A PROJECT REPORT ON EXPORT FINANCE

Submitted To

Jain Irrigation Systems Ltd., Jalgaon. In The Partial Fulfillment of Master in Business Administration Submitted By Sachin S. Kothari Under The Guidance Of Prof. Vedashree Vaidya

Department Of Management G.H.Raisoni Institute of Information Technology, Jalgaon North Maharashtra University, Jalgaon. 2010-12

ACKNOWLEDGEMENT

I take this opportunity to express my gratitude to Mr. B.J. Gundhar Sir (MAMAJI) and Mr. Bhatt Sir (HR Manager) who gave me opportunity to study such big renounced organization (Jain Irrigation Systems Ltd) as a part of my project. I would like to express my sincere gratitude to my project guide Mr. Mahesh Ingale Sir (Assist. Manager Finance), Mr. A.W. Jain Sir of Jain Irrigation Systems Ltd., for the continued support & direction he gave during his project work. I am thankful to them for providing their valuable time and all necessary information whenever required. I would like to extend my deep sense of gratitude to Mr. Sushil Khamkar Sir, Mr. Pankaj Patil Sir, Mr. Jagdish Jadhav Sir and all staff of Jain Irrigation Systems Ltd., whom I visited for their valuable time and courtesy they extended towards me. I sincerely thank to Prof. Vedashree Vaidya for his support and valuable guidance in reviewing the project form time.

Sachin S. Kothari

MBA-II, Finance

INDEX
Chapter no. 1 2 3 4 5 6 7 8 9 10 11 Title
Introduction of topic Objectives Research Methodology Company Profile Literature Survey Data analysis and Interpretation Limitations Findings and Observation Suggestion Conclusion Bibliography

Page no.
01 06 08 13 28 53 60 62 64 66 68

INTRODUCTION

INTRODUCTION OF TOPIC

INTRODUCTION OF EXPORTS Export in simple words means selling goods abroad. International market being a very wide market, huge quantity of goods can be sold in the form of exports. Export refers to outflow of goods and services and inflow of foreign exchange. Export occupies a very prominent place in the list of priorities of the economic set up of developing countries because they contribute largely to foreign exchange pool.

Exports play a crucial role in the economy of the country. In order to maintain healthy balance of trade and foreign exchange reserve. It is necessary to have a sustained and high rate of growth of exports. Exports are a vehicle of growth and development. They help not only in procuring the latest machinery, equipment and technology but also the goods and services, which are not available indigenously. Exports leads to national self-reliance and reduces dependence on external assistance which howsoever liberal, may not be available without strings. Though Indias export compared to other countries is very small, but one of the most important aspects of our export is the strong linkages it is forging with the world economy which is a great boon for a developing nation like India. Definition The definition of "Export" is when you trade something out of the country. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.

INTRODUCTION OF EXPORT FINANCE Credit and finance is the life and blood of any business whether domestic or international. It is more important in the case of export transactions due to the prevalence of novel non-price competitive techniques encountered by exporters in various nations to enlarge their share of world markets.

The selling techniques are no longer confined to mere quality; price or delivery schedules of the products but are extended to payment terms offered by exporters. Liberal payment terms usually score over the competitors not only of capital equipment but also of consumer goods. The payment terms however depend upon the availability of finance to exporters in relation to its quantum, cost and the period at pre-shipment and post-shipment stage.

Production and manufacturing for substantial supplies for exports take time, in case finance is not available to exporter for production. They will not be in a position to book large export order if they dont have sufficient financial funds. Even merchandise exporters require finance for obtaining products from their suppliers.

This project is an attempt to throw light on the various sources of export finance available to exporters, the schemes implemented by ECGC and EXIM for export promotion and the recent developments in the form of tie-EXIM tie-ups, credit policy announced by RBI in Oct 2001 and TRIMS.

FINANCE IS THE LIFE AND BLOOD OF ANY BUSINESS Success or failure of any export order mainly depends upon the finance available to execute the order. Nowadays export finance is gaining great significance in the field of international finance. Many Nationalized as well as Private Banks are taking measures to help the exporter by providing them pre-shipment and post- shipment finance at subsidized rate of interest. Some of the major financial institutions are EXIM Bank, RBI, and other financial institutions and banks. EXIM India is the major bank in the field of export and import of India. It has introduced various schemes like forfeiting, FREPEC Scheme, etc. Even Government is taking measures to help the exporters to execute their export orders without any hassles. Government has introduced schemes like Duty Entitlement Pass Book Scheme, Duty free Materials, setting up of Export Promotion Zones and Export Oriented Units, and other scheme promoting export and import in India. Initially the Indian exporter had to face many hurdles for executing an export order, but over the period these hurdles have been removed by the government to smoothen the procedure of export and import in India.

CONCEPT OF EXPORT FINANCE:

The exporter may require short term, medium term or long term finance depending upon the types of goods to be exported and the terms of statement offered to overseas buyer. The short-term finance is required to meet working capital needs. The working capital is used to meet regular and recurring needs of a business firm. The regular and recurring needs of a business firm refer to purchase of raw material, payment of wages and salaries, expenses like payment of rent, advertising etc. The exporter may also require term finance. The term finance or term loans, which is required for medium and long term financial needs such as purchase of fixed assets and long term working capital. Export finance is short-term working capital finance allowed to an exporter. Finance and credit are available not only to help export production but also to sell to overseas customers on credit. INTRODUCTION OF EXPORT FINANCING

Financial assistance is extended by the banks to the exporters at pre-shipment and postshipment stages. Financial assistance extended to the exporter prior to shipment of goods from India falls within the scope of pre-shipment finance while that extended after shipment of the goods falls under post-shipment finance. While the pre-shipment finance is provided for working capital for the purchase of raw material, processing, packaging, transportation, warehousing etc. of the goods meant for export, post-shipment finance is generally provided in order to bridge the gap between shipment of goods and the realization of proceeds.

For raising funds in India, investors can raise a substantial portion of the project cost in India through debt and equity instruments. Applications for long-term loans can be made to State Financial Corporations when the project is small - generally less than Rs.50 million - or to national-level.

OBJECTIVES

OBJECTIVES
1. To study the conceptual Framework of export finance.

2. To study the documents required for export in Jain Irrigation Systems Ltd.

3. To study the Pre-shipment and Post-shipment procedure in Jain Irrigation Systems Ltd.

4. To cover commercial & Non-commercial or political risks attendant on granting credit a foreign buyer.

5. To study the risk factor in the light of inflation, international market conditions and influence of global trade etc.

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

The term Research can be defined as a careful investigation or enquiry specially to search new facts in any branch of knowledge. The term Research refers to the systematic method consisting of enunciating the problems, formulating the hypothesis, collecting the fact or data, analyzing the facts and reaching certain conclusion either in the form of solution toward the concerned problem or in certain generalization for some theoretical formulation. According to CLIFFORD WOODY, Research is a careful inquiry or examination in setting the facts or principle, a diligent investigation to ascertain something.

METHODOLOGY Methodology is the systematic and objective identification, collection analysis, dissemination, and use of information for the purpose of improving decision making related to the identification and solution of problem. During the course of conducting the study the information were gathered mainly through the primary sources.

RESEARCH DESIGN A Research Design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose. It is a conceptual structure with in which research is conducted. Research Design is a framework or blueprint for conducting the research project. It details the procedure necessary for obtaining the information needed to structure and solve research problem.

