NEED FOR THE STUDY:

Export marketing is an important aspect of selling goods from one country to

another country. This helps the country to get more profits and it turn to help BOP of the
home country. For a developing country like India exports play a vital role in balancing
the differences between imports and exports.
The steel industry is the basic and prime industry the Iron and Steel is very much
important for the development of industries and industrialization. The Iron and Steel is
used from small cottage industry to major engineering industry and even domestic
purposes also like stainless steel vessels and construction of buildings houses, etc.
So iron and steel even affects the economy of the country .So the marketing study
of iron and steel industry becomes more important aspect of study.

OBJECTIVES OF THE STUDY:

The study has been under taken with the following objectives

To know about the importance of steel industry.

To know about the export procedure of VSP.

To know about the pricing strategies of VSP in the international market.

To know about the sales performance in export marketing.

To know about the profile of VSP.

To identify problems, if any in export marketing.

And to give suggestions.

METHODOLOGY OF THE STUDY:

The study is made by collecting data from the both primary and secondary
sources.
Review of iron and steel industry and other facts was done by collecting
information from secondary sources like manuals, journals etc.
The company activities and background was studied by interacting with the
executives and information collected from their records and also by the training guide
provided by the company.
The exports activities and information like product mix, pricing, export marketing
procedure, export documents were collected during the discussion with the guide allotted
by the company for the project and the material give by the guide
Other information like marketing plans, various sales and production figures,
were collected from the management information system (MIS) division of marketing
department.

LIMITATIONS:

It is not possible to collect all the data as the managers are not available because
they are busy with their work.

Most of the managers are reluctant to give information because the data is
confidential.

Export marketing is very dynamic .The policies and export procedures are
updated every now and then.

IRON AND STEEL INDUSTRY

Steel comprises of the most important inputs in all sectors of economy steel
industry is both a basic and a core industry. The economy of any nation depends on a
strong base of iron and steel strong potential in that nation. History has shown that
countries having a strong potentiality for iron & steel production have played a prominent
role in the advancement of civilization in the world.
Steel is such a versatile commodity that every object we see in our day to day life
has used steel either directly or indirectly. Their products are innumerable. To mention a
few, it is used for such small items as nails pins needles etc. through surgical instruments,
agricultural implements boilers ships frigates railway automobile parts etc to heavy
machines structures etc. the indirectly many modern fields of todays science and
technology, it would seem very painful to imagine the great investment that has into
the fundamental research.
In iron & steel technology has helped both directly and fate of todays civilization
had steel not been there. Steel is a versatile and indispensable item. The versatile of steel
can be traced to mainly 3 reasons. 1) It is the only metallic material item, which can be
conveniently and economically produced in tonnage quantities. 2) It has good strength
coupled with ductility and malleability. 3) Its properties can be changed over a very wide
range. It alloys easily with many the common elements. Its properties can be manipulated
to any extent by proper heat treatment techniques. Taking these factors into consideration,
it can be said without committing a serious error, that the types of steel available are
innumerable.

DEVELOPMENT OF STEEL INDUSTRY IN INDIA

The development of steel industry in India should be viewed in conjunction with
the type and system of government that had been ruling the country. Iron & Steel making,
as India has known a craft for a long time. However, its production in significant quantity
started only after 1900. The growth of steel industry can be conveniently studied by
dividing the period into pre & post independent era. By 1950 the total installed capacity
for ingot steel was 1.5 mt per year. During the pre independence period, there was no
significant development in steel sector mainly due to the apathy of the government. It is
only after independent that bold steps were taken to develop this sector. In a short span of
about three decades or so that capacity was chronological order is depicted below:
1830: Joshia marshal health constructed the first manufacturing plant at Porto nova
madras presidency. But it was a financial failure.
1874: James erskin founded the Bengal iron works. It passed on to M/s Hiller &
company. In 1882 and to M/s martin & co in.
1898: Jamshedji tata initiated the scheme for an integrated steel plant.
1906: Sakchi in Bihar was chosen as the site for the tata iron & steel Company. The
same place is now known as Jamshedpur.
1911: TISCO started production initially 1000t of ingots/year and in TWO Year it
reached 5000t per year by 1939 it reached a Production capacity of 15000t- ingot
steel per year.
1918: Initially iisco was founded and the Bengal iron & Steel was merged with it in
1926 to start with iisco restricted itself for manufacturing of pig iron for export to
U.K. and Japan. It produced steel in 1939.
1949-50: Formulation of the Mysore iron & steel ltd. At bhadravathi in karnataka owing
to the pioneering efforts of sir. M.VISVESVARAYA it originally consumed
charcoal produced by wood distillation plant and continued to produce charcoal
pig iron. Later it started manufacture of steel in 1936 and after 1945 adopted

electric reduction of iron ore. It is also manufacturing Ferro alloys and special
steel.

1951-56:

FIRST FIVE-YEAR PLAN:

No steel plant came up. First plant was mainly agicultural oriented. But TISCO
was allowed to expand from 1MT/year to 2 MT/year of ingot steel and IISCO from .
5MT/year to 1.0 MT /year. However, the first five plans contemplated a new steel plant
to be erected in public sector. Thus the Hindustan steel ltd was born on 19 th January
1954, with the decision of setting up three steel plant each with one million tonne ingot
steel per year at Rourkela, Bhilai & Durgapur.
1956-61:

SECOND FIVE-YEAR PLAN

It is during this period that additional steel producing capacity was installed and a
bold decision was taken to increase the ingot steel output in India to 6 MT/year. The three
1 MT steel plant one each at Rourkela, Bhilai and Durgapur were completed during this
period. They started production during the end of this plan. In addition we are having the
capacity to produce 300,000 and 350,000 tonnes respectively of pig iron for sale.
1961-66:

THIRD FIVE-YEAR PLAN:

During this plan the 3 plants under HSL, TISCO, IISCO, were expanded. The
expansion programs however could be completed only by 1968-69. Also were added
during this plan an alloy steel plant at Durgapur which has capacity of 100,000 tonnes of
ingots or 60,000 tonnes of finished steel, produces more than 100 categories of alloy
steels. The government was also considered to set up a steel plant at bokaro initially with
help of US. This, however, could not be materialized and in 1964 USSR agreed for
completed technical collaboration and assistance for bokaro plant in January 1964 BSL
came into existence.

1966-69:

RECISSION PERIOD:

The ambitious expansion programme taken up during the five-year plan could not
be completed during that period. All the expansion programmes were actively executed
during this period. The work on the first stage on bokaro plant (1.7Mt) started in October
1967.
1969-74:

FOURTH FIVE-YEAR PLAN:

Balancing facilities have been incorporated in all the steel plants. Work for 2 nd
stage expansion of bokaro was registered on October 25, 1972 to 4.0 Mt. Also started in
this period, Salem steel plant. Work on Sales steel plant project was also taken up during
this period licences were given for the setting up of many mini steel plants and re-rolling
mills. Government has accepted the idea of setting up 2 more steel plants in the south one
each at VISAKHAPATNAM AND and hospat. Both these produce plain, low carbon steel
products initially with a capacity 2 mt. Year of ingot steel. SAIL was also formed during
this period on 24 January, 1973. All the plants tried to increase their production with the
result the total steel output also increased. There was significant increase in the quantity
of steel products exported to other countries. Central research & development
organization was set up in June 1973 to tackle the research and development of the iron
& steel industry countries.
1974-79:

FIFTH YEAR PLAN:

Work on Salem Project programmed well. Bokaro with 1,7 Mt capacity started in
February78, The expansion of Bhilai Steel Plant from 2.5 Mt. To 4.0 Mt. And bokaro
from 1.7 mt to 4.0 mt. Picked up momentum. The idea of setting up the 5 th integrated
steel plant, the first shore-based plant at vizag took a definite shape. More mini steel
plants and re-rollers have been added. Modernization work on RSP also started. By the

end of fifth five-year plan , the total installed capacity from 6 integrated plants was 10.6
mt.
1979-80:

ANNUAL PLANS:

The various plans on hand were reviewed and the progress on different plants
consolidated. Soviet Union has agreed to help in setting up the VIZAG steel plant.
1980-85:

SIXTH FIVE-YEAR PLANT

Work on expansion of BhilaI & Bokaro plants progressed. Bokaros intermediate

stage of 2.5 mt. Completed. Many of the units were commissioned stage 1 of Salem
plant was commissioned on 13-09-81. Work on VIZAG steel plant started with a big band
and top priority was accorded to start the plant. TISCO was modernized by adding LD
converter shop, continuous casting and vacuum are refining units the capacity to 2.16 mt.
Schemes for Modernization of BSP, RSP, DSP, and IISCO were initiated. Production
from mini steel plants improved considerably. At the end of 6 th five-year plan the capacity
from integrated steel plants stood at 11.56 mt.
1985-91:

SEVENTH FIVE-YEAR PLAN:

Almost all the units in the expansion work of Bhilai & Bokaro to 4.0 mt
Completed on VIZAG steel plant picked up and the rationalized concept has been
introduced to commission the plant with 3.0 mt liquid steel capacity by 1990.
1992-97:

EIGHTH FIVE-YEAR PLAN:

All units of VIZAG steel plant are commissioned by July 1992. Government of
India has given permission to private parties to set up mini steel plant.

PRESENT STATE OF INDIAN IRON &

STEEL INDUSTRY AND FUTURE PLANS
Presently in India steel products are being produced from four different sources:

INTEGRATED STEEL PLANTS.

MINI STEEL PLANTS.

RE-ROLLING MILLS.

ALLOYS AND SPECIAL STEEL PLANTS.

CHARACTERISTICS OF INTEGRATED STEEL PLANTS:

1. They have large capacities. A total installed capacity of six major integrated steel
plants is over 70Mt of crude steel per year.
2. Highly capital intensive. Cost of setting up a green field steel plant now is around
Rs 30, 000/- per ton of steel capacity. These have long gestation period.
3. Labour intensive. About 0.28 million employees are employed in Indian iron and
steel industries. Integrated plants and major source of employment of engineers,
technicians, skilled and semi workers.
4. They would have all facilities including raw materials resources , water supply ,
power supply , testing and inspection facilities, township facilities medical,
educational, recreational etc. ,all under one administrative control . This would the
extent of dependency of outside agencies, which would help the smooth running
of plant.
5. It starts with the fundamental, naturally occurring raw materials, and processes
them to the finished products-all operations being carried out under administrative
control.
6. Interdependencies of all the processing units on the processing units the path of
material flow.
7. Potential source for earning foreign exchange through exports.
10

8. They serve as centers for the development of ancillary industries around the steel
plants.
9. They are major consumers of refractory materials. About 30-40kg of refectories
are needed to produce one ton of crude steel.
.
CHARACTERISTICS OF THE RE-ROLLING MILLS:
1. They buy the primary rolled product from integrated steel plants or mini steel
plants and process them into finished rolled products.
2. They generally dont have any meeting and refining facilities.
3. Originally re-rolling mills were producing only bars and rods but now they
produce variety of products like light structural, ribbed bars etc. .
4. Though the installed capacity re-rolling mills is 21mt only of the rolling steel. Out
of 1061 re-rolling units, 396 are closed of various problems. Global environment
facility (GFE) a government project has now taken up the revival plan for rerolling industry.

