Summer Internship Project
EXPORT DOCUMENTATION AND LOGISTICS A STUDY WITH REFERENCE TO ABC LEATHERS
Submitted in partial fulfillment of PGDM program 2008-10
Submitted by SAKSHIKA PALLAVI Roll Number: IB/01/21
Company Guide: Mr. SANJEEV KUMAR
Shipping Manager ABC Leather, Gurgaon
Faculty Guide: Prof. NEERAJ SINGHAL
Course Co-ordinator (PGBM-IB)
Apeejay School of Management Dwarka,New Delhi July 2009
This is to certify that the project work done on EXPORT DOCUMENTATION AND LOGISTICS A STUDY W.R.T “ABC LEATHERS” Submitted to Apeejay School of Management, Dwarka by SAKSHIKA PALLAVI in partial fulfillment of the requirement for the award of PG Diploma in Business Management, is a bonafide work carried out by him/her under my supervision and guidance. This work has not been submitted anywhere else for any other degree/diploma. The original work was carried during 18/05/2009 to 27/06/09 in “ABC LEATHERS”
Date: 10th July, 2009
Course Co-ordinator (PGBM-IB)
DOCUMENTATION AND LOGISTICS A STUDY W.R.T “ABC LEATHERS” Under the guidance of Prof. NEERAJ SINGHAL Submitted in partial fulfillment of the requirements for the PG Diploma in Business Management in Apeejay School of Management is my original work and the same has not been submitted for the award of any other Degree/diploma/fellowship or other similar titles or prizes.
Place:New Delhi Date: 10th July, 2009
SAKSHIKA PALLAVI Roll No. IB/01/21
I would like to thank Apeejay school of management to give opportunity to work on this project. My sincere thanks to SUNIL KAPUR, Managing Director of ABC LEATHERS for permitting me to do the project. Thanks to all in ABC Leathers who have helped me complete this useful project report. My sincere thanks to Mr. Sanjeev kumar (Shipping Manager) for his valuable support and guidance. It was overwhelming experience for me to have kind support right from the beginning to the end of my training and I also would like to thanks Mr. Ausotosh kumar (shipping executive) for his valuable support. I sincerely express my gratitude to Prof. Neeraj singhal. and all other faculty members for their effective guidance for the successful completion of this project report.
TABLE OF CONTENTS
1. 2. 3. 4.
Executive Summary Introduction Company profile About the project 23
1 2-8 9-17 18-
Literature review 29
Research methodology 30-31
Data analysis and findings 46
Annexure List of Tables Production base of leather and leather products v
Performance of Indian Leather Industry Current export basket of Indian leather industry 13. Figures Main centers for leathers Feathers of leather sector in India
The project was done in ABC leathers, Gurgaon. It’s a Leather Export enterprise known for its commitment to quality and good values. Leather was the first clothing fabric over the past few decades. Leather is emerging as a hip look on the streets and in the office covering men or women, young or old from top to bottom. Thanks to a blend of nature and modern technology, the new look of leather is soft and supple. Leather has become a very specialized high fashion fabric that requires talented specialists to turn into a quality garment. They design and develop leather garments such as leather jackets men and women, leather bags, leather belts. Leather wallets. The project is about the study of whole organization including their departments such as Merchandising department, Production department, Shipping department, Packing department etc. The whole management of export documents is done which includes preparing documents for different modes of exports, to analyze the documents, prepare and send them to their destination. The documents include Letter of credit, Different kinds of invoices, Certificate of origin, Bill of lading, Bank receipt certificate, packing list, Bill of entry etc.
1. To study the problems of the leather organization. 2. The key challenges faced by the organization. 3. Suggestions and remedies to solve the problems. 4. Strategies for the growth of leather firm.
The Indian leather industry comprises of a large number of artisanal, cottage, tiny, small and medium enterprises. The industry has an unorganised and an organised sector, and according to a 2008 estimate, around 80 per cent of leather footwear units are in the unorganised sector. India has the highest livestock numbers in the world, providing a huge supply of raw materials – as skins and hides – to this industry. As converting leather into value-added products is a purely skill-based, labour-intensive process, the industry has the potential to play a big role in creating employment- and income-generating opportunities in the country. Leather was the first clothing fabric over the past few decades. Leather has developed a racing reputation from bickers collars to lingerie. Leather is emerging as a hip look on the streets and in the office covering men or women, young or old from top to bottom. Thanks to a blend of nature and modern technology, the new look of leather is soft and supple. Leather has become a very specialized high fashion fabric that requires talented specialists to turn into a quality garment. Leather is tailored into hipster sheep skin pants, clinched waist jackets, goatskin shirts, double breasted suede shearling with shawl collar in a petite fit, pig suede soft silk nap sportswear, etc. Clothing leather is thin, versatile and almost silky and comes in a variety of eye catching colours viz. red, camel, goldmetallic, or olive. Even blue or green are no strangers in the rainbow shades. Animal prints, which are so popular in clothes, come to life as leather outfits. Relative to virtually all man made textiles, leather is very strong and has a high resistance to tears and punctures. The comfort provided by leather garments is due to leather’s ability to combine breathing and insulating properties. Leather is hot in summers and cold in winters but in reality, it adjusts constantly to its environment. This is because, leather is a natural product and it breathes freely maintaining a comfort level in all seasons. Even in warm climates, leather is wearable and bearable. Leathers are constantly improved, as new finishes and colours are created. The richness and variety of leathers available to everyone at reasonable prices would be the envy of 2
ancient potentates. Leathers and suedes can be dyed, glazed, buffed, polished, foiled, embossed, printed, patented, beaded, sparkled, perforated, stencilled silk screened, woven fringed or embroidered, to create a variety of looks. Leather is tanned and finished so that the grain side has a smooth rich surface.
The “Merchandising” is known to the persons specially involved in garments trade. The term merchandising has been derived from the ‘merchandise”. Merchandise means buying and selling huge amounts of goods. In front of their shipment time they are trying to arrange everything as early as possible. When all items are in store then Yarn is given for 2/3 pcs of garments sample send for make size set. When size set made then they measure it. If it is OK the Yarn provide for 100% production. In production process the merchandiser just follow up his order, what is the condition of his order? During that total time merchandiser inform his Buyer what is the condition of his product. In our 90 days working period I have also follow up five whole worth order.
MERCHANDISER IS A DATA BUS BETWEEN BUYER & SELLER
Merchandiser is he/she who builds up relationship with the buyer and acts as a Seller. He plays a vital role in an organization in a sense that he bears more responsibility than other in regards to execution of an order. The responsibilities which he bears on the job are as follows: • He represents as a buyer to the Factory. • He represents as a seller to the buyers. • He inspects Quality as a buyer (from the Buyer’s point of view). • He negotiates a price for the sellers. • He looks at the deal from seller’s point of view.
• He looks into the business to flourish more in the future. • He tries to offer the deal more competitive without compromise Quality. • His object is to satisfy the buyers to progress more of the futures business. • His aim is to impress the buyers by means of: 1. Right products 2. Right Quality 3. Right Quantities 4. Right Time 5. Undamaged condition
MERCHANDISING CHRONOLOGICAL PROCESSES:
A. Salesman Samples, Counter Samples, Approval Samples, Photo Samples, Preproduction Samples, Production Samples, Shipping Samples. B. Swatch and Trims, Trim’s related Affairs, Communication in international Business.