DATA COLLECTION: The task of data collection begins after a research problem has been defined and research design has been chalked out. While deciding about the method of data collection to be used for the study, the research should keep in mind two types of data viz. Primary and Secondary. SOURCES OF DATA a) Primary Data. b) Secondary Data.

Primary Data: The Primary Data are those, which are collected afresh and for the first time and thus happen to be original in character. The observation method is the most commonly used method especially in studies relating to behavioral sciences. In a way we all observe things around us, but this sort of observation is not scientific observation. Observation becomes a scientific tool & the method of data collection for the researcher, when it serves a formulated research purpose, is systematically planned & recorded & is subjected to check & controls on validity & reliability. Under the observation method, the information is sought by way of investigators own direct observation without asking from the respondent. The main advantages of this method is that subjective bias is eliminated if observation is done accurately secondly, the information obtained under this method relates to what is currently happening; it is not complicated by either the past behavior or future intentions or attitudes. Thirdly, this method is independent of respondents willingness to respond and such is relatively less demanding of active co-operation on the part of respondents as happens to be the case in the interview or the questionnaire method. This method is particularly suitable in studies which deal with subjects (i.e. respondents) who are not capable of giving verbal reports of their feelings for one reason or the other.

However, observation method has various limitations. 1) It is an expensive method, 2) The information provided by this method is very limited, 3) Sometimes unforeseen factors may interfere with the observational task.

At times, the fact that some people are rarely accessible to direct observation creates obstacle for this method to collect data effectively. While using this method, the researcher should keep in mind things like: What should be observed? How the observation should be recorded? Or how the accuracy of observation can be ensured? In case the observation is characterized by a careful definition of the units to be observed, the style of recording the observed information, standardized conditions of observation and the selection of pertinent data of observation, then the observation is called as structured observation. But, when observation has to take place without these characteristics to be thought of in advance, the same is termed as unstructured observation.

Secondary Data: The secondary Data are those which have been already collected by someone else and which have already been passed through statistical process. The Secondary Data regarding the project was given by the staff of the respective department.

METHODOLOGY ADOPTED FOR RESEARCH

For this project, the method available was to get enough information through personal interaction with staff of Export & Custom Excise Department. The collection of primary data requires considerable time. In this research the Primary data were obtained by actual working and interacting with the managers & their associates who are involved in the process. The secondary data was also given by the company.

COMPANY PROFILE

COMPANY PROFILE

Jalgaon Plant

HISTORY The Beginning of the Road to Success The Roots Our journey began in 1887 when our forefathers left the deserts of Rajasthan, their home state, in search of water and food and reached Wakod, at the foothills of the famous Ajanta Caves. They started farming as a means of livelihood. In 1963 selling kerosene in pushcart, the young law graduate, Mr. Bhavarlal Jain, founded the family business in trading. The family partnership with a meager Rs.7000 was an accumulated savings of three generations, as a capital. Soon, agencies for two wheelers, auto vehicles and automobile accessories were established in quick succession. Story of Success Trading: Inspired by a quote, "Agriculture: a profession with future" young Jain added dealership of tractors, sprinkler systems, PVC pipes and other farm equipment. In order to broad base the agri-business, agencies for farm inputs such as Fertilizers, Seeds, Pesticides were also added. Sales grew from Rs. 1 million in 1963 to Rs. 110 millions in 1978, a phenomenal increase of 110 times. These formative years helped us build a unique and lasting enterprise. This was achieved through consistent high standards of performance and personal behavior on the one hand and a strong sense of commitment for meeting targeted volumes and for payment of debts in time, on the other. Dealing with national and international principals was a contributing factor towards building these attitudes. In time, we came to be recognized as a reputable, trustworthy and prestigious house. This background augured well for an entry into industrial ventures.

Refined Papain: We took over a 14 year-old sick Banana Powder Plant in April 1978 at a high auction price of Rs. 3 million while we only had Rs. 0.2 million as inevitable surplus. The plant was quickly modified for the production of Papain from Papaya latex. In December

1978, the founder traveled to New York in search of customers for Jain Papain. The competition for purchase of raw materials at home and for sale of Papain abroad was stiff and stifling. However, we developed purified Papain through ceaseless in-house R&D and emerged as the `Number One supplier of the highest purity refined Papain. Thus Papain put us on the international map. PVC Pipes: In 1980, manufacturing of PVC Pipes commenced with a small annual capacity of 300 MT's which was increased to over 35,600 MT's per annum by 1997, making us the largest single producer of PVC Pipes in the country. A close-knit dealer distribution network in the rural areas coupled with continuous automation and up gradation of product facilities and in-house R&D for maximum capacity utilization has kept us at the forefront. This further helped us to expand the range to Casing & Screen Piping Systems thereby continuing to contribute to the growing export volumes Micro - Irrigation Systems: Beginning in 1989, we toiled and struggled to pioneer Watermanagement through Micro Irrigation in India. We have successfully introduced some hitech. concepts to Indian agriculture such as `Integrated System Approach, One-Stop-Shop for Farmer, and `Infrastructure Status to Micro Irrigation & Farm as Industry. We have come a long way. Food Processing : In 1994 we set-up world class food processing facilities for dehydration of onion, vegetable and production of fruit purees, concentrates and pulp. These plants are ISO 9001 & HACCP certified and Meet International FDA statute requirements. Combining the modern technologies of the west with the vast, mostly untapped agriculture resources of India, using the local human resources and inculcating the culture of excellence in quality and total customer service. We have set ourselves a goal 'to become a major and reliable global supplier of food ingredients of finest quality.' Today with over 3000 committed employees strength worldwide, we have established our Leadership in diverse products like Micro & Sprinkler Irrigation, Agricultural Inputs, AgroProcessed Products, Plastic Pipes & Plastic Sheets.

CORPORATE PHILOSOPHY

Mission Leave this world better than you found it. Vision Establish leadership in whatever we do at home and abroad. Credo Serve and strive through strain and stress; Do our noblest, that's success. Goal Achieve continued growth through sustained innovation for total customer satisfaction and fair return to all other stakeholders. Meet this objective by producing quality products at optimum cost and marketing them at reasonable prices. Guiding Principle Toil and sweat to manage our resources of men, material and money in an integrated, efficient and economic manner. Earn profit, keeping in view commitment to social responsibility and environmental concerns. Quality Perspective Make quality a way of life. Work Culture Experience: 'Work is life, life is work'.

Profile of Directors

Shri. Bhavarlal H. Jain Mr. Bhavarlal H. Jain is the Founder of the Jain group of companies and Chairman of the Company.

Mr. Ashok B. Jain Mr. Ashok B. Jain is the Vice Chairman of the Company. He holds a graduate degree in commerce from Pune University, India. In 1993 he became Director and was responsible for Corporate Administration, Corporate Image and Relationships, Events Management, Personnel/Human Resource Development, Communication, Public Relations, Art and Publicity. At present he also acts as director in charge of the Food Processing Division.

Mr. Anil B. Jain Mr. Anil B. Jain has been the Managing Director of the Company since 1993. He has commerce degree from Pune University and Law Degree from Mumbai University. Mr. Anil Jain has an extensive background and experience in Finance, Banking, Mergers & Acquisitions, Strategic Planning, Restructuring Operations, Export Marketing, International Business Relations, Collaborations and Joint Ventures.

