Elecon project report

A

Project report of

Elecon Engineering limited

On

Expoer Procedure & Documentation

Submitted by: submitted to:

Sam symon Dr. Rupal R Patel

Roll no: 28 B.J.V.M

Exam seat no:

TY BBA

SARDAR PATEL UNIVERSITY

VALLABH VIDYANAGAR

388120

ELECON ENGINEERING COMPANY LTD

◙ Preface ◙

I am proud to introduce myself as a student of BJVM Commerce College, as a BBA student. BJVM is the pioneer institute in management course. It’s my privilege that I got a chance to prepare report on ‘ELECON ENGINEERING COMPANY LIMITED’ as a part of curricular activity of BBA.

For the regular exporting form like Elecon as it is Government of India recognized export house, export documentation as well as export procedure aspect are well efficient and up to standardization to avoid discrepancies and secure the shift passage of goods. Every exporter should pre-plan their suitable export procedure and have a sound knowledge of export procedure and documentation.

This project report gives the complete details, importance and uses of each type of document in export procedure and documentation.

During this project I got to know export procedure and documentation in making export trade.

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◙ Acknowledgement ◙

The ‘comprehensive project’ is one step ahead towards attaining BBA degree successfully. Lots of people who have genuinely guided my efforts in right direction and made it successful endeavor. I would like to attend my heartfelt gratitude to all those people who have helped me in presentation of this report, guiding me towards the achievement its purpose.

First and foremost I would like to thank Dr. Rupal Patel my project guide with her help I am able to complete this report on Elecon Company limited.

Also I would like to thank Principal R.M Patel sir of BJVM Commerce College for his support.

Place: Vallabh Vidyanagar Sam Symon

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◙ Index ◙

Sr no

Particulars Page no

1 Title page 1

2 Preface 2

3 Acknowledgement 3

4 Certificate 4

5 Index 5

6 Introduction of Elecon 6

7 Literature review 15

8 Research Methodology 30

9 Data collection 32

10 Data analysis 33

11 Conclusion 35

12 Bibliography 36

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◙ Introduction ◙

Elecon Engineering Company limited is an Indian Company specialized in the manufacturing of industrial equipment. Elecon is one of the largest Asian manufacturer of material handling equipment, industrial gear and mining equipment.

History

Elecon Engineering was established in 1951 in Gurgaon, Mumbai by Ishwarbhai B Patel. The Company’s early focus was on Engineering, procurement and construction project in india. It initially manufactured conveyor systems. The company was registered as a private limited company on 11 January 1960. In May 1960 the company moved to its current location in Vallabh Vidyanagar, Gujarat later the company was listed on the Bombay stock exchange and the national stock exchange.

In 1976, the company established its gear system division, specialized in power transmission system, in designs and manufactures worm drives, helical gears, spiral bevel gears as well as a range of couplings. Its products target a range of industries, including steel rolling mills, wind turbines, marine applications and space applications.

In 1995, Elecon established its Alternate Energy Division, for the design and manufacture of wind turbines.

In October 2010, Elecon acquired the Benzlers-Radicon Group, the power transmission division of UK-based David Brown Ltd.

In 2012, Elecon Engineering secured two prestigious orders: NTPC and Tecpro Systems.

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Company Profile

Type Private company

Traded as BSE: 505700NSE: ELECON

Industry Industrial equipment

Founded 1951

Founder Bhanubhai B. Patel

Headquarters Anand, Gujarat, India

Area served Engineering industries

Key people Prayasvin Patel, Chairman & MD

Products

Material handling systems

Industrial gearsMining equipment

Revenue 13.16 (20¢₹ US) (2010–11)Operating income 1.836 (2.7¢₹ US) (2010–11)

Net income 5 (7.4¢₹ US) (2010–11)