Production is the functional area responsible for turning inputs into finished outputs through a series of production processes. The Production Manager is responsible for making sure that raw materials are provided and made into finished
goods effectively. He or she must make sure that work is carried out smoothly, and must supervise procedures for making work more efficient and more enjoyable. Five production sub-functions In a manufacturing company the production function may be split into five subfunctions: 1. The production and planning department will set standards and targets for each section of the production process. The quantity and quality of products
coming off a production line will be closely monitored. In businesses focusing on lean production, quality will be monitored by all employees at every stage of production, rather than at the end as is the case for businesses using 2. The purchasing department will be responsible for providing the materials, components and equipment required to keep the production process running smoothly. 3. The stores department will be responsible for stocking all the necessary tools, spares, raw materials and equipment required to service the manufacturing process. Where sourcing is unreliable, buffer stocks will need to be kept and the use of computerised stock controlsystems helps keep stcoks at a minimal but necessary level for production to continue unhindered. 3. The design and technical support department will be responsible for researching new products or modifications to existing ones,
estimating costs for producing in different quantities and by using different methods. It will also be responsible for the design and testing of new product processes and product types, together with the development of prototypes 4. The works department will be concerned with the manufacture of products. This will include the maintenance of the production line and other necessary repairs. The works department may also have responsibility for quality control. A key aspect of modern production is ensuring quality. The term quality means fitness for purpose i.e. a product, process or service should do exactly what is expected of it.
Shipping department deals with all kinds of documents. It include preparing of documents, analyzing of documents and send them to their destination.
The export process is made more complex by the wide variety of documents that the exporter needs to complete to ensure that the order reaches its destination quickly, safetly and without problems. These documents range include those required by the South African authorities (such as bills of entry, foreign exchange documents, export permits, etc.), those required by the importer (such as the proforma and commercial invoices. Function of export documentation Export documentation may serve any or all of the following functions: An attestation of facts, such as a certificate of origin Evidence of of the terms and conditions of a contract if carriage, such as in the case of an airwaybill Evidence of ownership or title to goods, such as in the case of a bill of lading A promissory note; that is, a promise to pay A demand for payment, as with a bill of exchange A decalaration of liability, such as with a customs bill of entry Broad categories of export documentation There are five broad categories of documentation you will encounter when exporting. These are: 1. Documents involving the importer
The proforma invoice The export contract The commercial invoice The packing list
Letter of credit Certificate of origin Certificates of health Fumigation certificate Pre-shipment inspection certificate Transport documents
2. Documents required to export goods from South Africa
Exporter registration form Letter of credit Commercial invoice Bill of entry export Form F178 Form NEP (no foreign exchange proceeds) Form E (repatriation of foreign exchange earnings) Export permit
3. Documents required for transportation
Bill of lading Air waybill Freight transit order Road consignment note
Export cargo shipping instruction
4. Documents required for payment
Commercial invoice Letter of credit Transport documents
5. Insurance documents
The leather industry utilizes the by products of slaughterhouses and transforms the raw material into various types of leather and manufactured end products. The leather productionconsumption chain has three processing stages, each requiring different combinations of materials, inputs, labour and capital. The first stage is the recovery of raw materials that has direct links with animal production activities. Hides and skins are recovered from dairy, draught animals or animals from slaughter houses. The second stage is leather tanning and finishing, which involves capital intensive operations. The third stage is the production of leather products, which is a labour intensive activity. These three processing stages are linked to key commercial components of the chain, such as the marketing of intermediate inputs, components and end products, trade and consumption. The various inputs to the chain without which the chain cannot operate competitively are qualified labour, design and art centers, components production, access to chemicals, technical and administrative support institutions, research and development, training and a set of adequate policies.
• Time period is very short
The area of coverage has been limited to one district There may be error due to respondent’s basis
The leather Firm utilizes the by products of slaughterhouses and transforms the raw material into various types of leather and manufactured end products. The leather productionconsumption chain has three processing stages, each requiring different combinations of materials, inputs, labour and capital. The first stage is the recovery of raw materials that has direct links with animal production activities. Hides and skins are recovered from dairy, draught animals or animals from slaughter houses. The second stage is leather tanning and finishing, which involves capital intensive operations. The third stage is the production of leather products, which is a labour intensive activity. These three processing stages are linked to key commercial components of the chain, such as the marketing of intermediate inputs, components and end products, trade and consumption. The various inputs to the chain without which the chain cannot operate competitively are qualified labour, design and art centers, components production, access to chemicals, technical and administrative support institutions, research and development, training and a set of adequate policies.
The name of company is “ABC LEATHERS”. It was started in the year 1989 and good Division was started in the year 2004. The company was earlier located in new delhi Mayapuri. Now it has own constructed building in GURGAON, plot number 875, udyog vihar gurgaon.
ABC LEATHERS is established in two unit. The total factory area (in square feet)
Unit – I
Unit-I - 875, Udyog Vihar, Phase V, Gurgaon, Haryana Tele – 91-124- 4001521 Fax – 91-124 –4001395 Email – email@example.com 22,000 Mayapuri. Phase 2, New Delhi
Unit – II
They are an Indian supplier of, Clothing, Leather or Suede Clothing. They have own tannery named Peacock tanners private limited situated at Hyderabad. They are the larger exporter of leather garments.
The promotion takes place through buying agent of any buying house by the buying from mouth to mouth. Through their own website on internet. By the international trade exhibition and fairs.
The current promoters are United States of America, Canada, United
Kingdom, Holland, & few other east European countries. We are already servicing Big Names in the U.S.A. By the export promotion council and through media
To become a leading transportation, clearing and export company in the India. To be the recognized industry leader, through total commitment to customer service, by maintaining our uncompromising integrity, in the support and development of our People, Communications and Systems in sustained growth and profitability.
To set the standard for excellence in global export through total commitment to quality in people and customer service, with superior financial results. To solve reliable export services to the needs of the business community. Reliable services means on-time delivery, undamaged goods, and correct documentation in case of deviations. To perform continuous business improvement in order to meet and exceed customer expectation, To create sustainable business growth in order to enhance the prosperity of employee and benefit shareholders. Decisions can impact the success of the company as much as the performance of the export. Quality :-By maintaining high standards of quality in the work culture and products that is in manufacture /exports and the services that its provides. Cost:-By always remaining competitive by world standards and maintaining production levels that achieve economics of scale. Delivery:- By always delivering goods on time with excellent planning and by cutting down the production lead time. Development:-By developing cost effective and innovative products without compromising on quality. Safety:-By providing a world class,safe and hazard free work environment to its employees. Moral :-By always keeping its moral standards high and conducting its business with dignity according to the established rules and regulations.
C.E.O- Mr. Sunil kapur LEATHER STORE/PURCHASE- Mr. Rajnish singh MERCHANDISING/SAMPLING- 1. Mr. Anuj sareen (Merchandising manger) 2. Ms. Shivani kaur(SR. Merchandiser) 3. Ms. Iqbal kaur (SR. Merchandiser)
PRODUCTION- 1. Mr. Ansumal verma(Factory manager) 2. Mr. Anuj kohli (Production executive)
FINISHING AND PACKING- 1. Mr. Anuj kohli(Production executive) 2. Mr. Raj kumar(Packing supervisor) ACESSORIES STORE- Mr. Vinod singh(Store executive) QUALITY CONTROL- Mr. Lal babu ansari(Quality controller) Mr. Raghunath singh(Quality controller) ACCOUNTS- Mr. Anil mehta PERSONAL- Mr. Subhash Sharma(Personal manager) SHIPPING- Mr. Sanjeev Kumar(Shipping manager)
THE COMPANY AND ITS PRODUCT LINE
The company is ABC LEATHERS. Based in Gurgaon , they are an Indian supplier of, Clothing, Leather or Suede Clothing. ABC leather was established in 1989 with a view to manufacturing international standard leather garments and accessories. The company operates with its two units located in Mayapuri (Delhi), and (Gurgaon). The company is equipped with state of the art machineries from Durkopp adler, camoga, juki, elligi, omac, etc in house in the most modernized set up. A variety of machines such as industrial flat-bed single needle lock stitch sewing machine, industrial flatbed twin needle lock stitch sewing machine, zigzag sewing machine, automatic buttonholing machine, automatic button sewing machine, automatic pocket welting sewing machine, automatic over-lock sewing machine, lining cutting machine, fusing machine, etc. are used for various functions in leather garments manufacturing
industry. These machines are imported ones because garments are manufactured for export markets.