Mr. Ajit B. Jain Mr. Ajit B. Jain has been the Joint Managing Director of the Company since 1994. He is an engineering graduate from Dnyaneshwar University. In 1991, he was appointed Director with the overall responsibility of the pipe manufacturing plant at Jalgaon, including production, maintenance and marketing.

Mr. Atul B. Jain Mr. Atul B. Jain is Director of Marketing. He holds a graduate degree in commerce from Pune University, India. Presently, he focuses on marketing our products on a global basis in addition to being director in charge of piping division.

Mr. R. Swaminathan Mr. R. Swaminathan is a Director and Chemical Engineer responsible for manufacturing operations in Polytube, Sprinkler, PVC & PC Sheets and PVC & PE Pipe units.

Mr. R.C.A. Jain Mr. Ramesh C.A. Jain [IAS Retd.] (Independent) is a Director of the Company. He holds a Bachelor of Law Degree from the University of Bombay and a Post-graduate Diploma in Development Administration from the University of Manchester in the United Kingdom.

Mr. Vasant V. Warty Mr. Vasant V. Warty (Lender Nominee appointed by SBI) is a Director.

Mrs. Radhika C. Pereira Mrs. Radhika C. Pereira (Independent) is a Director. She is a graduate of Mumbai University concentrating in science and law, and holds an LLM from Cambridge (England) and Harvard (USA).

Dr. D. R. Metha Mr. D R Mehta is a Director appointed on 26.12.2007. He is graduate of Arts and Law from Rajasthan University.He was the Chairman of Securities and Exchange Board of India (SEBI).His prior prestigious postings include the Deputy Governor of Reserve Bank of India, Director General of Foreign Trade, Ministry of Commerce, and Additional Secretary, Banking, Ministry of Finance.

Mr. Ghanshyam Dass Mr. Ghanshyam Dass is also director. Mr. Dass is a member of Brickwork Ratings Committee (A Credit Rating Agency).

STRUCTURE OF JISL PRODUCTS

I. High-Tech Agri Input Products:

The segment comprises of Micro and Sprinkler Irrigation Systems, PVC pipes, bio tech tissue culture and other agri inputs

Micro Irrigation Systems (MIS): Second largest MIS Company: JISL is the largest MIS manufacturer in India and second largest in the world with the installed (standalone) capacity of 121,161 MTPA. The company

controls 55% market share in drip irrigation systems and 35% share in sprinkler Irrigation system. Establishments: JISL has three state of the art manufacturing facilities at Jalgaon, Tamil Nadu, Andhra Pradesh in India respectively. The company also has its facilities in Watertown USA Fresno, USA and Naan, Israel. Major Contributor to the revenues: Contribution from MIS (domestic sales) has increased from 15% in FY05 to 54% in FY10. We expect the contribution from the segment to increase to 47% by FY12. The division has grown with the CAGR of 72% in the last five years and we further expect it to grow with the CAGR of 30% for the next three years. More than 50% MIS revenues come from Maharashtra and Andhra Pradesh: JISL has dominant presence in Maharashtra and Andhra Pradesh. The former contributes about 3033% and latter about 20% to MIS revenues of the company. We expect that revenues from these two states should grow by 30-35% in the coming few years. Industry: The industry is broadly divided into the organized and unorganized segments in the country. The current industry size is estimated at Rs 17 bn and is growing rapidly. Currently, area of about 3 mn Ha of possible 69 mn Ha is covered under micro irrigation system in India. As per Government task force 17 mn Ha of land can be easily bring under MIS in next five years. Globally, MIS industry is undergoing a consolidation phase with M&A activities.

PVC Piping: Market Share: There are three major players in the organized segment of PVC piping. JISL is one of the major players in the segment with the market share of 15%. Capacity: The Company has the total installed standalone capacity of 205,420 MTPA (inclusive of PE piping), which has increased with the CAGR of 36% during the last five years.

 Second major Contributor to the revenues: PVC & PE Piping division is the major contributor to the revenues of the company after MIS division. It contributed 36% (standalone) to the revenues in FY10. We expect the contribution from the segment to go down to 32% with the change in the revenue mix of the company. Demand -Supply: The demand for PVC in India is huge, much more than the supply. Increased micro irrigation spends and push for urban infrastructure by government agencies will further improve the demand situation for the industry.

Biotech Tissue Culture: Capacity: JISL started with banana as the main crop for tissue culture in 1978. Today, it has the capacity of 20 mn plantlets per annum with the average capacity utilization of 83%. Turnover: The sales in business crossed Rs 150 mln during FY10 reflecting a growth of 26%. Growth: The segment has grown with the CAGR of 26% in last three years and we further expect it to grow with a CAGR of 33% in the next few years.

II. Industrial Products:

This segment includes varied business lines such as PVC & PC sheets, PE pipes for industrial applications and agro processing.

PVC & PC Sheets: Installed Capacity: JISL has the installed capacity of 36,300 MTPA. Performance: The segment has seen de-growth in the last two years. Revenue mix from the business has also come down substantially to 7% in FY10 from 20% in FY05. The adverse effect of continued slow down of American housing industry has led to decline in PVC sheet business revenue by 8% last year.

 Industry: The market can be divided in two segments viz graphics market and building materials market (BMI). . Application: The basic use of PVC sheets in BMI segment are as surrounds for windows and garage doors, corner boards, soffits and interior applications. The graphic market has been using PVC sheets in manufacturing sign and graphic boards.

PE Piping (for industrial usage): Application: PE pipes are used on sewage and effluent disposal, replacement of cement/metal pipes. Presence: JISL is operating in all the segments of the industry like cable duct, sprinklers, gas distribution, water conveyance, sewage conveyance, effluent disposal etc. Market Share: The Company has the commanding presence in the gas and cable duct segments of the PE pipe business with the overall market share of 30%. JISL is the only player to manufacture pipes above 1000 mm diameter: Recently JISL has become the first company in India to successfully install indigenously manufactured 1600 mm diameter PE pipe under seawater in one of the prestigious infrastructure projects in Chennai. Demand Drivers: The massive infrastructure projects undertaken under the Bharat Nirman Yojana, increased investments by telecom industry and plans for piped gas in cities, continues to be the potential demand drivers for the industry. The demand for next 18 months is expected to be 250,000 kms of duct pipes.

Agro Processing: Agro processing business of JISL can be divided in two segments viz onion & vegetables dehydration and fruit processing.

A. Onion and Vegetables Dehydration: Third largest producer: JISL has the overall capacity to produce around 25,000 MTPA of finished product between its three plants in (Jalgaon & Baroda) India and USA. It is the third largest dehydrated onion producer in the world. Market Share: JISL enjoys the export share of more than 50% dehydrated onions from the country. Acquisition of Cascade Specialities Inc: JISL has acquired controlling stake in Cascade Specialities Inc. in the second half of FY08. With this acquisition the company has established presence in the USA, world biggest market for dehydrated onion. USA accounts for 65% of the worlds total production. USA is also the biggest consumer of dehydrated onions followed by European Union, Latin America etc. Industry: Global onion dehydrated industry is pegged at around 180,000 MTPA growing at the rate of 6-8% per annum. We expect that with the growing demand of dehydrated onions and general upward movement of prices of food products, globally, JISL will able to achieve higher sales volumes and realizations in the coming years.

