Vardhman Polytex Limited Bathinda Project for Mba

of

In partial fulfilment of the Requirements for the

award of Degree of Master of Business Administration

Submitted To: Submitted By:

School of Management Studies, Ajay

Punjabi University, M.B.A. 2nd Year

Patiala Roll No.5410

School of Management Studies

Punjabi University, Patiala

2010-2012

ACKNOWLEDGEMENT

Life of human beings is full of

interactions. No one is self-sufficient by himself whenever

anyone is doing some serious and important work a lot of

help from the people concerned is needed & one less

specially obliged towards them. I cannot forget

acknowledging them in few words as without the guidance

& co-ordination of them in my project report would not

have been possible.

A large number of individual contributed to this

project. I am thankful to all of them for their help and

encouragement.

I would like my heartfelt thanks to Mr. Rajender

Pal, PR & IR Manager of Vardhman Polytex Limited for giving

me an opportunity to have training in the organisation.

I would also like to thank Mr. Vijay Arora, Chief

Manager for his guidance, inspiration, and constructive

suggestions, which helped me in the Project . I must also

thank the management of Vardhman Polytex Limited to

provide excellent opportunity and environment to be able to

pull my project through. Cooperation of the staff is also

gratefully acknowledged.

Ajay

2

M.B.A. 2nd Year

Roll No.5410

GUIDE CERTIFICATE

TO WHOMESOEVER IT MAY CONCERN

This is to certify that the project report titled “Export

Process and Documentation” Offered by Vardhman

Polytex Limited has been prepared by Ajay, Roll No.- 5410,

a student of MBA 2nd year of School of Management

Studies, Punjabi University, Patiala Session (2010-12) with

Marketing as major area of specialization. The study was

conducted with special reference to Vardhman Polytex

Limited, Bathinda. I recommend this project for evaluation.

Place:

Date:

3

INDIAN TEXTILE INDUSTRY - HISTORY

The history of textiles in India dates back to nearly five

thousand years to the days of the Harappan civilization.

Evidences that India has been trading silk in return for spices

from the 2nd century have been found. This shows that

textiles are an industry which has existed for centuries in our

country. Recently there has been a sizeable increase in the

demand for Indian textiles in the market. India is fast

emerging as a competitor to China in textile exports. The

Government of India has also realized this fact and lowered

the customs duty and reduced the restrictions on the

imported textile machinery. The intention of the

government’s move is to enable the Indian producers to

compete in the world market with high quality products. The

results of the government’s move can be visible as Indian

companies like Arvind Mills, Mafatlal, Grasim; Reliance

Industries have become prominent players in the world. The

Indian textile industry is the second largest in the world-

second only to China. The other competing countries are

Korea and Taiwan. Indian Textile constitutes 35% of the total

exports of our country.

The history of apparel and textiles in India dates back to the

use of mordant dyes and printing blocks around 3000 BC.

4

The foundations of the India's textile trade with other

countries started as early as the second century BC. A hoard

of block printed and resistdyed fabrics, primarily of Gujarati

origin, discovered in the tombs of Fostat, Egypt, are the

proof of large scale Indian export of cotton textiles to the

Egypt in medieval periods.

During the 13th century, Indian silk was used as barter

for spices from the western countries. Towards the end of

the 17th century, the British East India Company had begun

exports of Indian silks and several other cotton fabrics to

other economies. These included the famous fine Muslin

cloth of Bengal, Orissa and Bihar. Painted and printed

cottons or chintz was widely practiced between India, Java,

China and the Philippines, long before the arrival of the

Europeans.

India Textile Industry is one of the largest textile industries in

the world. Today, Indian economy is largely dependent on

textile manufacturing and exports.

INDIAN TEXTILE INDUSTRY

Textile Industry in India is the second largest employment

generator after agriculture. It holds significant status in India

as it provides one of the most fundamental necessities of the

people. Textile industry was one of the earliest industries to

come into existence in India and it accounts for more than

5

30% of the total exports. In fact Indian textile industry is the

second largest in the world, second only to China. The Indian

textile industry has a significant presence in the economy as

well as in the international textile economy. Its contribution

to the Indian economy is manifested in terms of its

contribution to the industrial production, employment

generation and foreign exchange earnings. It contributes 14

percent of industrial production, 9 percent of excise

collections, 18 percent of employment in the industrial

sector, nearly 20 percent to the country’s total export

earning and 4 percent to the Gross Domestic Product.

It is closely linked with the agricultural and rural economy. It

is the single largest employer in the industrial sector

employing about 35 million people. If the employment in

allied sectors like ginning, agriculture, pressing, cotton trade,

jute, etc. are added then the total employment is estimated

at 93 million. The net foreign exchange earnings in this

sector are one of the highest and, together with carpet and

handicrafts, account for over 37 percent of total export

earnings at over US $ 10 billion. Textiles, alone, account for

about 25 percent of India’s total forex earnings.

India’s textile industry since its beginning continues to be

predominantly cotton based with about 65 percent of fabric

consumption in the country being accounted for by cotton.

The industry is highly localized in Ahmedabad and Bombay

in the western part of the country though other centers exist

6

including Kanpur, Calcutta, Indore, Coimbatore, and

Sholapur.

The structure of the textile industry is extremely

complex with the modern, sophisticated and highly

mechanized mill sector on the one hand and the hand

spinning and hand weaving (handloom) sector on the other.

Between the two falls the small-scale power loom sector. The

latter two are together known as the decentralized sector.

Over the years, the government has granted a whole range

of concessions to the non-mill sector as a result of which the

share of the decentralized sector has increased considerably

in the total production. Of the two sub-sectors of the

decentralized sector, the power loom sector has shown the

faster rate of growth. In the production of fabrics the

decentralized sector accounts for roughly 94 percent while

the mill sector has a share of only 6 percent.