FEATURES OF THE PRODUCT 1. Designer leather bags high quality of designer leather bags. 2. High quality of designer wallets 3. High quality of designer leather jackets]
4. High quality of designer leather belts PRODUCTS- 25000 pairs gloves per month 25000 belts per month 30000 ladies handbags per month 25000 garments per month Leather qualities- Cow, buff, sheep and goat leathers
Marketing strategies is based on buyers and sellers. Target markets should be selected after careful consideration of various factors like political embargo, scope of exporter's selected product, demand stability, preferential treatment to products from developing countries, market penetration by competitive countries and products, distance of potential market, transport problems, language problems, tariff and nontariff barriers, distribution infrastructure, size of demand in the market, expected life span of market and product requirements, sales and distribution channels. For this purpose we should collect adequate market information before selecting one or more target markets. The information can be collected from various sources like Export Promotion Council (EPCs)/Commodity Boards, Federation of Indian Export Organisation, (FIEO), Indian Institute of Foreign Trade (IIFT), Indian Trade Promotion Organisation (ITPO), Indian Embassies Abroad, Foreign Embassies in
India, Import Promotion Institutions Abroad, Overseas Chambers of Commerce and Industries, Various Directories, Journals, Market Survey Reports. CUSTOMERS- Tommy hilfiger Espirit Paul smith D.K.N.Y International Max marda Trussardi jeans
Personal connections are the most important way of entering foreign markets.
Agents or distributors were the second most prominent method, and the internet was the third most popular method (especially for non-US markets).
1. leathers 2. Jatin group of industries 3. R.K International 4. Alfa industries 5. Shri ganesh polymers 6. Maruti novelties 7. My international 8. Supreme leathers
The Council for Leather Exports (popularly known as CLE) set up in July 1984, is an autonomous non-profit company registered under the Indian Companies Act, 1956 entrusted with export promotion activities and development of the Indian leather industry. 15
1. Service tax 10 to 30% 2. Duty drawback is 9.9% 3. Focus product scheme for USA 2.5% and for other country 1.25% 4. Duty free import on leathers 5. Advance licence import over 20 crore
India has a well developed tax structure. Income tax, Customs duties, Central Excise, Sales Tax and Service tax are the main taxes levied by the Central Government VAT, Stamp duty, State Excise, Land Revenue, Tax on professions are the principal taxes levied by the State Governments Local Bodies are empowered to levy tax on properties, octroi and for utilities like water supply, drainage etc. Corporate Tax is currently taxed at: 30% in the case of domestic companies and surcharge @ 10% of tax 40% in the case of foreign companies and surcharge @ 2.5% of tax Indirect tax include vat and cst (central sales tax) Service tax is 10% to 30% Flat tax rate is 30% and FBT (frienge benefit tax)
Recruitment process- Recruitment process is on the basis of interviews and educational qualification such as MBA for manager’s post. They also recruit large number of fashion designers for designing. Work experience is there main criteria.
SALARY AND WAGES- salary is according to the employee’s qualifications and their experience. Incentives are also given to employees according to their performance. PERFORMANCE AND APPRAISEL- Performance and appraisal takes place once in a year. A study conducted on each employee their performance in the organization and their participation in the growth of organization as well as himself/herself. TRAINING AND DEVELOPMENT- Training is given to the unskilled employee for the self-development as well as for organization. Classes, surveys and meetings always took place for the purpose of training and development. The main policy includes restrictions on child labor. Persons below 18 yrs are not appointed as labors.
1. Delay in shipment 2. Not proper packing 3. Errors in documentation 4. Delay in production 5. Less working employees 6. Problems in cash transactions
1. Highest turnover in the year 2007 2. Order of 8000 leather bags by the Tom filger in the year 2004. 3. Purchased new technology machines from USA
In the future ABC LEATHERS plans to add more new machineries and upgrade its infrastructure. ABC LEATHERS also plans to enhance their business in all over India as well as outside India. They also plan to enhance their production units. The objective is to keep pace with changing technology and the dynamic nature of international business.
First of all, it is useful to recall that a firm's performance is understood here as its capacity to increase or consolidate its market: share in foreign or domestic markets. Over the period of the study, the firms in the sample have achieved respectable performances in terms of sales on various markets and the composition of their product ranges. Secondly there is need of highly equipped machineries and more advance HR policies Promotion of firm is slow there should be more advertisement. On the other hand this firm has good relationships with other firms and buying houses. But the company need little bit of developments regarding departments.
THE PROJECT TAKEN IN THE ORGANISATION
The project is the detailed study on export documentation, the whole organization including their all departments, the problems and challenges faces by the organization and their findings and solutions. Its a leather export firm so what are problems faced by leather firm and how to enhance leather export. The project is whole study about the export firm.
Certain documentation takes place while exporting from India. Special documents may be required depending on the type of product or destination. Certain export products may require a quality control inspection certificate from the Export Inspection Agency. Some food and pharmaceutical product may require a health or sanitary certificate for export. Shipping Bill/ Bill of Export is the main document required by the Customs Authority for allowing shipment. Usually the Shipping Bill is of four types and the major distinction lies with regard to the goods being subject to certain conditions which are mentioned below: Export duty/ cess Free of duty/ cess Entitlement of duty drawback Entitlement of credit of duty under DEPB Scheme Re-export of imported goods The following are the documents required for the processing of the Shipping Bill: GR forms (in duplicate) for shipment to all the countries.
4 copies of the packing list mentioning the contents, quantity, gross and net weight of each package. 4 copies of invoices which contains all relevant particulars like number of packages, quantity, unit rate, total f.o.b./ c.i.f. value, correct & full description of goods etc. Contract, L/C, Purchase Order of the overseas buyer. AR4 (both original and duplicate) and invoice. Inspection/ Examination Certificate. The formats presented for the Shipping Bill are as given below: White Shipping Bill in triplicate for export of duty free of goods. Green Shipping Bill in quadruplicate for the export of goods which are under claim for duty drawback. Yellow Shipping Bill in triplicate for the export of dutiable goods. Blue Shipping Bill in 7 copies for exports under the DEPB scheme. Documents Required for Post Parcel Customs Clearance In case of Post Parcel, no Shipping Bill is required. The relevant documents are mentioned below:
Customs Declaration Form - It is prescribed by the Universal Postal Union
(UPU) and international apex body coordinating activities of national postal administration. It is known by the code number CP2/ CP3 and to be prepared in quadruplicate, signed by the sender. Despatch Note, also known as CP2. It is filled by the sender to specify the action to be taken by the postal department at the destination in case the address is non-traceable or the parcel is refused to be accepted.
Prescriptions regarding the minimum and maximum sizes of the parcel with
its maximum weight : minimum size: Total surface area not less than 140 mm X 90 mm. Maximum size: Lengthwise not over 1.05 m. Measurement of any other side of circumference 0.9 m./ 2.00 m. Maximum weight: 10 kg usually, 20 kg for some destinations.
Commercial invoice - Issued by the seller for the full realisable amount of
goods as per trade term.
Consular Invoice - Mainly needed for the countries like Kenya, Uganda,
Tanzania, Mauritius, New Zealand, Burma, Iraq, Ausatralia, Fiji, Cyprus, Nigeria, Ghana, Zanzibar etc. It is prepared in the prescribed format and is signed/ certified by the counsel of the importing country located in the country of export.