B. Fruit Processing: Capacity: JISL established modern food processing plants, decades ago, realizing the opportunity and potential of fruit and vegetable processing. The current fruit processing capacity of the company is 109,575 MTPA. Largest food processor: Today, JISL is the largest processor of fruits and vegetables from India. The company has also set up a most modern and largest pomegranate processing facility at Jalgaon. Industry size and growth: There are 4,000 fruit processing units in India with an aggregate processing capacity of 1.2 MTPA. As per the estimates 20% of the output is exported and rest are consumed domestically. The Indian fruit processing industry is growing currently by 20% per annum.

Certifications

All divisions Micro Irrigation, Plastic Piping & Plastic Sheet divisions Plastic Park

ISO-9001:2001

ISO-14001:2004

ISO-18001:2007

Food division

ISO-22000:2005, FSMS, BRC, GMA - Safe, HACCP, SGF & KOSHER

Agriculture division

EUREPGAP

QUALITY POLICY

The companys quality edifice stands on the following Pillars: 1. Total commitment for customer satisfaction. 2. Protection and Advancement of Environment. 3. Market Leadership. 4. Strive for Quality Excellence. 5. Sustainable Development of Stakeholders. Our commitment to quality is unflinching, our hunger for growth is deep-rooted and our capacity for details is amazing. Over the decades, we have demonstrated a rare resilience and fortitude. The Group is determined to improve productivity and focus continuously on innovation and up-gradation of its products and people.

LITERATURE SURVEY

LITERATURE SURVEY

EXPORT PROCEDURE OF JISL:

It involves 3 stages: Stage 1: Processing of purchase order. Stage 2: Pre-shipment procedure. Stage 3: Post-shipment procedure.

Stage 1: Processing of purchase order:

ENQUIRY - Through Website, Telephone, Self.

PRODUCT CHECKLIST as per company standards- Marketing department checks whether the enquiry is within our company standards i.e., type of product in terms of sizes, thickness, density, colour, etc. Further provides sample catalogue.

FINAL ENQUIRY received from customer. QUOTATION / PROFORMA INVOICE Which includes: Type of Product, price, quantity, delivery date, shipment address, buyer address, manufacturer/exporter, payment terms-FOB,CIF, CFR.

ORDER CONFIRMATION WORK ORDER Work Order is prepared for production of purchase order. It contains Consignees Name, Delivery port, Country to which it is to be exported. Further it contains Type of sheets to be prepared in terms of Size, Thickness, colour, density, Total weight. Other contents are packing details, Delivery details and Instructions if any. 4 copies of Work Order are prepared and 3 of them are issued each to Production, Quality Assurance, Packing Department.1 copy is attached to purchase order and order confirmation for the record.

PACKING DEPARTMENT informs Marketing Department after the consignment is packed and ready to be dispatch.

Stage 2: Pre-shipment procedure:

Arrangement COMPANY.

of

CONTAINER

through

CHA/TRANSPORTER/SHIPPING

After the container is arrived at plant, Packing Department prepares DESPATCH SLIP.

Marketing/Export department prepare the documents required for export. These are as follows: 1. INVOICE and INVOICE BACK 9 copies. 2. PACKING LIST 9 copies. 3. A.R.E. 1 6 copies. 4. ANNEXURE C1 3 copies. 5. FORWARDING/EXCISE LETTER 2 copies. 6. OUTWARD GATE PASS 2 copies.

All the above documents except Outward Gate Pass are handed over to Internal Custom Excise Department of the company. Further, the consignment is checked, verified and then all the documents are signed by SUPERINTENDENT and INSPECTOR of CENTRAL EXCISE AND CUSTOM, JALGAON. Container cannot be departed unless and until the documents are signed. After signing of the documents qcontainer is free to reach at port.

If the Port of loading is ICD Bhusaval, Shipping bill (manual) is prepared at ICD. The Consignment is checked and sealed by custom authority. Exchange Control (GR) is prepared. All the documents are endorsed by Assistant Commissioner of Customs, ICD Bhusaval.

There are 6 copies of Shipping bill: Shipping bill for 100% EOU (Original) For Customs. Shipping bill for 100% EOU(Duplicate) For Shipping line. Shipping bill for 100% EOU. Export Promotion Copy (Triplicate) Exporter, for Proof of Export. Shipping bill/Dock Challan. Port Trust Copy (Original) Surveyor of Shipping line at ICD. Shipping bill/Dock Challan. Port Trust Copy (Duplicate) - Surveyor of Shipping line at ICD. Shipping bill/Dock Challan. Port Trust Copy (Triplicate) Yard Authorities (CONCOR, Bhusaval).

All the necessary documents are forwarded to Mumbai Office, & they deliver those excise documents to their nominated CHA.

Apply for GSP/CERTIFICATE OF ORIGIN to concerned offices.

Container is gated-in at port, Carting of goods at docks (warehouse) & Inspection of goods.

Signature of the Superintendent: LET EXPORT.

After the container is loaded on vessel, Mate Receipt is issued by Chief Officer of shipping line. We apply for BILL OF LADING. It is issued by Shipping line.

If the Port of loading is JNPT, All the necessary documents are forwarded to CHA for custom clearance at JNPT.

Filing of Shipping Bill checklist through EDI, Shipping Bill is prepared and Custom will give shipping bill no. Assessment of invoice n shipping bill by the custom superintendent. Custom will give custom security no.

Apply for GSP/CERTIFICATE OF ORIGIN to concerned offices.

Container is gated-in at port, Carting of goods at docks (warehouse) & Inspection of goods.

Signature of the Superintendent: LET EXPORT

After the container is loaded on vessel, Mate Receipt is issued by Chief Officer of shipping line. We apply for BILL OF LADING. It is issued by Shipping line.

Stage 3: Post-shipment procedure:

Submitting following documents to our Bank for onward dispatch to customers Bank as per PO/LC terms: 1. GR form (Duplicate).

2. Bill of Landing (3 copies). 3. Invoice. 4. Packing List. Any other document required as per terms.

Follow-up with the bank for DHL no. for dispatch of original docs to customer/bank.

Forwarding the documents as desired by Consignee/Buyer for removal of goods from the port of discharge.

After the receipt of Mate Receipt & EP Copy, following documents are submitted to Jalgaon Customs for Proof of Export: 1. Invoice 2. Packing List 3. Bill of Lading 4. Mate Receipt 5. EP Copy 6. A.R.E.1- Original & Duplicate.

There are 2 seals on the container 1. Of the ICD or the Exporter(if he has the authority) 2. Shipping Line. The 1st seal will be cut at the docks before putting the container on the vessel.

EXPORT DOCUMENTATION An exporter without any commercial contract is completely exposed of foreign exchange risks that arises due to the probability of an adverse change in exchange rates. Therefore, it becomes important for the exporter to gain some knowledge about the foreign exchange rates, quoting of exchange rates and various factors determining the exchange rates. In this section, we have discussed various topics related to foreign exchange rates in detail. Export from India required special document depending upon the type of product and destination to be exported. Export Documents not only gives detail about the product and its destination port but are also used for the purpose of taxation and quality control inspection certification. There are a number of documents, which have to be prepared by the exporter in order to arrange export of his consignments. The Documents used by 100% Export Oriented Unit of JISL can be mainly classified into two, i.e., (A)Commercial Documents. (B)Regulatory Documents.

