Final ST Project

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL
(A GOVT. OF INDIA UNDERTAKING UNIT)
SUMMER INTERNSHIP PROJECT
FOREX MANAGEMENTIMPORT AND EXPORT IN BOKARO STEEL PLANT (BSL)

VIDHI ( IPER PGDM ) Page 1
ACKNOWLEDGMENT
I am neither expert nor a trend spotter. I am a management student with foundations of management principles and theories who is keen in different industries, its happening mainly in SAIL-BSL. I am highly obliged to Mr. Dharmendra Kumar- Assistant Manager (F & A-Purchase) SAIL-BSL, my prime internal guide for his invaluable support; guidance and knowledge that he shared with me thereby aiding me in making this project a success along with different guides as Sri S.KUMAR-Sr. Manager (F&A-Sales Invoice), MS MEENA BAKLA,(sr. manager)- (F& A PURCHASE SECTION) of each sections who provided their utmost working knowledge, which has broaden my area of interest and benefited mostly in completing the project. Their guidance and suggestions without which it was a difficult step to complete the project alone. This provided me some experience not only in practical aspects of industry but also in human relation, group work , individual work and provided great insights into the actual working of an industry . Definitely I cant ignore the technology with internet as a backbone in building the project. I am obliged to DR. A.S.KHALSA (Director), my guide and other staff members, for their inspiring presence and blessings for going ahead and fulfilling the project report. I hereby also declare that the contents in the report are true to the best of my knowledge. Lastly I thank to INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH,BHOPAL and BOKARO STEEL PLANT SAIL which gave me an opportunity regarding training purpose and helped me in building some experience in my career.
Vidhi IPER PGDM
VIDHI ( IPER PGDM )
Page 2

CERTIFICATE
This is to certify that the project entitled FOREX MANAGEMENT IMPORT AND EXPORT at SAIL- BOKARO STEEL PLANT has been carried out by Ms. VIDHI from 09ND MAY 2011 to 02TH JULY 2011, under my supervision in partial fulfillment of his PGDM Programme at INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH (IPER), BHOPAL. I am satisfied with her sincere performance and study conducted by her in SAIL-BOKARO STEEL PLANT. The project is hereby approved as a bonafied work carried out and presented in a manner satisfactory to its acceptance area to the post graduate degree for which it has been submitted. I recommend submitting the project report. I wish her all success in life. This is also certified that the project work is original and has not been submitted to any other place.
Project Guide(SAIL) Mr. .Dharmendra Kumar Assistant Manager -Purchase (F & A) BSL (SAIL).
Project GuideIPER) DR. A.S.KHALSA Director IPER PGDM BHOPAL
VIDHI ( IPER PGDM )
Page 3
DECLARATION
I hereby declare that the following documented project report titled FORGIEN EXCHANGE MANAGEMENT IN SAIL-BSL is an authentic work done by me as a part of my study on Finance. I also further state that the project has been prepared by my own with the secondary data provided in the reports of the company, which were essential for the completion of the project. The project was undertaken as a part of the course curriculum of PGDM Programme, INSTITUTE OF PROFESSIONAL EDUCATION AND RESEARCH, (IPER), BHOPAL, MP. This has not been submitted to any other Examination body earlier.
VIDHI PGDM 3RD TRIM IPER PGDM BHOPAL,MP
VIDHI ( IPER PGDM )
Page 4
EXECUTIVE SUMMARY
Steel Authority of India Limited (SAIL) is the leading steel making company in India. It has got one of the prestigious honors i.e. aMAHARATNA COMPANY. It is fully integrated iron and steel maker, producing both basic and special steel for domestic construction engineering, power, railway automotive and defense industries and for safe in export markets. Bokaro Steel Plant The fourth integrated plant in the public sector taking shape in 1965 in collaboration with the Soviet Union. It was originally incorporated as a limited company on 29thJanuary 1964, and was later merged with SAIL first as a subsidiary and then as a unit through the public sector iron & steel companies act1978. Foreign Exchange management is concerned with import and export procedure, mode of import payments along with export payments. The foreign policy of this large scale company is an obligation by the Government of India, as there will be more flow of the foreign currency. The exports are to be looked as a more prime area because revenue is generated from it. In todays world no economy is self sufficient, so there is need for exchange of goods services amongst the different countries. So in this global village, unlike in the primitive age the exchange of goods and services is no longer carried out on barter basis. Every sovereign country in the world has a currency that is legal tender in its territory and this currency does not act as money outside its boundaries. So whenever a country buys or sells goods and services from or to another country, the parties of both countries have to exchange currencies. So we can imagine that if all countries have the currency then there is no need for foreign exchange. Importing is an importing tool for increasing our production as lower labour costs or a different tax regime may mean one countrys prices for a particular product are significantly lower than those in the other country moreover a higher-quality of finished products or raw materials with upgrades the quality level of of the goods produced.
VIDHI ( IPER PGDM )
Page 5

Exports are a part of its revenue but the plant does not fully depend on it as its customers are more of domestic area than the foreigners.
In short it can be said that this project mainly deals with : Procedure of payment of foreign exchange to the importers and exporters through LC, CAD , WIRE TRANSFER and PURCHASE ORDER AS WELL AS HOW FOREIGN EXCHANGE REMIT IS DONE .
VIDHI ( IPER PGDM )
Page 6
CONTENTS: 1) A) HISTORY OF SAIL B) CURRENT POSITION OF STEEL INDUSTRY 2) COMPANYS PROFILE a) HISTORY OF SAIL b) MANAGEMENT 3) FINANCE DEPARTMENT OF SAIL 4) IMPORT AND EXPORT OBLIGATION OF SAIL 5) DATA AND INTERPRETATION 6) FOREIN EXCHANGE MANAGEMENT AND DOCUMENTATION IN SAIL 7) PROBLEM IN FOREIN EXCHANGE MANAGEMENT 8) SUGGESTION AND CONCLUSION 9) BIBLIOGRAPHY 10) ANNEXTURE
VIDHI ( IPER PGDM )
Page 7

CHAPTER-1 A. History of Steel Industry In India The antiquity of mans use of iron attested by references to that metal both in fragmentary writing & inscriptions that survived ancient civilization of Babylon, Mexico, Egypt, China, India, Greece & Rome. However, it is believed that most of the iron used by prehistoric people might have been obtained by fragment of meteorites and it remained a rare metal for many centuries.
For many years after man learned how to extract iron from its ores, the product probably was so relatively soft and unpredictable, that bronze continued to be preferred for many tools and weapons. Eventually iron replaced the nonferrous metal for these purposes when man learned how to master the difficult arts of smelting, forging, hardening and tempering iron. Archeological findings in Mesopotamia and Egypt have proved that iron or steel has been in the service o mankind for nearly 6000 years. The origin of the methods used by early man for Extracting iron from its ores is unknown. Some have suggested that many method accidentally. learned the
Iron, in the beginning was smelted by charcoal made from wood. Later coal was discovered as a great source of heat. Subsequently, it was converted into coke, which was found to be ideal for smelting of iron. Iron kept its dominant place for 200 or more years after the Saugus works that was the first successful Iron Works in America founded in 1646, with the advance of Industrial Revolution, iron formed the rails for newly invented railroad trains. It was also used to amour the sides of the fighting ships. About the mid 19 th century the new age of steel began with the invention of Bessemer process (1856) making steel available in large quantities at reasonable cost. Indian history is also replete with references to the usage of iron and steel. Some of the ancient monuments like the famous iron pillar near New Delhi or the massive beams used in the Sun Temple at Konark bear ample testimony to the technological excellence of the Indian metallurgists.
VIDHI ( IPER PGDM )
Page 8

The history of iron in India goes back to the ancient era. Our ancient literary sources like Rig Veda, the Atbara Veda, the Puranas and other Epics are full of references to iron and its uses in peace and war. According to one of the studies, iron has been produced in India for over 3000 years.
B.Current Position of Steel Industry
Steel industry has a major role to play in the economic growth of India. With new global acquisitions by Indian steel giants, setting up of new state-of-the-art steel mills, modernisation of existing plants, improving energy efficiency and backward integration into global raw material sources, India is now on the centre of the global steel map. Consumption of steel in the construction sector, industrial applications, and transport sector has been on the rise and special steel usage in engineering industries such as power generation, petrochemicals and fertiliser industry is also growing.
India has retained its position as the 5th largest producer in 2010 and recorded a growth of 11.3 per cent as compared to 2009. India has also emerged as the largest sponge iron/direct reduced iron (DRI) producing country in the world in 2010, a rank it has held on since 2002. Sponge iron production grew at a CAGR of 11 per cent to reach a level of 20.74 million tonne (MT) in 2009-10 as compared to 14.83 MT in 2005-06. India is expected to become the second largest producer of steel in the world by 2015-16, on account of growing steel demand, rich resources base of iron ore, skilled manpower and vast experience of steel making and the huge capacity expansion planned and being executed in the steel sector. With the expanding consumer market, Indian steel industry is likely to receive huge domestic and foreign investments. Nearly 222 memorandums of understandings (MoUs) for planned capacity of around 276 MT have been signed between the investors and various State Governments, mostly in Orissa, Jharkhand, Chhattisgarh and West Bengal. India has recorded a growth of over 8.6 per cent, producing 6.35 MT of steel in March 2011 as against 5.85 MT in the corresponding month in 2010, according to World Steel Association (WSA). Steel exports has increased by 17.3 per cent as it reached an estimated 2.46 MT, while steel imports were at an estimated 5.36 MT, a growth of 2.8 per cent in 2010.
VIDHI ( IPER PGDM )
Page 9

ProductionCrude steel production was registered at 51.57 MT during April-Dec 2010 in the country as per Joint Plant Committee (JPC). The production is expected to be nearly 110 MT by 201213. Crude steel production grew at a compound annual growth rate (CAGR) of 8.4 per cent during the five years, 2005-06 to 2009-10. The crude steel performance accounted for 31 per cent of the total crude steel production in the country during 2009-10, contributed largely by the strong trends in growth of the electric route of steel making, particularly the induction furnace route, which was a key driver in the growth of the segment. In case of total finished steel (alloy + non-alloy), production for sale was recorded at 47.30 MT, a growth of 7.9 per cent during Apr-Dec 2010. Steel Authority of India (SAIL) Ltd has planned to enhance its hot metal production capacity from the level of 13.82 million tones per annum (MTPA) to 23.46 MTPA under its current phase of expansion and modernization which is expected to be completed by financial year 2012-13. In the next phase, SAIL would increase its capacity further to 26.18 MTPA.The indicative investment for current phase is about US$ 13.28 billion. Additionally, approximately US$ 2.21 billion has been earmarked for modernisation and expansion of SAIL Mines. NMDC Ltd plans to increase the production of iron ore from the present level of about 24 MT to 40 MT by 2014-15. Besides, setting up a 3 MTPA Integrated Steel Plant at Nagarnar in Chhattisgarh. The environmental clearance for the plant has been accorded by Ministry of Environment and Forests (MoEF). ConsumptionThe Indian steel industry has been on a high-growth trajectory led by buoyancy in sectors such as infrastructure and construction, oil and gas and automobiles. The demand for steel is expected to further increase with major international automobile manufacturers setting manufacturing facilities in India. The consumption of steel domestically was recorded at 44.28 MT, indicating further strengthening of demand during Apr-Dec 2010. The consumption of steel in the country has shown an increase of 10.3 per cent during April 2010 to January 2011 as compared to the same period of previous year.
VIDHI ( IPER PGDM )
Page 10

CHAPTER-2 COMPANY PROFILE A. History of SAIL
A Rich Heritage The Precursor SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialisaton of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954. The President of India held the shares of the company on behalf of the people of India.
Expanding Horizon (1959-1973) Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel Ministry. From April 1957, the supervision and control of these two steel plants were also transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December 1959.
A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to construct

and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January 1962 after commissioning of the Wheel and Axle plant. The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT. The second phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73.
Holding Company
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for managing industry. The policy statement was presented to the Parliament on December 2, 1972. On this basis the concept of creating a holding company to manage inputs and outputs under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as an operating company.
Since its inception, SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Besides, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry.
VIDHI ( IPER PGDM )
Page 12

JOINT VENTURES SAIL has promoted joint ventures in different areas ranging from power plant to ecommerce. The important joint ventures of the company, among others, are:-
COMPANY NTPC-SAIL Power Company Pvt. Ltd Bokaro Power supply company Pvt. Ltd M- Junction services Ltd.
LOCATION NEW DELHI
JV PARTNER NTPC
EQUITY 50:50
PROFILE Operates & manages the captive power plants of durgapur, Rourkela & Bhilai
BOKARO
DVC
50:50
Manages 302MW power generation 660tonnes per hour steam generation facilities at Bokaro steel plant.
KOLKATA
TATA Steel
50:50
Promotes e-commerce activities in steel and related areas.
SAIL & MOIL Ferro Alloys Pvt. Ltd.
BHILAI
MANGANESE ORE (INDIA) LIMITED
50:50
Production of ferro manganese and silicon Manganese at Bhilai with furnace operation at Nandini/ Bhalai
Bhilai jaypee cement limited
SANTNA & BHILAI
Jaiparkash Associates Ltd.
26:74
To set up and operate a cement plant of 2.2 million tones per annum capacity at split location at satna & Bhilai , using slag generated during
VIDHI ( IPER PGDM )
Page 13

blast furnace . Bokaro jaypee cement Ltd. BOKARO Jaiparkash Associates Ltd. 26:74 To set up and operate a cement plant of 2.1 million tones per annum capacity, utilizing generated slag during Blast furnace operation at BSL.
MEMORANDUM OF UNDERSTANDINGS to set up, develop, manage and own captive/independent power plant (s) at suitable location/s to meet future power requirements of Larsen & Toubro Ltd. SAIL. The scope of agreement also includes exploration of opportunities to own captive thermal coal blocks to cater to the power plant requirements. Shipping corporation of India. to promote a Joint Venture Company, which shall primarily provide shipping related services to SAIL for imported coking coal and also participate in world wide dry bulk shipping trade. to increase production from the existing facilities at Steel Complex Limited (SCL), Calicut and also set up, develop & manage a 50,000 TMT Rolling Mill along with its balancing facilities and auxiliaries at SCL, Calicut. to collaborate in a wide range of strategic business and commercial areas of mutual interest. to jointly explore and develop low silica limestone mines in the Sultanate of Oman. for exploration by MECL at all SAIL mines for assessing the reserves and quality of ore available. It has already started exploratory work in Gua and Chiria mines. for equipment/spares required for modernization/expansion.
Government of Kerala
POSCO
Rashtriya Ispat Nigam Ltd. (RINL) Mineral Exploration Corporation Ltd. (MECL) Heavy Engineering
VIDHI ( IPER PGDM )
Page 14

Corporation (HEC) Bharat Earth Movers Limited (BEML) Rajasthan State Mines & Minerals Limited (RSMML) IIM, Ahmedabad and Management Development Institute (MDI), Gurgaon for supply of crucial equipment.
for long-term supply of low-silica limestone.
knowledge sharing.
for procurement of high power locomotives Indian Railways
History Bokaro steel plant brings out before ones eyes the vision of a massive giant in the making. Bokaro Steel Plant - the fourth integrated plant in the Public Sector - started taking shape in 1965 in collaboration with the Soviet Union. It was originally incorporated as a limited company on 29th January 1964, and was later merged with SAIL, first as a subsidiary and then as a unit, through the Public Sector Iron & Steel Companies (Restructuring & Miscellaneous Provisions) Act 1978. The construction work started on 6th/April/1968. The Bokaro Steel Plant is hailed as the countrys first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how. Its first Blast Furnace started on 2nd October 1972 and the first phase of 1.7 MT ingots steel was completed on 26th February 1978 with the commissioning of the third Blast Furnace. All units of 4 MT stage have already been commissioned and the 90s' modernization has further upgraded this to 4.5 MT of liquid steel. Bokaro Steel Plant (BSL) situated in the coal belt of the eastern region, symbolize Indias advancement in the design, engineering & equipment suppliers & construction of steel plants. It is the 4th integrated steel plants in the public sector conceived in 1959; it actually started taking shapes in 1965, with the collaboration of SOVIET UNION. It was initially set up with a capacity of 1.7 million tones (MT) of flat products per annum with a provision to expand up to 4 million tones .It was incorporated as a limited company. The plant was conceived as the countrys 1st SWADESHI steel plant to be built with maximum indigenization going into the equipments, materials & know-how.