Being an agro-based industry the production of raw material

varies from year to year depending on weather and rainfall

conditions. Accordingly the price fluctuates too.

POSITION OF INDIAN TEXTILE INDUSTRY

The Indian textile industry contributes about 14 per cent to

industrial production, 4 per cent to the country's gross

domestic product (GDP) and 17 per cent to the country’s

export earnings, according to the Annual Report 2009-10 of

7

the Ministry of Textiles. It provides direct employment to

over 35 million workers directly and it accounts for 21% of

the total employment generated in the economy and is the

second largest provider of employment after agriculture.

Some of the textile clusters in which productions happens

are very huge and significant for the overall industry, for

example

Panipat produces 75% of all blankets produced in India

Tirupur contributes 80% of the country’s cotton hosiery

exports

Ludhiana makes 95% of total woolen knitwear

produced According to the Ministry of Textiles, Export target

in textiles in 2010 at USD is 50 billion.

the cumulative production of cloth during April’09- March’10

has increased by 8.3 per cent as compared to the

corresponding period of the previous year. Moreover, total

textile exports have increased to US$ 18.6 billion during

April’09- January’10, from US$ 17.7 billion during the

corresponding period of the previous year, registering an

increase of 4.95 per cent in rupee terms. Further, the share

of textile exports in total exports has increased to 12.36 per

cent during April’09-January’10, according to the Ministry of

Textiles.

As per the Index of Industrial Production (IIP) data

released by the Central Statistical Organisation, cotton

textiles has registered a growth of 5.5 per cent during April

8

March 2009-10, while wool, silk and man-made fibre textiles

have registered a growth of 8.2 per cent while textile

products including apparel have registered a growth of 8.5

per cent.

The textile sector has increased their investment in

projects to upgrade their equipment amid fierce market

competition and to meet the growing demand for more

textile products. Total investment in the textile industry

between 2004 and 2008 was around Rs.65,478 crore in

India, which is expected to reach Rs.1,50,600 crore by 2012.

This enhanced investment would generate 17.37 million

jobs-- 12.02 million direct and 5.35 million indirect—by 2012.

INDIA’S MAJOR COMPETITIORS IN THE WORLD

To understand Indias position among other textile producing

the industry contributes 9% of

GDP and 35% of foreign exchange earning, Indias share in

global exports is only 3% compared to Chinas 13.75%

percent. In addition to China, other developing countries are

emerging as serious competitive threats to India. Looking at

export shares, Korea (6%) and Taiwan (5.5%) are ahead of

India, while Turkey (2.9%) has already caught up and others

likeThailand (2.3%) and Indonesia (2%) are not much further

behind. The reason for this development is the fact that India

lags behind these countries in investment levels, technology,

9

quality and logistics. If India were competitive in some key

segments it could serve as a basis for building a modern

industry, but there is no evidence of such signs, except to

some extent in the spinning industry.

INDIA’S COMPETITIVENESS CONTRIBUTION TO

ECONOMY:

With 3.9 million handlooms, India is the highest handloom

producing country in the World. 30% of the total export

income is generated by textile alone, it is second largest

Employer industry after agriculture. The textile industry

constitutes approximately 14% of country's total industrial

production.

MARKET SHARE OF COUNTRIES IN TEXTILES

INDUSTRY

10

CHINA VS INDIA IN TEXTILE MARKET

The Indian Textile Industry has an overwhelming presence

in the economic life of the country. It is the second largest

textile industry in the world after China. Apart from

providing one of the basic necessities of life i.e. cloth, the

textile industry contributes about 14% to the country's

industrial output and about 17% to export earnings.

CHINA INDIA

High Productivity Lower Productivity

Skilled Manpower Skilled Workforce

Fashion awareness is not so high

Fashion awareness is so high

Labour is becoming expensive

Labour is Relatively Cheap

Net importer of cotton Is self sufficient in Cotton

Caters for mass market Is good at niche products

Has huge installed capacities and economies of scale with competitive pricing

Has smaller capacities

11

Exports have risen by 10% but at the same time China’s

exports have risen by more than 20%, even countries like

Pakistan and Bangladesh have done better india

SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Weakness:

Strength:

Strong cotton base

Growing Domestic Market

Strong entrepreneurial class

Flexibility in production of small order lots

Presence of integrated i.e. concept to consumer.

Ability to handle value additions, embellishments etc.

Adequate labour supply at relatively competitive wages

Good "cultural" comfort with US and Europe

12

Technological obsolescence and lower efficiencies

Opportunities:

Understanding buyers need because of language

advantage

Threats:

Enhanced competition from other countries

Poor work practices resulting in higher labour cost

component in many staple garments, in spite of low

labour costs

Rigid government labour policy and lack

rationalization of duties in MMF.

High transaction and power cost

Too much emphasis on cotton, synthetic fibre base

not equally developed

Fabric/processing still to gear up to meet

international standards

Improvements in infrastructure and regulations.

Research and product development

Buyers preference for India, after China

Rupee appreciation in last few months.

Trade blocs and partnerships at the exclusion of

India.

Location disadvantage: long transit time to key

markets.

Pricing pressure, following opening up of quotas

13

OSWAL GROUP

14

VPLBATHINDA VPLBATHINDA

ANSHUPATILUDHIANAANSHUPATILUDHIANA

VTMLUDHIANAVTMLUDHIANA

F.M.HAMMERLAYKOLAPUR

F.M.HAMMERLAYKOLAPUR

OSWAL GROUP OSWAL GROUP

OSWAL GROUP is a premier textile group of Northern

India having its corporate office at Ludhiana Punjab. The

group had existrance for last 40 years with core competency

of spinning. We were earlier part of Vardhman Group but

after family settlement between two brothers in 2003, we

have nemed ourselves as Oswal group. The group is mainly

into spinning and dyeing of all types of yarn in differenet

blends and manufacturing of garments. The group has plans

to diversify in future but mainly in textiles related activitries.

