Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
ON
EXPORT PROCEDURE & DOCUMENTATION
AT
SUBMITTED BY:
CHAYAN MEHTA
BHAGWANT DEEP SINGH
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ACKNOWLEDGEMENT
I am very thankful to all those involved who have enabled me to successfully complete
my project on Export Procedure & Documentation.
I would like to express my sincere gratitude to Mr. NANDA KUMAR and Mr.
MUKESH ARORA without whose support and encouragement I would not have achieved what
I have today.
I am heartily thankful to the whole unit of LUCKY EXPORT for the warm response
they had given me to complete my summer training. I am also thankful to Mr. ANIL WATS
(GENERAL MANAGER EXPORTS ) for giving me opportunity to undertake this project in
his reputed organization.
I would also like to express my humble thanks to my guides Mrs. ANINDITA
CHATERJEE and Mr. MANISH SHARMA ( PROJECT MENTOR) for the invaluable time
they devoted to me helping me to better understand the depth of the requirement of the project
and elucidating my uncountable doubts.
TABLE OF CONTENTS
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S.No.
Particulars
Page No.
01.
Acknowledgement
02.
Executive Summary
03.
Statement Of Obejective
04.
05.
Company Profile
06.
Research Methodology
13
07.
17
24
28
28
30
31
34
61
66
69
08.
Modes Of Payment
70
09.
72
10.
Summary
76
11.
Conclusion
88
12.
89
13.
Bibliography
90
EXECUTIVE SUMMARY
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Objective
The main objective of the study is to formulate the overall procedure of export orders say how
to export, documentation, modes of payment & incentives from Govt. of LUCKY EXPORT.
Research Methodology
Research comprises defining and redefining problems. Research purpose is to discover answer to
question through the procedure of scientific procedure. Interviews and discussion with the
supervisors and officials to get the root of the pre-determined objective and in order to outline
the a to z steps of processing export order.
STATEMENT OF OBJECTIVES
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To study the department wise functions & sequential documentation for various
operations in export orders adopted by LUCKY EXPORTS.
The focus of the study was the formulation the multifunction procedure of an export unit
named LUCKY EXPORT. The focus of the study was on identifying the activities of different
divisions and departments of LUCKY EXPORT having an impact on the export procedure of
this unit. Focus was to outline the standard modes of payment for export houses. Researcher
analyzed the pre-export formalities and necessities for exportation. The project is an attempt to
formulate the how to export concept finally to contribute to national and international economy
& business relationship.
COMPANY PROFILE
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Lucky Group is Government Recognized Trading House with diverse interest in trading. Their
group turn over from export is approximately USD. 50 Million. Their offices are in Moscow,
Sharjah & Khartoum besides corporate office at Noida (India) and representative offices in
various African countries like Ivory Coast, Senegal, Ethiopia.
Lucky Group of Companies, an India based Engineering, Procurement & Construction (EPC)
company was established in the year 1990. It is affiliated with:
1. Delhi Chamber of Commerce
2. Federation of Indian Export Organization
3. Confederation on Indian Industry
4. Federation of Indian Chamber of Commerce and Industry
It is ISO 9001:2008 certified and Star Export House status holder from Government of India
consecutively for the last 15 years.
The Lucky Group Companies are:
LUCKY EXPORTS
EXPOTEC INTERNATIONAL
LIMITED
LUCKY EXPORTS
About the Company
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COPPICE TECHNOLOGIES
PVT. LIMITED
Business Type:
Manufacturer
Eng. Goods, Plants, Medical, Pharmaceutical.
Exporter
Eng. Goods, Plants, Medical, Pharmaceutical.
BOARD OF DIRECTORS
Lucky Group comprises of a Board of Directors perceptive to the dynamics of international
business. This body controls and provides strategic direction to all Group companies.
Dilawar Shaban
Chairman of the Board
Iqbal Shaban
President
Rafique Shaban
Executive Director
Raza Shaban
Executive Director
Saleem Shaban
Executive Director
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VISION
AND
MISSION
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VISION:
To become respected global trading company that provides best of business solution delivered by
best-in-class people.
MISSION:
Our mission is to cater to the specific scrap metal needs of our customers and, at the same time,
to expand our sourcing points by creating strategic alliances with our key suppliers to best create
value for our clients.
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o
o
o
o
o
o
o
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RESEARCH METHODOLOGY
Research in a common parlance refers to a search for knowledge. Research can also be
defined as scientific and systematic search for pertinent information on the specific topic. So
research means careful investigation on inquiry especially through search for new fact in branch
of knowledge. Research is an academic activity and as such as term should be used in a technical
sense. Research comprises defining and redefining problem, formulation hypothesis or
suggested solution, collection, organizing and evaluating data, make deduction and research
conclusion and careful testing the conclusion to determine whether they fit or not . Research
purpose is to discover answer to question through the procedure of scientific procedure.
As in live studies on LUCKY EXPORT. The LUCKY EXPORT did the research work
manually and intents to assess the overall potential and performance of this unit and desire.
Research has helped to portray accurately the characteristic of a particular unit. Research helped
to find out the problem faced by the unit, unit strength where they have competitive edge over
the other competitors, unit weakness where the unit has to improve how they need to turn them
into the opportunities.
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RESEARCH DESIGN
The study is descriptive and empirical in nature with applied bias.
Descriptive Study:
Descriptive studies are utilized when the researcher attempts to describe the state of affairs
without controlling the variables causing change. This study includes the survey and fact finding
inquires of different kind. The major purpose of descriptive research was description of the state
of affairs that exists in LUCKY EXPORT, the functional activities and procedure adopted and
the working of LUCKY EXPORT. Interviews were taken of the executive and various kinds of
facts were sought by this.
