PROJECT REPORT

ON

“GLOBAL SUPPLY CHAIN MANAGEMENT IN RANBAXY

LABAROTARIES LTD., PAONTA SAHIB”

SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE MASTER’S IN INTERNATIONAL

BUSINESS

OF

H.N.B GHARWWAL CENTRAL UNIVERSITY,

SHRINAGAR

SUBMITTED TO:

INTERNAL GUIDE EXTERNAL GUIDE

PROF. PARVI BHARTI MR. NAVDEEP PAHUJA

ASST. PROFESSOR SUPPLY CHAIN ASSOCIATE

IMS RANBAXY LABS. LTD.

DEHRADUN PAONTA SAHIB, H.P.

SUBMITTED BY:

ANKUR SRIVASTAVA

MIB1022

INSTITUTE OF MANAGEMENT STUDIES-DEHRADUN BATCH 2010-12

ACKNOWLEDGEMENT

It is my profound joy to express my heartiest feelings to the organization Ranbaxy

Laboratories Ltd. as well as the whole team under whom I successfully able to

accomplish my training in an effective manner.

My deep gratitude goes to Mr. Navdeep Singh Pahuja for guiding me throughout my

project. His constant guidance and support has helped me to complete my project so

comprehensively. He has given me a new insight into the Global Supply Chain

Management and Export Import Process and Documentation. I really consider

myself fortunate to have experienced one of the irrefutable facts of a Supply Chain

Manager’s life today.

My very heartily gratitude to Ms. Parvi Bharti, Asst. Prof. MIB, IMS Dehradun

who was my internal guide and my torchbearer in this research under whom I

successfully able to accomplish my training in an effective manner. I find myself

better equipped to handle the transition from a management student to management

personnel due to her guidance.

CERTIFICATE

I have the pleasure in certifying that Mr. Ankur Srivastava is a bonafide student of

IIIrd

Semester of the Master’s Degree in International Business (Batch 2009-11), of

Institute of Management Studies, Dehradun under H.N.B. Garhwal University,

Srinagar Roll No. MIB1022.

He has completed his project work entitled “PRODUCTION PLANNING AND

GLOBAL SUPPLY CHAIN MANAGEMENT IN RANBAXY

LABORATORIES LTD.” Under my guidance.

I certify that this is his original effort & has not been copied from any other source.

This project has also not been submitted in any other Institute / University for the

purpose of award of any Degree.

This project fulfils the requirement of the curriculum prescribed by this Institute for

the said course. I recommend this project work for evaluation & consideration for

the award of Degree to the student.

Signature : Parvi Bharati

Name of the Guide : Parvi Bharti

Designation : Asst. Professor

Date : 28 Oct 2011

EXECUTIVE SUMMARY

Introduction

The research project is undertaken in one of India’s famous Generic Pharmaceutical

Drug Producer, Ranbaxy Laboratories Ltd. It is a Government Approved Four Star

Rating Export House with an annual turnover of approximately $1.619 billion

started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese

company Shionogi. The name Ranbaxy is a combination of the names of its first

owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from

his cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh

joined the company in 1967, the company saw an increase in scale. In 1998,

Ranbaxy entered the United States, the world's largest pharmaceuticals market and

now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in

2005.

The objective of the study is to understand the Production Planning, its procedure,

Global Supply Chain, its processing and supply of finished pharmaceutical products

in the global market on due date. The another objective of this study was to know

the procedure and documentation process of Export and Import of the raw material

as well as finished goods.

The research conducted by me consisted of the study of global supply chain

management and its coordination with the production department, Production

planning and fulfillment of commitments to the global market on the due dates with

the coordination of the three departments “The Production Deptt., The G.S.C.

Deptt., and EXIM Deptt.”

The research was based on Primary Data accumulated by me from the company

bulletins, company brochures and documents provided by the company as well as

data collected from the internet, and orientation programmes organised by the

company.

5500+ SKUs , 1000+Raw Materials and 15000+ Packaging Materials

Country specific formulation with no scope of flexibility.

75% SKU demand is normally less than a specified batch size.

Frequency/Repetition of demand – More than 50 % required less than 4 times a year.

Conflicting Optimization objective – Set up Vs the SKU Delivery deadline

GMP / QC mandates in manufacturing like hold time for formulated bulks, storage

capacity on floor etc.

Complex manufacturing/Testing processes and lead times

Frequent input changes based on market dynamics leading to Complex Switchover

Planning and obsolescence

LIST OF CONTENT

SR.

NO.

CONTENT PAGE

NO.

TITLE PAGE

ACKNOWLEDGEMENT

INTERNAL GUDE CERTIFICATE

COMPANY CERTIFICATE

1 OBJECTIVE OF THE STUDY 1

2 INTRODUCTION 2-21

3 RESEARCH METHODOLOGY 23-24

4 FINDING ANALYSIS 24

5 CONCLUSION 78

6 ANNEXURE 79-81

REFERANCES 82

1

OBJECTIVE OF STUDY

2

OBJECTIVES OF STUDY

The main objective of this report was to know more about the working and functionality

of the Production Planning Department and Global Supply Chain Department and the

coordination between these two departments resulting in the proper and timely supply of

the finished products into the global market.

1. To study the Global Supply Chain functions, it’s working and its

importance at the firm

2. Study of Documents used during the import and export process.

3

INTRODUCTION

4

INTRODUCTION

RANBAXY LABORATORIS LIMITED. Ranbaxy Laboratories Limited (BSE: 500359) is

an Indian pharmaceutical company. Incorporated in 1961, Ranbaxy exports its products to

125 countries with ground operations in 46 and manufacturing facilities in seven

countries. The company went public in 1973 and Japanese pharmaceutical

company Daiichi Sankyo gained majority control in 2008.

Formation

Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a

Japanese company Shionogi. The name Ranbaxy is a combination of the names of its first

owners Ranbir and Gurbax. Bhai Mohan Singh bought the company in 1952 from his

cousins Ranbir and Gurbax. After Bhai Mohan Singh's son Parvinder Singh joined the

company in 1967, the company saw an increase in scale.

Trading

In 1998, Ranbaxy entered the United States, the world's largest pharmaceuticals market

and now the biggest market for Ranbaxy, accounting for 28% of Ranbaxy's sales in 2005.

For the twelve months ending on 31 December 2005, the company's global sales were at

US $1,178 million with overseas markets accounting for 75% of global sales (USA: 28%,

Europe: 17%, Brazil, Russia, and China: 29%). For the twelve months ending on

December 31, 2006, the company's global sales were at US $1,300 million.

Most of Ranbaxy's products are manufactured by license from foreign pharmaceutical

developers, though a significant percentage of their products are off-patent drugs that are

5

manufactured and distributed without licensing from the original manufacturer because the

patents on such drugs have expired.

In December 2005, Ranbaxy's shares were hit hard by a patent ruling disallowing

production of its own version of Pfizer's cholesterol-cutting drug Lipitor, which has annual

sales of more than $10 billion. In June 2008, Ranbaxy settled the patent dispute with

Pfizer allowing them to sell Atorvastatin Calcium, the generic version of Lipitor(R)

and

Atorvastatin Calcium-Amylodipine Besylate, the generic version of Pfizer's Caduet(R)

in

the US starting November 30, 2011. The settlement also resolved several other disputes in

other countries.