FUTURE PLANS:
Though steel industry is having recessionary trends now, it is bound to stage come
back sooner than anticipate. With the increased volumes, economy of operations becomes
competitive. In recent past steel market has turned into buyer market from seller market.
Steel industry in India has prepared their future plans keeping customer satisfaction in
view.
SAIL has prepared a corporate technology plan for 2005A.D which aims to
achieve target capacities through technology upgradation and moderation, creation of
new facilities and introduction of new technologies. Besides this, SAIL has been also

11

planning to hive off some of its power plants, oxygen plants and fertilizer plants at
Rourkela etc.
RINL has worked out a corporate plan up to 2002ad which envisages to introduce
modern technology in coke ovens and blast furnace to increase their capacities, add
second steel melting shop with a slab caster, by investing an amount of approximately
Rs1520crores .When implemented, plant would produce 3.85Mt of hot metal and 4.05Mt
of steel by the year 2201-2002ad.RINL is now also planning to hive off its power plant.
As a separate company, it would come under infrastructure sector and all the benefits
available to this sector can be availed.
TISCO has also completed its modernization plans. Recently they have set up a
hot strip mill and are now setting up a cold rolling mill which is expected to be
commissioned in the year 2000.Setting up of the new bar mill announced earlier has been
put on hold.
Though majority of steel now in India is producing through LD converters present
trend in the world is to adopt electric arc furnace route. It is predicted that percentage of
steel produced through eaf route in the world in the year 2010 will increase to 50% from
the present level of nearly 35% new steel plants are likely to be commissioned in next
few years adding a capacity of 13mt of steel per annum.

12

GLOBAL STEEL SCENARIO:

Evidences indicate that iron and steel items have in use the mankind for almost
6000 years. But the modern form of iron & steel industry producing cheaper steel by
mass production came into being only during the 19th century, after industrial revolution
took routes on Great Britain and other European countries. This was made possible by
DEVELOPMENT of Bessemer steel making process by DR.HENRY BESSEMER, openhearth furnace by SIEMEN and MARTIN brother and modern rolling mill by HENRY
CORT.
However, the growth & development of I&S industry of world was comparatively
slow and picked up at a significant rate after World War II. From a level of 28.30Mt in
1990, it rose to 786 Mt in 1989. The oil crisis of the seventies had a pronounced impact
on the over all economy of the world including steel. Steel production started declining
and reached a low of 645.80mt in 1982. Nineties saw the collapse of great Soviet Union
& eastern European economies. However in 1997 there was some recovery when global
steel production and consumption levels touched the figure of 793mt & 695mt
respectively. It is also observed that there is a definite shift in the growth of steel industry
from developed countries to developing countries. The trends that there would be growth
in steel industry at the rate of 0.13% in developed countries as against developing
countries mainly Asian countries where growth is predicted at the rate of 3.25%.the steel
prices in the international arena started declining since dec95. The economical crisis of
South East Asian countries has started showing its effect and will continue to affect the
international steel market. However, the market conditions are likely
To improve by second half of 1999 however, there is a trend through out the
world to use the latest steel making technologies which are helpful in reduction on cost of
production of steel. Combined blown converters, more and more production by steel by
electric furnace, replacement of ingot route by concast route, thin slab casting use of
alternative routes for iron making viz. corex process are gaining ground.

13

INDIA:
India is the 10th largest producer of steel in the world with a production rate of
23.4MT in 1997. With its abundant mineral resources, cheap lab our and strategic
location India has a potential to become force to recon in global arena. After govt. of
India adopted the policy of economic liberalization is looking up 21 projects with
licensed capacity of 12 MT with investment to the tune of RS22000 have been cleared
since 1991 and are in different stages of construction and commissioned 6 more projects
with 5 MT installed capacity are in the pipeline investing about RS 10000. by 2006 it is
expected steel demand will rise to 49MT including provision of 9MT towards exports
however ,presently Indian steel industry is passing through a dark phase due to crashing
of prices on global market and general recess in Indian economy and currency crisis in
south east Asia since august 1996. Dumping of cheap steel by CIS countries and South
Korea, Japan has affected the local steel industry adversely.

14

INTRODUCTION
To set up an integrated steel plant at Visakhapatnam was announced on 17th
August 1970 by Smt. Indira Gandhi in Parliament and the formal inauguration was done
on 20th January 1971.

The plant annual capacity was 3 million tons of liquid steel in October 1977.
USSR helped India in setting up the 3.4 million tons integrated steel plant at
Visakhapatnam in the year 1979. The project is estimated to cost Rs. 6,269.57 tons based
on Mills as on first quota of 1986.

VSP became the first Integrated Steel Plant to achieve the distinction of covering
all the process and products under ISO 9002, ISO 14000 and ISO 18000 for the entire
plant.
Having a total manpower of about 17,000, VSP has envisaged a labour
productivity of not less than 230 Tonnes per man per year of Steel which is the best in the
country and comparable with the International levels.
The main consideration for setting up the steel plant at Visakhapatnam was to have
locational advantage of port on the coast of Bay of Bengal.

However, locational

advantage could not be utilized fully by the Company due to various constraints and nondevelopment of captive harbor adjoining the plant site. The main objectives of RINL on
its incorporation were to take over the VSP from SAIL with all its assets, liabilities, rights
and obligations and to carry on in India and elsewhere manufacturing, trading, importing
and exporting of iron and steel of all qualities.

15

MISSION:
To be a continuously growing company through technological up-gradation,
operational efficiency and expansion, producing steel at international standards of cost
and quality ensuring optimal return on investment to stakeholders and meeting
expectations of the customers.

OBJECTIVES:

Towards growth-Expand the plant capacity to 7 MT by 2011-12 and 10

MT by 2019-20.

Towards profitability- Achieve net profits from 2002-03 onwards with

special emphasis on enhancement of production.

Towards employees- make RINL the employer of choice. Upgrade the

skills and efficiency of employees through training and development and
maintain high levels of motivation and satisfaction.

Towards safety, environment and safety- Continue efforts towards safety

of employees, conservation of environment and become a good corporate
citizen.

16

INFRASTRUCTURE FACILITIES
Location:
The plant is located on the coast of Bay of Bengal. 16 Kms. to the South west of
Visakhapatnam port. It lies between the northern boundary of National highway from
Madras to Calcutta and 7 Kms. the south of the Howrah - Madras Railway line.
Visakhapatnam is well connected by own with unique cities of India.
The area enclosed within boundary wall of steel Plant is about 2,600 hectares.
Additionally 2,600 hectares is occupied by Steel Plant Township and 350 hectares by
Kaniti Balancing Reservoir.
Power:
Total requirement of power in VSP is 280 MW where 3.0 million tons stage is
reached.
Parts of this requirement are met from 4x60 MW generators at VSPs own captive
power plant.
Two steam turbine generators of 7.5MW each generates power using waste heat
of dry quenching unit of coke ovens and 2x12.0 MW temperature pressure recovery
turbines will generate power utilizing high pressure available from temperature gases of
BF.
The balance 1.39MW (about 150MVA) of power is to be supplied by the Andhra
Pradesh state electricity board to meet the maximum demand requirement of power at
VSP.
Water:
The total water requirement of the plant will be 73 million gallons per day, which
is to be met by the Yeleru water supply scheme, which is an Andhra Pradesh government
project.
17

Auxiliary Facilities:

Extensive facilities have been provided for repair & maintenance as well as
manufacture of spares. The repair shop complex houses machine shop, structural shop,
Steel and NF foundry, Forge shop, Loco & wagon repair shops, Electrical repair shop,
Utilities equipment repair shop, Air conditioning & ventilation system repair shop.
In addition to the above basic units to carry out various operations, VSP is having
fully equipped Research & Control Laboratories to monitor and control all the operations
carried out in the Plant.
It is also having well established Training and Development Center to train the
newly recruited personnel and to conduct refresher courses for the employees and make
them able to handle jobs assigned to them during their regular duties.

MAJOR SOURCES OF RAW MATERIALS:

RAW MATERIALS

SOURCE

Iron one lumps and fines

Bailadilla, M.P.

BF Lime stone

Jaggayyapeta, A.P.

SMS Lime stone

Jaisalmer, Rajasthan

BF Dolomite

Dubai

SMS Dolomite

Madharam, A.P.

Manganese ore

Chipuripalli, A.P.

Boiler Coal

Talchar, Orissa

Coking Coal

Australia

18

MAJOR UNITS:

DEPARTMENTS

ANNUAL

CAP. UNITS(3.0MT STAGE)

(000T)
COKE OVENS

2,261

3 Batteries each of 67
ovens
&7mts Height

SINTER PLANT

5,256

2 Sinter machines of 312

Sqm grate area each

BLAST FURNACE

3,400

2 Furnaces of 3200 cum.

volume each

STEEL

MELTING 3,000

SHOP

3 LD Converters each of
150 cum. volume & six 4
strand bloom casters

LMMM(Light

& 710

4 stand finishing mill

Medium Merchant Mill)

WRM(Wire Rod Mill)

850

2 x 10 stand finishing mill

MMSM(Medium

850

6 stand finishing mill

Merchant

Structural

Mill)
Besides these main metallurgical units Captive Power Plant of 247.5 MW
capacities, Oxygen Plant, Acetylene Plant, Compressed Air Plant, Extensive repair and
maintenance facilities form part of the services available at VSP.
Steel Plant can take pride in having a clean & green township with provision of
about 8000 quarters, markets, community welfare centers, clubs, etc. for the employees
and their families besides having a modern hospital with 155 beds
MODERN TECHNOLOGY:

19

Seven-meter tall coke oven worth dry quenching of coke using Nitrogen gas,
steam generated during this process is to be used for power generation. 3200 cum. Blast
furnaces, the longest in the country with conveyor changing the belt less top equipment.
Gas expansion turbines are provided for power generation by utilizing the BF gas top
pressure.

Hot metal desulphurization facilities provided for 100 percent continuous

casting of liquid steel into blooms. High speed Rolling mills with computerized controls
and extensive waste heat recovery system were provided
MAJOR PRODUCTION UNITS:

A) Coke ovens:
The coal is proposed before charging into Coke ovens in coal tower.

The

prepared coal in the coal tower is drawn by a changing car on the top of the batteries and
charged into the ovens as per the sequence -0 The charged coal is gradually heated in
absence of air to attain a temperature of 1000-1050 0 C which generally takes about 16
hrs for the coke to be ready. The volatile matter escaping during carbonization is
collected in a gas collection main through stand pipe. The stone is cooled by Ammonia
liquid spray and sent to coal chemical plant. The ready coke is pushed out of the oven by
a pusher car into a coke car and is taken to the dry cooling plant for discharging the hot
coke into cooling chambers.
There are three batteries, each having 7 ovens. Each oven is having a volume of
41.6 m2 and can hold 31.6 T of only coal charge.
The heat for carbonization is being supplied by a mixture of blast furnace gas and
coke oven gas having a calorific value of 1000 Kcal/NM3.
Batteries are of under jet, compound type having twin heating filled and
recalculation of waste gases.

20

B) Sinter plant department:

In Sinter plant ore fines are made into Sinter before being charged into blast
furnace.