Website elecon.com

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Product Profile

Couplings

Elevator Traction Machines

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https://www.elecon.com/product-category/couplings/

https://www.elecon.com/product-category/elevator-traction-machines/


Helical Gear

High Speed Gear

9

https://www.elecon.com/product-category/helical-gear/

https://www.elecon.com/product-category/high-speed-gear/


Loose Gear

Marine Gear

10

https://www.elecon.com/product-category/loose-gear/

https://www.elecon.com/product-category/marine-gear/


Planetary Gear

Special Gear

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https://www.elecon.com/product-category/planetary-gear/

https://www.elecon.com/product-category/special-gear/


Wind Farms

Wind Mill Gear

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https://www.elecon.com/product-category/wind-farms/

https://www.elecon.com/product-category/wind-mill-gear/


Wind turbines

Worm Gear Boxes

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https://www.elecon.com/product-category/wind-turbines/

https://www.elecon.com/product-category/worm-gear-boxes/


Elecon exporting countries

o Callao

o Bargen

o Manchester

o Colombo

o Chittagong

o Kathmandu

o Genoa

o Felixstowe

o Chicago

o Lilongwe

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Export Procedure & Documentation

Objectives

„What are the important steps in export transaction

„What are the standardized and aligned pre-shipment documents

„What are the documents related to goods

„What are the certificates related to shipment

„What are the documents related to payment

„What are the documents related to inspection

„What are the documents related to excisable goods

„What are the documents related to exchange regulation

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Introduction

India has a mission to capture 2% of the global share of trade by 2019, up from

the present level of less than 1%. Export is one of the lucrative business activities in India. The

government also provides various promotional schemes to the exporters for earning valuable

foreign exchange for the country and for meeting their requirements for importing modern

technology and essential inputs. Besides, the income from export business is also exempted to

the specified extent under the Income Tax Act, 1961, Refund of Central Excise and Custom Duty

on export is also made under the Duty Drawback Scheme of the Government. There is no Sales

Tax on products meant for exports.

Exports can be of goods which can be moved physically from one country to

another or can be of service rendered. Detailed list of services are given in the Foreign Trade

Policy covering more than 160 items e.g. Insurance, Hospital, Postal and Telecommunication

etc.

TWO CLASSES OF EXPORTS:

Physical Exports: If the goods physically go out of the country or services are

rendered outside the country then it is called asphysical export. Deemed Exports: Where the

goods do not go out of the country physically they can be termed as deemed exports. This will

be subject to certain conditions as prescribed by the DGFT. Under Deemed Exports, the goods

may be supplied to the manufacturer exporter who ultimately export a finished product of

which this supply forms a part and ultimately go out of the country. E.g. Supply of fabrics to the

garment exporter who exports the garments made out of the said fabric.

The government may announce from time to time the types of supplies that may

be considered as deemed export. The Foreign Trade Policy gives the list of supplies considered

under the Deemed Export Category. The policies and procedures are different for Physical

Exports and Deemed Exports as also the benefits available. In a nutshell, Deemed Exports do

not enjoy all the benefits that are available under Physical Export. The Foreign Trade defines

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exports as taking out of India any goods by land, sea, air. Although the act does not term them

as “Physical Exports”, we have to put phrase to distinguish it from “Deemed Exports” which is

sales in India but considered as exports for limited purpose.

TYPES OF EXPORTERS Exporters can be basically classified into two groups

Manufacturer Exporter: As the exporter has the facility to manufacturer the product he

intends to export and hence he exports the products manufactured by him.

Merchant Exporter: An exporter who does not have the facility to manufacture an item.

But, he procures the same from other manufacturers or from the market and exports

the same.

An exporter can be both a manufacturer exporter as well as a merchant

exporter, he can export product manufactured by him or he can export items bought from the

market.

Once it is decided to export, it is mandatory on your part to follow certain

procedures, rules and regulations as prescribed by various regulatory authorities such as DGFT,

RBI, and Customs. These procedures, rules and regulations are laid down in the Exim Policy

2004-09, Exchange Control Manual, Customs Act etc. Accordingly Export documents are

required to be prepared keeping in view of the requirement of the foreign buyers and our

regulatory authorities.

