-Worthy status has to

contact the nearest Export Inspection Agency (EIA) for necessary
recognition and submit full particulars of quality control measures
adopted by him.

 After preliminary examination of the details furnished, a

questionnaire is supplied by the EIA to the manufacturer.

 On receipt of the duly filled in questionnaire, inspection by the

panel of experts appointed by the EIA is fixed.

If the panel gives a satisfactory report, the unit is declared “Export-Worthy”.

Otherwise the firm may be declared “ Not Export-Worthy”

PROCEDURE AND DOCUMENTATIN IN CENTRAL EXCISE CLEARANCE:

Excise duty is a levy imposed by the Central Government on goods manufactured in

India. This duty s usually collected on goods at source i.e. before they are removed from
the factory. Export goods re totally exempted from central excise duty. However,
necessary clearance has to be obtained in either of the following two ways:

 Export under Bond : Under this system, the exporter need not pay any amount
of duty but export the goods under a bond supported by a bank guarantee, for a sum
equivalent to excise duty chargeable on such goods. As this system amounts to
“running bond account”, the bond is arranged for suitably large amount with the
approval of the Excise Authorities so that several consignments may be exported,
under the same bond without frequent renewals.

 Export Under Rebate : Under this system, the manufacturer/ exporter initially
pays the duty and then claims its refund after shipment of the goods.

Procedure for Excise Clearance under Rebate:

In five copies of the following different colours:

 Original Copy…………………….. White

 Duplicate Copy………………….… Buff
 Triplicate Copy…………………… Pink
 Quadruplicate (Fourth) Copy……… Green
 Quintiplicate (Fifth) Copy………… Blue
 Application to Assistant Collector : The exporter now has to
remove the goods from the factory / warehouse premises for which he has to apply
to Assistant Collector of Central Excise.

 Instruction to Range Superintendent : The ACCE will instruct the

Range Superintendent of Central Excise under whose jurisdiction the factory is
located.

 Appointment of Inspector : In order to comply with excise duty

clearance, the Range Superintendent will appoint an inspector. The inspector will
clear the goods either at the factory or at the port.

 Processing of AR-4 Form : The duty filled in AR-4 forms should

be accompanied by three copies of Gate Pass (GP-1) and the Personal Ledger
Account (PLA) Book of Central Excise alongwith the necessary amount of duty.
The Excise Inspector, after verifying the same, returns the original and the duplicate
copies of AR-4 form, the original and the triplicate copies of GP-1 and the PLA
Book. The exporter has then to submit the AR-4 form to the Customs Authorities
together with the Shipping Bill, GR form etc

In brief the five copies of AR-4 form are processed as follows:

 The fifth (blue) copy is retained by the Excise Authorities.

 The fourth (green) copy is sent by Excise Authorities to the Chief
Accounts Officer of Central Excise.
 The third (pink) copy is sent to Maritime Collector of Central
Excise at the port of shipment.
 The original (white) and the duplicate (buff) copies are returned
to the exporter.
 The exporter hands over the original and the duplicate copies to
the Customs Authorities.
 The Customs Preventive Officer sends the original to the
Maritime Collector (MCFC) and duplicate copy is returned to the
exporter or his agent for his own record.

 Refund of Excise Duty : The exporter has to apply to Maritime Collector of

Central Excise (MCCE) after the shipment of goods along with the duplicate copy of
AR-4. If MCCE is satisfied, it will instruct the Refund Section to prepare cheque
and hand it over to the exporter.
  SHIPMENT STAGE:

Shipping is the common, economical and convenient method of transportation used for
sending goods to overseas buyer.

o Services of Clearing and Forwarding Agents to Exporter:

Getting the goods cleared and forwarded for export purpose through the customs is a
technical and complicated job. Generally, exporters are not familiar with customs
procedure. Hence they appoint professionally qualified persons known as Clearing
and Forwarding Agents; who ensure that goods are cleared by the customs with least
inconveniences. C&F Agents charge fees for the services rendered. C&F Agents
ease the burden of the exporters by providing the following services:

 To collect documents from the exporter.

 To book shipping space in advance.
 To arrange for internal transport, when requested.
 To get the documents routed through the customs.
 To ensure safe and timely departure of cargo.
 To hand over a set of relevant documents to the exporter.
 To take follow-up action.

Once all the formalities prior to shipment of goods are completed the exporter is now
ready to arrange for their actual shipment. The shipment stage includes the following
formalities:

 Reservation of Space in the Ship : The exporter has to contact the

shipping company well in advance for booking the required space in the vessel for
shipment of his consignment. Space in the vessel for shipment of his consignment.
He has to provide necessary information as regards date of shipment, gross and net
weight of each package, particulars of importer and that of his own ; arrival and
departure date of the vessel etc. When the sipping company accepts the exporter’s
request the company accepts the exporter’s request, the company or its agent issues
“ Shipping Order” containing instructions regarding loading and shipment. A copy
of the sent to the Commanding Officer of the concerned ship.

 Arrangement of Internal Transport from factory/ Warehouse to

the Port of Shipment : The exporter has to make necessary arrangements for
transporting the goods by road or rail from his own place to the port of shipment. If
railway wagon or wagons are to be booked, the ‘Shipping Order’ and a ‘Forwarding
Note’ with necessary fees etc. should be submitted to the Railway authorities. After
loading the goods in to wagon, the Railway office issues Railway office issues
Railway Receipt. It document of title to the goods.The exporter should endorse R/R
in favour of the consignee or his agent enable him to take deliver the goods at the
port of shipment.

 Preparation and Processing of Shipping Documents : When

goods reach the port of shipment, the exporter has to arrange for preparation of
complete set of documents to be passed on to the forwarding agent. The following
documents must be submitted to the Customs Appraiser at the Custom House.

 Shipping Bill (five copies)

 Commercial Invoice (in duplicate)
 Letter of Credit together with the export contract.
 Certificate of origin.
 GR Form (original and duplicate)
 AR-4 / AR-4a Form.
 Packing List or Packing Note.
 Valuation Certificate
 Declaration of Duty Drawback (in duplicate)
 Certificate of Inspection, where necessary (original copy)
 Marine insurance policy
 Rail Freight Concession Form (if needed).
 Weightment Certificate (if needed).

All the above documents accept the original of GR, original copy Shipping Bill
and one copy of Commercial Invoice are returned to the forwarding agent after
verification.

 According to customs regulation, no cargo meant for export can be loaded on a

ship unless the Customs Authorities at the port accord their formal approval. The
officer of the Customs Department of the rank of an Appraiser scrutinizes the
documents to determine accuracy and genuineness. He further ensures that
formalities relating to exchange control, quality control, pre shipment inspection
and licensing have been complied with by the exporter.

 Carting Order : The C&F agent obtains ‘Carting Order’ from the Port Trust
authorities to cart or carry the goods inside the dock. After obtaining the carting
order, the cargo can be moved in to the appropriate shed inside the docks.
 Examination of Goods : The C&F agents now approaches the Customs
Examiner who may physically inspect the goods. The Customs Examiner , if
satisfied, issues ‘Let Export Order’. It is a clearance from the customs that goods
are permitted to export.

 Loading of goods on board the ship : The duplicate copy of Shipping Bill
which is endorsed by the Customs Examiner is handed over to the Customs
 Examiner is handed over to the Customs Preventive Officer who endorses it with
‘Let Ship Order’. It is issued by Preventive Officer of the customs. The goods
are then loaded on board the ship for which Mate’s Receipt from the
superintendent of Port Trust.

 Obtaining Bill of Lading : The C&F Agent approaches the shipping company
surrenders Mate’s Receipt and obtains Bill of Lading. The shipping company
issues 2 or 3 negotiable copies of B/L and as many non-negotiable copies as
required by the exporter.
(It is important to note that negotiable B/L is a document of title to the goods
whereas non- negotiable B/L expedites sale of consignment abroad.)

 POST-SHIPMENT STAGE /REALISATION OF EXPORT PROCEEDS :

 Submission of Documents by the Agent to the Exporter : The C&F agent

submits the necessary documents to the exporter to enable him to present the
same to his bank for the purpose of negotiation.

 Shipment Advice to Importer : After the shipment of goods, the exporter has
to send suitable has to send suitable intimation to the importer for his
information . By this intimation , the date of shipment, the name of the vessel,
date on which the goods will reach the destination should be informed to the
importer. A copy of non-negotiable bill of lading is also sent for information.
The importer gets the remaining documents through his bank.

 Presentation of Documents to the Bank for Negotiation : A complete set of

documents is submitted by the exporter to his bank for the purpose of
negotiating the same and obtaining export proceeds in time. The bank then sends
the same documents to the importer. The following documents are to be
submitted to the bank:

 Bill of Exchange
o Sight Draft or
o Usance Draft

 Commercial Invoice with packing list, if required

 Bill of Lading or Airway Bill (Negotiable copy)
 Marine Insurance Policy.
 Certificate of Origin
 Consular Invoice, GSP Certificate.
 Inspection Certificate.
 Any other document.
It is important to note that the exporter also submits GR Form (duplicate copy)
which remains with the bank till payment is received.
 Dispatch of Documents : The details and the mode of dispatch of the
shipping documents are specified in the L/C. Negotiating, in this sense, implies
mailing or dispatching a set of documents to ensure that the importer or his agent
receives the same in time so that he can present them to the port authorities and
claim delivery of the exported goods.

 Documentary Bill of Exchange : When the above documents are

attached to a Bill of Exchange, it is called ‘Documentary Bill of Exchange’. The
bill is in the form of a draft only. It is only after the same is accepted by the
importer, it becomes a valid Bill of Exchange. If the exporter grants credit terms
of payment, a usance draft is drawn by him. Usance draft is also to be accepted
by the importer by putting his signature and date on it. After ‘acceptance’ of the
bill, the documents of title to goods are released to the importer. In case of sight
draft, the importer collects documents against payment. While drawing the bill
of exchange, the exporter has to comply with the terms and conditions of the
Letter of Credit.

 Letter of Indemnity : The exporter can collect advance payment from his
banker by signing a letter of indemnity. The understanding is in case the buyer’s
bank does not release the payment, the exporter will refund the money with
accrued interest to the bank.

 Realization of Export Proceeds : The importer receives the

documentary bill of exchange sent by the exporter’s bank. In the case of usance
bill, payment is made on maturity of the bill. If the exporter’s bills are not
covered by a Letter of Credit, the bank gives loan against bill till the payment for
export is received by the exporter. Such advances are, however, not granted
unless the exporter obtains ECGC cover. The advances so given are adjusted by
the bank on the maturity of the export bill. The negotiating bank has to take
follow up action to remind the importer’s bank to clear the payment at the
earliest. When the payment is received by the negotiating bank, post-shipment
procedure is said to have been completed.

 Processing of GR Form : When the negotiating bank has received

payment from abroad, it will record it on the duplicate copy of GR and forward
it to RBI. The original copy of GR was already sent to RBI by the customs when
goods were shipped. Now RBI will tally the information in the original and
duplicate copy of GR. Whey they are found to be alright, the transaction is
treated closed because the required foreign exchange payment has already been
received.
 MEANING OF EXPORT DOCUMENT

Some export documents are required to be prepared before the shipment of goods while
completing customs formalities. In addition, some documents are useful for issued by the
shipping company. All such documents are useful for completing the procedure of exporting
and are called shipping documents.

In India, since 1991new standardized documents are introduced by the Government under
Aligned Documentation System (ADS). This new system is based on the UN layout key.
Exporters should use such standard forms while preparing various export documents. This gives
convenience to all concerned parties. Moreover, such standard forms are, now used in many
countries. ADS has simplified export documentation procedure and has also brought uniformity
in the export document which need to by prepared in each and every export trade transaction.