Vardhman Polytex Limited Bathinda

It is the oldest unit of the Company. This unit started its

commercial production in 1986 with an installed capacity of

11,520 spindles. This unit is situated in the hub of the

cotton belt and derives the advantage of procuring its

basic raw material of best quality at lower cost from nearby

locations.

Vinayaka Textile Mill, Ludhiana

15

This unit was setup in 2004 with an installed capacity of

24,288 spindles. This unit has latest state of art technology

imported from Rieter (Switzerland), Muratac (Japan) and

Uster (Switzerland). The spinning capacity of this unit has

now increased to 49,632 spindles. The Company has also

installed a dye house at the same location having a

capacity of 13 MT per day advanced machinery imported

from China.

Anshupati Textile Ludhiana

This unit was set up by the Company in 1991 with an

installed capacity of 8,000 spindles to manufacture

grey/dyed acrylic yarn. The acrylic yarn is used in the

manufacturing of hosiery and knitted garments. This

unit also manufactures the acrylic yarn which is used in

the manufacturing of mink blankets.

F.M. Hammerle TextilesLtd.

During the year, the Company entered into a joint venture

agreement with F.M. Hammerle Group, Austria for setting

up a green field project for manufacture of quality yarn

and piece dyed shirting fabric with annual capacity of 12

million meters. For this purpose, a new company in the

name of 'Oswal F.M. Hammerle Textiles Ltd.' has been

floated which will set-up its plant at Village Kagal, Dist.

Kolhapur (Maharashtra). The Company has 76% equity in

the said joint venture company and 24% equity is held by

16

F.M. Hammerle Group. The civil construction has already

commenced. The plant is expected to be operational

towards the end of 2007.

The F.M. Hammerle (FMH) Group of Austria is a

well-known name in the international textile scene for

more than 160 years now. Through this venture, VPL has

entered into the field of manufacturing high-end shirting

fabric. The subsidiary was set up by VPL in a technical

and marketing collaboration with the FMH group.

Vardhman Polytex Limited (VPL), Bathinda : It is a unit

based at Bathinda in Punjab. Earlier this mill was known as

Punjab Mohta Polytex Limited. Its foundation stone was laid

on 12th June 1983 by the Chief Minister of Punjab Sardar

Darbara Singh. The plant was commissioned on 4th

December 1986 and inaugurated by sardar Surjit Singh

Barnala. It was taken over and in corporated by Mahavir

Spinning Limited in 1987. Thus it became the subsidiary of

Mahavir Spinning Ltd. At the time of amalgamation it had

9000 spindles and 504 rotors making the total of 11520

spindles. In 1991 the name of the unit was changed to

Vardhman Polytex Limited, as a separate company. But

going on after the family settlements in 2003, the unit came

under Oswal Group. This unit had been awarded with ISO-

9002 certificate by the bureau of Indian Standards after the

final audit, which took place in the unit on 26th July 1996.

17

Presently the Chief Manager of Company is Mr. Vijay

Arora. The Personal Relations & Industrial relation Manager

is Mr. Rajinder Pal. Presently there are four manufacturing

units running in Vardhman. Manufacture process goes on 24

hours in 3 shifts of 8 hours. There are about 1500 workers

including employees. There is production of 104592 spindles

i.e. 60 Tons/day. There is consumption of electricity near

about 3 to 3.5 crores each month. The turnover of last year

(2010-2011) was about 800 crores of Oswal Group.

Cotton a raw material for the industry is require

main cotton belts in India are Punjab, Haryana, Gujarat,

Maharashtra. Raw material at this unit is purchased from the

following places, Major from Punjab are: Abohar, Mansa,

Malout, Muktsar, Moga, Bathinda, Kotkapura, Jaitu, Rampura,

Fazilka etc. From Haryana: Sirsa, Fatehbad, Hisar, Hansi,

Bhiwani, Barwala, Kalanwali etc., From Rajsthan

Ganganagar, Hanumangarh etc.

YARN MANUFACTURING BY VPL BATHINDA

Products By VPL ( Yarns) Count Range

Grey Cotton Yarn( Carded) Ne 16s to 32s

Grey Cotton Yarn( Combed) Ne 16s to 40s

18

Compact Yarns Ne 20s to 30s

Organic Cotton yarns Ne 20s to 40s

Supima Cotton Yarns Ne 20s to 50s

Polyster/ Cotton Yarns( Different Blends)

Ne 20s to 40s

100% Modal and Cotton/ Modal blends

Ne 16s to 40s

100% Bamboo and Cotton /Bamboo Blends

Ne 10s to 40s

Slub/Multicount Ne 08s to 40s

Lycra/Spandex Blended Core Spum Yarns

Ne 10s to 30s

Polyester Cotton Yarn Ne 20s to 40s

Marketing Channels

VPL has a strong marketing and sales presence in both the

export and domestic markets. Domestic market has three

major channels, namely

19

1) Agents Æ Brokers Æ Customers

In this channel, agents are appointed by the Company to

make arrangements for sale and also for receiving the

payments on time. These agents have further

arrangements of sale to different customers via brokers.

Recourse of

Company is with the agents for both purposes.

2) Distributor Æ Brokers Æ Customers

This kind of arrangement is followed when the payment is

arranged by the trader. They can stock the material also

and sell to different customers via brokers, if required.

3) Direct (which includes corporate customers

The Company deals with a few customers especially the

corporate buyers directly as well. Names of a few of the

corporate buyers are enlisted below:

20

FOR EXPORT CHANELS ARE

1)AGENTS(FORIEN/ INDIAN)

This is the major channel for the Company’s export

marketing. There are Indian as well as foreign agents for

this kind of set-up and a combination of them can also

exist for export deals where Indian agents have foreign

counterparts or vice-versa.