On 23 June 2006, Ranbaxy received from the United States Food & Drug

Administration a 180-day exclusivity period to sell simvastatin (Zocor) in the U.S. as

a generic drug at 80 mg strength. Ranbaxy competes with the maker of brand-name

Zocor, Merck & Co.; IVAX Corporation (which was acquired by and merged into Teva

Pharmaceutical Industries Ltd.), which has 180-day exclusivity at strengths other than

80 mg; and Dr. Reddy's Laboratories, also from India, whose authorized generic version

(licensed by Merck) is exempt from exclusivity.

On 10 June 2008, Japan's Daiichi Sankyo Co. agreed to take a majority (50.1%) stake in

Ranbaxy, with a deal valued at about $4.6 billion. Ranbaxy's Malvinder Singh remained as

CEO after the transaction. Malvinder Singh also said that this was a strategical deal and

not a sell out.[

On 16 September 2008, the Food and Drug Administration issued two Warning Letters to

Ranbaxy Laboratories Ltd. and an Import Alert for generic drugs produced by two

manufacturing plants in India.[5]

On February 25, 2009 the U.S. Food and Drug Administration said it has halted reviews of

all drug applications including data developed at Ranbaxy's Paonta Sahib plant in India

6

because of a practice of falsified data and test results in approved and pending drug

applications. "Investigations revealed a pattern of questionable data," the FDA said.

Acquisition

On June 11, 2008, Daiichi-Sankyo acquired a 34.8% stake in Ranbaxy, for a value $2.4

billion. In November 2008, Daiichi-Sankyo completed the takeover of the company from

the founding Singh family in a deal worth $4.6 billion by acquiring a 63.92% stake in

Ranbaxy.

The addition of Ranbaxy Laboratories extends Daiichi-Sankyo's operations - already

comprising businesses in 22 countries. The combined company is worth about $30 billion.

Current Scenario Of The Company

Ranbaxy Laboratories Limited operates as an integrated international pharmaceuticals

organization with businesses encompassing the value chain in the marketing, production

and distribution of pharmaceuticals products. It operates under two segments:

Pharmaceuticals and other business. Pharmaceuticals segment comprises the manufacture

and trading of Formulations, Active Pharmaceuticals Ingredients (API) and Intermediate,

Generics, Drug discovery and Consumer Health Care products. Other business comprises

rendering of financial services.

The Company manufactures products for anti-infectives, cardiovasculars, musculoskeletal,

gastrointestinal, dermatologicals, and central nervous system.

Ranbaxy Laboratories Limited encompasses the entire pharmaceutical value chain from

manufacturing to marketing generic pharmaceuticals, value added generic

pharmaceuticals, branded generics, Active Pharmaceuticals Ingredients (API) and

intermediates. As a research driven company, over 6% of its revenues are invested in

7

R&D. Among the pharmaceutical companies in India, Ranbaxy has the largest R&D

budget with an R&D spend of over U.S. $100 million.

The company has manufacturing operations in eight countries with a ground presence in

49 countries, and its products are available in over 125 countries. It has been aggressively

entering into joint ventures and strategically acquiring companies in the past few years.

Besides concluding its acquisition of Be-Tabs in South Africa, which makes Ranbaxy the

5th largest generic pharmaceutical company in South Africa, the Company acquired 13

Dermatology products from Bristol-Myers Squibb in the U.S in 2007. Ranbaxy acquired

RPG Aventis which has since been renamed Ranbaxy Pharmacie Generiques SAS. It also

has subsidiaries in Spain, Netherlands, Russia and Australia.

The Company manufactures products for anti-invectives, cardiovasculars,

musculoskeletal, gastrointestinal, dermatologicals, and central nervous system.

Ranbaxy Laboratories Limited encompasses the entire pharmaceutical value chain from

manufacturing to marketing generic pharmaceuticals, value added generic

pharmaceuticals, branded generics, Active Pharmaceuticals Ingredients (API) and

intermediates. As a research driven company, over 6% of its revenues are invested in

R&D. Among the pharmaceutical companies in India, Ranbaxy has the largest R&D

budget with an R&D spend of over U.S. $100 million.

The company has manufacturing operations in eight countries with a ground presence in

49 countries, and its products are available in over 125 countries. It has been aggressively

entering into joint ventures and strategically acquiring companies in the past few years.

Besides concluding its acquisition of Be-Tabs in South Africa, which makes Ranbaxy the

5th largest generic pharmaceutical company in South Africa, the Company acquired 13

Dermatology products from Bristol-Myers Squibb in the U.S in 2007.

8

Other subsidiary companies:

Solus Pharmaceuticals Limited

Rexcel Pharmaceuticals Limited

Vidyut Investments Limited

Ranbaxy Drugs and Chemicals Company

Ranbaxy Drugs Limited

Gufic Pharma Limited

Ranbaxy Life Sciences Research Limited

Ranbaxy SEZ Limited

Ranbaxy Malaysia Sdn. Bhd., Malaysia

Ranbaxy (Hong Kong) Ltd., Hong Kong

Ranbaxy GmbH, Germany

Ranbaxy (S.A.) (Proprietary) Ltd., South Africa

Sonke Pharmaceuticals (Pty.) Ltd., South Africa

Ranbaxy Egypt (L.L.C), Egypt

Rexcel Egypt (L.L.C), Egypt

Ranbaxy (U.K) Ltd., United Kingdom

Ranbaxy Poland S.P. Z.o.o., Poland

Ranbaxy Do Brazil Ltda, Brazil

Ranbaxy Nigeria Limited, Nigeria

Ranbaxy Unichem Company Ltd., Thailand

Ranbaxy Farmaceutica Ltda., Brazil

Ranbaxy-PRP (Peru) S.A.C, Peru

Ranbaxy Europe Ltd., United Kingdom

Ranbaxy Pharmaceuticals, Inc., USA

9

Ranbaxy Inc., USA

Ranbaxy USA, inc., USA

Ohm Laboratories, Inc., USA

Ranbaxy Laboratories, Inc., USA

Ranbaxy Signature LLC, USA

Ranbaxy (Netherlands) B.V

Ranbaxy Holdings (U.K.) Ltd., United Kingdom

Ranbaxy Ireland Ltd., Ireland

ZAO Ranbaxy, Russia

Ranbaxy Pharmacie Generiques SAS, France

Ranbaxy Portugal – Con E Desenvolv De ProdFarmaceuticos

Laboratories Ranbaxy, S.L., Spain

OPIH, France

Ranbaxy Australia Pty. Ltd., Australia

Ranbaxy Pharmaceuticals Canada INC., Canada

Ranbaxy Italia S.P.A., Italy

Ranbaxy Mexico S.A. De C.V., Mexico

Ranbaxy Mexico Servicios S.A. De C.V., Mexico

Terapia S.A., Romania

Terapia Distributie S.R.L., Romania

Ranbaxy Belgium N.V., Belgium

Ranbaxy Pharma AB, Sweden

Be-Tabs Pharmaceuticals (Proprietary) Ltd., South Africa

Be-Tabs Investments(Proprietary) Ltd., South Africa

10

Business and Financial Metrics

Second Quarter 2010 Results (ended June 30, 2010)

Ranbaxy reported sales for the second quarter of $458 million (Rs 21,029 million), a

growth of 22% over the second quarter of 2009. Earnings before interest, taxes,

depreciation & amortization (EBITDA) was $90 million (Rs. 4,168 million), a margin of

20%. Profit after tax was $72 million (Rs. 3,320 Million), a margin of 16%.