 LETTER OF CREDIT

In recent times , this method of payment has become most popular. On the basis of the
instructions given by the importer, his bank gives a written undertaking to the bank of the
exorter that if the exporter presents certain shipment documents covering the goods within a
fixed period , the bank can make payment to the exorter.

A Letter of Credit is an authorization issued by the opening bank to the negotiation bank
that if the exporter presents the relevant set of documents, make the payment.

Parties of Letter of Credit

• Beneficiary : Seller of the goods. L.C. is issued in his favour enabling him to obtain
payment on submission of stipulated documents/compliance with the terms &
conditions of L.C.
 • Advisory Bank : Bank normally located in the country of the seller that advises the
credit to beneficiary, establishes the genuineness of the credit.

Besides these principal parties, a documentary credit may also have additional parties as under :

• Confirming Bank : Adds its guarantee to the credit opened by

the issuing Bank. Undertakes the responsibility of
payment/negotiation/acceptance.

• Nominated Bank : Bank authorized by the Issuing Bank to honour the reimbursement
claim in settlement of negotiation/acceptance/payment lodged with it by paying,
negotiating or accepting bank. It is normally the bank with which Issuing Bank has
account, from which payment is to be made.

• Second Beneficiary : The person in whose name an L.C. is transferred (if it is a

transferable L.C.) by the original beneficiary.

• Negotiating Bank : Exporter’s Bank to which the exporter presents the document for
payment.
Types of L.C.s

According to degrees of security provided-

 Revocable Credit

Can be amended or cancelled by the issuing Bank at any time at the instigation of
the buyer.

 Before procuring the goods

 After procuring the goods
 Before dispatching the goods
 After dispatching the goods
 When the goods are in the transit
 When the goods have reached the destination

Hence, exporter cannot be sure of payment.

Issuing Bank is responsible to reimburse the bank through which made
the credit available for payment/ acceptance/ negotiation/ deferred payment, if
such bank has undertaken payment, acceptance, negotiation or deferred payment
against documents which are as per the L.C., provided they were undertaken
before undertaken of notice of revocation from the Issuing Bank
If it is not stated that credit is revocable, the credit is deemed irrevocable (Article
6c of the UCP)

 Irrevocable Credit

Constitutes a definite undertaking of the issuing bank.

 Cannot be cancelled/amended without the consent of the parties to
the credit, particularly the beneficiary.
In the absence of the indication the credit is revocable, the credit is deemed
irrevocable.

 Irrevocable Confirmed Credit

A confirmation of an irrevocable credit by another bank( the confirming bank )

upon the authorization or request of the Issuing bank.
Constitutes a definite undertaking of the confirming bank, in addition to that of
the Issuing Bank, provided-

 The credit is irrevocable

 Credit must clearly instruct or authorize the correspondent bank
to add its confirmation;
 The credit must be available at the confirming bank.

Confirming bank usually lies in the country of the exporter, thereby minimizing his
political/ sovereign/ transfer of exchange risk;
a bit costlier.
 Confirmed L/C:

• A certain opening bank may not be known in the country of the exporter.
Under the circumstances, the importer may ask the opening bank to get the L/C
confirmed by a local bank. The confirming bank agrees to honour all the
documents presented by the exporter provided it fits into the terms and
conditions of L/C . A confirmed L/C is considered to be the safest type of L/C to
realize payment because it carries guarantee for payment from two banks viz.,
opening bank and confirming bank. Only irrevocable L/C is confirmed.

• By adding its confirmation, the confirming bank steps into the shoes of the
opening bank. Consequently, its confirmation constitutes a definite undertaking to
houour its commitment provided relevant documents are presented and the terms and
conditions complied with.

 Unconfirmed L/C:

• As the name indicates, unconfirmed L/C is one to which confirmation is

not added by the advising bank. Therefore, the and does not accept the liability
to make payment. The risk of non-payment is high.

 With Recourse L/C:

• This L/C is with a condition. The condition is if the opening bank does
not reimburse the negotiating bank, when exporter is already paid, the
negotiating bank will request the exporter to refund the payment with interest.
 Without Recourse L/C:

• It is popularly known as Sans recourse L/C is with out the condition. In

case the bill is not honoured by the importer and the negotiating bank has
already paid to the exporter, the negotiating bank cannot ask the exporter to
refund the amount. The negotiating bank can take recourse to the opening bank
and the opening bank can demand money form the importer. This is generally an
irrevocable L/C which protects the interests of the exporter. Hence an
irrevocable, without recource and confirmed L/C is the most secured L/C.

 Transferable L/C:

• A transferable L/C is one which contains an express provision that the

benefits nder it may be transferred either fully oe partly to one or more parties.
In our country, such L/C can be transferred only once and that too within the
country.

 Non –transferable L/C:

• This type L/C cannot be transferred to a third party. Only the exporter
can take advantage of it provided he submits the relevant set of documents to the
bank.

 Restricted L/C:

• A L/C is called restricted because of its mode of operation. If the

shipping documents are to be negotiated through a specific bank (other than
negotiating bank), such a L/C is called restricted L/C. The negotiating bank does
not encortage restricted L/C. The negotiating bankdoes not encourage restricted
L/C because they lose business on such transactions and cannot earn foreign
exchange. When L/C is restricted, negotiating bank may not provide finance to
the exporter.

 Unrestricted L/C:

• A L/C which does not specify any specify any specific bank authorized
to negotiate documents, such a L/C is called unrestricted L/C . An exporter can
ask the importer to issue unrestricted L/C. This will free him from the problem
of restricted L/C.

 Fixed L/C:

• A fixed L/C which is issued for a fixed period and fixed amount. The
exporter can draw the bills upto the given amount within the given period. The
L/C stands terminated when the amount is used up within the given period.
 Revolving L/C

• The importer opens a L/C with substantial amount for a specific period in
favour of the exporter. The exporter can make one or ore shipments and
withdraw payment against the original L/C. When the amount is used up, the
importer reimburses the amount and restores the balance. This L/C is suitable
when there is regular flow of trade activities between the importer and exporter.

 Red Clause L/C:

• In this L/C, the terms ‘red clause’ is printed in red ink. The opening bank
authorizes the negotiating bank to provide pre-shipment finance to the exporter
to enable him to purchase raw materials. The risk of non-submission of
documents or-execution of order is borne by the opening bank and not by the
negotiating bank.

 Green Clause L/C:

• The term ‘green clause’ is printed in green ink for the sake of differentiation.
This
L/C not only allows packing credit advances but also provides payment for
warehousing charges at the port of shipment. In India opening of green clause L/C
covering import of goods requires prior permission of RBI.

 Back to back L/C:

• Back to Back L/C provides ancillary credit. The exporter requests the
negotiating bank to open a domestic L/C. on the strength of the original L/C in
favour of
local supplier/s. When the domestic L/C is supported by the over the original l/C
to the bank as a security. The advantage to the exporter is that he can get
supplies without blocking his funds.

 Omnibus L/C:

• This L/C available to exporters with outstanding reputation.The exporter can

draw
“ round sum amount” from a bank against the security of general lien of goods.

 Traveller’s L/C:

• This type of L/C is issued to a person who plans to visit foreign

countries. Upto the amount mentioned in L/C, the person can draw cheques
which the banks will honour. It is of great convenience for the person because he
can draw several cheques upto the amount mentioned in L/C.
  According to payment methods-

 Sight Credit

Beneficiary receives the proceeds upon presentation of requisite

documents to the designated paying bank.
Drafts may not be necessary.

 Acceptance Credit

Drawing of draft either /confirming bank/another bank is a must.

when the documents are presented, the draft is accepted instead
of payment being made.

 Deferred Payment Credit:

No draft is called for

Upon presentation of documents authorized bank issues a
written promise
to make payment on the due date.

 Negotiation Credit:

Can be Sight or Usance Credit.

Negotiation of draft/document means giving of value for these
drafts/documents if they are found to e in conformity with the
credit terms (article 10b-11of UCP)
Usually a draft is drawn (on the issuing bank) as per the credit
terms (article 9a-IV of UCP)
Negotiation is either free to any bank or restricted to a
nominated Bank.
Payment is ultimately made by the issuing bank at the given
time after it received the documents and found them to be in
conformity with the credit terms.

 Revolving Credit:

After a drawing is made, the credit reverts to its original amount

for reuse by beneficiary.
it could be formulated in many ways-

 Amount of credit US $20,000/- revolving 5 times to maximum

of US$ 1,20,000/-
  Credit amt US $20,000/- revolving every month for the same
amount, for the first time in January, 1996, for the last time in
May, 1996 Maximum payable under the credit US$ 1,20,000/-

 Installment Credit:

L.C. is opened for full value of goods to be shipped but stipulates that
shipments be made in specific quantities at stated periods/intervals;
It the beneficiary fails to ship goods within any installment period,
credit ceases to be available for that and any subsequent installment
(unless otherwise stipulated) article 41 of UCP.

Credit with advance payment/Anticipatory Credit:

Credit provides for advance payment to beneficiary at pre shipment

stage itself, which is to be adjusted at the time of submission of final
documents.
If beneficiary fails to submit documents recovery is made from the
Opening Bank
It could be two ways

 Red Clause Credit.

 Green Clause Credit.

 OPERATION OF LETTER OF CREDIT :

 Request from the Importer : The importer will request his bank
to open a L/C in favour of the exporter. He can get his L/C opened
either by depositing cash in advances or by showing sufficient
balance in his current account.

 Issue of L/C : the opening bank issues the L/C and forwards it
either directly to the negotiating bank or to the Advising Bank.

 Possession of L/C : In case the exporter wants confirmation of

L/C, advising bank is authorized by the opening bank to add
confirmation. Nowadays exporters prefer confirmed L/C.
Hereafter, the exporter can take possession of L/C.

 Submission of Documents : After shipment of goods through

the customs, the exporter presents relevant set of documents to the
negotiating bank.

 Scrutiny of Documents : The negotiating bank will minutely

scrutinize the documents to ensure that they are as per the
 requirement of the importer. If documents are found to be in
order, the negotiating bank will make the payment to the exporter.

 Realisation of Payment : The amount paid by the negotiating

bank to the exporter is reimbursed by the opening bank.

 Documents to importer : The documents sent by the negotiating

bank to the opening bank is now handed over to the importer.

 PROFORMA INVOICE:

An exporter may be required to prepare pro-forma invoice (for the convenience of the
importer). It is a quotation given in the form of a regular invoice. It is sent as a reply to an
inquiry. Such proforma invoice gives exact idea of the total amount, which the importer will
have to pay if the order is placed. In addition, it also contains the terms and conditions of
sale. In international marketing, such invoices are used extensively. It’s useful to the
importer for securing import license from the government and the letter of credit (L/C) from
his bank.

 COMMERCIAL INVOICE:

Commercial invoice is an important and basic export document. It is prepared y the exporter
after the execution of order and contains details of the goods shipped. It is prepared as per
the confirmed order. This basic document is useful for different purposes.
C.I. is the statement of account sent by the seller to the buyer and is prepared on seller’s
letter-head. It is an exporter’s bill for the goods shipped. It is called basic document, as the
information needed for the preparation of the other export documents is available in the
invoice. It is rightly called as “horoscope” of export trade transaction.
There is no standard form for a commercial invoice and every exporter is free to design his
own form to suit his requirements. Sometimes, the import control and customs requirement
in many countries necessitate the use of a special invoice. In few countries. have designed
special invoice forms for exporters. Such special invoice forms are available with the local
customs or with trade associations and chambers of commerce.