The Bokaro Steel Plant is an integrated metallurgical unit engaged in the production of ingots, plates, sheets and coils. In the process, it also produce a number of by -products crude tar, Ammonium sulphate, Benzene, Xylene, Toluene, Coal Tar , Cresols. Medical Facilities The township has a modern 1100-bed Bokaro General Hospital (BGH) with specialized units like Critical Care Unit, Intensive Coronary Care Unit, Nuclear Medicine Laboratory, Ultra modern operation theatre complex and eye operation theatre. The child care unit of the hospital has been recognized as baby friendly hospital by the UNICEF. The blood bank has been given the status of regional training center by the central government, the only one in the Jharkhand. To take care of the employees working in plant, an occupational health service center has been provided within the plant premises. BGH has been granted the status of one of the training centers for students of nursing. The medical team boasts of around 200 doctors and 1000 paramedic staff.
B.
Management
The Government of India owns about 86% of SAIL's equity and retains voting control of the company. However, SAIL, by virtue of its Navratna status, enjoys significant operational and financial autonomy. SAIL has created its own Central Marketing Organization (CMO) and the International Trade Division to take care of its international and marketing operations The steel products manufactured by SAIL include: Hot and cold rolled sheets and coils Galvanized sheets Electrical sheets Railway products Plates, bars and rods Stainless steel and other alloy steels
Integrated Steel Plants Bhilai Steel plant (BSP) in Chhattisgarh Durgapur Steel Plant (DSP) in West Bengal Rourkela Steel Plant (BSL) in Jharkhand IISCO Steel Plant (ISP) in West Bengal Bokaro Steel limited (BSL) in Jharkhand
VIDHI ( IPER PGDM )
Page 16

CHAPTER-3 Finance Department of SAIL Finance is described as science of money and involves the process of conversion of accumulated funds to productive use .The essence of the effective financial management is that the income generated should be greater than the cost of procuring and processing the raw materials by optimum utilization of the same. In the recent changed business scenario which is the outcome of changed Indian economic policy from command economy to free economy to integrate the Indian economy to the world economic order .The role of financial manager has become a crucial one since the factor of efficiency in all productivity field has become paramount. In a multi process industry like an integrated steel plant like this one where some processes remain involved in certain endothermic behavior of cost one finds it difficult to prepare the cost benefit analysis ,hence in deciding the optimum level of activity because each level of activity can be attained with the various number of alternative resources available at a particular point in time. F&A is an important department of BSL headed by ED .There are 34 production cost centers, 24 service centers and 18 job costing centers of engineering shops : Cost and budget section allows process costing systems for its production and service centers job costing method for its engineering shops for maintaining its cost record like production and consumption of RM,power,fuel,stores, spares etc. .In production and service cost per unit is determined upon output and in engineering shop cost is determined upon machine hour rate .Monthly and annual cost is prepared on actual basis and derivations are reported to higher management through MIS report. The reporting of actual business performance and analysis of reason for variance with planned one is done by use of management accounting techniques like variance analysis, ratio analysis and sensitivity analysis .Cost reduction activity is being monitored by cost and budget section and performance in this stage is brought to the notice of higher management. Organizations like SAIL which has various units and subsidiaries, finance and accounts plays an important role.
VIDHI ( IPER PGDM )
Page 17

3.1) Sections in Finance and Accounts CODE-01 PAY SECTION It deals with the accounting of employees related salary slip .Basically deals with any activity related to pay .Loan, Bonus Any monthly payments taken once in a year CODE-02 MAIN ACCOUNTS SECTION It deals with the consolation of accounts with each quarter along with the final close. It prepares a main ledger, assets ledger, section ledger and trial balance etc...It prepares and maintains assets register of the company .It facilitates the inter plant reconciliation, coordination with the various auditors. CODE-03 PURCHASE ACCOUNTS It basically deals with the payments and accountings of all the goods against which purchase order has been placed. Its work starts when goods are received and verified with GRN (goods and returned notes).They receive and verify the bill. CODE-04 CASH ACCOUNT It deals with the disbursement and receipt of cash as per the bills passed by the officers of various sections .Its main function includes monitoring of cash deposit ,liasioning with banks .They generally prepare the bank reconciliation statements(BRS).They deal with Rs 350-380 crores of expenditure on monthly basis. Whereas the revenue side consists of lease, rent etc. CODE-05 PROJECT FINANCE It deals with the project accounting (not with the project calculation).Basically it deals with the payments to parties related to different projects. CODE-06 ESTATE ACCOUNTS It deals with the accounting of IPU cases.IPU is investment in planning unit and is related to projects. CODE-08 STORE ACCOUNTS It deals with the accounting and maintenance of stores ledger .receipt, balance of inventories etc. . .Stores department has the custody of around two lakh items. The document raised by the stores department is:
VIDHI ( IPER PGDM )
Page 18

Issue notes Material return notes Dispatch notes Goods receipt notes Stock transfer voucher Stock adjustment voucher Provisional voucher Book transfer voucher CODE-09 PROVIDENT FUNDS It deals with the accountings of employees provident funds along with the loans taken against provident funds balance. CODE-10 FREIGHT ACCOUNTS It deals with the payments and accounting of freight bills related to raw materials .This section generally deals with the freight inward whereas outward is dealt by the invoicing section(which is not the part of sales accounts). CODE-11 INSURANCE SETION It deals with the accounting of sales tax matters which are related to steel goods CODE -12 OPERATIONAL PAYMENTS SECTION It deals with the payments of those expenditures which are generally not related with any particular department like Telephone bills Water bills-15 crores Township management bills Aviation Miscellaneous payments City park (horticulture)
VIDHI ( IPER PGDM )
Page 19

In plant scrape recovery-15 crores Railways-10 crores Sports CMO CODE-14 SALES ACCOUNTS It deals with the preparation of invoice and accounting thereof. CODE-15 COST AND BUDGET There are 77 cost centers .They prepares the budget on monthly, quarterly and annual basis .They deal with daily profits. They prepare the MIS reports .They make the valuation of finished /semi finished stock of plant .Actually this section decides the rate of each output. CODE -16 RAW MATERIAL It deals with the accounting of raw material consumption including Ferro and non Ferro items.It deals with evaluation of raw materials as well as payment of bills related to raw material. CODE-17 EXCISE ACCOUNTS It deals with the CENVAT, Excise duty. CODE -18 VAT It deals with the accounting and payments of VAT to central governments.
VIDHI ( IPER PGDM )
Page 20
3.2) Finance and Accounts Department Organization Chart
ED (F&A)
GM (F&A)
DGM (F&A)
DGM (F&A)
DGM (F&A)
DGM (F&A)
DGM (F&A)
DGM (F&A)
DGM (F&A)
OF,Project Finance, A/C admin, Cash A/C, Insurance& Claims, Hindi Cell,Quality Circle & Suggestion Scheme
Pay A/C,PF & Pension, Time Office, Estate A/C, BGH
C&B, Main A/C, Stock Verificat ion,MIS, Govt. Audit and Internal Audit
Purchase & Stores A/C,RM A/C, Railway Freight & Claim, Opas, Direct Taxes Report & Return
Sales & Excise ,Service Tax ,Indirect Taxes Report & Return
Kolkata A/C
ERP
VIDHI ( IPER PGDM )
Page 21

CHAPTER 4 Import and Export obligation of SAIL The Indian steel industry have entered into a new development stage from 2005-06, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 7th largest producer of steel. Indias steel consumption will continue to grow at nearly 16% rate annually, till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The National Steel Policy has envisaged steel production to reach 110 million tones by 2019-20. However, based on the assessment of the current ongoing projects, both in Greenfield and Brownfield, Ministry of Steel has projected that the steel capacity in the county is likely to be 124.06 million tones by 2011-12. Production

Steel industry was relicensed and decontrolled in 1991 & 1992 respectively. Today, India is the 7th largest crude steel producer of steel in the world. In 2008-09, production of Finished (Carbon) Steel was 59.02 million tones. Production of Pig Iron in 2008-09 was 5.299 Million Tons. Last 5 year's production of pig iron and finished (carbon) steel is given below: (in million tons) Category Pig Iron Finished Carbon Steel 2004-05 2005-06 2006-07 2007-08 2008-09 3.228 40.055 4.695 44.544 4.993 55.416 5.314 58.233 5.289 59.02
Imports of Iron & Steel

Iron & Steel are freely importable as per the extant policy. Last five years import of Finished (Carbon) Steel is given below:Year Qty. (In Million Tons) 2004-2005 2.109 2005-2006 3.850 2006-2007 4.436 (Partly estimated) 2007-08 6.581 2008-2009 5149 (Partly estimated)
VIDHI ( IPER PGDM )
Page 22

Exports of Iron & Steel Exports (Qty. in Million Tonnes) Year 2004-2005 2005-2006 2006-2007 (Prov. estimated) 2007-2008 2008-2009 (Prov. estimated) Finished (Carbon) Steel Pig Iron 4.381 4.478 4.750 4.627 3.482 0.393 0.440 0.350 0.560 0.350
India has also emerged as the largest sponge iron/direct reduced iron (DRI) producing country in the world in 2010, a rank it has held on since 2002. Sponge iron production grew at a CAGR of 11 per cent to reach a level of 20.74 million tonne (MT) in 2009-10 as compared to 14.83 MT in 2005-06. India is expected to become the second largest producer of steel in the world by 2015-16, on account of growing steel demand, rich resources base of iron ore, skilled manpower and vast experience of steel making and the huge capacity expansion planned and being executed in the steel sector. India has recorded a growth of over 8.6 per cent, producing 6.35 MT of steel in March 2011 as against 5.85 MT in the corresponding month in 2010, according to World Steel Association (WSA). Steel exports has increased by 17.3 per cent as it reached an estimated 2.46 MT, while steel imports were at an estimated 5.36 MT, a growth of 2.8 per cent in 2010. Crude steel production was registered at 51.57 MT during April-Dec 2010 in the country as per Joint Plant Committee (JPC). The production is expected to be nearly 110 MT by 201213.
The steel industry in India is likely to receive huge domestic and foreign investments.

Posco, South Korea, plans to set up a 12 MT integrated steel plant in Orissa. Mittal Group's announced plans to set up their 12 MT integrated steel unit in Orissa. Bhilai Steel Plant (BSP), the flagship entity of the Steel Authority of India Limited (SAIL), has secured a fresh order of exporting rails to Sri Lanka. The order of about 14,000 tonnes is for the UIC-60 grade of rails. Earlier, the company had received an order to supply 6,500 tonnes of rails to Sri Lanka. Tata Steel Ltd (TSL) and Nippon Steel Corporation (NSC) have signed a joint venture (JV) agreement to setup India's first continuous annealing and processing line
Page 23
VIDHI ( IPER PGDM )

(CAPL) for the production of 600,000 tonnes per annum of automotive cold-rolled steel at Jamshedpur, India. The project will be set up at a capital cost of approximately US$ 509.08 million and is expected to come on stream in 2013. IMPORT Importing of goods was for a long period of time. As the goods which were unavailable in one country was too imported from the other sourced country. Before it was similar to the barter system but as the year passes as the world changes to a growth stage, these importing of goods becomes a business and of course of a more profitable one. Now many big organizations do importing of goods and raw materials which enhanced their production to a high margin. Sail basically imports. There are a number of benefits to be gained by opting for an overseas supplier. o Lower priced goods: Lower labour costs or a different tax regime may mean one countrys prices for a particular product are significantly lower than those in the UK. o Higher-quality finished products: Every country has its specialties and strengths. If you want the very best, it could be to your advantage to import from a particular country. o Traditional skills and raw materials: It makes sense to take advantage of traditional crafts and skills that have been carried on for generations in some cultures. o Original products: Originality and authenticity are important in some markets if you want to keep ahead of your competitors Since the payments are done by conversion from currency to the another. There may be some type of risk as fluctuating exchange rates can affect the price of the product and your profitability. A forward exchange contract is one way to protect you. This is a binding obligation to buy or sell a certain amount of foreign currency at a pre-agreed rate of exchange, on or before a certain date. This enables you to budget at a guaranteed rate of exchange. Payment options How you choose to pay your supplier depends on a number of factors, not least the level of trust between the two.. Open Account-Orders placed with organizations may be dealt with on an open account basis. The supplier trusts your ability to pay them against their invoice within, say, 30 days. Clearing banks offer fast money electronic transfer systems for such transactions. Or you could open a euro currency account allowing you to trade with countries in the Euro zone using just one account.

