Siri Mba Final Project

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CONTENTS CHAPTER NO Chapter 1: Introduction 1.1 Meaning and nature of FT operations 1.2 Need for the study 1.3 Objective 1.4 Methodology Chapter 2: Company profile 2.1 India’s largest international trade 2.2 MMTC Mission 2.3 Corporate objectives 2.4 Infrastructure 2.5 Logistics & Customer servicing 2.6 Credentials 2.7 Board of directors Chapter 3: India’s trading industry 3.1 India’s trading industry Chapter 4: Export/Import procedure 4.1 Pre-requisites & exports 4.2 Export Procedure 4.3 Export financing 4.4 Import financing 4.5 Documentation 4.6 Recognition of exports Chapter 5: MMTC Imports 5.1 Gems & Jewellery Imports 5.2 Fertilizer Import 5.3 Metal Import 5.4 Coal & Hydrocarbons Import 5.5 General Imports PAGE NO 3 3 4 4 5 6 6 7 7 7 8 11 18 19 23 26 28 29 30 35 36 40 44

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Chapter 6: MMTC Exports 6.1 Mineral Ore Exports 6.2 Agro Products 6.3 General Exports Chapter 7: Data Analysis 7.1 Product group wise composition 7.2 Business composition 7.3 Foreign Exchange Earnings 7.4 Competitors Chapter 8: SWOT Analysis Chapter 9: Achievements & Awards Chapter 10: Limitations, Findings, Suggestions Chapter 11: Bibliography

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1. INTRODUCTION
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MEANING AND NATURE OF FOREIGN TRADE OPERATIONS STUDY. NEED FOR THE STUDY. OBJECTIVE OF THE STUDY. METHODOLOGY.

1.1 Meaning and nature of Foreign trade operations: As far as foreign trade is concerned, this meant large-scale import substitution through extensive protection of domestic industries, direct controls on imports and investments, and overvalued exchange rates. As far as export sector is concerned, it was marked by extreme pessimism. Most of the third world countries have a colonial past marketed by extensive and intensive exploitation of their economies by colonial powers. One of the important instruments of exploitation has been the instrument of foreign trade. 1.2 Need for the study: Raul Prebisch, Hans Singer, Gunnar Myrdal, Ragnar Nurkse and many other development economists in 1940s and 1950s pointed out that colonial powers have had the best of both worlds, both as consumers of primary commodities and as producers of manufactured articles while the colonies (the underdeveloped countries) have had the worst of both worlds, as consumers of manufactures and producers of raw materials. This was due to declining prices f primary goods and increasing prices of manufactured goods causing the terms of trade to deteriorate considerably over time for the underdeveloped countries which were exporters of primary goods. Therefore many underdeveloped countries that won independence in post world war 2 period viewed foreign trade and investment with a certain amount of suspicion. Accordingly, they turned their attention to the domestic markets. Many of them also adopted large-scale programmes of industrialization to Build up the industrial sectors of their economies and reduce their dependence for manufactured goods on developed countries.

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1.3 Objectives of the study:
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To understand the INDIA’s Trading Industry. To know the Export/Import procedures & documents. To know about MMTC Imports & Exports. Analyzing the changes taken place in the imports and exports of MMTC.

1.4 Methodology: To attain the objectives of studying trade operations of MMTC. The information has been collected in two ways:
1. 2.

Primary data. Secondary data.

Primary data:
In primary data the analysis of India’s trading industry, collection of Export/ Import procedures and documents required, collection of data regarding the MMTC import and export details and methodology’s they following.

Secondary data:
The secondary data has been collected from annual reports of organization, internet and books.

2. MMTC COMPANY PROFILE
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CORPORATE PROFILE:




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Established in 1963, MMTC, one of the two highest foreign exchange earners for India, is a leading international trading company with a turnover of over US$ 5 billion. It is the largest international trading company of India and the first Public Sector Enterprise to be accorded the status of "FIVE STAR EXPORT HOUSE" by Govt. Of India for long-standing contribution to exports. MMTC is the largest non-oil importer in India. MMTC's diverse trade activities encompass Third Country Trade, Joint Ventures, and Link Deals - all modern day tools of international trading. Its vast international trade network, which includes a wholly owned international subsidiary in Singapore, spans almost in all countries in Asia, Europe, Africa, Oceania and Americas, giving MMTC global market coverage. 2.1 MMTC-India's largest international trading house MMTC- where opportunities are explored consistently and continuously with dedication and persistence. The last four decades of MMTC's dedication has richly rewarded the company by placing in its present enviable position of India’s largest international trading house. With annual business turnover of over US$ 2 billion, MMTC contributes significantly to India’s international trade by opening export opportunities across the globe for Indian products and sourcing inputs required by the domestic industry, agriculture and for home consumption. MMTC is committed to continuously innovative business operations that support competitiveness across the larger value chain with models founded on market principles. The company's diverse core competencies provide robust competitive capabilities resulting into organization's ability to add value to its product and services. To adapt effectively to the era of globalization and liberalization, MMTC has been adopting new and innovative tools of trading for enhancement of productivity and efficiency. Provide robust competitive capabilities resulting into organization's ability to add value to its product and services. To adapt effectively to the era of globalization and liberalization, MMTC has been adopting new and innovative tools of trading for enhancement of productivity and efficiency. Providing end-to-end logistics, protecting customers from perceivable risks, supplying quick and reliable market information backed by dependable after
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sale service trough ERP solutions, are some of the strategic initiatives which have made the company truly market driven with enhanced customer satisfaction. As a leading player in fertilizers and fertilizer raw material, MMTC has become a major fertilizer marketing company in India, through planned forward integration of its import activities with the direct marketing of Urea, DAP, MOP, Sulphur, Rock Phosphate, SSP and other farming and agricultural inputs. 2.2 MMTC's MISSION: As major trading company in Asia (with special focus on international trading particularly in the field of bulk handling), MMTC aims at achieving sustainable and viable growth rate by achieving excellence in all its activities, generating optimum profits through total satisfaction of shareholders, customers, suppliers, employees and society. To achieve the Mission, MMTC has set objectives to consolidate its position as a leading international trading house with focus on 'bulk' operations. Besides keeping its position intact as the single largest international trader in the country for product lines like minerals, metals, fertilizers, precious metals and as a major operator in Agro, coal & hydrocarbon sectors, the company also associate itself in promotion and development of trade related infrastructure. 2.3 CORPORATE OBJECTIVES:


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To be a leading international trading house operating in the competitive global trading environment, particularly specializing in bulk handling activities, and adequate returns on capital employed. To strive to become market leader in the most of its traditional product lines like Minerals, metals, Fertilizers and Gold, Gems & jewellers. To aim at becoming a major exporter of Agro products. To render high quality of service to all categories of customers professionalism and efficiency and to provide high quality of goods and services to all our customers. To put in place a streamlined and efficient system within the company for settlement of commercial disputes. To promote development of infrastructural facilities to facilitate trade related activities.

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2.4 INFRASTRUCTURE MMTC has a strong nationwide presence with 76 offices covering all the major consumption centres and port towns in India with deployment of over 2000 highly skilled and experienced manpower across the country. The company also has an international trading setup in Singapore serving clientele in china, south East Asia and countries in the Far East. With the state of art wide area network proving online information exchange throughout the country through ERP , the company has capability to proactively source items surplus, the company has capability to proactively source items surplus to domestic demand for exports from India and also to coordinate the demand of domestic users for import. It has its own warehouse, storage facilities, handling and transportation network and quality control mechanism in place to provide quick and quality services to its clientele. The company handles about 15 million tones of cargo annually and is the largest single user of the railways and port facilities for international trading operations in India. 2.5 LOGISTICS & CUSTOMER SERVING Headquartered in New Delhi with port regional offices providing the logistic support, the company services a large customer base in India. Every key requirement of the customers focused attention with a view to provide services to their utmost satisfaction. For details of company's products and services in core areas of its operations are available on its website www.mmtclimited.org. 2.6 CREDENTIALS With special focus on international trading of bulk items, MMTC has established its credentials as a major trading company in Asia. MMTC is the first international trading company to be given the coveted status of "Super Star Trading House" and the first public sector enterprise to be accorded "Golden Super Star Trading House" status by the government of India.

