Executive Summary Of Imperial Auto 3k6y2i

EXECUTIVE SUMMARY The Automobile industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. India has emerged as one of the world's largest manufacturers of small cars. According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki. Founded in 1969, Imperial Auto Industry today is a pioneer manufacturer and exporter in automotive tubing sector. Employing about 900 qualified people, it has manufacturing operations in 5 different plants in India & warehouses in Detroit and London. In 1990 IAI became supplier to the most OES like New Holland, Suzuki, DCM Toyota, JCB, Mahindra Nissan and other main players of the industry. With an ambition to become a globally recognized and financially strong company, IAI sustains an undisputed leadership in the Indian market. IAI is well established strong company and has heavily invested in several auto-parts plants in important automotive fields; each plant’s facilities meet international standards to assure the quality of the product at international level. The company policy is to ensure value for money to the customer, by providing products, which meet customer's requirement. IAI strives to achieve consistent improvement in quality through process control, adherence to quality system and safe and clean working environment. The report covers my objectives during the internship programme i.e were to study the supply chain management of Imperial Auto Industry, the Export Procedures and Export Documents that are required. During the internship programme I studied the various documents that are required for exports such as the documents required in case of shipment through Air / Sea, shipping bill, packing list, invoice and how the packaging and labelling is done. All the Inco were to be kept in mind as they play an important part in exports.

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Since my project is an experienced based project my research is an exploratory research because the objective of the exploratory research is to generate new ideas and insights. Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research focuses mainly on the discovery of new ideas and helps to determine the best research design, data collection method and selection of subjects. All the above mentioned things are discussed in detail in the following report.

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Automobile Industry in INDIA The Automobile industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads.

Chapter – 1

Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which attracted significant Indiaspecific investment by multinational automobile manufacturers. In February 2009, monthly sales of enger cars in India exceeded 100,000 units.

Introduction

Embryonic automotive industry emerged in India in the 1940s. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalisation and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated t ventures with Indian companies.

Exports India has emerged as one of the world's largest manufacturers of small cars. According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki. In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. 3

Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011.

In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export. The company said that the plant was a part of its plan to make India the hub for its global production business. Fiat Motors also announced that it would source more than US$1 billion worth auto components from India. In recent years, India has emerged as a leading centre for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its enger vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is deg a low-cost car for the Nissan-Renault alliance, which will market the product worldwide. NissanRenault may also domestic commercial vehicle manufacturer Ashok Leyland in another small car project. While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.

Rank wise Largest Automobile Manufacturers in India by Sales 1.

Maruti Suzuki

2.

TATA

3.

Hyundai

4.

Mahindra

5.

General Motors

6.

Honda

7.

Toyota 4

8.

Ford

9.

Fiat

10. Skoda

Chapter – 2 Industry Analysis

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Swot Analysis STRENGTH – •

India’s largest manufacturer of Fluid Transmission Products (‘FTPs’)

•

Multi location manufacturing facilities spread all over India to serve Domestic and International Customers

•

Being the major manufacturer in India, it has the advantage of holding the maximum percentage of market share.

•

The company has a very impressive customer portfolio including some of the automobile giants like – TATA, FIAT, HYUNDAI, CATERPILLAR, JCB, ESCORTS and to name a few.

WEAKNESSES – •

Being the sole manufacturer, the company have the burden to meet the global and domestic customer requirements.

OPPORTUNITIES – •

The Automobile industry in India is the seventh largest in the world with an annual production of over 2.6 million units in 2009.

•

By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. This provides the undue advantage to the company being the major manufacturer of automotive parts.

• Has made substantial investment in equipments to ➢ Manufacture FTPs for CRDi engines ➢ Fully automate the rubber hose manufacturing process 6

•

Recent t Venture between Imperial Auto Industries and Tokai Rubber of Japan has been a first investment in India by a Japanese hose maker ever.

THREATS – •

Threat of international automotive manufacturers entering into the market.

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Research Methodology Research is composed of two words Re – Search which means to search again and again or search for new facts or modify the older ones. Research process is systematic way to gain new knowledge.

Research Objectives are – • • • •

To discover new facts. To and test new facts. To analyse an event, process or phenomena and identify the cause and effect relationship. To develop new tools, concepts and different theories.

Research Methodology means system of models, procedures and series of techniques used to find the results of a research problem is known as Research Methodology.

Types of Research – •

Exploratory Research –

The objective of the exploratory research is to generate new ideas and insights. Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research focuses mainly on the discovery of new ideas and helps to determine the best research design, data collection method and selection of subjects. •

Descriptive Research –

The descriptive research studies are those which are concerned with describing the characteristics of a particular individual, or a group such as age, sex, education level, occupation or income. The objective of the study is to answer the “who, what, when, where and how” of the subject under investigation.

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•

Causal Research –

The causal design investigates the cause and the effect relationship between two variables. Suppose a manufacturer has sold his product at two points, T1 and T2. The sale in T2 is much higher than that in the previous year. During the year, the firm has also launched an advertising campaign for its product. The manufacturer is interested in knowing whether advertising has caused the increase in the sale in the year T2.

Since my project is an experienced based project my research is an exploratory research because the objective of the exploratory research is to generate new ideas and insights. Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research focuses mainly on the discovery of new ideas and helps to determine the best research design, data collection method and selection of subjects.