Letters of credit These offer both buyer and seller security and are honored through the banking system. The conditions are stated on the letter of credit, including the amount to be paid, a description of the goods and what documents the exporter must present to receive payment. The importers bank guarantees the exporter that payment will be made if those conditions are met. Documentary collections Documents relating to the goods imported are sent by the supplier via their own bank to your bank. Your bank receives all the shipping documents and the invoices, which state the methods of payment. The bank will notify you when it has all the documents. The advantage of this system is that you, as the importer, dont have to make payment for your goods until you have accepted the documents relating to them from your bank. Terms of delivery and means of transport Although some suppliers may want to quote for their goods including the transport or freight charges, importer may take responsibility for goods early in the supply chain. This allows choosing the carrier, routing and point of entry into the imported country. Always inspect goods as soon as they are received. FOB Free on board Named port of shipment Maritime and inland waterway transport only The seller delivers the goods, cleared for export, when they pass the ships rail at the named port of shipment. CFR Cost and freight Named port of destination Maritime and inland waterway transport only The seller delivers the goods when they pass the ships rail in the port of shipment and must pay the costs and freight necessary to bring the goods to the named port of destination. CIF Cost insurance and freight Named port of destination Maritime and inland waterway transport only The same as CFR except the seller must also procure insurance against the buyers risk of loss or damage during carriage.
CPT Carriage paid to Named place of destination Any mode of transport
VIDHI ( IPER PGDM )
Page 25

The seller delivers the goods to the nominated carrier and must also pay the cost of carriage necessary to bring the goods to the named destination. IMPORT PROCEDURE PROCEDURE CUM PAYMENT FACILITATED AT BOKARO STEEL PLANT (SAIL)
MODE OF PAYMENT
CAD- CASH AGAINST DOCUMENT
LC LETTER OF CREDIT
TT - TELEGRAPHIC TRANSFER
LETTER OF CREDIT
A letter of credit makes a bank's promise to pay the exporter to that of the foreign buyer provided that the exporter has complied with all the terms and conditions of the letter of credit. The foreign buyer applies for issuance of a letter of credit from the buyer's bank to the exporter's bank and therefore is called the applicant; the exporter is called the beneficiary. Payment under a documentary letter of credit is based on documents, not on the terms of sale or the physical condition of the goods. The letter of credit specifies the documents that are required to be presented by the exporter, such as an ocean bill of lading (original and several copies), consular invoice, draft, and an insurance policy. The letter of credit also contains an expiration date. Before payment, the bank responsible for making payment, verifies that all document conform to the letter of credit requirements. If not, the discrepancy must be resolved before payment can be made and before the expiration date. A letter of credit may either be irrevocable and thus, unable to be changed unless both parties agree; or revocable where either party may unilaterally make changes. A revocable letter of credit is inadvisable as it carries many risks for the exporter. A change made to a letter of credit after it has been issued is called an amendment. Banks also charge fees for this service. It should be specified in the amendment if the exporter or the buyer will pay these charges. Every effort should be made to get the letter of credit right the first time since these changes can be time-consuming and expensive. To expedite the receipt of funds, wire transfers may be used. Exporters should consult with their international bankers about bank charges for such services.
PROCEDURE The following procedures include a flow of events that follow the decision to use a Commercial Letter of Credit.
After a contract is concluded between buyer and seller, buyer's bank supplies a letter of credit to seller.
Seller consigns the goods to a carrier in exchange for a bill of lading.
VIDHI ( IPER PGDM )
Page 27
Seller pays bill of lading for payment from buyer's bank. Buyer's bank exchanges bill of lading for payment from the buyer.
Buyer provides bill of lading to carrier and takes delivery of goods.
PROCEDURE OF BSL 1. On receipt of advice from respective department (Purchase department) along with relevant information (Bank details etc.) we proceed for opening of Letter of Credit (LC). 2. Checking of Terms & conditions of Purchase Order (PO) in line with requisite information required for LC opening. LC cannot be opened unless Bank Guarantee is CONFIRMED or, relevant Bank details etc not provided.
VIDHI ( IPER PGDM )
Page 28

3. LC opening advice sends to Bank in separate format in the form of FD SWIFT-700 APPLICATION & GUARANTEE FOR ISSUE OF DOCUMENTARY CREDIT along with relevant Po. LC has been opened thereafter. 4. After opening of LC, if respective department asked for amendment in LC, we do the relevant amendment by giving advice in respective format for amendment.
5. On receipt of documents for payment by our Banker, if any, discrepancy is to be sought by bank, we need to reply instantly to Bank about respective discrepancy, if any, exist, otherwise Bank will retire the document within relevant frame of time as thinks fit. 6. Properly endorsed document by Bank has to be retired and handed over to us for further communication to our Sales & Tax Department (S&T), Kolkata office. 7. We have to submit declaration in the form of Form A1 to bank for foreign remittance against supply of imported Plant & Equipment, materials etc as per PO. 8. Endorsed document has to be sent immediately to our S&T department Kolkata office for further processing like release of material, payment of duty, etc.
9. On payment to Foreign Beneficiary, Banker has been debited our current A/C which has to be booked into our section with respective PO though accounting in SAP. 10. After releasing of material & payment of duty by our S&T department, Kolkata office, and triplicate copy of Bill of Entry (B/E) send to us for further submission to it to our Banker.
VIDHI ( IPER PGDM )
Page 29
CASH AGAINST DOCUMENT CAD (CASH AGAINST DOCUMENTS) Cash against documents is a type of transaction in which the title for purchased goods is released to the buyer after the total sale price is paid using cash. Often, a commission house or a similar financial institution upon verification of the cash payment handles the actual transfer of title. Usage of the cash against document method is commonly employed with transactions that involve the purchase of exports. The process for CAD, or cash against documents, in an export environment is fairly straightforward. After accepting an order from an international customer, the exporter prepares the export documents required by both the country of origin and the destination. Among the documents is a form that is normally referred to as an Export Collection Form. This form, along with other manifests and copies of shipping documents, is forwarded to the bank used by the exporter. While it is not always necessary, many exporters choose to prepare a bill of exchange, and include that document with the other forms.
As the next step in a purchasing using the cash against documents method, the exporters bank forwards the necessary documents to the bank designated by the purchaser or importer. The documents are provided with a proviso that they are not to be released to the importer until payment for the shipment is made in full. Until the payment is received by the exporters bank, the transaction is not considered complete. Once the importers bank receives authorization to honor the exporters invoice, cash payment is electronically transferred to the exporters financial institution. After receiving confirmation that the payment was executed and posted properly, the importers bank releases all documents pertaining to the transaction to the buyer. Many banks charge fees for executing cash against documents transaction. In some instances, the seller covers all bank charges. However, it is more common for buyers to cover any charges issued by the banks at each end of the transaction. Typically, the seller adds the bank charges from the point of origin onto the invoice, while the importers bank normally debits the account used to issue the cash against documents payment.
VIDHI ( IPER PGDM )
Page 30
TELEGRAPHIP TRANSFER
A telegraphic transfer is a method of transferring money by telegram, cable or telex issued by a bank in one centre to another in a foreign centre. Transfers of large sum of money are generally done by TT. If money is to be sent urgently, the bank may be requested for telegraphic transfers on payment of a nominal charges and telegram charges. In case both telegraphic transfer and mail transfer, money can also be made payable to a beneficiary on identification. Sometimes depositors/clients want to remit funds immediately on an urgent need and at their request the funds by using of various mode like telegraph/telephone/Telex/Fax etc. duly attested by secret Test Number. On receipt of which paying branch pay amount to the payee crediting his account or payment order as the case may be is called telegraphic transfer (TT). It is a quickest mode for remittance of fund from one place to another. Procedure of issue TT (at the Issuing Office): 1) Fill up the TT application form. 2) Realized required fund, Commission, VAT & Telephone charge. 3) Required information: 4) Name of the issuing branch 5) Name of the paying branch 6) Amount in figure & words 7) Payees name and account number 8) Date, Test Number 9) Voucher to be prepared 10) Dr. Partys Account/ Cash 11) Cr. General Account by issuing IBCA 12) Commission Account 13) VAT Account
Procedure for payment of TT(at the Paying Office): 1) At first verify the Test Number of message 2) Confirm the Test Number of message. 3) Entry the particular of TT to the TT Payable Resister. 4) Dr. General Account (by responding IBCA for TT) 5) Cr. TT Payble A/c 6) Dr. TT Payble A/c 7) Cr. Party A/c Payment Order Payment Order is meant for making payment of the bankers own or of the customers dues locally and not for effecting and remittance to an outstation. In a sense, the payment order is used for making a remittance to the local creditor. It is not a negotiable instrument and can not be endorsed.
VIDHI ( IPER PGDM )
Page 32

1. Total Import Value from Bokaro Steel Plant (From 1-Oct-2010 to 31-Mar-2011)
MONTH Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 TOTAL
USD 1201945.13 14822796 5,49,688 3778613 2405822.71 12,32,753 22209176.84
INR 53428289 154480964 6,59,40,645 170699836 109789056 5,53,57,341 488398145
EURO 4457955.22 2711216 6596479.44 3837695.75 1537607.21 864726.11 20005679.73
INR 275650254 166763932 487411382 169571210 94713421 103437149 1297547348
JPY 1038000 1038000
INR 552865 552865
GBP 64,999 20,459 1550.21 87,008
INR 4678191 14,89,208 1156.22 4679347.22
MONTH 10-Oct 10-Nov 10-Dec 11-Jan 11-Feb 11-Mar
TOTAL(INR) 329078543 325923087 553352027 342313119 158794490 158794490
VIDHI ( IPER PGDM )
Page 33
TOTAL IMPORT VALUE (INR)

600000000 500000000 400000000 300000000 200000000 100000000 0 OCT NOV DEC JAN FEB MAR
INTERPRETATION: As in the above figure showing the total import value of Bokaro steel plant it shows a declining trend in this six months period from October 2010 to march 2011. The declining trend may be due to the less import orders from the company so the payment value is also less of the other can be that the currency when converted in INR in later months gives less value as compared to previous months.
TOTAL IMPORT VALUE (EURO)

7000000 6000000 5000000 4000000 3000000 2000000 1000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
VIDHI ( IPER PGDM )
Page 34

INTERPRETATION: The total import value of euro that is European currency has a declining trend. Whereas its maximum lies in December month. The reason can be that export from country accepting euro is maximum in December.
TOTAL IMPORT VALUE (USD)

16000000 14000000 12000000 10000000 8000000 6000000 4000000 2000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION: Total import value of USD is also declining in this graph and has maximum in the month of November. This month has maximum payment in terms of USD
TOTAL IMPORT VALUE(JPY)

1200000 1000000 800000 600000 400000 200000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 JPY
VIDHI ( IPER PGDM )
Page 35

INTERPRETATION: JPY is only visible in month of January and thus has highest.
TOTAL IMPORT VALUE(GBP)

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION: Total import value of GBP is maximum in month of November and has declining trend in six month from November 2010 to march 2011. A GRAPH OF FOREIGN CURRENCY TOGETHER OF TOTAL IMPORT VALUE:
TOTAL IMPORT VALUE ( FC )

Mar-11 Feb-11 Jan-11 Dec-10 Nov-10 Oct-10 0 5000000 10000000 15000000 20000000 GBY JPY EURO USD
VIDHI ( IPER PGDM )
Page 36

INTERPRETATION: EURO and USD appear in most of the months whereas USD is maximum in November and EURO is maximum in December. Mainly the acceptable currency of all 4 is USD.the other reason for this that value of one currency more and less due to recession in currency value has also been declining.
Payment Methods: (In INR*)

LC Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 TOTAL 276980382 106008119 310769415 201429433 105853893.2 171875212 1172916454 CAD 1,13,37,279 4,80,90,586 58,29,402 33,45,105 4,76,88,516 16,40,448 11,79,31,336 TT 33,817.00 1352134 1,385,951.00
VIDHI ( IPER PGDM )
Page 37
PAYMENT METHOD (LC)

INTERPRETATION: In the graph above x axis shows month and y axis shows amount in INR letter of credit as a payment method is mostly accepted by company so in that case the graph is higher and so it first increases and then decreases. The trend is like of V upside down. Maximum is in month of December.
PAYMENT METHODS (CAD)

60000000 50000000 40000000 30000000 20000000 11337279 10000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 5829402 3345105 1640448 48090586 47688516
INTERPRETATION:
VIDHI ( IPER PGDM )
Page 38

In this graph x axis shows month and y axis shows amount in INR and then it is v shaped as November and December has highest of CAD as payment methods and others are relatively less hence CAD and LC are preferable.
PAYMENT METHODS (TT)

1500000 1000000 500000 33,817.00 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 1352134
INTERPRETATION: Telegraphic transfer or Performa invoice is very less in number as many companies do not find it promising and hence the number is less as compared to letter of credit and cash against documentation.
TOTAL IMPORT DATA (In FC**)
MONTH Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 TOTAL
USD 1201945 2417736.2 5,49,688 3778613 2405822.7 4229815.5 14033932
EURO 4457955.7 2711176 6596479.4 3837695.8 1537607.2 1686969.1 20827883
JPY 1038000 1038000
GBP 64,999 20,459 1550.2 87,008
TOTAL 5659900.72 5193911.2 6596479.44 8674767.75 3944980.13 5916784.61
VIDHI ( IPER PGDM )
Page 39
TOTAL IMPORT DATA(EURO)

INTERPRETATION: This graph is total import data of EURO and x axis shows month and y axis shows amount in EURO itself , that how much import has been done in case of EURO. It has declining trend and from October onwards it has gone to decline.
TOTAL IMPORT DATA(JPY)

1200000 1000000 800000 600000 400000 200000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION:
VIDHI ( IPER PGDM )
Page 40

In this graph x axis shows month and y axis shows the amount in JPY and it has only one months transaction so it can be said that in month of January itself material has been bought in JPY currency.
TOTAL IMPORT DATA(GBP)

INTERPRETATION: In this graph x axis shows month and y axis shows amount in GBP.it has only 2 month transaction. In which November is having highest and January is less so it has a declining trend
TOTAL IMPORT DATA(USD)

4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
VIDHI ( IPER PGDM )
Page 41