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BOARD OF DIRECTORS:
Shri Sanjiv Batra - Chairman & Managing Director Smt Asha Swarup - Part Time Director (up to 21.5.2007) Dr Christy L Fernandez - Part Time Director (up to 8.6.2007) Dr S Behuria - Part Time Director (w.e.f.21.5.2007) Shri R Gopalan - Part Time Director (w.e.f. 8.6.2007) Shri S K Kar - Director (Finance) Shri Adarsh R Goyal - Director (Marketing) Shri A Mahapatra - Director (Personnel) Shri H S Mann - Director (Marketing) Shri Sunir Khurana – Director (Marketing)(w.e.f.7.5.2007)

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2.7 MMTC’S ROLE IN INDIA’S FOREIGN TRADE This corporation, known as the MMTC, was established by the government of India in 1963.It was expected to develop the export of mineral ores and such other products as assigned to it by the govt. from time to time. It was also given the responsibility of importing some essential raw materials from Indian industries Of all main products it concentrated on the export of iron ore, manganese ore, certain grades of coke and coal, Ferro-manganese, bauxite, etc. Iron ore occupies a predominant position in the exports. The total exports of the country in iron ore and concentrates are of the order of 28 million tones, fetching Foreign Exchange earnings of Rs. 543 crores in 1988-99. And also MMTC is responsible only for the export of Iron ore other than of Goan Origin. On the Import side, the corporation by non ferrous metals, fertilizers, certain categories of steel, etc. in bulk quantities at competitive rates for supply to Indian industries. The various subsidiaries of MMTC were established and expanded with the avowed Government objectives of placing the Export and Import trade, especially of the products which come under the purview of the organization, in the Public Sector with a view to giving a boost to Export Trade. With liberation, competition became severe and posed an immediate threat to the traditional lines of business as it became free for all. In this completely changed business scenario, MMTC quickly converged fits focus to consolidate the core business areas like minerals, metals and fertilizers. To complement consolidation and support expansion, diversification into new areas like agro, precious metals, coal and hydrocarbon were initiated with added emphasis on expanding trade related infrastructure like warehouse, distribution and retail outlets. No doubt increased competition means higher pressure on margins and business success rates, but to deal with the challenges the company has been putting greater emphasis on enhancing operational efficiencies and increased customer focus. To increase profit margins and tackle both global and domestic competition, MMTC has set forth processes to enhance their knowledge base , sharpen marketing skills, optimize internal systems and adopt a new IT driven mechanism to enhance responsiveness and have effective monitoring and control.

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Management focus is on improving efficiencies of all their resources including the key asset-human resources through innovative schemes. IT will be the key enabler, which will not only reinforce the core activities of the business transactions but would also broaden the range of the business opportunities. As an organization, MMTC will continue to be customer driven. Profits in future will be influenced by the intent of the company to give customer value for money, improved responsiveness and providing specific and most appropriate solutions to customer needs. MMTC has reinforced its business setting a strong foundation for an accelerated growth in these years ahead. Strategic initiatives and aggressive marketing efforts have been well rewarded with an all round growth in the company’s performance amidst highly challenging operating environment driven by intense competition. MMTC is diversifying, establishing and expanding into new areas of core competency i.e. bulk handling. Coal& Hydrocarbon and Agro have been identified as promising and new business areas having potential to make MMTC bigger and more profitable. MMTC has made forays into various new products for value addition. In the area of mineral exports, value added product in the form of sized lumpy ore is now being exported to Japan and South Korea. MMTC promoted project in Orissa will provide value addition of nearly 6 times to the iron ore hitherto exported from the region. MMTC – the public sector trading giant has successful transformed to adjust to the new economic order.

3. INDIA’S TRADING INDUSTRY

3.1. INDIA'S FOREIGN TRADE: JANUARY-2009 A. EXPORTS (including re-exports)
Exports during January, 2008-09 were valued at US $ 12381 million which was 15.9 per cent lower than the level of US $ 14717 million during January, 2008. In rupee terms, exports touched Rs. 60460 crore, which was 4.3 per cent higher than the value of exports during January, 2007-08. Cumulative value of exports for the period April- January, 2008-09 was US$ 144266 million (Rs.645572 crore) as against US$ 127454 million (Rs. 512945) registering a growth of 13.2 per cent in Dollar terms and 25.9 per cent in Rupee terms over the same period last year.

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B. IMPORTS
Imports during January, 2008-09 were valued at US $ 18455 million representing a decrease of 18.2 per cent over the level of imports valued at US $ 22566 million in January, 2007-08. In Rupee terms, imports increased by 1.4 per cent. Cumulative value of imports for the period April- January, 2008-09 was US$ 243358 million (Rs. 1090182 crore) as against US$ 194285 million (Rs. 782297 crore) registering a growth of 25.3 per cent in Dollar terms and 39.4 per cent in Rupee terms over the same period last year. C. CRUDE OIL AND NON-OIL IMPORTS: Oil imports during January, 2008-09 were valued at US $ 4463 million which was 47.5 per cent lower than oil imports valued at US $ 8505 million in the corresponding period last year. Oil imports during April- January, 2008-09 were valued at US$ 83290 million which was 32.4 per cent higher than the oil imports of US$ 62926 million in the corresponding period last year. Non-oil imports during January, 2008-09 were estimated at US $ 13992 million which was 0.5 per cent lower than non-oil imports of US$ 14061 million in January, 2007-08. Non-oil imports during April- January, 2009 were valued at US$ 160068 million which was 21.9 per cent higher than the level of such imports valued at US$ 131359 million in April- January, 2007-08.

EXPORTS & IMPORTS : (US $ Million) (PROVISIONAL) JANUARY EXPORTS(including re-exports) 2007-2008 2008-2009 %Growth 2008-09/2007-2008 IMPORTS 2007-2008 2008-2009 %Growth 2008-09/2007-2008 22566 18455 -18.2 194285 243358 25.3 14717 12381 -15.9 127454 144266 13.2 APRILJANUARY

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TRADE BALANCE 2007-2008 2008-2009 -7849 -6075 -66830 -99093

EXPORTS & IMPORTS : (Rs. Crore) (PROVISIONAL) JANUARY EXPORTS(including re-exports) 2007-2008 2008-2009 %Growth 2008-09/2007-2008 IMPORTS 2007-2008 2008-2009 %Growth 2008-09/2007-2008 TRADE BALANCE 2007-2008 2008-2009 Figures for 2007-08 are the latest revised whereas figures for 2008-09 are provisional F. No. 1(5)/2008-EPL Government of India Ministry of Commerce and Industry Department of Commerce Economic Division New Delhi, The 2nd March, 2009
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APRILJANUARY

57948 60460 4.3

512945 645572 25.9

88852 90125 1.4

782297 1090182 39.4

-30904 -29665

-269352 -444610

PRESS RELEASE INDIA’S FOREIGN TRADE: JANUARY, 2009.

D. TRADE BALANCE
The trade deficit for April- January, 2008-09 was estimated at US $ 99093 million which was higher than the deficit at US $ 66830 million during April- January, 200708.

Merchandise Trade


Advance Release Calendar

SDDS data category and Component Unit of description Observation s Percentage Data for Change Latest Previous from data period Previous to (2) (3) latest Period

Period of Latest data (1)

External SectorMerchandise Trade

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Total Exports (f.o.b.) Total Imports (c.i.f.) Total Trade Balance

US$ Million US$ Million US$ Million

January, 2009

12381

14717

-15.9

January, 2009

18455

22566

-18.2

January, 2009

-6075

-7849

-22.6

1. Reference Month 2. Provisional data reported in the Press Note of the Current Month 3. Latest revised figures of the previous year reported in the Press Note of the current Month

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DEPARTMENT OF COMMERCE System on Foreign Trade Performance Analysis (FTPA) Export of Principal Commodities Groups Commodity A) PLANTATION B) AGRI & ALLIED PRDTS C) MARINE PRODUCTS D) ORES & MINERALS E) LEATHER & MNFRS F) GEMS & JEWELLERY G) SPORTS GOODS H) CHEMICALS & RELATED PRODUCTS I) ENGINEERING GOODS J) ELECTRONIC GOODS K) PROJECT GOODS L) TEXTILES M) HANDICRAFTS N) CARPETS O) COTTON RAW INCL WASTE P) PETROLEUM PRODUCTS Q) UNCLASSIFIED EXPORTS Total Apr-Nov 2007 2,440.34 31,141.47 5,160.61 20,255.63 9,213.77 53,753.53 348.63 56,356.25 84,176.67 8,936.36 371.39 47,873.15 1,615.91 2,593.80 2,543.07 69,888.30 10,990.24 407,659.13 Apr-Nov 2008(P) 3,395.95 45,281.10 4,961.88 22,367.97 10,925.95 60,435.80 446.33 73,126.26 121,118.59 13,663.93 531.44 54,729.49 1,010.08 2,379.41 1,999.79 95,570.60 11,297.88 523,242.47 %Growth 39.16 45.40 -3.85 10.43 18.58 12.43 28.03 29.76 43.89 52.90 43.09 14.32 -37.49 -8.27 -21.36 36.75 2.80 28.35 %Share 0.65 8.65 0.95 4.27 2.09 11.55 0.09 13.98 23.15 2.61 0.10 10.46 0.19 0.45 0.38 18.27 2.16 100.00

Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Import of Principal Commodities Groups
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Commodity A) BULK IMPORTS B) PEARLS, PRECIOUS & SEMIPRECIOUS STONES C) MACHINERY D) PROJECT GOODS E) OTHERS Total