2)DIRECT

VPL is dealing with some

overseas customers directly as

well like;

a) Egyptian International (Egypt)

b) CMT Lee (Mauritius)

c) Yuki (Bulgaria)

d) Ontario (Ukraine)

21

TOP CUSTOMERS

Following tables give the sales percentage

break-up from the top customers of the

Company.

EXPORT MARKET

The top ten customers contribute to around 60% of the

total exports of the Company, and the top three are listed

below.

NAME OF CUSTOMER COUNTRY (%)

South Asia Textile PTE

Ltd

Singapore & Sri Lanka 21

GME & Supplies USA 10

K.N. Lee Malaysia 5

Domestic market

Some of the key customers in the domestic market are as

below.

NAME OF CUSTOMER LOCATIONSilver Enterprises New DelhiGanpati Textile New DelhiKochhar Sung Up Acrylic Ltd. LudhianaVardhman Enterprises New DelhiGulati Exports GurgaonRiba Textile Chidana

22

Hem Knit Wear Ludhiana

Manufacturing Process

23

1.MIXING

The different varieties of cotton are issued as per

product mix from the raw material section in bale from.

The different varieties of cotton and different lots are

mixed together as per the requirement of end product

and standard recommended mixings. The material is

conditioned in mixing for 24 hours.

2.BLOW ROOM

The cleaning and opening of fobers is done is aa

sequence of beaters. Main purpose is to reduce tuft size

, remove the trash particles abd foreign matter etc,

ehich often comes in the bales

3.CARDING

further cleaning of fibers is done and fibres are opened

into single fibers extent i.e. main purpose is further

removal of trash in cotton and the parrallaeziation of

fibres. From the carding machine, the material is

deleivered in the form of sliver.

24

4.DRAW FRAME

The purpose of this process is to reduce the wt/yard in

the card sliver 6 to 8 end of card slivers are doubled

together in this process to reduce variations and further

drafting is done to reduce the wt/yard of sliver.

5.LAP FORMER

20-25 Precombed draw slivers are fed together to

produce a lap sheets of fibres which is wound on the

spools.

6.COMBERS

The laps prepared on lap former are fed to combers.

The main purpose of combing process is to remove the

short fibres from the material in the form of noil. The

average noil percebtage carries from 15 to 18%. The

material is deleivered in the form of sliver.

7.SPEED FRAME

The finisher draw frame sliver is fed to the speed

frames for conversion into the roving form. In this

process wt/yard of the sliver is reduced, slight twist is

given to the fleece and the material deleivered in the

form roving, wound on the plastic bobbins

8.RING FRAME

The roving is fed to ring frame for conversion into yarn.

In the process the wt/yard of roving are reduced as per

25

requirements of ultimate user and the deleivered yarn

is wound on the plastic bobbins.

9.WINDING

In this process, the yarn is wound on paper cones to

produce bigger package as per requirement of market.

The weight varies from 1.2 kg to 2.2. kg. during the

process, in addition to the formation of bigger

packages, the yarn faults are also removed with help of

electronic yarn cleaner.

10. DOUBLING

In case of type cord the process is same upto winding.

After cone winding the yarn is fed into cheese winding.

In the process 2 ply or 4 ply is to be done as per

requiremntets. After the yarn is fed into ring doubling

and required is given in 2 or 4 ply yarn. In the next

process in assembly cheese winding is get the package

in the package in the required form to be fed into T.F.O.

in T.F.O. final yarn is prepared in the form of cheese

and required T.P.I. is given to the final yarn in process

11. PACKING

In this process, the cones/cheese are packed in bags or

cartoons as per the requirements of the market. In

addition to the packing the material is checked

thoroughly to avoid mixing of different materials.

26

OBJ ECTIVE OF THE STUDY

The main objectives of the research were:

To know export procedure in general and spinning

mill(Vardhman Polytex Limited) in particular

To understand related aspects of exports.

Actual Export performance of Vardhman Polytex

Limited

SWOT analysis in particular context to exports in

Vardhman Polytex Limited.

27

RESEARCH METHODOLOGY

To know export procedure in general and spinning

mill(Vardhman Polytex Limited) in particular

The Department concerned shall be studied in detail. The

relevant information shall be collected from company files and

officials and of commercial department .

To understand related aspects of exports.

This study can be divided as government organisation

involved, technological upgradation and quality

parameters.

Actual Export performance of Vardhman Polytex

Limited

28

Data shall be collected from the annual reports of

Vardhman Polytex Limited and required visits to the

requisite offices.

SWOT analysis in particular context to exports in

Vardhman Polytex Limited.

The information shall be collected by personal

observation and views of officials.

Export - Exporting is merely a selling but when it is selling

at home, it does not bother you because you are in personal

contact with a buyer for which you do not need to comply

with several procedural requirements including filling and

exchanging of a lot of documents. But the difference comes

when you intend to sell to some one who is thousands of

miles away from you, speaking different language, having

different customs, preferences, currency and import

regulations. In order to facilitate trade with other countries,

certain sets of rules have been developed by the trading

nations over the centuries, which are normally followed in

foreign trade today. The International Trade is governed by

rules made by the World Trade Organisation (WTO). Details

on WTO can be obtained from Information Advisory Centre

(IAC) of the EPB.

29

Policies Adopted by Vardhman Polytex Limited for

Export

With the support of rich industrial knowledge and sound

infrastructure, we, Vardhman Polytex Limited, are able to

supply and manufacture a premium quality range of

products on time. Established in the year 1970, our company

is known as a

prominent manufacturer and supplier of Cotton Yarns,

Carded & Combined Cotton Yarns, Fancy Yarns, Core

Spun Yarns, and many more. Our range is available in a

variety of colors and sizes that perfectly match the emerging

market demands. Our flawless range of end products have

helped us to achieve a leading position in the market.