Operational Highlights of the Second Quarter 2010

To sharpen its focus on generics, the Company reached an agreement to transfer its

New Drug Discovery Research assets to Daiichi Sankyo India Pharma Pvt Ltd (DSIN).

Ranbaxy launched Atorvastatin in Canada and South Africa. The launch in

Canada, was under the Company’s global settlement with Pfizer. In South Africa,

Ranbaxy was the first to launch a generic version in the market.

Valacyclovir, an FTF product in the US, achieved a peak market share of 74%

before the end of exclusivity during the quarter.

The Company introduced Daiichi Sankyo’s innovative anti-platelet drug Prasita

(Prasugrel) in India. During the quarter, Ranbaxy launched 31 new products in India,

including 3 in-licensed products.

The Company made 32 filings and received 35 approvals for dosage forms during

the quarter.

During the quarter, emerging markets recorded sales of $230 million, a growth of

6%, and contributed about 50% to global sales. Sales in developed markets amounted

to $203 million, a growth of 63%.

11

Business Segments

Anti-Infective

This segment launched Valacyclovir Hydrochloride in the United States. The product was

also launched in United Kingdom and France.

Cardiovascular

This segment introduced the drug Simvastatin. The Company launched Olvance

(Olmesartan, Medoxomil) and its fixed dose combination with Amlodipine (Ol-Vamlo), in

India. Further expanding its portfolio in Canada, Ranbaxy launched two products, Ran-

Simvastatin (Simvastatin) and Ran-Amlodipine (Amlodipine).

Musculoskeletal

In the Musculoskeletal segment, Ketorolac was the primary contributor to sales. In the

United States, Ranbaxy entered into an agreement with Validus Pharmaceuticals to market

and distribute an Authorized Generic version of Rocaltrol (Calcitriol). Ranbaxy's flagship

brand in this segment is Volini.

Central Nervous

The key products in Central Nervous System segment are Gabapentin and Sertraline. The

two other products include Oxcarbazepine Suspension and Sumatriptan tablets.

Gastrointestinal

The Company launched Pantoprazole in the Gastrointestinals segment. Ondansetron

tablets were launched in Canada.

Dermatological

The Company received Dermatological franchises through the acquisition of brands and

marketing rights from Ochoa Laboratories in India for their range of Dermatological

products.

12

MAJOR PRODUCTS OF RANBAXY LABORATORIES LTD.

Using the finest R&D and Manufacturing facilities, Ranbaxy Laboratories Limited

manufactures and markets generic pharmaceuticals, value added generic pharmaceuticals,

branded generics, active Pharmaceuticals (API) and intermediates.

The Company remains focused on ascending the value chain in the marketing of

pharmaceutical substances and is determined to bring in increased revenues from dosage

forms sales.

Ranbaxy's diverse product basket of over 5,000 SKUs available in over 125 countries

worldwide encompasses a wide therapeutic mix covering a majority of the chronic and

acute segments. Healthcare trends project that the chronic treatment segments will outpace

the acute treatment segments, primarily driven by a growing aging population and

dominance of lifestyle diseases. Our robust performance in Cardiovasculars, Central

Nervous System, Respiratory, Dermatology, Orthopedics, Nutritionals and Urology

segments, clearly indicates that the Company has strengthened its presence in the fast-

growing chronic and lifestyle disease segments.

13

Top 10 Molecules (2010)

•Valacyclovir

•Simvastatin

•Donepezil

•Atorvastatin and Combinations

•Co-amoxyclav and Combinations

•Ciprofloxacin and Combinations

•Ketorolac and Tromethamine

•Imipenem and Cilastatin

•Ginseng and Vitamins

• Loratadine and Combinations

Trends and Forces

Gaining First-to-File exclusive rights to a generic through patent challenges

Generic drug companies can challenge a patent's validity or argue that their version does

not infringe on the existing drug's patent even before patent expiration. The first company

to apply for FDA Approval for a generic, in spite of an existing patent, receives a 180-day

period of exclusivity to produce and sell the generic version.

Ranbaxy has been filing more than 20 ANDAs to the U.S. Food and Drug Administration

(FDA) each year. It has one of the largest product pipeline in the US that includes 18

potential First-To-File opportunities with a market size of around US $27 billion, at

innovator prices

Pricing Pressures in US & European generic markets affect Ranbaxy's revenue

Due to an increase in number of pharmaceutical companies forging into the generics

market, there has been downward pricing pressure on generics in the U.S. The generics

market in Europe, which had become a safe haven for Indian pharmaceutical companies

after competition pulled down margins in the US, has come under pricing pressure too,

14

especially in countries like Germany, the UK and France, the top three generics markets

on the continent. These countries have seen margins in the generics segment erode as

much as 80-90%. The pricing pressure has been adversely affecting revenue as both US &

Europe occupy Ranbaxy's majority market share.

Regulatory issues raised by regulators in various countries where Ranbaxy operates pose a risk to its markets

On September 16, 2008 the U.S.Food and Drug Administration (FDA) issued warning

letters to Ranbaxy Laboratories Ltd., and an Import Alert for Drugs from Two Ranbaxy

Plants in India affecting over 30 different generic drugs and citing serious manufacturing

deficiencies. Following this the World Health Organisation (WHO) observed that several

inspections of Ranbaxy's Paonta Sahib site, in June 2008, revealed noncompliance with

WHO good manufacturing practices standards. Further, India's business daily Mint quoted

the Canadian health ministry as saying a "regulatory letter" was sent to Ranbaxy

Pharmaceuticals Canada requesting an action plan and a response to the FDA's move.

Impending healthcare reforms in Romania, Ranbaxy's largest market in the EU, is leading

to a delay in the government's product and price approval list, and adding to uncertainty

amongst customers and suppliers. The outcome of these regulatory issues pose a risk to

the company's image as global generic player as well a risk to its markets worldwide.

15

Competition

The pharmaceutical industry is characterized by rapid advances in scientific knowledge.

The industry is therefore led by large manufacturers and marketers of drugs investing

heavily in research & development, having clinical testing, marketing and distribution

capabilities. Some of Ranbaxy's main competitors are:

Sun Pharmaceuticals Industries is No. 1 in India in specialty therapy

areas like psychiatry, neurology, cardiology, gastroenterology, diabetology and

respiratory. . It has brands in 30 markets worldwide and also has a generic presence in

the U.S. with Caraco Pharm Labs, Sun Pharmaceutical Industries Inc (subsidiary).

Cipla is a leader in the domestic retail pharmaceutical market. It also exports raw

materials, intermediates, prescription drugs, over-the-counter products, and veterinary

products to some 180 countries around the world.

GlaxoSmithKline is one of the oldest pharma companies in India and with a

turnover of Rs. 1500 crore is one of the market leaders in India with a share of

6.2%. Its main portfolios consist of anti- infectives, dermatologicals and pain

management drugs.

Dr. Reddy's Laboratories is a global pharmaceutical company with its

headquarters in India and a presence in more than 100 countries. In India it the largest

drug maker by sales.

16

Ten Years At A Glance:

17

Balance Sheet as at 31st

Dec. 2010

18

19

Ranbaxy Indian manufacturing Sites

Ranbaxy has 8 manufacturing plants all over India

Toansa - API

Mohali - Dosage form

Goa - Dosage form

Delhi - EVT plant major products pep-fiz and F-cal

Poanta Sahib – Dosage form & API

Bhaddi - Dosage form

Batamandi - Dosage form

Dewas - API & dosage form

20

DEWAS PLANT

Dewas, plant was established in 1983 and manufactures both API and DF.