Legalised/ Visaed Invoice - This shows the seller's genuineness before the
appropriate consulate/ chamber of commerce/ embassy. It do not have any prescribed form.
Certified Invoice - It is required when the exporter needs to certify on the
invoice that the goods are of a particular origin or manufactured/ packed at a particular place and in accordance with specific contract. Sight Draft and Usance Draft are available for this. Sight Draft is required when the exporter expects immediate payment and Usance Draft is required for credit delivery.
Packing List - It shows the details of goods contained in each parcel/
Certificate of Inspection - It shows that goods have been inspected before
Black List Certificate - It is required for countries which have strained
political relation. It certifies that the ship or the aircraft carrying the goods has not touched those country(s). 21
Weight Note - Required to confirm the packets or bales or other form are of a
Manufacturer's Certificate - It is required in addition to the Certificate of
Origin for few countries to show that the goods shipped have actually been manufactured and are available.
Certificate of Chemical Analysis - It is required to ensure the quality and
grade of certain items such as metallic ores, pigments, etc.
Certificate of Shipment - It signifies that a certain lot of goods have been
Health/ Veterinary/ Sanitary Certification - Required for export of foodstuffs,
marine products, hides, livestock etc
Certificate of Conditioning - It is issued by the competent office to certify
compliance of humidity factor, dry weight, etc
Antiquity Measurement - Issued by Archaeological Survey of India in case of
Transhipment Bill - It is used for goods imported into a customs port/ airport
intended for transhipment.
Shipping Order - Issued by the Shipping (Conference) Line which intimates
the exporter about the reservation of space of shipment of cargo through the specific vessel from a specified port and on a specified date.
PROBLEMS BEHIND LEATHER EXPORT ORGANIZATION
This Leather firm is moving towards an unprecedented crisis with the slowdown of global economy. With the economies of US, Europe and Japan plummeting together, India has also witnessed fall in GDP growth from around 9% last financial year to 7% in the current financial year. It is projected to dip even further to around 5.5 % - 6% for Year 2009 - 10. 22
The leather exports sector which witnessed a growth 20% in the first half of 2009 got dented by the global slowdown in the subsequent months. The main reason is attributed to the decline in orders from Western markets, especially the US and UK. The European Union and the US are the two biggest markets forIndian leather export firms which stand at 65% and 25% respectively in terms of India's export share of Leather products. Secondly Chinese Govt. is generously helping Chinese exporters to follow an aggressive exports policy which help them to bag the orders in the competition. It is a matter of big concern for our Leather Industry which is mainly dependent upon its exports rather than domestic sales. Indian exports of leather is estimated at 3.5 billion INR and its domestic market is hovering around 2.5 billion INR. The main reason behind this could be that our leather industry cannot rely on its domestic market as the retail sector is still immature to sell the export products. Leather exporters are being inextricably caught in a situation where buyers are delaying fresh orders besides delaying their payments on existing orders and on top of that they are also asking for huge discounts. It seems that if the problem is not addressed on time, it would adversely affect the small scale and tiny industries and also have an impact on big businesses, leading to job-loss and closure of units over the next few months. It is estimated that around 2-3 lakh workers can lose their jobs in leather industry which has employed around 25 lakh total workers. The leather and leather goods industry worldwide has emerged as an unexpected site of complex battles over the apparent trade-offs between trade liberalisation, economic growth and its environmental consequences in the past decade. Leather is India’s eighth largest foreign exchange earner. It is also a labour-intensive sector. Small and medium enterprises account for more than 75% of the firms, with notable price advantage available to a number of traded commodity lines.
Leather exports from India are on the rise, though the importance of leather in the overall export basket has declined. On the whole, developing countries like India, with price advantage for key exports, should gain from the liberalisation of industrial tariffs. However, a recent study carried out by The Energy and Resources Institute (Teri) on the impact of trade liberalisation on the leather sector shows that standards related barriers, rather than tariff instruments, have increasingly hampered trade. The challenge now is to internalise the negative externalities generated by environmentally damaging by-products. Over the last two decades, the leather processing sector has come under greater regulatory scrutiny by governments and consumer advocacy groups in the industrial economies. Stringent regulations forced the industry to shift to their developing country counterparts with less stringent norms, which led to rapid growth of tanning capacity in these countries, initially. But later, with the rise of new environmental practices such as eco-labeling and the ban by major leather importers of carcinogenic chemicals such as Pentacholorophenol (PCP) and azo dyes and even boric acids, they are now forced to make costly changes to their production processes
Leather was the first clothing fabric over the past few decades. Leather has developed a racing reputation from bickers collars to lingerie. Leather is emerging as a hip look on the streets and in the office covering men or women, young or old from top to bottom. Thanks to a blend of nature and modern technology, the new look of leather is soft and supple. Leather has become a very specialized high fashion fabric that requires talented specialists to turn into a quality garment. Leather is tailored into hipster sheep skin pants, clinched waist jackets, goatskin shirts, double breasted suede shearling with shawl collar in a petite fit, pig suede soft silk nap sportswear, etc. Clothing leather is thin, versatile and almost silky and comes in a variety of eye catching colours viz. red, camel, goldmetallic, or olive. Even blue or green are no strangers in the rainbow shades. Animal prints, which are so popular in clothes, come to life as leather outfits. Relative to virtually all man made textiles, leather is very strong and has a high resistance to tears and punctures. The comfort provided by leather garments is due to leather’s ability to combine breathing and insulating properties. Leather is hot in summers and cold in winters but in reality, it adjusts constantly to its environment. This is because, leather is a natural product and it breathes freely maintaining a comfort level in all seasons. Even in warm climates, leather is wearable and bearable. Leathers are constantly improved, as new finishes and colours are created. The richness and variety of leathers available to everyone at reasonable prices would be the envy of ancient potentates. Leathers and suedes can be dyed, glazed, buffed, polished, foiled, embossed, printed, patented, beaded, sparkled, perforated, stencilled silk screened, woven fringed or embroidered, to create a variety of looks. Leather is tanned and finished so that the grain side has a smooth rich surface. In the literature export barriers have been operationalzed as export obstacles/ inhibitors, problems or impediments. They all refer to, attitudinal, structural,
operational and other international operations (Leondidou, 1995). This definition of export barriers includes several factors, which go beyond the marketing domain. Lall (1991, p.139) restricted his definition only to marketing barriers. He defined marketing barriers as “those gaps, which need to be filled before the competitive producer becomes a successful exporter.” Since the focus of this research is on export marketing problems the latter definition is suitable to this study.
EXPORT AND ITS CHALLANGES
Export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade. Export goods or services are provided to foreign consumers by domestic producers. Export is an important part
of international trade. Export of commercial quantities of goods normally requires involvement of the customs authorities in both the country of export and the country of import. The advent of small trades over the internet such as through Amazon and eBay have largely bypassed the involvement of Customs in many countries due to the low individual values of these trades. Nonetheless, these small exports are still subject to legal restrictions applied by the country of export. CHALLENGES: Exporting to foreign countries poses challenges not found in
domestic sales. With domestic sales, manufacturers typically sell to wholesalers or direct to retailer or even direct to consumers. When exporting, manufacturers may have to sell to importers who then in turn sell to wholesalers. Extra layer(s) in the chain of distribution squeezes margins and manufacturers may need to offer lower prices to importers than to domestic wholesalers.
PROBLEMS AND KEY CHALLENGES ON THE BASIS OF REVIEW
Sales & Marketing: Heavy dependence on a few customers; Lack of in-house design capability; Complete dependence on customer for design; Multiple iterations during sampling increases overhead costs; Lack of standardisation of specifications.
Production: Production planning and order fulfilment of large number of articles/styles with reducing lead times; High wastage of leather during production; Low productivity of manual intensive processes. Material Management: Availability of leather and accessories as per planned date; Supply order visibility; Inefficient material management. Finance, HR & Other Processes: Accounting not integrated to key business processes; Availability and affordability of skilled IT manpower.