 Contents of Commercial Invoices:

 Name and address of the importer and exporter.
 Order and contract No.
 Description of goods and Marks and Packaging specifications.
 Port of destination/ port of loading.
 Value of goods, discount offered and the net amount payable.
 Details of shipment including name of vessel, route taken, sailing
date, GR No., Import License No., Exchange Permit No.
 Terms of trade and sale agreement.
 Letter of Credit No.
 Signature of the exporter.
 Marine Insurance and other details relating to shipping of goods.
 Any other details, if required.
  Use of commercial Invoice:
Uses of Commercial invoice to the exporter;

 Commercial invoice is useful for the collection of payment from

the importer for the goods sold out.
 It is useful for completing export formalities with export
inspection agency, negotiating bank, excise and customs
authorities.
 It is useful to settle dispute about payment.
 It is useful for the collection of export incentives and preparation
of shipping bill.
 It is useful for accounting purposes.

Uses of Commercial invoice to the importer;

 Commercial invoice is useful for the payment of customs duty.

 It indicates the exact amount payable to the exporter.
 It is useful for the collection of tariff concession, if available.
 It is useful for accounting and filing purposes.
 It is used to obtain loan from the bank against the import of goods.

 CONSULAR INVOICE:

Consular invoice is sent by the exporter to the importer along with other shipping
documents. Consular invoice is a certificate issued by the Trade Consulate of the importer’s
country stating the fact that goods of particular value are being imported from a particular
country by particular individual (i.e., importer). Here, the invoice is submitted in prescribed
form by the exporter (in three copies) and he gets it duly certified by the Consulate of the
importing country stationed I the exporting country. A small fee is charged by the Consulate
office for providing this facility. One copy of this invoice is given to the exporter while the
other one is sent directly by the Consulate to the customs office of the importer’s country.
As the certificate is an authorized document, the customs office calculates the duty on the
basis of value of the goods imported (i.e., ad-valorem duties).

Benefits / Uses of Consular Invoice:

Benefits / Convenience to the Exporter:

It facilitates easy clearance of goods from the customs.

 When the invoice is signed by the consulate of the importing
country, it is an assurance to the exporter that his goods will enter
into the buyer’s country without any problem.
 The interest of the exporter is well protected. He can realize
foreign exchange against shipment without problem.

Benefits / Convenience to the Importer:

  The importer gets quick delivery of goods and that too without
opening the containers for verification purpose.
 Goods are delivered quickly after the calculation of duty as per
the consular invoice received.

Benefits / Convenience to the Custom Officer:

 The work or customs authorities become easy and quick. Goods

are cleared quickly.
 Duty calculation is possible on the basis of consular invoice
received. This means the physical verification is not required.
 No need to open the cargo to calculate of value of goods.
 Loss of time and re-packing of the goods are avoided.

MATE’S RECEIPT:

Mates’ receipt is issued by the mate or master (Commanding officer) of the vessel in
which the goods are shipped for onward journey to specific port of destination. It is issued
by the Mate after cargo is loaded on the ship. It is Prima facie evidence that goods are
loaded in the vessel. M.R. is an acknowledgment, which contains the following details:

 Name of the ship and Name of the shipping company.

 Date of shipment
 Description of packages (Quality, quantity, etc.)
 Number of packages and marks on them….
 Condition of cargo when it was received on the Board.
 Port of loading and port of delivery.
 Name and address of the exporter and importer.
 Voyage number and date
 Freight paid or payable
 Signature of issuing authority

Mate’s receipt is to be passed on to the port on to the port trust authorities to enable them to
recover port dues from the exporter. After the payment of dock dues, the exporter or his
agent collects the mate receipt from the port trust authorities and hands over the same to the
shipping company for preparing bill of lading. Bill of lading is prepared on the basis of the
mate’s receipt.

Types of Mate’s Receipt:

 Clean receipt indicates that goods have been properly packed and
there is no defect of any kind in the packing.
 Qualified receipt means packing is defective and that shipping
company will not be responsible for damages of any kind.

 The exporter should get a clean receipt to avoid further complications.

 Uses / Importance of Mate’s Receipt:

 Mate’s receipt serves as an acknowledgment of goods received

for transportation.
 It is used for the issue of B/L by the shipping company.
 It enables the exporter to pay port trust dues.
 It enables the clearing and forwarding agent of the exporter to
present mate’s receipt to the custom’s preventive officer who
records certificate of shipment on all the copies of shipping bull
and other documents.

BILL OF LADING (B/L):

Bill of Lading is a document of title to the goods. It is one of the principal export
documents. It is issued by the shipping company and serves as a receipt from the shipping
company, which undertakes to deliver the goods at agreed destination on payment of
freight.

Contents of a Bill of Lading:

 Name and address of the shipper / consignee and the name of the
shipping company;
 Name of the ship, voyage number and date of loading of goods on
the ship
 Quantity, Quality, marks and description of goods;
 Number of originals issued;
 Port of shipment; and port of destination and date of loading;
 Number of packages;
 Signature of issuing authority;
 Freight paid or payable.

Procedure of Issuing Bill of Lading

An exporter has to collect the bill of lading from the shipping company or from its
agent. He has to submit completed from to the shipping company for verification and
approval. Normally bill of lading are made out in set of two originals. The shipper
should submit the sets of bill of lading along with mate’s receipt to the shipping
company. The company then calculates the freight amount on the basis of measurement
or weight as certified by the recognized chambers of commerce. After the freight is
paid, the shipping company returns the bill of lading.

B/L will not be issued to the exporter unless the cargo is loaded on the ship and ‘Mate’s
Receipt’ is obtained. The terms and conditions of contract of carriage are normally
noted on the back side of the bill of lading.
 Importance / Benefits of Bill of Lading:

Importance / Benefits to the Exporter:

 Bill of lading is legal document. In the event of dispute it can be

presented in a court of law.
 It is a contract of transportation.
 It is an acknowledgement of the receipt of the goods on board ship.
 It enables the exporter to send a shipment advice to the buyer.
 It helps the exporter to file claim of compensation, if goods are
damaged in transit.
 It helps the exporter to calculate exact amount of freight while
submitting CIF quotation.
 It is used when claiming duty drawback.

Importance / Benefits to the Importer:

 It is a document of title to the goods.

 It is a semi-negotiable document i.e. its ownership can be
transferred by endorsement and delivery
 It enables importer to pay exact amount of freight under FOB
quotation

Importance / Benefits to the Shipping Company;

 It enables the shipping company to collect freight either from the

exporter or importer.
 It protects the shipping company in the sense that goods damaged
before loading on the ship is shown in B/L.

Types of Bill of Lading: -

Shipper’s Load and Count

The phrase “shipper’s Load and count” means cargo moving under a bill of lading
(B/L) where the carrier acts as a transport contractor without responsibility for loading
or unloading. The carrier marks this phrase on the B/L if it does not supervise the
loading or unloading of the cargo, which is typical case in a full container load
shipment. Hence the carrier will not be held accountable for the number of units
reported on the B/L. The carrier often adds the words “said to contain” or “said by
shipper to contain” before the umber of units a commodity, for example, “3 40-FT.
CONTAINERS SAID TO CONTAIN 4,095 CARTONS RUBBER SHOES”.
 Clean versus Foul Bills of Lading

The bill of lading (B/L) is made out according to the information contained in the dock
receipt, or in some cases according to the completed working copy of the B/L supplied
by the customs broker. If a dock receipt is clean, the B/L will be clean; otherwise the
B/L will be foul. The bank will reject a foul bill of lading, unless stipulated otherwise in
the letter of credit (L/C)

Clean Bill of Lading

The Clean Bill of Lading bears an indication that the goods were received without
damages, irregularities or short shipment, usually the words “apparent good order
and condition”, ”clean on board” or the like are indicated on the B/L.

Foul Bill of Lading

The foul bill of lading---unclean bill of lading, dirty bill of lading or clause bill of
lading---is the opposite of the clean bill of lading. It bears an indication that the goods
were received with damages, irregularities for short shipment, usually the “unclean on
board” or the like are indicated on the B/L, for example, “insufficient packing”,
“missing safety seal” and “one carton short”.

Short Form Bill of Lading

In a Straight Bill of Lading--- non-negotiable Bill of Lading---the title to the goods is

conferred directly to a

In a short from Bill of Lading---blank back Bill of Lading---the terms and conditions
of carriage on the reverse (back) of the Bill of Lading (B/L) are omitted, instead they are
listed on a document other than the B/L. Unless otherwise stipulated in the letter of
credit (L/C), a short form bill of lading is acceptable.

The short form B/L saves the cost of printing (i.e., no printing on the back of the B/L)
and if the terms and conditions of carriage change, there is no need to reprint the B/L
form.

Long Form Bill of Lading

In a Long Form Bill of Lading the terms and conditions of carriage are printed on the
reverse (back) or the Bill of Lading. The long form bill of lading is commonly used in
international shipping.

Received versus On Board Bills of Lading

Received Bill of Lading

The Received Bill of Lading does not prove that the goods have been shipped. It only
acknowledges that the goods have been received by the carrier for shipment. Therefore,
the goods could be in the dock or warehouse.
 On Board Bill of Lading

The On Board B/L--- Shipped B/L--- proves that the goods have been shipped, as
evidenced by the pre-printed wording or the on board notation (e.g. “on board”,
“Lading on Board” or “Shipped on Board”) on the B/L.

Straight versus Order Bills of Lading

Straight Bill of Lading

In a Straight Bill of Lading---non-negotiable Bill of Lading---the title to the goods is

conferred directly to a party named in the L.C. (the importer usually), as such the title to
the goods is not transferable another party by endorsement. In other words, the B.L. is
not negotiable.

The Letter of Credit calls for a straight Bill of Lading usually by using such words as
“consigned to {the named party})” or “issued in the name of {the named party})”.
The named party can obtain the goods directly from the carrier at destination. Therefore,
unless the cash payment has been received by the exporter or the buyer’s integrity is
unquestionable, the use of a straight Bill of Lading is risky for related information.

Order Bill of Lading

In an Order Bill of Lading---negotiable Bill of Lading---the title to the goods is

conferred to the order of shipper or to the order of a named party in the Letter of Credit
(the issuing bank usually).The purpose of an order Bill of Lading is to protect the
interest of the shipper or the named party to the title to the goods.

The title to the goods is transferable to another part by endorsement, usually on the
reverse (back) of the (B/L). If the endorsement of B/L is required in the (L/C), all the
originals must be endorsed.The Letter of Credit may calls for an order Bill of Lading
that is: (1) To order blank endorsed or To order of shipper and blank endorsed, (2) To
order of shipper and endorsed to order of shipper and endorsed to order of (the named
party), or (3) To order of (the named party {other than the shipper}).
 Freight Paid B/L : When the freight is paid by the exporter, it is
called freight paid bill of lading.

 Freight Collect B/L : When the export contract is on F.O.B. terms

and when freight is not paid by the exporter, it is called freight collect
B/L.

 Clean B/L : Clean bill of lading means a bill without any adverse
remark about condition of goods.

 Claused B/L : It bears some adverse remarks. When goods are not
properly packed and show signs of damage. The shipping company
puts adverse remark e.g., ‘Goods Damaged’.
  Direct B/L : When the same ship carries goods from the port of
shipment to the port destination, shipping company issues direct B/L.

 Through B/L : It covers goods being trans-shipped on route. It

covers the whole voyage.

 Stale B/L : If the B/L is held too long and not presented to
consignee/ Bank soon after it is given by the shipping company, it’s
called stale B/L

 Order B/L : Those B/L is issued in the order of a certain person.

Title to the goods is given by possession of B/L.

 Straight B/L : When the importer / agent is named in the B/L, it is

called straight B/L.

 Container B/L : When containers are used in international trade,

the shipping company issues container B/L. Such a bill covers
particular container from one port to another.

To order blank endorsed or To order of shipper and blank endorsed

Unless provided otherwise, a consignment that is “to order” means to order of shipper. The
“blank endorsed” means without specifying to which the Bill of Lading (B/L) is transferred. In
such instance, whoever bears the B/L after endorsement holds the title to the goods.