It consists of 6 API Plant and 4 production block.

API plants

- Plant 1 - Ciprofloxacin, Gabapentin, Ganciciclovir,Toyoma, Valacyclovir, Cetalopram,

Valgancicyclovir, Orlistat, Cleptromycin

- Plant 2 - Clarithromycin, Carbomer

- Plant 3 - Cilastitan

- Plant 4 - Imipenem

- Plant 5 - Imipenem+Cilastatin (I+C); Sterile block

- Plant 6 - Wurster coating

DF Blocks

- Semi synthetic penicillin block

- General tablet block

- Cephalosporin block

- Penem block

21

CGMP Guidelines

cGMP is defined as a set of principals and procedures which when followed by

manufacturers helps ensure that the product manufactured will have the required quality,

safety and efficacy.

GMP began in the year 1962

First issued in 1963

Todays version is 1978

Ten commandments of cGMP

Write procedures – e.g.SOP’s, Process order, Master formula & temp.

specifications

Follow the written procedures.

Record & document the work.

Validate the work.

Design & build proper facilities & equipments.

Maintain proper facilities & equipments.

Competent as a result of education, training & experience.

Clean and protect against contamination.

Quality approach

All time ready for audits.

22

QUALITY POLICY:

Management

- Quality risk management implementation

- Management reviews

Personnel

- Adequate qualifications and expierience

- Continuous training and development

Control procedures & specifications

Validation

- Process validation, should be carried out by executing at least

three consecutive batches.

- Cleaning validation

Manufacturing & process control

- No plant deviations from SOP or STP without prior approval of QA ……manager

- Batch production records initiates manufacturing activities.

- OOS & OOT products, report to dept. head.

Stability

- Stability testing program is carried out.

Review process

- Internal quality audit and annual product review is carried out.

Contract manufacturing/Repackaging sites.

Market complaints and recalls.

QA, qualified persons shall play role in evaluating; investigating and resolving

NDD Research / Clinical Pharmacology & pharmacokinetics.

23

RESEARCH

METHODOLOGY

24

The Research Methodology used by me was to collect data, primary and secondary

data and the analysis of the collected data to understand the current and past

scenario of the company’s production and supply in the global market of the world.

The collection of data was done by me in the company premises by meetin the

company executives working in the relative departments, study of company

leaflets, company booklets, journals and financial reports.

The Data Collected were:

1. Primary Data

a. Meetings with company executives.

b. Company Orientation Programmes

2. Secondary Data

a. Company Leaflets

b. Company Journals and booklets

c. Company balance sheets

d. Documents provided by the EXIM Deptt. Of the company

25

FINDINGS

26

GLOBAL SUPPLY CHAIN

27

Planning hurdles

5500+ SKUs , 1000+Raw Materials and 15000+ Packaging Materials

Country specific formulation with no scope of flexibility.

75% SKU demand is normally less than a specified batch size.

Frequency/Repetition of demand – More than 50 % required less than 4 times a

year.

Conflicting Optimization objective – Set up Vs the SKU Delivery deadline

GMP / QC mandates in manufacturing like hold time for formulated bulks, storage

capacity on floor etc.

Complex manufacturing/Testing processes and lead times

Frequent input changes based on market dynamics leading to Complex

Switchover Planning and obsolescence.

28

NEW PRODUCT DEVELOPMENT

Identification of

the new moleculePDL & DRA

Pilot Plant

Scale up batch

Exhibit batch

Filing & approval Validation

Manufacturing

Art work is an

important part of

new prod. developt.

The process of art

work is started

atleast 4 to 5 months

before the product

has to be

manufactured

29

CONCEPT OF PRODUCTIVITY

Productivity is defined as the ability of an organization or company to convert availabl resources

into profitable services or goods.

Productivity = Output / Input ratio

Productivity in the work place allows you to apply your skills, technology and innovative ideas to

achieve maximum output with the inputs and process that are already in place.

Importance of Productivity

Productivity increases the rate of low cost per unit and results in lower price.

It helps in retaining whatever competitive advantage that you may have.

It also increases the standard of living since more and more products can be

purchased, if product production is more.

Consumers will benefit from a higher productivity from your business.

Productivity increases profits for businesses and will lead to salary increases for

laborers

30

Integrated Planning Process

31

Detailed Supply Planning Process

NDR Receipt – Unconstrained Demand (4 Months)

Product Plant Allocation

Leveling of Plan based on Capacities and known constraints

Batch Sizing and Prioritization

Rough cut Capacity Planning

Material (RMs and APIs) Indent

Material Commits

Detailed Scheduling

Market Commits

S & OP

Revised Commits

Current Month Execution and Monitoring.

32

Planning System

NDR consolidation and leveling -- Excel Based

RCCP and Detailed Scheduling – APO/MRP Based

Planning Process through APO under validation for Dewas Plant

For other plants – RCCP through VB tool and MRP in R3

Manual Scheduling for other plants

Batch Sizing – APO Based for Dewas Plant. Others VB based

Commits to Markets – Excel Based

MIS – Excel Based

Execution in R/3 for all the Plants .

33

Budget 2011-12 Directives for Production & Supply

Sea to Air ratio for EU to be 80 : 20

Suggest a CFT led by Pranit . Members – Rakesh/Ganesh/Hemant

Injectable Planning - A new approach

Suggest a CFT lead by Sanjay Sinha

Potential implementation – I Plus C and Ceph block

30 days plan to be completed in 27 Days.

APO implementation

Stabilization at Paonta

Implementation of weekly scheduling at Dewas.

Goa Implementation

Double testing of APIs.

34

Key Success Factors

R Vs C – 80 % plus.. Current level 65 t0 68 %.. 2010 Beginning not encouraging

C Vs A -- 95 % Plus Current level 80 to 85 %.. Jan is also not encouraging for a

few plants

Planning calendar timelines and manufacturing participation

Freezing the commits on 13th

/14th

.

Viewing GMS commits realistically against scheduling requirement to

maximize R Vs C

Frequent change in commit. Plant head commitment.

India DIFOT Vs M2 SFS by design.

Exploring revised calendar options - Pranit

35

S.W.O.T. Analysis of DF Supply Planning.

STRENGTHS Experienced and system Savey Managers

Strong leadership skills

Globally acknowledged , Standardized

processes.

Special focus on New

products/MTOs/Tenders

The compressed and efficient planning

calendar

First company /Team in Indian Pharma to

manage/.Stabilize APO

Strong on MIS/ Data Backup/ Data

retrieval/Analysis

Young Team /Team leads

Manage Multiple

geographies/Cultures/Diversities/time zones

Process driven work culture/Not personality

Driven

GSC – Internal Team Synergy

WEAKNESSES Communication infrastructure

Team strength – Headcount

Attrition /Trained resources joining

competition.

Techno regulatory updates/Skills.

Business dynamics Vs Mfg processes

rigidity

Supply alignment meeting between

GMS/API GSC

OPPORTUNITIES GATP – Global Availability to Promise

India supply chain practices to be taken

/implemented in global plants.

Global uniform planning calendar

Synchronization with DS Supply chain

practices

ARV Servicing

NP Planning – Single Target

THREATS Need dynamic supply chain policy

attuned with business dynamics.

One size fits all – will this approach be

god in a longer run..

Talent Retention

Long term planning Vs Capacity

utilization

36

KEY SUCCESS FACTOR

Jan'11 R vs C Root Cause Analysis

SSP

Block

GEN

Block

Ceph

Block

Dewas Paonta Goa EVT Solrex LL Total DF

Categoryòò No. No. No. No. No. No. No. No. No. No.