An initial mix consisting of ore fines and blue dust, manganese ore,

metallurgical wastes, dolo-fines, sand, 80% of limestone and 80% of coke fines is
prepared. This mix along with sinter returns, Sinter screenings 20% of lime fines and
20% of fine coke is stocked in bunkers. Moisturizing and palletizing is carried out in 4.2
x 24m drum mixer to obtain homogeneous mixture with partial palletizing and optimum
moisture. 10-25 mm size sinter is used as hearth layers of about 40mm thick. This
decreases dust entrapment by exhaust gases, reduce grate bar consumption.
Sinter mix up to 300mm thick is laid on the heath layer. A mixture of coke oven
gas and blast furnace gas having a calorific value of 2,000 Kcal. NM 3 is used for
ignition.
The prepared sinters is crushed to about 15mm size and cooled by forcing
atmospheric air. This sinter is then sends to blast furnace through conveyors.

C) Blast Furnace:
There are two blast furnaces of 3,200 cubic meter useful volumes, each capable of
producing 1.7 Mt of hot metal per year while operating for 350 days are installed. There
are four hot blast stores for each furnace with a total heating surface of 224,000 square
meters. The dome can be heated to a temperature of 1450 0 C maximum while the waste
flue temperature is up to 4000 C. Stores are heated, by a mixture of blast furnace gas and
coke oven gas having a calorific value of 1100 Kcal/N Cum, up to

1300 0C pressure

of mixed gas before burners is 600 mm W.C.

Hot metal is discharged into 140 T hot metal ladles by rocking runners in east
house. There are four railway tracks for hot metal transportation, one service sub-track
and once track for flue dust disposal independent running railway tracks are provided for
delivery of hot metal to SMS requirement = 0.5 - 3 T as per blowing conditions Raw or
calcined coke - used to increase lining life of converter. Lump Coke - Use to preheat the
lining of newly lined converter.
21

D) Rolling Mills:
The cast blooms produced in SMS-CCD do not find much applications as such
and are required to be shaped into products such as Billets, rounds, squares, flats, angles
(equal & unequal), T-bars, Channels, I-PE beams, HE beams, wire rods and
reinforcement bars by rolling them in three sophisticated high speed high capacity, fully
automated rolling mills. They are
1. Light & Medium Merchant Mills
2. Wire Rod Mills
3. Medium Merchant & Structural Mills.
All the above-mentioned Rolling mills are Hi-Tech Rolling mills with
full automation and all modern equipments.

E) Raw material handling plant (RMHP):

The raw material handling plant receives the basic raw materials required for the
steel making process from various sources through railway wagons. The raw materials
like Iron ore fines, iron ore lumps, sized iron ore, limestone, dolomite etc are stocked in
ore and flux yard. Imported coking coal, medium cooling coal and boiler coal is stocked
in coal yard. These raw materials are sent in different proportions to nations departments
through conveyor system.

Salient features of RMHP:

Peripheral unloading system for railway wagons coming directly up to

pushers.

Blender reclaims for blending of ores and flux in which the bucket wheel
has a lateral motion across the bed.

Wheel on boom reclaims for reclaiming different materials from some bed
in ore of flux yard and same type coals in CHP.,

Ring Granulators for crushing of boiler coal.

22

PLC control of all systems.

Driers for dying SMS sized ore.

Mixers for mixing lime in purchased and generated fires.

Preparation of sized iron ore for use in BF to enable close size range of
raw materials.

Dust Extraction system is provided at various locations of RMHP to

absorb the dust generated during the process.

VARIOUS IRON & STEEL PRODUCTS:

VSP holds forth promise of adequate simply to the consumers of Iron & Steel
product in the country. Pig Iron, Billets, Plain rounds, Reinforcement bars, plain and
Ribbed Rods, Equal and unequal Angles, channels and beams flooring out of VSPs large
capacity mills will ensure that the requirements of all consumers are fully met.
PRODUCTS QUALITY:
Computerized process control of VSP starts right from the hot metal production.
Dynamic control of steel melting operation guarantees steel chemistry strictly as per
specifications, Product with International specifications and tolerance, Reinforcements
bars of VSP produced through Temp core cooling process will have high strength
coupled with good bendability and weldability are a boon to the construction sector. VSP
wire rods will have high strength and good ductility because of controlled cooling of wire
rods by the STELMORE cooling.
BY-PRODUCTS:
For consumers wanting suppliers of naphthalene, Pitch, Anthracite oil, neonate
oil, coal tar, wash oil, light oil, Benzene, Toluene, Xylene etc.,
By products from its 60 Modern coke oven plant will be useful in many industries.

23

ACHIEVEMENTS:
Commissioned in 1989, it was the shore based, integrated company spread over
an area of 5000 sq.km. Since commissioning, VSP has crossed many mile stones in the
fields of production, productivity and exports. Some of the peak achievements are:

ISO 9002 for SMS and all the downstream units- a unique distinction in
the Indian Steel industry.

Indira Priya Darshini Vriskha Mitra Award: 1992-93.

Nehru Memorial National Award for Pollution Control:1992-93 & 199394.

EEPC Export Excellence Award:1994-95.

CII(Southern Region) Energy Conservational Award: 1995-96

Best Labour management Award from the Government of AP.

SCOPE Award for best turnaround for 2001,02,03.

Environmental Excellence Award from Greentech Foundation for energy

conservation in 2002.

Best Enterprise award from SCOPE,WIPS for 2001-02, besides

A number of awards at the Local, Regional &National level competitions

in the area of Quality Circles &Suggestions schemes, etc.

24

IMPORTANT DEPARTMENTS IN VSP.

Coke & Coal chemical Department.

Thermal power plant (TPP)

Sinter Plant (SP)

Raw materials handling plant (RMHP)

Blast Furnace (BF)

Steel Melting shops (SMS)

Rolling Mills.

Light & Medium Merchant Mill (LMMM) Wire Rod mill (WRM)

Medium Merchant & structural mill (MMSM)

Auxiliary shops.

Forge shop

Steel structural mill

Central Machine shop

Foundry

Field Machinery Department (FMD)

Ore mines and quarries (OMQ)

Traffic Department (TD)

Energy Management Department (EMD)

Production planning and Monitoring (PPM)

25

Safety Eng. Department

Quality Assurance & Technology Development Department (Q, A

& TD)

2002-03 AN YEAR OF TURNAROUND

For the financial year 2002-03 ,VSP is expected to achieve a net profit if around
Rs.450 crores inspite of the best efforts by VSP, collective, achieving net profit became
an eluding milestone due to various reasons like long gestation period ,high interest loans
and low demand cycles during the last 10 years. But these odds never deterred VSPs
determination to achieve success. While the tear 2001-02 was the year of achieving
Rated capacities, the year 2002-03 is the year of Turn around for VSP
Five key parameters that led to VSPs turnaround are:
1. Innovation and up gradation of the plant equipment.
2. Efficient operations management coupled with optimum waste
utilization and cost reduction measures.
3. Marketing policies and strategies aided by speedy decision making to
achieve record sales.
4. Healthy HR with emphasis on motivation and morale boosting of
employees.
5. Dynamic financial and cost management.

Marketing performance:
VSP has posted its best turnover of Rs. 5059 crs. This corresponds to 24% in
improvement in total sales over the last year. The total sales include best domestic sales
of Rs. 4443 crs and Rs. 626 crs of export sales. While the domestic sales improved by
19%, exports grew by 69 % over last year. VSP has sold 4.25 lakh tons of special steel, a
growth of 16% over last year.

26

ROLE OF EXPORT MARKETING:

Marketing itself is a significant factor of economic development of a country.
Every economy reports to enter the International Trade to develop its manufacturing and
trading activities. The process of industrialization depends on export marketing.
In order to materialize the goal of development planning, many development
economies including India have attached immense role to export marketing. A close
relationship exists between foreign trade and economic breakthrough of a country
whether it is economically developing or developed.

Export Marketing is comparatively a highly complex and scientific activity than

domestic selling. There are different governmental rules and regulations having bearing
on business operations of various countries. International competition in packaging,
credit terms, delivery schedules and after sales service facilities to mention a few in
severe, thereby rendering complex. Therefore, there are a few basic requisites of overseas
selling which a prospective exporter must not only fulfill at a particular point of time but
also continue to keep him always abreast of them.

27

EXPORT PROCEDURES OF VSP:

The main objective of the export producer is for streamlining the various activities
connected with exports. e.g, Booking of Orders, Appointment of handling, dispatch of
materials and claims etc.
The agencies involved in the process are as follows:
Marketing Department
Finance Department
Production Planning and monitoring Department.
Committee of marketing and Finance.
Advance licensing section.
(A) PLANNING:
Marketing department finalizes the material to be exported at least 45 days before
the start of the quarter in consultation with the PPM department. Market information
about demand prices of each country on periodical basis is collected. They also decide the
quantities to be exported through agents and spot booking.
(B) BOOKING OF ORDERS:
1. By inviting bids through Internet.
2. By spot Booking.

28

1. By Inviting Bids:
VSP invites bids from organizations / persons to whom VSP is already exporting
and also to the updated customers. The customer database is regularly updated on the
basis of inquiries received from time to time.

The bids are received by internet/E-mail. After analyzing the bids, VSP allocates
(exports) the products to different bidders on the following basis.

The prices quoted.

The quantity required.

The credit worthiness of the bidder.

Maintaining presence in various markets and not allocating (exporting to only

one market).

2. By spot Booking:

VSP also believes in the demand forecasting about the products produced by them
for the next quarter and the quantity already committed during the next quarter.
If any surplus is left over and if some of the customers require more quantity VSP
takes spot booking taking into consideration the quantity ordered and the quantity
available.

Spot booking is generally accepted for any price, which is above a minimum price
known as floor level price (FLP) the price is fixed after negotiations between VSP and
the trader booking the order.

29

(C) OPENING OF LETTER OF CREDIT:

This step involves opening of letter of credit (L/C) or any other financial
agreement by the customer. Once this is done, it ensures that there is no chance of any
default once the goods are exported by VSP.

(D) DELIVERY SCHEDULE:

It will be confirmed by VSP after the receipt of L/C in VSPs format. In some
exceptional cases, delivery schedule can be extended beyond the quarter by one month at
the decision based on the rolling programmed.

(E) ADVICE FOR COMMENCEMENT OF PRODUCTION:

At this stage, the advance license department of the exports gives the advance
license application No. Notice of readiness (NOR) is issued to the customer after rolling
is completed.

(F) NOMINATION OF VESSEL:

This step involves nomination of a vessel to carry the goods to their destination.
VSP mainly follows two ways of nomination vessels, which are

FOB (Free on Board): In these conditions the seller delivers the goods on
board the vessel free of cost to the buyer at a port of shipment named in the
sales contract ( (90% of VSPs export are on FOB basis)

30

CIF (Cost Insurance and Freight): In it the word cost signifies the price for
the goods themselves. In CIF, the seller has to procure insurance against the
risk of loss or damage to the goods during the carriage. The main difference
from FOB is that in CIF the seller (VSP) nominates the vessel and pays for
carriage.

This is done by contracting transchart in the ministry of surface transport.

Depending on the destination and the quantity to be exported, transchart nominates a
vessel. Then VSP enters into an charter party agreement with the owner of the vessel
nominated by Transchart.

(G) ACCEPTANCE OF NOMINATED VESSEL:

In this step, the acceptance of the nominated vessel takes place. VSP decides the
acceptance of the vessel on the following basis.