A. Commercial Documents : Commercial documents are required for effecting physical transfer of goods and their title from the exporter to the importer and the realization of export sale proceeds. Out of the 16 commercial documents in the export documentation framework as many as 14 have been standardized and aligned to one another. These are proforma invoice, commercial invoice, packing list, shipping instructions, intimation for inspection, certificate, of inspection of quality control, insurance declaration, certificate' of insurance, mate's receipt, bill of lading or combined transport document, application for certificate origin, certificate of origin, shipment advice and letter to the bank for collection or negotiation of documents. However, shipping order and bill of exchange could not be brought within the fold of the Aligned Documentation System. Principal Documents: Commercial Invoice The following details need to appear in the commercial invoice: Name and address of the exporter. Name and address of the consignee. Name and the number of Vessel or Flight.

 Name of the port of loading. Name of the port of discharge and final destination. Invoice number and date. Exporter's reference number. Buyer's reference number and date. Name of the country of origin of goods. Name of the country of final destination. Terms of delivery and payment. Marks and container number. Number and packing description. Description of goods giving details of quantity, rate and total amount in terms of internationally accepted price quotation. Signature of the exporter with date. Packing List: The exporter prepares the packing list to facilitate the buyer to check the shipment. It contains the detailed description of the goods packed in each case, their gross and net weight, etc. The difference between a packing note and a packing list is that the packing note contains the particulars of the contents of an individual pack, while the packing list is a consolidated statement of the contents of a number of cases or packs.

Name and contact details The importer's/consignee's/buyer's name, address and contact details The gross, tare and net weights of the cargo The nature, quality and specifications of the product being shipped The type of package (such as pallet, box, crate, drum, carton, etc.) The measurements/dimensions of each package The number of pallets/boxes/crates/drums, etc. The contents of each pallet or box (or other container) The package markings, if any, as well as shipper's and buyer's reference numbers

Bill of Lading

The bill of lading is a document issued by the shipping company or its agent acknowledging the receipt of goods on board the vessel, and undertaking to deliver the goods in the like order and condition as received, to the consignee or his order, provided the freight and other charges as specified in the bill have been duly paid. It is also a document of title to the goods and as such, is freely transferable by endorsement and delivery. Bill of Lading serves three main purposes: As a document of title to the goods; As a receipt from the shipping company; and As a contract for the transportation of goods Contents of Bill of Lading Name and logo of the shipping line. Name and address of the shipper. Name and the number of vessel. Name of the port of loading. Name of the port of discharge and place of delivery. Marks and container number. Packing and container description. Total number of containers and packages, Description of goods in terms of quantity. Container status and seal number. Gross weight in kg. & volume in terms of cubic meters. Amount of freight paid or payable. Shipping bill number and date. Signature and initials of the Chief Officer. Fumigation Certificate Fumigation certificate is required as proof that the packing materials e.g. wooden crates, wood, wool etc), have been fumigated or sterilized. Certificates contain details such as purpose of treatment, articles concerned, temperature range used, chemicals

and concentration used etc. Please note that in some countries like Australia, fumigation treatment is not required for air shipment, but required for sea shipment. Some countries, such as Australia, Canada, New Zealand, the US and the UK, are very strict about letting in goods that might contain bacteria or insects that could harm their agriculture. For this reason, they may require a fumigation certificate - also referred to as a 'pest control certificate - as proof that the packing materials e.g. wooden crates, wood, wool etc., have been fumigated or sterilized. Fumigation certificates usually contain details such as purpose of treatment, the articles in question, temperature range used, chemicals and concentration used, etc. Sometimes they may be required for sea shipments, but not for air shipments. Your freight forwarder should be able to advise you as to whether you require such as certificate. Certificate of originA Certificate of Origin (C/O) is required by some countries and is intended to certify to the importing authorities as to which country the products being imported were manufactured in - that is, the C/O certifies that the imported product meets the 'Country of Origin' requirements set by the importing country and which are expected of their foreign suppliers. It may be required that the C/O include information such as local material and labour content. In many cases, a statement of origin printed on company letterhead will suffice, although the document may need to be certified in some way. In other instances, specific types of C/Os may be required, such as the Generalised System of Preferences (GSP) Form A and the Chamber of Commerce C/O. Marine Insurance Goods in transit are subject to risk of loss of goods arising due to fire on ship, perils of sea, theft etc. marine insurance protects losses incidental to voyages and in land transportation. Marine insurance policy is one of the most important document used as collateral security because it protects the interest of all those who have insurable interest at the time of loss. The exporter is bound to insure the goods in case of CIF quotation, but he can also insure the goods in case of FOB contract, at the request of the importer, but the premium payment will be made by the exporter. There are different types of policies such as

o Specific Policy: This policy is taken to cover different risks for a single shipment. For a regular exporter, this policy is not advisable as he will have to take a separate policy every time a shipment is made, so this policy is taken when exports are in frequent. o Floating Policy: This is taken to cover all shipments for some months. There is no time limit, but there is a limit on the value of goods and once this value is crossed by several shipments, then it has to be renewed. o Open Policy: This policy remains in force until cancelled by either party i.e. insurance company or the exporter. o Open Cover Policy: This policy is generally issued for 12 months period, for all shipments to one or more destinations. The open cover may specify the maximum value of consignment that may be sent per ship and if the value exceeded, the insurance company must be informed by the exporter. Insurance Premium: Differs upon product to product and a number of such other factors, such as distance of voyage, type and condition of packing, etc. Premium for air consignments are lowered as compared to consignments by sea. B. Auxiliary documents: Mate's Receipt This document used in the shipment of a cargo. When the goods are received by or for the sea carrier, a mates receipt is issued either directly by the ship or by the ships agents. This is the first evidence that the goods are received and statements on the document describe the quantity of goods, any identifying marks and the apparent condition. This information is inserted from visual evidence when the goods are received. The quantity can be verified by a tally or count being made of the number of packages and the tally clerks receipt may be attached to the mates receipt. This information on the mates receipt is very important because this information should also be transferred on to the bill of lading. The bills of lading are usually required to be issued in accordance or in conformity with the mates receipts and/or the tally clerks

receipts. Sometimes the document that is issued by the agents of the carrier fulfills the function of the mates receipt but is called the dock receipt. B.Regulatory Documents A.R.E.1 Form (for Central Excise) - The Excise Officer/Inspector will make endorsement on all copies of ARE-1. The handling of ARE-1 Form is done as follows: The inspector returns the original and duplicate copies to the exporter The triplicate copy is sent to officer (ACCE or Maritime Commissioner (MCCE) to whom bond was executed or letter of undertaking (LUT) was given. This copy can also be handed over to the exporter in a tamper proof sealed cover to be submitted to ACCE/MCCE. The 4th copy will be retained by the excise inspector. The 5th copy is also handed over to the exporter. At the time of export, original, duplicate and the 6th copy (optional) will be submitted to customs officer. The customs officer will examine these copies and then export will be allowed. The customs officer will then make endorsement of export on all copies of ARE-1. He will cite shipping bill number and date and other particulars of export on ARE-1. The original copy and quintuplicate (optional) will be returned to the exporter. The duplicate copy will be sent directly to the ACCE\MCCE i.e. excise officer with whom bond was executed will get 2 copies, one from RSCE (or excise inspector) when goods are cleared from factory and other Custom Officer after export. This will enable him to keep track to ensure that all goods cleared from factory or warehouse without payment of duty are actually exported. In case of export after payment of duty, under claim of rebate, the basic procedure is same as above, except that the triplicate copy (by excise inspector) and duplicate copy(by customs officer)will be sent to the officer to whom rebate claim is filed. If claim of rebate is by electronic submission, these copies well be sent to excise rebate audit section at the place of export. Shipping Bill (for Customs)