INTERPRETATION: In this above graph the data is in USD and x axis shows month and y axis shows amount in USD . it has rising trend .import in month of October and December is less because materials were more bought in other currency.
TOTAL TRAGET FOR THE MONTH OF OCTOBER 2010 MARCH 2011 (IMPORTS) INR
FC
USD EURO
OCT 4,61,60,050 1,63,55,698 6,25,15,748
NOV 14,17,89,562 8,74,35,553 23,25,04,968
DEC 6,59,40,645 18,51,88,105 25,11,28,750
JAN 6,57,50,736 8,03,74,738 14,89,208 14,76,14,682
FEB 9,29,86,041 1,40,16,498 10,70,02,539
MAR 5,53,57,341 2,33,63,770 7,87,21,111
JPY
GBP TOTAL
IMPORTS MONTHS WISE-( figure in Rs) MONTHS INR OCT'10 NOV'10 DEC'10 JAN'11 FEB'11 MAR'11 6,25,15,748 23,25,04,968 25,11,28,750 14,76,14,682 10,70,02,539 7,87,21,111
VIDHI ( IPER PGDM )
Page 42

3000 2500 2000 1500 1000 625.15748 500 0 OCT'10 NOV'10 DEC'10 JAN'11 FEB'11 MAR'11 1476.14682 1070.02539 787.21111
TOTAL IMPORT PAYMENT(INR)

2511.2875 2325.04968
INTERPRETATION: In this graph there is x axis showing month and y axis showing amount in INR, it has a trend of inverse u and it is quite visible with December having highest and October with lowest. It can be said that the total import payment in INR is presented of different month and from the graph itself it can be said that imports have been less in 3 monthsi.e January, February, and March. And due to this production may have hampered or else it can be said that materials were not needed as production of that particular products were needed whose raw material were not bought.
PAYMENT MONTHY THROUGH LC AND CAD-(figure in lakhs) MONTH Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 LC 104.17587 165.72764 85.46138 67.30996 83.52799 17.52641 CAD 113.37279 480.90586 58.29402 33.45105 476.88516 16.40448
VIDHI ( IPER PGDM )
Page 43
PAYMENT THROUGH LC AND CAD

600 500
400 LC 300 CAD
200
100
0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION: In the graph above x axis shows month and y axis shows amount in INR. This graph shows a comparison of both LC (letter of credit) and CAD (cash against documentation) and can be seen that LC is more than CAD. LC is far from x axis but declining and on the other hand CAD is more towards x axis and it is also declining.
LETTER OF CREDIT
R U P E E S 180 160 140 120 100 80 60 40 20 0 165.72764
104.17587 85.46138 67.30996 17.52641 Oct-10 Nov-10 Dec-10 MONTH Jan-11 Feb-11 Mar-11 83.52799
VIDHI ( IPER PGDM )
Page 44

INTERPRETATION: In this graph x axis shows month and y axis shows amount in INR and it has a declining trend or can say that it was maximum in November and then started declining.
CAD
600
R U P E E S I N
500 400 300 200 100 0 Oct-10 113.37279
480.90586
476.88516
INTERPRETATION: In this graph x axis shows month and y axis shows amount in INR.,in this graph it has increasing and decreasing trend as from October it is rising and then declined in December and again highest in February and march with lowest.
VIDHI ( IPER PGDM )
C R O R E S
)
58.29402 Nov-10 Dec-10
33.45105 Jan-11 Feb-11
16.40448 Mar-11
MONTH
Page 45
EXPORTS
PROCEDURE OF EXPORTS IN BSL
INTERNATIONAL
BUYER
3
1 2
SAIL (ITD)
CMO (ITD)
4 10
11. A
BSL SALES & INVOICE SHOP
11
PPC (BSL)
6
7 9 8
BSL CENTRAL EXCISE DEPT.
12. A 18
INDIAN BANK
R&C
TRAFFIC DEPT. RLY
12 17
13
AT BORDER SALES OFFICE
CMO (BSL)
14
16
CUSTOM DEPT.
15
FOREIGN COUNTRY
VIDHI ( IPER PGDM )
Page 46

EXPORT PROCEDURE DESCRIPTION
1
International buyer sends an order enquiry letter to SAIL (ITD). SAIL- makes enquiry within its units makes a confirmation for the materials. International buyer puts a purchase order against the CMO (ITD). CMO (ITD) sends the order specification to PPC-BSL. E.g.-HR Coil-200 tons, CR Coil-220 tons, SLABS-300 tons etc PPC places an order copy to sales section. Here based on the order specification sales &Invoice makes an invoice. PPC puts one more order copy to the concerned authority for manufacturing of the finished goods for the export. After the manufacturing done the material sent to R&C department. Here in R&C department testing of material is done according to the order. R&C department passes the goods to PPC with test certificate. PPC get in touch with the traffic department of Indian Railways. BSL makes DA goods loaded to wagons. Railways provide a RR receipt for freight charges to the border. PPC provide one copy of DA,RR,TC to Invoice section. Invoice section prepares a commercial Invoice . BSL Sales &Invoice passes the commercial invoice to Sales &Excise. Sales & Excise prepares an Export Invoice ARE1, NEPAL INVOICE. Sales & Invoice sends one more copy to CMO (ITD).
8 9
10
11
11. A
12
Excise section passes the Bill of Export or Excise Invoice with RR receipt to BSO at the border.
12. A
Excise department sends one copy of Bill of Export to Indian bank after opening of an LC account. Railways transport the goods the BSO at the border and hand over to BSO.
13 14

Goods send to custom department for inspection and exporting to the buyer country.
15 16
Custom department after clearing, transfers the goods to the buyer country. Custom department sends the custom endorsed copy to CMO.
17
Bank realization certificate will move to sales and excise department.
18
Excise department sends the documents to the bank. Bill of Export- Export Invoice. Proof of Export- Approval letter.
VIDHI ( IPER PGDM )
Page 48

Total Export Value from Bokaro Steel Plant (From 1-Oct-2010 to 31-Mar-2011)
MONTH OCT-2010 NOV-2010 DEC-2010 JAN-2011 FEB-2011 MAR-2011 TOTAL
USD 36,98,583 36,51,180 27,51,197 40,93,755 38,40,629 38,33,770 2,18,69,114
INR 16,39,21,200 16,40,10,986 12,38,31,414 18,55,69,898 17,41,72,542 17,20,21,279 98,35,27,319
EURO -
INR -
JPY -
INR -
GBP -
INR -
TOTAL EXPORT VALUE ( USD )

VIDHI ( IPER PGDM )
Page 49

INTERPRETATION: In the graph above x axis shows month and y axis shows amount in INR and It can be because of 1 reason that most of the countries accept USD and so it has highest. January has the highest and December has the lowest.
TOTAL EXPORT VALUE ( INR )

200000000 a m o u n t ( I N R ) 180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 Oct-10 Nov-10 Dec-10 MONTH Jan-11 Feb-11 Mar-11
INTERPRETATION: The graph shows the total export value in INR and x axis shows month while y axis shows amount in INR.it can be seen that January has highest of all and December shares lowest. This value is the conversion of all the foreign currency in INR so to make it simpler.
VIDHI ( IPER PGDM )
Page 50

Receipts Methods: (In INR*)
MONTH OCT-2010 NOV-2010 DEC-2010 JAN-2011 FEB-2011 MAR-2011 TOTAL
LC 10,87,64,236 14,04,48,405 11,01,71,588 15,89,71,772 14,14,76,706 11,98,56,384 77,96,88,491
CAD 5,51,56,964 2,35,62,581 1,36,59,826 2,65,98,126 3,26,95,836 5,21,64,895 20,38,38,228
TT -
RECEIPT METHOD(LC)
INTERPRETATION: In this graph above shows receipt method through LC and x axis shows month and y axis shows amount in INR. it is very clear that January month has highest and December and October with lowest , a slightly upward moving trend line.
VIDHI ( IPER PGDM )
Page 51
RECEIPT METHOD(CAD)
60000000 50000000 40000000 30000000 20000000 10000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION: In this method of receipt that is CAD x axis shows month and y axis shows amount in INR and October has highest while December share lowest. And looking towards the trend line it is almost constant.
TOTAL EXPORT DATA (In INR*)
MONTH
LC PAYMENT
CAD PAYMENT
TOTAL PAYMENT
OCT 2010 NOV 2010 DEC 2010 JAN 2011 FEB 2011 MAR 2011 TOTAL
10,87,64,236 14,04,48,405 11,01,71,588 15,89,71,772 14,14,76,706 11,98,56,384 77,96,88,491
5,51,56,964 2,35,62,581 1,36,59,826 2,65,98,126 3,26,95,836 5,21,64,895 20,38,38,228
16,39,21,200 16,40,10,986 12,38,31,414 18,55,69,898 17,41,72,542 17,20,21,279 98,35,27,319
VIDHI ( IPER PGDM )
Page 52
TOTAL PAYMENT(INR)
200000000 180000000 160000000 140000000 120000000 100000000 80000000 60000000 40000000 20000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
INTERPRETATION: In the graph above x axis shows month and y axis shows amount in INR. It is the month wise payment of the export in INR value and it is quite clear that January has highest and December has lowest. It is combination of both LC and CAD and can be said that many of countries to whom SAIL is exporting products like to accept payment of LC and CAD and not TT as they are promising. TOTAL EXPORT DATA (In FC**) MONTH OCT-2010 NOV-2010 DEC-2010 JAN-2011 FEB-2011 MAR-2011 TOTAL USD 36,98,583 36,51,180 27,51,197 40,93,755 38,40,629 38,33,770 2,18,69,114 EURO JPY GBP TOTAL 36,98,583 36,51,180 27,51,197 40,93,755 38,40,629 38,33,770 2,18,69,114
VIDHI ( IPER PGDM )
Page 53
TATOL EXPORT (USD)

INTERPRETATION: In the graph above it can be clearly seen that total export data in USD is decreasing till December and rising in January and then again declining. It can be due to change in currency where the material are being sold. *INR- Indian Rupees **FC- Foreign Currency
TIME PERIOD- 1ST OCTOBER 2010 TO 31ST MARCH 2011 EXPORT VOLUME -24,963 TONS EXPORT VALUE PRODUCT WISE ITEMS Coil Plate -Rs 98, 35, 27,319 -HOT ROLLED PRODUCTS QUANTITY( TONS) 19850 45 Rs per TONS 38287 392938 VALUE(Rs) 76,02,05,180 1,76,82,210
-COLD ROLLED PRODUCTS ITEMS Coil

VIDHI ( IPER PGDM )
QUANTITY( TONS) 3610
Rs per TONS 42623
VALUE(Rs) 15,38,72,187
Page 54

-GC ITEMS Sheet QUANTITY( TONS) 1048 Rs per TONS 49396 VALUE(Rs) 5,17,67,742
TIME PERIOD- 1ST APRIL 2010 TO 31ST MARCH 2011 EXPORT VOLUME -54,579 TONS EXPORT VALUE PRODUCT WISE ITEMS Coil Plate Sheet -Rs 2,14,56,98,130 -HOT ROLLED PRODUCTS QUANTITY( TONS) 41941 2792 47 Rs per TONS 38198 39004 38852 VALUE(Rs) 1,60,20,73,945 10,88,99,700 18,26,055
-COLD ROLLED PRODUCTS ITEMS Coil QUANTITY( TONS) 6190 -GC ITEMS Sheet QUANTITY( TONS) 3609 Rs per TONS 47270 VALUE(Rs) 17,05,99,534 Rs per TONS 4297 VALUE(Rs) 26,22,98,896
MATERIAL EXPORTED
INR
HR COIL HR PLATE HR SHEET CR COIL GC SHEET

VIDHI ( IPER PGDM )
1,60,20,73,945 10,88,99,700 18,26,055 26,22,98,896 17,05,99,534
MATERIAL EXPORTED BETWEEN 1ST APRIL 2010 TO 31ST MARCH 2011
Page 55
MATERIALS EXPORTED (INR- CR)

GC SHEET P CR COIL R O HR SHEET D U HR PLATE C T HR COIL S 1705 2622 18 1088 16020
2000
4000
6000
8000
10000
12000
14000
16000
18000
AMOUNT IN INR
INTERPRETATION: In this graph x axis shows amount in INR and y axis shows materials which are exported and from that HR COIL is maximum in comparison to CR COIL and other.
COMPARISON ( EXPOTS AND IMPORTS )

RECEIPT AND PAYMENT METHOD IN INR ( DATA)
MONTH Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 LC( RECEIPT) 108764236 140448405 110171588 158971772 141476706 119856384 LC ( PAYMENTS) 276980382 106008119 310769415 201429433 105853893.2 171875212
VIDHI ( IPER PGDM )
Page 56
RECEIPT AND PAYMENT METHOD THROUGH LC

350000000 300000000 250000000 200000000 150000000 100000000 50000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 LC( RECEIPT) LC ( PAYMENTS)
INTERPRETATION: In the graph above x axis shows the month and y axis shows INR value and it is clearly visible from above that the LC payments are more in comparison to LC receipt in every month it can be so that the company in abroad rely on LC more
MONTH Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
CAD( RECEIPT) 55156964 23562581 13659826 26598126 32695836 52164895
CAD ( PAYMENT) 11337279 48090586 5829402 3345105 47688516 1640448
VIDHI ( IPER PGDM )
Page 57
RECEIPT AND PAYMENT METHOD THROUGH CAD

60000000 50000000 40000000 30000000 20000000 10000000 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 CAD( RECEIPT) CAD ( PAYMENT)
INTERPRETATION: In the above graph it is visible that CAD receipt is more that CAD payments so it can be said that in case of CAD , BSL has more of CAD method of receiving and payment more in LC
VIDHI ( IPER PGDM )
Page 58

CHAPTER 5 Foreign Exchange Mgt. and Documentation in SAIL
FOREIGN EXCHANGE MGT. -OVERVIEW In todays world no economy is self sufficient, so there is need for exchange of goods and services amongst the different countries. So in this global village, unlike in the primitive age the exchange of goods and services is no longer carried out on barter basis. Every sovereign country in the world has a currency that is legal tender in its territory and this currency does not act as money outside its boundaries. So whenever a country buys or sells goods and services from or to another country, the residents of two countries have to exchange currencies. So we can imagine that if all countries have the same currency then there is no need for foreign exchange.
NEED FOR FOREIGN EXCHANGE Let us consider a case where Indian company exports HR COILS to USA and invoices the goods in US dollar. The American importer will pay the amount in US dollar, as the same is his home currency. However the Indian exporter requires rupees means his home currency for procuring raw materials and for payment to the labor charges etc. Thus he would need exchanging US dollar for rupee. If the Indian exporters invoice their goods in rupees, then importer in USA will get his dollar converted in rupee and pay the exporter. From the above example we can infer that in case goods are bought or sold outside the country, exchange of currency is necessary. Sometimes it also happens that the transactions between two countries will be settled in the currency of third country. In that case both the countries that are transacting will require converting their respective currencies in the currency of third country. For that also the foreign exchange is required.
VIDHI ( IPER PGDM )
Page 59