Age of the vessel ( It should not be more than 25 years)

Handling equipment ( Crane etc.) are available on the vessel

(H) TRANSPORTATION OF THE GOODS FROM PLANT TO THE PORT:

Once the product is rolled out as per the customer specification, the next step is
the transportation of the finished goods from the plant to the port. Here, a filled AR4 form
has to be submitted to central excise authorities it keeps in eliminating the needs to pay
central excise duty on the goods to be exported.

(I) FULFILLMENT OF CUSTOMS FOR FORMALITIES:

31

In this stage, some customs formalities are fulfilled.Filing a shipping bill with the
customs. The shipping bill contains the description & quantity of the goods being
exported & the value of the above mentioned goods.

Presentation of a form known as G/R declaration form (which contains the

shipping bill reference no.) in duplicate to the customs. After shipment and
verification the original is sent to RBI and duplicate copy is returned to VSP
which submits the same to the bank where it presents the documents either for
negotiation against L/C or for onward transmission in case money is received
in advance.

(J) LOADING OF VESSEL:

In this step, when the vessel arrives, loading takes place on the vessel. Generally,
the no of days to be taken for loading is decided before the loading takes of. If VSP loads
the goods in lesser no of days than the agreed no of days (Lay Days) it earns certain
amount of money known as dispatch money from the master of the vessel. In reverse
situation, VSP has to pay to the master of the vessel a penalty, which is known as
demurrage charge.

(K) ISSUANCE OF MATES RECEIPT:

In this stage, the Mates receipt is obtained. This is issued by the Master of the
vessel on completion of loading. It contains the following particulars.

Description of goods.

Quantity shipped

Loading Port

Destination Port
32

Name of the consignee

Notify address

Any other particulars, as agreed to between the buyer and VSP.

This receipt should be dated and stamped by the master of the vessel. Bill of

lading if registered is issued either by the master of the vessel or his agent on submission
of the masters receipt. Its prepared strictly in accordance with a specified format.
(L) CONTRACT AND AMENDMENTS THERE TO
After finalization of an order, the marketing department informs the details like
material specification, size, quantity, delivery schedule etc. to PPM, works department
concerned, finance, and advance licensing section etc.
The advance licensing informs the advance license application No. or advance
license No. and Duty Exemption entitlement certificate (DEEC) book number to the
concerned officer in exports section. Marketing people then send the detailed contract for
sale and purchase of steel products/pig iron in the approved form in duplicate to the
buyers for his signature. On receipt of the signed contract copies from the buyer, they
sign the contract on behalf of VSP. They also send one copy of the signed contract to the
buyer and a photocopy of the contract to the Finance Dept., independent Inspection
Agency, and shipping section under marketing.
If the buyer insists on some amendments to the approved format the marketing
department obtains the approval of the competent authority and communicates to the
buyer accordingly. In case any amendments is required in the contract including
extension of delivery schedules, the marketing departments takes the approval of the head
quarters Marketing Committee (HQMC) or competent authority as per the delegation of
powers.

33

(M) LETTER OF CREDIT AND AMENDMENTS THERE TO

In case the payment is arranged through L/C, the marketing department ensures
that the buyer opens the letter of credit in the specified format through any of the
International banks having correspondent relationship with SBI, Bank of Baroda, SBH or
any other member of the consortium bankers of VSP. Finance department then forwards
the letter of credit on receipt from the bank to the marketing department along with the
list of amendments required from the finance point of view. They also inform the name of
the bank through which the LC would be negotiated.
Except for the variation in the language from bank to bank the marketing dept
ensures that there is no amendment to the terms and conditions of the L/C and if there is
any amendment, they take the approval of the head quarter marketing committee.
Finance dept also informs marketing department about the confirmation of letter
of credit.
(N) CANCELLATION OF CONTRACT
The contract may be cancelled with the approval of the competent authority in the
following cases.

If the contract copy forwarded to the buyer is not returned to VSP within the
stipulated time.

If the amendment to the agreement proposed are not accepted to VSP.

If the buyer fails to place the vessel for loading within the agreed time or the
vessel placed is not suitable for the loading, negotiate the documents as per the
Red clause. If there is no Red clause cancel the contract.

34

If a buyer fails to open the letter of Credit (L/C) within the stipulated time or fails
to carry out necessary amendments to L/C within the stipulated time. In such
cases the marketing department informs the Finance departments, works Dept.
concerned and Advance License section about the cancellation of the contract.
When a contract is cancelled for any of the above reasons, the marketing

department encashes the performance Bank guarantee submitted by the buyer, if any, as
per the delegation of powers.
(O) APPOINTMENT OF PRE-SHIPMENT INSPECTION AGENCY:
The marketing dept. issues tender Enquiry to at least three parties of International
repute, having operations at Visakhapatnam. (The tender enquiry shall be issued at least
30 days before the expiry of the present contract.
They also allow ten days time to the parties to quote against the enquiry. They
also follow the standard procedure for receipt, opening and evaluation of the tenders
received and finalized the tender.
(P) APPOINT OF TRANSPORTATION HANDLING AND STEVEDORING
AGENTS:
The marketing department issue limited tender Enquiry to all eligible parties with
the approval of the competent authority. They ensure that all parties have got valid license
to work at Visakhapatnam Port.

35

DOCUMENTATION:
A distinguishing feature of international trade is the complex paperwork.
Therefore many small exports are frightened by the extent and complexity of the
documentation.
CLASSIFICATION OF DOCUMENTS
A. DOCUMENTS RELATED TO GOODS:
1. Commercial invoice:
A commercial invoice gives details of the goods, which are the basis of the
the transaction between the exporter and the importer. It is an important document.
This performs many functions
i)

It is the exporters bill of goods.

ii)

It serves as the basis for calculation of the import duties by the

custom officials in the buyers country.

iii)

It serves as the evidence of contract of sale.

2. Performa invoice:
An importer may require a proforma invoice for the following purposes:
i)

To obtain an important license from the government of his country.

ii)

To help him open a letter of credit.

iii)

To obtain the release of foreign exchange.

3. Packing list:
The exporter is required to pack the goods according to the instruction of

36

the importer. A list of content of each case or pack is called as a packing

Note. If there are many cases or packs, then a consolidated statement of
contents is prepared. A separate packing note is prepared for the each
container.
4. Certificate of origin:
i)

Description, quantity and value of the goods.

ii)

Number of packages and markings on each package

iii)

Declaration by the shipper(exporter)

iv)

Certificate by the issuing authority.

5. GSP Certificate:
Under the generalized system of the preferences scheme of the united Developing
countries are given the facility to export their manufactured goods to developed
countries, at concession rates of duty. India is one of the recipients of such concession. In
order to avail this benefits a GSP.
Certificate of origin is required to be obtained from a competent authority. The
government has authorized the export inspection council and the director general of
foreign trade (DGFT) to issue the certificate for all the items.
It has also authorizes the central silk board, the courier board, the all India
Handicrafts board, the textiles committee and the jute commissioner to issue such
certificate in respect of items falling under their control.

B. DOCUMENTS RELATED TO TRANSPORT:

The exporter can transport the goods by sea, air or combination of road/rail
or even post.

37

1. Shipping order
2. Mates receipt
3. Bill of lading
Contents of bill of lading:

Name of ship or vessel

Name of the port where goods were loaded

Name and address of the shipper

Name and address of the consignee. It may be whether blank or in favor of a

Specified person or his order.

Name and address of the person to notify when goods reach destination port

Port of discharge and delivery

Details of freight paid or to be collected

Description of goods

Number and kind of packages

Marks and numbers on packages

Remarks about condition of goods, if any

Contents of the shipping bill

Name, address and IEC number of the exporter

Name of the ship or vessel

Name of the agent

Description, quantity of goods

Value of the goods

Type of cargo (whether containerized or bulk)

Number of packages

Markings and numbers on each of them

38

Port of discharge of goods

Contents of marine insurance policy

Name of the insurers

Name of the person in whose favour the insurance is effected

Nature of the goods insured

Risk insured against

Sum insured

Period of insurance

C) DOCUMENTS RELATED TO PAYMENT:

1. Letter of credit:
A letter of credit is a written undertaking issued by the buyer bank agreeing to
pay a certain sum of money within a stipulated period against a specified set
Documents.
There are different types of letter of credit such as irrevocable letter of credit,
without letter of credit.
2. Bill of exchange:
A bill of exchange is a negotiable instrument. It is defined as an unconditional
order in writing, addressed by the one person to another, signed by the person giving it,
requiring the person to whom it is addressed to pay on demand or on a fixed determinable
future time a sum certain in money to or to the order of a specified person, or to bearer.
A bill of exchanges may be either a sight bill or a time bill. A sight bills required
to be paid immediately on presentation to the buyer a time bill is payable on a fixed dare
specified on the bill, usually after 30, 60, or 90days.The characteristic

39

Feature of bill of exchange is

a) Negotiability
b) Discounting
c) Unconditional
d) Dishonor

3. Documentary bills:
Documentary bills are sets of bill of exchange which are attached to the
documents related to the export transaction. Usually documents attached are the Bill of
lading and insurance policy certificate. These documents will enable the Importer to take
physical delivery of the goods either on payment or on acceptance of time bill.
4. Bank certificate of payment:
This certificate is issued by the negotiating bank, that is, the exporter bank
certifying that the bill covering the particular consignment has been negotiated and the
payment has been received in the maker specified under the exchange control regulations.

D) DOCUMENTS RELATING TO INSPECTION:

Certificate of inspection:
For a number of products notified under the export act 1962 it is obligatory for an
exporter of specified products to obtain an inspection certificate; the scheme is
administered by the export inspection council of India (eic). The exporter has to make an
application in the prescribed form called intimation for inspection to the export agency
along with the following documents:

Copy of the commercial invoice.

Demand draft for the necessary fee in favor of the agency.

Copy of the export contract.