Req no of SKU's ð 57 340 136 533 300 90 12 119 186 1240

Frontend Constraints (Demand

less than filed Batch Size/Market

related/ NDR Infidelity)

11(19%) 76(22%) 37(27%) 124(23%) 32(11%)

15(17

%)

5(42%) 8(7%) 10(5%) 194(16%)

Backend Constraintsò

Remaining SKU's 46 264 99 409 268 75 7 111 176 1046

Hit 43(93%) 223(84%) 76(77%) 342(84%) 206(77%)

57(76

%)

7(100%

)

94(85

%)

145(82%) 851(81%)

Technical 14(4%) 1(1%) 15(3%) 1 1(1%) 17(1%)

RM - In-house 11(3%) 3(2%) 14(2%) 1 1(1%) 4(2%) 20(2%)

RM - Out-source 5(1%) 4(3%) 9(2%) 8(3%) 2(2%) 1(1%) 6(3%) 26(2%)

PM 0 2(1%) 2

PDL/DRA/Quality 2(4%) 4(1%) 2(1%) 8(2%) 26(9%)

11(12

%)

4(3%) 4(2%) 53(4%)

Manufacturing/Capacity 1(2%) 6(2%) 10(7%) 17(3%) 26(9%) 3(3%) 6(5%) 9(5%) 61(5%)

Others 1 3(2%) 4(1%) 6(5%) 6(3%) 16(1%)

Total R vs C 75% 66% 56% 64% 69% 63% 58% 79% 78% 69%

37

PURCHASE

Purchasing refers to a business or organization attempting for acquiring goods or services

to accomplish the goals of the enterprise.In pharmaceutical industries these goods are

divided into three categories.

Packaging material (PM).

38

PURCHASE CYCLE

39

PHARMACEUTICAL QULITY SYSTEM

40

Important points concerning purchase

GMS structure

GMS is headed by VP (GMS & GSC) who reports to the president, Head

API GBU.

DOA (Delegation of authority):

Purchase without PO:

Any purchase transaction upto INR 5000 or $110 US will not require PO except all

inventory items and imported items.

QCF not required if PO documents not exceed INR – 10,000.

Retention & review of documents by GMS is done in a 8 yr period.

Emergency Purchase:

If any breakdown, location head has the authority to purchase goods of up to INR

50,000 without any QCF.

41

LOGISTICS

The process of planning, implementing, and controlling the efficient, cost effective flow

and storage of raw materials, in-process inventory, finished goods and related information

from point of origin to point of consumption for the purpose of meeting customer

requirements.

42

60% exports – Sea 40% exports – Air

Goods are exported to more than 145 destinations, core are 40-45.

10-12 thousand tonnes goods are exported annually.

Major challenge is to maintain the cool chain (Data logger used)

Dewas, Goa & LL (Gujarat, hyderabad & Bomabay) accounts for 60%, 5-8 and

15-18% of exports.

INTENTIVES BY GOVERNMENT

Licence Exemption

Advance Licence Reclaim on import-

export

DEPP Indigineous goods

Drawback Cotton, yarn products

Focus market scheme Free on board

43

DISPATCH PLANNING

44

CONTRACT MANUFACTURING

Contract manufacturing is a process that established a working agreement between two

companies. As part of the agreement, one company will custom produce parts or other

materials on behalf of their client.

Loan license means that getting manufactured the finished good in some other company

but the raw material & method is provided by the hiring company. The liability is of the

hiring company and only the address of the hired company would be mentioned on the

label.

P to P (Principal to principal) means getting the finished goods manufactured by some

other company and the responsibility of the method & raw material lies with the

manufacturing company itself and will also hold the liability. Both the name & address of

the Mfg. Company would be reflected on the label.

45

RANBAXY’S CONTRACT MANUFACTURERS

Location Company

Hyderabad, Nagarujna

Aurangabad

NATCO Pharma, ESPI Industries &

Chemicals Pvt. Ltd

Mediscare (Volini spray)

Madras Madras Pharma

Paonta sahib Kilitch drugs (India) Ltd,

Zeon Lifesciences,

Baddi Ankur Pharma

Biodeal

Delhi Mega Internationa

Bombay M J Pharma (Insulin), Kilitch (Inj.)

Gujarat Linken P’ceuticals, Nirma chemical, Vita

Lab

Jaipur Amol Pharma

Indore Plethico Pharma

46

INVENTORY MANAGEMENT

Inventory is a list for goods and materials, or those goods and materials themselves, held

available in stock by a business.

Objective

Hold enough inventory to satisfy customer demand, without holding too much.

Just the right quantities of stock to satisfy demand will minimize cost.

Mismanagement of inventory leads to -

Facility Costs: Inventory holding costs which includes rental on warehousing,

mobile and static equipment, utilities, compliance costs e.g. for dangerous goods.

Human Capital: Cost of labor to manage the stock move it, handle it and count it.

Finance costs: When capital is tied up in inventories the cost of finance

(interest), and/or lost opportunity cost of gaining returns elsewhere must be

counted

Management Costs: White collar personnel and IT costs

Procurement Costs: Cost of purchase, including transport

Stock Accuracy: if stock records are wrong, large amounts of time and expense

can be absorbed sorting them out.

Pillage: Theft of goods. Unfortunately this occurs and is a cost to be factored in.

47

Effective Management of Inventory

48

WAREHOUSES

49

GOODS DISTRIBUTION IN DIFFERENT WAREHOUSES

50

ISSUE OF RM & PM

51

PACKAGING

Packaging means of ensuring safe delivery of product to ultimate consumer in sound

condition at minimum cost.

Or

It is an art, science and technology for safe delivery of product to consumer.

52

Packaging development

Retention of control sample is done till 1 year after expiry

Pantone guide is used for colour differentiation & communication.

53

Testing of Packaging Material

SAMPLING

No of boxes Boxes to be open

2-8 2

9-15 3

16-25 5

26-50 8

51-90 13

151-300 32

Testing equipments Test performed for Cartons

Infra-red and UV Description

Scrub group rub tester Grammage

Torque tester Size

Incinerator Grain direction

Polarimeter Construction

Injection rubber piercer Printing

54

LITRATURE RIVIEW

OF

EXIM DOCUMENTATION

55

IMPORT AND EXPORT DOCUMENTS

Pre-shipment documents:

Commercial documents :

The commercial documents are those which, by customs of trade, are required for

affecting physical transfer of goods and their title from the Importer to the importer and

the realization of Import sale proceeds.

14 out of 16 commercial documents have been standardized and aligned to one another.

Shipping order and bill of exchange could not be brought within the fold of the aligned

documentation system because of their very different data elements and having a very

little in common with other commercial documents.

The commercial documents may be classified into principal documents and auxiliary

documents.

Principal documents:

Out of the 16 commercial documents mentioned above, the Importer is required to send

the following eight documents to the importer. These are known as the principal Import

documents.

1. Commercial invoice

2. Packing list

3. Bill of lading

4. Combined transport documents

5. Certificate of inspection/quality control

6. Insurance certificate/policy

56

7. Certificate of origin

8. Bills of exchange and shipment advice

Auxiliary documents:

The remaining eight commercial documents are known as auxiliary documents.