About foreign exchange market. Particularly for foreign exchange market there is no market place called the foreign exchange market. It is mechanism through which one countrys currency can be exchange i.e. bought or sold for the currency of another country. The foreign exchange market does not have any geographic location. Foreign exchange market is describe as an OTC (over the counter) market as there is no physical place where the participant meet to execute the deals, as we see in the case of stock exchange. The largest foreign exchange market is in London, followed by the new york, Tokyo, Zurich and Frankfurt. The market are situated throughout the different time zone of the globe in such a way that one market is closing the other is beginning its operation. Therefore it is stated that foreign exchange market is functioning throughout 24 hours a day. In most market US dollar is the vehicle currency, viz., the currency sued to dominate international transaction. In India, foreign exchange has been given a statutory definition. Section 2 (b) of foreign exchange regulation ACT,1973 states: Foreign exchange means foreign currency and includes All deposits, credits and balance payable in any foreign currency and any draft, travelers cheques, letter of credit and bills of exchange expressed or drawn in India currency but payable in any foreign currency.
Any instrument payable, at the option of drawer or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other. In order to provide facilities to members of the public and foreigners visiting India, for exchange of foreign currency into Indian currency and vice-versa. RBI has granted to various firms and individuals, license to undertake money-changing business at seas/airport and

tourism place of tourist interest in India. Besides certain authorized dealers in foreign exchange (banks) have also been permitted to open exchange bureaus. Following are the major bifurcations Full fledge moneychangers they are the firms and individuals who have been authorized to take both, purchase and sale transaction with the public. Restricted moneychanger they are shops, emporia and hotels etc. that have been authorized only to purchase foreign currency towards cost of goods supplied or services rendered by them or for conversion into rupees. Authorized dealers they are one who can undertake all types of foreign exchange transaction. Bank is only the authorized dealers. The only exceptions are Thomas cook, western union, UAE exchange which though, and not a bank is an AD.
Even among the banks RBI has categorized them as followes: Branch A They are the branches that have nostro and vostro account. Branch B The branch that can deal in all other transaction but do not maintain nostro and vostro a/cs fall under this category. For Indian we can conclude that foreign exchange refers to foreign money, which includes notes, cheques, bills of exchange, bank balance and deposits in foreign currencies.
PARTICIPANTS IN FOREIGN EXCHANGE MARKET The main players in foreign exchange market are as follows: 1. CUSTOMERS The customers who are engaged in foreign trade participate in foreign exchange market by availing of the services of banks. Exporters require converting the dollars in to rupee and importers require converting rupee in to the dollars, as they have to pay in dollars for the goods/services they have imported. 2.COMMERCIAL BANK
VIDHI ( IPER PGDM )
Page 61

They are most active players in the forex market. Commercial bank dealing with international transaction offer services for conversion of one currency in to another. They have wide network of branches. Typically banks buy foreign exchange from exporters and sells foreign exchange to the importers of goods. As every time the foreign exchange bought or oversold position. The balance amount is sold or bought from the market. 3. CENTRAL BANK In all countries Central bank have been charged with the responsibility of maintaining the external value of the domestic currency. Generally this is achieved by the intervention of the bank. 4. EXCHANGE BROKERS Forex brokers play very important role in the foreign exchange market. However the extent to which services of foreign brokers are utilized depends on the tradition and practice prevailing at a particular forex market center. In India as per FEDAI guideline the Ads are free to deal directly among themselves without going through brokers. The brokers are not among to allowed to deal in their own account all over the world and also in India. 5. OVERSEAS FOREX MARKET Today the daily global turnover is estimated to be more than US $ 1.5 trillion a day. The international trade however constitutes hardly 5 to 7 % of this total turnover. The rest of trading in world forex market is constituted of financial transaction and speculation. As we know that the forex market is 24-hour market, the day begins with Tokyo and thereafter Singapore opens, thereafter India, followed by Bahrain, Frankfurt, paris, London, new york, Sydney, and back to Tokyo.
6. SPECULATORS The speculators are the major players in the forex market.

Bank dealing are the major speculators in the forex market with a view to make profit on account of favorable movement in exchange rate, take position i.e. if they feel that rate of particular currency is likely to go up in short term. They buy that currency and sell it as soon as they are able to make quick profit. Corporations particularly multinational corporation and transnational corporation having business operation beyond their national frontiers and on account of their cash flows being large and in multi currencies get in to foreign exchange exposures. With a view to make advantage of exchange rate movement in their favor they either delay covering exposures or do not cover until cash flow materialize.
Individual like share dealing also undertake the activity of buying and selling of foreign exchange for booking short term profits. They also buy foreign currency stocks, bonds and other assets without covering the foreign exchange exposure risk. This also results in speculations.
Exchange Rate System
Countries of the world have been exchanging goods and services amongst themselves. This has been going on from time immemorial. The world has come a long way from the days of barter trade. With the invention of money the figures and problems of barter trade have disappeared. The barter trade has given way ton exchanged of goods and services for currencies instead of goods and services. The rupee was historically linked with pound sterling. India was a founder member of the IMF. During the existence of the fixed exchange rate system, the intervention currency of the Reserve Bank of India (RBI) was the British pound, the RBI ensured maintenance of the exchange rate by selling and buying pound against rupees at fixed rates. The inter bank rate therefore ruled the RBI band. During the fixed exchange rate era, there was only one major change in the parity of the rupee- devaluation in June 1966.

Exchange rate is a rate at which one currency can be exchange in to another currency, say USD = Rs.44.75. This rate is the rate of conversion of US dollar in to Indian rupee and vice versa.
METHODS FOR QOUTING EXCHANGE RATES EXCHANGE QUOTATION There are two methods of quoting exchange rates. 1) Direct methods Foreign currency is kept constant and home currency is kept variable. In direct quotation, the principle adopted by bank is to buy at a lower price and sell at higher price.
2) Indirect method: Home currency is kept constant and foreign currency is kept variable. Here the strategy used by bank is to buy high and sell low. In India with effect from august 2, 1993,all the exchange rates are quoted in direct method. It is customary in foreign exchange market to always quote two rates means one for buying and another rate for selling. This helps in eliminating the risk of being given bad rates i.e. if a party comes to know what the other party intends to do i.e. buy or sell, the former can take the letter for a ride. There are two parties in an exchange deal of currencies. To initiate the deal one party asks for quote from another party and other party quotes a rate. The party asking for a quote is known as asking party and the party giving a quotes is known as quoting party.
VIDHI ( IPER PGDM )
Page 64

The advantage of twoway quote is as under i. The market continuously makes available price for buyers or sellers ii. Two way price limits the profit margin of the quoting bank and comparison of one quote with another quote can be done instantaneously. iii. As it is not necessary any player in the market to indicate whether he intends to buy or sale foreign currency, this ensures that the quoting bank cannot take advantage by manipulating the prices.
iv. It automatically insures that alignment of rates with market rates.
v. Two way quotes lend depth and liquidity to the market, which is so very essential for efficient market. In two way quotes the first rate is the rate for buying and another for selling. We should understand here that, in India the banks, which are authorized dealer, always quote rates. So the rates quoted- buying and selling is for banks point of view only. It means that if exporters want to sell the dollars then the bank will buy the dollars from him so while calculation the first rate will be used which is buying rate, as the bank is buying the dollars from exporter. The same case will happen inversely with importer as he will buy dollars from the bank and bank will sell dollars to importer.
DOCUMENTATION IMPORT Importing of goods was for a long period of time. As the goods which were unavailable in one country was too imported from the other sourced country. Before it was similar to the barter system but as the year passes as the world changes to a growth stage, these importing of goods becomes a business and of course of a more profitable one. Now many big organizations do importing of goods and raw materials which enhanced their production to a high margin. Sail basically imports.

There are a number of benefits to be gained by opting for an overseas supplier. o Lower priced goods: Lower labour costs or a different tax regime may mean one countrys prices for a particular product are significantly lower than those in the UK. o Higher-quality finished products: Every country has its specialities and strengths. If you want the very best, it could be to your advantage to import from a particular country. o Traditional skills and raw materials: It makes sense to take advantage of traditional crafts and skills that have been carried on for generations in some cultures. o Original products: Originality and authenticity are important in some markets if you want to keep ahead of your competitors Since the payments are done by conversion from currency to the another. There may be some type of risk as fluctuating exchange rates can affect the price of the product and your profitability. A forward exchange contract is one way to protect you. This is a binding obligation to buy or sell a certain amount of foreign currency at a pre-agreed rate of exchange, on or before a certain date. This enables you to budget at a guaranteed rate of exchange. Payment options How you choose to pay your supplier depends on a number of factors, not least the level of trust between the two.. Open Account-Orders placed with organisations may be dealt with on an open account basis. The supplier trusts your ability to pay them against their invoice within, say, 30 days. Clearing banks offer fast money electronic transfer systems for such transactions. Or you could open a euro currency account allowing you to trade with countries in the Eurozone using just one account. Letters of credit These offer both buyer and seller security and are honoured through the banking system. The conditions are stated on the letter of credit, including the amount to be paid, a description of the goods and what documents the exporter must present to receive payment. The importers bank guarantees the exporter that payment will be made if those conditions are met. Documentary collections Documents relating to the goods imported are sent by the supplier via their own bank to your bank. Your bank receives all the shipping documents and the invoices, which state the methods of payment. The bank will notify you when it has all the documents. The advantage

of this system is that you, as the importer, dont have to make payment for your goods until you have accepted the documents relating to them from your bank. Terms of delivery and means of transport Although some suppliers may want to quote for their goods including the transport or freight charges, importer may take responsibility for goods early in the supply chain. This allows choosing the carrier, routing and point of entry into the imported country. Always inspect goods as soon as they are received. FOB Free on board Named port of shipment Maritime and inland waterway transport only The seller delivers the goods, cleared for export, when they pass the ships rail at the named port of shipment. CFR Cost and freight Named port of destination Maritime and inland waterway transport only The seller delivers the goods when they pass the ships rail in the port of shipment and must pay the costs and freight necessary to bring the goods to the named port of destination. CIF Cost insurance and freight Named port of destination Maritime and inland waterway transport only The same as CFR except the seller must also procure insurance against the buyers risk of loss or damage during carriage. CPT Carriage paid to Named place of destination Any mode of transport The seller delivers the goods to the nominated carrier and must also pay the cost of carriage necessary to bring the goods to the named destination.
VIDHI ( IPER PGDM )
Page 67

ANNEXURE- 1
DOCUMENTS FOR- LC 1LC ADVICE LETTER FROM PURCHASE DEPARTMENT REGARDING OPENING OF
STEEL AUTHORITY OF INDIA LIMITED BOKARO STEEL PLANT BOKARO STEEL CITY PURCHASE DEPARTMENT INTER OFFICE CORRESPONDENCE NO: PUR DATE FROM: DATE:. TO:
Sub: LC opening. Ref No: It may please be noted that the above order was placed on M/S Paulwurth for items required for Blast Furnace. Please note the following: 1. Two copies of purchase order are enclosed. 2. One copy of order confirmation is enclosed. 3. One copy of annexure is enclosed. You are requested to kindly arrange to open LC and inform the suppliers for intimation to us. The details are given below: 1. PO Value: 2. LC Value 3. Delivery terms: FCA port of shipment 4. Load Port: 5. Discharge Port: 6. Latest date of shipment: 7. Validity. 8. Negotiating time: 9. Partial shipment 10. Transshipment 11. Name of the Beneficiary bank 12. Bank name and details; 13. Item Description 14. Imports to be covered under OGL The case is very urgent and it is requested to kindly open the LC at the early with intimation to us.
VIDHI ( IPER PGDM )
Page 68

Authorized Signatory 2-PURCHASE ORDER Purchase order (IMPORT) Purchase department Materials management division Bokaro steel plant- 827001 No. of items:
PONO: AMENDMENT NO: To :
PO DATE: AMENDMENT DATE: Copy To:
Ship To Address
Reference of Quotation RFQ No.Reference of contract: Contract Date: Mob: Phone: Email:
Pur Grp/File: PO Value: PO Value text:
Contact person : Currency:
Dear Sir, Please arrange to supply the materials detailed below in accordance with offer, subject to the terms and conditions, instructions specified here in read along with general conditions of contract SAIL/P1. Important: timely delivery is essence of the contract. Terms and Conditions Foreign curr. Pay value Inspection Handled by Price Term Inspection Place Payment Term Security Deposit Amount Incoterm SD Validity up to Load Port Insurance Term Discharge Port in India PBG Amount Country of Origin PBG Validity up to Unloading Responsibility Ultimate Consignee Pre Shipment Consignee at port: Part Shipment LD Applicability
VIDHI ( IPER PGDM )
Page 69

Document to be submitted along with material supply: Document to be submitted along with bill of payment:
Other charges: Not Applicable Invoicing Party/ Payment to be made toANNEXURE: General Terms and conditions PLEASE NOTE:
Your Vendor Code with us:
For SAIL/Bokaro Steel Plant PRADIP KUMAR RAY Purchase order (IMPORT) Purchase department Materials management division Bokaro steel plant827001 No. of items: Copy To:
PONO: AMENDMENT NO: To :
PO DATE: AMENDMENT DATE:
Ship To Address
Reference of Quotation RFQ No.Reference of contract: Contract Date: Mob: Phone: Email:
Pur Grp/File: PO Value: PO Value text:
Contact person : Currency:
Dear Sir, Please arrange to supply the materials detailed below in accordance with offer, subject to the terms and conditions, instructions specified here in read along with general conditions of contract SAIL/P1. Important: timely delivery is essence of the contract. Terms and Conditions
VIDHI ( IPER PGDM )
Page 70