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Chapter – 3 Company Analysis

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History 1970s IAI started supplying to M&M, Telco, Kirloskar, FIAT, Ambassador etc. the only automotive players in that decade. 1980s Japanese collaborations like Maruti-Suzuki & LCVs from Mazda, Nissan, Toyota and Mitsubishi started manufacturing in India. IAI started supplies to Maruti Suzuki, DCM Toyota, Swaraj Mazda, JCB & Mahindra Nissan. For the first time, India experienced high volume manufacturing of Cars. For the first time, India experienced high volume manufacturing of Cars. 1990s Multinationals like New-Holland, Ford, FIAT, John-Deere, JCB, Hitachi, Mitsubishi, GM IAI took active participation in the emerging scenario & became a supplier most of the above OEs. 2000s Global sourcing from multinationals overseas is a great potential area, like JCB, John-Deere, New Holland, Cummins, Komatsu etc. IAI got status of approved global supplier from John Deere, Cummins is already exporting to some OE manufacturers overseas.

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Imperial Auto Industries Founded in 1969, IAI today is a pioneer manufacturer and exporter in automotive tubing sector. Employing about 900 qualified people, it has manufacturing operations in 5 different plants in India & warehouses in Detroit and London. In 1990 IAI became supplier to the most OES like New Holland, Suzuki, DCM Toyota, JCB, Mahindra Nissan and other main players of the industry. With an ambition to become a globally recognized and financially strong company, IAI sustains an undisputed leadership in the Indian market. IAI is well established strong company and has heavily invested in several auto-parts plants in important automotive fields; each plant’s facilities meet international standards to assure the quality of the product at international level. The company policy is to ensure value for money to the customer, by providing products, which meet customer's requirement. IAI strives to achieve consistent improvement in quality through process control, adherence to quality system and safe and clean working environment. QS-9000 Certified in the year 2000, ISO-14001 awarded in 2003 and TS-16949 certified in 2004 IAI has become the ultimate choice of the global market in the automotive sector.

Group Companies •

IAI Ltd. Chakan, Pune Brake / Fuel tubes - Fuel injection tubes Tubular cross - Sheet metal components Brake shoes for two wheelers

•

Imperial Auto Nylon Tubings Ltd., Pune (formerly known as Eagle Picher Imperial Auto Industries Ltd.) Extruded nylon tubes. Preformed automotive nylon tube assemblies in ready to fit condition

•

IAI Ltd. Ware Houses Pune – Lucknow – Jamshedpur

•

Overseas Warehousing Facilities ISO – Detroit, USA - HEL – London, U.K. 12

Company Philosophy  Ensure value for money to the customers.  Make products which meet / exceed customer expectations.  Treat work force as of a big family.  Run all business groups operations profitably.

Main Business Groups  Automotive Steel Tubing ○ Brake Tubes ○ Fuel Tubes ○ Fuel Injection Tubes ○ Over Flow Lines ○ Fabricated Tube Assemblies ○ Cross  Flexible Hoses ○ Fuel Hose Assemblies ○ Radiator Hoses ○ Brake Hose Assemblies ○ Hyd. High Pressure Hose Assemblies ○ Vacuum & Heating Hose Assemblies ○ Air Starting System Hoses ○ Automotive Fuel System ○ Related Components and Sub- Assemblies  Hydraulic Circuits or Industrial Equipment and Railway

Traction Locomotives

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Product Group

Quantity Unit pieces per year

Brake Hose Assemblies

1020000

Brake Tube

1500000

Fabricated Hose Assemblies

3780000

Fuel Hose

840000

Fuel Injection Pipes

2760000

Hydraulic Hose Assemblies

1800000

Low Pressure Flexible Hose Assemblies

5160000

Nylon Tube

260000

Rubber Hose

12000000

Teflon Hose

832000

PRESENT PRODUCTION IN NUMBER:

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Sales – Domestic & Exports Amount in - US $ (Million)

Particular s

FY 0203

FY 0304

FY 0405

FY 0506

FY 0607

FY 0708

FY 0809

FY 0910

Net Domestic Sales

15.77

19.71

26.72

37.23

58.66

70

64

99

15

Export Sales

0.21

0.43

3.06

7.22

12.7

23

16

27

Net Sales

15.98

20.14

29.78

44.45

71.36

93

80

126

Fig 1.1

Source – Imperial Auto Status Report

Fig 1.2

Source – Imperial Auto Status Report

As we can see in both the above graphs (Fig 1.1 and Fig 1.2) the net sales and the profits are directly proportional and are continuously increasing except for the year 2008 – 2009 because of the economic slowdown which affected the buyer’s indirectly causing decline in net sales of Imperial Auto. As we can see the increase in the net sales leads to increase the profit of the organization.

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Diversified Vehicle Mix

Segment

Engines

Customers

Cummins, International Truck and Engine Coproration,USA, John Deere, Deutz , Tata, Cummins and Kirloskar

Two Wheelers Bajaj Auto, Hero Honda, Yamaha, LML, Triumph Motorcycles and Piaggio

Cars

Tractors

Commercial Vehicles

Tata Motors, Maruti Suzuki, Hyundai Motors, Toyota Motors, FIAT , Mitsubishi & General Motors

New Holland, Mahindra & Mahindra, JohnDeere, Punjab Tractors, Escorts and TAFE

Tata Motors, Ashok Leyland and Eicher Motors

Fuel Pumps Mico Bosch Earthmoving equipment Caterpillar, JCB , L&T Case & Komatsu 17

Source – Imperial Auto Brochure

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Customer Policy IAI ensure value for money to the customer by providing products which meet customer's requirement. We shall strive to achieve consistent improvement in quality through process control, adherence to quality system and safe and clean working environment.