The growth of any organization as well as product is due to

the complete effort of the team. We are also blessed by

most hard working, stable and honest team that works for

the promotion of our product. We are supported by a team of

skilled and experienced members who make use of latest

technologies to deliver reliable and qualitative range of

yarns. Apart from this, they are highly familiar with the art of

giving the perfect finishing to the product.

We are able to maintain our leadership through

setting new benchmarks in our field due to the

following factors:

Excellent quality range

30

Assured timely delivery of consignments

Use of state-of-the-art technology

Customer satisfaction

Wide network of distribution

Competitive prices

Transparent business dealing

Quality Policy(TQM) Total Quality Management

The Company follows the quality policy as given under:

Quality shall be built into the Company’s products to not

only meet customer requirements continuously, but also

exceed them. The Company shall achieve this through

an interface with the market place, access to state of the

art technology, research and development, process

development and adoption of innovative manufacturing

and marketing strategies.

The quality policy shall be integrated with the Company’s

main objectives: -

31

• To remain market leader in quality.

• Increase market share with focus on niche

segments.

• Improve productivity.

• Cost reduction.

• Reduction in percentage of seconds.

These objectives shall be reviewed from time to time.

The management of the Company shall be committed

to provide resources and comply with all requirements

needed for fulfillment and continual improvement of the

Company’s quality management system.

Quality culture shall be created throughout the

organization through training and motivation of people

at all levels.

The quality policy shall be implemented through a

network of systems and procedures understood and

followed throughout the Company

Unmatched Quality

Being a quality oriented organization, we always emphasize

on maintaining higher standards of quality. This is the reason

why we have always followed a stringent Quality Control

32

Management. Our team of quality analysts make sure that

each product that is dispatched from our end, meets the

international standard of quality. For this, our quality

analysts monitor every stage right from procurement to

designing, production and dispatching.

The range undergoes numerous tests on the following

quality parameters set by the industry:

Strength

Finish

Size

Color.

Proper quality control policy help us in rendering every

product flawless in terms of color, size, finishing, and

application.

The Main Reason Of best exporter (Vardhman Polytex

Limited) in textile market in India is following

1. COMPANY'S PHILOSOPHY:

• Total Customer Delight

• Competing with the best

• Total Quality People

• Product Quality a way of life

33

• Continued improvement through innovation & creativity

• State of Art Technology with ultramodern R&D facilities

• Respect of every VPL Parivar Member

•Achieving Excellence through culture integration

• Change a way of life

• Act as responsible corporate citizen and discharge our

social responsibilities

Export 2010-2011 (VPL)

Particulars Quantity (Tons)

Value (Crores)

Cotton Yarn – KH 29.88 17.53

Cotton Yarn – CH 37.37 60.26

Cotton Yarn - Ch Fine 69.36 21.16

Cotton Yarn- Organic(100%)

7.61 2.6

Cotton Yarn- Organic Blended

11.91 11.58

Modal: Cotton-Blended

83.34 1.76

34

Cotton Yarn – CH Supima

1 3.87 1.78

Cotton: Lycra- Combed

79.56 1.52

Cotton:Bamboo – Combed

40.82 0.86

Total 119.05 Crores

Export 2009-2010

Particulars Quantity(Tons)

Rate(Kg.)

Amount(Rs.)

Cotton Yarn – KH 491.13 118.51 58202945

Cotton Yarn – CH 4033.96 119.74 483017161

Cotton Yarn - Ch Fine 1107.01 138.48 153297845


132.04 152.53 20140170


81.65 143.37 11705515

35


61.24 160.51 9828735


2.2 227.65 500094


8.62 170.40 1468579

Cotton:Bamboo – Combed

0.05 333.98 16832.66

Total Exports 738177877

Export 2008-2009

Particulars Quantity(Tons)

Rate(Kg.)

Amount(Rs.)

Cotton Yarn – KH 450.06 100.12 45060938

Cotton Yarn – CH 2727.55 110.99 302730148



- - -


- - -

36


- - -


- - -


- - -

Cotton:Bamboo - Combed

- - -

Total 425603072

Export 2007-2008

Particulars Quantity (Tons)

Rate Amount

Cotton Yarn – KH 596.72 95.44 56951246

Cotton Yarn - CH 1885.95 103.70 195564642



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- - -

37


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Cotton Yarn - CH Supima

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- - -

Cotton:Bamboo - Combed

- - -

Total 84893686

Export Procedure Export procedure is a system or

methodology by which export trade transaction is

completed. It involves the study of different steps that are to

be taken by the two parties namely the exporter and the

importer. The export procedure is lengthy & time consuming.

It involves a number of steps right from the time an export

order is received and it is completed with the realization of

export proceeds.

In between there are many formalities is required

to be completed. In the export procedure various formalities

need to be completed & various documents are required to

be prepared by the exporter. Every exporter should have a

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thorough knowledge of the rules, regulations & procedure

required to be followed for exporting the goods

abroad.

The procedure of exporting involves the following stages:-

STAGE 1:

First of all, searching of customer is done and then export

order is received. Usually gets order in three ways:-

Through Internet.

Through International Trade & Exhibition.and,

Through Global Tender which is floated by the Importer.