Foreign curr. Pay value Price Term Payment Term Incoterm Load Port Discharge Port in India Country of Origin Unloading Responsibility Pre Shipment Part Shipment LD Applicability Document to be submitted along with material supply: Inspection Handled by Inspection Place Security Deposit Amount SD Validity up to Insurance Term PBG Amount PBG Validity up to Ultimate Consignee Consignee at port:
Document to be submitted along with bill of payment:
Other charges: Not Applicable Invoicing Party/ Payment to be made toANNEXURE: General Terms and conditions PLEASE NOTE:
Your Vendor Code with us:
For SAIL/Bokaro Steel Plant PRADIP KUMAR RAY Purchase department Materials management division Bokaro steel plant827001 No. of items: Net Value 986.10
Purchase order (IMPORT)
PONO: PO DATE: AMENDMENT NO: AMENDMENT DATE: ITEM Material Quantity Unit Basic rate Curr. Discount SI 10 5410023114 2.000 EACH 493.05 EUR 0.00 Materials description : CONNECTION BOX, INTERMEDIATE Vendor Material Number : Terms and conditions (ITEM): Material Specification: INTERMEDIATE CONNECTION BOX FOR LOADCELLS ARTICLE NO. 6019049 MAKE: PAUL WURTH ITEM Material Quantity Unit Basic SI rate
VIDHI ( IPER PGDM )
Curr. Discount
Net Value
Page 71

80 84100247611 1.000 EAC H 4533.88 EUR 0.00 4533.88
Materials description : TRANSMITTER, PRESSURE F/COMPENSATION Vendor Material Number : Terms and conditions (ITEM): Material Specification: PRESSURE TRANSMITTER PROVIDED WITH MANIFOLDS AND BUILT IN A CABINATE FOR PRESSURE COMPENSATION OF WEIGHING SYSTEM ARTICLE NO. 6085113 MAKE : PAUL WURTH Other Terms and Conditions Applicable To all Items GUARANTEE / WARRANTY : Guarantee for design and poor workmanship for 12 months from the date of use or 18 months from the date of supply whichever is earlier SPECIAL CONTRACT CONDITIONS : Inspection: imported item, so pre despactch inspection is waived and the material will be accepted on the basis of Guarantee Certificate and material Test Certificate/Manufacturers certificate of quality. Guarantee Certificate & Materials Test Certificate/Manufacturers certificate of quality shall be sent along with dispatch for the purpose of raising Good Receipt Note at Stores. TERMS OF PAYMENT : 100% of the total order value shall be payable on sight at bank counter through irrevocable and confirmed LC against negotiable dispatch document to be submitted to our Bank through firms bank. All bank charges outside India shall be to the account of M/S Paul Wurth and all bank charges inside India shall be borne by SAIL/BSL. The LC shall be confirmed through SBI # Antwerp branch PLEASE NOTE: For SAIL/Bokaro Steel Plant
PRADIP KUMAR RAY
VIDHI ( IPER PGDM )
Page 72

3- FD SWIFT-700 APPLICATION & GUARANTEE FOR ISSUE OF DOCUMENTARY CREDIT
VIDHI ( IPER PGDM )
Page 73
VIDHI ( IPER PGDM )
Page 74
VIDHI ( IPER PGDM )
Page 75
VIDHI ( IPER PGDM )
Page 76

4. FORM A1 TO FOREIGN DEPARTMENT CIRCULAR NO.2000 76 DT. 04 .08 .2000
FORMAT FOR DECLARATION CUM UNDERTAKING UNDER SECTION 10(5) CHAPTER III OF FOREIGN EXCHANGE MANAGEMENT ACT , 1999. I/WE hereby declare that the transaction (s) the details of which are specially mentioned in the schedule here under does not involve and is not designed for the pupse of any contravention or evation or the provision of the aforesaid Act of any rule,regulation ,notification, direction or order made there under. I/ WE also here by agree and undertake to give such informations / documents,before the Bank undertakes the transaction (s) and as may be required from time to time as will reasonably satisfy you about the transaction (s) in terms of the above declaration. I/ WE also understand that if I/ WE refuse to comply with such requirements or make un satisfactory compliance there with, the bank shall refuse in writing to undertake the transaction and shall if it has reason to believe that any contravention / evasion is contemplated by me / us report the matter to Reserve Bank of India. I / WE further declare that under signed has / have the authority to give his declaration and undertaking on behalf of the firm / company.
Signature of applicant For foreign exchange Place: Bokaro Steel City Date : Applicable when the declaration / undertaking is signed on behalf of the firm / company SCHEDULE Nature / purpose of foreign exchange transactions: Amount of foreign exchange to be released: . Beneficiary: .. FOR OFFICE USE ONLY: details of documentary evidence verified: 1) 2)..3)..4)..and on
VIDHI ( IPER PGDM )
Page 78
5- LC OPENING CHARGES CHARGED BY THE BANK TO THE APPLICANT-SAIL/BSL STATE BANK OF INDIA COMMERCIAL BRANCH, BOKARO SECTOR 4, CITY CENTRE-BOKARO DEBIT ADVICE DATE: TO: SAIL BOKARO STEEL PLANT BOKARO STEEL CITY BOKARO Dear Sirs, REF: LC REF Favoring : Purchase/Contract Reference PO no..Dated .Amendment No. Dated:.. We have today debited your account Rs. As per the details given below. Details of Charges Usance charge Commitment charge Posted charge Cable charge Other charge Total charge Margin Recovered for: TEL NO: FAX NO: SWIFT NO: PIN CODE:
Issued on:
Amount In INR -
State Bank of India may provide you buyers credit on this credit during its currency through its foreign office at competitive rates , in conformity with RBI specified all-in-costing ceiling. For applicable rates and terms and conditions, we request you to contact the opening branch or our branch at STATE BANK OF INDIA COMMERCIAL BRANCH, BOKARO SECTOR -4, CITY CENTER BOKARO
VIDHI ( IPER PGDM )
Page 79

Yours Faithfully Authorized Signatory 6- LETTER OF CREDIT OPENED BY THE BANK .........................................................................Bank User ID Report ID : : Message Report OUTGOING MESSAGE Message sender Reference Sender Sequence Number Message type Receivers address Message User Reference Non Delivery warning Requested Delivery Notification Requested Obsolescence period (hh-mm) Message status Creators User ID Verifiers User ID Authorized User ID : : : Date : IFSC :
: : : : : : : :
27 Sequence of Total Number : Total : 40A Form of Documentary Credit type 20 Transaction Reference Number Documentary credit number 31C 40 E 31D 50 59 32B Date of issue, Date Applicable rules Date and Place of Expiry Applicant Name & address Beneficiary Currency Code Amount Currency Available withBy BIC Code Drafts at narrative Drawee :
: :
: : : : : : : : : :
Page 80
41A
42C 42A
VIDHI ( IPER PGDM )

43P 43T 44E 44F 44C 45A 46A 47A 71B 48 49 78 57A 72 BIC : Partial Shipments narrative Transshipment narrative : Port of Loading/Airport of Departure Narrative : Port of Discharge : Latest Date of shipment Description of goods and/on Service Narrative : Documents Required Narrative Additional Conditions Narrative Details of charges Narrative Period for presentation Narrative : Confirmation Instructions : Instructions to the Paying/Accepting Bank narrative Advice Through Bank BIC : Sender to Receiver Information Narrative : :
: : :
Creation Date Sent Date : Acknowledged Date :
Creation Time Sent time : Acknowledged Time
VIDHI ( IPER PGDM )
Page 81
7-BILL OF ENTRY RETURNED DOCUMENTS RECEIVED BY THE BANKER FOR MAKING PAYMENT TO FOREIGN BENEFICIARY NAME OF EXPORTER -----------------------------M/S STEEL AUTHORITY OF INDIA LIMITED ADDRESS.. BOKARO STEEL PLANT, ISPAT BHAVAN DATE BOKARO STEEL CITY-827001 NO:.. TREMS OF SALE -. .. Your Reference -. transportation To-. Designation Net Unit Price Weight Subject 1 2 3
INVOICE Carrying fromFor EUR
Total Gross Weight . . . . . .
VIDHI ( IPER PGDM )
Page 82

ITEM 1 ITEM 2 ITEM3 IMPORT IS COVER UNDER OGL 1.CONSIGNEE AT INDIAN AIRPORT 2.ULITIMATE CONSIGNEE IRRECOVABLE LC NO:. PURCHASE ORDER NO:.. AMENDEMENT DATE:. COUNTRY OF ORIGIN: .. CUSTOM TARIFF NO: . PACKING LIST n..
All objections concerning weight and quantity have to be made immediately after the inspection of goods.
VIDHI ( IPER PGDM )
Page 83
8-BILL OF LADING / AIRWAY BILL
VIDHI ( IPER PGDM )
Page 84

STAPLE DOCUMENTS ABOVE PERFORATION AIRWAY BILL OR BILL OF LADING
Shippers name &
Address
Shippers A/C no.
Issued By
Consignees name & Address
Consignees Account no.
Copies 1, 2 and 3 of this all
waybill are originals & have the same validity
Terms & Condition

Issuing carriers Agent Name & City
Accounting Information
Agents IATA Code Account No.
Airport of Departure (Addr. Of first carrier) and requested routing
Reference no.
to by Currency Declared Value for Carriage Declared Value for customer
To
By First Carrier
To
by
Airport of Destination
Requested Flight Date
Amount of Insurance
Handling information
No. of pieces
Gross Weight
Commodity Item no.
Chargeable Weight
Rate / Charge
Total
Nature & Quantity of Goods
Prepaid
weight Charge Valuation Charges
collect
Other Charges
Tax Total other charges due agent Total other charges due carner
Total period
Currency Conversion Rate
Shipper Address
Signature of shipper or his agent
Total Collect
CC Charges in Dest. Currency EXECUTED ON (date) at (Place) signature of issuing career
For carners use only at destination
VIDHI ( IPER PGDM )
Page 85

9-MANUFACTURERS GUARANTEE CERTIFICATE
[Seller Company Name & Logo]
M/S STEEL AUTHORITY OF INDIA LTD. BOKARO STEEL PLANT, ISPAT BHAWAN BOKARO STEEL CITY, JHARKHAND INDIA, PIN-827001
Our Reference: MANUFACTURES GUARANTEE CERTIFICATE

(AS PER PURCHASE ORDER)
CONCERN:
Item SI 10: Item SI 20: Item SI 30: Item SI 40:
IRREVOCABLE LC NUMBER: PURCHASE ORDER NO: AMENDMENT NO: IMPORT IS COVER UNDER OGL.
DATE:
WE THE UNDERSTAND [SELLER NAME, ADDRESS, CITY, COUNTRY] IN OUR QUALITY MANUFACTURERS, ARE HEREBY STANTING THAT MATERIAL IS GUARANTEED FOR DESIGN AND POOR WORKMANSHIP FOR A PERIOD OF 12 MONTH FROM THE DATE OF USE FOR 18 MONTHS FROM THE DATE OF SUPPLY, WHICHEVER IS EARLIER. EXCLUDED OF THE GUARANTEE OBLIGATION ARE THOSE ITEMS, WHICH ARE SUBJECT TO NATURAL WEAR AND TEAR AS THE COSTS FOR DISMANTLING, REFITING AND TRANSPORTATION OF DEFECTIVE PARTS. THE GUARANTEE DOES NOT COVER THOSE DAMAGES, WHICH OCCUR BY WRONG HANDLING, MAINTENANCE FAILURE AND OPERATION, NOT IN ACCORDANCE WITH INSTRUCTION OF [SELLER].
[PLACE] [DATE]
[SELLER NAME & ADDRESS]
VIDHI ( IPER PGDM )
Page 86

10-MANUFACTURERS PACKING LIST CERTIFICATE
[Seller Company Name & Logo]
M/S STEEL AUTHORITY OF INDIA LTD. BOKARO STEEL PLANT, ISPAT BHAWAN BOKARO STEEL CITY, JHARKHAND INDIA, PIN-827001
Packing list no.[Place] [Date] Carrying from: Method of Transport:
References: [PO no.] [Date] [Amendment date] References: Division: Designation

Subject: Net Weight
Matricule:
Gross Weight
Case No. Accessories: LC No. PO No. Invoice No. Custom- Tariff- no. Country of origin:
ABN code(8)
Banques (Competes IBAN) -
Identification No. -
VIDHI ( IPER PGDM )
Page 87

11. ADVICE LETTER TO SHIPPING AND TRANSPORT FOR RELEASE OF MATERIAL AT PORT
VIDHI ( IPER PGDM )
Page 88

STEEL AUTHORITY OF INDIA BOKARO STEEL PLANT BOKARO STEEL CITY FINANCE & ACCOUNT DEPARTMENT Ref. No.
From: To:
Mob. No.
Mob. No.
Sub:- Release of Material from Kolkata Sea/ Air Port in the case of 1. 2. 3. 4. 5. [Seller company name], [PO No., Date], [LC No. Date] [Seller company name], [PO No., Date], [LC No. Date] [Seller company name], [PO No., Date], [LC No. Date] [Seller company name], [PO No., Date], [LC No. Date] [Seller company name], [PO No., Date], [LC No. Date]
Enclosed please find the following documents received from [BANK NAME, ADDRESS] in respect of above PO/ LC/ CAD for needful action at your end:-
1. [Seller company name], [PO No., Date], [LC No. Date] [INVOICE NO.] [DATE]- 1 COPY (ORIGINAL) [BILL OF LADING] [DATE]- 1 COPY (ORIGINAL) PACKING LIST NO.- 1 COPY (ORIGINAL) CERTIFICATE OF ORIGIN- 1 COPY (ORIGINAL) MANUFACTURERS GUARANTEE CERTIFICATE- 1 COPY (ORIGINAL) MANUFACTURERS TEST CERTIFICATE- 1 COPY (ORIGINAL) MANUFACTURERS QUALITY CERTIFICATE- 1 COPY (ORIGINAL) SHIPPING SPECIFICATION- 1 COPY (ORIGINAL)
2. [Seller company name], [PO No., Date], [LC No. Date] [INVOICE NO.] [DATE]- 1 COPY (ORIGINAL) [BILL OF LADING] [DATE]- 1 COPY (ORIGINAL)
VIDHI ( IPER PGDM )
Page 89