ENGER CAR COMMERCIAL [ TRUCKS ]

TRACTORS

ENGINES

ASHOK LEYLAND BAJAJ TEMPO EICHER MOTORS MAHINDRA & MAHINDRA SWARAJ MAZDA TATA MOTORS

EICHER

CUMMINS INDIA

ESCORTS HMT INTERNATIONAL TRACTORS

EICHER GREAVES M&M ( Peugot )

L&T JOHN DEERE MAHINDRA & MAHINDRA NEW HOLLAND PUNJAB ( SWARAJ) TAFE (EICHER)

SIMPSON & Co. SWARAJ ENGINES TATA CUMMINS

HEAVY EARTH MOVERS

TWO WHEELERS

EXPORTS

CATERPILLAR

BAJAJ AUTO

CATERPILLAR USA

ESCORTS

HERO HONDA

CUMMINS USA

Fiat HM Hyundai Maruti Suzuki Tata Motors Toyota

JCB

INTERNATIONAL TRUCKS USA

L & T CASE

JCB UK

JOHNDEERE

LISTER PETER UK PIAGGIO ITALY

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TRIUMPH UK

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Competitors DOMESTIC RUBBER HOSE COMPETITORS 1.

Heliflex Hydraylics & Engg Co.

2.

Super Hoze

3.

Evershine Rubber Pvt. ltd.

4.

Deep Jyoti Rubber Pvt. ltd.

INTERNATIONAL COMPETITORS 1. Gates corporation 2. Teleflex COMPETITORS OF AUTOMOTIVE PIPES • DOMESTIC COMPETITORS 1. SUPERIOR STEEL OVERSEAS 2. AADNI TECH • INTERNATIONAL COMPETITORS 1.

Polymeric flexible hose and tubing

2.

Tele flex

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Supply Chain Management It is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

Chapter – 4 Supply Chain Management

The key supply chain processes – • •

• • • • •

•

Lead time to manufacture Demand management & Order fulfilment Procurement Manufacturing flow management/ Outsourcing/partnerships Supplier relationship management Customer relationship management Customer service management 23

Lead time to manufacture Different products have different lead times. It depends upon the manufacturing capacity and demand management of the company in order to fulfil the needs of their final consumers.

Procurement process Strategic plans are drawn up with suppliers to the manufacturing flow management process and the development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship where both parties benefit, and a reduction in time required for the design cycle and product development. Also, the purchasing function develops rapid communication systems, such as electronic data interchange (EDI) and Internet linkage to convey possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers involve resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers on matters of scheduling, supply continuity, hedging, and research into new sources or programs.

Manufacturing flow management process The manufacturing process produces and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency in meeting customer demand.

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Outsourcing/partnerships This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage, and outsource everything else. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, managing and controlling this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally, with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.

Customer service management process Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the source of customer information. It also provides the customer with real-time information on scheduling and product availability through interfaces with the company's production and distribution operations. Successful organizations use the following steps to build customer relationships: •

Determine mutually satisfying goals for organization and customers

•

Establish and maintain customer rapport

•

Produce positive feelings in the organization and the customers

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Electronic Data Interchange (EDI) Is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents from one computer system to another, i.e. from one trading partner to another trading partner. It is more than mere e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages. The National Institute of Standards and Technology in a 1996 publication defines electronic data interchange as "the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media." EDI can be formally defined as 'The transfer of structured data, by agreed message standards, from one computer system to another without human intervention'.

Advantages – •

Saves Money –

Save company money by providing alternative to or replacing information flows that require a great deal of human interaction and materials such as paper documents, meetings, faxes, etc. EDI and similar technologies allow a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry. •

Reduced Errors –

Another advantage of EDI is reduced errors, such as shipping and billing errors, because EDI eliminates the need to rekey documents on the destination side. •

Speed –

One very important advantage of EDI over paper documents is the speed in which the trading partner receives and incorporates the information into their system 26

thus greatly reducing cycle times. For this reason, EDI can be an important component of just-in-time production systems.

Disadvantages –

•

One of the most significant barriers is the accompanying business process change. Existing business processes built around slow paper handling may not be suited for EDI and would require changes to accommodate automated processing of business documents. For example, a business may receive the bulk of their goods by 1 or 2 day shipping and all of their invoices by mail.

“The existing process may therefore assume that goods are typically received before the invoice. With EDI, the invoice will typically be sent when the goods ship and will therefore require a process that handles large numbers of invoices whose corresponding goods have not yet been received.”

•

Another significant barrier is the cost in time and money in the initial set-up. The preliminary expenses and time that arise from the implementation, customization and training can be costly and therefore may discourage some businesses.

•

Increased efficiency and cost savings drive the adoption of EDI for most trading partners. But even if a company would not choose to use EDI on their own, pressures from larger trading partners (called hubs) often force smaller trading partners to use EDI.

“An example of this is Wal-Mart’s insistence on using EDI with all of its trading partners; any partner not willing to use EDI with Wal-Mart will not be able to do business with the company.”

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28

29

Window for EDI and Dispatch

Transit Receive

30

Out Look

Customer wise Payment Outstanding

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Exports Management The term "export" is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer". In International Trade, "exports" refers to selling goods and services produced in home country to other markets. In today’s increasingly globalised world the annual value of international trade in the form of exports and imports is estimated to exceed $12 trillion. Exporting is crucial for a nation’s growth, competitiveness and employment.