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HOW TO SET UP AN EXPORT ORGANISATION

The proper selection of organization depends upon

Ability to raise finance.

Capacity to bear the risk.

Desire to exercise control over the business.

Nature of regulatory framework applicable to anyone

If the size of the business is small, it would be advantageous to form a sole

proprietary business organization. It can be set up easily without much expenses and legal

formalities. It is subjected to only few governmental regulations. However, the biggest

disadvantage of sole proprietorship business is limited ability to raise funds which restricts the

growth. Besides the owner has unlimited personal liabilities. In order to avoid this

disadvantage, it is advisable to form a partnership firm.

The partnership firm can also be set up with ease and economy. Business can

take benefit of the varied experiences and expertise of the partners. The liability of the partners

though joint and several, is practically distributed amongst the various partners, despite the

fact that the personal liability of the partner is unlimited. The major disadvantage of

partnership firm of business organization is that conflict amongst the partners is a potential

threat to the business. It will not be out of place to mention here that partnership firms are

governed by the Indian Partnership Act, 1932 and, therefore they should be formed within the

parameters laid down by the Act. Company is another form of business organization, which has

the advantage of distinct legal identity and limited liability to the share holders.

It can be a private limited company or a public limited company. A private

limited can be formed by just two persons subscribing to its share capital. However, the

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number of its shareholders cannot exceed 50, public cannot be invited to subscribe to its capital

and the members right to transfer their share is restricted. On the other hand, a pubic limited

company has a minimum of seven members. There is no limit on the maximum number of its

members. It can invite the public to subscribe to its capital and permit the transfer of share. A

public limited company offers enormous potential for growth because of access to substantial

funds. The liquidity of investment is high because of easiness of transfer of shares. However its

formation can be recommended only when the size of the business is large. For small business,

a sole proprietary concern or a partnership firm will be the most suitable form of business

organization. In case it is decided to incorporate a private limited company, the same is to be

registered with the Registrar of Companies.

CHOOSING APPROPRIATE MODE OF OPERATIONS:

You can choose any of the following modes of operations

Merchant Exporter i.e. buying the goods from the market or from the manufacturer and

then selling it to foreign buyers.

Manufacturer Exporter i.e. manufacturing the goods yourself for export.

Sales Agent / Commission Agent / Indenting Agent i.e. acting on behalf of the seller and

charging the Commission.

Buying Agent i.e. acting on behalf of the buyer and charging Commission.

Service provider i.e. providing service from India to another country.

NAMING THE BUSINESS

Whatever form of business organization has been finally decided, naming the

business is an essential task for every exporter. The name and style should be soft, attractive,

short and meaningful. Open a current account in the name of the organisation in whose name

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you intend to export. It is advisable to open the account with a bank which is authorised to deal

in Foreign Exchange.

STRUCTURE OF AN EXPORT ORGANISATION

marketing manager for generating sales

Commercial manager for looking activities of the execution of the orders.

staff personnel for carrying out the day-to-day activities namely

o Preparation of pre - shipment documents.

o Co-ordinating with clearing agents on the progress of the shipment to be made.

o Co-ordinating with the ware house\C. excise department regarding packing and

clearance of the goods for export.

o Preparation of post shipment documents foe banks.

o Follow-up with the bank on dispatch of documents, receipt of payment,

availment of bank loans etc.

To look into the requirement of licenses, claiming of export benefits fiiling of documents

with the Government Authorities in Discharge of Export Obligations, if any, filing of

returns to the various Government Agencies which are mandatory, prepare and keep an

information bank of various transaction of the company, their domestic as well as

international competitors.

An office boy for doing leg work.

A clearing and forwarding agent to handle the documents and the goods in the customs

premises\ in the ports of lading.

Depending upon the size of the business the numbers of personnel under each

category may increase. For example if a company is transacting substantial volume of business

in more than one product. Then it is necessary to have marketing manager for each product so

that the person can concentrate on a particular trade to enhance the business.