Apr-Nov 2007 280,682.22 24,859.68 79,863.64 3,409.83 233,277.97 622,093.38

Apr-Nov 2008(P) 473,370.78 47,055.06 100,943.27 8,997.26 292,789.07 923,155.38

%Growth 68.65 89.28 26.39 163.86 25.51 48.39

%Share 51.28 5.10 10.93 0.97 31.72 100.00 DOC-NIC

Data Source: DGCIS, Kolkata

Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Top 5 Countries of Export Rank 1 2 3 4 5 Country USA U ARAB EMTS SINGAPORE CHINA P RP HONG KONG Total Apr-Nov 2007 55,461.39 40,884.50 18,125.33 23,978.91 16,007.32 407,659.13 Apr-Nov 2008(P) 62,150.50 58,804.61 26,498.36 23,055.20 19,861.46 523,242.47 %Growth 12.06 43.83 46.20 -3.85 24.08 28.35 %Share 11.88 11.24 5.06 4.41 3.80 100.00 DOC-NIC Top of Form

Data Source: DGCIS, Kolkata

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Bottom of Form Department of Commerce System on Foreign Trade Performance Analysis (FTPA) Top 5 Countries of Import Rank 1 2 3 4 5 Country CHINA P RP SAUDI ARAB U ARAB EMTS USA IRAN Total Apr-Nov 2007 72,226.14 46,336.54 33,944.69 36,823.22 27,132.81 622,093.38 Apr-Nov 2008(P) 92,264.40 71,515.94 60,403.18 54,647.35 42,260.68 923,155.38 %Growth 27.74 54.34 77.95 48.40 55.75 48.39 %Share 9.99 7.75 6.54 5.92 4.58 100.00

4 .EXPORT/IMPORT PROCEDURE & DOCUMENTS -AN

OVERVIEW
4.1 Pre-requisites of Exporters The exporter must have the following requirements before he goes for an Export transaction 4.1.1 PAN from income tax For obtaining a PAN number one has to apply to the income tax department. This is a requirement to open the current account in the name of the proposed business firm and to apply for the allotment of the Importer-Exporter Code Number. 4.1.2 Importer-exporter code number It has been provided under sec-7 of the foreign trade act 1992 that business firms can enter into the business of exports-imports only if it has been allotted an importer-exporter code number by the competent licensing authority. The chief

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licensing authority of India is the office of the DGFT under ministry of commerce with its head quarters located at Udyog Bhavan, New Delhi.

4.1.3 Registration of export firm

4.1.3.1 Registration under sales tax law
There is an exemption from levy of sales tax on the sale of goods to an exporter for the export of goods against specific export order to another country both under the central sales tax act, 1956. so the goods must be registered under central sales tax law. 4.1.3.2 Registration under central excise law The constitution of India empowers the central and state government to impose and collect the levy of excise vide entry No.84. 4.1.4 Registration -cum-membership certificate (RCMC): Under the EXIM policy 1997-2002 an exporting firm shall be granted license to import/export of items other than restricted items or any other benefit/concession available under the EXIM policy if it has obtained the RCMC from the concerned export promotion council. 4.2 Export procedure 1) The exporter should be scrutinizing the export order with reference to the terms and conditions of the contract. The export order must specify the mode of payment in unmistakable term such as letter of credit, documents on payment, documents against acceptance etc. The documents required by the foreign buyer must be prepared and submitted to the negotiating bank in the exact specified form and manner. The most important documents that are usually demanded by the importer are: * Bill of exchange. * Commercial invoice. * On board clean bill of lading. * Marine insurance policy * Packing list. * Certificate of origin
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2) As soon as the export order has been confirmed, preparations for the dispatch of goods are started. A delivery note (in duplicate) is sent to the works manager or the factory manager. This note should contain the description of goods as been given in the export order, along with a copy of the instructions given by the importer. The date by which the goods must be manufactured, the date by which the necessary formalities must be completed, the requisite time margin to be given and the shipment must be clearly intimated to the works manager. 3) As soon as the goods have been manufactured, the clearance of the excise authorities has to be obtained. The exporter has to prepare 2 important documents: ARE-1 form and invoice in lieu of gate pass. The other authority that is to be approached next is the export inspection agency for conducting quality control and pre-shipment and for assurances of inspection certificate. If the goods are sent to port of shipment by railway, a railway receipt is obtained. 4) After the good have been dispatched to the port town, the works manager sends a dispatch advice to export dept. soon after, an application is sent to the insurance company for marine insurance. The insurance policy is obtained in duplicate. At this stage all formalities in relation to floor price regulation, certificate of origin, ECGC cover and consular invoice, whatever necessary should be completed. Thereafter the export department sends the following documents to its C&F agents. The documents are * Commercial invoice * Original export order * Original letter of credit * GR form original showing the IE code number * ARE-1 form * Invoice/challan * Packing and weighting list * Certificate of inspection * Declaration form in triplicate * Consular invoice * Export license, where necessary * Endorsement regarding floor price * Purchase memo * Railway receipt 5) The C&F agent takes delivery of the consignment from the railways and arranges its storage in the warehouse .thereafter he prepares requisite copies of the shipping bill. The most important, which are to be filled in the shipping bill. The most important particulars, which are to be filled in the shipping bill, are: * Consignees name& address
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* Vessel's name * Rotation number allotted to the vessel by the customers. * Agent's name * Colour * Port of discharge * Final estimated * Exporters name address * Number of packages * Marks and number * Gross, net and tare weight * Description * FOB value * Country of origin * Code number of goods * Number of packages * Marks and numbers * Gross, net and tare weight * Description * FOB value. * Country of origin * Code number of goods * Number and name of the exchange control GR form * ARE-1 number and date. * Export license number. 6)After the shipping bill has been passed by the customers, the C&F Agents presents the port trust copy of the shipping bill to the shed superintendent of the port trust and obtained carting order, thereafter a Dock challan is prepared. 7) The passed shipping bill including the Dock challan, where submitted, Cart Ticket or Boat Ticket, in the case of over side Cargo, are carried by authorized licensing sircar making the cargo ready for shipment. 8)The ship's export clerk calls from shed or boat after loading prepares the Mate's receipt and in case of airways it issues Airway bill. The ship captain or agent signs the Mate's Receipt. It is then delivered to the port commissioners. the mste's receipt is presented to the shipping company and bill of lading is obtained. 9) The C&F Agent forwards the following documents to the exporter: * Full set of bill of landing or Airway bill * Export promotion copy of shipping bill * Copies of customs and attested invoices * ARE-1 form (duplicate copy)
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* Original export order * Original letter of credit. 10) As soon as the exporter receives the above documents from the C&F agents he completes the remaining formalities. The exporter files a claim with the maritime commissioner of central excise duty or for getting credit in bond account. Side by side, shipment advice is sent to the importer. The following documents are forwarded along with the shipment advice: * A Non-Negotiable copy of bill lading or airway bill * Customs invoice * Commercial invoice * Packing list 11) The following documents are presented to the negotiated bank: * GR Form (Duplicate) * Bill of exchange * Bill of lading/airway bill * Original letter of credit * Commercial invoice (2 copies) * Customs invoice * Certificate of origin (2 copies) * Packing list (4 copies) * Marine insurance policy (2 copies) * Bank certificate in the prescribed form (2 copies) * Additional copies of commercial invoice to be certified invoices to be certified by the bank and returned to exporter * Consular invoices where necessary 12) The negotiating bank scrutinizes all documents with reference to original letter of credit and set following documents are sending to the banker of importer: * Bill of exchange * Negotiable bill of landing/airway bill * Customs invoice * Insurance policy * Certificate of origin * Consular invoice where necessary * Packing list The negotiating bank transmits the duplicate copy of GR form to exchange control dept of RBI. The original copy of bank. Certificate, along with the attested copies of commercial invoice is returned to the exporter. The duplicate is forwarded to the DGFT.
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4.3 EXPORT FINANCING The survival and the growth of the business depends, among other things, on the continues availability of the required amount of the funds. This is true for both the exporters and domestic business. In the regard to export business funds are required at the time of business (long term funds) and for carrying on business (short term funds). The exporters in India have the facility to obtain both the long term and short term funds. Export -import bank of India and all financial institution as well as state level financial institutions to raise long-term funds needed to establish their business. 4.3.1 Pre-shipment Finance Pre shipment finance is a facility to provide working capital finance to an exporter for the purpose of export. The basic purpose of granting this facility is to enable the eligible exporters to procure raw materials, supplies, process or manufactured or warehouse is ship the goods meant for exports. This can be classified into the following three categories: * Packing Credit * Advance against incentives receivable from government covered by ECGC guarantee. * Advance against Cheque/ Drafts received as Advance payment. 4.3.1.1 Packing Credit This type if credit granted by a bank that enables an exporter to pack the goods meant for Exports. It includes the loan or advance or Credit granted by a Bank to an exporter for financing the purchase of raw-material supplies etc., required processing or manufacture of the goods as well as for their shipment to foreign country. It is granted on the basis of confirmed export order of an irrevocable letter of credit opened by an importer in favour of the exporter from India or any other evidence of an export order for export placed by a foreign buyer with an Indian exporter. 4.3.1.2 Pre-shipment credit in foreign currency (PCFC) Export import bank of India (EXIM Bank) has introduced a scheme for Indian exports to enable them to avail of pre-shipment credit in foreign currencies to finance cost if imported inputs for manufactures of expert products.