Chapter – 5

Export Management

Advantages to consider: • • • • • • • • • •

Enhance your domestic competitiveness Increase sales and profits Gain your global market share Exploit international trade technology Reduce dependence on existing markets Exploit international trade technology Extend sales potential of existing products Stabilize seasonal market fluctuations Enhance potential for expansion of your business Sell excess production capacity

•

Maintain cost competitiveness in your domestic market. 33

List of Documents used in Export Trade 1) Application form for allotment of IEC Number (Aayaat Niryat Form) 2) Application form for registration / hip / Registration-cum-

hip certificate of Export Promotion Council. 3) Master Document 1 4) Master Document 2 5) Performa Invoice 6) Commercial Invoice 7) Customs Invoice 8) Packing List 9) Intimation for inspection 10) Application for certificate of origin 11) GSP Certificate of origin 12) Shipping Bill 13) Declaration for claim of Duty Drawbacks 14) Exchange control declaration form :GR / SDF / PP / SOFTEX 15) Application for the removal of excisable goods for Exports (ARE-1) 16) Port trust copy of shipping bill 17) Mate’s receipt 18) Bill of lading for combined transport and port to port shipment 19) Airway Bill 20) Certificate of insurance / insurance policy 21) Letter of bank for collection / negotiation of documents 22) Bill of exchange 23) Form of claim of drawback under Rule 13 24) D Form for claim of drawback against postal exports 25) Bank certificate of Export and Realisation 26) Certificate of Inward remittance 27) Bill of entry 28) A.1: For remittance against exports 29) A.2: For remittance other than imports 30) Application for the grant of Export Licence (Ayaat Niryat Form)

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Export Procedures Processing an Export order You should not be happy merely on receiving an export order. You should first acknowledge the export order, and then proceed to examine carefully in respect of items, specification, pre shipment inspection, payment conditions, special packaging, labelling and marketing requirements, shipment and delivery date, marine insurance, documentation etc. if you are satisfied on these aspects, a formal confirmation should be sent to the buyer, otherwise clarification should be sought from the buyer before confirming the order. After confirmation of the export order immediate steps should be taken for procurement/manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer. Entering into an Export contract In order to avoid disputes, it is necessary to enter into an export contract with the overseas buyer. For this purpose, export contract should be carefully drafted incorporating comprehensive but in precise , all relevant and important conditions of the trade deal. There should not be any ambiguity regarding the exact specifications of goods and of sale including export price, mode of payment, storage and distribution methods, type of packaging, port of shipment, delivery schedule etc. The different aspects of an export contract are enumerated as under: •

Product, Standards and Specifications

•

Quantity

•

Inspection

•

Total Value of Contract

•

of Delivery

•

Period of Delivery/Shipment

•

Packing, Labelling and Marking

•

Arbitration

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BRIEF SPECIMEN CONTRACT FORM FOR SALE PURCHASE TRANSACTIONS EXPORTS AND IMPORTS I. Name and address of the parties.......(state correct appellation and complete address of the parties) II. We, the above named parties have entered into this contract for the sale/purchase, etc. ....... (state briefly the purpose of the contract) on this ........(date) at ........(place)..... subject to the following and conditions: a. Goods................ b. Quantity ...............Quality................. (Describe the quantity, quality and the other specifications of the goods precisely as per the agreement. An agency for inspection/certification of quality and/or quantity may also be stipulated). c. Price................ Mode of payment ...................(Quote the price, , i.e. ex-works/FOB(free on board) CIF(Cost, Insurance & Freight) etc. in the currency agreed upon and describe the mode of payment i.e. payment against L/C(letter of credit)/DA (document against acceptance) /D/P(document against payment)etc. It is also desirable to mention the exchange rate.) d. Shipment............... (Specify date of delivery and the maximum period upto which delivery could be delayed and for which reasons, port of shipment and delivery should be mentioned). e. Packing and marking...............(Requirements to be specified precisely) f. Insurance................. (State the type of insurance cover required, i.e. FPA(free from particular average)/WA (with average)/ All Risks, etc. State also the party responsible for insurance) g. Brokerage/Commission ........(if any payable may be mentioned) h. ing of the property and of risk. The property or ownership of the goods and the risk shall finally to the buyer at such stage as the parties may agree, i.e. when the goods are delivered at the seller's place of work/ the ship's rails/are covered by insurance etc. as per agreed ).

Arbitration 36

Arbitration clause recommended by the Indian Council of Arbitration: "All disputes or differences whatsoever arising between the parties out of relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be settled by arbitration in accordance with the rules of the arbitration of the Indian Council of Arbitration and the award made in pursuance thereof shall be binding on the parties."(or any other arbitration clause that may be agreed upon between the parties). 3.Any other special condition, prevalent in or relevant to the particular line of trade or transaction, may also be specified. Export Pricing and Costing Export pricing should be differentiated from export costing. Price is what we offer to the customer. Cost is the price that we pay/incur for the product. Price includes our profit margin; cost includes only expenses we have incurred. Export pricing is the most important tool for promoting sales and facing international competition. The price has to be realistically worked out taking into consideration all export benefits and expenses. You can still be competitive with higher prices but with better delivery package or other advantages. Your prices will be determined by the following factors: •