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Export procedure and documentation

Preliminaries Steps

„IEC number the IEC numbers are normally allotted by the regional licensing authorities.

„Membership cum registration: membership of certain bodies will help the exporters in a number of ways

„Inquiry and offer: An inquiry is a request from a prospective importer to be informed of the terms and conditions of sale.

„Confirmation of order : Once the negotiation are completed and conditions are acceptable to the buyer and seller, the buyer may place and order with the exporter.

„Export license : the exports of some items are banned and of some items controlled by means of licenses, though many items are permitted to be exported freely.

„Finance :If the exporter require preshipment financial assistance, he should take the necessary steps to obtain it.

„Production/procurement of goods : Once the order is confirmed, the exporter should take necessary steps to ensure the timely availability of the goods of the specifications required and execute the export order promptly.

„Shipping space : As soon as the export order is confirmed, the exporter should contract the shipping companies which have sailings for the port to which goods have to be sent and book the required shipping space.

„Packing and marketing : once the goods are ready, they are packed and marked properly.

„Quality control and pre-shipment inspection : Needless to say, goods should be exported only after ensuring that they are of proper quality.

„Excise clearance : As a matter of policy, the government has granted excise duty exemption for export products.

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Customs Formalities

„Goods may be shipped out of India only after Customs clearance has been obtained.

„Following documents to the customs authorities,

1.Shipping bill

2.Declaration regarding truth or statement made in the shipping bill

3.Invoice

4.GR form

5.Export licence

6.Quality control inspection certificate

7.Original contract, wherever available or correspondence leading to contract

8.Contract registration certificate

9.Letter of credit

10.Packing list

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11.AR-4 form

12.Any other documents

Exchange Control Formalities

„An exporter, who has sent goods outside the country, has the obligation to satisfy the Reserve Bank of India that he has received payment from his overseas buyer.

„Make a declaration on the prescribed form to the Collector of Customs that foreign exchange, representing the full export value of goods, has been or will be disposed of in the manner and within the period specified by the RBI

„Negotiate all shipping documents, including those relating to sales on consignment basis, through authorized dealers.

„Receive payment by an approved method

„Surrender the foreign exchange received from exports to the exchange control authority through authorized dealers.

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Shipping The Goods

„Goods may be exported to foreign by sea, air, post, land or river.

1.Shipping by sea : To obtain the permission of the port authorities for the movement of goods into the port, it is necessary to present the cart ticket to the gate warden/inspector/keeper at the port gate.

2.Shipping By Air : Shipping by air has become popular for such products as commodities which are perishable and seasonal or high in cost but low in bulk.

3.Shipping By Post : Shipping of goods may be effected by post, subject to the foreign trade and foreign exchange regulations of the country.

4.Shipping By Land : The procedure for the export of excisable goods by land to countries like Afghanistan is, by and large, similar to the one laid down for export by sea.

Negotiation Of Documents

„After shipping the goods, the exporter should arrange to obtain payment for the exports by negotiating the relevant documents through the bank.

Export Incentives

„If the exporter is entitled to any export incentives, he should take the necessary steps to realize it (them).

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Principal Export Documents 1.Commercial invoice

Document required by customs to determine true value of the imported goods, for assessment of duties and taxes. A commercial invoice (in addition to other information), must identify the buyer and seller, and clearly indicate the (1) date and terms of sale, (2) quantity, weight and/or volume of the shipment, (3) type of packaging, (4) complete description of goods, (5) unit value and total value, and (6) insurance, shipping and other charges (as applicable).

2.Packing list

A packing list is a document that includes details about the contents of a package. The packing list is intended to let transport agencies, government authorities, and customers know the contents of the package. These details help each of these parties handle the package accordingly.

3.Bill of lading

a detailed list of a ship's cargo in the form of a receipt given by the master of the ship to the person consigning the goods.

4.Combined transport document

Combined transport is a form of intermodal transport, which is the movement of goods in one and the same loading unit or road vehicle, using successively two or more modes of transport without handling the goods themselves in changing modes.