DOCUMENTS REQUIRED FOR CASH AGAINST DOCUMENTATION AND PERFORMA INVOICE:
TO:
The Manager
FROM:
(Person Sending Payment)
(Any Bank) (Address) (City, Country) PHONE: (Your Number) REQUEST FOR OVERSEAS TELEGRAPHIC TRANSFER (ANY BANK) CUSTOMER TRANSFER MESSAGE TYPE 100 (Address) (City) DATE TO: WESTPAC WELLINGTON NEW ZEALAND TRANSACTION REF (TRN) (Bank Use) VALUE DATE (DDMMYY) REMITTER (Your Name) (Your Address) ACCOUNT WITH BANK Westpac, 318 Lambton Quay Wellington (Swift Code: WPACNZ2W) BENEFICIARY CUSTOMER A/C No. 030049-0001100-27 INLAND REVENUE DEPARTMENT CURRENCY N Z D , AMOUNT , O (SWIFT CODE: WPACNZ2W)
Bank City Country
DETAILS OF PAYMENT Enter your IRD Number followed by the relevant tax type code Enter the period end date the payment is for (not the date you are making the payment.) The Bank, and any of its branches or offices, is not to be held responsible for any delays or errors in transmission. Foreign Amount @Rate Local Amount (Bank use) Please dispatch this Telegraphic Transfer as above. (Your Signature) Authorised Signatures Cable costs ( Bank use) Commission (Bank use) Grand Total
VIDHI ( IPER PGDM )
Page 90

EXPORTS PROCEDURE OF EXPORTS IN BSL
INTERNATIONAL
BUYER
3
1 2
SAIL (ITD)
CMO (ITD)
4 10
11. A
BSL SALES & INVOICE SHOP
11
PPC (BSL)
6
7 9 8
BSL CENTRAL EXCISE DEPT.
12. A 18
INDIAN BANK
R&C
TRAFFIC DEPT. RLY
12 17
13
AT BORDER SALES OFFICE
CMO (BSL)
14
16
CUSTOM DEPT.
15
FOREIGN COUNTRY
EXPORT PROCEDURE DESCRIPTION


1
International buyer sends an order enquiry letter to SAIL (ITD). SAIL- makes enquiry within its units makes a confirmation for the materials. International buyer puts a purchase order against the CMO (ITD). CMO (ITD) sends the order specification to PPC-BSL. E.g.-HR Coil-200 tons, CR Coil-220 tons, SLABS-300 tons etc PPC places an order copy to sales section. Here based on the order specification sales &Invoice makes an invoice. PPC puts one more order copy to the concerned authority for manufacturing of the finished goods for the export. After the manufacturing done the material sent to R&C department. Here in R&C department testing of material is done according to the order. R&C department passes the goods to PPC with test certificate. PPC get in touch with the traffic department of Indian Railways. BSL makes DA goods loaded to wagons. Railways provide a RR receipt for freight charges to the border. PPC provide one copy of DA,RR,TC to Invoice section. Invoice section prepares a commercial Invoice . BSL Sales &Invoice passes the commercial invoice to Sales &Excise. Sales & Excise prepares an Export Invoice ARE1, NEPAL INVOICE. Sales & Invoice sends one more copy to CMO (ITD).
8 9
10
11
11. A
12
Excise section passes the Bill of Export or Excise Invoice with RR receipt to BSO at the border.
12. A
Excise department sends one copy of Bill of Export to Indian bank after opening of an LC account. Railways transport the goods the BSO at the border and hand over to BSO. Goods send to custom department for inspection and exporting to the buyer country.
13 14
15 16
Custom department after clearing, transfers the goods to the buyer country. Custom department sends the custom endorsed copy to CMO.
17
Bank realization certificate will move to sales and excise department.
18
Excise department sends the documents to the bank. Bill of Export- Export Invoice. Proof of Export- Approval letter.
VIDHI ( IPER PGDM )
Page 93

DOCUMENTS IN SUPPORT OF EXPORT
1. PROOF OF EXPORT
VIDHI ( IPER PGDM )
Page 94

2. EXPORT CONTRACT COPY STEEL AUTHORITY OF INDIA LTD. INTERNATIONAL TRADE DIVISON 13TH FLOOR, H.T.HOUSE, K.G. MARG NEW DELHI, INDIA Ref No: ROM: TO:
CONTRACT NO: NO & DATE:
DATE:
We hereby contract with you for supply of _ _ _ _ (MT) of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ (Products) as per other details given at Annexure I. All supplies against this contract are to be completed for the fully quantity of _ _ _ _ (Amount) by you by _/_/_ _ (Date). Details of the destination to which above materials are to be sent are as follows along with the details of our foreign buyer. 1. Destination 2. Name of Buyer Test Certificate should bear the name & address of our buyer. Test Certificate will include the following details: 1. That materials conform to the specification as per Annexure I. 2. Size in mm and inches within brackets. 3. Actual weight in MT (Metric tons). 4. Heat no. & Coil no. 5. Rolling Tolerance as per relevant specification at Annexure I. 6. Lot No. 7. Mechanical Properties. 8. Chemical Composition. Please send a copy of this contract duly signed from your end as proof of your acceptance of above contract. In case you want to change any of the conditions, please send back this contract to us for modification and re-issuance. BOKARO STEEL PLANT FOR INTERNATIONAL TRADE DIVISION (SR. MANAGER)
FROM: ORK ORDER NO: CONTRACT NO: PLANT CLEARANCE REF. NO: & DATE: THE BUTYER: PLANT: MATERIAL: CERTIFICATE: office of the chief metallurgist of Plant. of the materials II) item No. III)Size IV) Heat No. V) Chemical Composition
TO:
TC NO NAME OF PRODUCING DESCRIPTION OF WORKS TEST A)To be issued by the B) Test Certificate: I) Description
VI) Rolling Tolerance as per relevant specification in Annexure. VII) Mechanical Properties EXCISE FORMALITIES: LOADING INSTRUCTION: SPECIAL CONDITION (if any): DESIGNATION & ADDRESS OF CONSIGNEE: Das/RRs ARE TO BE SENT: TYPES OF WAGONS IN WHICH GOODS DESPATCHED: NO OF WAGONS TO BE DESPATCHED: DESPATCH INTIMATION: S. N O OWNING RAILWAY S TYPES OF WAGON/ TRUCK/ LORRY WAGON/ TRUCK/ LORRY NOS. DESCRIPTIO N OF NO. OF PIECES MATERIALS & SIZE QTY. (MT) DESTINATION
VIDHI ( IPER PGDM )
Page 96

1 2 3 4 5
DESPATCH INTIMATION TO BE SENT TO: HEAD OFFICE) & ALSO TO (MAIN HEAD OFFICE) S. NO. 1 2 3 4 5 6 7 DOCUMENTS DESCRIPTION DESPATCH ADVICE DESPATCH ADVICE DESPATCH ADVICE RAILWAY RECEIPT TEST CERTIFICATE TEST CERTIFICATE TEST CERTIFICATE COPIES TO BE SENT
(BRANCH
ORIGINAL & NO. OF COPIES TO BE SENT (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT) (ADRESS WHERE TO BE SENT)
You require any further clarification on the work order; please revert to us within 7 days from the date the work order.
DATE:
SIGNATURE:
VIDHI ( IPER PGDM )
Page 97
PLACE:
NAME:
OFFICE:
DESIGNATION:
ANNEXURE I MATERIAL AND QUANTITY: DESCRIPTION OF THE MATERIALS: TOTAL QUANTITY: SIZEWISE AND TOTAL QTY TOLERANCE: SPECIFICATION & SIZE: ROLLING TOLERANCE: BASIS OF INVOICEING: PACKING: COLOUR SCHEME: SHIPPING MARKS: PARTIAL SHIPMENT: TRANSHIPMENT: SHIPPING SCHEDULE: LOADING: AND COUNTRY: COMMENCED: COMPLETED: DESTINATION: INSURANCE: OF ORIGIN: SHIPMENT: AGENCY:
PORT OF DESTINATION PORT DESPATCH TO BE DESPATCH TO BE RAILWAY MARINE CERTIFICATE NAME OF PREINSPECTION
PRICE: USD/METRIC TONS
VIDHI ( IPER PGDM )
Page 98

2. BILL OF EXPORT
Exporter: Invoice No. & Date: BE No. & Date
Q/Cert. No & Date: Consignee: Export Trade Control DEPB SCHEME as per PARA 4.3 of FOREIGN TRADE POLICY 2004-09 DEPB RATE@5% Custom House Agent:
Import/Export Code No. RBI Code No.
Types of Shipment
Lorry No/Goods Train & Wagon No.
Originating From
Nature of Contact: CIF ( ) /CFR ( ) /FOB ( )
Country of Destination
Exchange Rate
Currency of Invoice
Quantity Value FOB
Net Weight Gross Weight Total FOB value in words Analysis of Export Value FOB Value Freight Insurance Commission Discount Other Deduction L/C No. Central Excise REG No. State of Origin Code We shall not claim any benefit under advance license or DFRC scheme of any other scheme in respect of export made against this bill of export. The goods are covered under product group code no 61 of handbook of procedure. Currency Amount Full export value OR where not ascertainable, the value which exporter expects to receive on the sale of goods. Currency Amount Product Group DEPB No.
VIDHI ( IPER PGDM ) Declaration:
Page 99

4- NEPAL INVOICE
NEPAL INVOICE
INVOICE OF GOODS LIABLE TO CENTRAL EXCISE DUTY IN INDIA
SL N O.
Gro ss wt of Pac kag es
Gro ss wt/N t wt
Coil no Identifi cation No
Quanti ty of goods
Description of Goods/Tarrif classification
Value Rs P
BED
ECS, S.ECS Mar ks & no. of pac kag es 12
Ra te %
Amount Rs
Rate %
Amou nt Rs
No. & Date of document under which excise was paid or is payable 15
Num bers & descr iption of pack ages
Remar ks Wago n No/ Railwa y Receip t No.
1 1
3 9.24 0 9.24 0
4 R9224 3
5 9.240
6 CR COIL IS 513 GR O 0.8 *1220 72091730
7 389,928 .00
8 10. 00
9 38,992. 80
10 2.000 0 1.000 0
11 779.80 389.93
13 0012000751 19. 10. 2010 B1/02/EXPORT/ 2002 31. 10. 2002 0012000751 19. 10. 2010 B1/02/EXPORT/ 2002 31. 10. 2002 0012000751 19.10.2010 B1/02/EXPORT/ 2002 31.10.2002 0012000751 19.10.2010 B1/02/EXPORT/ 2002 31.10.2002 0012000751 19.10.2010 B1/02/EXPORT/ 2002 31.10.2002
14
15 SE111 158 26100 1460
9.69 0 9.69 0
M0806 2
9.690
CR COIL IS 513 GR O 0.8 *1220 72091730
408,918 .00
10. 00
40,891. 80
2.000 0 1.000 0
817.84 408.92
SE111 158 26100 1460
M0804 3
10020
CR COIL IS 513 GR 0 1.35*1220 72091630 CR COIL IS 513 GR 0 1.35*1220 72091630
420,840 .00
10. 00
42,084. 00
2.000 0 1.000 0 2.000 0 1.000 0
841.68 420.84
SF111 158 26100 1460 SE111 158 26100 1460
M0804 2
7.500
315,000 .00
10. 00
31,500. 00
630.00 315.00
M0683 1
8.600
CR COIL IS 513 GR 0 1.35*1220 72091630
361,200 .00
10. 00
36,120. 00
2.000 0 1.000 0
722.40 361.20
SE111 158 26100 1460
TO TA
45.050
1,895,8
189,588
3,791. 78
VIDHI ( IPER PGDM )
Page 100

L 86.00 .60 1,895. 89
TRANSMITTED UNDER CENTRAL EXCISE SEAL TO NEPAL/ BHUTAN
I/we here by declare that the above mentioned particulars are true and Duty amounted debited wide serial no: 0111 Correctly stated and the consignment of goods is intended for export to Dated: 20. 10. 2010 Nepal/Bhutan and shall not be diverted en route to any other country. Export under bond under rule 19 Signature of exporter or his Place: B . S.City Authorized agent with date. Date: 20.10.2010 Name in Block Letters & Designation . 5.ARE 1 RANGE: DIVISION: ORIGINAL/DUPLICATE/SIXUPLICATE ADDRESS: COMMISSIONERATE: THROUGH: MARCHANT NAME ARE-1 INVOICE INVOICES NO
CONTRACT NO: BORDER : NEGOTIATION BRANCH:
INVOICE OF GOODS LIABLE TO CENTRAL EXCISE DUTY IN INDIA TRANSMITTED UNDER CENTRAL EXCISE SEAL TO
VIDHI ( IPER PGDM )
Page 101

SL . No . Gro ss wt of Pac kag es Gro ss Wei ght/ Net Wei ght Coil Quant no ity of identi goods ficati on Descripti on of Good/Ta riff classific ation Val ue (Rs .) BE D Rat eAm t ECS Mar , ks & S.E no. CS of Rat Pac ekag Amt es No. & Date of docume nts under which excise was paid or is payable 11 No & Descrip tion of packag es Rem arks/ Wag ons No./ RR No.
1 1 2 3 4
10
12
13
I/We hereby declare that the above mentioned particulars are true amount debited wide serial no: and correctly stated and the consignment of goods is intended for
Duty Date:
export to.. And shall not be diverted en route to any other country. Export under bond under rule 19 Signature of exporter or his Authorized agent with date. Name in Block Letter & Designation (SAIL)
VIDHI ( IPER PGDM )
Page 102

6.BANK REALISATION CERTIFICATE BANK CERTIFICATE OF EXPORT AND REALISATION FORM-1 TO: (NAME AND ADRESS OF LICENSING AUTHORITY)
INVO ICE NO. (1) EXPORT PROMO TION COPY OF SHIPPIN G BILL DULY AUTHEN TICATIO N BY CUSTO MERS (2) DESCRIP TION OF GOOS AS GIVEN IN THE CUSTOM S AUTHEN TICICATE D SHIPPIN G BILL (3) BILL OF LADIN G/ PP RECI PTS/ AIRW AYS BILL (4) DESITIN ATION OF GOODS (5) BILL AMOU NT CIF/C &F/FO B (6) FRIEG HT AMOU NT AS PER LADIN G FRIEI GHT MEMO (7) INSURA NCE AMOUN T (8) COMMIS SION/DI SCOUN T PAID/ PAYABL E (9) EXPORT IS IN FREE CONVE RTIBLE CURRE NCY OR IN INDIAN CURRE NCY (10) FOB VALU E/ FOR EIGN EXC HAN GE OR IN IINDI AN CUR REN CY (11) DATE OF REALIS ATION OF EXPOR T PROCE EDS (12) GRI/ PP/ SDF FOR M NO. (14) NO. DAT E& CAT EG OR Y OF APP LIC ABL E LIC EN CE (15)
WE:( NAME AND ADDRESS OF THE EXPORT) BILLTO:(NAME AND ADDRESS OF THE BANK i.e. BRANCH & CITY) Full Official address Signature of Export Place Date
Authorized Foreign Exchange Dealer Banks Certificate to the Bank by RBI Official Seal/Stamp
Code No. Allotted
-----------------------------------------------------------------------------Full Address of the Banker Note:
----------------------------------------------------Signature of Banker Branch & City official stamp
1. Bank can issue a consolidated certificate (consignment wise) for more than one consignment.
VIDHI ( IPER PGDM )
Page 103