EXPORT BARRIERS AND PROBLEMS
In this are studies are bedeviled by a research predilection for comparative studies which explore the actual problems and obstacles facing firms who had already exporting. The barriers found out are: 1. Insufficient finance 2. Foreign government restrictions 3. Insuffecint knowledge about foreign pricing
4. Inadequate product distribution abroad 5. Lack of foreign market connection
RESEARCH ON CHALLENGES AND BARRIES ACCORDING TO REVIEW
Studies traditionally consider the benefits of trade. But cross-border trade also involves costs, some external to the management of the firm — associated with moving the product across space and jurisdiction to a foreign customer — and some within the firm itself. These costs represent challenges, if not barriers, to an exporter. There is a large quantity of research about the export experiences and perceptions of small and medium sized enterprises. Leonidou8 consolidates information on 39 perceived barriers to SME internationalization, providing a comprehensive list of these barriers separated into overarching categories: internal (including informational, functional, and marketing) and external (including procedural, governmental, task and environmental). He identifies the following as the most important barriers based on a survey of 32 empirical studies of small business exports: limited information to locate or analyze markets inability to contact overseas customers identification of foreign business opportunities excessive transportation and insurance costs different foreign customer habits and attitudes poor or deteriorating economic conditions abroad political instability in foreign markets
BENEFIT OF EXPORT MARKETING
The benefits include: increased revenues and profits alternatives to stagnant domestic markets improving efficiency 28
attracting better employees and shareholders Most studies also cite the importance of exporting in an increasingly global market.10 Research elsewhere has attempted to quantify the substantial costs of moving products from origin to destination in a foreign market, costs over which the firm itself has little or no control.11 The researchers classify them into tariff and non-tariff barriers, and ‘inferred’ border costs such as shipping and transport time, border security, language, currency conversion and market information. For example, two experts in this area, Andersen and van Wincoop, found that “inferred border costs appear on average to dwarf the effect of tariff and non-tariff policy barriers.”12 In this chapter we address the challenges to exporting that are subject to managerial discretion. These focus on the internal costs of pursuing the export market arising from actions and adjustments that position and maintain the firm’s export capacity — the costs of positioning the firm to become an exporter. Managerial discretion is not an absolute. In some instances such as what and how much to produce, labour inputs, having an export oriented business plan, networking, and establishing an organizational structure congruent with exporting, involve decisions over which management has substantial control. In other areas such as finding distribution channels, acquiring market information, finding financial resources, and dealing with risk and uncertainty, managerial options are more constrained. However, all of these challenges — integrally related to the export decision — involve costs.
WHAT ARE THE CHALLENGES TO EXPORTING?
So what are the organizational adjustments and the various costs linked to the export challenge? To investigate these, the survey presented respondents with an identical set of statements applied first to the US market and, second, to other international markets. For ease of reference, we have noted after each statement the type of cost represented according to categories often used in empirical research. The statements were:
It is difficult to obtain the added financial resources. (search costs)
It is difficult to find the right distribution channels. (search costs) We lack a network of contacts in the United States. (for the US market)
We lack a network of contacts outside of Canada and the US. (for non-US
export markets) (search costs)
It is difficult to obtain reliable market information. (search costs) It is difficult to hire qualified labour. (training and search costs) The company is short of managerial expertise. (search costs) There is little or no interest from management. (switching costs) - The company is pre-occupied with other geographical markets.
We are concerned about losing control over our products. (legal costs and loss of profitability) There is too much added risk and uncertainty. (increased profit variability
PROBLEMS IN DOCUMENTS
According to research papers of (Aaker, 1988; Porter, 1980) and (Katsikeas and Morgan, 1994) problems found out in documentation are:
1. Country of destination not specified or invalid in header section 2. There was error in selecting valid pin number for declerant 3.
Missing or invalid description of goods
4. Missing or invalid gross wt kgs 5. Pin failure in summary section
The methodology for my research design was Exploratory as well as descriptive. Study was conducted on both the primary data as well as secondary data. But main focus was on primary data. The methodology adopted by me is as follows: Direct consultation- This includes direct interaction with staff of the organization regarding the problems that I may encounter during my research. And this also consisted of verification of suggestions and recommendation given by me in my research report. Data collectionData was mainly collected from the internal reports of the
compay and gathering further information; I have also referred to the various secondary sources. Collection of data : Primary sources: - Handouts given by the company guide Secondary sources: - Internet sources The procedure for conducting the study requires a lot of attention be paid for, it has direct Bearing on securing reliable and meaningful information. It is because of this reason that the Research Methodology adopted for the study needs to be elaborated upon. At the same time research methodology helps the researcher to give his/her reasons for adopting a certain course of action, while ruling out the others. With this idea in mind, the methodology has been separately mentioned in this study. This study is micro in nature. Basically information and data for this project has been collected from primary sources i.e. from various departments of organization. 31
For collection of information needed for the project work, method of personal meetings was used and but formal questionnaire was not made. Meetings were held in person with functionaries of ABC leathers exports limited at various levels in order to know type of information they need to take decision, its availability with regard to time, accuracy, cost, reliability, utility and system of collection of information both from internal and external sources. Interaction with functionaries at various level were made to obtain information from their unpublished records. Various formats used in preparation of reports were collected from different departments and significance of each term used in each format was understood. Many problems like non-availability of information , biased information, concealment of facts And problems etc. arising due to cross-checking, were confronted during collection of facts and Figures due to time constraint, the study has been restricted to the documentation section of ABC leathers.
DATA ANALYSIS AND FINDINGS
Leather Industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, growth and exports. There has been increasing emphasis on its planned development, aimed at optimum utilisation of available raw materials for maximising the returns, particularly from exports. The leather industrial sector comprises of: a) tanneries (where raw hides and skins are converted into leather) b) factories transforming leather into a variety of consumer products such as footwear, garments and outerwear, and assorted leather goods such as wallets, passport cases, key chains, handbags and brief cases. Apart from the quality of raw material, the process of its conversion into leather and, later, of the design, product development and process of manufacture, of products play a key role in adding value to it.