5.Certificate of inspection/quality control

A document certifying that merchandise (such as perishable goods) was in good condition at the time of inspection, usually immediately prior to shipment. ... When used as a required document under letter of credit terms, the details and identity of the party providing the inspection should be mentioned.

6.Insurance certificate/policy

A certificate of insurance is a document issued by an insurance company/broker that is used to verify the existence of insurance coverage under specific conditions granted to listed individuals.

7.Certificate of origin

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A Certificate of Origin (CO) is an important international trade document confirming that the goods in a particular shipment have been wholly obtained, produced, manufactured or processed in a particular country.

8.Bills of exchange and shipment

advicea written order to a person requiring them to make a specified payment to the signatory or to a named payee; a promissory note.

Auxiliary Documents

1.Performa invoice

2.Intimation for inspection

3.Shipping instructions

4.Insurance declaration

5.Shipping order

6.Mate receipt

7.Application for certificate of origin

8.Letter to the bank for collection/negotiation of documents.

Regulatory Documents

1.Gate pass-1/gate pass-2 –prescribed by Central Excise Authorities

2.AR4/AR4A form -prescribed by Central Excise Authorities

3.Shipping Bill/Bill of Export -prescribed by Central Excise Authorities

4.Export Application/Dock Challan – Prescribed by Port Trust.

5.Receipt for payment of Port Charges

6.Vehicle Ticket

7.Exchange Control Declaration – Prescribed by RBI GR/PP Forms

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8.Freight Payment Certificate

9.Insurance Premium Payment Certificate

Documents Related To Goods

1.Invoice : An invoice is the seller’s bill for merchandise and contains particulars of goods, such as the price per unit at a particular location, quantity, total value, packing etc.

2.Packing Note and List : Difference between a packing note and a packing list is that the packing note refers to the particulars of the contents of an individual pack, while the packing list is a consolidated statement of the contents of a number of cases or packs.

3.Certificate of origin : A certificate of origin, as the name indicates, is a certificate which specifies the country of the production of the goods.

Certificates Related To Shipment

1.Mate receipt : A mate receipt is a receipt issued by the Commanding Office of the ship when the cargo is loaded on the ship, and containts information about the name of the vessel, berth, date of shipment, description of packages, marks and numbers, conditions of the cargo at the time of receipt on board the ship etc.

2.Shipping Bill : The shipping bill is the main document on the basis of which the Customs’permission for export is given.

3.Cart Ticket : A cart ticket, also known as a cart chit, vehicle and gate pass, is prepared by the exporter and includes details of the export cargo in terms of the shipper’s name, the number of packages, the shipping bill number, the port of destination and the number of the vehicle carrying the cargo.

4.Certificate of Measurement

A certificate which signifies competency in the area of evaluating the investment performance of investment firms. The Certificate in Investment Performance Measurement is issued by the Chartered

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Financial Analyst Institute and requires certificate holders to: ... - Obtain membership in the CIPM Association.

5.Bill of Lading

a detailed list of a ship's cargo in the form of a receipt given by the master of the ship to the person consigning the goods.

6.Airway Bill

Documents Related To Payment

a)Letter of credit

a letter issued by a bank to another bank (especially one in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.

b)Bill of exchange

a letter issued by a bank to another bank (especially one in a different country) to serve as a guarantee for payments made to a specified person under specified conditions.

c)Trust receipt

Trust Receipt (TR) is a type of short-term import loan to provide the buyer with financing to settle goods imported under Letter of Credit where title of goods is held by the bank.

d)Letter of hypothecation

Enables an accepting bank to sell the shipment if the buyer does not accept or pay the bill of exchange. A bank or lender is authorized to seize and sell the documented item if default occurs. In international trade, a letter of hypothecation is a written confirmation.

e)Bank certificate of payment

A certificate of deposit (CD) is a time deposit, a financial product commonly sold in the United States and elsewhere by banks, thrift institutions, and credit unions. CDs are similar to savings accounts in that they are insured "money in the bank" and thus virtually risk free.