STAGE 2:

The export order must specify the mode of payments

such as:

L/C (Letter of Credit)

D/P (Document against Payment)

D/A (Document against Acceptance)

At this stage, the company prepares all the necessary

documents including Sales Contract required by the buyer

and submits to the negotiating bank in exact specified

manner. The most important documents demanded by the

importer are:-

Bill of Exchange

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Commercial Invoice

Packing List

Bill of Lading

Marine Insurance Policy

Certificate of Origin

STAGE 3:

After getting export order from the desired country,

VPL enters into a contract with it. Once the order has been

received, the export order is scrutinized with reference to

the terms & conditions of the export contract. This is the

most crucial stage. All subsequent actions and reactions will

depend on these terms & conditions.

It is ensured that contract has been entered into in

accordance with the prevalent export policies of the country

and Foreign Exchange Regulations like FERA and FEMA.

STAGE 4:

As soon as the export order has been confirmed,

preparations for the dispatch of Yarns are started. After

Agreement, the manufacturing order is sent to the

production manager by the marketing department of VPL.

This order contains the description of Yarns as has been

given in the export order, alongwith the copy of the

instructions given by the importer. The date by which the

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Yarns must ready is clearly intimated to the production

manager and advice the material procurement for assuring

the availability of the items required for the Yarns on the

basis of work order, manufacturing starts.

STAGE 5 :

After manufacturing, inspection is carried out by the

quality assurance deptt. of VPL, as final inspection is done by

the IMPORTER, if the importer so desires.

STAGE 6 :

As soon as the yarns are manufactured,

production manager informs the marketing department that

the goods are ready to dispatch. At this stage, two important

documents are to be prepared :-

ARE 1 form

CT 1 form

ARE 1 form is prepared in quantiplicate and CT 1 form is

prepared in quadra duplicate. CT forms are issued by the

exise department. ARE1 forms are presented to the Range

Superintendent of Central Exise , who after necessary

formalities signs all the copies. The original & duplicate

copies are given back to the exporter. The triplicate copy is

sent to the maritime collector, fourth copy is sent to the

Chief Accounts Officer & the remaining copy is kept by the

office of Range Superintendent.

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The other authority which the export department

approaches immediately at this stage is the Export

Inspection Agency for conducting Quality & Pre-Shipment

Inspection. An inspector is deputed by the Inspection Agency

to inspect the consignment. If the Yarns are confirmed to the

prescribed specifications, an Inspection Certificate is issued.

The Yarns are then dispatched to the port of shipment.

STAGE 7:

After the Yarns have been dispatched to the port of

loading, a dispatch advice is sent to the export department.

Soon after an application is sent to the Insurance Company

for Marine Insurance Cover. The Insurance policy is obtained

in duplicate.

At this stage all formalities in relation to ECGC cover,

Certificate of Origin, Consular Invoice etc. wherever

necessary is completed.

There after the export department sends the following

documents to its clearing & forwarding agent along with

detailed instructions:-

Commercial Invoice

Original Export Order

Original Letter Of Credit

ARE1 form (original & duplicate copies)

Excise Gate Pass

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Packing List

Certificate of Inspections

Declaration Form in Triplicate

Consular Invoice

Export License

Railway Receipt

STAGE 8:

The Clearing & forwarding agent takes the delivery of

the consignment from the railways & arranges its storage &

warehouse. Thereafter the agent prepares the requisites

copy of shipping bill.

STAGE 9:

After the shipping bill has been prepared & passed by

the customs, the Clearing & forwarding agent presents the

port trust copy of the shipping bill to the shed

superintendent of the port trust & obtain carting order for

bringing the export cargo in the transit shed for physical

examination. Thereafter, in the case of shed cargo, the dock

challan is prepared. The following details are given in the

dock challan:-

Consignee’s name & address

Vessel name

Port of destination

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Exporter’s name

Mark & No. of packages

Gross weight

Port charges payable

Other details as necessary

STAGE 10:

The ship clerk calls for cargo from shed & after loading

prepares the mate’s receipt. The mate’s receipt is signed by

the captain of the ship. It is then delivered to the port

commissioner’s shed. The clearing & forwarding agent pays

the port charges & takes the delivery of the mate’s

receipt. This mat’s receipt is then presented to the shipping

company along with the requisite no. of Bill of Lading.

STAGE 11:

The clearing & forwarding agent forwards the

following documents to the exporter:-

Full set of Bill of Lading

Shipping Bill

Copies of Custom Invoice

ARE1 form

One copy of commercial Invoice duly attested by the

customs

Original Export order

Original Letter of Credit

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Railway concession form duly attested by the customs

STAGE 12:

As,soon as the exporter (VPL) receives the above

documents from the clearing& forwarding agent, completes

the remaining formalities. The exporter files a claim with

maritime collector of Central Excise in the port town for

rebate of Central Excise duty, side by side, shipment advice

is sent to the importer. The following documents are

forwarded along with the shipment advice:-

A non negotiable copy of the Bill of Lading

Customs Invoice

Commercial Invoice

Packing list


Single country declaration

STAGE 13:

The following documents are presented to the

negotiating bank:-

ARE 1 form (Duplicate copy)

Bill of Exchange

Full set of Bill of Lading (All the negotiating copies)

Letter of Credit (original)

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Commercial Invoice (Two copies)

Custom Invoice (2 copies)

Packing list (2 copies)

Certificate of Origin (2 copies)

Marine Insurance certificate (2 copies)

Bank Realisation Certificate (2 copies)

STAGE 14:

This is the last stage of export procedure. At this stage

the bank processes & negotiation is done in the following

manner:-

The entire documents are scrutinized with reference to yhe

terms & conditions of the original Letter of Credit (In case of

L/C payment terms)

Thereafter a set of following documents is transmitted to the

banker of the importer by the first air mail followed by the

second set of it by the second air mail to ensure that in case

the first is lost, the importer can take the delivery of the

consignment on the basis of second set of documents. These

set of documents are:-

Bill of Exchange

Negotiable bill of lading

Commercial Invoice

Customs Invoice

Insurance policy

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Consular Invoice

Packing list

The original copy of the bank certificate along with the

attested copies , the commercial invoice is returned to the

exporter. The duplicate copy of the bank certificate is

forwarded to the office of the Director General of foreign

trade in the area.