If the sample Letter of Credit requires a B/L that is “to order blank endorsed”, as such enter
the words “To Order” in the Consignee field in the Bill of Lading and other documents/forms.

In a “to order blank endorsed’ Bill of Lading (B/L), technically speaking whoever bears the B/L
after its issuance holds the title to the goods.

If the sample Letter of Credit requires a B/L that is “to order blank endorsed’, as such enter
the words ”To Order of UVW Exports “ in the Consignee field, since the shipper in such L/C
in UVW Exports.

In both the above sample cases, the B/L must bear blank endorsement of the shipper as follows:
UVW Exports
(plus the authorized signature)

And, entering the words “To Order” or “To Order of UVW Exports” in either of the above
cases is correct, but to avoid rejection of documents, always follow the wordings stipulated in
the Letter of Credit as a precaution.
To order of shipper and endorsed

To order of (the named party)

This L/C requirement resembles the “to order of shipper and blank endorsed”, except that
words “To Order of (named party)” must be indicated over the shipper’s endorsement.

If the sample Letter of Credit requires a Bill of Lading that is “to order of shipper and endorsed
to order of The Moon Bank”, as such enter the words “To Order of UVW Exports” in the
Consignee field in the Bill of Lading and the endorsement as follows:

To Order of The Moon Bank

UVW Exports
( plus the authorized signature)

To order of (the named party (other than the shipper)

The named party under this Letter of Credit (L/C) requirement most often is the Issuing Bank.
The L.C. does not call for an endorsement, thus the exporter does not have to endorse the B/L .

The sample Letter of Credit requires a Bill of Lading “to order of The Sun Bank, Sunlight City,
Import Country”, as such enter the words “To Order of The Sun bank, Sunlight City, Import
Country” in the consignee field in the bill of Lading and other documents/ forms.

Synopsis: the title to the Goods in an Order Bill of Lading

To Order blank endorsed

Or
To Order of shipper and blank endorsed.

The title to the goods is conferred to the shipper, who retains the ownership in the consignment.
The shipper presents the blank endorsed Bill of Lading (B/L) and other required export
documents to the bank, the bank negotiable, that is, the rights of holder can be transferred to
another party. To Order of shipper and endorsed to order of (the named party). The title to
the goods is conferred to the shipper, who retains the ownership in the consignment. If the
named party is the negotiating bank, the shipper’s endorsement of the Bill of Lading (B/L)
transfers the title to the goods to the negotiating bank, and the bank can transfer the title to the
goods to another party by endorsement. The shipper presents the endorsed B/L and other
required export documents to the negotiating bank. If the named party is other than the
negotiation bank, then negotiating bank merely holds the B/L, not its title, on behalf of the
named party. To Order of the (named party (other than the shipper). The title to the goods
is conferred to the named party, who retains ownership in the consignment. The shipper merely
holds the Bill of Lading (B/L) on behalf of the named party. The shipper presents the B/L and
other required export documents to the negotiating bank, the bank holds the B/L on behalf of
the named party and negotiates the Letter of Credit (L/C). The named party can transfer the
goods to another party by endorsement. In practice, the named party in the “to order of the
named party)” usually is the Issuing bank. Therefore, unless the importer pays the Issuing
bank and the Issuing bank endorses the B/L to order of the importer cannot obtain the goods
from the carrier. Nearly, the interest of the Issuing bank and the exporter (the shipper) are
protected if the B/L is “to order of the named Issuing bank)”

Ocean /Sea Transport Documents

Through Bill of Lading

The through Bill of Lading---combined transport Bill of Lading---is used to cover at least
two different modes of transportation, known as multimodal transport, or different means of
conveyance.The format of a through Bill of Lading is closely similar to the sample ocean Bill
of Lading except the words “Through Bill of Lading”, “Combined Transport Bill of
Lading”, or “Combined Transportation” or the usually are printed on the Bill of Lading.

Freight Forwarder’s Bill of Lading

The freight forwarder’s Bill of Lading---house Bill of Lading---is issued by the ocean freight
consolidator or NVOCC (non vessel operating common carrier) or NVO (non vessel owner or
non vessel owning carrier).

Unless otherwise authorized in the Letter of Credit (L/C), the freight forwarder’s Bill of Lading
is not acceptable in the L/C negotiation.

Charter Party Bill of Lading

The charter party Bill of Lading is issued by the carrier or its agent in the charter shipping.
The documentary requirements in a charter party Bill of Lading are similar to the ocean
(marine) B/L.
Unless otherwise authorized in the Letter of Credit (L/C), the charter party Bill of Lading is not
acceptable in the L.C. negotiation.

Non-Negotiable Sea Waybill

The non-negotiable sea waybill---liner waybill---usually is marked with the words “Sea
Waybill” or the like on its face.

Stale Bill of Lading

And the Guarantee for Delivery of Goods

In the short-sea trades, for example within the Asian countries, it is not uncommon for the
goods to arrive at the port of destination before the Bill of Lading (B/L). Under this
circumstance the B/L is known as a stale Bill of Lading or late Bill of Lading.

The shipper or its agent may receive the B/L from the carrier or its agent in about 2 days after
the customs closing date. If the shipper is to arrange for marine insurance, 1 to 4 days may
elapse before the shipper receives the insurance policy. The negotiating bank may dispatch the
documents to the Issuing bank in 1 to 7 banking days following the day of receipt of the
documents. Furthermore, taking into account the mailing time needed for the documents to
reach the Issuing bank, the vessel may have arrived at the port of destination without the B/L.
Consequently, a delay in customs clearance of the goods and payment of warehousing charges
may occur, and the cargo may exposed to the risk of loss or damage at destination.
 The remedy to the problem of stale Bill of Lading is for the importer to use the Guarantee for
Delivery of Goods (this or similar form is available at the Issuing bank) and the posting of a
bond, both of which must be countersigned by the Issuing bank, in order to clear the goods
through customs in the absence of the B/L. However, the importer is obliged to surrender to the
carrier the original B/L upon receipt, or to procure a replacement of the original B/L in case of
loss. The Bill of Lading must properly endorse.

Document Sent with Bill of Lading:

As a normal rule, the exporter sends the bill of lading to the bank of the importer
to enable him to take the delivery of goods.

The following documents are sent along with the bill of lading:
 Bill of exchange
 Commercial invoice
 Consular invoice
 Certificate of origin
 Packing list (if needed).
 Inspection certificate
 Any other useful document
In many cases, all these documents (including B/L) are sent along with the Bill
of Exchange for collection of export proceeds. The term documentary bill of
exchange is used frequently. This means the bill of exchange is accompanied by
other documents useful to the importer.

AIRWAY BIIL:

When goods are exported by air, the concerned airline authorities issue Airway Bill.
AWB is merely a receipt of the goods meant for export. Unlike B/L, it is not a document
of title to the goods.

o SHIPPING BILL:

Shipping bill is the main customs document. It is required by the customs authorities for
granting permission for the shipment of goods. It contains various details of goods to be
shipped. This document must be submitted for securing customs permission for
exporting goods. The cargo is allowed to be carted to the docks only after the shipping
bill is duly certified by the customs.
Contents of Shipping Bill

 Name and address of Shipper

 Name of the vessel
 Name of the agent, if any
 Port of destination
 Amount of drawback claimed
 Description, quantity and value of shipment
 Number of packages and the marking on them
 Other details, if applicable.

Types of Shipping Bill:

Customs authorities have developed three types of shipping bills on the basis of
classification of goods and mode of transport. Export products are classified into the
following three categories:-

 Drawback goods
 Free goods
 Dutiable goods

 Drawback shipping bill is useful for claiming the drawback of duties paid to
customs authorities.
 The free shipping bill is useful for exporting the goods on which export duty is
not charged.
 Finally, dutiable shipping bill is required for goods on which export duty is
payable as per the rates fixed. In order to make it easy to identify category of
export, following colours have been provided to deferent kinds of shipping bills:
-
No. Types of goods By Sea By Air
1. Drawback goods Green Green
2. Dutiable goods Yellow Pink
3. Duty-free goods White Pink

Thus an exporter wanting to claim any duty drawback bas to fill up a green shipping
bill whether goods are sent by air or sea.

Number of Copies of Shipping Bill:

Shipping bill is normally prepared in five copies as such copies are required by
different agencies for inspection and filing. Five copies of shipping bill include.

 Customs copy
 Drawback copy
 Export promotion copy
 Port trust copy
 Exporter’s copy

Importance of Shipping Bill:

 Shipping bill is used obtain “Carting Order” from the port trust
authorities to bring the goods inside the dock.
 It is required by the custom authorities for clearance of goods. The
custom authorities endorse the duplicate copy of the shipping bill with
“let export order” and “let ship order”.
  It enables the exporter to claim DBK and excise refund when the
shipping bill is duly endorsed by the customs.
 It is used by the customs to determine the value of exportable goods.
 It facilitates the loading of cargo on the ship. When the customs
preventive officer provides duplicate copy of the shipping bill to the
agent of the shipping company, permission to load the cargo is given.

CERTIFICATE OF ORIGIN:

Certificate of origin indicates that the goods which are being exported are manufactured in
specific country. This certificate is sent by the exporter to the importer and is useful for
claiming special concession on the import duty charged. This certificate needs to be
produced before the customs authorities for the assessment of duty and clearance of goods
with concessional duty.

When imports from certain countries are favorably treated in the matter of levy of import
duties, the Custom Authorities of concerned country insist on some proof of the fact that the
goods are genuine products of such countries. It is a sort of declaration testifying the origin
of exports. It is mainly useful for taking advantage of a preferential duty, if available. The
certificate of origin ensures that the goods have not been re-shipped by the exporter after
importing from some other country.

In India, the Certificate of Origin is issued by the Chambers of Commerce, Export

Promotion Councils and various Trade Associations which have been authorized by the
Government. The Central Silk Board, the Coir Board, Textile Committee are also
authorized to issue such certificates.

Types of Certificate of Origin:

 Certificates for clearance : These certificates are required by

all countries for clearance of goods by the importers. They are generally
issued by trade associations and the Chambers of Commerce. The
exporter gives details in the prescribed form, submits a copy of the
commercial invoice and pays required fees. On the basis of all these
documents, the Chamber of Commerce issues Certificate of Origin.

 Certificates for availing concessions under GSP : These

certificates are required for availing concessions available under
Generalized System of Preferences (GSP) . Such certificates are to be
obtained in triplicate. In India, certain agencies such as Export Inspection
Council, Central Silk Board, Jute Commissioner, etc., are authorized to
issue certificates under GSP.

 Certificate for availing concessions under Commonwealth

Preferences (CWP): The prescribed form of such Certificate of Origin is
available with the organizations mentioned above. These organizations
and their regional offices have been authorized by the Govt. of India to
 issue Certificate of Origin required in respect of exports to the preference
giving countries under CWP.

o Importance and Uses of Certificate of Origin:

Importance and Uses of Certificate of Origin to the Exporter:

 This document certifies that goods are Indian in origin.

 It facilitates clearance of goods from the customs of the exporter’s
country.

Importance and Uses of Certificate of Origin to the Importer:

 An Importer gets quick delivery of goods from the customs.

 An Importer can claim special concession as regards payment of tariff.
 An Importer gets adequate proof about the origin of goods.
 An Importer is convinced that those goods are not re-shipped.

COMBINED CERTIFICATE OF ORIGIN AND VALUE:

This document is applicable to commonwealth countries only. This document certifies not
only the origin of goods but also the value of goods. It helps to determine import duty. The
details of this document are similar to that of commercial invoice. Under the
Commonwealth Preference System (CPS), the importer can claim payment of preferential
tariff. This certificate has to be signed by the exporter along with a witness. This certificate
can obtained from the office of the High Commissioner of the importing country.