Empirical Studies:
An empirical research relies on experience or observation alone often without due regard for
system and theory. It is the data research coming up with the conclusion which is capable being
verified by observation and experiment. As in case of, the observation was done to find the
export procedure & documentation problem and the weakness. In this, help of various
departments was taken to observe the working and to deduce conclusion to suggest course of
action to . In this the fact were taken into hand from LUCKY EXPORT at their source and is
then utilized to infer desired information.
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Collection of Data
The study has utilized both primary as well as secondary data for analyzing export performance,
procedure & documentation of LUCKY EXPORT.
Primary Data: The primary data was collected through the interview techniques & personnel
meeting where the Heads of different functional departments, various executive are interviewed
and pretended information were collected pertaining to various aspects of export activities.
Secondary Data: It was collected through scanning, searching and disseminating information
through company research profile and company maintained data also in search information for
export procedure and export market related data was collected through the data compiled by
Government Manual, Export Import policy of DGFT, customs and excise manuals, RBI
exchange control Manual and other organization that compile data for various export oriented
activities and documentation.
Analysis Pattern
The nature of the project is of the subjective nature so for the analysis of the available data, the
use various statistical and mathematical and graphical techniques was not required. There were
no additional statistical and technical tool were considered for suitability of the procedure &
problem in order to achieve the desire objective. The study was of the qualitative aspect not the
quantitative. All the data was collected through interviews a secondary data so not tool were used
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Export Procedure
&
Its Documentation
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It is a good practice to diversify export markets. Concentrating exports to only a few markets
poses imminent danger to an exporting country. Too much export concentration in a market
usually invites protectionist trade laws from the importing country. In case the importing country
imposes sanctions, the effect to the economy of the exporting country and the livelihood of its
people can be devastating.
the accounting assistant is the bookkeeper, the human resources department is the
personnel department, the flat is the apartment, the chop is the stamp, the motor carrier
is the trucking company, and the letter carrier is the postman.
series of punched holes. Keying a wrong character may mean retyping the message from
the beginning. The 'final' tape is rerun to send the message out or make additional copies
of the message. The advantage of having a 'final' tape is to save the transmission time and
cost. Or, you can send the message directly. Each character that was keyed (typed) will
instantly appear at the receiver's end. Therefore, as long as the line is 'on', the sender and
the receiver can 'talk' over the telex, that is, exchange messages over the telex while the
line is 'on'.Although the e-mail is popular nowadays, the fax remains as an important tool
of export communication in many countries.
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PRE-EXPORT ACTIVITIES
The planned group work for export order processing can greatly facilitate subsequent operations
and avoid the hassles associated with the process. The pre-export activities can be divided into
the following sets of activities:
A. Study Of Government Rules And Regulations
B. Identifying Various Parties And Liasion
C. Registration
D. Obtaining I/E Code Number.
b)
Customs act,1962
c)
d)
Foreign exchange regulations act, 1973 (now being replaced by FEMA and Money
Laundering Bills)
e)
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Besides these, other parties may also be associated depending on the nature of commodity
and rules guiding the export of the same. Examples of these bodies can be Inspection Agencies,
Export Promotion Council, Concor, Ministry of Agriculture etc.
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C) Registration
For stepping in the field of an export business, it is compulsory for a company to get registered
with Export Promotion Council related to the main product line with which they are dealing.
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Stage-1st
of the contract. According to section 4(1) of the Sale of Goods Act, 1930, A contract of sale of
goods is a contract whereby the seller transfer or agree to transfer the property in goods to the
buyer for a price, therefore, this Act includes both a Sale and an Agreement to sell.
This is the most crucial stage. All subsequent actions and reactions will depend on
the terms and conditions of the export contract. It should be ensured that the contract has been
entered into in accordance with the prevalent export promotion policies of the country and the
foreign exchange regulations. The export order must specify the mode of the payment in
unmistakable terms such as letter of Credit, Documents of Payment, Documents against
Acceptance, etc. The specifications stipulated by the importer in the export order and the L/C
such as delivery schedule, packing, inspection, marking, etc., must be strictly adhered to. The
documents required by the foreign buyer must be prepared and submitted to the negotiating bank
in the exact specified form and manner.
2. Quantity
3. Inspection
4. Total Value of the Contract
5. Terms of Delivery/Commercial Terms
6. Taxes, Duties and Charges
7. Period of Delivery Shipment/Part Shipment etc
8. Packing Labeling and Marking
9. Terms of Payment-Amount, Mode & Currency
10. Discounts and Commissions
11. Licenses and Permits
12. Insurance
13. Documentary Requirement
14. Guarantee
15. Force Majeure or Excuse for Non-Performance of Contract
16. Remedies.
17. Arbitration.
Besides these main elements, an export contract may contain other elements
desired by the parties to the contract. Export order should be confirmed by the exporter only after
the terms and conditions of the L/C have been found to be in order.
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Stage-2nd
Upon confirmations of the export order preparations for the dispatch of goods are started. A
Delivery Note (in duplicate) or Production Order is sent to the Work Manager or the Factory
manager. This note should contain the description of the goods as has been given in the export
order, along with a copy of the instructions given by the importer. The date by which the goods
must be manufactured, the date by which the necessary formalities must be completed, the
requisite time margins to be given and the shipment must be clearly intimated to Works manager.