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Documents Relating To Inspection

„Certificate Of Inspection : It is a certificate issued by the Export Inspection Agency, certifying that the consignment has been inspected as required under the Export (Quality Control and Inspection) Act, 1963.

Documents Related To Excisable Goods

a)G. P. Forms

b)Form C

c)Forms A.R.-4/A.R.-4A

Summary„Some important steps and documents in export transaction are : preliminaries, inquiry and offer, confirmation of order, export license, finance, procurement of goods, shipping space, packing and marking, quality control and pre-shipment inspection, excise clearance, customs formalities, exchange control formalities, insurance, shipping goods, negotiation of documents and export incentives.

„There are two dozen commercial and regulatory documents involved in preshipment stage of an export transaction.

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„The different commercial and regulatory documents may be classified into documents related to goods, documents related to shipment, documents related to payment, documents related to inspection etc.

Research methodology

Definition: The process used to collect information and data for the purpose of making

decision. The methodology may include publication research , interview, surveys and other

research techniques and could include both present and historical information.

There are two types of data primary and secondary …

Primary: Raw or primary data is a term for data collection at source. This type of

information is obtained directly from first hand source by means of survey, observation

and experimentation.

Secondary: It refers to the data collected by someone other than the user that is the

data is already available and analyzed by someone else.

Primary data is collected by:

1. Observation method: it is commonly used in studies relating to behavioral

science, under this method observation becomes a science tool to collect

data.

2. Interview method: this method of collecting data involves presentation of

oral verbal stimuli and reply in terms of oral-verbal responses.

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3. Questionnaire: in this method a questionnaire is sent to the concerned

respondents who are expected to read, understand and reply on their own

and return the questionnaire filled by due information asked.

Schedules: this method of data collection is similar to questionnaire method

with the difference that schedules are being filled by enumerations specially

appointed for the purpose. Enumerators should be well trained to perform

their job, he/she should be honest, hardworking and patient.

Secondary data can be collected by:

1. Publications of government

2. Technical and trade journal

3. Reports of various business banks

4. Public records

5. Statistical or historical documents

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Data collection

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Data analysis

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Year Sales turnover(mn)2014-15 13,2892013-14 12,9292012-13 15,2682011-12 16,1322010-11 11,739

2010-11 2011-12 2012-13 2013-14 2014-15 0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Series 1

Series 1

For the year ended on March 31, 2015, the Companyhas achieved a Turnover of 50,319.24 Lacs as against

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`50,123.19 Lacs in the previous year, representing amarginal increase in Turnover by 0.40%.For the year ended on March 31, 2015, the Company has achieved Earnings Before Interest (Finance Cost),

Depreciation & Amortization and Tax (EBIDTA) of`10,650.35 Lacs as against the EBIDTA of`10,006.97Lacs during the previous year, representing increase inEBIDTA by 6.43%. The increase was driven by reductionin operational and finance cost during the year.The Company holds total unexecuted orders worth`23,387 Lacs as on March 31, 2015. This will help us tocontinue to have sustainable growth in coming years.

The reason for growth of elecon in the current year is because of the need for technical instruments like mining tools in the world wide economy, that is why the demand in the market has raised in the recent years.

Conclusion

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Every business has to follow a systematic documentation for the systematic import and export of goods flowing out of country.

The complexity of documents can be eliminated when prepared by experienced staff. The document required differs from country to country, product to product. A proper planning will lead to less loss or wastage of products.

Most of the company have a well-trained personal to fill in such documents to avoid complexities later while sending copies of certain document the original is however retained for further verification on a later date. Tough it is complex process in playing a major role in international trade.

Bibliography

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www.google.com www.wikipedia.com www.shareinfo.com www.eleconengineering.com

Books

a guide to international trade and export managementBy: C.A VIRENDRA K PAMECHA

Anti-dumping law & procedureBy; R.K Gupta

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http://www.eleconengineering.com/

http://www.shareinfo.com/

http://www.wikipedia.com/

Education

Elecon project report