1. Proforma invoice

2. Intimation for inspection

3. Shipping instructions

4. Insurance declaration

5. Shipping order

6. Mate receipt

7. Application for certificate of origin

8. Letter to the bank for collection/negotiation of documents

Regulatory documents:

Regulatory pre-shipment Import documents are those which have been prescribed by

different government departments/bodies in compliance of the requirements of various

rules and regulations under relevant laws governing Import trade such as Import

inspection, foreign exchange regulations, Import trade control, customs etc.

There are 9 regulatory documents associated with the pre-shipment stage of an Import

transaction and are as follows:

1. Gate pass-I/Gate pass-II (prescribed by central excise authorities)

2. AR4/AR4A form (prescribed by central excise authorities )

3. Shipping bill/bill of Import (prescribed by central excise authorities )

57

For Import of goods

For Import of duty free goods

For Import of dutiable goods

For Import of goods under claim for duty drawback

4. Import application (prescribed by port trust)

5. Receipt for payment of port charges

6. Vehicle ticket

7. Exchange control declaration prescribed by RBI GR/PP forms

8. Freight payment certificate

9. Insurance premium payment certificate

The different commercial regulatory documents may be classified into documents related

to shipments, documents related to payment; documents related to inspection, documents

related to excisable goods and documents related to foreign exchange regulations.

Documents related to goods:

(i) Invoice

CUSTOMS INVOICE

The customs invoice is used in lieu of the commercial invoice in a few importing countries

for customs purposes, but the importer often needs a commercial invoice too. The customs

invoice can be in a form called the certificate of value. The invoices vary in format but

they contain essentially the same data as in the commercial invoice and packing list. The

blank customs invoice is available from the customs broker or forwarder and specialized

printer. Certain importing countries may require their importers, not the Importers in the

Importing country, to provide the completed customs invoice for customs clearance.

58

CONSULAR INVOICE

As the name implies, the consular invoice is a specific invoice issued by the Consul of the

importing country. Many importing countries, mainly less developed countries, have

already phased out this invoice. It is used for customs clearance and other purposes; as

such any errors or omissions on the invoice may cause problems and fines at the customs

in the importing country. The consular invoice is a form of non-tariff barrier. The format

of the consular invoice form varies greatly, but it contains essentially the same data as in

the commercial invoice and packing list. The invoice form is either in the language of the

importing country (e.g. Spanish usually) or bilingual, that is, a combination of English and

Spanish usually. The Importer's declaration normally is included in a consular invoice.

The consular legalization and payment of a consular fee is required. The consular fee can

be a percentage of the FOB invoice value.

(i) Packing list:

The packing list is the detailed list of contents of the shipment, including quantities, items,

model numbers, dimensions and net and gross weights. A packing list should specify per

carton or crate the number and type of units of material inside. The shipper gets the

packing list ready at the time the goods are being is prepared for shipping. There is no

standard format for packing lists.

Although it is not a required customs document, the packing list is often used by the

customs broker to obtain additional information about the shipment.

(ii) Certificate of origin:

The Certificate of Origin is only required by some countries. In many cases, a statement of

origin printed on company letterhead will suffice. Special certificates are needed for

countries with which the United States has special trade agreements, such as Mexico,

59

Canada and Israel. More information about filling out these special certificates is available

from the

Certificates related to shipment:

(i) Mate receipt: – mate receipt is a receipt issued by the commanding office of

the ship when the cargo is loaded on the ship, and contains information about the

name of the vessel, berth, date of shipment, description of packages, marks and

numbers, condition of the cargo at the time of receipt on board the ship etc.

(ii) Shipping Bill: -Shipping bill is the main document for obtaining custom permission

for shipping goods. This document is of four types: -

Free shipping bills

Drawback shipping bills

Ex-bond shipping bills

Dutiable shipping bills- are filled up where the consignment is subject to Import duty and

where duty drawback is to be claimed. Whereas free shipping bills is filled up when the

consignment is subject to Import duty and no duty drawback is to be claimed. Ex-bond

shipping bills is needed in case of shipment from the customer bounded warehouse.

(iii) Airway bill: - Airfreight shipments are handled by air waybills, which can never be

made in negotiable form.

(iv) Bill of lading: - is a contract between the owner of the goods and the carrier (as with

domestic shipments). For vessels, there are two types: a straight bill of lading which is

non-negotiable and a negotiable or shipper's order bill of lading. The latter can be bought,

sold, or traded while the goods are in transit. The customer usually needs an original as

proof of ownership to take possession of the goods

60

DOCUMENTATION: -

Generally documentation is perceived to be the most complex, difficult and critical

activity of Import marketing particularly in India. Successful consummation of an Import

order needs innovative skills and meticulous planning including proper compliance and

subsequent documentary provision.

One may categorize Import documents into three dimensions on the basis of their role in

smooth flow of trade.

REGULATORY CONTROL IN INDIA

After becoming an Importer company it is required to obtain a (RCMC) from the relevant

Import promotion council, commodity board or any other designated body. This

certificate is needed for getting some more Import incentives given by the govt.of India.

Next step in becoming an Importing unit is to obtain importer-Importer code number from

director general of foreign trade.

a) GR FORM / PP FORM: -

GR FORM / PP FORM in duplicate is required for every consignment for obtaining

customs clearance. This form is needed as a legal requirement under the Foreign

Exchange Regulation Act of India. GR FORM is needed for all consignments other than

ones being shipped by post, while PP FORM is needed for goods going by post.

b) DOCUMENTATION: -

Various documents originated during Import marketing activities of Moser Baer are

defined below: -

SALE ORDER / CONTRACT: -

It is a premiere document that has to be generated in any transaction. It is an agreement

between buyer and seller, in which seller has agreed to buy them, at an agreed price with

specified delivery terms. Delivery terms may be F.A.S, F.O.B, and C&F etc.

61

F.A.S (Free Along Side)

In this seller has the obligation to deliver the goods alongside the vessel on the quay. The

buyer has to bear all the cost and risk of loss or damage to the goods.

62

Dutiable shipping bills

F.O.B (Free On Board): -

When the delivery condition is F.O.B, the seller has the liability to load the goods /

materials on the vessel specified by the buyer. The transportation, insurance and other

agreements are to be made by the buyer.

C & F (Cost and Freight): -

The seller must pay the costs and freight necessary to bring goods to the named port of

designation but the risk of loss and damage to the goods is transferred from the seller to

the buyer.

In case of “International Trade” the buyer and seller separated by distant boundaries.

Hence it becomes less viable for the parties to come together to form a contract. Thus it

so happens the buyer or seller initiates the formation of contract by sending purchase order

or sale order respectively. Sometimes the buyer intimates the seller by sending the

purchase order, or if seller finds the initiative lucrative, he sends his sale order to the

buyer. Thus in this way the parties enter into a contract with each other. Such type of

contract is known as “Constructed Contract”.

Various contents of sale order are listed below:-

a. Price of the product

b. Quantity and quality of the product

c. Period of delivery

d.Port of delivery

e. Standard terms and condition

f. Types of financial arrangements

63

g. Payment terms

Documents related to payment:

(i) LETTER OF CREDIT: -

L /C are the most popular method of payment / receipt in foreign trade transaction as well

as it the mother document which give rise to all other documents. Under L/C the buyer

promise to pay the seller on due date. In this type of credit, the buyer’s liable to pay. It is

thus also known as banker’s commercial or documentary credit.

It is commonly referred as commercial L/C as it a means to opening a credit in favour of

someone, under which payment will be made provided that certain conditions are fulfilled

within given time.