This is what the manufacturers. The specifications and instructions to be intimated to the supplier
of export goods shall, however, remain the same. While sourcing the goods from suppliers,
merchant exporter has to lay down clear cut specifications of quality norms because the ultimate
accountability to the buyer is of the exporter only. In case of poor quality, the exporter may not
be in position to get repeat order from the foreign customers who have wide choice of the
exporters in the world market.
Sourcing of export order in LUCKY EXPORTS is based upon quality production
system. Merchandiser finals the export contract with his correspondent buyer and receives an
export order via fax, e-mail or courier. After receiving the export order, merchandiser orders a
production order to Production Manager in written form. This production order contains the
following entities:
P.O. Number
Invoice Number
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Product Name
Product Specifications ( colour , size, weight etc)
Quantity
Instructions(stitching, labeling etc)
Dispatch Date
Stage-3rd
Dispatching
As the Production unit delivers the goods to Packing Department, the following
1) Packing
The Packing Incharge receives the importers instructions for packing from the Merchandiser
and covers the following operations:
i) Final finishing of the goods(final passing, clipping etc)
ii) Tagging & Folding(according to importers instructions)
iii) Packing(Cartoon, bale or pair-packing)
2) Labeling
Specific marketing and labeling is used on report shipping cartons & containers to:
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or use no hooks
3) Inspection
After packing and labeling, goods are inspected by the inspection agent or buying agent on
behalf of importer. That means importer sends his own agency to inspect the goods. The
inspector has right to open any of the carton or bale to verify the goods in accordance with
invoice, packing list and desired quality scale.
If he finds any defect he can send these goods for processing again, otherwise, he issues
Inspection Certificate. If buyer demands handloom certificate then exporter ask textile
committee to inspect the consignment and provide them handloom inspection certificate.
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This certificate can be helpful to suit against importer in case of disputers or undue rejection
of goods by importer.
4) Containerization
A container is an article of transport equipment, strong enough for the repeated use, to
facilitate handling and carriage of goods by one or other modes of transport.
Normally containers having following dimensions are used in handloom field:i) 20 ft. 26 cbm
ii) 40 ft. 54 cbm
iii) 30 ft. 60 cbm (high cube)
LUCKY EXPORTS makes use of container of 20 & 40 ft. il.(according to the goods to be
dispatched).
5) Locking of Containers
Before locking the container, excise authorities select 10% of rolls as samples and inspect
them. The samples are sent for further sub-mission to customs. After examination of cargo,
the excise seal along with the seal of shipping line on the container and endorse the excise
invoice, AR-2 form, gate-pass etc. The main check point in the excise documents are: Name & Address of Consignee
Destination
Description of goods & Specifications
FOB value of goods
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Quantity
Movements of goods(from -- to --)
Container no. & Truck no.
Identification marks & Excise no.
For additional security of goods, in transit, the doors of container are locked with the iron
rods with seals. In case of any shortage reported by the buyer and when a claim is required to
be filled, excise endorsed documents play extremely crucial role.
Stage-4th
Pre-Shipment Operations
1)
documents enclosed with it. It also contains some other details like Lorry Receipt No., RBI
Code No. B/L particulars etc. The shipping advice is particularly important in short-sea
trades, for example within the Asian countries where the goods may arrive at the port of
destination before the shipping documents, and in the ports of destination where theft and
pilferage of the imported goods is rampant.
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2)
Letter of credit:
are used primarily in international trade transactions of significant value, for deals between a
supplier in one country and a customer in another. They are also used in the land
development process to ensure that approved public facilities (streets, sidewalks, storm water
ponds, etc.) will be built. The parties to a letter of credit are usually a beneficiary who is to
receive the money, the issuing bank of whom the applicant is a client, and the advising
bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e.,
cannot be amended or canceled without prior agreement of the beneficiary, the issuing bank
and the confirming bank, if any.
TO
UVW Exports
88 Prosperity Street East, Suite 707
Export-City and Postal Code
Dear Sirs:
We have been requested by
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us
sight
for
full
Covering:
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to
Special conditions:
1. All documents indicating the Import License No. IP/123456 dated January 18,
2001.
2. All charges outside the Import-Country are on beneficiary's account.
15
Authorized Signature
Unless otherwise expressly stated, this Credit is subject to the Uniform Customs and
Practice for Documentary Credits, 1993 Revision, International Chamber of
Commerce Publication No. 500.
latest negotiation date can be March 26, 2001 or 15 days after the date of shipment,
whichever comes first.
In case the L/C does not stipulate the latest negotiation, it is within 21 days after the date
of issuance of the transport documents, but on or before the L/C expiry date.
b) Expiry Date and Place
The expiry date and place is the last day of validity of the credit and the place allowed
by the letter of credit (L/C) for the presentation of documents and/or draft(s) for payment,
acceptance or negotiation. In the sample letter of credit the expiry date is March 26,
2001 and the place for presentation of document is Export-City, which is the
beneficiary's city.
In case the validity of an L/C is stated in a period of time, for example "this credit is valid
for three months" or "this credit is available for two months" or "this credit is good for
one month", but does not specify the date from which the time is to run, its validity starts
from the issuance date of L/C by the issuing bank. The bank normally discourages stating
the L/C validity in a period of time.