EXPORT DOCUMENTATION

There are a number of documents, which have to be

prepared by the exporter in order to arrange export of his

consignments.

These documents can be mainly classified into two i.e.

(a) Commercial Documents and

(b) Regulatory Documents

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Commercial documents: There are 15 commercial

documents. Out of the 15 commercial documents, eight

are principal and the rest are auxiliary.

Principal documents are required for effecting physical

transfer of goods and transferring of title of goods from

an exporter to an importer. There are eight principal

documents:

1. The Commercial Invoice: It is a formal demand note

for payment issued by the exporter to the importer for

goods sold under a sales contract. It should give details

of the goods sold, payment terms and trade terms. It is

also used for the customs clearance of goods and

sometimes for foreign exchange purpose by the

importer. It is prepared by exporter.

2. Packing List: A list with detailed packing information of

the goods shipped.

3. Bill of Lading/Air Waybill: An evidence of contract

between the shipper of the goods and the carrier. The

customer usually needs the original as proof of

ownership to take possession of the goods. A kind of

waybill used for the carriage of goods by air. This serves

as a receipt of goods for delivery and states the

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condition of carriage but is not a title document or

transferable/ negotiable instrument.

4. Certificate of Inspection/Quality control: A report

issued by an independent surveyor (Inspection

Company) or the exporter on the specifications of the

shipment, including quality, quantity, and/or price, etc;

required by certain buyer and countries.

5. Certificate of origin: It is a document certifying the

country in which the product was manufactured and in

certain cases may include such information as the local

material and labor content of the product. A popular

example of its is Form A which is often called the GSP

form A.

6. Bill of Exchange: An unconditional written order, in

which the importer addressed to and required by the

exporter to pay on demand or at a future date a certain

amount of money to the order of a person or bearer.

7. Shipment Advice: The documents related to Shipment

discussed further in detail.

8. Insurance Certificate: An insurance policy is an

insurance document evidencing insurance has been taken

out on the goods shipped, and it gives full details of the

insurance coverage. An insurance certificate certifies that

the shipment has been insured under a given open policy

and is to cover loss of or damage to the cargo while in

transit.

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Auxiliary Documents: TheSe are required for

preparation and procurement of principal export documents.

The seven auxiliary documents are

1. Performa Invoice

2. Intimation for inspection

3. Shipping instructions

4. Insurance Declaration

5. Application for certificate of origin.

6. Mate's Receipt: A mate receipt is issued by the

commanding officer of the ship when the cargo is loaded

on the ship and contains information about the name of

the vessel, berth, date of shipment, description of

packages, marks and members etc. it is first handed over

to the Port Authorities that all the port dues may be paid

by the exporter. After paying all the dues, the agent may

collect the receipt from the port authorities. Bill of loading

is prepared by the shipping agent after the mate receipt

has been obtained.

7. Letter to bank of collection/negotiation of

documents

Regulatory Documents

These are those documents which have been prescribed

by different govt. departments for the requirements of

various rules and regulations under relevant laws

governing by export trade such as foreign exchange

regulations. There are seven regulatory documents

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associated with the pre-shipment stage of the export

transaction. They are:

1. ARE Form (By Central Excise Authorities): It is used

for claiming excise rebate / duty drawback.The different

copies of ARE.1/AR4 forms should be of different colors

indicated below:

Original---- White (Returned to Exporter)

Duplicate--- Buff (Do)

Triplicate--- Pink (Rebate sanctioning

authority )

Quadruplicate---Green (Chief Accounts Officer

at Collectorate Head Quarters)

Quintuplicate---- Blue (Central Excise Officer)

Sixtuplicate- Yellow (optional copy to

exporter)

2. Shipping Bill/Bill of Export (Central Excise

Authorities): It is the main document required by the

Custom Authority for allowing shipment. Basically shipping

bills are of four types. The major distinction between one

type and another lies with regard to the goods being

subject to:

A. Export Duty

B. Free of Duty

C. Entitlement to Duty Drawback

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D. Entitlement of Credit of duty under DEPB scheme

E. Re Export of importing goods.

3. Port Trust Copy of Shipping Bill/ Export

Application/Dock Challan: The exporter has to fill up

a form in duplicate for the payment of dock charges.

This form is known as ‘Dock Challan’. It is after

completion of this process that the exporter can bring

the goods for loading in the ship. For this purpose, a

document is issued permitting the goods to be brought

to the docks for loading. This document is known as

Dock Warrant. After the goods are actually brought to

the docks and handed over to the dock authorities for

loading in the ship, the document issued as a proof of

delivery is known as Dock Receipt.

4. Vehicle ticket: It is prepared by the exporter and

includes detail of the export cargo in terms of the

shipper’s name, the number of packages, the shipping

bill number, the port of destination and number of items

carrying the cargo. The cargo driver should posses the

ticket and the when the vehicle is brought to the port

gate, it should be presented to the gate warden along

with other shipping documents. After that he is allowed

to pass the gate.

5. Exchange Control Declaration/GR/PP forms (By

RBI): It is Prescribed by the RBI under FEMA to ensure

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that the Forex receipts in respect of exports are

repatriated to India. Prepared in duplicate. Both copies

submitted to customs at port of shipment along with

shipping bill. Customs gives ten no. running serial no. on

both copies Customs returns duplicate copy and retains

original. Exporter submits GR form and other documents

to his bank/authorized dealer for collection of export bills

within 21 days

6. Freight Payment Certificate -Steamer Agents: It is

like receipt for payment of freight

7. Insurance Premium Payment Certificate -

Insurance Co.: It is like receipt for payment of

insurance premium.