SOME FEATURES OF INDIAN LEATHER INDUSTRY
The Government policies on leather and leather product export started changing from 1974. Priorities were given for export of value added goods. From the year 1991 onwards only finished leather were exported and export of raw or semifinished leather was banned; Many tanners started setting up factories for manufacturing leather products after 1991-92 like shoe uppers, shoes, garments and leather goods. Similarly many shoe and garment manufacturers began to seek backward linkage, by taking on lease or setting up tanneries. This is a unique development in India, a tanner becoming product maker and the product sector setting up tanneries or leasing out tanneries;
At the same, as incentive to the exporters, the import duties on capital goods have been reduced; Until 2002, the leather sector was reserved for small scale sector and this may have prevented Foreign Direct Investment (FDI) in this sector. The FDI in this sector from August 1991 to December 2005, is US$ 51.84 millions. This is only 0.15% of total FDI inflows and ranked at 30; Today the industry ranks 8th in the export trade in terms of foreign exchange earnings of the country; India is largest livestock holding country; The Indian leather sector meets 10% of global finished leather requirement. The export destinations of Indian finished leather and leather products in 200607 were as follows
The main production centres for leather and leather products are the following: Tamil Nadu – Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul and Puducherry West Bengal – Kolkata
Uttar Pradesh – Kanpur, Unnao, Banther, Agra and Noida Punjab – Jallandhar Tamil Nadu accounts for about 40% of India’s exports and has about 60% of tanning capacity. The Indian leather industry employs about 2.5 million workforce and 30% of the workforce is women. The industry has a very strong institutional set up. The following are the major institutions cater to the industry: CLE Council for Leather Exports (Under Ministry of Industries and Commerce); CLRI Central Leather Research Institute (Under Department of Scientific and Industrial Research, Ministry of Science and Technology) AISHTMA, All India Skin Hide Tanners Merchants Association ISF, Indian Shoe Federation IFLMEA, Indian Finished Leather Manufacturers and Exporters Association CFTI Central Footwear Training Institute ILIFO, Indian Leather Industry Foundation Regional Tanners Associations Common Effluent Treatment Plants Special Purpose Vehicles promoted to implement certain infrastructure projects IILP, Indian Institute of Leather Products UPLIA, Uttar Pradesh Leather Industries Association CLCTA, Kolkata Leather Complex Tanners Association 35
AFMEC, Agra Footwear Manufacturers and Exporters Association
STRUCTURE OF INDIAN INDUSTRY
In India, the fact that this industrial sector remained, by and large, reserved for the small scale sector* until as recently as 2002, is reflected in its structure. The production base of leather and leather products in the country is presented below: Production base of leather and leather products: Sector / Product 1 2 Tanneries – Leather Footwear – Leather Footwear – Non leather Garments and outerwear Assorted leather goods Saddlery and Harness Leather gloves Estimated annual production capacity 2.5 billion sq.ft 1009 million pairs (includes about 100 million pairs of shoe uppers) 1056 million pairs Household Sector 10% 60% Small sector 35% 25% Medium & Large scale sector 55% 15%
20 million pieces
120 million pieces
12 million pieces
100 million pieces
*A small scale industrial unit is one where the investment in plant and machinery does not exceed Rs. 10 million. *In respect of leather, while a sizeable percentage of goat and sheep skins as also calf skins is processed in better organised modern tanneries of Tamilnadu, a predominant share of the heavy hides such as of cow and buffalo is processed in Kanpur and Kolkata. The quality of finished skins produced in India is highly regarded globally; 37
however, processed heavy hides have limited range and average finish. Kanpur has emerged as the main centre of buffalo leather while Kolkata specializes in cow leather. In the past few years, modern tanneries have come up in Kanpur and Kolkata too for processing hides. New products such as upholstery leather are now manufactured by tanneries in Kanpur and Kolkata.
The historical review of the performance of the industry over the past three and a half decades is presented in the following table Performance of Indian Leather Industry (in US$) 1972 Total export Domestic market Total turnover Global export India’s % on global export 239.88 162.50 402.38 4000 4.00 1985 552.10 320.00 872.10 16000 3.44 1995 1752.38 1145.00 2897 54350 3.22 2005 2421.59 2045 4466 75260 3.22 2007 2982 2600 5582 n.a
Current output and exports
The current (2007) value of output of this industrial sector is estimated at over Rs. 250,000 millions per annum. Of this, export accounted for Rs. 134,920 millions in 2005-07 and the remainder, by the domestic market. The main products of leather sold in the domestic market are footwear and assorted leather goods. There is a very small demand for leather garment in the colder regions of the country. It may be noted that whereas the export figures are accurate, based on customs data, the domestic consumption figures are estimates. 38
Current export basket of Indian leather industry
Product category Finished leather Leather footwear Footwear components Leather garments Leather goods Saddlery and harness Non-leather footwear Total Exports, US$ mln 688.05 950.90 212.65 308.98 690.66 81.85 48.69 2981.79 % on total exports 23% 32% 7% 10% 23% 3% 2% 100%
Environmental compliance of the Indian tanning industry
Funding support for modernizing manufacturing facilities Funding support for establishing design studios Duty free import of raw materials More than 95% of the tanneries in India have pollution control devices. The clustered manufacturing has resulted in common effluent treatment plants. There are 19 common effluent treatment plants are operational in India and out of which 14 are operational in Tamil Nadu. More than 150 individual effluent treatment plants are operational in isolated tanneries and locations where the common facilities are not possible In Tamil Nadu alone about Rs.225 crores (US$ 56.25 million) have been invested in pollution control devices since 1996 In order to comply with recent legal compliance, the tanneries in Tamil Nadu have to meet zero liquid discharge norms, being this norm is not applicable even in industrialized countries. This will result in increased product cost of about 12% over the cost of other tannery centres within India or outside India. 39
In order to meet the additional expenditure, Government of India is assisting the common effluent treatment plants by capital grants upto 75% of investment cost which will meet the recent legal requirement. Under this programme, project with Government grant upto Rs.1000 millions are being implemented. For the remaining production centres in Tamil Nadu, project proposals have been submitted to Government with an project outlay of Rs.3000 millions. This has resulted in freezing of capacity in tanneries in Tamil Nadu. As of now the increase in capacity of tanneries located in Tamil Nadu is without a solution.
Challenges for the tannery sector
Increased cost of production per unit area of finished leather due to stringent environmental norms Expansion of production capacities – issue in Tamil Nadu due to local laws despite compliance Increasing demand of raw material – raw hides, skins and semifinished leathers Low level of technology in small tanneries No specific dedicated industrial areas for leather sector in Tamil Nadu Poor capacity utilization in most tanneries leading higher financial cost and overheads
Challenges in leather product sector
Varying levels of technology in the factories depends on the size of the factories Low quality of shoes – threat of shift in production to other areas or countries where wages levels are low if the quality is maintained at same level Most companies work on subcontract basis – design, component selection and methods of production are given by the buyers and do not provide their own fashion collections, however companies are able to make prototypes based on ideas provided by the buyer Strong requirement to increase quality as well as quantity Availability of right raw material (finished leather) at right time Under developed designs for footwear components sector Absence of own collections and poor development of footwear components, particularly for women’s footwear – Market size of women’s footwear in the world is 63% of total footwear market, but the share of women’s footwear exports out of India’s total footwear is only 34% Meeting manpower requirement under the state of affairs of rapid industrialization
Government policies in support of the industry
The entire leather sector is now de-licensed and de-reserved, paving way for expansion on modern lines with state-of-the art machinery and equipment 100% Foreign Direct Investment and Joint Ventures permitted through the automatic route
100% repatriation of profit and dividends, if investments made in convertible foreign currency. Only declaration to this effect to the Reserve Bank is required. Promotion of industrial parks (one leather park in Andhra Pradesh, one leather goods park in West Bengal, one footwear park in Tamil Nadu and one footwear components park in Chennai).
Features Of Leather Sector In India
Employs 2.5 million persons. A large part (nearly 60-65%) of the production is in the Small/Cottage Sector. Annual export value poised to touch about 2 billion US dollars. Amongst top 8 export earners for India. Endowed with 10% of the world raw material and export constitutes about 2% of the world trade. Has enormous potential for future growth. Very high value addition within the country.
SWOT Analysis of Indian Leather Industry
SWOT analysis for leather sector based on the information already provided in this section is given below. STRENGTHS Existence of more than sufficient productive capacity in tanning. Easy availability of low cost of labour. Exposure to export markets. Managements with business background become quality and environment conscious. Presence of qualified leather technologists in the field. Comfortable availability of raw materials and other inputs. Massive institutional support for technical services, designing, manpower development and marketing. Exporter-friendly government policies. Tax incentives on machinery by Government. Well-established linkages with buyers in EU and USA.
WEAKNESSES Low level of modernisation and upgradation of technology, and the integration of developed technology is very slow. Low level of labour productivity due to inadequate formal training / unskilled labour. Horizontal growth of tanneries. Less number of organised product manufacturers. 44
Lack of modern finishing facilities for leather. Highly unhygienic environment. Unawareness of international standards by many players as maximum number of leather industries are SMEs. Difficulties in accessing to testing, designing and technical services. Environmental problems.