Range of products offered

•

Prompt deliveries and continuity in supply

•

Frequency of purchase

As regards quoting the prices to the overseas buyer, the same are quoted in the following internationally accepted :

INCO 2000 The International Chamber of Commerce had prepared a set of standard of delivery in 1953. These could be used as export price quotations, known as 37

Inco. The purpose of Inco 2000 is to provide a set of international rules for the interpretation of the most commonly used trade in foreign trade. Thus, the uncertainties of different interpretations of such in different countries can be avoided or at least reduced to a considerable degree. The scope of Inco 2000 is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods sold. Inco 2000 do NOT apply to the contract of carriage. A brief description of each Incoterm is outlined below:

EX WORKS (EXW) The seller delivers when he places the goods at the disposal of the buyer at the seller’s premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. This term represents the MINIMUM OBLIGATION FOR THE SELLER, and the buyer has to bear all costs and risks involved in taking the goods from the seller’s premises. However, if the parties wish the seller to be responsible for the loading of the goods on departure and to bear the risks and all costs of such loading, this should be made clear by adding explicit wording to this effect in the contract of sale. This term should not be used when the buyer cannot carry out the export formalities directly or indirectly. In such circumstances, the FCA term should be used, provided the seller agrees that he will load at his cost and risk.

FREE CARRIER (FCA) The seller delivers the goods, cleared for export, to the carrier nominated by the buyer at the named place. It should be noted that the chosen place of delivery has an impact on the obligations of loading and unloading the goods at that place. If delivery occurs at the seller’s premises, the seller is responsible for loading. If delivery occurs at any other place, the seller is not responsible for unloading. This term may be used for all modes of transport. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway, or by a combination of such modes. If the buyer nominates a person other than a carrier to receive the goods, the seller is deemed to have fulfilled his obligation to deliver the goods when they are delivered to that person.

FREE ALONGSIDE SHIP (FAS) The seller delivers when the goods are placed alongside the vessel at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that moment. The FAS term requires the seller to clear the goods for export. However, if the parties wish the buyer to clear the 38

goods for export, this should be made clear by adding explicit wording to this effect in the contract of sale. This term can only be used for sea or inland waterway transport.

FREE ON BOARD (FOB) The seller delivers when the goods the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss of or damage to the goods from that point. The FOB term requires the seller to clear the goods for export. This term can only be used for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail, the FCA term should be used.

COST & FREIGHT (CFR) The seller delivers when the goods the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any other costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. The CFR term requires the seller to clear the goods for export. This term can only be used for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail, the T term should be used. COST, INSURANCE & FREIGHT (CIF) The seller delivers when the goods the ship’s rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination but the risk of loss of or damage to the goods, as well as any other costs due to events occurring after the time of delivery, are transferred from the seller to the buyer. However, in CIF the seller also has to procure marine insurance against the buyer’s risk of loss of or damage to the goods during carriage. Consequently, the seller contracts for insurance and pays the insurance . The buyer should note that under the CIF term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as much expressly with the seller or to make his own extra insurance arrangements.

The CFR term requires the seller to clear the goods for export. This term can only be used for sea or inland waterway transport. If the parties do not intend to deliver the goods across the ship’s rail, the CIP term should be used. CARRIAGE PAID TO (T) 39

The seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway, or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk es when the goods have been delivered to the first carrier. The T term requires the seller to clear the goods for export. This term may be used for all modes of transport.

CARRIAGE & INSURANCE PAID TO (CIP) The seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any other costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage. Consequently, the seller contracts for insurance and pays the insurance . The buyer should note that under the CIP term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to as much expressly with the seller or to make his own extra insurance arrangements. “Carrier” means any person who, in a contract of carriage, undertakes to perform or to procure the performance of transport by rail, road, air, sea, inland waterway, or by a combination of such modes. If subsequent carriers are used for the carriage to the agreed destination, the risk es when the goods have been delivered to the first carrier. The CIP term requires the seller to clear the goods for export. This term may be used for all modes of transport.

DELIVERED AT FRONTIER (DAF) The seller delivers when the goods are placed at the disposal of the buyer on the arriving means of transport not unloaded, cleared for export, but not cleared for import at the named point and place at the frontier, but before the customs border of the ading country.

The term “frontier” may be used for any frontier including that of the country of export. Therefore, it is of vital importance that the frontier in question be defined precisely by always naming the point and place in the term. However, if the parties wish the seller to be responsible for the unloading of the goods from the 40

arriving means of transport and to bear the risks and costs of unloading, this should be made clear by adding explicit wording to this effect in the contract of sale. This term may be used for all modes of transport when the goods are to be delivered at a land frontier. When a delivery is to take place in the port of destination, on board a vessel, or on the quay (wharf), the DES or DEQ should be used. DELIVERED EX SHIP (DES) The seller delivers when the goods are placed at the disposal of the buyer on board the ship not cleared for import at the named port of destination. The seller has to bear all the costs and risks involved in bringing the goods to the named port of destination before discharging. If the parties wish the seller to be responsible for the unloading of the goods from the arriving means of transport and to bear the risks and costs of discharging the goods, then the DEQ term should be used. This term can only be used when the goods are to be delivered by sea or inland waterway or multimodal transport on a vessel in the port of destination.