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Under this scheme EXIM bank arranges short term loans of credit in foreign currency from lending agencies and lends the funds so raised to banks authorized to deal in foreign exchange. The banks re-lend these funds to their exporter customer for import of eligible items. While allocating PCFC limits to their customer's banks will assess the exporter's import requirement for export production. The credit period for an advance under PCFC will not exceed 180 days. The foreign currency pre-shipment credit will be made available in the major international currencies in which the EXIM bank raises funds. The facility for pre-shipment credit limit in foreign currency is available to the following categories of exporters: * Export Houses, trading houses with annual export turnover exceeding Rs.10 Crores. * Manufacturing units with minimum export orientation of 25% of production or export turnover of Rs.5 crores whichever is lower. For this purpose, only physical exports of commodities will be taken into account. Such exports could be made either directly or through trading houses. * The exporter should have satisfactory record.

4.3.1.3 Packing credit against incentives receivable from government of India.
Generally, the advances against incentive receivables from the Government of India are granted on the post-shipment stage. But in certain exceptional circumstances when the value of the materials to be produced for the execution of the order is more than the FOB value of the export order then the banks may grant packing credit against the amount of incentives available from the government of India. Such advances are granted for a maximum period of 90 days at concessional rates of interest as applicable in the case of packing credit advances. the rate of interest on such advances is 10% at present. Such advances are repaid against the negotiation of the export bills and the incentives received from the Government of India.

4.3.1.4 Advance against Cheques/Drafts received as advance payment.
The banks may grant advance to the exporters at the concessional rates of interest notified by the Reserve bank of India, against the proceeds to be realized by them in respect of any cheques or drafts received by them as advance payment towards an export order. The banks extend this facility to only those exporters who have an unblemished track record of dealings with the bank.

4.3.2 Post-shipment finance
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Bank give post-shipment credit (short term) after the shipment of goods and submission of commercial documents to them for negotiation or collection. Postshipment credit is given for exports on deferred payment terms for respect of specified capital and producer goods as are approved by EXIM Bank of India, from time to time.

4.3.2.1 Purchase/Discount of bills
Where bills are not covered under letters of credit, the exporter would have complied with the terms of the relevant sales contract/firm export order. At the request of the exporter, the bank will purchase or discount the export bill and pay the equivalent rupees to the exporter under post-shipment finance.

4.3.2.2 Advance against bills sent on collection basis.
Banks may also sometimes grant advance against bills sent on collection basis. This may be resorted to when the accommodation available under foreign bills purchased in exhausted or when some export bills drawn under L/C have discrepancies. 4.3.2.3 Advance against goods sent on consignment basis. Need for this type finance arises where goods are exported on consignment basis at the risk of the sale and eventual remittance of sale proceeds by the agent/consignee. 4.3.2.4 Advance against cash incentives/ Duty drawbacks Where the domestic cost of production of certain goods is high in relation to international price, government may grant some incentives to the exporter so that he may compete effectively in the overseas market. Such advances are clean in nature and banks may stipulate a margin between 20% to 40% of such claims as the percentage of incentive varies from time to time as published in government notification.

4.3.2.5 Advances against Un-Drawn balances
In certain lines of exports, it is the practice of exporters not to draw bills for the full invoice value of the goods but to leave a small part un-drawn, for payment after adjustments due to differences in weight, quantity, etc., ascertained after arrival inspection, weighment or analysis of the goods. In such cases, banks may negotiate bills and grant post shipment finance on such un-drawn balances subject to some conditions at the concessive rate of interest and subject to a maximum of 90 days.
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4.3.2.6 Advance against Retention money
Banks have permitted to grant advances against retention money, which is payable within one year from the date to date of shipment at concessive rate of interest up to 90 days .if such advance extend the period beyond one year, they will be treated as deferred payment advances, which are also responsible for concessive rate of interest.

4.3.2.7 Rate of interest
As the export credit interest rates are frequently changeable, exporters are advised to contact their banks for the latest rates from time to time.

4.4 Import financing
Every country needs to import to sustain in these world. India followed a restricted import policy till mid eighties. Nothing could be import without license and which required cumbersome procedure along with intricate documentation. Although some liberalization measures were taken in second half of eighties. Real break through came in the nineties.i.e.1991. Study progresses have been made in replacement of the quantitative restrictions. Licensing and discretionary control over the imports by deregulation, simplification of procedures and protection through traffics and exchange rates. Import financing involves making payment to foreign entities for the goods purchased from them. it means about the arranging of funds, involving the choice of financial institution and the instrument to be used for making payment and involving choice of intermediary , through whom the payment is to be made.

4.4.1 Financing import under letter of credit
Letter of credit can be defined as a commitment of bank to pay the seller of goods certain amount provided he presents stipulated documents evidencing the shipment of goods within a prescribed period of time. As a credit instrument and means of making and securing payment, the letter of credit is an essential document for conducting world trade today. It fulfils all the requirements provided the conditions regarding its use are stated in clear and unambiguous terms.

4.4.2 Import letter of credit involves three stages

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* Requesting bank to open letter of credit. * Retiring documents under letter of credit. * Imports trust receipt facility. Bankers also grant import loans to their approved customers and undertake the clearance of goods on their behalf. in such cases, the bank retires the bills received under the letter of credit to debit of loan account of the customer and the relative documents forwarded to an approved clearing again for the clearance of the goods. after the goods are cleared, dispatched and railway receipts send to the bank, the relative goods or railway receipts are delivered to the importer after receiving the due amount. Where an arrangement exists, the goods may be stored in the bank's lock and released against proportionate payments as and when desired by the importer.

4.4.3 Financing against bills under collection
Incase the imports are not covered by the L/C, the documents are forwarded by a bank in suppliers country, known as the collecting banks, for collection of proceeds from the importer and payment to the supplier through the remitting bank. The collecting bank would examined the documents and instructions stated in the covering schedule to ensure that all the stated documents are received intact and the bill of lading and bill of exchange are endorsed in its favour or blank endorsed to enable the bank to handle the documents. The bank then presents the documents to the importer on payment (D/P) are written acceptance (Usance/D/a bill). Where the importer is eligible to receive the documents only on payment, he can avail an import loan or trust receipt facility. Sometimes the shipping documents are directly sent to the importer, in such cases the bank may receive clean bill for collection of proceeds. In these cases, banks are required to call for documentary evidence of imports such a custom noticed invoice, exchange control copy of bill of entry and import license, if any.

4.4.4Financing imports under deferred payment
Imports under the deferred payment imply that the supplier has agreed to supply gods on credit terms extending beyond six months. In such case, authorize dealer has to refer each deferred payment to the RBI for prior approval of advance payment ,bank guarantee with exchange control copy of import licence, contract copy and desired facilities. Appraisal for issue of guarantees or loans is similar to finance. For importing under deferred payment, the importer should have sufficient cash generated to pay the due instalments. He should arrange for payment of advance and down payments from
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his own resources, which would cover bank's margin requirements. Import machinery has to be hypothecated to the bank and the importer should counter this transaction.

4.4.5 Financing under foreign credit
Government of India gets assistance and loans and development credits from international financial institutions. These loans are of two types: tied loans and loans in free foreign currencies. Terms and conditions of each loan along with detailed instructions regarding the procedure to be followed for opening letters of credit, submission of documents, etc,. are set out in public notices issued by the DGFT. Payment under foreign credit may be under: * Letter of commitment method * Reimbursement method. The importer in India obtains the letter of commitment from the government of India after furnishing a bank guarantee for payment of rupee equivalent of the import value. The importer then furnishes the letter of commitment to the bank opening L/C.Then the usual procedure follows the shipping documents are delivered to the importer on acceptance or payment. Where no L/C is opened at all and on receipt of document covering rupee deposits are made to government a/c by the importer through the bank. Under the replenishment method, the aid giving the country makes to the government of India on production of evidence of payment of imports. Hence payment to the suppliers is made by the L/C opening bank through the normal banking channels and reimbursement is by the government of India by submitting the required documents. 4.5 Documentation It plays a very crucial role in the execution of an export order, due to the increasing volume and value of trade and widening of transactions have to be settled which cannot be done by mere word of mouth. The elaborate procedures which are followed in foreign trade has made it necessary to use written statements in course of buying and selling. There are post shipment and pre shipment documents.pre shipment documents are divided into 2 categories i.e., commercial and regulatory. Commercial documents are used by exporters and the importers in discharge of their respecting legal and other incidental responsibilities under sales contract. They are divided into principal and auxiliary documents.