40

EXPORT PRICING OF VSP

Pricing is a very critical decision in International Market because it is major factor
influencing a firms total revenue from exports and its profitability. There is no scientific
mathematical formula or method that can be applied in pricing a product correctly.
Export pricing has become a highly specialized and sophisticated technique. It is
imperative to adopt a mass suitable price policy for success in international market, in
terms, is influenced by two major factors i.e cost and marketing situation. The assistance
available against export adds another dimension to the pricing policy. The economy of
scale and technological improvement achieved as a result of scales are still other factors
influencing price decision.
The basic approach to export pricing has been than export order may be booked at
the best obtainable price generally in line with the opportunities exists, at the booking
time, keeping in view the cost of production and the domestic price.
V.S.P generally gets information regarding the price terms in the international
market from the following sources:
1. Business journals such as the London metal bulleting, American market
(metal) built, etc.
2. Market and price information furnished by foreign agents

41

3. Market and price information gathered by delegation deputed abroad.

4. Export Enquiries giving price indicators firms purchase aids received from
foreign buyer/agents.
V.S.P. is following pricing based on the data of cost of production, cost plus
pricing or full cost pricing method explain that the price is fixed at a level which reflects
the average total cost i.e. the total cost of fixed cost and variable cost, V.S.P. is not follow
the cost plus pricing. If cost plus pricing is followed the price of steel products of the
company international market will be very high and the buyer will not be interested even
though the quality is good.
V.S.P. is following marginal cost price. It has good scales in domestic and export
contributes valuable foreign exchange and covers variable cost only and at some time
fixed cost too.
At V.S.P. Pricing is done by comparing the export price obtained by taking
various elements into consideration and then comparing with domestic market and the
prevailing international price in domestic prices the price element takes into
consideration are ex-works, transportation cost, handling cost which include selling
distribution and administration cost.
There are five types of export prices
1. Ex-factory
2. Free alongside ship (F.A.S)
3. Free on board (F.O.B)
4. Cost insurance and freight (C.I.F)
5. Deliver duty paid
The ex-factory price represents the simplest arrangement .The importer is
presumed to have brought the goods right at the exporters factory .All cost and risk from

42

there on becomes the buyers problem. The ex-factory arrangement limits the exporter
risk. However, an importer may find an ex-factory deal highly demanding.
The F.A.S contract requires the exporter to be responsible for the goods until
they are placed along side the ship. All charges incurred up to that point must be borne by
the seller. The F.A.S price is slightly higher than the ex-factory price, since the exporter
undertakes to transport the goods to the point of shipment and become liable for the risk
associated with the goods for the longer period.
The F.O.B price includes actual placement of goods aboard the ship. The F.O.B
contract requires the following seller and buyer obligations.
The seller must:
a) Deliver the goods on board the vessel named by the buyer at the port if
shipment on the date specified in the contract.
b) Bear all cost payable on or for the goods until they have effectively
been placed aboard the ship.
c) Suitably packed goods for the mode of transportation specified.
d) Provide documentation indicating proof of delivery of goods aboard the
mode of transportation.
The buyer must:
a) Arrange for transportation specifying the mode of transportation to the
port of departure
b) Bare all cost and risk from the time of goods have been placed on
board the mode of transportation.
In the C.I.F price quotation, the owner ship of the goods passes to the importer as
soon as they are loaded abroad the ship. But the exporter is liable for the payment of
freight and insurance charges up to the port of destination.
The delivered duty paid alternative imposes on the exporter the complete
responsibility for delivering the goods at a particular place in the importer country .Thus

43

the exporter makes arrangements for the receipt of goods at the foreign port ,pays
necessary duties and handling, and provides for further inland transportation in the
importer country. Needless to say, the price of the delivered duty paid goods is much
higher than the goods exported under the C.I.F contract.
Currently VSP follows F.O.B price for exports and C.I.F price for imports as they
are more beneficial.

DISTRIBUTION:

Due to its located near the coastal area base and near to the port, it is having very
much suitability for its distribution of its products. The distribution is mainly from the
exports departments and they will distribute according to the demand. The parties which
what the products of V.S.P. Meet at the export section and marketing department or they
will send message by fax or by telephone they will contact and distribution was done
according to the demand of the party.

MODE OF TRANSPORT:

1. Railways
2. Road
3. Sea Port

PROMOTION:

Generally, they advertise through regular builders and contractors in domestic

market. Where as in international marketing they select the world trade magazines and
websites to advertise their products via electronic and print media.

44

VSP have their website named vizagsteel.com and a few magazines circulated
internally or externally. These are:
1. Steel File (Bimonthly)
2. T.Q.M Journal (quarterly)
3. Gangavaram se (Quarterly)
4. Ukkuvani (Monthly)

TERMS AND CONDITIONS FOR AGREMENT FOR SALE BY VSP

FOR EXPORTS OF IRON AND STEEL PRODUCTS ON FOB BASIS.
1. Rastriya Ispat Nigam Limited, Visakhapatnam Steel Plant, a company incorporated in
India under the Companies Act 1956 having its registered office at Administrative
Building .Visakhapatnam Steel Plant ,Visakhapatnam 530031 herein after referred to
as SELLER.
1.1 The SELLER is an independent legal entity with power and authority to enter
into contracts solely in its own behalf under applicable laws of India and general
principles of contract Laws. Government of India is not a party to any agreement
as per these terms and conditions and is not and shall not be liable for any acts,
omissions ,commissions breaches or other wrongs arising out of any agreement as
per the terms and conditions and the BUYER shall waive release and forego any
and all actions for claims including loss claims, impleads claims including loss
claims, impleads claims of counter claims against Government of India arising out
of this contract and shall not sue the government of India as to any manner, cause
of action of thing whatsoever arising of or under this agreement.

45

2. The person/Company/Firm identified as BUYER in the agreement including his /its

successor /permitted assignee shall be herein after referred to as BUYER.
2.1 The obligations in the agreement are between BUYER and SELLER and
unless otherwise agreed any agreement as per these terms and conditions except
that any communication to / from such representative shall be deemed to be
to/from BUYER.

3. PRICE BASIS:
3.1. Unless otherwise agreed, price of the material shall be free on board
(stowed), Visakhapatnam port, Visakhapatnam, India.
3.2. (Applicable for steel products only): The BUYER shall arrange at his own
cost and expense to provide materials including dunnaging required for stowing,
dunnaging, lashing, shoring and securing of the materials inside the hatches /holds
of the vessel at load port to the master of the vessel nominated by BUYER and
accepted by SELLER for delivery as per clause 5 herin below. Labour charges
involved in the work of dunnaging/stowing /lashing/shoring and securing of the
materials shall be borne by seller.
3.3.

SELLER

shall

under

no

circumstances

be

liable

for

any

costs/charges/liabilities /insurance/freight/taxes of duties/levies/fees whatsoever

nature, including by reason of importation of the material in the country of
import, arising subsequent to the delivery of the materials as per the agreement on
the bases of FOBST.
3.4 Marine insurance to be covered by the BUYER.
4. MATERIAL & QUANTITY:

46

4.1. Subject to these terms and conditions (and expressly agreed deviations
/deletions/additions of any) , the SELLER is obliged to sell material of technical
specifications as agreed and the BUYER is obliged to buy the same.
4.2. (Applicable for steel products only).
Size wise and specifications wise break up shall be as agreed. Unless otherwise
agreed , SELLER has a right to sell/dispatch ./ship the material as per agreement
with quantity variance of +of 5% on total quantity with + of 10%for each size
and specification at SELLER s option with packing and marking as usually done
by seller .Unless otherwise agreed, SELLER shall invoice on the basis of actual
net weight. Quantity and quality shall be certifier in Inspection Certificate by an
independent inspection agency at BUYERS cost to co-jointly carryout survey
with the independent
Inspection agency appointed by the SELLER, in accordance with international
standards, regarding the physical condition and packaging of the cargo at the
transit storage yard port on a lot wise basis.
4.3. (Applicable for pig iron material):
Unless otherwise agreed, the tolerance on quantity to be delivered shall be +/-10%
at buyers option .The option shall be exercised by the BUYER at the time of
nomination of the vessel. Weight (quantity) shall be established by draft survey at
loading port by an independent inspection agency, and the quantity and quality
established at load port shall be final. Weight of deleterious impurities such as
nonferrous dirt, dust, moisture over 0.5 %( half percent) shall be deductible from
the final weight. Buyer has freedom to nominate their own agency at Buyers cost
to co-jointly carryout out quality and quantity survey with the independent
inspection agency appointed by the SELLER, and the inspection is to be carried
out in accordance with international standards applicable for pig iron of quality
inspection and draft survey.

47

4.4 The cost of inspection by the independent inspection agency appointed by the
SELLER. The inspection certificate issued by them certify, inter-alia
that the materials were inspected at the loading port prior to loading and that the
marking were as per requirements of the Agreement between the SELLER and the
BUYER;
the size wise break-up of quantity loaded on board the vessel indicating the
number of bundles /coils (APPLICABLE FOR STEEL PRODUCTS ONLY): and,
that materials were loaded on board the vessel without apparent damage were
found to be in good order and that the materials were properly lashed and secured
inside the hatches /holds of the vessel.
5. DELIVERY/ SHIPMENT:
5.1. The SELLER shall deliver the materials free in the holds of the vessel
nominated by BUYER and accepted by the SELLER as per these terms and
conditions in one or more safe berths reachable on arrival always afloat at loading
port which shall be Visakhapatnam, India .Unless financial arrangement is made
by the BUYER se per clause 6 .below of otherwise as agreed by SELLER, the
SELLER is not obliged to confirm delivery.
5.2. The BUYER shall nominate a vessel not more than 25 years old with lay
date/cancellation date within 30 days of Sellers notice of readiness of materials
for shipment of within the laydays in case given by the SELLER of acceptable to
the SELLER whichever is earlier .The BUYER shall take into account limitations
of the port such as maximum LOA of 12 mts , maximum beam length of 30.48
mts and maximum laden draught of vessels as .448 mts in some berths and 10.06
mts in others.
5.2.1 In case there is a delay by the SELLER to confirm notice of readiness of
materials and the BUYER had made financial arrangements

as agreed the

BUYER has the option to cancel the contract or take the delivery of the material

48

at the contract price & terms within a period of 90 days beyond the original
agreed delivery period.
5.3 While nominating a vessel the BUYER shall communicate following
particulars for the nomination.
a) Name of the vessel
b) Year of built & Flag
c) Classification
d) LOA/Beam/Draft at max .DWT.
e) Loadable tonnage /nominal tonnage for delivery
f) No of Decks /single decker/TWEEN decker if TWEEN, the third deck if
any)
g) No of holds/hatches
h) Hatch Openings: Weather deck/Tween deck
i) Type of hatch covers: Weather deck /Tween deck
j) Cargo gear capacity: Cranes-single swinging Derricks-Configurations
hatchwise-Derricks working in union purchase-not acceptable.
k) ETA /laydate/ cancellation date at load port.
5.3.1 The SELLER is entitled to following additional information if required :
a) Original name of vessel if changed at present
b) Whether disponently owned
c) Owners P & I Club
d) Disponent Owners P & I Club
e) Last special survey
f) Last dry docking
g) Position of engines
5.4 The vessel nominated by the BUYER shall be geared and equipped with
cranes/derricks capable of lifting minimum specified tonnage at a time as below
from the wharf and placing the materials in the places of the hatches including

49

wing spaces and having minimum four available hatches. The SELLER shall
guarantee a loading rate 2000MT per weather working day of 24 consecutive
hours Sundays , holidays and non-weather working days excepted even if used
(2000 MT PWWD SASHEXEIU) for steel products and a rate of 4000 MT
PWWD SASHEXEIU for pig iron subject to these terms and conditions of the
basis of five or more available workable hatches of hooks ,whichever is less . The
SELLER is not obliged to accept vessels with gear capacities ,less than three
hooks .If due to any reason , a vessel is accepted with lower gear capacity or
lesser number of hatches /hooks ,the load rate shall be reduced prorata .The rate of
demurrage/despatch shall be as mentioned in the below table:
In the case any /all vessel gears are not suitable for loading the cargo , due to any
reason and in case buyer provides shore crane berths & shore cranes at his cost
the same will be considered as gear for the purpose of laytime calculations. In
such an event waiting time for getting shore crane berth shall be excluded from
time used.
In case and hatches is doubled up, it shall be considered as double hatch only
when two cranes that are capable of being worked by two gangs simultaneously
are made available for not less than 75% of loading time of that hatch.
Product

Norm.Qty

Gear

Demurrage/

for delivery

Capacity

Despatch

(MT)

(MT)