2. F.O.B value actually realized and date of realization of export proceeds are to be given in all cases, expect where consignment has been against confirmed irrevocable letter of credit
3. This shall also be required wherever be specifically prescribed in the Policy/Procedures.
VIDHI ( IPER PGDM )
Page 104

CHAPTER 6 Problem in Foreign Exchange Mgt.
STATEMENT OF PROBLEM In the world of globalization and international business, where a company would be performing one or the other kind of activity like selling its products, sourcing its raw materials, raising funds abroad, investing in the international markets it has to deal with many currencies for making payments or receiving its receipts. So the firms would be facing the currency risk where an appreciation or depreciation of the currency it is dealing with may eat away its profits, so there arises the opportunity of managing the currency risk. This project thus deals with the various strategies by which those risk could be managed. NATURE OF FOREIGN EXCHANGE RISK Foreign Exchange dealing is a business that one get involved in, primarily to obtain protection against adverse rate movements on their core international business. Foreign Exchange dealing is essentially a risk-reward business where profit potential is substantial but it is extremely risky too. Foreign exchange business has the certain peculiarities that make it a very risky business. These would include: Forex deals are across country borders and therefore, often foreign currency prices are subject to controls and restrictions imposed by foreign authorities. Needless to say, these controls and restrictions are invariably dictated by their own domestic factors and economy. Forex deals involve two currencies and therefore, rates are influenced by domestic as well as international factors. The Forex market is a 24-hour global market and overseas developments can affect rates significantly.
VIDHI ( IPER PGDM )
Page 105

The Forex market has great depth and numerous players shifting vast sums of money. Forex rates therefore, can move considerably, especially when speculation against a currency rises. Forex markets are characterized by advanced technology, communications and speed. Decision-making has to be instantaneous. Description of Foreign Exchange Risk In simple word FOREX risk is the variability in the profit due to change in foreign exchange rate. Suppose the company is exporting goods to foreign company then it gets the payment after month or so then change in exchange rate may effect in the inflows of the fund. If rupee value depreciated he may loose some money. Similarly if rupees value appreciated against foreign currency then it may gain more rupees. Hence there is risk involved in it. Classification of Foreign Exchange Risk

Position Risk Gap or Maturity or Mismatch Risk Translation Risk Operational Risk Credit Risk
1. Position Risk The exchange risk on the net open Forex position is called the position risk. The position can be a long/overbought position or it could be a short/oversold position. The excess of foreign currency assets over liabilities is called a net long position whereas the excess of foreign currency liabilities over assets is called a net short position. Since all purchases and sales are at a rate, the net position too is at a net/average rate. Any adverse movement in market rates would result in a loss on the net currency position. For example, where a net long position is in a currency whose value is depreciating, the conversion of the currency will result in a lower amount of the corresponding currency

resulting in a loss, whereas a net long position in an appreciating currency would result in a profit. Given the volatility in Forex markets and external factors that affect FX rates, it is prudent to have controls and limits that can minimize losses and ensure a reasonable profit. The most popular controls/limits on open position risks are:
Daylight Limit : Refers to the maximum net open position that can be built up atrader during the course of the working day. This limit is set currency-wise and the overall position of all currencies as well.
Overnight Limit : Refers to the net open position that a trader can leave overnight to be carried forward for the next working day. This limit too is set currency-wise and the overall overnight limit for all currencies. Generally, overnight limits are about 15% of the daylight limits.
2. Mismatch Risk/Gap Risk Where a foreign currency is bought and sold for different value dates, it creates no net position i.e. there is no FX risk. But due to the different value dates involved there is a mismatch i.e. the purchase/sale dates do not match. These mismatches, or gaps as they are often called, result in an uneven cash flow. If the forward rates move adversely, such mismatches would result in losses. Mismatches expose one to risks of exchange losses that arise out of adverse movement in the forward points and therefore, controls need to be initiated. The limits on Gap risks are:
Individual Gap Limit : This determines the maximum mismatch for any calendar month; currency-wise.
Aggregate Gap Limit : Is the limit fixed for all gaps, for a currency, irrespective of their being long or short. This is worked out by adding the absolute values of all overbought and all oversold positions for the various months, i.e. the total of the individual gaps, ignoring the signs. This limit, too, is fixed currency-wise.
VIDHI ( IPER PGDM )
Page 107
Total Aggregate Gap Limit : Is the limit fixed for all aggregate gap limits in all currencies.
3. Translation Risk Translation risk refers to the risk of adverse rate movement on foreign currency assets and liabilities funded out of domestic currency. There cannot be a limit on translation risk but it can be managed by: 1. Funding of Foreign Currency Assets/Liabilities through money markets i.e. borrowing or lending of foreign currencies 2. Funding through FX swaps 3. Hedging the risk by means of Currency Options 4. Funding through Multi Currency Interest Rate Swaps. 4. Operational Risk The operational risks refer to risks associated with systems, procedures, frauds and human errors. It is necessary to recognize these risks and put adequate controls in place, in advance. It is important to remember that in most of these cases corrective action needs to be taken post-event too. The following areas need to be addressed and controls need to be initiated.
Segregation of trading and accounting functions : The execution of deals is a function quite distinct from the dealing function. The two have to be kept separate to ensure a proper check on trading activities, to ensure all deals are accounted for, that no positions are hidden and no delay occurs.
Follow-up and Confirmation: Quite often deals are transacted over the phone directly or through brokers. Every oral deal has to be followed up immediately by written confirmations; both by the dealing departments and by back-office or support staff. This would ensure that errors are detected and rectified immediately.
VIDHI ( IPER PGDM )
Page 108
Settlement of funds: Timely settlement of funds is necessary not only to avoid delayed payment interest penalty but also to avoid embarrassment and loss of credibility.
Overdue contracts: Care should be taken to monitor outstanding contracts and to ensure proper settlements. This will avoid unnecessary swap costs, excessive credit balances and overdrawn Nostro accounts.
Float transactions: Often retail departments and other areas are authorised to create exposures. Proper measures should be taken to make sure that such departments and areas inform the authorised persons/departments of these exposures, in time. A proper system of maximum amount trading authorities should be installed. Any amount in excess of such maximum should be transacted only after proper approvals and rate.
5. Credit Risk Credit risk refers to risks dealing with counter parties. The credit is contingent upon the performance of its part of the contract by the counter party. The risk is not only due to non performance but also at times, the inability to perform by the counter party. The credit risk can be
Contract risk: Where the counter party fails prior to the value date. In such a case, the Forex deal would have to be replaced in the market, to liquidate the Forex exposure. If there has been an adverse rate movement, this would result in an exchange loss. A contract limit is set counter party-wise to manage this risk.
Clean risk: Where the counter party fails on the value date i.e. it fails to deliver the currency, while you have already paid up. Here the risk is of the capital amount and the loss can be substantial. Fixing a daily settlement limit as well as a total outstanding limit, counter party-wise, can control such a risk.
VIDHI ( IPER PGDM )
Page 109

Sovereign Risk: Refers to risks associated with dealing into another country. These risks would be an account of exchange control regulations, political instability etc. Country limits are set to counter this risk.
VIDHI ( IPER PGDM )
Page 110

CHAPTER 7 Suggestions In the view of the analysis and with the changes in the industry scenario it is felt that the company is moving at a pace. It keeps on reconstructing its policies for the betterment. The foreign exchange management of such a large scale industry is tedious to explain. The procedure moves from such a hierarchical level and involves a lot of interaction that it looks as it is concerning a gang of persons. A bunch of ideas and a series of knowledge is revolving me, that what I spent my invaluable time which will help me forever. Not only for the educational purpose but a practical sense of meeting different type of personnels and grasping their work knowledge. Interactions, discussions, negotiations each one it is a part of work life and such cannot be segregated. Time management is at the top along with a plan for next days work I learnt in these six weeks. A new field of knowledge and the methodology of how to interact with it were a bit amazing for me. Relating to my area of interest FOREX MANAGEMENT gave me new thoughts relating to the incoming and outgoing of materials. How to deal with it, what are the major players involving in the whole process along with it their roles. Now in the mode of payment the use of the letters of credit is a good tool for reducing risk as in case of other modes bank just ask for payment and if the importer set-aside then the exporter has to suffer a huge loss so LC has grown substantially over the past decade. Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. The exports is an obligation by the central government and BSL has also moved accordingly to the latest scenario i.e. but if look in the previous year Rs214 Cr approx exports has been done and around Rs160087 Cr sales is in domestic sector which clearly speaks that the domestic market of BSL is at a strong base that lying on the exports. The imports is been done for new technology better raw material of the plant, equipments and heavy machinery which is long lasting. Here importing is done with the banking norms and major portion what F&A is looking behind the Payment side, BSL mainly uses LC for the payment to the party, CAD and TT is being used substantially. If looking to the last six months of the previous year major imports has been done in December Rs 25,11,28,750 and comparing to it least one was in October Rs 6,25,15,748. In comparison among LC and CAD , payment through LC is over all quite same as well as huge amount dealings has been done in all the last six months leaving Mar11 to one side. But in case of CAD the major payments has been done in Nov10 and Feb11 but overall payments is large in case of CAD. The reason might be the exporters choice of payment or ease in process of payment. BSL is been looking ahead for increasing its production so for this it in been importing more than exporting. The target for FY 11-12 has been set to as to produceHot

Metal-4.750 MT, Crude steel-4.405 MT and saleable steel-3.930 MT and I think such could be easily achievable. Conclusion In the view of the analysis and with the changes in the industry scenario it is felt that the company is moving at a pace. It keeps on reconstructing its policies for the betterment. The foreign exchange management of such a large scale industry is tedious to explain. The procedure moves from such a hierarchical level and involves a lot of interaction that it looks as it is concerning a gang of persons. A bunch of ideas and a series of knowledge is revolving me, that what I spent my invaluable time which will help me forever. Not only for the educational purpose but a practical sense of meeting different type of personnels and grasping their work knowledge. Interactions, discussions, negotiations each one it is a part of work life and such cannot be segregated. Time management is at the top along with a plan for next days work I learnt in these six weeks. A new field of knowledge and the methodology of how to interact with it were a bit amazing for me. Relating to my area of interest FOREX MANAGEMENT gave me new thoughts relating to the incoming and outgoing of materials. How to deal with it, what are the major players involving in the whole process along with it their roles. Now in the mode of payment the use of the letters of credit is a good tool for reducing risk as in case of other modes bank just ask for payment and if the importer set-aside then the exporter has to suffer a huge loss so LC has grown substantially over the past decade. Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. The exports is an obligation by the central government and BSL has also moved accordingly to the latest scenario i.e. but if look in the previous year Rs214 Cr approx exports has been done and around Rs160087 Cr sales is in domestic sector which clearly speaks that the domestic market of BSL is at a strong base that lying on the exports. The imports is been done for new technology better raw material of the plant, equipments and heavy machinery which is long lasting. Here importing is done with the banking norms and major portion what F&A is looking behind the Payment side, BSL mainly uses LC for the payment to the party, CAD and TT is being used substantially. If looking to the last six months of the previous year major imports has been done in December Rs 25,11,28,750 and comparing to it least one was in October Rs 6,25,15,748. In comparison among LC and CAD , payment through LC is over all quite same as well as huge amount dealings has been done in all the last six months leaving Mar11 to one side. But in case of CAD the major payments has been done in Nov10 and Feb11 but overall payments is large in case of CAD. The reason might be the exporters choice of payment or ease in process of payment. BSL is been looking ahead for increasing its production so for this it in been importing more than exporting. The target for FY 11-12 has been set to as to produceHot

Metal-4.750 MT, Crude steel-4.405 MT and saleable steel-3.930 MT and I think such could be easily achievable.
VIDHI ( IPER PGDM )
Page 113

BIBLIOGRAPHY
www.sail.co.in www.bokarosteel.com www.moneycontrol.com www.money.livemint.com www.money.rediff.com www.nse.com www.etintelligence.com
List of Abbreviations
SAIL Steel Authority of India Limited BSL- Bokaro Steel Limited ISP-Indian Iron and Steel Company Steel Plant ASP Alloy Steel Plant SSP Salem Steel Plant RMD Raw Material Division VISL Visvesvaraya Iron and Steel Limited BRL- Bharat Refractories Limited SMS-Steel Melting Shop CCS-Continuous Casting Shop CRM-Cold Rolling Mill HRM Hot Rolling Mill CR Cold Rolled HR- Hot Rolled GP Galvanised Plate GC - Galvanised Coil MIS- Management Information System CMO- Central Marketing Organisation
VIDHI ( IPER PGDM )
Page 114

Final ST Project

Uploaded by

Copyright:

Available Formats

Final ST Project

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Final ST Project

Uploaded by

Copyright:

Available Formats

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

(A GOVT. OF INDIA UNDERTAKING UNIT)

SUMMER INTERNSHIP PROJECT

FOREX MANAGEMENTIMPORT AND EXPORT IN BOKARO STEEL PLANT (BSL)

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

Vidhi IPER PGDM

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

Project GuideIPER) DR. A.S.KHALSA Director IPER PGDM BHOPAL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI PGDM 3RD TRIM IPER PGDM BHOPAL,MP

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

B.Current Position of Steel Industry

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

LOCATION NEW DELHI

Promotes e-commerce activities in steel and related areas.

SAIL & MOIL Ferro Alloys Pvt. Ltd.

MANGANESE ORE (INDIA) LIMITED

Bhilai jaypee cement limited

SANTNA & BHILAI

Jaiparkash Associates Ltd.

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

for long-term supply of low-silica limestone.

for procurement of high power locomotives Indian Railways

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

3.2) Finance and Accounts Department Organization Chart

Pay A/C,PF & Pension, Time Office, Estate A/C, BGH

VIDHI ( IPER PGDM )

FOREX MANAGEMENT- IMPORT AND EXPORT IN BSL,SAIL

Imports of Iron & Steel