GR FORM:

GR form is an exchange control document which is to be submitted to the Reserve Bank of

India after clearance from the Custom Authorities. It is designed mainly to furnish
guarantee to the Reserve Bank of India to remit the foreign exchange earned from the
export shipment within 180days from the date of exports. It is a type of declaration and
assurance as regards foreign exchange receivable out of the export transaction. As per the
exchange control regulations, the exporter has to realize export proceeds within a period of
6 months from the date of shipment from India. Hence, declaration to that effect is to be
given by the exporter in this form. Unless GR Form is presented with full particulars, the
customs authorities will not pass the shipping bill.

Content of GR Form:

 Name of the exporter.

 Name of the negotiating bank.
  Currency in which payment will be received.
 Name of the buyer’s country.
 Port of origin.
 Port of destination.
 Commission or discount payable on export.
 Quality, Quantity, and value of exports.

Preparation of GR Form:

 GR form is used for declaring exports to all countries other than

Nepal and Bhutan. It is to be completed in duplicate.
 GR form is used to declare receipt of foreign exchange.
 All entries should be made in the currency of the invoice.
 Bank’s name concerned with the realization of export proceeds
should be noted clearly.
 The code number of exporter should be noted correctly and the
clauses which are not applicable should be noted clearly.

Operation of GR Form:

 The exporter has to submit GR forms to the customs authorities (in

duplicate) so as to obtain necessary permission for shipment of
goods.
 The customs authorities then scrutinize the form with reference to
exchange regulations.
 Original copy of the form is retained by the customs authorities for
forwarding it to the Reserve Bank of India.
 Duplicate copy is handed over to the exporter for lodging with the
negotiating and through which payment for exports is to be realized.
 The duplicate copy of the GR form will be retained by the bank till
full export proceeds are realized.
 When payment is received the bank will send duplicate copy of GR
form to RBI. & the exporter has realized payment in foreign
exchange.

 PP FORM

PP Form is also an exchange control document. It’s used in place of form GR when goods
are exported by post parcel. Exports to all countries other than Nepal and Bhutan by post
parcel are declared on PP form. The parcels containing articles of jewellery or must first be
submitted for valuation to Customs.like G.R. it is also filled in duplicate.
  MARINE INSURANE POLICY

A marine insurance policy is a contract that covers perils on high sea. In case of CIF
contract, the responsibility for taking insurance cover is that of the exporter. The premium
charged by the insurance company depends on the total value of the goods dispatched.
Marine insurance policy can be of the following types:

 Specific Policy
 Open Policy
 Floating Policy
 Open Cover Policy etc.

 BILL OF EXCHANGE

Bill of exchange is also known as “Draft” . A bill of exchange is an instrument in writing

containing an unconditional order, signed by the drawer, directing a certain person to pay a
certain sum of money only to or to the order of a person or to the bearer of the instrument.

Parties to Bill of Exchange :

 The Drawer : The person who draws the bill i.e. the exporter
 The Drawee : The person on whom the bill is drawn for payment i.e.
the importer.
 The Payee : The person to whom the payment is made i.e. the
exporter or supplier of goods.

 A bill of exchange contains an order from the creditor to the debtor to

pay a specified amount to a person mentioned therein.
 When the exporter expects the importer to make immediate payment
upon the presentation of the draft, the draft is called “Sight Draft”.
 When the draft is drawn for payment at a date later than presentation, is
called “Since Draft” or Demand Draft”.

 Contents of Bill of Exchange

 Name and signature of the drawer.

 Name of the drawee
 Name of the payee or order and endorsement of the payee
where applicable.
 Specified sum
 Fixed date or determinable future date of payment.

 Advantage to the Exporter:

A bill of exchange provides some protection to the exporter against

the importer for not paying the bill amount provided it is
Documentary Bill of Exchange in D/A or D/P.
 BILL OF ENTRY :

This document is used in case of import business. This document contains detail like
quality, quantity, number of packages etc. when goods enter the dock of the importing
country. Bill of entry is prepared in three copies. In case the details of goods are not known
to the importer, the agent can prepare “bill of sight” and then check the goods at the docks
and later prepare bill of entry. There are three types of bill of entry:

 Bill of entry in case of goods for home consumption.

 Bill of entry for free goods, which can be imported without
paying custom duty.
 Bill of entry when goods are kept in bonded warehouse.

 Contents of Bill of Entry :

 Name and address of the importer.

 Name and address of the exporter.
 Description of goods.
 Value of goods.
 Importer licence number of the importer.
 Name of the port / dock where goods are to be cleared.
 Rate and amount of import duty payable.
 Any other details.
MEANING OF EXPORT ASSISTANCE AND INCENTIVES :

Export assistance and incentives is a financial help given by the Government to Indian
exporters to improve their ability to compete in foreign markets. Indian exporter can survive
provided they can produce good quality goods at reasonable cost. In the domestic market
practically everything is highly taxed. We can export and rebates to make the price competitive.

ADVANTAGES / ROLE OF EXPORT ASSISTANCE AND INCENTIVES IN EXPORT PORMOTION :

Over the years assistance and incentives provided by our Government has helped Indian
exporter in many ways. It has resulted in earning high foreign exchange and opening up new
areas of business. Some of the common advantages are :

 Export assistance and incentives make the business financially attractive.

 It helps to increase profit in the business.
 It enables exporters to expand and diversify the business.
 It makes available expertise in the field of export marketing.
 It improves competitive ability of the exporters.
 It facilitates repayment of loans including debt-servicing.
 It removes the deficit in balance of payments.
 It makes optimum use of available resources between domestic and overseas markets.
 It compensates for higher domestic cost of production.
 It provides the much needed help to new exporters.
 It helps to achieve socio-economic objectives of the country.
 It helps to earn goodwill for the country.
 It creates new employments opportunities.
 It helps to reduce trade deficit.

 MENANIG OF EXPORT PROMOTION :

Export promotion refers to the raising of the volume of exports through diversification and
exploring of new markets. Export promotion is systematic attempt to capture foreign
markets. Various incentives, facilities and concessions are provided by the Government for
export promotion. Export firms improve the quality goods and ability to compete in order to
survive in foreign markets. Export promotion need not be treated as the responsibility of the
Government alone. It is a national objective and the business community and the society at
large must give necessary cooperation to the Government for promoting exports.

 IMPORTANCE / ADVANTAGES OF EXPORT PROMOTION :

 To earn foreign exchange.

 To make the country economically and politically strong.
 To increase industrial production.
  To expand activities of tertiary sector.
 To repay foreign loans.
 To make optimum use of available resources.
 To achieve global reputation.
 To remove deficit in the balance of trade and balance of payments.

 EXPORT PROMOTION MEASURES ADOPTED BY THE GOVERNMENT

IN VARIOUS EXIM POLICIES :

Export promotion measures in India can be divided into:

 Export Policy Measures : These measures are introduced through

suitable policy initiatives at the government level. These measures are
mentioned in the Exim policy issued from time to time. Export policy serves
as a abase for various incentives offered to exporters. Along with the Exim
policy, industrial, monetary and fiscial policies are adjusted to meet the
requirements of exporters in their export promotion efforts.

 Export Assistance Measures : These measures are offered in the form

of incentives to help exporters to raise their competitive capacity in foreign
markets. These measures are monetary in character and includes duty
drawback, tax reliefs, refund of excise duty, transport subsidy etc.

 Export Marketing Assistance and Assistance for Export

Production : Export marketing assistance includes

 Conduct of market studies

 Surveys and research
 Collection and dissemination of market information
 Participation in fairs and exhibitions abroad
 Credit facilities for publicity abroad
 Business tours, etc.

Assistance for export production includes

 Priority in allotment of raw materials by IRMAC

 Liberal import of raw materials
 Components and machinery for improving quality and
need of production
 Import licences against performance etc.

 Infrastructuaral Assistance : These assistance are obtained through

various agencies and institutions established for promoting exports. Such
institutions do not participate directly in export trade but indirectly help the
exporters by creating favourable export environment. The institutions
established for export promotion are
  Commodity Board
 IIFT
 Indian Council of Arbitration

Export Inspection Council etc.

Background of Export Promotion

Exports from the Industrial sector over a period of time have acquired great significance in
India's foreign trade. The Industrial Sector today constitutes a very important segment of India's
economy and it accounts for nearly 40 of the gross value of output in the manufacturing sector
and about 50% of the total exports from the country. Direct exports from the Industrial Sector
accounts for 35% of the total exports.
Export Promotion from the Industrial sector has been accorded a high priority in the India's
export promotion strategy. The Industries due to their inherent strengths of capital investment,
high employment generation, maximum utilisation of capacity, flexibility in operation, etc. are
highly conducive for rapid industrialization and generation of export surpluses.
An idea about the contribution of Industrial sector in country's total exports can be had from the
table given below:

Year Total Exports Share of Industrial Exports % share

1990-91 32,553.34 11664.15 35.83
1991-92 44,041.81 19883.40 45.15
1992-93 53,350.54 23784.82 44.58
1993-94 69,546.97 32307.09 46.45
1994-95 82,674.11 40068.15 48.46
1995-96 106,464.86 47470.22 43.64
1996-97 117,524.98 52248.54 44.46
1997-98 126,286.00 59442.18 47.07
1998-99 141,604.00 67979.00 48.07
1999-2000 159,561.00 79200.00 49.64

Export Assistance & Facilities

Export Promotion from Small Scale Sector has received utmost priority of the Government.
Every Policy formulated for achieving growth in exports have a number of incentives to small
scale exporters so as to maximise export earnings. Such incentives include :

1. Free import of capital goods/raw material and other essential inputs, and in certain cases
duty free or with concessional rate of Custom Duty, so as to ensure higher production
for exports.
2. With a view to make Indian products competitive in the world markets, a large number
of incentives were provided to the exporters from time to time. Such incentives include
refund of duties paid on the raw material used in export production by a system of Duty-
 Draw-Back, Pre and Post shipment Credit to the exporters at concessional rate of
interest, etc.
3. Export Policy of the Government has remained liberal as there were hardly any
restrictions on export of items from small scale sector. Export Procedures have been
simplified from time to time so as to promote exports from the small scale sector. The
efforts of the Government have always been to regulate and simplify procedures so as to
create a congenial environment for the exporting community.

 Export-Import Policy

1. Recognition of Export Houses/ Trading Houses, etc.

With a view to recognise established exporters so that they may build marketing
infrastructure and expertise required for export production, merchant as well as
manufacturer exporters, EOU etc. are recognised as Export House, Trading Houses, Star
Trading Houses and Super Star Trading Houses on the basis of certain criteria as laid
down in the Export-Import Policy 1997-2002. The eligibility criteria for such
recognition is based either on the basis of FOB or Net Foreign Exchange value of
exports of goods and services made directly by the exporters during the preceding three
licensing years or the preceding licensing year. In an attempt to encourage exports from
the small scale sector, the exports made by small scale sector manufacturer-exporters
are given triple weightage for the purpose of recognition as EH/TH/STH/SSTH.
Accordingly, in terms of provisions contained at para 12.7(a) of the Exim Policy 1997-
2002 (amended upto 31/3/99), triple weightage on FOB or net foreign exchange on the
export o f products manufactured and exported by units in the small scale industry
(SSI)/ Tiny sector/ Cottage sector and double weightage on FOB or net foreign
exchange to merchant exporter exporting products reserved for SSI units and
manufactured by units in the SSI/Tiny Sector is give. These Export Houses, Trading
Houses, etc. are entitled to certain benefits under the current Export-Import Policy.

 Starting EXPORTS

XVII Export Houses, Trading Houses, Star Trading Houses and Super Star
Trading Houses

 Objective:- The objective of the scheme is to recognise established exporters as

Export House. Trading House, Star Trading House and Super Star Trading House
with a view to building marketing infrastructure and expertise required for export
promotion. Such House should operate as highly professional and dynamic
institutions and act as important instruments of export growth.