PARTIES INVOLVED IN L/C: -

1. Buyer or importer

2. I) Issuing or opening Bank

II) Reimbursing Bank

3. Seller or Importer or beneficiary

4. I) Advising / confirming Bank

II) Paying Bank

III) Negotiating Bank

Based on security, L/C can be classified into 3 types: -

1. Revocable or irrevocable: -

64

A revocable L/C can be cancelled or modified, by the buyer at any time without any notice

to the seller. But an irrevocable L/C cannot be cancelled without prior notice to the seller

of Importer.

2. Confirmed or Unconfirmed: -

When the bank authorized by opening bank confirms an irrevocable L/C, it becomes

confirmed. Otherwise the L/C is unconfirmed.

3. Recourse or without recourse: -

If the advising bank pays the seller but does not get reimbursing from the opening bank,

then this bank can recover the whole money with interest from the seller.

But in case of without recourse, the liability of the Importer ends after he has deposited the

required documents and received payments.

(ii) BILLS OF EXCHANGE: -

It is a document for the goods Imported. It is the means of collecting money through

banking channels and also a method of payment by credit. A bill of exchange is also

referred as “Draft”. It is a legal document. In India, Section 5 of Negotiable Act, 1881,

defines bill of exchange as:-

“An instrument in writing containing an unconditional order, signed by the maker,

directing the person to pay certain amount”.

It has the following characteristics:-

a. It is an instrument in writing

b. It is an unconditional order signed by Maker (Drawer)

c. It is a direction given to a specific person (Drawee)

d. It is a direction to make payment of specific or fixed amount.

65

A bill of exchange performs the following functions: -

i. Means for collecting payment

ii. Means for demanding payments

iii. Means for extending credit

iv. It is a promise of payment

v. It is a receipt of payment

Various documents are required for custom clearance. Importer or his agent

submits the following documents to the custom department so as to get custom

clearance for Import.

(iii) BANK CERTIFICATE OF PAYMENT

It is a certificate issued by the negotiating bank of the Importer, certifying that the bill

covering particular consignments has been negotiated and that the proceeds received in

accordance with exchange control regulation in the approved manner.

DISPATCH INSTRUCTION: -

Dispatch instruction is almost like sale order. It is an instruction or order given by the

company’s marketing department to the plant to dispatch specified goods to the port of

any other designations.

Contents of dispatch instruction are given below:-

a. Specification and quantity of materials to be transported

b. Port of dispatch

c. Shipment schedule

66

d. Place and port of schedule

e. Name of the buyer

A.R.4 FORM: -

It is an application, by the company to the central excise department of custom, for excise

relief.

In India Importable goods are exempted from duty. Hence if the company Imports goods

to foreign countries, to gain foreign exchange, it applies to central excise department to get

exemption, from excise duty, by giving application in a prescribed format under rules –

158, 185, 1730. This application is known as the A.R.4 FORM.

The contents of A.R.4 FORM are listed below:-

a) Name and address of range officer

b) Name of the company

c) Port of loading

d) Country of loading

e) Central excise regd. No.

f) Number and description of goods

g) Gross weight / net weight

h) Value of goods

i) Weight and quantity of goods

j) Duty rate and amount

k) Amount of rebate claimed

l) Remarks

67

m) Declaration of the company

DELIVERY INVOICE: - The plant prepares it at the time of removal of goods from the

plant. It is meant for excise purpose. It contains the following: -

a. Quantity of goods dispatched

b. Price of goods

c. Mode of dispatch

d. Port of dispatch

e. Buyer’s details

f. A.R.4 reference

PROFORMA INVOICE: -

It is basically a form of quotation by the seller to the buyer. It is a sort of invitation to the

buyer from the seller to place a firm order to him. It is deposited with the custom

clearance for estimation of excise duty. It helps in getting custom clearance.

A Proforma invoice contains:-

a. Importer’s name

b. Consignee’s name

c. Notify’s name

d. Buyer’s name

e. Country’s of origin

f. Designation

68

TEST CERTIFICATE: -

It is a verification certificate that shows that the goods shipped have the required cast no.

and percentage composition.

INSPECTION CERTIFICATE: -

It is a document which certifies that the goods have been inspected (prior to shipment).

This certificate is generally desired by the importer so that he can be sure that right types

of goods ordered are being sent by the Importer. In India certain goods are subjected to

quality control. For this purpose an agency called (EIC) was created.

G.R FORM: -

It is one of the most important documents in international business. This form is obtained

from R.B.I. This form is filled by the Importer and is endorsed by the customs. This form

is one kind of guarantee given by Importer to R.B.I. The Importer gives guarantee that

within “six” months of transaction the foreign currency involved will be realized.

G.R FORM contains: -

a. Importer’s name and address

b. Invoice no. And date

c. Consignee’s name and address

d) Port of loading and discharge

e) Country of designation

f) Exchange rate

g) Currency of invoice

69

h) Net & gross weight, particulars, description

SHIPPING BILL: -

It is the main document on which custom permission for Import is given. It is custom

document. It is a document, which is necessary for loading the cargo on ship.

It contains the following: -

a. Importer’s name and address

b. Invoice no. And date

c. Port of loading

d. Port of designation

e. Details of packages and goods

f. Analysis of Import value; currency; amount

MATE RECEIPT: -

When the cargo is loaded on the ship, the commanding officer / captain of the ship will

issue the receipt called the “mate receipt” for goods loaded.

It contains the following information:-

a. Name of the vessel

b. Berth

c. Date of shipment

d. Description of packages etc

BILL OF LADING: -

70

It is a document which is issued by the shipping company acknowledging the receipt of

goods mentioned there / in and undertaking that the goods are in condition and will be

delivered to the consignee, provided that the freight specified therein is duly paid.

It serves the following 3 purposes: -

It is a document of title of goods shipped,

It is a receipt for goods, received by the steamship company,

It contains the terms of the contract between the shipper and shipping company

MARINE INSURANCE: -

When the goods are transported from one place to another there is always risk involved.

Hence to avoid such transit losses, marine insurance is taken up. In India there are various

insurance companies, such as General Insurance Company. Insurance Policy is normally

done through agents.

Marine insurance contains the following:-

a. Name and address of the subsidiary of insurance company

b. Claim payable

c. Name of the insured

d. Vessel no.

e. Place of dispatch

f. Port of loading and dispatch

g. Destination

h. Insured value

i. Terms of insurance

71

j. Particulars and description of goods

100% E.O.U. -

Import Oriented Units means an industrial unit offering for its entire production, excluding

rejects and items otherwise specifically permitted to be supplied to the domestic Tariff

Area (DTA). Such units may be set up under the Import Oriented Unit (EOU) scheme or

Import Processing Zone (EPZ), Electronic Hardware Technology Park (EHTP). Such units

may be engaged in manufacture/production or trading of any goods, like Hardware.Units

engaged in service activities may also be considered on merits.

The scheme of 100% Import Oriented Units (EOUs) was introduced in the year 1980 with

the objective of generating of production capacity for Imports by providing an appropriate

policy frame work, flexibility of operations and incentives. In order to enable them to

operate successfully in the international markets, such units are allowed to import

machinery, raw materials and components and consumables free of customs duties, and if

procured indigenously, full exemption of excise duty is available. These units have to

operate under customs bond and are expected to achieve the levels of net foreign exchange

earnings fixed by the Board of Approval as a percentage of their Imports.

EOUs are governed by the following basic terms and conditions:

It may be established anywhere in India subject to locational criteria, local zoning laws

and environmental regulations.