DELIVERED EX QUAY (DEQ) The seller delivers when the goods are placed at the disposal of the buyer not cleared for import on the quay (wharf) at the named port of destination. The seller has to bear all the costs and risks involved in bringing the goods to the named port of destination and discharging the goods on the quay (wharf). The DEQ term requires the buyer to clear the goods for import and to pay for all formalities, duties, taxes, and any other charges upon import. If the parties wish to include in the seller’s obligations all or part of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale. This term can only be used when the goods are to be delivered by sea or inland waterway or multimodal transport on discharging from a vessel onto the quay (wharf) in the port of destination. However, if the parties wish to include in the seller’s obligations the risks and costs of the handling of the goods from the quay (wharf) to another place (warehouse, terminal, transport station, etc.) in or outside the port, the DDU or DDP should be used.

DELIVERED DUTY UNPAID (DDU) 41

The seller delivers the goods to the buyer, not cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods thereto, other than, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes, and other charges) for import in the country of destination. Such “duty” has to be borne by the buyer as well as any costs and risks caused by his failure to clear the goods for import in time. However, if the parties wish the seller to carry out customs formalities and bear the costs and risks resulting there from, as well as some of the costs payable upon import of the goods, this should be made clear by adding explicit wording to this effect in the contract of sale. This term may be used for all modes of transport, but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ should be used.

DELIVERED DUTY PAID (DDP) The seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination. The seller has to bear all the costs and risks involved in bringing the goods thereto including, where applicable, any “duty” (which term includes the responsibility for and the risks of the carrying out of customs formalities, and the payment of formalities, customs duties, taxes, and other charges) for import in the country of destination. While the EXW term represents the minimum obligation for the seller, DDP represents the MAXIMUM OBLIGATION FOR THE SELLER. This term should not be used if the seller is unable directly or indirectly to obtain the import license. However, if the parties wish to exclude from the seller’s obligations some of the costs payable upon import of the goods (such as value-added tax: VAT), this should be made clear by adding explicit wording to this effect in the contract of sale. If the parties wish the buyer to bear all risks and costs of the import, the DDU term should be used. This term may be used for all modes of transport, but when delivery is to take place in the port of destination on board the vessel or on the quay (wharf), the DES or DEQ should be used.

Understanding risks in International trade 42

While selling abroad, you may undergo the following risks: i. Credit risk ii. Currency risk iii. Carriage risk iv. Country risk These risks can be insured to a great extent by taking appropriate steps. Credit risk against the buyer can be covered by insisting upon an irrevocable letter of credit from the overseas buyer. An appropriate policy from Export Credit and Guarantee Corporation of India Ltd. can also be obtained for this purpose. Country risks are also covered by the ECGC. As regards currency risk, i.e. possible loss due to adverse fluctuation in exchange rate, You should obtain forward cover from your bank authorised to deal in foreign exchange. Alternatively, you should obtain export order in Indian rupee. Carriage risk, i.e. possible loss of cargo in transit can be covered by taking a marine insurance policy from the general insurance companies.

Documents in the case of Shipment by Air / Sea

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The following documents are required for custom clearance of the shipment of goods by Air / Sea:

1) Shipping Bill ( Appropriate type ) in quadruplicate or the annexure A (in case of computerised processing of export documents) 2) Commercial invoice 3) Exchange control declaration form GR or SDF as applicable (original and duplicate) 4) Copy of Letter of Credit / Copy of Export Order / Export Contract duty attested by bank 5) Packing List 6) Certificate of origin or GSP certificate of Origin 7) Shipper’s Declaration form for exports of good under a. Claim of duty drawback b. Advance license c. Without certification from Export Inspection Agency ARE.1 duly approved by the Central Excise Officer or Invoice showing clearance of excisable goods.

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Shipping Bill This is the most important documents required by the customs authorities for allowing exports. It contains all the details of the goods shipped. The clearing and forwarding agent (also known as Custom House Agent), or the exporter himself / herself fills up the shipping bill. Shipping bill is used when the shipment is sent by Sea / Air.

Copy of Imperial Auto Industries Shipping Bill Attached below -

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Packing List 48

The packing list is an extension of the commercial invoice, as such it looks like a commercial invoice. .The exporter or his/her agent---the customs broker or the freight forwarder---reserves the shipping space based on the gross weight or the measurement shown in the packing list. Customs uses the packing list as a check-list to the outgoing cargo (in exporting) and the incoming cargo (in importing). The importer uses the packing list to inventory the incoming consignment. A typical packing list contains – •

Package Number

•

Item number and Description of goods

•

Quantity

•

Weight

•

Measurement

•

Signature and/ or stamp

•

Marks and Numbers

•

Corrections or Changes in the Packing List

Summary of Totals in a Consignment •

Total Number of Packages

•

Total Quantity

•

Total Weight and Total Measurement

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Invoice An invoice a commercial document issued by a seller to the buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the buyer must pay the seller, according to the payment . The buyer has a maximum amount of days to pay these goods and are sometimes offered a discount if paid before. From the point of view of a seller, an invoice is a sales invoice. From the point of view of a buyer, an invoice is a purchase invoice.

A typical invoice contains 

The word Invoice (or Tax Invoice if in Australia and amounts include GST).