OPPORTUNITIES Abundant scope to supply finished leather to multinationals setting up shop in India. Growing fashion consciousness globally. Use of information technology and decision support software to help eliminate the length of the production cycle for different products Product diversification - There is lot of scope for diversification into other products, namely, leather garments, goods etc. Growing international and domestic markets.
THREATS Entry of multinationals in domestic market. Stiff competition from other countries.(The performance of global competitors in leather and leather products indicates that there are at least 5 countries viz, China, Indonesia, Thailand, Vietnam and Brazil, which are more competitive than India.) Non- tariff barriers - Developing countries are resorting to more and more non – tariff barriers indirectly. 45
Improving quality to adapt the stricter international standards. Fast changing fashion trends are difficult to adapt for the Indian leather industries. Limited scope for mobilising funds through private placements and public issues, as many businesses are family-owned.
COUNTRY WISE ANALYSIS The major markets for Indian leather products are Germany with a share of
14.28%, Italy 13.20%, UK 11.42%, USA 9.56%, Hong Kong 6.23%, France 6.23%, Spain 5.99%, Netherlands 4.22%, U.A.E. 2.42%, Denmark 1.73%, Belgium 1.53% and Australia 1.52%. These 12 countries together accounts for nearly 78.33% of India’s total leather products export.
Overall positive growth is seen in markets like Germany 5.24%, USA
12.22%, UK 0.03%, France 13.57%, Spain 1.50%, Netherlands 13.23%, Australia 11.87%, and Denmark 26.23%.
Overall decline is seen in markets like Hong Kong 15.89%, Italy 1.55%,
Russia 29.38%, Greece 23.92%, and South Africa 19.64%.
Major importing Countries of leather products of “ABC LEATHERS” (In Million US$) Country April-Feb 2007-08 Germany UK USA France Spain Netherlands UAE Denmark Australia Sweden Switzerland Finland Italy Hong Kong 452.67 381.03 286.84 182.93 197.07 124.47 67.62 45.68 45.24 35.90 23.34 12.69 447.58 263.67 April-Feb 2008-09 476.41 381.16 321.90 207.76 200.02 140.94 80.73 57.66 50.61 36.57 24.49 14.47 440.64 222.03 5.24% 0.03% 12.22% 13.57% 1.50% 13.23% 19.39% 26.23% 11.87% 1.84% 4.91% 13.97% -1.55% -15.89% % Variation
EXPORT PERCENT OF “ABC LEATHERS”
The export of leather constituted 65 per cent of the total exports of leather sector during 1995-99 whereas the export of other value added goods was 22 per cent. However, during 2002-2007 the exports in leather contributed 72 per cent of the total exports of leather sector and the export of leather products including bags and leather garments contributed 48 per cent Exports of leather and leather products increased by 11.31 percent during the first eight months, April-November, of the fiscal 2007-08, owing to an 18 percent rise in exports of leather footwear and increased access to the markets. According to the latest export data released by DGCI, Kolkata, and the Council for Leather Exports (CLE), during these eight months, exports of leather and leather products touched $2211.24 million against $1986.50 million in the previous fiscal, an increase of 11.31 percent. In rupee terms, the earnings declined 1.35 percent from Rs 9084.33 crore to Rs 8961.79 crore. With the export of $917.66 million, the southern region had 41.50 percent in the total leather exports, followed by the western region ($426.21 million, 19.27 percent) and the eastern region ($320.72 million, 14.50 percent). Export of footwear (leather, footwear components, and non-leather footwear) increased from $761.99 million to $912.57 million. According to data compiled by CLE, in dollar terms, leather footwear alone grew 18.72 percent, from $586.32 million to $696.10 million and footwear components by 29.10 percent to $184.01 million from $142.54 million. Export of non-leather footwear, a segment dominated by China, declined by 2.01% from $33.13 million to $32.4 million. Finished leather exports increased by 3.20% to $495.30 million from $479.96 million. Export of leather garments increased by 8.34% to $234.03 million from $216.02 million. Leather goods exports rose by 4.94% to $499.44 million from $475.94.
CLE data shows: led by Germany, 10 countries account for 75.36% of India’s leather exports. With a share of 13.9%, Germany continues to be the main market, followed by Italy (13.30%), the UK (12.20%), the US (9.53%), Hong Kong (8.05%), Spain (5.79%), France (5.33%), Netherlands (3.7%), UAE (11%), and Australia (1.42%).
I had done my summer internship from ABC LEATHERS. In ABC LEATHERS there are following departments: 1. Merchandising department 2. Production department 3. Packing department 4. Shipping department 5. Finishing department 6. Accounts department 7. HR department SHIPPING DEPARTMENT- My Internship taken in shipping department. Shipping is physical process of transporting goods and cargo. Every product ever made, bought, or sold has been affected by shipping. Despite the many variables in shipped products and locations, there are only three basic types of shipments: land, air, and sea. In this shipping department there is 8 employees one is shipping head and others are shipping executives. Shipping department have the responsibilities of managing the shipments, Delivery of shipments on ti me, To manage all export documents, to calculate the size of shipment according to the products. The use of containers in export shipments makes the transport and handling easier and faster. The crane and gantry are commonly used in handling containers. The forklift is also used at the docks and container terminals to move the 20' and shorter dry cargo containers, which are equipped with forklift pockets---fork pockets or tine pockets. The ports worldwide handle over 100 million TEUs annually. The unit TEU (twentyfoot equivalent unit) is used to express the relative number of containers based on the 50
equivalent length of a 20' container. For example, 100 containers of 20' is 100 TEUs, while 100 containers of 40' is 200 TEUs. The container ships used in the international traffic are designed with the cells (compartments with cell guides) resembling a honeycomb wherein the containers are placed, thus named cellular container ships. The ships are bigger and faster nowadays, especially those used in the deep-sea voyage (long haul). Those rated below 20 knots are common in the short-sea voyage (short haul). The knot is a unit of ship's speed, being one nautical mile per hour. One nautical mile is 1.852 kilometers. A ship that steams at 20 knots is moving at a speed of about 37 kilometers per hour. Some cellular container ships in the 20 to 23 knot range can accommodate 2,000 to 3,000 TEUs. Some rated 24 knots have a carrying capacity of 4,000 to 4,900 TEUs and load of 56,000 to 75,000 metric tons. The length of the vessel can be about 900' (275 meters) and the beam---the widest part of a ship---can be about 125' (38 meters). The size of vessel is huge compare to a standard football field having a goal line of 300' (91.44 meters) and an end line of 160' (48.77 meters).
OBJECTIVES OF SHIPPING DEPARTMENT1. The act or business of transporting goods. 2. The body of ships belonging to one port, industry, or country, often referred to in aggregate tonnage. 3. Passage or transport on a ship -Mine mentor is Mr., Sanjeev kumar shipping manager. He helped me a lot during whole internship. He explained me all the all the problems regarding shipping and other departments also. He explained me all the methods and programming of all the departments. He enhance my knowledge through practical exercises.
PURPOSE OF INTERNSHIP:
1. How the whole organization works 2. What is the roles and problems of shipping departments 3. Contribution of shipping department 4. Analyze the strategies for the growth of leather’s exports 5. Problems, challenges and solutions
1. A detailed study on whole organization 2. To analyze the documents and arranging transport 3. To find out problems of whole organization and how to improve them 4. To find out the challenges according to different modes of
KEY CHALLENGES AND PROBLEMS
The leather exports firms which witnessed a growth 20% in the first half of 2009 got dented by the global slowdown in the subsequent months. The main reason is attributed to the decline in orders from Western markets, especially the US and UK. The European Union and the US are the two biggest markets for ABC LEATHERS which stand at 65% and 25% respectively in terms of India's export share of Leather products. Leather exporters are being inextricably caught in a situation where buyers are delaying fresh orders besides delaying their payments on existing orders and on top of that they are also asking for huge discounts. It seems that if the problem is not addressed on time, it would adversely affect the small scale and tiny industries and also have an impact on big businesses, leading to job-loss and closure of units over the next few months.