The unit will undertake to manufacture in bonded area and to Import its entire period

ordinarily of five years.

If a unit approved under this scheme is unable for any reason, to fulfill its Import

obligations, the Board of Approval will review the case and recommend the future

course of action to be taken in regard to that unit.

72

Once a 100% EOU is de-bonded, it would have to pay the following duties.

Customs duty on capital goods on the depreciated value but at the rate prevailing at

time of import.

Customs duty on unused raw materials, components, consumables and spares of value

at the time of import at rates in force at the time of clearance.

In respect of excisable goods, excised duty without any depreciation and at rates

applicable at the time of clearance.

EOUs established any where in India and Import 100% its products except certain fixed

percentage of sales in the domestic Tariff Area as may be permissible under the policy.

IMPORT DOCUMENTATION

Documentary Requirements:

Customs documents are the set of documents required by a customs authority to accurately

and completely identify goods which are being imported. Every country has its own

specific rules and regulations governing information and documentary requirements.

The minimum documentation required to be submitted with customs import entries or

Informal Clearance Documents includes:

Air way-bill or bill of lading

Invoices

73

Any other papers (including packing lists, insurance documents, etc) relating to the

shipment.

The Customs Act 1901 requires importers to retain commercial documents relating to a

transaction for five years from the date of entry. These documents may be required for

Customs audit purposes. Failure to meet the requirement may attract a penalty of $2000.

Airway Bill:

Any airway bill, also called, an air consignment note, is a receipt issued by an airline for

the carriage of goods. As each shipping company has its own bill of lading, each airline

has its own airway bill.

Bill of lading:

The bill of lading is a document, issued to a consignee, by a carrier that describes the

goods to be shipped, acknowledges their receipt and states the terms of the contract for

their carriage. The shipper is responsible for completing the bill of lading and providing

the completed document to the carrier at the time the shipment is sent.

The carrier provides a copy of the bill of lading to the Importer before departure, as

evidence of the transfer of goods from the Importer to the carrier. A copy of the bill of

lading is also forwarded to the importer, to arrange for the pick-up of the goods, and a

third copy is kept for the carrier’s records.

Original bill of lading:

- The original bill of lading always stipulates the contract of carriage.

74

- Possession of the original bill of lading at destination entitles the bearer to the goods.

- The original bill of lading is sometimes sent to a financial institution that represents

the shipper. The financial institution remits the original bill of lading to the importer

once all financing and other obligations are met.

Manifest:

A manifest is an itemized list of the contents of the shipment, to be shown to officials for

customs clearance. Another name for the manifest is cargo control document (CCD). The

most commonly used manifest is a Form A8A.

The carrier prepares the manifest based on the information provided by the shipper. The

carrier must provide the customs broker with a manifest in order for the broker to obtain a

release from Customs.

A manifest or CCN has its own identifier, called the cargo control number. Once

submitted and accepted by Customs, the manifest and cargo control number are monitored

by Customs to ensure the proper clearance and closure of the shipment.

Packing list:

The packing list is the detailed list of contents of the shipment, including quantities, items,

model numbers, dimensions and net and gross weights. A packing list should specify per

carton or crate the number and type of units of material inside. The shipper

gets the packing list ready at the time the goods are being is prepared for shipping. There

is no standard format for packing lists.

75

Although it is not a required customs document, the packing list is often used by the

customs broker to obtain additional information about the shipment.

Commercial Invoice:

A commercial invoice is the basic document from which the buyer or importer pays the

vendor or Importer.

On import shipments, the commercial invoice generally serves a dual purpose: to enable

the Importer to collect his/her money and to assist the importer in clearing the goods

through Customs.

The commercial invoice does not need to conform to a rigid format. The Importer or

manufacturer is free to set out the information in any manner they choose, provided that

the prescribed data elements found on the invoice are included. Specifically, the following

information must be included and be clear, accurate and precise:

- Importer name and address

- Consignee name and address

- Description of the goods

- Net and gross weights

- Unit price

- Extended price

- Currency of settlement

- Terms of delivery and terms of payment

- Date

- Reference numbers

- Import licenses

- Freight included or excluded

76

Import permits and special certificates:

The goods subject to government department requirements need special permits,

certificates or other paperwork, in addition to the standard customs documentation. In

some cases, shipments may require examination by customs officers to verify marking or

proper labeling. In others, qualified inspectors, working on behalf of the OGD in question,

must review the documentation and/or examine the goods prior to release.

Often the data needed to satisfy OGD requirements is not normally provided with the

shipment. It must then be supplied by the importer to the customs broker at the time of

customs entry.

OGDs are becoming more stringent with regard to imports. What’s more, new, additional

OGD requirements are being implemented all the time. It is crucial that your customs

broker be aware of these regulations to ensure correct processing and compliance of your

shipments subject to OGD requirements.

Moserbaer prepares all appropriate certificates and import permits on a duty free-per-

permit basis as it is a 100% E.O.U. and present these to the OGDs and Customs, in order

to secure the release of the shipment.

Import documentation procedure is as follows:

The papers and documents required before starting the steps and procedures of clearing

goods imported for companies and establishments or others in general

Copy of the commercial register and a form of the business activity issued by the

Ministry of Commerce and Industry

Certificate of membership with the Chamber of Commerce and Industry

77

Certificate of origin for imported goods certified by the competent authorities in the

Importing or producing country

Original invoice of purchase certified by the competent authorities in the Importing or

producing country

Bill of Lading for goods imported by sea or air

Manifest papers of goods imported by sea or air

Delivery order by the shipping agent of goods imported by sea or air

Letter of Authority certified party concerned with custom clearance in case of inability

to appear in person.

78

CONCLUSION

By observation and research done in Ranbaxy plant situated at Paonta Sahib, Sirmour,

Himachal Pradesh on their Production, Global Supply Chain and EXIM & Custom Deptt.

I reached to a conclusion that all the three departments work together with a great

coordination and rhythm to perform their jobs and fulfill the market commitment on the

due dates given by the company. The company has a global market in more than 70

countries and is efficiently fulfilling the demands of the global market with a fabulous

coordination of all the three departments which leads to a sustainable multinational

pharmaceutical giant

79

ANNEXURE

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Import-Export Documents Used for Global Supply of Products as well as imports of Raw

Material & Packaging Material, as per the formats issued by the Govt. of India.

1. Master Document

2. Master Document 2nd

3. Performa Invoice

4. Invoice

5. Packing List

6. Bill Of Loading

7. Mate’s Reciept

8. GSP Form’A’

9. Application For Certificate Of Origin

10. Certificate Of Origin

11. Intimation Of Inspection

12. Certificate Of Inspection

13. Marine Insurance Declaration

14. Marine Insurance Certificate

15. Shipment Advice

16. G.R. Form

17. S.D.F. Form

18. Exporter’s Declaration Form

19. SOFTEX Form

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20. Shipping Bill

21. Shipping Bill For Export Of Duplicate Goods

22. Shipping Bill For Export Of Duty Free Goods

23. Bill Of Goods Under Claims Of Duty Drawbacks

24. Bill Of Entry For Home Consumption

25. ARE-1 Form

26. Rebate Order

27. ARE-2 Form

28. Form CT-1

29. Format Of Importer-Exporter Code Number

30. Shipping Instructions

82

BIBLIOGRAPHY

Hindustan Times

The Times Of India

The Economic Times

Business Standard

www.ranbaxy.com

www.wikipedia.org

www.britannicaonline.com