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Regulatory documents are prescribed by different government departments for compliance of formalities under relevant laws, rules and regulation governing export trade. The following are the main documents: * Proforma invoice * Export order * Commercial invoice (customer invoice, consular invoice, legalized invoice) * Packing list * Certificate of inspection * Insurance policy/certificate * Certificate of origin * Generalized system of preferences certificate * Mate's receipt * Transport documents (ocean freight, air freight, rail/road, post, courier) * Bill of exchange * Letter to bank for negotiation * Export declaration form (exchange control declaration/GR form, SDF form. PP Form, i.e., parcel post) * Freight payment certificate * ARE-1 Form * Shipping bill (duty drawback bill-green, duty free goods-white, export of goods under duty entitlement pass book scheme -blue, duty free goods ex bond-yellow, dutiable goods-yellow) * Port trust copy of shipping bill/export application/dock challan * Vehicle ticket * Antiquity certificate * Certificate of chemical analysis * Certificate of measurements * Bank certificate of export and realization * Bank realization certificate 4.6 Recognition of exporters The EXIM policy 2002-2007 provides for the recognition of export firms to further promote exports from India. An export firm i.e., merchant exporters, manufacturer exporter and trading companies having foreign equity, EOU, SEZ and EPZ units engaged in the export of merchandise can seek recognition as per the criteria laid down in EXIM policy as : * Export house * Trading house * Star trading house * Star trading house * Golden super star trading house
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Under EXIM Policy 2002-2007, the criteria for recognition are the FOB value of physical exporters or Net Foreign Exchange (NFE) earned at the option of the exporter. The cut off amounts for eligibility for recognition are: Category Average FOB value(3 licensing years)(Rs) 15 crores 75 crores 375 crores 1125 crores FOB value during the preceding licensing years(Rs) 22 crores 112 crores 560 crores 1680 crores Average NFE earnings(3 licensing years)(Rs) 12 crores 62 crores 312 crores 937 crores NFE value during the preceding licensing years(Rs) 18 crores 90 crores 450 crores 1350 crores

Export house Trading house Star trading house Super star trading house

5. MMTC IMPORTS MMTC’s imports extend to a large product bases and makes a major share in the total Indian imports. These imports include Gems and Jewellery Fertilizers Metals Coal and hydrocarbons General imports (including chemicals, drugs and pharmaceuticals, timber) 5.1 Gems and Jewellery imports MMTC imports and supplies bullion to the exporters under various provisions of EXIM policy. Different schemes being followed are as under;

● ● ● ● ●

5.1.1 Exporters 5.1.1.1 on loan

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Exporters wishing to avail gold on loan scheme from MMTC need to be registered by submitting information in the prescribed format. Loan facility is extended against bank guarantees of required values covering cost of gold and customs duty. To be repaid and exported within prescribed days as per EXIM policy by purchasing equivalent quantity of gold at LME price prevailing on the date of purchase along with fixing commission. CIP premium & Service charges etc. interest as applicable for the period of loan based on interest rates fixed by MMTC will be charged.

5.1.1.2 Outright purchase
Application for outright purchases have to be submitted along with the national value of gold intended to be purchased by the party and BG for customs duty. Delivery would be against the price fixation payable along with fixing commission, CIP, delivery charges and MMTC’s. Service charges etc. gold would be delivered to an authorized representative of the exporter against payment of the differentials if any, of actual and national value.

5.1.1.3 On replenishment Basis
Exporters wishing to avail gold on replenishment basis from MMTC need to register themselves with their application in prescribed format. The quantity of precious metal booked shall be equivalent to the precious metal content in the exported product and the admissible wastage. An initial deposit of 20% of the national price declared by MMTC will be made with registration. Delivery of gold would be made against receipt of full payment together along with interest.

5.1.1 For domestic sale 5.1.1.1 On loan
Customer to register in the prescribed format with a bank guarantee covering 110% notional value of the material. The maximum period of loan is 60 days. The customer has the flexibility to fix the price of gold on any working day within loan period and pay the cost of material with interest as applicable. At the time of repayment of gold loan the customer will deposit Demand draft/ pay order covering the value of gold, custom duty, clearing and handling, storage charges, service charges plus any other incidentals. In case of committed consignments customers would be required to submit EMD of 10%. At the time of repayment of loan customer to deposit value of the metal, based on the price fixed with interest rate as applicable. Other charges like sales tax, octrio and local taxes etc. shall be applicable as prevailing in the state.

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5.1.2 Out right basis
Customers here are required to register themselves with MMTC. They have to pay the value by way of Demand Draft/banker’s cheque respect of quantity of gold required at a national price fixed by MMTC for that day. Delivery of material is given to customers after receipt of the amount in MMTC’s bank account. On L/C basis: Imports can also be undertaken on usance L/C basis for 180/360 days basis. Intend can be placed on MMTC by depositing EMD of 25% (this value is calculated on 110% or stop loss clause).L/C shall be opened by MMTC on foreign supplier. The balance 75% to be deposited by the buyer to MMTC prior to taking delivery of material, which shall converted into an FDR along with 25% amount, paid as EMD earlier.

5.1.2 BANK GUARENTEE
A.

B.

C.

The exporters who wish to procure gold from MMTC are required to submit bank guarantee from nationalized banks covering the value of gold/ custom duty as applicable. Bank guarantees issued by scheduled/ private banks are acceptable. The issuing bank should confirm to the following norms: 1. Minimum net worth of bank should be rs.100 crores. 2. Minimum capital adequacy ratio (CAR) should be 9%. For availing gold under loan scheme of MMTC the exporter is required to submit two bank guarantees (B.G s) from banks fulfilling above norms. The first bank guarantee, which is the main bank guarantee, shall cover the value of gold being taken on loan and the second or the differential bank guarantee shall be towards the value of custom duty with element of interest for the material being lent. The proforma B.Gs can be obtained from MMTC’s office. The exporters who wish to avail gold under MMTC’s outright purchase scheme have to submit B.G covering the cost of custom duty including interest for 120 days or the maximum period allowed for exports from banks.

5.1.3 ADDITIONAL FACILITIES IN RESPECT OF BULLION TRADE.
1.

Spot rate fixing with suppliers up to 11:00 PM working days. 2. Delivery of bullion beyond office hours up to 8:00 PM on working days and Saturdays.

5.1.4 DUTY FREE SHOPS
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MMTC has four duty free shops operational at: 1. Mumbai’s Sahar International airport at the departure lounge 11A. 2. Mumbai’s Sahar International airport at the departure lounge 11C. 3. Chennai’s Anna International Terminal, transit area, departure lounge, 1st floor, Meenumbukkam. 4. Thiruvananthapuram international airport, 1st floor, departure lounge. The showrooms have round the clock operations and showcase high quality designs at reasonable prices to the international travellers. The showroom has been able to promote studded jewellery (Diamonds, precious/ semi-precious stones) sales apart from traditional handmade plain gold items. The product mix also includes platinum jewellery and medallions. MMTC‘s brand of silverware ‘SANCHI’ and other premium products are placed to appeal to the customers. Duty free shops help in promoting exports of jewellery from India.

5.1.5 MEDALLIONS AND SANCHI
MMTC has a unit in Delhi for manufacture of gold and silver medallions. Medallions of different weights as per international quality standards are manufactured to service corporate sector and also for retail sales by MMTC .MMTC’s medallions come with a guarantee of purity and fineness, in India MMTC is the only company who is having in house facility of both manufacturing and assaying of medallions in the organized sector. Sanchi is MMTC’s brand of silverware specifically introduced for the quality conscious consumer. MMTC has introduced sterling silverware (92.5%) for the discerning customers. Sanchi is known for its purity, quality and design. The designs are simple yet elegant and appeal to the taste.

5.1.6 REGISTRATION FORMAT AND BASIC FORMALITIES
Exporters who wish to avail gold under above schemes have to submit the information/ documents listed below on their company’s letterhead. All the documents should be self-attested:Name of the firm/ company Address with Tel& Fax No: RCMC (Registration cum membership certificate) no. issued by GJEPC
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1. 2. 3.

4. 5. 6. 7. 8. 9. A. B.