In case the expiry date and/or the latest negotiation date falls on a day on which the bank
is closed for reasons not including the acts of God, strikes, riots, civil commotions,
lockouts, insurrections, wars or any other causes beyond the bank's control, the expiry
date and/or the latest negotiation date is extended to the succeeding first day on which the
bank is opened. Such extension, however, does not extend the latest date of shipment.
c) Draft(s) Drawn On
The draft(s) drawn on answers the question "Which bank or who is the drawee (the
payer) of the draft?" The draft is most often drawn on the confirming bank or the issuing
bank. In some cases, the draft is drawn on the applicant. In the sample letter of credit the
draft is drawn on the confirming bank, which is The Moon Bank.
d) Draft(s) Drawn At
The draft(s) drawn at answers the question "The draft is drawn at what terms?" It can be
a sight draft (i.e., payment on demand or on presentation) or a term draft (i.e., payment at
a fixed or determinable future time). In the sample letter of credit the draft is drawn at
sight.
e) Draft(s) Drawn Under
The draft(s) drawn under answers the question "The draft is drawn under which credit
and the credit is of which bank?" In the sample letter of credit, the L/C requires that the
draft(s) be marked "Drawn under documentary credit No. SB-87654 of The Sun Bank,
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Sunlight City, Import-Country, dated January 26, 2001" (please see the completed sample
draft).
f) Latest Shipment
The latest shipment---latest date of shipment or last date for shipment---is the last
day of the period of time allowed by the letter of credit (L/C) for shipment, dispatch or
taking in charge. In the sample letter of credit the latest shipment date is March 19, 2001.
g) Port or Point of Origin and Port or Point of Destination
The port or point of origin is the port or place of loading, dispatch or taking in charge.
The port or point of destination is the port or place of discharge or delivery. Some of
the expressions that may appear in the letter of credit (L/C) indicating the origin and the
destination are:
In the sample letter of credit the origin is Moonbeam Port, Export-Country and the
destination is Sunny Port, Import-Country.
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3)
Quantity
If the letter of credit (L/C) does not stipulate the quantity in a stated number of units (i.e.,
it does not state in units such as piece, set, box, dozen, or gross), or unless the L/C
stipulates that the quantity of the goods specified must not be exceeded or reduced, a
tolerance of 5% more or 5% less quantity is permitted, provided the total amount does not
exceed the amount of the L/C.
In the sample L/C the stated quantity is 100 Sets, thus the quantity in the invoice must be
100 Sets. If such sample L/C does not state the quantity, the UVW Exports can ship
between 95 sets and 100 sets of pneumatic tools, but not over 100 sets as the total amount
will exceed the L/C amount of US$25,000. If such L/C does not state the quantity and the
L/C amount is US$26,250 or more, the exporter may ship between 95 and 105 sets.
If the L/C quantity is indicated using the words "about", "approximately", "circa" or
similar expressions, the quantity in the invoice cannot exceed 10% more or 10% less than
the quantity indicated in the L/C. For example, if the L/C quantity is "about 100 sets", the
quantity in the invoice can be any quantity between 90 sets and 110 sets, provided the
total amount does not exceed the amount of the L/C.
Unit Price
If the letter of credit (L/C) unit price is indicated using the words "about",
"approximately", "circa" or similar expressions, the unit price in the invoice cannot
exceed 10% more or 10% less than the unit price indicated in the L/C. For example, if the
L/C unit price is "about US$250", the unit price in the invoice can be any unit price
between US$225 and US$275, provided the total amount does not exceed the amount of
the L/C.
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Amount
Unless otherwise stipulated in the letter of credit (L/C), the amount must not exceed the
amount permitted by the L/C. If the L/C amount is indicated using the words "about",
"approximately", "circa" or similar expressions, the amount of the invoice cannot exceed
10% more or 10% less than the amount indicated in the L/C. For example, if the L/C
amount is "approximately US$10,000", the amount of invoice can be any amount
between US$9,000 and US$11,000.
Explanations:
Fields in the Preamble of the Commercial Invoice
" For account and risk of Messrs. "
Enter the complete name and address of the importer (the consignee) in the field (For
account and risk of Messrs.). The title Messrs. stands for Messieurs in French meaning
gentlemen. It is used to address a business firm in a formal manner, the same way the title
Mr., Mrs. or Miss is used to address a person.
" Letter of Credit No. " , " Date " and " Issuing Bank "
Referring to the sample L/C, enter "SB-87654", "January 26, 2001" and "The Sun
Bank" in the respective fields in the documents. The sample L/C does not stipulate
indicating this information in the documents except the draft(s), thus UVW Exports may
choose not to enter it in the documents, but there is no harm if it is entered in the
documents.
" Import Permit/License No. " and " Date "
Referring to the sample L/C, enter "IP/123456" and "January 18, 2001" in the
commercial invoice and all other documents, including bill of lading and insurance
policy.
" Buyer's P.O. or Contract No. " and " Date "
The letter of credit may require the documents to show the purchase order (P.O.) or
contract number. Referring to the sample L/C, enter "DEF-101" and "January 10, 2001"
in the respective fields in the documents.
" Buyer's Department / Store No. "
The department or store number is often required when dealing with the chain stores. It is
the identification number of the store or branch of a chain store. The store number is used
in the routing of goods by the chain store. It identifies the store that places the order or to
which branch (of the chain store) the goods will be delivered.
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4)
Packing List:
packages, which helps customs authorities and receives in identifying the contents of specific
package.
It contains almost all the information provided in invoice along with details of
packing like:
No. of bales or cartons
Gross weight
Net weight
Dimensions etc.
For the purpose of explaining other fields in the packing list, it is assumed that the pneumatic
tools in the sample L/C contain the following data:
The catalogue or item number of the pneumatic tools is A380
Each set is in an inner box and there are two boxes in an export
master carton, or a total of 50 cartons for the 100 sets
Each master carton:
Net Weight (N.W.)
Gross Weight (G.W.)