Some Main Documents Related to Payment

1. Letter of Credit: it is an arrangement whwreby

the importer requests and instructs the issuing bank

2. Bill of Exchange (Draft)

Related Aspects of Export

As per the government rules and policies a company

involved in the process of export has to complete a number

of formalities before starting the actual exports. The

formalities related with export process of Vardhman Polytex

Limited are:

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o The company has to get an export code by registering

itself with the Director General Foreign Trade

o After registering the company gets a RBI Code.

o Various export promotion councils have been set up for

various products and a company involved in export has

to register with it. Vardhman Polytex Limited has

registered with TEXPROCIL (Textile Export Promotion

Council).

o The Company has to notify central excise department.

After notification the range Office regularly checks the

records of the exports and taxes etc.

o The company involved in exporting a product receives

certain benefits. For these the company has to inform

and authentify the exports made by it to the concerned

export promotion zone head.

o Finally the company has to tie up with a commercial

bank for maintenance of accounts, Loans etc.

Quality Policy

A product known for better quality always stands a

class above its competitors. It is on the basis of quality that

Vardhman can afford to charge higher prices than the

competitors. A constant check is maintained during various

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stages manufacturing process by R & D department of

Vardhman Polytex. In pursuit of better quality and to

maintain present level of quality, a quality policy has been

incorporated into the system.

Quality shall be built into the company’s products to not

only meet customers’ requirements continuously but exceed

them. The company shall achieve this thought an

interface with the market place, R&D, Process development

and adoption of innovative manufacturing and marketing

strategies.

The quality policy shall be implemented through a

network of systems and procedures understood and followed

throughout the company. The quality policy shall be

integrated with the company’s main objectives:

a. to Remain market leader in quality

b. Increase market share with focus on each segment

c. Improve Productivity

d. Cost Reduction

e. Reduction in Percentage of wastage

The management is committed to provide capital

and human resources to achieve above objectives. A

companywide quality culture shall be created through

training and motivation of people at all level in

organization.

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SWOT ANALYSIS OF

VARDHMAN POLYTEX LIMITED

From the study undertaken at Vardhman Polytex Limited the

following are observed:

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Strengths

a) The Company is a professionally managed

company and all the departments are being

headed by professionals.

b) The Company was earlier a part of Vardhman Group

and a follower of new management concepts like

Kaizen, Quality Circles, Five Ss, etc., and as such is

continuously upgrading the skill level of the workers

for better product quality.

c) The Company is already in the line of spinning yarn

and as such is having the requisite technology

/personnel.

d) The technology used by the Company is comparable

to its peer and as such is capable of supplying quality

products.

e) The expansion projects will improve the productivity

and profitability of the Company and consequently

competitiveness.

f) The existing units will add to the cash generation

of the Company resulting into improved repayment

capacity of the unit.

g) The Company is better equipped to face the world

competition in view of the State of the art machinery

and improved productivity.

h) The Companys’ Bhatinda unit is ISO 9000 certified,

whereby its quality manufacturing is at par with its

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competitors.

i) The Companys’ dyeing facility has been certified

by Oekotex Switzerland, which is top certification.

j) The Company has been awarded status of Star

Trading House.

k) Bhatinda is the hub for cotton procurement, as the

unit is located in Bhatinda itself, thus, the Company

has the advantage of economies of procurement.

l) The Company has raised the term funds at very

favourable interest rates, which are either lower

then its peers or at par with its peers.

Weaknesses

a) The basic raw material of the Company is cotton,

which is an agriculture produce. The cotton prices

are thus dependent on the production of cotton

(demand / supply) in the country/international

market.

b) The Company is also in acrylic yarn segment where

the margins are thin.

c) The Company is manufacturing grey cotton yarn

(70%), while the diversification / entry to other

cotton yarns like mélanges, higher counts is still to

be made.

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Opportunities

a) The Company can import cotton at competitive rates

and better quality at any time in case of need due to

rupee appreciation.

b) The Company can explore international markets as

the potential is high.

c) With the closing down of textile units in Europe, the

advantage of foreign acquisition can be explored.

Threats

a) Trade blocs and partnerships at the exclusion of

India.

b) Location disadvantage: long transit time to key

markets.

c) Pricing pressure, following opening up of quotas

d) Enhanced competition from other countries similarly

constrained by quotas

Vardhman Polytex Limited has a strong hold in the market

due to dominance of its brand and it has opportunities like

technology and quality Upgradation which it is continuously

in pursuit of.

It’s only the policies of GOI like promotion of 100% EOU

and exchange rates of other competing countries which offer

a major threat to Vardhman Polytex Limited.

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But with pursuance for quality and technology Vardhman

Polytex Limited is trying to convert most of opportunities into

strength and reduce its weaknesses.

Conclusion

From the present study conducted at Vardhman Polytex

Limited , it can be concluded that

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Vardhman Polytex Limited has a strong position in the

market due to the quality and variety of cotton yarn supplied

by it. VPL mainly deals with export of production. All the

exporters follow the same process for exporting their things.

Export process is rigid as well as flexible. The documents

used in export procedure are standardized.

Vardhman Polytex Limited is trying its best to improve

the present level of quality of yarn being manufactured and

to upgrade the technology its continuously in the process of

modernization. All the efforts are done by the top

management to boost up the exports.

BIBLOGRAPHY

International Marketing

- B.S. Rathor, B.M. Jain, J.S. Rathor

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International Trade & Export Management

- R.L. Varshney, B.Bhattacharya

www.texprocil.com

www.export911.com

www.eximguru.com

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http://www.eximguru.com/

http://www.export911.com/

http://www.texprocil.com/

Vardhman Polytex Limited Bathinda Project for Mba

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