 A unique reference number (in case of correspondence about the invoice)  Date of the invoice.  Tax payments if relevant (e.g. GST and VAT)  Name and details of the seller 

Tax or company registration details of seller (if relevant)

 Name and details of the buyer  Date that the product was sent or delivered 

Purchase order number

 Description of the product(s)  Unit price(s) of the product(s) (if relevant)  Total amount charged (optionally with breakdown of taxes, if relevant) 

Payment (including method of payment, date of payment, and details about charges late payment)

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Packaging and Labelling Packaging refers to a container in which the product reaches the end use consumer. It is a part of the presentation of the product and stays right till the consumer takes it from the retail store. It should not be confused with packing. Packing refers to the external protective covering used for the safe transportation of the goods to the importer. For example – Plastic box used to pack as a set of embroidered handkerchiefs is an example of packaging. On the other hand, the corrugated fibre board boxes which are used for packing the plastic boxes for their safe transportation to the importer in foreign country would represent packing. Packaging plays an important role in marketing of a product; it is the part of an augmented product. The augmented product is that part of the product which deals with adding new features to the basic product in order to exceed the customer expectations. These features take the form of packaging, delivery arrangements, warehousing, customer advice etc. in order to add value to the product. As a matter of fact, the competition between the exporters at the foreign market place is not in relation to the core product or its basic tangible features but it is the augmented product.

Functions of Packaging – Packaging of goods for exports performs the following functions: 1) The product is broken down into saleable units in of size or weight or any other dimensions relevant to that product. 2) It protects the product during transportation, storage, display and use. 3) It conveys the message about handling of the product to the transporter / buyer / consumer during transport, storage, display and use.

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Packaging Design – The design of the packaging should be developed very carefully to ensure: 1) Proper protection is provided to the product. 2) The product is environment friendly and easy to dispose off. 3) It is safe to handle during transportation. 4) It is convenient and safe to use in compliance with the relevant standards of the target export market. It should be understood that primary packaging of the product performs the function of the silent sales man. The total package design (comprising of material, size, shape, colour, text, graphics and logo) should be such that it provides: 1) Proper perception and expectations about the product. 2) Convenience and efficiency in use. 3) It should be faultless. The exporter should also keep in mind the product and the target group of customers while deg the primary packaging of the product.

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Labelling Labelling is the process of fixing labels on the export product. Its main purpose is to inform the consumer essential details in respect of the product as regards its quantity, quality, how to use it and maintain it. Many a time, the foreign buyers insist on inclusion of a particular type of label to comply with the regulations of their countries. Different countries have different regulations as regards labelling of the product. One of the most common regulations is in respect of the origin of the goods i.e. a product must carry a label to indicate the country in which it has been manufactured.

Check List of Information on a Label – Every label should contain the following information: 1) Information to satisfy the legal requirements of particular country. 2) Instructions for taking care of the product. 3) Dimensions of the product i.e. size, weight, thickness etc. 4) Inputs used i.e. contents used in manufacturing. 5) Instructions for the use of the product. 6) Country of origin. 7) Name and Address of the manufacturer. 8) Lot number of the consignment. 9) Date of manufacture and date of its expiry.

Forms of Labels – Labels on the products may assume any of the following forms: 1) Strip of cloth 2) Card label 3) Adhesive sticker 4) ’s manual

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Features of good quality label – A good quality should have the following forms: 1) It includes all the relevant information. 2) It is printed in the language of the importer’s country. 3) It should be developed taking into consideration the colour and shape preferences of the prospective buyers. 4) It is appropriate to the product.

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Findings Supply Chain Management software’s are available in two forms •

Planning applications

•

Execution applications.

Chapter – 6

Planning applications are designed to devise an optimal solution for filling an order.

Findings & Recommendations Execution applications are designed to track the physical status of goods, manage materials and track financial information associated with the supply chain. Certain Supply Chain Management applications are based on open data models and the sharing of data within and outside an organization. Through the sharing of data, SCM applications can improve the time-to-market of products, reduce product costs and allow a better management of resources. Minimized Delays Many supply chains – particularly those that haven’t been enhanced with a supply chain application – are plagued by delays that can result in poor relationships and lost business. Late shipments from vendors, slow downs on production lines, and logistical errors in distribution channels are all common issues that can negatively impact a company’s ability to satisfy customer demand for its products. With supply chain software, all activities can be seamlessly coordinated and executed from start to finish, ensuring much higher levels of on-time delivery across the board. Improve Supply Chain Network Supply chain software’s provide complete, 360 degree visibility across the entire supply chain network – something that cannot be easily achieved with disted manual processes. 58

With supply chain, s can monitor the status of all activities across all suppliers, production plants, storage facilities, and distribution centres. This enables more effective tracking and management of all related processes, from the ordering and acquisition of raw materials, through manufacturing and shipping of finished goods to customers. So the status of mission-critical activities can be tracked at all times, and potential inefficiencies or problems can be identified and corrected immediately, before they become unmanageable. Reduced Costs Supply chain software can help reduce expenses in variety of ways – •

Improve inventory management, facilitating the successful implementation of just-in-time stock models.

•

Enable more effective demand planning, so production output levels can be set to most effectively address customer requirements – without the shortages that result in lost sales.

Weaknesses – •

Being the sole manufacturer, the company have the burden to meet the global and domestic customer requirements.

•

Threat of international automotive manufacturers entering into the market.

•

There are three major buyers of Imperial auto products in India which is quite a risky position depending on just three of these companies. ○ TATA ○ Cummins ○ JCB

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Recommendations •

Since, India is expected to top the world in of car volumes on nation’s road, it provides great opportunity for Imperial Auto but at the same time they should increase their production capacity in order to meet the customer requirements.

•

There are three major buyers of Imperial auto products in India which is quite a risky position depending on just three of these companies. They can have other buyers which can help them reduce their risk of order cancellation. They should increase their share in the other companies in order to minimise the risk.