IE Code: Latest ITC code no: Sales tax registration no: Custom registration no: PAN No: Constitution Proprietorship: name and address of the proprietor Partnership firm: (copy of partnership deed to be furnished. if registered, a copy of registration certificate to be attached) Name of the firm: 1. 2. 3. c. limited company (copy of memorandum of association/ articles of association, audited balance sheet for the last Name of the Directors: 1. 2. 3. Bankers with Address: 1. 2. Bankers Certificate/ Report Name of the Partner/ Proprietor/ Directors, authorized to sign application. (A set of their specimen signature, dully attested by their Bankers to be submitted) Affidavit to the effect that Exporter has not been Debarred/ Black

5.2 FERTILIZER IMPORTS 5.2.1 Fertilizer Trading in India




India is the 3rd largest Producer and consumer of Fertilizers in the world with an installed capacity of Nitrogen (N) and Phosphate (P) nutrients at 14 million tones p.a. The Indian Fertilizer industry is broadly divided into Nitrogenous, Phosphatic and Potassic Segments.

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● ● ●

Urea, a nitrogenous type of fertilizer, is mostly consumed in India. Currently the Urea capacity is 20.2 million tones while consumption is 21.7 million tones. The total production of Phosphate in country was 3.36 million tones p.a. in 200, which was a 6%, increase over 1999. Main Phosphatic fertilizers produced in India are Di ammonium Phosphate (DAP) and single super Phosphate (SSP). Entire requirement of Potassic fertilizer is imported .The major potassic fertilizer consumed in country is Muriate of potash (MOP).

5.2.2 Fertilizer Trading in India in MMTC
MMTC limited is one of the largest importers of finished fertilizers and Fertilizer Raw material in India with a current import quantum of about half a million tones annually. MMTC has a leading sourcing, procuring and distribution of fertilizers in India and in neighbouring countries

5.2.2.1 MMTC’s Unique Position
One of the world largest institutional buyers of fertilizer. Has over three decades of fertilizer handling experience. Importing in bulk and effecting high Seas Sale for fertilizer majors. Sourcing from established supplier’s world wide. Securing competitive prices through bulk buying. Strong links with state marketing agencies. Wide network of distribution channels for timely delivery and after sales services. Large warehousing facilities having proximity to railheads. Well controlled logistics for movement of goods. Domestic marketing of fertilizers under the MMTC brand.

5.2.2.2 Items of trade: MMTC imports following fertilizers and raw materials in bulk on full/part ship load basis:

Finished fertilizers
Urea Di Ammonium Phosphate (DAP) Muriate of potash (MOP)
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Raw materials and intermediates
Sulphur Rock phosphate Phosphoric Acid Ammonia

5.2.2.3 Purchases (Imports)
Imports are centralized through the Corporate Office in New Delhi. Purchases are made on tender basis and also on long term contract basis . List of empanelled suppliers is generally maintained. Purchases are made both on F.O.B and C&F. basis

5.2.2.4 Types of Sales
Finished fertilizers to customers in India can be supplied on High seas or ex-jetty basis. Ex-plot/ Ex-Godown Sales are also made subject to availability. Secured credit can also be provided against L/Cs and bank guarantees.

5.3 Metals Imports
MMTC Limited is India’s Single Largest Trader of metals. Handling about 75,000 tonnes Of non-ferrous metals/ concentrates p.a. MMTC’s share of import in India’s import of refined base non-ferrous metals in terms of value is about 20%.

5.3.1 Items of Trade
MMTC imports following metals with ASTM or BSS or LME approved specifications.


Base Non-ferrous Metals: Copper (min. 99.90% purity) in the form of Wire bars, Cathodes, CC rods Aluminium (min 99.70%) Zinc Ingots High Grade (min 99.95%) Zinc Ingots Spl. HG (min. 99.995%) Lead Ingots (min. 99.97%) Tin (min. 99.85% purity) Nickel (min. 99.80% purity) (Squares 4” x 4” and 10” x 10”, Strips 4” x 24” and Briquettes)

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● ● ● ●

Copper Concentrates Minor Metals: Antimony (min. 99.65% purity) Silicon (Grade 4-4-1 and 5-53) Magnesium (min. 99.9% purity) Mercury (min. 99.9% purity) Industrial Raw Materials: Asbestos Steel and its products.

5.3.2 Centralized Imports at Corporate Office
MMTC’s imports of all non-ferrous metals, Industrial Raw Materials, Minor Metals, Steel and concentrates are centralized at corporate office in New Delhi and the sales are effected through various sale centres located all over India. 5.3.3 Quality Material MMTC purchases quality material conforming to international specification viz. ASTM or BSS or LME approved brands. Customers of MMTC include institutional buyers who are accredited with ISO-9000 certificate. Quality Certificate from Producer/ LME approved assayer is essentially a part of MMTC’s purchase contract.

5.3.4 Strategies of Purchase (Imports)
Generally based on the LME cash settlement price plus premium. Premium is fixed at the time of finalization of contract with the foreign supplier. LME reference price could be any one of the following:
a. b.

c.

Monthly average: LME cash settlement price for the month of shipment or prior to month of shipment or two/ three months after the month of shipment. Flexible Quotation Period: LME cash settlement price of any working day from the date of order till bill of lading date or till 5-15 days after Bill of Lading date. Sport LME cash settlement price.

5.3.5 Imports through Empanelled Suppliers MMTC imports its material through empanelled suppliers only. Criteria for empanelment of suppliers are as follows: Category A OR B OR
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Particulars Producers Ring Member or Associate Member of LME / KLTM

C producer reference. D

Metal Traders linked to producers with exclusive Backing / selling rights, with satisfactory bank

E

F

OR If not ring members or associate members of LME / KLTM, then they should have handled non-ferrous metals for last three years with a turnover of at least USD 100 million per annum. The Company should be profit-making company in three out of immediate past five years with satisfactory Bank reference. OR Suppliers who have successfully supplied any NFM to MMTC as empanelled supplier during last one year would also be permitted to make offers and would be empanelled at their request for other metals provided they submit a satisfactory back up arrangement for new metal proposed to be supplied. OR The suppliers not fulfilling MMTC’s criteria for empanelment and desirous to supply the material to MMTC be also enrolled subject to their accepting the conditions of payment being released after the receipt and acceptance of the material by MMTC’s buyers with regard to quality and quantity. A third party inspection agency appointed by MMTC at the cost of MMTC’s buyer should also be associated for getting reports on quality and quantity before material is allowed to be shipped from the Load port(s).

5.3.6 Three Types of Sales Customers have the following options for purchase: ● High Seas Basis ● Ex-Godown basis ● Ex-Bond basis MMTC can cater to all size lots from a low of 0.5 MT to as high as desired by the customer. Special incentives are given to regular (MOU customers). MMTC imports metals with split Bill of Lading to cater to the need of small customers who want to buy on high-seas basis.
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5.3.7 Customer service in pricing
MMTC’S in-house dealer Room monitors Real Time Information on LME prices of all base non-ferrous metals and currency fluctuations. We also provide support services on market intelligence to our customers incase they want to price material on their own.

5.3.8 Hedging in non-ferrous metals
MMTC is the first international trading corporate to obtain RBI’s approval for hedging in base non-ferrous metals through LONDON METAL EXCHANGE. Now that RBI has permitted hedging for various products through international commodities exchanges, MMTC is also open to hedging non- ferrous metals on the LME through futures and options. The benefit of hedging will also be passed on to the customers if so desired by them.

5.3.9 Marketing a steel products of Neelachal Ispat Nigam Limited
Metals profit centre is marketing iron and steel products of NINL, a company setup in the state of Orissa in which MMTC is the major equity holder and main promoter.

5.3.10 High credibility
MMTC generally imports non-ferrous metals from its suppliers on Cash against Documents (CAD) basis. It enjoys excellent credibility amongst all suppliers and buyers as it keeps its commitments even in the wake of adverse market conditions.

5.4 Coal and Hydrocarbons imports
Coal and hydrocarbon is one of the core business areas for MMTC. The total turnover of the division was Rs 3497 millions in 2002-2003, a growth of around 29% over the previous year. The major business activities comprises Rs 1376.2 million worth of LAM COKE, Rs 1737.4 million worth of steam coal and about Rs 90 million worth of Naphtha during the year 2002-2003. During the current fiscal year MMTC has already transacted business of around 4, 20,000 MT of LAM COKE valued Rs 2710 million, 4,58,352 MT of steam coal valued at Rs 999.2 million and about 25000 MT of superior kerosene oil worth Rs
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280 million. MMTC has also started importing coking coal and plans to import 1.4 million tons of coking coal annually. MMTC could with stand the stiff competition by its continuous and persistent efforts diversifying its markets, offering value added services to its existing customers, enlarging its product range and customer base, expanding extensively its infrastructure facilities, using its expertise in trading and by attaching utmost care and importance to its trade commitments as also the quality service and product. There are certain specific strengths of MMTC, which make it a strong player in this sector like: ● MMTC has a strong business relationship with the leading coal mines and reputed suppliers of various coal and hydrocarbon products. MMTC maintains a list of suppliers after ascertaining their credentials and this list is continuously updated. ● MMTC has comprehensive infrastructure for bulk cargo handling with well developed arrangements for rail and road transport, warehousing, port and shipping operations which gives MMTC complete control over trade logistics. ● MMTC is one of the biggest traders in bulk in the country. ● MMTC has been importing non-coking steam coal continuously for the power plants under long term contracts.