Data entry for shipping bill Exporters/CHAs are required to register their IE codes, CHAs License No, and the Bank A/C No.(for credit of Drawback amount) in the Customs Computer Systems before an EDI Shipping Bill is filed. Exporters/CHAs would be required to submit at the SERVICE CENTRE the following documents. A declaration in the specified format SDF declaration Quota/Inspection Certificate Drawback/DEEC/DFRC/DEPB Declarations etc., as applicable The formats should be duly completed in all respects and should be signed by the exporter or his authorized CHA Forms, which are incomplete or unsigned will not be accepted for data entry Initially, data entry for Shipping Bills will be allowed to be made only at the Service centre. After the exporters/CHAs become conversant with the EDI procedures, the option of Remote EDI System would also be made available. In the Remote EDI system (RES) Exporters/CHAs can electronically file their shipping bills from their offices. The Service Centre operators shall carefully enter the data on the basis of declarations made by the CHAs/Exporters. After completion of data entry, the checklist will be printed by the Data Entry Operator and shall be handed over to the Exporters/CHAs for confirmation of the correctness. Thereafter, the CHA/Exporters will make corrections, if any, in the checklist and return the same to the operator duly signed. The operator shall make the corresponding corrections in the date and shall submit the shipping bill. The operator shall not make any amendment after generation of the checklist and before submission in the system unless the corrections made by the CHAs/Exporters are clearly indicated on the checklist against the respective fields and duly authenticated by CHA/Exporters signature. The system automatically generates the S/Bill Number. The operator shall endorse the same on the checklist in clear and bold figures. It should be noted that no copy of the S/Bill would be available at this stage.

 The declarations would be accepted at the service centre from 10.00 hrs to 16.30 hrs. Declarations received up to 16.30 hrs will be entered in the computer system on the same day. The validity of the S/Bill in EDI System is fifteen days only. After expiry of fifteen days from the date of filing of shipping bill, the exporter has to file the declaration afresh. Port Trust Copy of Shipping Bill/Export Application/Dock Challan There are 3 copies of Shipping bill/Dock Challan, Port Trust Copy. Original & Duplicate copy is submitted to Surveyor of Shipping line. Triplicate copy is submitted to Yard Authorities (e.g.-CONCOR, Bhusaval) Exchange Control (GR) Form Exchange control document is a Guarantee Remittance Form required by RBI which assures to RBI that the exporter will realize the proceeds of goods within 180 days from the date of Shipment. RBI has introduced the GR procedure. Original copy of GR Form is submitted to Customs & Duplicate copy is submitted to Concerned Bank, which further hand over it to RBI. Submission of documents For FCL(Full Container Loading) 1. Mumbai Office - Invoice (3 copies) Packing List (3 copies) A.R.E.1( Original & Duplicate) Annexure C1(1 copy)

2. Raigad Customs, if the port of loading is JNPTInvoice (1 copy) Packing List (1 copy) Forwarding / Excise letter (1 copy)

3. Internal Custom Excise Department Invoice (3 copies) Packing List (3 copies) A.R.E.1( Duplicate, Triplicate, Quadruplicate) Annexure C1(2 copies) Forwarding / Excise letter (1 copy)

4. Transporter -

Invoice (1 copy) Packing List (1 copy) A.R.E.1( Sixtuplicate) Outward gate Pass(1 copy)

For LCL (Loose Container Loading), same is the procedure but we dont need to prepare Forwarding / Excise letter and Invoice Back.

Terms of Export financing

1.Bill Discounting:Definition: Bill discounting is a major activity with some of the smaller Banks. Under this type of lending, Bank takes the bill drawn by borrower on his(borrower's) customer and pay him immediately deducting some amount as discount/commission. The Bank then presents the Bill to the borrower's customer on the due date of the

Bill and collect the total amount. If the bill is delayed, the borrower or his customer pay the Bank a pre-determined interest depending upon the terms of transaction. In other words, Cashing or trading a bill of exchange at less than its par value and before its maturity date. The cash thus realized varies according to the number of days until maturity and the risk involved.

TYPES BILL DISCOUNTING:

1.Export Bill Discounts Export Bill Discounting finances receivables when exports are made under Letters of Credit.

Amounts Can vary depending on the Bill Amount.

Rates Variable Interest Rates based on BBK Base Rate.

Tenor Maximum 180 days.

Terms&Conditions Please refer to a detailed list or the Relationship Manager.

2. Cheque Discounting Cheque Discounting is a form of receivable financing. BBK can discount cheques drawn by acceptable drawers and provide funds up front.

Amounts From BD 10,000.

Rates Variable Interest Rates based on BBK Base Rate.

Tenor Maximum 24 Months.

Terms&Conditions Please refer to a detailed list or the Relationship Manager.

3. Negotiation of Export Bill of Exchange

Meaning:Negotiation of export bill of exchange refers to the purchase by bank, prior to collection, of bill of exchange and shipping documents, which the exporter has issued after shipment according to L/C, D/P. or D/A. As negotiation is not the banks obligation but based on a transaction agreement with the exporter, in order to preserve its claims, the bank prudently examines whether there is any discrepancies between L/C or contract terms and presented documents.

Required Documents

An application for negotiation (collection) of shipping documents L/C or the original copy of an export contract document A certificate of export declaration Documents required in L/C or an export contract document

3.Realisation Meaning:As per extant provisions of the FEMA, the amount representing the full export value of goods exported should be realised and repatriated to India within six months from the date of export. As per extant provisions of the FEMA, the amount representing the full export value of goods or software exported should be realised and repatriated to India within six months from the date of export.

PROFORMA OF REALISATION

STATE BANK OF INDORE EMPIRE HOUSE, 214 FORT, MUMBAI

TEL NO: FAX NO: SWIFT NO:

Settlement Advice (Short Realization) To : JAIN IRRIGATION SYSTEMS LTD SADHANA RAYON HOUSE, D N ROAD, FORT, MUMBAI

Dear Sir, We have to advice realization of Export Bill as per details here under, and confirm having debited your account 00000053050741729 with an amount of Rs 2,344.00 towards shortfall in respect of Export Bill Number 3000210RD0030088. Other Details are as follows: Applicant Name Applicant Address Drawing Reference Number Presentation Currency Presentation Amount Due date Realization Amount Value date Shortfall in realization Exchange Rate Rupee Equivalent Late/Early Payment : PARESH WARKE : : 3000210RD0030088 : EURO : 29,537.40 : 04/07/2010 : 29,486.40 : 06/07/2010 : 51.00 : 59.99 : 3,059.00 : 2 days :

Interest Rate Overdue/ Refund Interest Amount Overdue Commission EEFC Account EEFC Amount

: : 1,081.00 : 0.00 : :