 Eligibility:- Merchant as well as Manufacturer exporters, Service providers, Export

Oriented Units (EOUs)/units located in Export Processing Zones (EPZs)/ Special
 Economic Zone (SEZ’s)/ Electronic Hardware Technology Parks (EHTPs)/
Software Technology Parks (STPs) shall be eligible for such recognition.

 Criterion for Recognition:- The eligibility criterion for such recognition shall be
on the basis of the FOB/NFE value of export of goods and services, including
software exports made directly, as well as on the basis of services rendered by the
service provider during the preceding three licensing years or the preceding
licensing year, at the option of the exporter. The exports made, both in free foreign
exchange and in India Rupees, shall be taken into account for the purpose of
recognition.

 Exports made by Subsidiary Company:- The exports made by a

subsidiary of a limited company shall be counted towards export
performance of the limited company for the purpose of recognition. For this
purpose, the company shall have the majority share holding in the
subsidiary company.

 Export Performance Level:- The applicant is required to achieve the

prescribed average export performance level subject to the condition that
Deemed exports and export of imported goods as it is shall not be counted
for export performance.

The level of export performance for the purpose of recognition shall be as per the table below:

Category Average FOB FOB value Average NFE NFE earned

value during the during the earnings made during the
preceding three preceding during the preceding
licensing years, licensing year, in preceding three licensing year,
in Rupees Rupees licensing years, in in Rupees
Rupees

(1) (2) (3) (4) (5)

EXPORT 15 crores 22 crores 12crores 18 crores

HOUSE
TRADING 75 crores 112 crores 82 crores 90 crores
HOUSE

STAR 375 crores 560 crores 312 crores 450 crores

TRADING
HOUSE
 SUPER STAR 1125 crores 1680 crores 937 crores 1350 crores
TRADING
HOUSE

 Golden Status Certificate:- Exporters who have attained Export House, Trading
House, Star Trading Houses and Super Star Trading Houses status for t3 terms or more
& continue to export shall be eligible for golden status certificate which would enable
them to enjoy the benefits of status certificate irrespective of their actual performance.

Export Promotion Schemes

 Duty Drawback Scheme:

Under the duty drawback scheme the export products get relief in respect of Customs and
Excise Duties paid on raw materials and components used in their production. There are two
types of rates of drawback. (i) All Industry Rates are published in the form of notification by
Govt. every year and it’s valid for one year. (ii) Brand rates are fixed on the individual request
of an exporter/manufacturer where the Govt. has not determined All Industry Rates in respect
of any export product eligible for drawback or where the rate is not applicable because the
manufacturer of the product has availed of certain duty free facilities but where sufficient duty
paid inputs are also used. Fixation of brand rates is done under simplified procedure or normal
procedures as may be applicable.

For claiming the drawback on export of goods, the exporter is not required to file a separate
application for granting the amount of drawback, as the drawback shipping bill itself treated as
a claim and it is finalised after ensuring that the goods have been presented for examination by
Customs and cleared for being put on board a vessel/air craft and ensuring that the necessary
formalities to enable processing of claims are complied with. The payment of drawback claim
is made directly by the Customs House/ Central Excise Collectorate having jurisdiction over the
port/airport/land customs stations through which the export is made.

 Scheme for All Industry Rate(AIR) of Duty Drawback:

The AIRs are generally fixed as a percentage of FOB price of export product. Often very good
export prices are obtained for a product or class of products which have no co-relation with the
actual duties suffered on inputs used – which is sought to be refunded to Exporters as
drawback. In order to safeguard Government revenue but also be fair to exporters, reasonable
duty drawback caps have been imposed in respect of many export products having rates on
FOB basis. These caps essentially reflect the average duty incidence suffered on the inputs used
in the manufacture of the particular goods exported by several exporters with different prices
and they are fixed on the basis of data supplied by the export promotion councils and collected
by Directorate from other sources.

 Brand Rate of Duty Drawback Scheme:

In respect of export products where AIR of duty drawback is not notified or where the AIR of
duty drawback in considered by the exporter to be insufficient to fully neutralize incidence of
duties suffered on the inputs utilized in the production/manufacture of the export product, the
exporters opt for Brand Rate Duty Drawback Scheme. Under this Scheme, the exporters are
compensated by paying the amount of Customs & Central Excise Duty incidence which is
actually incurred on the inputs used in the manufacture of export products. For this purpose, the
exporter has to produce documents/proof about the actual quantity of inputs utilized in the
manufacture of export product along with evidence of payment of duties thereon.

 Section 74- Drawback:

In case of goods which were earlier imported on payment of duty and are later sought to be re-
exported within a specified period, customs duty paid at the time of import of the goods with
certain cut can be claimed as duty drawback by the exporter at the time of export of such goods.
Such duty drawback is granted with Re-export of Imported Goods. For this purpose, at the time
of import, the identity particulars of the goods are recorded at the time of examination of import
goods; at the time of export, cross verification of the goods under export is done with the help
of related import documents to ascertain whether the goods under export are the very ones
which were imported earlier.

Where the goods are not put into use after import, 98% of duty drawback is admissible at the
maximum. In cases where the goods are put into use in India after import (and prior to its
export), duty drawback is granted on a sliding scale basis depending upon the extent of use of
the goods. No duty drawback is available if the goods are put into use for a period exceeding 36
months after import. Application for duty drawback is required to be made within 3 months
from the date of export of goods.

 Procedure for Claiming Drawback:

The drawback on export goods – whether under AIR or Brand Rate is to be claimed at the time
of export and requisite particulars have to be filled in the prescribed format of shipping bill/bill
of export under Drawback. Triplicate copy of the Shipping Bill is treated as claim for
Drawback. The claim is also to be accompanied by certain documents as laid down in the Duty
Drawback Rules. If the requisite documents are not furnished or there is any deficiency, the
claim may be returned after shipment for complying with the requirements and furnishing
requisite information/documents (e.g. Brand Rate letter which may not be available at the time
of export but becomes available after shipment).

 Duty Remission Scheme:

 Duty Remission Scheme consists of ;
(a) Duty Free Replenishment Certificate and
(b) Duty Entitlement Passbook Scheme.

 Duty Free Replenishment Certificate(DFRC) Scheme:

Duty Free Replenishment Certificate (DFRC) Licence is issued to a merchant-exporter or

manufacturer-exporter. DFRC licences are issued only in respect of export products. DFRC
Licences are issued for import of inputs, as per SION, having same quality, technical
characteristics and specifications as those used in the export product and as indicated in the
shipping bills. The validity of such licences is normally 18 months and relevant DGFT
authority (who issues the licence) is competent to grant extension of validity period. DFRC
licence and or the material(s) imported against it are freely transferable.Exporters operating
under DFRC Scheme are entitled for availing AIR of duty drawback in respect of those duty
paid materials, whether imported or indigenous, used in the export product, which are not
specified in the DFRC licence.

 Duty Entitlement Pass Book(DEPB) Scheme:

It is an export promotion scheme and envisages grant of DEPB Credit Entitlement to an

exporter at the time of export at an ad-valorem rate notified by DGFT, in relation to FOB value
of the export product.. These rates are based on the computation of Basic Customs Duty
suffered by the exporters on the inputs listed in the Standard Input-Output Norms (SION)
applicable to the export product. The crucial feature of the DEPB Scheme is that all the inputs
listed in the Standard Input-Output Norms are deemed to have been imported and to have
suffered Customs duties. DEPB rates are finalised by the DEPB Committee, chaired by
Additional DGFT and consists of representative from Ministry of Finance also. Value caps have
been imposed on export products having DEPB rates of 15% or more to curb the tendency of
unscrupulous exporters to avail most of the runaway benefits by over-invoicing export.The
normal validity period of a DEPB Scrip is 12 months and DGFT authority (who issues the
scrip) is empowered to grant revalidation. These scrips are for a certain amount of DEPB credit
and can be utilised for adjusting Customs Duties (Basic or CVD) against import of any products
into India, without the necessity of any co-relation between the export product and the import
goods, i.e. it is not necessary to import only the relevant inputs corresponding to the export
product.

 Export Promotion capital Goods (EPCG) Scheme:

Under EPCG Scheme import of capital goods which are required for the manufacture of
resultant export product specified in the EPCG Licence is permitted at concessional rate of
Customs duty. This Scheme also enables upgradation of technology of the indigenous industry..
At present the EPCG licence holder is permitted to import capital goods at 5% or 10% Customs
duty.

Whereas under 5% duty EPCG Scheme the licence holder is required to undertake to fulfill
export obligation equivalent to 5 times the CIF value of imported capital goods within a period
of 8 years reckoned from the date of issue of licence, under 10% duty EPCG Scheme, the
 licence holder has to fulfill export obligation equivalent to 4 times the CIF value of imported
capital goods in five years. EPCG licences are issued to manufacturer exporters and merchant
exporter with or without supporting manufacturer, and service providers. The licence specifies
the value/quantity of resultant export product to be exported against it.

Capital goods imported under EPCG Scheme are subject to actual user condition and the same
cannot be transferred/sold till the fulfillment of export obligation specified in the licence.The
normal validity period of EPCG licence is 24 months and DGFT authority (who issues the
licence) is empowered to grant further revalidation. In order to ensure proper accountal of
fulfillment of export obligation, the EPCG licence holder is required to indicate the EPCG
licence No/date on the body of the Shipping Bill.

 EXPORT PROMOTION CAPITAL GOODS (EPCG) :

This scheme functions with commitment on the apart of exporters. Import of capital goods are
allowed and rate of import duty has been reduced from 15% to 10%. Those exporters who wish
to take advantage of this scheme must export four times the CIF value of imports. With a view
to achieve this target, the exporter is given time of five years.

EXPORT OBLIGATION
CUSTOMS DUTY PERIOD

FOB Basis NFE Basis

10% 4 times CIF Not applicable 5 years

value of CG
Zero duty (in case CIF value is 6 times CIF 5 times CIF 8 years
Rs.20 crores or more) value of CG value of CG
Zero duty in case CIF value in 6 times CIF 5 times CIF 6 years
Rs.1 crore or more for value of CG value of CG
electronics, food processing,
garments, leather, sports
goods, gems and jewellery,
agriculture, animal husbandry,
floriculture, horticulture,
pisciculture, viticulture poultry
Zero duty in case CIF value is 6 times CIF 5 times CIF 6 years
Rs.10 lakhs or more for soft value of CG value of CG
ware sector

 Calculation of NFE:

For the purpose of calculation of Net Foreign Exchange earned on exports, the value of all the
licences shall be deducted from the FOB value of exports made by the person. However, the
 value of freely transferable Special Import Licences, EPCG licences and the value of licences
surrendered during the validity of licence shall not be deducted.

 Import of Capital Goods : Under this scheme, exporter are allowed to import
both new and second hand capital goods with residual life of ten years. The import of
second hand goods under the scheme is subject to certain conditions. Capital goods
means:

 Plant
 Machinery
 Equipment
 Packing machinery and equipment
 Quality and pollution control
 Testing instruments
 Power generation sets
 Machine tools
 Refrigeration equipment
 Research and development
 Eligibility : EPCG Scheme is available both for manufacturing and service sectors. In
manufacturing sector, manufacturer exporters are eligible to import capital goods. In the
service sector the following are eligible:

 Consultants
 Journalists
 Travel Agents and tour operators
 Architects
 Artists
 Chartered accountants
 Diagnostic centers
 Engineers
 Doctors
 Scientists etc.

Features of EPCG Scheme:

 The EPCG licence holder can buy capital goods from domestic manufacturers. Such
domestic manufacturers are permitted to the import components at concessional customs
duty of 10%.

 Whatever capital goods are imported, it is subject to actual user conditions.