Sales & Marketing: Heavy dependence on a few customers; Lack of in-house design capability; Complete dependence on customer for design; Multiple iterations during sampling increases overhead costs; Lack of standardisation of specifications. Production: Production planning and order fulfilment of large number of articles/styles with reducing lead times; High wastage of leather during production; Low productivity of manual intensive processes Material Management: Availability of leather and accessories as per planned date; Supply order visibility; Inefficient material management Finance, HR & Other Processes: Accounting not integrated to key business processes; Availability and affordability of skilled IT manpower The challenge now is to internalise the negative externalities generated by environmentally damaging by-products. Over the last two decades, the leather processing sector has come under greater regulatory scrutiny by governments and consumer advocacy groups in the industrial economies. Stringent regulations forced the industry to shift to their developing country counterparts with less stringent norms, which led to rapid growth of tanning capacity in these countries, initially. But later, with the rise of new environmental practices such as eco-labeling and the ban by major leather importers of carcinogenic chemicals such as Pentacholorophenol (PCP) and azo dyes and even boric acids, they are now forced to make costly changes to their production processes. Firms have responded to such challenges. One response is a move towards more value-added production, instead of focusing on the export of semi-finished leather. Significantly, a majority of the firms are exposed to potential foreign competition, and their problems are compounded by limited access to finance, cumbersome bureaucratic processes in setting up, operating and growing a business, poor infrastructure and inadequate institutional structures. The removal of these constraints is a prerequisite for ensuring efficient operations in the sector. 53
Most reasons for the high level of pollution by the sector can be tracked to the production methods. Although manycleaner processes for tanneries have been developed, these technologies are yet to be adopted widely. The government has also introduced several policy changes, but such efforts alone can’t be successful, unless there is a serious effort from the industry. In 1989-90 and 1994, Germany banned leather items containing more than 5 mg/kg of PCP and treated with azo dyes, respectively. However, the government quickly banned the production of PCP and azo dyes. This led to relatively smooth compliance, and helped minimise the cost of switching to the new dyes to small tanneries. While the industry and the government have responded to the challenges thrown to them in a number of ways, several key issues, which would help the sector to propel towards prosperity, are still left unanswered. The study identifies major concerns, including better access to finance, policies to attract FDI in tanning, infrastructure development in leather clusters, rationalisation of excise, customs and other internal revenue policies.
I undergo 6 weeks training under ABC LEATHERS, which is a export firm. In this organization during 10 days I studied about the all departments, how each departments and then work in shipping departments in which I studied about all export documents and then rest days I analyze the problems of organization. 1. The summer training is a eye opener for me as it provided the first hand experience of how work is done in international trade. 2. It brought confidence in me 3. It gives new experience related to work in export firms 4. It gives me experience how the organization works 5. It gives me experience how to analyze the problems and solutions
Computer aided design: The leather companies also need to work with computer aided design software to enable their designing processes. Quality Testing Applications: A range of application exist which can be effectively be used for quality testing of leather and for capturing other essential characteristics There should be more use of information technology and new advance technologies to make documentation work more easier n efficient.
STRATEGIES FOR ENHACING LEATHER FIRMS
1. overcome the disadvantages of economies of scale 2. access skilled and educated labour 3. have better cost effectiveness due to sharing of common costs
4. have quicker dissemination of information leading to better responsiveness to
5. increase competitiveness by sharing best practices in the areas of
organizational capabilities technological innovations, flexible structure and faster decision making process. 6. have better negotiating power
Creating required infrastructure and long term plans
2. 3. 4. 5.
Providing subsidized term loans to exporters Treating US and Europe as focus market Innovative product design at competitive rates Government should increase the drawback rate, reduce delay in export incentives
6. 7. 8. 9.
Increase duty free import Increase of more information technologies Better system of HR deparment Training and development program should me more
The distribution should be more effective Develop and implement opportunities to establish personal contacts and promote the use of personal contacts in trade planning seminars and promotional materials;
encourage the use of agents and distributors, and ensure that resources exist on the internet to help exporters make connections,
particularly in non-US markets. 12. Help firms find the labour required for exporting endeavours. Options could include
matchmaking services or financial incentives for either firms or potential employees. 13. 13.Recognize in trade education and
promotional efforts that it is more difficult to begin exporting to non-US markets than to the US market. 14. 14.Create mentoring programs or opportunities for experienced exporters to share their skills and experiences with others.
15. Work with all trading partners, but especially those in the US, to improve the speed and ease with which Canadian exports enter foreign markets and to provide up to date, accurate, easily accessible customs information. Address the inconsistencies in border crossing procedures across the Western provinces.
http://www.scribd.com/doc/5266727/INTEGRATION-MERCHANDISINGMANAGEMENT http://www.thetimes100.co.uk/theory/theory--aims-functions-productiondepartment--206.php http://www.indianindustry.com/trade-information/export-procedures.html
_ National Institute Of Occupational Health (http://www.ijoem.com) _ Exime Bank: Research Brief (http://www.eximebankindia.com) _ International Council of Tanners _ Indian Investment Centre _ India Brand Equity Foundation (http://www.ibef.org) _ All India Association of Industries _ Science Tech Entrepreneur E-Zine (DST & FICCI) _ Federation of Indian Chambers of Commerce & Industry January 2005 _ United Nations Development Programme (NLDP) _ BIOONE Online Journals Access Control (http://www.bioone.org) _ UNIDO Report: Leather & Leather shoes cluster of Ambur _ Council for Leather Exports (
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Product Group- Leather and Leather Products Product Code: 64 Sl. No. 1 2 3 4 5A 5B 6 7 8 9 10 11 12 13 14 15 16 17 Description All types of leather garments including Coats/Jackets Children Leather Shoes including in CKD/SKD Children Rubber and Canvas Shoes with moulded soles including in CKD/SKD Finished Leather for general purpose / shoe upper lining/ garments Gents Leather half/ full Shoe Uppers including in CKD/SKD Gents leather half/full boot uppers including in CKD/SKD Gents leather boots including in CKD/SKD Gents/ladies leather sandles uppers Gents leather Sandles with PU Soles/ Rubber sole/PVC Soles Gents leather shoes including in CKD/SKD Gents Rubber and Canvas Shoes with moulded sole including in CKD/SKD Industrial Hand gloves Ladies leather shoes including in CKD/SKD Ladies leather boots including in CKD/SKD Ladies leather shoe/ boot uppers Ladies leather sandles with PU sole/ Rubber Sole/ PVC sole Ladies Rubber and Canvas shoes with moulded soles including in CKD/SKD Leather bags, all sorts (like Handbags, shoulder bags, shopping bags, portfolio travel bags, school bags, ladies bags, mens bags, Brief cases, Attache cases, Pouch bags, Clutch bags, Evening bags, Rucksacs, Ladies folio, Bags. Leather golf gloves Leather waist belts. Leather wallets, Purses, Key cases, Card holders, Coil purses, Bill folds , Spects cases, Toilet cases, Passport covers, Cigarette cases, Lipstick cases, Cosmetics cases, Pen cases, Memo cases, Cheque book covers, Ring binders, Book covers, Tie cases, Vanity cases, Desktop sets, Camera cases, planners. Rubber and Canvas footwear with rolled soles. Sports shoes with leather upper and moulded sole/ PVC sole including in CKD/SKD. Unstiched Gents leather shoe uppers PU Unit sole Leather portfolio DEPB Rate 6 6 8 8 6 6 7 7 6 7 8 5 7 7 6 6 7 6 Value Cap
18 19 20
6 5 6
21 22 23 24 25
7 7 6 8 6