Measurement (Meas.)
.....
.....
.....
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Total Quantity
If a consignment consists of different units, preferably show all the units used in the
summary of totals. For example, a shipment includes:
- Product
100 dozen
A
200 dozen
- Product B
300 boxes
- Product C
400 boxes
- Product
D
as such the total shows "300 Dozen and 700 Boxes".
Total Weight and Total Measurement
If the net weight and gross weight are used in the breakdown, the summary must show
the total net weight and the total gross weight. If kgs., lbs., CBM and cft. are used in the
breakdown, the summary must show the total of kgs., lbs., CBM and cft..
Under certain circumtances, such as in a consignment consisting of a few master cartons
where each carton contains several small items of different sizes, it is necessary to show
the breakdown of the quantity of each item. There is no need to show the breakdown of
the weight and measurement of each carton. Simply entering the total weight and the total
measurement of the consignment in the summary row would satisfy the export
requirements.
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5)
ARE-1 Form:
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shipment is obtained
6)
Bill of Exchange:
from the exporter LUCKY EXPORTS to the importer to pay a specified amount to a person.
To whom it is directed to pay is called maker of a bill means exporter (LUCKY EXPORTS).
When the goods are shipped by Sea, the bills are drawn in sets and two mailed to
the foreign correspondent through an authorized dealer for presentation to the importer. A
bill of exchange is to two types:a) Sight Bill: When the importer makes the payment immediately after the draft
presented to him. It is called a sight bill.
b) Usance Bill: When the exporter (LUCKY EXPORTS) has agreed to give credit to the
foreign buyer, he draws a bill, which is called usance bill. A usance bill is drawn for
payment at a date later than the date of presentation. There is no aligned document for
draft; the same can be prepared by the exporter in the usual format.
Drafts Drawn On the Bank
In the sample L/C the draft is drawn on the confirming bank, which is The Moon Bank.
The UVW Exports may issue a draft drawn on The Moon Bank as follows:
Sample Instrument: Draft
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The "No." (number) in the above sample draft may be used for the exporter's reference
number. Blank drafts are available at the paying bank.
First of Exchange (Second Unpaid) and Second of Exchange (First Unpaid)
In practice, it is not uncommon that two drafts are drawn on the drawee bank in a letter of
credit (L/C) to ensure that at least one draft reaches the drawee when they are dispatched
separately. The issuance of more than one draft in a letter of credit follows the same logic
as in the issuance of bill of lading in more than one original. At times even three drafts
may be drawn on the drawee bank, this practice was not uncommon before in certain
countries.
In contrast, normally one draft (sola bill) is issued in a documentary collection where the
draft is drawn on the importer.
The sample draft shown above is the first draft, marked "First of Exchange (Second
Unpaid)" and the number "1". In the second draft, if any is issued, is marked "Second of
Exchange (First Unpaid)" and the number "2". Some drafts may not be numbered "1" or
"2".
Drawer
The drawer is the party who issues the draft and to whom the payment is made. The
drawer is the seller (the exporter) and the payee of the draft. The payee could be another
party rather than the exporter, or could be the bona fide holder (the bearer) of the draft.
Drawee
The drawee is the party who owes the money or agrees to make the payment and to
whom the draft is addressed (made out). The drawee is the buyer (the importer), the
acceptor and the payer of the draft in a documentary collection. In a letter of credit the
drawee most often is the confirming bank or the issuing bank, which is the acceptor and
the payer of the draft.
Remitting Bank
The exporter's bank to whom the exporter sends the draft, shipping documents and
documentary collection instructions, and who subsequently relays them to the collecting
bank in a documentary collection is called the remitting bank.
The term remitting bank as used under a letter of credit may refer to a nominated bank
from whom the issuing bank or the confirming bank, if any, receives the shipping
documents.
The bank in the importer's country (the importer's bank usually) involved in processing
the collection---presents the draft to the importer for payment or acceptance, and
thereafter releases the shipping documents to the importer in accordance with the
instructions of the exporter---is called the collecting bank or the presenting bank.
7) Certificates of Origin
The certificate of origin is a document certifying the country in which the product was
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manufactured, and in certain cases may include such information as the local material and labor
contents of the product.
Some importing countries require a certificate of origin to establish whether or not a preferential
duty rate is applicable. A popular example of the certificate of origin is the Form A, which is
often called the GSP Form A.
The certificate of origin (C/O)is an alternative to the declaration or the certification and/or
legalization of the commercial invoice. The C/O is based on the rules of the country of origin.
The country of origin is the country where the goods are grown, produced or manufactured. The
manufactured goods must have been substantially transformed in the exporting country as the
country of origin, to their present form ready for export. Certain operations such as packaging,
splitting and sorting may not be considered as sufficient operations to confer origin.
The certificate of origin includes the Form A, Chamber of Commerce Certificate of Origin,
Exporter's Certificate of Origin, and Free Trade Market Certificate of Origin. The trade
agreement, import practice, and letter of credit (L/C) stipulation determine the type of C/O
needed.
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EC Certificate of Origin
The European Community (EC) Certificate of Origin, as its name implies, is used in the
European Community. It is issued by the Chamber of Commerce of the exporting
country, usually with payment of a fee.
EC countries consist of Belgium, Denmark, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, and United Kingdom.
Movement Certificates
Different Movement Certificates are being used in the European Union (EU)---EC
(European Community) and EFTA (European Free Trade Association) countries. The
certificates require endorsement by the customs of the exporting country.
EFTA countries consist of Austria, Finland, Iceland, Norway, Sweden, Switzerland, and
Liechtenstein.