•

The company has very less domestic warehouses due to which they fall for extra expenses after the production. They are more and more emphasizing on immediately exporting goods produced to their international warehouses.

•

Use of latest machinery can be of great advantage to the company and which is a must in today’s modern world. As it has been observed that some of the machines take more time in production than the latest ones. This may be due to less competition and continuous superiority that imperial auto is less bothered in this aspect.

•

The company has made substantial investments to fully automate the rubber hose manufacturing process; they should also focus on purchasing appropriate fully automated machines for other products to reduce the production time because improved machines will take less time.

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Conclusion •

Being a member of Imperial Auto Industry facilitates to know about the Supply Chain Management Processes of the company and also tell us about the delegation of powers. It gives an idea about the team work done by the marketing & export team together.

•

It is quite knowledgeable to know the Export Procedures.

•

To learn the Export Documents is of great importance as it helped to learn what all is necessary to be taken into consideration while processing the order before exporting.

I express my sincere gratitude towards my Industry guide, Mr. Vijay Patel and my Faculty guide, Mr. Ravi Prakash for their able guidance, continuous and cooperation throughout my project, without which the present work would not have been possible. They have not only provided me with knowledge required but also made me feel comfortable during the internship programme.

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Bibliography 1) www.impauto.com

2) Export Management – P.K.Khurana 3) Supply chain management - John T. Mentzer

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SYNOPSIS

COMPANY NAME : IMPERIAL AUTO INDUSTRIES Ltd. PROJECT TITLE - “Supply Chain Management Processes & Export Procedures” STUDENT’S NAME INDUSTRY GUIDE FACULTY GUIDE

: : :

OBJECTIVE:

ANSHUL DHAWAN MR. VIJAY PATEL MR. RAVI PRAKASH

Chapter – 7

To have an efficient understanding of Imperial Auto Industries, its Supply Chain Management processes, Export Procedures and Documentation.

Annexure

RESEARCH METHODOLOGY: My research is an exploratory research because the objective of the exploratory research is to generate new ideas and insights and helps to determine the best research design, data collection method and selection of subjects.

RECOMMENDATIONS: • • • • •

Being the sole manufacturer Imperial Auto should increase their production capacity in order to meet the customer requirements. The company has very less domestic warehouses due to which they fall for extra expenses after the production. The company has currently only 3 major buyers, it can go for more domestic buyers. Use of latest machinery can be of great advantage to the company and which is a must in today’s modern world. Should also focus on purchasing appropriate fully automated machines for other products to reduce the production time.

CONCLUSION: •

Being a member of Imperial Auto Industry facilitates to know about the Supply Chain Management Processes of the company and also tell us about the delegation of powers. It gives an idea about the team work done by the marketing & export team together.

• •

It is quite knowledgeable to know the Export Procedures. To learn the Export Documents is of great importance as it helped to learn what all is necessary to be taken into consideration while processing the order before exporting.

ABOUT THE PROJECT GUIDE: I express my sincere gratitude towards my Industry guide, Mr. Vijay Patel and my Faculty guide, Mr. Ravi Prakash for their able guidance, continuous and cooperation throughout my project, without which the present work would not have been possible. They have not only

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provided me with knowledge required but also made me feel comfortable during the internship programme.

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FUEL INJECTION PIPE ASSEMBLIES

BRAKE TUBES

TEFLON HOSE ASSEMBLIES

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Product Range

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TEFLON HOSE ASSEMBLIES

HIGH PRESSURE & LOW PRESSURE HOSE ASSEMBLIES

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CRDI PIPES

POWER STEERING ASSEMBLIES

POWER STEERING ASSEMBLIES

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CRIMPED BRACH HOSES

CRIMPED BRACH HOSES & SILICON HOSES

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Case Study RAW MATERIALS & FINISHED PRODUCT HANDLING & STORAGE

Imperial Auto Industries - is a pioneer manufacturer and exporter in automotive tubing sector. It has manufacturing operations in 5 different plants in India and became supplier to the most OES like New Holland, Suzuki, DCM Toyota, JCB, Mahindra Nissan and other main players of the industry. Imperial Auto Industries is well established strong company and has heavily invested in several auto-parts plants in important automotive fields; each plant’s facilities meet international standards to assure the quality of the product at international level.

THE BRIEF As the demand for these products has increased, methods of storing and handling raw materials and finished goods have to be continually evolved. The project was to consider alternative methods and technologies which would increase storage capacity whilst at the same time improving accessibility.

THE APPROACH This is a complex manufacturing operation with many varied processes, fed with a variety of raw materials and components. Because production throughput long ago out stripped the on-site warehouse capacity, finished goods are taken off-site to be handled by a distribution contractor. The current phase of evolution involved just-in-time supply of components and packaging to feed production. This meant that the on-site storage resources had to be rationalised in order to continue to store certain vital commodities whilst creating space for continuous in-feed and finished product output.

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Discussions were held with the product managers and teams in the production areas as well as the receipts and despatch supervisors to identify requirements and constraints. A new dispatch bay complex was designed which allowed the existing facilities to be dedicated to inbound materials. The two warehouse areas were completely redesigned and furnished with new equipment where required which included on line labelling and stretch wrapping for dispatch.

THE RESULT The problems of congestion and materials shortages which had been worsening were eliminated with a smooth reliable flow of materials in and finished product out of the plant

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