USD

(MIN)

per day

Pig iron

9999 or below

15

NIL/NIL

Pig iron

10000-19999

15

4000/2000

Pig iron

20000 & above

15

6000/3000

Steel

9000 or below

NIL/NIL

Steel

9001 9999

4000/2500

Steel

10000 -19999

5000/2500

Steel

20000 & above

10

6000/300
50

NOTE: Union Purchase Type Gear is not acceptable .The loading shall be on
CQD basis for cashews of NIL demurrage/despatch .It is preferable to have tween
decker for wire rods and single decker for pig iron .Stacking below the coils will
be rolled on plates below wing space will be three high for wire rods ,above
which the coils will be rolled on plates below the wing space and drop stowed in
the hatch openings . Tank tops should be able to support forklift along with
materials for loading steel cargo. Tank top strength should be 10T/M2 in respect
of 3T forklift for 3 high stacking and 16T/M2 for 10T forklift for 4 high stacking.
All cargo except WRC will be drop stowed in the hatch opening with in the reach
of vessel cranes only.
If one or more parties nominate a vessel for lifting part quantity of pig iron in
different sale contracts .the dem/dis amount shall be calculated as per the rates
applicable for the total quantity loaded in the vessel by all parties concerned and
the dem/dis amount so arrived shall be payable on prorata bases as per the
quantities lifted by the respective individual p0qrties /in different sale contracts.
In case party nominates part vessels for steel consignment ,the despatch
/demurrage calculations will be made based on per working per hatch per day of
per workable hatch per day basis as given below: PER WORKING HATCH
PER DAY or PER WORKABLE HATCH PER DAY means that laytime is
to be calculated by dividing the quantity of cargo in the hold with the largest
quantity by the result of multiplying the agreed daily rate per working workable
hatch by the number of hatches serving that hold. Thus:
Laytime = Largest Quantity in one hold
--------------------------------------- = Days
Daily Rate per Hatch x number of
Hatches serving that hold

51

Laytime used shall be corresponding to the hold in which largest quantity is

loaded with allowable exceptions as per our standard terms and conditions. The
time spent for loading cargo in all other holds will not count as laytime.

5.5 The SELLER shall communicate acceptance /non acceptance within next
working day and with reasons in case of non-acceptance. However, the SELLER
is not obliged to consider any nomination of the vessel unless financial
arrangement is made by the BUYER as agreed.
5.6. Upon arrival of the vessel within the limits of the loading port and after.
a) Ensuring that the hatches /holds of the vessel have been thoroughly
cleaned
b) obtaining free pretique and
c) ensuring that the vessel is load ready in all respects,
the Master of the vessel shall serve the Notice of readiness of the vessel to load
the Materials (i.e. Masters N/R) on the port office of the SELLER at the loading
port, during normal office hours which are 9.30 AM to 4.30 PM from Monday to
Saturday .The masters N/R shall not be server on Sundays /Port holidays /Charter
Party holidays. /Non weather working days.
5.7.Upon arrival of the vessel within the limits of the loading port or at any time
later till completion of loading ,if the SELLER or the load port authorities
consider that the cranes / gears of the vessel are not capable of lofting the
materials of the weights and dimensions as agreed, from the wharf and placing the
material inside the hatches as required for loading ,the SELLER has right to
reject the vessel outright without any liability including freight and all other
consequences/losses arising thereof. Incase it is considered that the loading rate

52

guaranteed, the SELLER has a right to assessment by an independent marine

surveyor to determine such load rate and the same shall be binding on the
BUYER .In case the surveyors find the gears not capable of loading from wharf to
any part of the hatches, risks /costs to the SELLER and the charges of the
independent marine surveyor shall be bourne by BUYER.
5.8. The BUYER shall ensure that the charter party governing the shipment shall,
inter-alia, include following provisions:
5.8.1. The ship owners shall appoint their own agents at load port.
5.8.2. The ship owners shall bear all ports dues/charges/ levies except port
loading charges, tonnage dues, light dues and other taxes ,assessments and
charges which are customarily payable by shippers.
5.8.3. Ten days prior to ETA of vessel shall give telex/cable/fax intimation to the
SELLER.
5.8.4. Thereafter at the interval of 7 days /72 hrs /24 hrs before the ETA of the
vessel ,master of the vessel shall send telex/cable/radio messages regarding the
ETA of the vessel to the SELLER and as well as to the Port office of the
SELLER.
5.8.5. Each vessel shall hold a valid gear certificate in conformity, covering the
duration of each voyage tested. The gear certificate shall be made available by the
Master of the vessel to the vessel to the representative of the vessel at the loading
port, in any case prior to commencement of loading port, in any case prior to
loading plan for the materials shall be furnished by the master of the vessel before
/on its berthing.

53

5.8.6. The master of the vessel shall allow on board the vessel the representative
of the independent inspection agency appointed by the SELLER and provide such
information/ assistance as may be required by such agency in connection with the
performance of their assignment duties.
5.8.7. The master of the vessel shall provide free use of light on board the vessel
as may be required for working the vessel at the loading port at all times and in
each case free of expense to the SELLER The master of the vessel shall make
available all the hatches for loading of the materials throughout the period the
vessel is worked for loading of the materials except in such hatches where the
materials have been completely loaded.
5.8.8.1. Laytime shall commence at 1300 hrs if Masters N/R is serve in the
afternoon.
5.8.8.2. Time between noon on Saturday and 0800 hrs on Monday and /of
between noon on the last working day preceding a legal holiday and/of port
holidays /Charterparty holidays and 0800 hrs in the next working day shall not
count as laytime even if used .unless the vessel is on demurrage.
5.8.8.3. After berthing if the port authorities of representative of the SELLER find
that the vessel is not ready in all respects to load ,the laytime will not commence
until the vessel in proceeding from the anchorage to the berth shall not count as
laytime unless the vessel is on demurrage.
5.8.8.4. In the event of breakdown of vessel gear or other equipment of the vessel
by reason such as insufficient power etc, not attributable to shipper the period of
such break down shall not count as laytime.
5.8.8.5. Time lost due of the following reasons shall not count as laytime unless
the vessel is on demurrage:

54

Non weather working days declared by the port authorities even if the
vessel is worked.

War, Rebellion, Tumult, Political disturbances, Insurrection.

Lockout, Strikes, Riots, Civil commotions.

Epidemics, Quarantine, Land-slips, Floods, Frost or Snow , Boretides ,

Bad Weather.

Stoppage of work , weather partial or general by workmen /long shoremen

/tug-boatmen of other hands essential to the working of the vessel or
loading of the materials into the vessel.

Accidents at Wharf

Intervention of security, customs and/or other constituted authorities.

Stoppage, whether partial or total, due to other causes beyond the control
of the SELLER.

5.8.8.6. The opening and the closing of the hatches of the vessel shall always be
done by the vessels crew and the cost involved therein shall be to the account of
the vessel.
5.8.8.7. The time lost due to shifting of the vessel within the port limits shall not
count as laytime . However, if the shifting is required by the SELLER, the shifting
charges shall be to the account of the SELLER and time lost in shifting shall
count as laytime.
5.8.8.8. The overtime of the crew and officers shall be to the account of the
vessel.
5.8.9. If any damage is caused to the vessel at the loading port at the time of
loading of the materials by the Stevedores engaged by the SELLER,. The claim, if

55

any, for such damage shall owners and the stevedores. The Master of the vessel
shall lodge such claim, if any, on the stevedores, promptly after the damage
Reports ,prior to the departure of the vessel from the loading port ,failing which
the claim shall stand barred and the stevedores shall stand absolved and relieved
of all responsibility .Subject to compliance with the conditions enumerated in the
clause ,in case the stevedores fail to settle the same ,the SELLER shall be
responsible for settlement of such claims.
5.8.10 Statement of Facts: Immediately after completion of loading of the
materials into vessel and before the sailing of the vessel from the loading port (s)
a statement of facts shall be made out at the loading port(s) duly signed by and
distributed amongst; (a) Master of the vessel /Agent of the vessel at the loading
port (b) Agents/Representative, if any of the BUYER at the loading port and (c)
representative of the SELLER at the loading port.
5.8.11. The Master of the vessel shall deliver a stowage plan in triplicate duly
signed by him before loading and immediately after completion of loading and
sailing of the vessel, if sought by the SELLER..
5.8.12. The ship owners shall instruct their Agents at the loading port to issue the
Bill(s) of Lading with marking as per LC (see 6.2.1(a) to the representative of the
SELLER ,immediately but within one day from the date of completion of loading
of the materials in the materials into the vessel.
5.9 Freight enquiries shall be notified in advance to:
Ministry of surface Transport,
Chartering wing (transchart)
Transport Bhavan , Sansad Marg.
NEW DELHI 1100001(INDIA)
TELEX:031-61147,61158,61159 VAHAN ND.
While nominating a vessel and preference is to be given Indian flag vessels.

56

6. TERMS AND CONDITIONS:

6.1. Unless agreed otherwise ,financial arrangements shall be made with six
weeks of acceptance of offer by the SELLER of before nomination of the vessel
whichever is earlier ,in USD by the BUYER in favor of SELLER by means of a
confirmed irrevocable without recourse to the drawers Letter of Credit governed
by Uniform Customs and Practices for Documentary Credits representing the
value or the contract quantity of the basis of FOBST , established through any
first class international bank in fovour of Rashtriyal Ispat Nigam Limited,
Visakhapatnam Steel Plant ,Visakhapatnam, India . The LC should be advised
through

State Bank of India ,

Bank of Baroda

Steel Project Branch

Vadlapudi Branch

Branch code no.6318

TLX:
0495 259 BBVA IN
0495 518 SWAT IN

0495 266 RODA IN

SWIFT:
SBININBBA145
as per the negotiating documents negotiable at the counters of any branch or any
bank of India.
6.2. PAYMENT AGAINST LC
6.2.1. The LC shall be available for payment of 100% of value of invoice (less if
any advance is already paid by the BUYER, covering the material shipped against
presentation of the SELLER drafts drawn at sight accompanied by following
Bank documents (and also against clause no.6.8 herein below)

57

3/3 original on board ocean of Charter Party Bills of Lading

SELLER s packing list

SELLERs signed Commercial Invoices

Pre-shipment Inspection Certificate issued by the independent inspection

agency appointed by the SELLER.

Note: One copy each of the aforesaid documents shall be despatched by courier
by the date of BL.
6.2.2. In case the LC shall be available for payment against 100% of invoice value
as per clause 6.8 herein below.
6.2.3. The LC shall specifically provide that Bills of Lading and pre-shipping
Inspection Certificate with remarks such as:
Some ties broken/missing, atmospheric/surface /superficial rust/edge rust
unprotected cargo, stored in open area prior to loading, rust stained/partly rust
stained shall be acceptable for negotiation.
6.4 The LC should provide for shipment of materials with quantity tolerance as
specified in clause 4 herein above or as otherwise agreed .It should be valid from
date of shipment as per the agreement and upto date of completion of shipment in
the vessel nominated by BUYER and 21 days beyond that for negotiations of
documents.
6.5 All Bank and other charges incurred outside the territory of India shall be
borne and paid for by the BUYER .LC confirmation charges ,if required shall be
and paid for by the SELLER.
6.6. The financial arrangement required to be made by the BUYER shall
deemed to be made only on receipt of L/C at the bank as specified in clause 6.1
58

above unless agreed otherwise .In case the financial arrangement is not made by
the BUYER within the agreed time the SELLER may forfeit the EDM if any
within the agreed time .the SELLER may forfeit the EDM, if any with the
SELLER.
6.7. If any advance is made by the BUYER against any contract ,in part of full, if
the BUYER IS not able to indicate size wise breakup of the material at least 4
weeks prior to the expiry of contractual; delivery period.
(1) In case of fall in prices , the SELLER is entitled to recover difference in
contract price and the weighted average price realized by SELLER for
the deliveries made in the last month within the contract delivery period
and return the balance and EMD to the BUYER without interest.
(2) The SELLER will return the advance without interest in case the
weighted average price realized for the last month of delivery as per
contract is more than the contract price.
6.8. In the event of
(a).The failure of the BUYER to nominate suitable vessel within lay days
given in Sellers notice of readiness of cargo or otherwise acceptable to Seller, of
within 15 days from the N/R of cargo whichever, or
(b).The vessel nominated by the BUYER and accepted by the SELLER
failing to arrive at the designated load port within the agreed lay-days for reasons
other than Force Majure as defined under clause no.10 herein below ,or
. The vessel (nominated by the BUYER and accepted by the SELLER )
being found unsuitable after its arrival at designated load port as certified by
independent marine surveyors.