 In order to know about the progress of business, the EPCG licence holder has to
submit a report of his export every six months. This report must be certified by a
Chartered Accountant who is not a business associate of the exporter.
  In order to continue t get the benefit of EPCG scheme, the licence holder must fulfill
the export obligations.

 When export obligation is fulfilled, the EPCG licence holder must submit a
consolidated statement of exports.

 The EPCG licence holder will submit a certificate from his banker when payment is
received from abroad.

 EPCG is a facility given to the exporters to improve the business. If they fail to
fulfill the export obligation within the stipulated period, the government reserves the
right to initiate action against the exporters.

 In order to get registered for EPCG facility, the exporter has to apply to Director
General of Foreign Trade (DGFT) with application fee and relevant documents.

 DUTY ENTITLEMENT PASSBOOK :

DEPB was introduced in the Exim Policy 1997-2002.

Under the Duty Entitlement Passbook (DEPB) Scheme, an exporter is eligible to claim credit as
specified percentage of FOB value of exports. The credit shall be available against such export
products and at such rate as may be specified by the DGFT.

 Validity : DEPB shall be valid for 12 moths from the date of its issue
 Eligibility : Merchant-exporter and manufacturer-exporter are eligible for DEPB.

 Types : DEPB is of two types viz.,

 Pre-Export basis
 Post-Export basis

 Pre-Export Basis : DEPB on Pre-Export basis aims to provide the

facility to eligible exporters to import inputs which are required for production.
 Post-Export Basis : DEPB on Post-Export basis shall be granted against
exports already made.

 SPECIAL IMPORT LICENCES (SIL)

One of the special incentives given to Indian exporters includes special Import Licences (SIL).
SIL is freely transferable. SIL is available for the following categories of exporters:
  EH / TH / STH / SSTH
 Deemed Exports
 Exports to ACU countries
 Manufacturers with ISO 9000 or BIS 14000
 SSI Exporters

SSI holders can import certain items which ordinarily cannot be imported by other exporters.
Under Exim Policy 1997-2002, 150 terms have been shifted from restricted list to SIL list.

 INDIAN EXORTERS CASH INCENTIVES TO:

 Marketing Development Assistance (MDA) : The Government

of India established Marketing Development Assistance (MDA) in order to stimulate
and diversify the export trade along with the marketing of Indian goods abroad.

 MDA is available to :

 Export Houses.
 Consortia of Small-Scale industries.
 Trading Houses
 Star Trading Houses
 Super Star Trading Houses
 Individual Exporters and persons sponsored by approved organizations.

MDA is utilized for the following purpose :

 To participate in Trade Fairs and Exhibitions.

 To sponsor trade delegations and study teams.
 To conduct market research, commodity research, etc.
 To undertake advertising campaign abroad.
 To establish offices and branches abroad.
 To train personnels within and outside the country.
 To secure samples and technical information.
 To proceed on business tours abroad.
 To establish showrooms abroad.

The rate of assistance varies from activity to activity. However, the representatives from small
scale industries and export houses of SSI will get grant of 60%. Assistance is allowed under
two heads viz., airfare and daily allowance. These assistance are disbursed by Federation of
Indian Export Organisation (FIEO) and Ministry of Commerce (MDA Section). The exporters
are advised to apply for MDA within 3 months from the date completion of activity.

 Duty Drawback : Under duty drawback, the manufacturer gets refund of customs and
excise duties paid by him on the materials utilized in the manufacture of exportable
goods.
  International Price Reimbursement (IPRS) : An exporter may need to import iron and
steel to export engineering goods. The international prices of iron and steel is subject to
fluctuations. The fluctuation in prices of steel is paid to the exporter. This assistance is
available to the specific categories of iron and steel such as pig iron, mild steel , alloy
steel etc.

 Natural Rubber Subsidy Scheme : When the rubber content in the product is more than
50% the exporter can claim subsidy. This scheme covers both manufacturer-exporters
and merchant exporters. The subsidy payable to exporters is announced every month by
the Rubber Board, Kottayam.

 External Marketing Assistance Scheme for Jute Goods : Various jute products are given
Marketing Assistance which is of Two types viz.
 Internal and
 External

 Internal Marketing Assistance provides assistance provides assistance at

the rate of 8% on the sale of specified jute products such as decorative fabrics, mats, soil
savers, carpets, blankets, yarn and handicrafts.

 External Marketing Assistance is given to diversified products. This

assistance is provided at the rate of 10% and includes items like serim cloth, specified
non-standard hessian cloth and carpet backing cloth.

 TAX INCENTIVES AND RELIEFS :

Income-tax relief to exporters :

 Deductions of whole of the profits derived from export of specified

goods or merchandise of exporters or Export Houses or Trading houses.
 Deduction of specified amount of profits of companies engaged in the
business of hotel or of a tour operator or a travel agent.
 Tax relief on remuneration received from abroad b teachers.
 Tax relief to playwrights, artists , sportsmen , etc.
 Tax relief on export of computer software.
 Tax relief to an Indian company or resident tax payer by giving a
deduction of 50% of the profit from project exports in computing the taxable
income.
 Tax exemption on plantation subsidy.
 Five-year tax holiday to 100% export oriented units.
 Five-year tax holiday to units in free trade zones or export processing
zones.
 Relief from tax on dividends of shares and royalties from certain foreign
enterprises.
EXPORT DOCUMENTS

No. Particulars
1. Essential term & Condition
2. Amendment’s Terms & Condition
3. Amendment Document
4. Advisory Bank Letter (Covering Letter)
5. PCFC (Packing Credit In Foreign Currency)
6. Bills Of Exchange
7. Credit Advice
8. Letter Of Credit Details (Page 1)
9. Certificate Of Origin
10. Packing Invoice
11. Commercial Invoice
12. Money Receipt Detail
13. Forwarder Cargo Receipt
14. Realization Receipt
15. Term & Conditions Of Sale Of Contract
16. Form EP
Acts Particulars
20 Transaction Reference Number
21 Related reference Number
23B Bank operation Code
30 Date of Amendments
31C Date of Issue
31D Date and Place of Expiry
31E New Date of Expiry
32A Value Date/Currency/Inter Bank Settled Amount
32B Issue of Documentary Credit Amount
32B Currency Code
33B (Decrease) New Documentary Credit amount after Amend Currency
 34B (Increase) New Documentary Credit amount after Amend Currency
39A Percentage of Credit amount Tolerable
39B Maximum Credit Amount
40 Form of Documentary Credit Type – Irrevocable
41D Available With…By (Name & address of Negotiate Bank)
42A Drawee (Purchaser)
42C Draft at Narrative (At sight in Duplicate)-Bills of Exchange
42D Drawee (Name & Address)
43P Partial Shipment Narrative (Partial Shipment not Permitted)
43T Transshipment (Narrative are not Permitted)
44A Loading on Board (shipment from India)
44B For Transportation to
44C Latest date of Shipment
44D Shipment period
45A Description of goods & Services
46B Document Required
47A Additional Information
48 Period Of Presentation
 Draft & Document must be Presented
 Not later than 21 days
 After FCR or BL issuance date but within credit validity
49 Confirmation instructor with instruction (Guarantee)
50K Applicant (Name & address of seller)
53A Reimbursing Bank
57A ‘Advise through’ Bank
57D Advisory Bank
59 Beneficiary (Name & Address of Seller)
70 Remittance Information
71A Detail of Charges
71B Charges
72 Sender to receiver information
78 Instruction to the Paying, Accepting Bank or Negotiate bank
Document to be dispatched to scope
Narrative  Document to be presented within 21 days
 7 days from shipment
 The date of shipment but within the or before the expiry of LC
79 All other terms and condition remain unchanged

For an Amendment document which term are necessary

STATE BANK OF INDIA (ADVISORY BANK) TEL NO :022-22184795

(ADDRESS OF ADVISORY BANK)

INTERNATIONAL SERVICES BR, MUMBAI
CUFFE PARADE, MUMBAI, INDIA

ADVISE OF EXPORT LC AMENDMENT DATE: 18/03/2005

OUR REFERENCE NO: 0191604EA007783

Dear Sir,

LC No. 108010974468-S for USD 6,584,772.56

Issuing Bank: STANDARD CHARTERED BANK (HONG KONG)

Acts Particulars
20 Transaction Reference Number
21 Related reference Number
30 Date of Ammendements
31C Date of Issue
31E New Date of Expiry
32B Issue of Documentary Credit Amount
32B Currency Code
33B (Decrease) New Documentary Credit amount after Amend Currency
34B (Increase) New Documentary Credit amount after Amend Currency
44A Loading on Board (shipment from India)
44B For Transportation to
44C Latest date of Shipment
44D Shipment period
45A Description of goods & Services
59 Beneficiary (Name & Address of Seller)
79 All other terms and condition remain unchanged

Beneficiary : WELSPUN INDIA LTD.

B-9 TRADE WORLD PREMISES
KAMLA MISS COMPOUND S B MARG
 MUMBAI.

We have been advised by the issuing bank by their cable dated 07/12/2004 that the above Letter
of Credit has been amended as under:

 Amount increase by :
 Amount decreased by :
 The new balance of LC is :
 Latest date for shipment is :
 Expiry date is :
 Credit available by is :
 Tenor days (Before Amendment) :
 Tenor days (After Amendment) :
 Usance from is HONG

For other details of amendment, please see the Original Amendment message enclosed hereto.

The above information is conveyed by us on behalf of the issuing bank for your information but
without any responsibility on our part excepting for the correctness of this copy of the
cablegram as received by us. This letter along with the enclosed Amendment message forms
part of the Letter of Credit.

Yours faithfully,

Authorized Signatory

STATE BANK OF INDIA (ADVISORY BANK) TEL NO :022-22184795

(ADDRESS OF ADVISORY BANK)

INTERNATIONAL SERVICES BR, MUMBAI
CUFFE PARADE, MUMBAI, INDIA

LC ADVICE: OUR REFERENCE NO: 0191604EA007783

For any Enquiry please contact LC advising section.

To : WELSPUN INDIA LTD.

B-9 TRADE WORLD PREMISES
KAMLA MISS COMPOUND S B MARG
MUMBAI
Original /amendment /pre advice of Credit Number 108010974468-S date 04/12/2004 for5, 541,956.91
received from

---------------------------------------------------------------------------------------------------------------------
ISSUING BANK : STANDARD CHARTEERD BANK (Who issuing the L.C. or Buyer)
HONG KONG

APPLICANT : WAL MART STORES INC (Buyer: Who buy the on a credit.)
USA (Who issue the L.C. from their own Bank)

BENEFICIARY : WELSPUN INDIA LTD (Seller: Who receive the L.C. from Applicant)
B-9 TRADE WORLD PREMISES

We are happy to advise the captioned Letter of Credit, original of which is enclosed hereto.
Please check the Letter of Credit carefully and if the terms are not to your requirements, contact the
openers directly for an amendment . The Letter of Credit is advised without engagement on our part
to negotiate the documents.

Please follow the instructions marked

1. The message is authenticated /unauthenticated please await advice

2. The Letter of Credit is advised without our confirmation.

3. The Letter of Credit is not yet operative

4. This message is in continuation of our telegram dated

5. The Letter of Credit is restricted to State Bank of India for negotiation

6. Please affix Rs. 2/- Revenue Stamps to this credit before presentation the documents
for negotiation

7. Please obtain RBI approval wherever necessary

8. Please advise us whether you desire to avail of our confirmation as requested by the
opening bank agreeable to bear our charges, on receipt of our consent, we shall proceed in the
matter.

9. This letter forms an integral part of the subject credit and must be attached thereto.

10. This credit is subject to uniform Customs and Practices for Documentary Credit
(1993 Revision ICC Publication No. 500)
11. Please make payment of Rs 1,550.00 to the courier by cash or cheque favoring
State Bank Of India A/C Mail Order Marketing Services /Flight Courier, being our LC advising
charges.