5.4.1 MAJOR END USERS OF COAL AND PETROLIUM PRODUCTS PRODUCTS non coking (steam) Coking coal Naphtha Coke Furnace oil Bitumen END USES Power plants, cement , paper industry Coke oven batteries Petrochemicals / Fertilizers Steel industry, foundries Power, fertilizer plants Road paving / insulation / paints

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MMTC is doing good business in non-coking (steam) coal, low ash metallurgical coke, naphtha etc. MMTC is catering to the requirements of various customers inclusive of state electricity boards and power utility companies. Most of the SEBs are nowadays going for imported steam coal because of the techno –economic considerations the quality of imported coal is superior in terms of higher GCV and lower ash, which leads to several advantages such as lower costs and environment friendly power generation MMTC is one of the largest importers of LAM COKE in India. We have imported LAM COKE for various customers like NINL, SAIL, RINL, KIOCL, IDCOL etc. For NINL, Duburi, Orissa which is being promoted by MMTC, LAM COKE is being imported on regular basis for operations of its blast furnace. We have already started importing coking coal for captive use of another company M/s Konark Met Coal Limited, which is also promoted by MMTC. 5.4.2 TYPICAL SPECIFICATIONS OF IMPORTED NON-COKING (STEAM) COAL No 1 2 3 4 5 6 7 8 9 10 11 Specification parameter Total Moisture(AR) Inherent Moisture(AD) Ash content(AD) Volatile Matter(AD) FC / VM Ratio(AD) Total Sulphur(AD) HGI GCV(AR) GCV(AD) Size Ash Fusion Temp. (IDT/HT/FT) Unit % by Wt. % by Wt. % by Wt. % by Wt. --% by Wt. --Kcal/Kg Kcal/Kg MM Deg C. Typical requirement 7 to 10 % 2 to 5 % 10 to 15 % 26 to 35 % 1.4 to 2 0.2 to 0.6 45 to 55 6100 to 6800 6400 to 7000 0 to 50 +1300/+1390/+1480

5.4.3 Typical specifications of imported low hash metallurgical coke S.no
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TECHNICAL

TYPICAL

GUARENTEED

1 2 3 4 5 6 7 8 9 10 11

PARTICULARS MOISTURE(AS RECEIVED) ASH(DRY BASIS) VOLATILE MATTER(DRY BASIS) SULPHER(DRY BASIS) PHOSPHOROUS(DRY BASIS) MICUM 40 MICUM 10 CSR CRI +80 MM _30 MM

SPECIFICATIONS 5.0% MAX 12.5% MAX 1.0% MAX 0.60% MAX 0.030% MAX 82% MIN 7 %MAX 62% MIN 23% MAX 6% MAX 4% MAX

SPECIFICATIONS ABOVE 10% ABOVE 13.5% ABOVE 1.50% ABOVE 0.8% ABOVE 0.035% BELOW 78% ABOVE 9% ABOVE 60% ABOVE 26% ABOVE 8% ABOVE 8 %

5.4.4 Typical specifications of cooking coal (size 0 to 50 MM) S.N TECHNICAL PARTICULARS GUARENTEED SPECIFICATIONS ABSOLUTE MAXIMUM / ABSOLUTE MINIMUM TOLERANCE LIMITS 4 10% MAX 20.0% MIN 32.0% MAX 10.0% MAX 0.80% MAX 5.0% MIN 1.1% MIN 1.40% MAX 55% MIN 80% MIN

1 1 2

3 4 5

2 Total moisture(on ‘A received ‘basis) Proximate analysis (on “Air dried” basis ) a) Volatile matter b) Ash Sulphur Crucible Swelling number a) Mean max reflectance of Vitrinite b) Vitrinite % c) Vitrinite distribution

3 8.0% MAX 20.0% MIN 28.0% MAX 8.0% MAX 0.60% MAX 5.0% MIN 1.15% MIN 1.30% MAX 55% MIN 80% MIN

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6

Gieseler Plastometer Test Maximum Fluidity(DDPM)

300 MIN

300 MIN

5.4.5 TYPICAL SPECIFICATIONS FOR BITUMEN GRADE 60/70 TEST Specific Gravity @ 25/26 0C Penetration @ 25 0C Softening point@ 0C Ductility @ 25 0C, cm Loss on heating Drop in penetration after heating % Flash point 0C Solubility in CS2, % Wt. Spot test Typical source of supply SPECIFICATION 1.01/1.06 60/70 49/56 100 min 0.2 max 20 max 250 min 99.5 min -ve Iran

5.4.6 TYPICAL SPECIFICATIONS FOR NAPHTHA Test Density at 15 0C RVP @ 37.8 0C AROMATICS PARAFFINS Distillation -IBP -FBP HEAVY METALS- VANADIUM, SODIUM, CALCIUM, LEAD Unit Kg/I PSI Vol% Vol % 0 C 0 C PPM Range 0.66-0.74 7-15 10-20 65-80 25-45 125-180 50 MAX

MMTC aims to be leading world class company in coal , hydrocarbons and energy related sectors , achieve international standards of excellence with focus on customer delight through value of products and services.

5.5 General imports 5.5.1 Chemical, Drugs and Pharmaceuticals.

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MMTC offers a wide range of chemicals produced in India in a most modern plants confirming to international standards. MMTC deals in ● Inorganic chemicals ● organic chemicals ● dyes and intermediates ● drugs and pharmaceuticals MMTC meets the requirements of local associates by way of imports of chemicals through overseas associates, as required by the local industries for sale on high seas basis as well as Ex-Godown basis. 5.5.2 TIMBER MMTC imports and supplies timber sawn lumbers from overseas and exports forest products. Major items are: ● teakwood Tectona-Grandis ● tropical hand woods- Salengan Batu, Keuring, Kapur, Meranti logs ● soft woods-spruce, Pine, Fir, Cedar ● sawn lumber-to specific size, specie and specifications ● Wood wastes, wood pulp and wood chips MMTC would consider joint ventures for both procurement and supply against government tenders and UN suppliers

5.5.3 SECURITY EQUIPMENTS
MMTC also arranges imports of various security equipments from reliable manufactures overseas and supply these to various military / paramilitary and police departments. The products offered by MMTC have established their quality and reliability with the end users. MMTC also supplies various equipments needed by telecommunication companies and supports domestic business in this area.

6. MMTC EXPORTS
MMTC’S Exports also extend to a large product bases and makes a major share in the total Indian exports. These exports include ● Mineral ores. ● Agro product ● General exports (including Textiles, Building material, engineering products).

6.1 Mineral ores exports
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MMTC Limited, India’s first super star trading house, continues to be the Country’s leader in mineral exports for four decades now. During the last decade, MMTC could withstand the stiff competition in the world market by its continues and persistent efforts in diversifying its markets, enlarging its product range, expanding extensively its infrastructure facilities and expertise in mineral operations, and by attaching utmost care and importance to its trade commitments as also the quality of service and products. During the year 2002-03 MMTC has achieved considerable success in mineral exports leading to an impressive turnover of 1244 crores. In quantitative terms, MMTC was able to export 13.02 million tones of iron ore, 2.31 lakh tones of manganese ore and 5.81 lakhs tones of crome ore during 2002-03. As recognition of above achievements during the year 2002-03, MMTC was awarded the highest export award for export of minerals once again for twelth time in a row. MMTC has been consistently strive into enhance its competitiveness in the area of value addition. It has setup a crushing and screening plant at Banehatti in Bellary Hospet sector not only to source higher value realization in the international market but also to compete with the international suppliers like Australia and Brazil in the markets like Japan and South Korea. Supply of iron ore, lumps and fines to the steel plant in Orissa. (NINL) promoted by MMTC. Would provide further fillip to value addition to minerals. The 1.1 million ton steel plant consumes about 2 million tons of various types of minerals annually being supplied by MMTC. The company has also taken an initiative to link import of capital equipments required for modernizing mining activities in the country to promote export minerals. The import of the earthmoving equipments was linked to export of iron ore under EPCG scheme.

MMTC—PIONEERINGINFRASTRUCTURE DEVELOPMENT
MMTC’s role in nation’s mineral export does not stop with increasing the volume. MMTC has been making certain strategic plans which would facilitate in not only sustaining the present level of exports but also equip the country to meet the challenges of larger volume of exports in future. One of the bottlenecks in increasing the Indian iron ore export is the deficiency in port facilities especially in the east coast where the operations are free the vagaries of weather like, closing of port operations during monsoon period in Goa,
45

Mangalore, and Bellikari etc. In this direction, MMTC bas been successful in obtaining an exclusively right to develop a temporary Iron ore terminal at Ennore near Chennai. This facility is likely to be operational by May/June’04 which all facilitates export of about 2.5 million tones iron ore per annum. This, in turn will decongest the Chennai port where presently the pre-berthing waiting time for iron ore vessels is more than a month. MMTC is also in dialogue with Ennore port for developing the permanent terminal at Ennore which will facilitate loading of super cape-size vessels to cater the increased demand for iron ore from Asian markets like, Japan, China, South Korea and Taiwan. This facility would be comparable to the International standards by presently now being operated from Australia and Brazil. MMTC is also in constant dialogue with the various ministers, Railways, ports and exporters to assess the development potential for a comprehensive infrastructure requirement for larger volume of exports. MMTC will continue to play a vital role in these directions.