59

The seller shall be entitled to negotiate his commercial Invoice against the LC
opened by the BUYER and realise 100% of the value of the Materials ready for
shipment on the basis of certificate issued by the SELLER, certifying the quantity
of the materials ready for shipment and alse certifying that the materials are ina
good condition. The materials will therefore be held in custody by the SELLER at
the risk and responsibility of the BUYER at the storage yard of the SELLER at
the load port . While the SELLER shall hold the materials free of ground rent for
period of 15 days from the date of payment ,for a storage extending beyond 15
days from the date of payment BUYER shall pay to the SELLER groune rent
calculated at the rate of USD 1.00 per metric ton per week of part therof .The
BUYER shall however nominate another suitable vessel within reasonable time
for taking delivery of the cargo for which payment has been realised by the
SELLER as aforesaid and subject to such vessel arriving at load port within the
agreed lay-days the SELLER shall at his cost deliver FOB (stowed ) the materials
for which payment has been realised by the SELLER as aforesaid .The LC
established by the BUYER in fovour of the SELLER shall make specific and
unconditional provision to the above ,.

7. SETTLEMENT OF DEMURRAGE / DESPATCH MONEY IN RESPECT OF

EACH SHIPMENT.
Based on the statement of Facts , the computation of laytime used shall be based
on provisions contained in clause 5 and its sub clause herein above .Despatch
money ,if any ,calculated on the basis of Working time

Saved shall

be

arranged to be remitted by the BUYER to the SELLER within sixty days from
the date of receipt of the claim of the SELLER with laytime statements .EMD
shall be released after receiving remittance in full towards pending despatch
mondy pending from the BUYER if any .If not , the amount of deurrage within
sixty says from the date of receipt of claim from buyer with

supporting

documents.

60

8. RISK AND TITLE:

Except in the case of negotiations under LC as per clause NO.6.8 herein
above,with respect to each shipment ,the risk shall pass from the SELLER to the
BUYER as soon as the materials cross the ships rails at the port of loading and
the title to the materials shall pass from the SELLER has negotiated the
documents and has received payment of the full invoice value of the materials
shipped from the negotiating bank
.
9. RIGHT OF TRANSFER:
Neither the BUYER nor the SELLER shall be entitled to assign of transfer
contract

resulting

from this

agreement except to its successor or to the

transferee of all or substantially all of its assests , and in the case of any such
assignment of transfer, the contract shall binding upon and shall isure to the
benefit of such successor of transferee.
10. FORCE MAJEURE:
If the SELLER and /of the BUYER be prevented from discharging its or their
obligation under this agreement by reasons of arrests or restraints of privacy of
rules

,government

of

people

,war

.Blockade,Revolution,Insurrection

Mobilisation, Strikes , Riots , Civil Commotions,Lockouts, Accidents, Acts of

God, Plague,or other epidimics,natural clamity of on account of any other cause
intefering with the production and/or delivery of the materials as herein above
contemplated ,the time during which production and/or delivery of the materials
contemplated the time or

time during which production and/or delivery os

prevented by any such causes as herein above mentioned, provided that in the
event of sluch delay exceeding ninty days ,the party other than the party which

61

invokes the force majeure may at their option ,cancel this agreement by Notice in
writing to the other party in respect of the undelivered quantity of the materials
without ,however ,any right against or being responsible to the other party for
sluch cancellation .The party invoking force majeure causes ,put the other party
on notice supported by certificate from the Chamber of Commerce of concerned
government authotity and shall likewise intimate the cessatioin of such causes. If
the force-months the SELLET or the BUYER may at his option cancel thie
agreement by notice in writing to the materials without ,however ,any right
against or being

responsiblw to the other party for such cancellation.

.The party invoking force majeure causes, put the other party on notice
supported by certificate from the Chamber of Commerce of concerned
government authority and shall likewise intimate the cessation of such causes. If
the force-months the SELLET or the BUYER may at his option cancel the
agreement by notice in writing to the materials without ,however ,any right
against or being

responsible to the other party for such cancellation.

11. LEGAL INTERPRETATION:

The contract of sale and purchase and these terms and conditions shall be
governed and construed in accordance with the Laws of India for the time being
in force. For all commercial terms and abbreviations used hereunder, which have
not been otherwise defined, the rules of INCOTERMS 1990, latest revision ,shall
be applied.

12. SETTLEMENT OF DISPUTES:

All disputes of differences whatsoever between the parties here to arising out of
or relating to the construction, meaning or operation or effect of this contract ot
the breach thereof shall unless amicably settled between the parties hereto be
settled by arbitration in accordance with the Rules of Conciliation and Arbitration

62

of the International Chamber of Commerce(ICC) , Paris .France , by a sole

Arbitrator appointed by the chairman of the
Arbitral Tribunal of the Court of Arbitration of ICC and the Award made in
pursuance thereof shall be binding on both the parties .The venue for the
arbitration proceedings shall Visakhapatnam, India.
13. JURISDICTION OF COURTS:
All disputes shall be subject to the jurisdiction of the competent courts of
Visakhapatnam.
14. IMPORTS / EXPORTS LICENSE:
It shall be the responsibility of the SELLER to arrange export license, if any,
required and it shall be the responsibility of the BUYER to arrange for the import
license ,if required ,in the country into which the materials are intended to be
imported.

15.MODIFICATIONS / WAIVERS:
No change in respect so these term and conditions are valid unless the same is
agreed to in writing by both the parties .All previous negotiation / understandings
between parties are cancelled while entering into an agreement as per these terms
and conditions .Failure to enforce any condition hereunder contained shall neither
be deemed as waiver of the conditions itself nor authorize any subsequent breach
thereof.

63

PRODUCTS OFFER FOR EXPORT:

The following table shows the different products offered by VSP in the export marketing.

Wire rods

Hot Roller Rebars

Angles

Channels

Beams

Billets

Pig Iron

The below table shows the various specifications and grade levels

1. WIRE RODS:

64

Specification Grade

Remarks

ASTMA510.96

SAE
1008
0.30%Max)

(Si-

ASTMA510.96

SAE
1010
0.40%Max)

(Si-

ASTMA510.96

SAE
1012
0.40%Max)

(Si-

ASTMA510.96

SAE
1015
0.40%Max)

(Si-

Tensile Strength 430 N/mm2 Max

Tensile Strength 450 N/mm2 Max.
Tensile Strength 470 N/mm2 Max.
Tensile Strength 510 N/mm2 Max

Note 1: In straight lengths 12m +/-0.1m but 2% short length in a bundle to be allowed. In
coils of dimensions as for Wire Rod Coils
Note 2: Rib design and Sectional Weight as per VSP's design. Size 32 & 28 also likely to
be available. Availability of 32, 28 & 18 size subject to economic quantity of orders.
2. HOT ROLLED REBARS:

Specification

Grade

Size (mm)

JISG3112

SD35

16, 18, 20, 25

BS 4449

250

16, 18, 20, 25

65

BS 4449

460

16, 18, 20, 25

JISG3112

SD35

8, 10

3. ANGLES:

Size (mm)

Section Weight Kg / metre

100 X 100 X 8 /
12.10 / 14.90, +5% -3%
10
90 X 90 X
6/8

8.20 / 10.80, +5% -3%

75 X 75 X
6/8

6.80 / 8.90,

+5% -3%

65 X 65 X
6/8

5.80 / 7.70,

+5% -3%

4. CHANNELS:

Size (mm)

Sec.Wt Kg/mtr

50 X 75 X 5.71

16.8 +/-2.5%

125 X 65 X 5.3

13.1 +/-2.5%

100 X 50 X 5

9.56 +/-2.5%

66

75 X 40 X 4.8

7.14 +/-2.5%

5. BEAMS:

Size
(mm)

Web
Thickness
Remarks
Sec. Wt

180 X 91

5.3
+/-0.7%
Flance Thickness : 8.0 +/- 1.0%
18.80 +/-4%

120
114

X 5.0
+/-0.7%
Flance Thickness : 8.0 +/- 1.0%
19.90 +/-4%

6. BILLETS:

Size (mm)
125
x
125
10,000 +/-400

Chemistry
x

See Note 2 below

65 X 65 X 6,000
Is : 2830(C:0.12-0.23%; SI:0.40% Max
+/-100
75 X 75 X 6,000
Mn : 0.3-1.5 Mn:0.3-1.5
+/-100

Note 1: Chemistry (other than Billets) JIS G3101 SS400 or IS; 2830; Bundle Wt: 5MT
(Max), Length 12+/- 0.1m (for 6+/-0.1m ends would be gas cut); Allowable short length
upto 2%.

67

Note 2: Chemistry for Billets: C: 0.14-0.20%; Mn: 0.5-0.9%; S/P: 0.05% Max; Si:
0.35% Max; OR SAE 1015; OR Forging Quality chemistry as per JIS G4051 GR S20C /
S45C.

7. PIG IRON:
BASIC GRADE STEEL MAKING PIG IRON :
CHEMISTRY: C: 3.5 - 4.5%; Mn : 1% MAX; Si : 1.25% MAX; P : 0.15% MAX; S :
0.05% MAX.
SIZE: Pigs with upto two notches upto 45kgs in weight. Chips/broken pieces below
25mm not exceeding 5%, dust, dirt and moisture exceeding 0.5% deductible from draft
survey wt.

FLOWCHART OF THE TOTAL EXPORT CYCLE:

A) Export Marketing Research

1. Scanning the sources of export

trade information

68

2. Analysing the country export trade

scenario
B) Export Marketing Strategy

3. Selection of the products for

export marketing
4. Identification of export markets
for these products

C) Export Marketing Mix Planning

5. Development of the products for

export
6. Deciding the aspects of
distribution such as transportation,
packaging etc.
7. Deciding the terms of payment
and means of financing
8. Studying the benefits available to
exporters
9. Fixing the price for export markets

D) Registration formalities

10. Obtaining the RBI code number

for exporters
11. Obtaining the IEC number/
identity card
12. Registration with EP council and
obtaining the RCMC

E) Export Order

13.Securing export orders for the

products

F) Per- Shipment Activities

14. Scrutiny of the order and

confirmation to the importer

69

15. Approaching the bank for

financial assistance
16. Manufacturing/ procurement of
goods and packing
17. Clearance of the goods by excise
authorities
18. Pre-shipment inspection of the
goods of quality control
19. Transportation of the goods to
the port of the shipment
20. Appointment of the clearing and
forwarding agent
21. Completion of port and customs
formalities by the agent
G) Shipment

22. Loading of the goods and their

shipment

H) Post- Shipment

23. Despatch of the documents by

the agent to the exporter
24. Sending the shipment advice to
the importer
25. Presentation of documents to the
bank or payment collection
26. Presentation of documents to
authorities for claiming export
benefits.