Yours Sincerely

Authorized Signature

FOREIGN EXCHANGE MANAGEMENT ACT (FEMA) FOR EXPORT IMPORT FOREIGN EXCHANGE Introduction Foreign Exchange Management Act or in short (FEMA) is an act that provides guidelines for the free flow of foreign exchange in India. It has brought a new management regime of foreign exchange consistent with the emerging frame work of the World Trade Organisation (WTO). Foreign Exchange Management Act was earlier known as FERA (Foreign Exchange Regulation Act), which has been found to be unsuccessful with the proliberalisation policies of the Government of India. FEMA is applicable in all over India and even branches, offices and agencies located outside India, if it belongs to a person who is a resident of India. Some Highlights of FEMA It prohibits foreign exchange dealing undertaken other than an authorised person. It also makes it clear that if any person residing in India, received any Forex payment (without there being a corresponding inward remittance from abroad) the concerned person shall be deemed to have received they payment from a nonauthorised person. There are 7 types of current account transactions, which are totally prohibited, and therefore no transaction can be undertaken relating to them. These include transaction relating to lotteries, football pools, banned magazines and a few others.

FEMA and the related rules give full freedom to Resident of India (ROI) to hold or own or transfer any foreign security or immovable property situated outside India.Similar freedom is also given to a resident who inherits such security or immovable property from an ROI.An ROI is permitted to hold shares, securities and properties acquired by him while he was a Resident or inherited such properties from a Resident.

Certain prescribed limits have been substantially enhanced. For instance, residence now going abroad for business purpose or for participating in conferences seminars will not need the RBI's permission to avail foreign exchange up to US$. 25,000 per trip irrespective of the period of stay, basic travel quota has been increased from the existing US$ 3,000 to US$ 5,000 per calendar year.

TYPES OF EXPORT FINANCE

The export finance is being classified into two types viz. 1. Pre-shipment finance. 2. Post-shipment finance.

PRE-SHIPMENT FINANCE

Meaning: Pre-shipment is also referred as packing credit. It is working capital finance provided by commercial banks to the exporter prior to shipment of goods. The finance required to meet various expenses before shipment of goods is called pre-shipment finance or packing credit.

Definition: Financial assistance extended to the exporter from the date of receipt of the export order till the date of shipment is known as pre-shipment credit. Such finance is extended to an exporter for the purpose of procuring raw materials, processing, packing, transporting, warehousing of goods meant for exports.

IMPORTANCE OF FINANCE AT PRE-SHIPMENT STAGE:

1. To purchase raw material, and other inputs to manufacture goods. 2. To assemble the goods in the case of merchant exporters. 3. To store the goods in suitable warehouses till the goods are shipped. 4. To pay for packing, marking and labelling of goods. 5. To pay for pre-shipment inspection charges. 6. To import or purchase from the domestic market heavy machinery and other capital goods to produce export goods. 7. To pay for consultancy services. 8. To pay for export documentation expenses.

FORMS OR METHODS OF PRE-SHIPMENT FINANCE:

1. Cash Packing Credit Loan : In this type of credit, the bank normally grants packing credit advantage initially on unsecured basis. Subsequently, the bank may ask for security.
2. Advance Against

Hypothecation:

Packing credit is given to process the goods for export. The advance is given against security and the security remains in the possession of the exporter. The exporter is required to execute the hypothecation deed in favour of the bank.
3. Advance Against

Pledge :

The bank provides packing credit against security. The security remains in the possession of the bank. On collection of export proceeds, the bank makes necessary entries in the packing credit account of the exporter.
4. Advance Against

Red L/C :

The Red L/C received from the importer authorizes the local bank to grant advances to exporter to meet working capital requirements relating to processing of goods for exports. The issuing bank stands as a guarantor for packing credit.
5. Advance Against

Back-To-Back L/C :

The merchant exporter who is in possession of the original L/C may request his bankers to issue Back-To-Back L/C against the security of original L/C in favour of the subsupplier. The sub-supplier thus gets the Back-To-Bank L/C on the basis of which he can obtain packing credit.

6. Advance Against

Exports Through Export Houses :

Manufacturer, who exports through export houses or other agencies can obtain packing credit, provided such manufacturer submits an undertaking from the export houses that they have not or will not avail of packing credit against the same transaction.
7. Advance Against

Duty Draw Back (DBK) :

DBK means refund of customs duties paid on the import of raw materials, components, parts and packing materials used in the export production. It also includes a refund of central excise duties paid on indigenous materials. Banks offer pre-shipment as well as postshipment advance against claims for DBK.

Post-shipment finance

Meaning: Post shipment finance is provided to meet working capital requirements after the actual shipment of goods. It bridges the financial gap between the date of shipment and actual receipt of payment from overseas buyer thereof. Whereas the finance provided after shipment of goods is called post-shipment finance.

Definition:: Credit facility extended to an exporter from the date of shipment of goods till the realization of the export proceeds is called Post-shipment Credit.

IMPORTANCE OF FINANCE AT POST-SHIPMENT STAGE:

1. To pay to agents/distributors and others for their services. 2. To pay for publicity and advertising in the overseas markets. 3. To pay for port authorities, customs and shipping agents charges. 4. To pay towards export duty or tax, if any. 5. To pay towards ECGC premium. 6. To pay for freight and other shipping expenses. 7. To pay towards marine insurance premium, under CIF contracts. 8. To meet expenses in respect of after sale service.

9. To pay towards such expenses regarding participation in exhibitions and trade fairs in India and abroad. 10. To pay for representatives abroad in connection with their stay board. 11. To get export bills purchased/discounted/negotiated 12. To get advances against bills for collection 13. To receive advances against duty drawback receivable from Govt.

FORMS/METHODS OF POST SHIPMENT FINANCE

1. Export bills negotiated under L/C: The exporter can claim post-shipment finance by drawing bills or drafts under L/C. The bank insists on necessary documents as stated in the L/C. if all documents are in order, the bank negotiates the bill and advance is granted to the exporter.

2. Purchase of export bills drawn under confirmed contracts: The banks may sanction advance against purchase or discount of export bills drawn under confirmed contracts. If the L/C is not available as security, the bank is totally dependent upon the credit worthiness of the exporter.

3. Advance against

bills under collection:

In this case, the advance is granted against bills drawn under confirmed export order L/C and which are sent for collection. They are not purchased or discounted by the bank. However, this form is not as popular as compared to advance purchase or discounting of bills.

4. Advance against

claims of Duty Drawback (DBK):

DBK means refund of customs duties paid on the import of raw materials, components, parts and packing materials used in the export production. It also includes a refund of central excise duties paid on indigenous materials. Banks offer pre-shipment as well as postshipment advance against claims for DBK.

5. Advance against

goods sent on Consignment basis :

The bank may grant post-shipment finance against goods sent on consignment basis.

6. Advance against

Undrawn Balance of Bills :

There are cases where bills are not drawn to the full invoice value of gods. Certain amount is undrawn balance which is due for payment after adjustments due to difference in rates, weight, quality etc. banks offer advance against such undrawn balances subject to a maximum of 5% of the value of export and an undertaking is obtained to surrender balance proceeds to the bank.

7. Advance against

Deemed Exports :

Specified sales or supplies in India are considered as exports and termed as deemed exports. It includes sales to foreign tourists during their stay in India and supplies made in India to IBRD/ IDA/ ADB aided projects. Credit is offered for a maximum of 30 days.