6.1.1 ITEMS OF TRADE
● ● ● ●

Iron ore Manganese ore Chrome ore Others (Mud chemicals, Barytes etc,.).

6.1.1.1 Logistic support
At all the loading ports, MMTC ensures proper receipt, stacking, quality control and delivery of the cargo into the vessels for shipment. The entire arrangement guarantees delivery of minerals& ores contracted in continues manner all around the year. All ports are equipped with mechanical loading facilities.

6.1.1.2 Destination of exports.
MMTC exports Iron ore to Japan, south Korea, china, Pakistan, Middle east, Thailand, Romania etc. the exports is both on basis of long term and annual spot contracts.

6.1.1.3 Leader in mineral exports
MMTC’s performance in mineral trade has been acknowledged by CAPEXIL (chemicals and allied products export promotion council) by conferring the nation’s highest award for excellence in mineral exports twelve times in succession. MMTC’s mineral sales are on FOB basis only.

6.2 Agro products:
46

MMTC limited is a global player in Agro trade, with its comprehensive infrastructural expertise to handle agro products. MMTC Limited provides full logistic support from procurement , quality control to guaranteed timely deliveries of agro products from different parts of India through a wide network of regional and port offices in India and its contracts abroad.

6.2.1 MMTC’S unique position in the agro trade
Reliable established supplier/buyer having over 3 decades of experience in the trade. Exporting/importing in bulk. Sourcing from established suppliers. Securing competitive prices through bulk buying. Strong links with govt. & state marketing agencies. Recognized as the best quality supplier of Agro products. Large warehousing facilities having proximity to railheads and ports. Well-controlled logistics for movement of goods.

6.2.1.2 ITEMS OF TRADE
1. 2. 3. 4. 5.

Wheat Rice Maize Soya bean meal Sugar

6.2.2.1 Wheat specifications
1 2 3 4 5 6 7 8 9 Test weight Protein content Moisture content Gluten(on wheat basis) Foreign matter Other food grains Shrivelled, shrunken & broken kernels Weeviled / bored grains Damaged grains 78 Kg Hectolitre(min) 10.5% (min) 12% (max) 23% (min) 1% (max) 2% (max) 4% (max) 2% (max) 2% (max)

6.2.2.2 Rice specifications
Parboiled 1
47

Broken grain (basis 2/3)

White / raw long grain 5-25% (max)

2 3 4 5 6 7 8 9 10

Moisture Damaged / discoloured Red / split kernels Foreign matter Paddy per kg Grain length Yellow kernels Chalky grains Milling degree

14% (max) 3% (max) 2% (max) 1% (max) 30 grains (max) upto 6 mm (max) 1% (max) 6% (max) well milled

6.2.2.3. Maize specifications
1 2 3 4 5 6 Moisture Foreign matter Broken Damaged kernels Admixture Affloataxin 14% (max) 2% (max) 2.5% (max) 5% (max) 2% (max) 20 PPB : 50 PPB

6.2.2.4 Soya bean meal specifications
1 2 3 4 5 6 Protein content Moisture Fibre Fats Sand / silica Urease activity 48% (min) 11 % (max) 6 % (max) 1.5% (max) 2% (max) 0.30 MgN2 / gm / min at 300C (by E.E.C.Method)

6.2.2.5 Sugar specifications
1 2 3 4 Colour Polarization Moisture Ash content Upto 150 ICUMSA Units (max) 99.7 degree (min) 0.1 % (max) 0.1 % (max)

6.3 GENERAL EXPORTS
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6.3.1 TEXTILES
MMTC exports Ready Made Garments. This includes woven men's and ladies' wear. MMTC is one of the leading organizations for import of Mulberry Raw Silk, Wool & Cotton of different grades which is then sold to manufacturers in India.

6.3.2 BUILDING MATERIAL
MMTC deals in major varieties of dimensional stones (granites), marble and other stones. MMTC organizes their procurement and processing to desired standards, sizes, finish, etc. MMTC handles procurement and export of stones in large volumes on continuous basis with consistency in block forms for gang saw size and other sizes, processed Slabs and Tiles of desired sizes and thickness with polishing, chamfering, etc. as per international standards. MMTC is also involved in procurement and export of Cobblestones and boulders. Apart from this MMTC also deals in clinker and cement with strong and reliable supply base.

6.3.3 Engineering Products
Engineering products dealt by MMTC are as under: Conveyor belts, Conductors, Transformers Generator sets, Diesel Engines Transport equipment.

7.Data analysis:

Table: 7.1.1 Product group wise composition 2009-10:
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In 2009-2010 product group wise composition is mentioned in the above pie chart. Products in MMTC are having percentages: Precious metals-71%,Fertilizers6%,,Agro-3%,Minerals-6%,Metals-5%, Hydro carbons-9%

Table 7.1.2: Business composition 2009-10: 2009-2010 32,228 399,690 19,324 2010-2011(Rs in million) 36,934 633,008 18,603

Exports Imports Domestic
50

B usinesscom position200 0 9-1
7% 4%

Import Export 89% Dom estic

Table 7.1.3: 2010 32228 399690 19324 3176 2009 45759 306951 15497 3209

Export Import Domestic Trading profit

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400000 350000 300000 250000 200000 150000 100000 50000 0 2009 2010 E xport Im port D omes tic T dingprofit ra

Table 7.1.4: Foreign exchange earning & outgo: Export Other Total Earning 32247.14 226.15 32473.29 Imports Interest Other Outgo 405703.64 362.63 877.03 406943.30

In the above table earnings and outgo of the company in exports and imports are mentioned clearly. Total Outgo is higher than the earnings.

Table 7.1.5: Highest ever Turnover:

52

50 0 00 40 0 00 30 0 00 20 0 00 10 0 00 0 20 -09 08 20 -10 09 Turnover

In 2008-09 highest ever turnover is Rs 36821in crores and in 2009-10 highest turnover is Rs 45124 crores. Compared with the year 2008-09 and 2009-10 turnover increase upto 23% in 2009-10.

Table 7.1.6: competitors:

NAME MMTC Ltd STC India Ltd PTC India Ltd

LAST PRICE 708.5 173.05 72.45

MARKET PRICE 70,850.00 1038.30 2137

SALES TURNOVER 68,833.27 20,617.38 9064.55

As shown in the above table MMTC turnover is higher than the other competitors. Sales turnover as well as the market is also more.

8. SWOT ANALYSIS:
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STRENGTHS 1. Large supplier base, customer base 2. Wide product portfolio includes all base metals, precious metals, agro products. 3. Credit facility from foreign suppliers has specific import licences.

WEAKNESS 1. Thin margins due to heavy competition (like STC,PEC,MSTC) 2. Overhead expenses(excess man power)

OPPORTUNITIES 1. Scope to expand in new geographical markets. 2. Vertical & Horizontal integration 3. Investment into subsidiaries with own suppliers

THREATS 1. Iron ore base which is a cash cow, Recession 2. Extension of precious metals 3. Govt trade policies like decimalisations.

9. Achievements & Awards: 1. CAPEXIL’S award for highest export in minerals and ores sector for the year 2009-10. 2. Top exports for the year 2008-2009,gold trophy by EEPC 3. Dun & Bradstreet (D&B) and Rolta corporate Award 2010 in trading sector 4. Ranked 4th by business today in their publication “BT 500-2010 public sector companies 5. Ranked 8th by Dun & Bradstreet in their publications “India’s Top 500 companies 2010” and India’s Top PSUs 2011.

10. Limitations:

54

1.

2. 3.

Since the study covers only bulk division of‘s laboratories Dr.Reddy’s laboratories limited, it does not represent the over all scenario of the bulk industry. The period of the study is limited 45 days. All inventory management techniques were not studied, as some information is related to purchase department.

11. Findings:
1. 2. 3. 4.

Presently the company maintains low inventory turnover ratio. They are trying to expand their business in major cities. They are trying to add new products. Implementing new strategies to improve the business.

12. Suggestions: 1. Day to day they need to verify the margins. 2. They need to target more on new products. 3. They need to expand the business in various sectors. 4. They need to concentrate on more exports to generate revenue.

13.Bibliography:

55

1. 2. 3. 4. 5.

www.google.com www.wikepedia.com www.mmtclimited.com www.scribd.com www.authorstream.com

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