DUTY EXEMPTION/REMISSION SCHEME

70

The Duty Exemption Scheme enables duty free import of inputs required for
export production.
An Advance Licence is issued under Duty Exemption Scheme.
The Duty Remission Scheme enables post export replenishment/ Remission of duty on
inputs used in the export product.
Duty Remission Scheme consist of
a.

DFRC(Duty Free Replenishment Certificate)

b.

DEPB(Duty Entitlement Passbook Scheme)

DFRC permits duty free replenishment used in the export product. The DEPB

allows drawback of import charges on the inputs used in the export product.
An application for grant of an advance licence/ DFRC/DEPB may be maid by the
Registered office or head office or a branch office or manufacturing unit of the eligible
exporter, to the licensing authority concerned.
1. ADVANCE LICENCE:
An advance licence is issued to allow duty free import of inputs, which are
physically incorporated in the export product. Advance licence can be issued for
1. Physical exports
2. Intermediate supplies
3. Deemed exports
Advance licence for physical exports and intermediate supplies are exempted from
payment of basic customs duty, additional customs duty, anti dumping duty and safeguard
duty, if any. However, Advance licence for Deemed products shall be exempted from
payment of basic customs duty, additional customs duty only.
An Advance licence shall specify:
1. the names and description of items to be imported and exported.
2. the quantity and value of individual inputs which are to be imported, as per SION
norms.
3. the aggregate CIF value of imports.

71

4. the FOB value and quantity of exports.

Exports made from the date of receipt of an application for an Advance Licence by
the licensing authority, may be accepted towards discharge of export obligation. If the
application is approved, the licence shall be issued based on input/output norms in force on
the date of receipt of the application licensing authority in proportion to the provisional
exports already made till any amendment in the norms is notified.
Port Of Registration:
The licence holder shall register the licence, the port specified in the licence and
thereafter all imports against the said licence shall be made only through that port. Exports
may be made through any of the specified ports:
Land customs: Ranaghat and Singhabad.
Export obligation period and its extension:
The period of fulfillment export obligation under an Advance Licence shall
commence from the date of issuance of licence. The export obligation shall be fulfilled
within a period of 18 months. The request for extension in export obligation period may be
made. The regional licensing authority shall grant one extension for a period of 6 months
from the date of expiry of the original export obligation period to the licensee subject to the
payment of composition fee of 1% of the unfulfilled FOB value of export obligation with
reference to CIF value of imports made for which extension is being sought.

Revalidation of Licence:

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The regional licensing authority may consider a request of the original licence
holder and grant revalidation for a period of 6 months from the date of expiry of the
original licence.

Fulfillment of Export Obligation:

The licence holder shall furnish the following documents in support of having
fulfilled the export obligation:
For physical exports:
1. Bank certificate of Exports and Realisation in the form given.
2. EP copy of the shipping bill(s) containing details of shipment effected.
3. A statement of exports giving details of shipping bill wise exports indicating the
shipping bill no., date, FOB value as per shipping bill and description of export
product.
4. A statement of imports indicating bill of entry wise item of imports, quantity of
imports and its CIF value.
Redemption:
In case the export obligation has been fulfilled, the licensing authority shall redeem
the case. After redemption, the licensing authority shall forward a copy of the redemption
letter indicating the shipping bill no., date, FOB value in Indian rupees as per shipping bill
and description of export product to the customs authority at the port of registration. Before
discharging BG/LUT against the advance licence, the customs shall verify that the details
of the exports as given in the Redemption Certificate are as per their records.
Regularisation of Bonafied Default:
The cases of a bonafied default in fulfillment of export obligation may be
regularised by the licensing authority in the manner indicated below:
i)

If the export obligation is fulfilled in terms of value, but there is a shortfall in

terms of quantity, the licence holder shall, for the regularisation, pay:

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a) to the customs authority, customs duty on the unutilized value of the

imported material along with interest @ 15% per annum thereon; and
b) an amount equivalent to 3% of the CIF value of the unutilized imported
material through a TR in the authorized branch of central bank of India.
ii)

if the export obligation is fulfilled in terms of quantity but there is shortfall in

terms of value, no penalty shall be imposed if the licence holder has achieved the positive
value addition. However, if the value addition falls below positive, the licence holder shall
be required to deposit an equivalent amount through TR in the authorized branch of Central
Bank of India, so that the 100 times the deposited amount rupees together account for
positive value addition over the CIF value.
iii)

If the export obligation is not fulfilled both in terms of quantity and value, the

licence holder shall, for the regularization, pay as per (i) and (ii) above.

2. DUTY ENTITLEMENT PASSBOOK SCHEME:

Here the duty credit under the scheme shall be calculated by taking into account the
deemed import content of the said export product as per SION and the basic custom duty
payable by export of such product shall also be taken into account while determining the
rate of duty credit under the scheme.
Fixation of DEPB Rate:
No exports shall be allowed under DEPB scheme unless the DEPB rate of the
concerned export product is notified.

Port of Registration:

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The export/import made from the specified ports given shall be entitled for DEPB.
Seaports: Mumbai, Kolkata, Cochin, Dahej, Kakinada, kandla, Mangalore, Marmagoa,
Mundra, Chennai, Nhavasheva, Paradeep, Pipavav, Sikka, Tuticorin, Visakhapatnam,
Surat, Nagapattinam and Okha.
The DEPB shall be issued with single port of registration, which will be the port from
where the exports have been made effected.
Credit under DEPB and Present Market Value:
In respect of products where the rate of credit entitlement under DEPB scheme
comes to 10% or more, the amount of credit against each such product shall not exceed
50% of the Present Market Value (PMV) of the export product.
Application for DEPB:
An application for grant of credit under DEPB may be made to the licensing
authority concerned in the form given, along with the documents prescribed therein. The
FOB value in free foreign exchange shall be converted into Indian rupees as per the
exchange rate for exports, notified by Ministry of Finance, as applicable on the date of
order of Let Export by the Customs.
Restriction on use of DEPB credit:
The CIF value of imports affected under DEPB shall not exceed the FOB value
against which the DEPB has been issued.

Time period:

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The application for obtaining credit shall be filed within a period of 6 months from
the date of exports or within 3 months from the date of realisation, whichever is later.

Verification by Customs:
The licensing authority shall ensure that while issuing the DEPB, the shipping bill
no., and date, FOB value in Indian rupees as per shipping bill and description of export
product. Before allowing the imports against DEPB, the Customs shall verify that the
details of the exports are as per their records.
Revalidation:
No revalidation shall be granted beyond the original period of validity of DEPB.

3. DUTY FREE REPLENISHMENT CERTIFICATE:

The exporter exporting under DFRC shall be required to give a declaration in the
EP copy of the shipping bill no., product group of SION of the export product.
Export/ Imports under DFRC:
The DFRC shall be issued with single port of registration, which will be the port
from where the exports have been effected.

Filling of Application:

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An application for grant of DFRC may be made to the licensing authority

concerned in the form given, along with the documents prescribed therein. An application
for DFRC shall be filled only after realisation if export proceeds. However, in case of
exports against irrecoverable Letter of Credit, application may be filled over exports. The
CIF value of DFRC shall be arrived at after discounting 25% from the FOB value of
exports. The FOB value shall be calculated on the basis of the Bank Realisation
Certificate.
Time period:
The application for DFRC shall be filled within six months from the date of
realisation reckoned form the last date of realisation in respect of shipments for which
DFRC is being claimed.
Verification by customs:
The licensing authority shall ensure that while issuing the DFRC, the Shipping
Bill no. and date, FOB value in Indian Rupees as per Shipping Bill and description of
export product are endorsed on the reverse of DFRC. Before allowing the imports against
DFRC, the Customs shall verify that the details of the exports as given on the DFRC are
as per their records.

PROBLEM OF THE CASE:

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According to the terms, we promised to export 15400 MT but we have exported

only 2320.75 MT. Based on the export figure we are eligible to import a total quantity of
3829.89 MTs but we have utilized a total quantity of 15715.44 MTs. So, the excess
utilized benefit to be paid by VSP is Rs. 7128004.27.
SOLUTION FOR THE CASE:
For solving this case we choose 2 schemes:
1 DEPB
2 Advance Licensing
so, we work out on these 2 schemes and choose the one which is beneficial.
In case of DEPB,
DEPB benefit for the balance Qty:
15400-2320.75=13079.25 Mt.
@ 252 X 13079.25 X 47(ER) x 14%=21687489.18
Therefore, net benefit if changed to DEPB is derived by substituting the
(DEPB benefit for the balance quantity excess utilized benefit to be paid.)
(21687489.18- 7128004.25= 14559484.93
Net benefit if changed to DEPB= 14559484.93
In case of advance licensing
The export benefit for balance quantity

is 6399284.65(13079.25*10.41*47)

CONCLUSION:
So we conclude that by comparing the two schemes DEPB is more beneficial to VSP.

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FINDINGS:
The findings of the study are:

VSP is making alliances with some trading companies abroad .This may
strengthen the market of VSP in the foreign market.

VSP has no branch offices abroad. Generally exports orders are booked at VSPs
main office at Visakhapatnam only.

Price settings are through open tenders.

VSP exports their products on F.O.B price only.

Presently VSP is spending nearly Rs. 90 crores per year as transportation charges.

VSP mainly exports their products to the neighboring countries only.

VSP exports only ISO 9002 certified products.

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SUGGESTIONS:

After analyzing the data and information collected from various sources during
the source of project work and the limitations and problems found, some suggestions are
given which may be help full to the organization in shot run and long run.
As VSP is producing iron and steel products of high standards and company has
given a major thrust to exports, it has to take promotional activities in large scale.
As in the present marketing situation where customers hold the key it is important
to influence the customers. It has been found to have taken up promotional activities at
the national level in a big way; similarly the company has to go for global promotional
campaign.
VSP can conduct seminars and customer counseling at international level so as to
make foreign customers aware of the quality product available in India at a competitive
price.
VSP has only one office in the exports division .This makes it difficult for
procuring orders directly from the customers. So it will be better for the company
to open international branch in regions where VSP exports large share of its total exports.

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CONCLUSION:

In the past the customer had no choice .The government policy and the main
producers options was prevailing in the market .Today with the liberalization the steel
industry decontrolled with abolition of freight reduced drastically, so the compulsory
licensing of the steel industry has been repelled. As a result a lot of secondary producers
with variable product mix are coming up in the steel industry. All these have threatened
the status quo of all the major producers.
In such a situation customer holds the key unlike yesterday, he is not dependent
on a few main producer. Thus customer oriented marketingshould be adopted.
All the suggestions given are directed towards the twin objective of strengthening
the market and improving the customer relationship between the company and its
customers. Both should care for each other without suffering a lot. Then VSP can face all
the competitions and challenges in the market. VSP have their valuable customers with
them for all times. VSP has yet to do a lot towards customer oriented marketing to
attract more and more customers because todays steel market belongs to customer only.

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