8. Advance against

Retention Money :

In respect of certain export capital goods and project exports, the importer retains a part of cost goods/ services towards guarantee of performance or completion of project. Banks advance against retention money, which is payable within one year from date of shipment.

9. Advance against

Deferred Payments :

In case of capital goods exports, the exporter receives the amount from the importer in installments spread over a period of time. The commercial bank together with EXIM bank do offer advance sat concessional rate of interest for 180 days.

DATA ANALYSIS AND INTERPRETATION

DATA ANALYSIS AND INTEPRETATION

Export Sales and Services

Year Amt

2007 4061

2008 4534

2009 4886

2010 5209

6000 5000 4000 3000 Export Sales (in million) 2000 1000 0 2007 2008 2009

2010

Export Sales of JISL

Interpretation: In above graph showing the export sales in 2007 is 4061 mln , 2008 is 4534, 2009 is 4886 and 2010 is 5209 therefore the graph showing tremendous increase in Export Sales of the company, from 2007 up to 2010 it grown by nearly by 2 times

EPC/PCFC

Year Amt

2007 1905

2008 1791

2009 2515

2010 559

EPC/PCFC
3000 2500 2000 1500 1000 500 0 2007 2008 2009 EPC/PCFC (in million)

2010

Interpretation: The above graph showing the EPC (Export Packaging Credit)/PCFC (Packaging Credit in Foreign Currency) in 2007 is 1905, 2008 is 1791, 2009 is 2515 and in 20010 are 559.

Export Incentives and Assistance (In Mln)

Year

2007

2008

2009

2010

Amt

68

129

280

285

Export Incentives and Assistance ( in mln)

300 250 200 150 100 50 0 2007 2008 2009 2010

Export Incentives and Assistance

Interpretation: The above graph showing the continuous growth in Export Incentives and
Assistance from year 2007 to 2010 it grown by nearly by 5 times...In 2007 is 68, 2008 is 129, 2009 is 280 and in 2010 is 285.

Debtors

Year Amt

2007

2008

2009

2010

4405

5956

7816

8876

Debtors
10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2006 2007 2008 Amt

2009

2010

Interpretation: Debtors is the Asset of the company therefore the above graph showing the continuous growth in debtors from 2007 to 2010.The debtors in 2007 is 4405, 2008 is 5956, 2009 is 7816, 2010 is 8876

Total income:-

Year Total Income

2005-06 8656

2006-07 12291

2007-08 16928

2008-09 21789

2009-10 27229

30000 25000 20000 15000 10000 5000 0 2005-06 2006-07 2007-08 2008-09 Total income ( in millions )

2009-10

Total income of JISL

Interpretation: - The above graph shows total income of JISL has risen hugely. The Total
income increased by 18573 from 8656 million in 2005-06 to 27229 millions in 2009-10. The Export Sales thus helped in increasing the total income of JISL.

EBD:

Year

2006-07

2007-08

2008-09

2009-10

Total Income

8424

8979

245

2578

9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2006-07 2007-08 2008-09 EBD ( in millions )

2009-10

Export Bill Discount of JISL

Interpretation: - The above graph shows total income of JISL has risen hugely. Export Bill
Discount (EBD) increased by 555 from 8424 million in 2006-07 to 2578 millions in 2009-10. The Export Sales thus helped in increasing the EBD of JISL.

LIMITATIONS

Theoretical knowledge is given more importance where as calculations and technique relating to finance is less.

Jain Irrigation provides the products (manufacturing) to a number of customers on credit but only few customers are taken into study.

The authority of the company does not provide confidential information.

Time allotted for the study is the limiting factor for the study as the time allotted is only 50 days.

Jain irrigation takes a number of products for manufacturing but only a few are taken for analysis, interpretation & explaining the strategies.

FINDINGS & OBSERVATION

While studying Export finance the following were observed :

FY 2009-10 was a challenging and testing year on both the domestic and export fronts.

In FY 2010 export demonstrated an excellent growth of 30% in rupee terms while the growth in dollar term was 25%.

This was achieved primarily through the successful ramp up of various medium and heavy duty engine per (HDEP) and programs both in Europe & North America.

Strong revenue growth on both the domestic & export front in FY 2010 has clearly highlighted the effectiveness and the importance of the de-risking strategy under favorable marketing conditions.

In domestic market jain irrigation grew with 15% in line with underlying market.

The company de-risking strategy has enabled it to continue growing in spite of a down turn in two of its major markets.

For the export business takes the Pre-shipment as well as Post-shipment finance from commercial banks in Indian rupee as well as in foreign currency.

Along the way company has also diversified into new segments & products. There has been a visible ship in the value addition with development of heavy value added benefits.

SUGGESTIONS

LEARNINGS/ SUGGESTIONS THROUGH THIS PROJECT

1. Export Finance is a very important branch to study & understand the overall gamut of the international finance market.

2. Availability of favorable Export finance schemes directly impacts the local trade, encourages exporters, enlarges markets abroad, improves quality of domestic goods and overall helps the nation boost its exchange earnings.

3. The Government of any nation plays a very vital role in boosting export turnover. The credit policy of the Indian Government is also changed depending upon the needs of the exporters, global trade environment etc.

4. ECGC and EXIM Bank take a lot of efforts for Export promotion. The strategies of these 2 agencies in India should be flexible & their finance schemes should be constantly synchronized with the changing scene of world trade. This alone can help Indian exporters to stand competition in world markets effectively and more gain-fully.

5. If JISL will do R&D in field of seeds & selling then there will be huge market available for expansion of their business. 6. If Extending Credit to Foreign Buyers therefore increase the export sales an Earn a maximum Profit. 7.Can be increase the manufacturing in each of the respective business lines to complete in the global market, through increased focus on cost-competitive and high quality manufacturing, commitment to R&D and penetrating new markets in India and the rest of the world.
.

CONCLUSION

CONCLUSION
The practical world is far more different than the theoretical world. Learning new things while working in practical and professional world makes one more efficient and responsible. Quality is a very important aspect of trade. The company should take each and every measure to maintain quality which will give an increment to the customer satisfaction.

Starting export business in India is not a difficult task. With proper knowledge and strategy, one can lead the way to the world wide success.

Plastic exports in itself carry very huge scope and is a good product to trade in.

Government is trying each and every step to boost exports from the country. Proper knowledge of Government schemes and promotion councils can direct towards a successful export business.

In order to be successful in exporting one must fully research its markets. No one should ever try to tackle every market at once. Many enthusiastic persons bitten by the export bug fail because they bite off more than they can chew. Overseas design and product requirements must be carefully considered. Always sell as close to the market as possible. The fewer intermediaries one has the better, because every intermediary needs some percentage for his share in his business, which means less profit for the exporter and higher prices for the customer. All goods for export must be efficiently produced. They must be produced with due regard to the needs of export markets. It is no use trying to sell windows which open outwards in a country where, traditionally, windows open inwards.

BIBLIOGRAPHY

BIBLIOGRAPHY

Books Referred: 1. Export What Where & How 2. Export Marketing by Paras Ram. by Michael Vaz.

3. Annual Report of JISL from Year 2005 to 2010.

Internet Websites: 1. www.jains.com 2. www.indiandata.com