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The receipt issued by an airline or its agent for the carriage of goods is called airway bill or air
consignment note. It is issued in terms and conditions of the contract of carriage of goods. It
is not a document of title and it is not issued in a negotiable form.
Generally AWB is issued in three copies, viz; for the carrier, for the consignee and for the
consignor.
Like the AWB, the PPR evidence merely the receipt of the goods to be exported to the buyer
and is not a document of title.
A Bill of Lading is the most important document in Foreign Trade. It is generally issued by a
shipping company. It services as a receipt from the shipping company who undertakes to
deliver the goods at agreed destination on payment of freight in a prearranged manner and
also a document of title to the goods. B/L is generally made out in the sets of two or three
originals. All the originals are duly signed by the master of ship or the agent of the steamship
company and all the originals are equally valid for taking the delivery of goods and once one
original copy is utilized the other originals become full and void.
B/L is nor a negotiable instrument in terms of Negotiable instrument Act, However, it is a
practice to call the original copies as negotiable copies.
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Sample Document:
Ocean Bill of Lading
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INSURANCE DOCUMENTS
Letter of insurance.
This is analogous to cover note issued by the broker. It is stated that particular subject are
placed under insurance and certificate/policy of insurance will be issued later on.
Brokers Certificate
This is also not acceptable as broker issues the same, as broker acts for the insured and cannot
compel insurer to accept the proposal of insurance.
Insurance Certificate
The insurance on open cover or floating policy covering all shipment on certain terms
and subjects to conditions laid down. Unless the insurance certificate gives details of the
conditions of cover it is not so much value to third party who negotiate the shipping
documents.
Insurance Policy
This is a basic legal document-evidencing contract of insurance between the insurer and
insured. It gives full details of all the risks covered. Marine or transit insurance policies can
be assigned by the insured merely by endorsement and delivery. Insurance policies are
issued in different forms like floating policy, open policy or cover, specific policy etc
A floating policy is a contract of insurance for covering a number of shipments, the details of
which are not finalized when the contract of insurance is conclude. The relevant details like
name of the vessel, destination, description of cargo etc. is therefore required to be declared
subsequently and endorse in the policy.
An open cover /policy is valid for a given period of time or permanently open. As per this
policy the insurer undertakes to insure all the shipments for which the details are already
intimated to the insurer.
A specific policy covers specific shipments and such policy is readily available for submitting
with the export documents.
The coverage of risks is classified into categories like A, B, C etc. and the insurance policies
are issued accordingly.
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The above documents along with cargo are sent to ICD by road. The ICD used by may be
Parparganj, tuglakabad or any other, depending on the contract with the importer.
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Stage-5th
Customs Clearance
Custom House Agent (CHA) and freight forwarders, who are known as clearing
and forwarding agents, generally act on behalf of importance and exporters for handling their
export shipments or clearing their import consignments.
They handle all documentation work through the customs & port authorities and other
regulatory agencies
1) Shipping Bill: Shipping bill is the main document required by customs authority for
allowing shipment. The exporter (LUCKY EXPORT) has to submit some documents for
shipping bill which are as follows:
SDF (GR Form) in duplicate for shipment.
Four copies of packing list giving contents, quantity gross and net weight of
each package
Four copies of invoice indicating all relevant particulars such as number of packages,
quantity, unit rate, total FOB/CIF value, correct and full description of goods etc
Purchase Order, Letter of Credit
Inspection certificate
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Retained by customs
ii) Duplicate
Exporters certificate
iii) Triplicate
iv) Quadruplicate
to excise department
v) Quintuplicate
vi) Sixtuplicate
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2) GR/SDF Form: GR/SDF form is filled and submitted by the exporter. The exporter
give this form to his shipping agent to get it stamped from the customs office after clearance
of goods from custom. GR/SDF form is prepared in duplicate. The original copy remains
with authorities and they submit it to the Reserve Bank of India. Duplicate copy is submitted
to Negotiating Bank, after mentioning the date of receipt of payment on GR/SDF form they
also send it to RBI.
Contents of GR Form:
i) Name of advising bank (if exports is under L/C arrangement)
ii) Name of bank through which payment is to be realized.
iii) Customs assessable value.
iv) Quantity of goods.
v)
3) Bill of Lading:
or its agent acknowledging the receipts of the goods mentioned in the bill for shipment on board
and undertaking to deliver the goods in who like order and condition as received to the consignee
or his order provided the freight and other charges specified in the bill of lading require will
depend upon the terms of better of credit.
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CONTAINERISATION
Modern ship building technology has brought forth dry cargo bulk carriers and tankers to
reduce per unit cost of transportation in tramp shipping. Likewise the container technology
has brought in the cellular ships to carry general cargo in containers to reduce cargo-handling
cost and promote faster movements.
The container system of transportation involves bulking of the break-bulk cargoes by putting
them in containers of standard sizes shown below: Length Streadth Height
10 X 8 X 8
20 X 8 X 8-81/2-9-91/2
30 X 8 X 8
40 X 8 X 8
The movement of containers would progress in the following phases:
From port to port (Pier to Pier)- the carriage of containers is confined to the scalage of
journey.
From Inland Container Depot (ICD) in one country to ICD in another country- the
movement of containers is extended to the interior parts of the country and
Door to Door-the movement of containers is further extended right to the factory gates
of the manufacturer/exporter to the door of the importers warehouse in a foreign
country.
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Volumetric Calculation of Weight for charging: When shipping lightweight and bulky packages, use the following formula to help you
determine their volumetric weight:
Multiply the width by the length by depth of your shipment and divide the total by 6000.