12. Please note that this branch of SBI does not negotiate document drawn under the
LC. You may, therefore, present document under the LC to nearest authorized branch of SBI.
This, however, does not carry any engagement on the part of SBI to negotiate documents under
the LC.

Yours faithfully,

AUTHORISEDN SIGNATORY

ISO 9002 GLOFAME COTSPIN INDUSTRIES LTD

Registered (formerly Welspun Cotton Yard Ltd.)

KPMG
Quality Register

Our Ref : 200514003

Date : 30.05.2005

STATE BANK OF BIKANER & JAIPUR

GIRIRAJ BUILDING,
DANA BUNDER BRANCH
MUMBAI-400009.

KIND ATTN. : MR. NITISH KUMAR

Dear Sirs,

Reg. : Release of Packing Credit in Foregin Currency.

You are hereby requested to release the PCFC for USD 75000 as per details given below.

Contract No. Contract Amt. Exch. Rate Balance Avl. (FC) Eligible Amount

8000000100 294,103.00 1.00 238,224.00 238224.00

TOTAL 238224.00

We are enclosing herewith statement showing calculation for PCFC along with original contracts.

Further we undertake that the PCFC availed shall be utilized for exports and there is sufficient stock to
cover the total PCFC availed.

We further state that we have not availed any PCFC against the above contracts from any other bank.

Thanking You
Yours faithfully.

For GLOFAME COTSPIN INDUSTRIES LTD.

DIREC
TOR / AUTHORISED SIGNATORY.

DRAWN UNDER IRREVOCABLE DOCUMENTAY NUMBER 8252AI1139/ 2164

DATED 2005/ 03/ 24 OF BANCA DI ROMA, ITALY.

NO. : 2005200137 Date: 25.04.2005

Exchange for USD 25664.73

30 DAYS AFTER SHIPMENT______________________________________of this FIRST

of Exchange ( SECOND of the same tenure and date being unpaid )
pay to the order of ORIENTAL BANK OF COMMERCE, CORPORATE GROUP
FINANCE BRANCH

CUFFE PARADE, MUMBAI 400005.

The sum of U.S. DOLLARS TWENTY FIVE THOUSAND SIX HUNDERED SIXTY
FOUR AND CENTS 73/100 ONLY.
Value received and charge the same to the account of 553 CARTONS SEA
Shipped by MAERSK MISSOURI V-506

Invoice Number FCR NUMBER FCR Date

------------------- ------------------- -------------

2005200137 BOM 755411

20.05.2005

To,

BANCA DI ROMA For Welspun terry Towels

ITALY ( A Unit of Welspun India Ltd.)

Authorized Signatory

CREDIT ADVICE FOR CUSTOMER STATE BANK OF INDIA

Commercial Branch
Nariman point, Mumbai.

CURRENT/CASH CREDIT A/c:_________________________ Phone:

22822547/22851308
MAIL TO:____________________________________________

Transaction Detail

Rs Ps

Rupees__________________________________________

________________________________________________
 YOURS FAITHFULLY

PTN

INT……….

Manager

GLOBAL TRUST BANK Original for Beneficiary

TRADE SERVICES –KWD DIVISION DATE OF ISSUE :

LEVEL 5, GLOBAL TRUST BANK HONG KONG 17 FEB 2005
673 NATHAN ROAD, KOWLOON HONG KONG

IRREVOCABLE TRANSFERABLE DOCUMENTARY CREDIT NO. DC LCK415154

BENIFICIARY APPLICANT
WELSPUN TERRY TOWELS , LI AND FUNG (TRADING) LTD.
B-9 TRADE WORLD, KAMLA MILLS, 7/F, HK SPINNERS INDUSTRIAL BUILDING,
COMPOUND SENAPATI BAPAT MARG, PHASE I AND II , 800 CHEUNG SHA WAN RD,
LOWER PAREL, MUMBAI-13. INDIA. KOWLOON, HONG KONG.

ADVISING BANK : AMOUNT: USD 53812.80

STATE BANK OF INDIA 5 PERCENT LESS ALLOWED
INTL SERVICES MUMBAI (SBOIINIS) USD FIFTY THREE THOUSAND EIGHT
INTERNATIONAL SERVICES BRANCH HUNDRED TWELVE.80 ONLY
WORLD TRADE CTR. 3/F CUFFEE PARADE
MUMBAI 400 005. INDIA.
DATE AND PLACE OF EXPIRY :
04 MAR 2005
PARTIAL SHIPMENT : SEE BELOW AT THE CREDIT ISSUING OFFICE
TRANSHIPMENT : ALLOWED

CREDIT AVAILABLE WITH :

SHIPMENT ANY BANK
FROM : INDIA
TO : UNITED STATES BY : NEGOTIATION
LATEST :

DRAFT AT : 45
DAYS SIGHT SHOWING THIS DC NO.
DRAWN ON THE ISSUING BANK

DOCUMENT REQUIRED :

DETAILS AS PER ATTACHED SHEET (S) WHICH FORMS (S) AN INTEGRAL PART OF
THIS CREDIT.

GOODS :

DETAILS AS LPER ATTACHED SHET (S) WHICH FORM (S) AN INTEGRAL PART OF THIS CREDIT.

F.O.B. INDIA

TERMS AND CONDITION OF SALE OF

CONTRACT
All Sales shall be transacted between Buyer and Seller as Principals.

1> Effective date of contract: -

 This contract shall become effective from the date when seller receives
the 2nd copy of this contract countersigned by Buyer and finds the
contents in order.

2> Quantity

Quantities quoted are subject to a variation of plus or minus 10% unless

. otherwise specifically advised

3> Payment

Draft shall be drawn at sight under a first class banker’s confirmed

irrevocable and without recourse Letter of Credit shall be established
within fifteen (15) days after conclusion of any contract unless otherwise
specifically advised and be effective in its expiry date at least fifteen
(15) days after the date of shipment for negotiation of the relative draft.

If the buyer fails to provide such a Letter of Credit for seller as

prescribed above, seller shall have the option of canceling any part of
whole of the contract.

4> Shipment:

Unless otherwise agreed, partial shipment and transshipment shall

be allowed, the date of Bill of Lading shall be taken as the
Conclusive proof of the date of shipment, Ten (10) days grace
Shall be allowed for the shipment earlier or later than the time
Agreed upon by the parties. In the event of the goods for one order
Being shipped in more than one lot each lot shall be deemed to be
Separate contract of the sale.

Seller shall not be responsible for non-shipment or later shipment

Of the contracted goods due to Force Majeure or cause due to
Failure or Buyer to provided in time a Letter of Credit or other
Instructions requested by the seller. Should any extension of
Expiry date of a Letter of Credit be occasioned, the time of
Shipment shall be postponed to the same degree.

5> Insurance and freight

Insurance shall be affected by seller at one hundred and ten

Percent (110%) of the invoice amount in case of CIF of C & F
Contract. Any unforeseen increase in freight and/or marine and
and war risk insurance premium subsequent to execution of the
Contract shall be to Buyer’s account.

6> Make-up, Packing and Marking

 Unless otherwise specified and packing and marking shall be .
seller’s option

7> Force Majeure :

Seller shall not be responsible for non-performance or later

performance of all or part of the contract due to order, regulations
and/or ordinance by Government and/or State. Act of God, War,
blockade, revolution, insurrection, mobilization or due to any other
causes or circumstances beyond seller’s control.

8> Claim

( No claim shall be entertained before the payment is made or the

draft is duly honoured). Each claim shall be advised by telegram or
cable to seller with in 14 days after the arrival of the goods at the
destination, and shall be confirmed by airmail within fifteen (15)
days after telegraphing or cabling. No claim shall be entertained
after the expiration of such fourteen (14) days.

9> Arbitration

Any dispute or claim arising out of relating of this contract shall be

Settled by arbitration. Such arbitration shall take place in Bombay
(India), and shall be held and shall proceed in accordance with the
Indian Government regulations, whose decision shall be final
binding and enforceable to both parties and the loser shall bear
its cost.

10> Currency Risk

Form EP
(Vide Rule 5 of the Export Promotion Rules 1976.)

To,

The Deputy Assessor & Collector (Octroi)

Municipal Corporation of Greater Mumbai.

Sir,
 I/We _______________________of __________________________do hereby
declare that the articles specified below are imported into Greater Mumbai for the
purpose of Export to Foreign Country, Viz: __________________ from
_______________________ per ____________________and are to be consigned to
_____________________at _________________________be exempted from duty of
Octroi.

I/We am/are the registered Exporter(s)as provided for under the Export Promotion Rules 1976 and
my/our registration No. is __________________________
Particulars of the consignment imported
No. of Weight &
No. & date Import Amount of No. & date of 1/4% per cent
packages & value as per Rate of
of Import Mark Octroi documents of amount of
description of Import Octroi
Documents (if any) Leviable export. Octroi
articles document

___________________________________________
Signature of the Importer.
Address
___________________________________________________________________________________
___________ 6(1/4) per cent of the total octroi payable recovered vide R.
No._______________________ Date____________________
Registration fee paid vide R. No. __________________________ Dated ______________________
Exemption claim registered vide R.No. __________________________ Dated ____________________

Signature of the Octroi Inspector

The articles referred to overleaf are allowed to be removed from _________________________
on _______________________ without payment of Octroi.
(Place of import)
Signature of the Supervising Inspector.

Deputy Assessor & Collector (Octroi).

I/We
___________________________________________________________________________________
do hereby certify that the articles
________________________________________________________________________ Specified
overleaf have been exported to ________________________________ per
__________________________ on _____________________________
In support I/We enclose herewith copy of the shipping bill No.
______________________________ dated ________________________________ and/or copy of the
bill of lading/Air Consignment Note No. __________________________ dated
____________________
Signature of the Registered Exporter
(The above endorsement is to be certified only on the original and duplicate copies returned to the
Registered Exporter at the place of import. The copies along with the relevant documents of export
should be forwarded to the office of the Deputy Assessor & Collector(Octroi) within one month from
the date of export.)

Certified that the export documents referred to above have been verified and full export of the
articles specified overleaf has been confirmed.

_____________________________________
Signature of the Verifying Officer.

Designation _____________________________________
Date ____________________________________
(Original copy to be returned to the Registered Exporter for his record. Duplicate and Triplicate to be
filled in Octroi Head Office for record.)

CERTIFICATE

TO WHOM SOEVER IT MAY CONCERN

This is to certify that FOB value of exports for the year 2001-02, 2002-03 and 2003-04 of
M/s.Welspun Terry Towels (A unit of Welspun India Ltd.) Village Morai, Taluka Pardi, Dist.
Valsad, Gujarat are as under:
Year FOB value of Exports
(Product-Cotton Terry Towels)

(Rs.in Lacs)

2003-2004 27,254.51
2002-2003 20,560.84
2001-2002 18,455.31

The above Certificate is made after verification of records of the company produced
before us and were found corrected.

Date :

Place : Mumbai

Bibliography

Books
• ‘Documentary Letters of Credit and UCP 500 w.e.f. 1st January, 1994’
A Nabhi Publications, 1st Edition, January, 1994
• ‘Cut your cost before they hit your profits’
by Naresh Jand & Naveen Jand

• ‘Banking briefs’
by N. Gurumurty

Journals
• “Woven to perfection”
ITM International Textile Monitor March- April, 2003

• “Well done but still miles to be spun”

Dalal Street Investment Journal May 19- June 1, 2003

• “Welspun: Spinning a new web”

The Financial Express, Saturday November 16, 2002

• Various news from The Economic Times, Mumbai

Web sites
• www.ieport.com

• www.eximpolicy.com

• www.welspun.com

www.economictimes.com