For example
If the width is 50cm, length 40cm and the depth 30cm.
Vol. Wt. = 50cm x 40cm x 30cm = 10 Kgs
6000
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Stage-6th
Post-Shipment Operations
This document, also called as commercial invoice, is widely used in commercial
transaction. The seller generates this after the shipment is done. It is the statement of account of
sale rendered by the seller to the buyer and is prepared in a specific format. The invoice is
usually made out for the full realization amount of goods. It is one of the documents required for
negotiation.
The post-shipment department is done for preparing this invoice, the bill of
lading-number and date, shipping bill number and date, GR number and date, freight details,
quota details and letter of credit or contract copy is required.
This invoice is actually a commercial invoice. The major difference between pre
and post invoices are as follow:
The pre-shipment invoice is used for customs clearance while the other one is sent
to the L/C opener/buyer for getting the realization through the bank.
The post shipment invoice may contain the discount or partial advance payment, if
any, thereby reducing the bill amount compared to the pre-shipment.
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5 copies
Packing list
7 copies
Bill of Lading
2 orig. + 3 copies
10 orig. + 4 copies
1 copy
Weight List
10 orig.+ 1 copy
Additional Documents:
Certificate of Origin:
There are certain countries that require their importers to obtain certificate of
origin from the exporter, without which clearance of goods is not allowed.
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3 Copies
Commercial Invoice
5 Copies
Packing list
5 Copies
5 Copies
2 Copies
Weight List
2 Copies
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RECEIPT OF INQUIRY
FROM BUYER
UNDERSTANDING THE
REQUIREMENT & ACCESSING THE
CAPABILITIES
& CAPACITIES
NO
ACCEPTENCE
FOR SAMPLING
SAMPLING
PREPARATION
SAMPLE
APPROVED BY
BUYER
REVIEW
BUYERS
COMMENT
NO
DISPATCHING
(TAGGING, FOLDING, PACKING,
INSPECTION & TRANSPORTATION)
PREPARATION OF PRE-SHIPMENT
DOCUMENTS
(PACKING LIST, COMMERCIAL INVOICE, AR-2
FORM, BILL OF EXCHANGE ETC)
FEEDBACK
MODES OF PAYMENT
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Managerial functions tend to become more and more complicated as the operations of a
company cross the boundaries of the nation in which it is operating. Exports finance is no
exception to this generalization. The risk dimension accentuates significantly as soon as the
goods are sold to a buyer outside the country. Some of the risk factors are inadequate personal
knowledge about the foreign buyers, possible restrictions on transfer of funds from importers
country, fluctuations in rates of exchange, obstacles to payments for reasons such as wars,
political disturbances payment delays and a lot of other socio political factors. It may be
appreciated that these risk factors originate out of one common reason i.e. the business
operations are done in different of business environment.
The final indicator of success any business is its financial viability and in exports
the inflow of funds is from across the borders. So, an export transaction is deemed to be
complete only after the final payment has been received. The payment is influenced by several
factors such as government rules and practices, bankers, Om Policies, importers financial
position and the prevailing trade practices in the industry. The payment can influence other
factors of marketing mix, price being the most significantly affected. The exports managers must
take the following factors into account while evolving their payment policies.
a) The institutional aspect the operations of the mechanism and credit facibilities.
b) Foreign exchange and its relation to export terms and receipt of the export proceeds.
c) The methods of receiving payments.
d) Other factors.
i) Exporters knowledge of the buyer.
ii) Buyers financial position.
iii) Security of payment and risk factors.
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Duty Drawback
The duties suffered on the raw material used in the final export product, whether imported or
procured indigenously, are refunded to the exporter through duty drawback scheme.
The cost/duty figures supplied by all industries are used arrive at duty drawback rates,
which are published as all industry rates. In case exporter is not satisfied with this rate, he has an
option of getting a special band rate. The current scheme does not allow drawback, if the
exporter has already audited MODVAT credit.
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I.
I.
DEEC.
II.
DEPB
exporter is given license to import raw material without payment of duty. This license is
called an Advance License. The transaction under the license as to be logged by customs in a
book called DEEC book. This book has two separate parts for exports and imports. The
exporter has to undertake an export obligation in terms of value and quantity. The licensing
authority, Director General of Foreign Trade, monitors the export obligation.
The license could be two types:
Quantity based Advance License
Value based Advance License
The exporter has twelve months time to fulfill export obligation. Non-fulfillment of
the obligation attracts the duty waired easier on the imports of raw material plus interest plus
penalties.
This scheme shall apply only for the export of the product where standard input-output
norms have been published in hand book of procedures.
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Issuance of license
obligation
Nil
15%
35%
50%.
However, the export obligation of particular block of year may be set off by the excess
exports made in the proceeding block of the year.
In respect of license of Rs.100 crore or more, the export obligation shall be fulfilled over
a period of 12 years in the following proportions:-
Of license
obligation
Nil
15%
35%
50%.
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PROCEDURE:
1.
Seller and Buyer conclude a sales contract, with method of payment usually by letter of
credit (documentary credit).
2. Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of
Seller (beneficiary).
3. Issuing bank requests another bank, usually a correspondent bank in Seller's country, to
4. Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about
5. If credit terms and conditions conform to sales contract, Seller prepares goods and
6. Seller presents documents evidencing the shipment and draft (bill of exchange) to paying,
accepting or negotiating bank named in the credit (the advising bank usually), or any bank
willing to negotiate under the terms of credit.
7. Bank examines the documents and draft for compliance with credit terms. If complied with,
8. Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.
9. Bank examines the documents and draft for compliance with credit terms. If complied with,
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10. Documents release to Buyer after payment, or on other terms agreed between the bank and
Buyer.
11. Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods
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Brokerage fees
Export levies
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Insurance premiums
Air freight
Insurance premiums
Ocean freight
Lighterage
Lighter age
10
11
12
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Brokerage fees
Warehousing
Interest charges
Advertising
13
14
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EXW
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Ex Works
FAS
FCA
Free Carrier
FOB
Free On Board
CFR
CIF
CIP
CPT
Carriage Paid To
DAF
Delivered At Frontier
DDP
DDU
DEQ
Delivered Ex Quay
DES
Delivered Ex Ship
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The seller must place the goods alongside the ship at the named port. The seller must
clear the goods for export; this changed in the 2000 version of the Incoterms. Suitable for
maritime transport only.
FOB Free on board (named loading port)
The seller must load the goods on board the ship nominated by the buyer, cost and risk
being divided at ship's rail. The seller must clear the goods for export. Maritime transport
only. It also includes Air transport when the seller is not able to export the goods on the
schedule time mentioned in the letter of credit. In this case the seller allows a deduction
of sum equivalent to the carriage by ship from the air carriage.
Group D Arrival
DAF Delivered At Frontier (named place)
This term can be used when the goods are transported by rail and road. The seller pays
for transportation to the named place of delivery at the frontier. The buyer arranges for
customs clearance and pays for transportation from the frontier to his factory. The
passing of risk occurs at the frontier.
DES Delivered Ex Ship (named port)
Where goods are delivered ex ship, the passing of risk does not occur until the ship has
arrived at the named port of destination and the goods made available for unloading to
the buyer. The seller pays the same freight and insurance costs as he would under a CIF
arrangement. Unlike CFR and CIF terms, the seller has agreed to bear not just cost, but
also Risk and Title up to the arrival of the vessel at the named port. Costs for unloading
the goods and any duties, taxes, etc are for the Buyer. A commonly used term in shipping
bulk commodities, such as coal, grain, dry chemicals - - and where the seller either owns
or has chartered, their own vessel.
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SUMMARY OF INCOTERMS
For a given term, "Yes" indicates that the seller has the responsibility to provide the service
included in the price. "No" indicates it is the buyer's responsibility. If insurance is not included
in the term (for example, CFR) then insurance for transport is the responsibility of the buyer or
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the seller depending on who owns the cargo at time of transport. In the case of CFR terms, it
would be the buyer while in the case of DDU or DDP terms, it would be the seller.
Unlo
Unload
Entr
ad
Landi
Landin
onto
Entry - y Loa Export Transp from ng
Transp g
Transpo
trucks
Custo Duti
Incoter d to - duty ort to truck charge ort to charges
rt
to Insuran
from
ms
es
ms
truc payme exporte at the s
at importe at
destinati ce
the
clearan and
k nt
r's port origin origin' r's port importe
on
importe
ce
Taxe
's
s port
r's port
rs' port
s
port
EXW No No
No
No No
No
No
No
No
No
No
No
FCA Yes Yes Yes
No No
No
No
No
No
No
No
No
FAS
Yes Yes Yes
Yes No
No
No
No
No
No
No
No
FOB Yes Yes Yes
Yes Yes No
No
No
No
No
No
No
CFR
Yes Yes Yes
Yes Yes Yes
Yes
No
No
No
No
No
CIF
Yes Yes Yes
Yes Yes Yes
No
No
No
Yes
No
No
CPT
Yes Yes Yes
Yes Yes Yes
No
No
No
No
No
No
CIP
Yes Yes Yes
Yes Yes Yes
No
No
No
Yes
No
No
DAF Yes Yes Yes
Yes Yes Yes
No
No
No
No
No
No
DES
Yes Yes Yes
Yes Yes Yes
No
No
No
No
No
No
DEQ Yes Yes Yes
Yes Yes Yes
Yes
No
No
No
No
No
DDU Yes Yes Yes
Yes Yes Yes
Yes
Yes
Yes
No
No
No
DDP Yes Yes Yes
Yes Yes Yes
Yes
Yes
Yes
No
Yes
Yes
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CONCLUSION
It is clear from the above study that the complexity of international import-export business can
be overcome easily by a systematic export procedure & fair documentation. This is only the
documentation which safeguards the interests of Exporter, Importer, Banks, Governments,
Transport Agencies, Insurance Agencies and Inspection Agencies. Thus the whole study
concludes in brief
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To survive & grow in todays international market for any export house, the systematic
export procedure is compulsory.
To overcome any kind of error, bottleneck, fraud and mistake; the awareness and
implementation of standardized rule-regulations & documentation is necessary.
The final indicator of success any business is its financial viability and in exports the
inflow of funds is from across the borders. Thus mode of payment must be decided on
the basis of best business suitability according to the Govt. & RBI policies.
Also the Government of India has instituted many support programmes with a view to
give thrust to our sectors. These programmes have been made to facilitate the exporters
in their exports efforts at various stages of export process.
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Primary data is analyzed though interview of executives and they may not be available
and may not be part of research.
Less sufficient response of executives & supervisors in respect to information related to
securities & weakness matter of unit.
BIBLIOGRAPHY
WEBPAGES
export911.com
indiandata.com
Superindian.com
HOW TO EXPORT
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A NABHI PUBLICATION
EXPORT-IMPORT
NEWSLETTER
www.luckygroupcompanies.net
COMPANY BROCHURE
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