STUDY ON FOREIGN BANK

CHARGES AND NATURE OF

DISCREPANCIES

Presented by:

Gursharan Kaur

MBA-2B

94972238270

Introduction about Textile Industry

Largest industry when it comes to

employment

Contributes about 34% of total exports

India is the second largest producer of

cotton yarns and fifth in production of

synthetic fibres and yarns.

Contd..

Segments of Textile Industry

Processes used in Textile

Industry

Leading Textile mills

Vardhman group

Set up: 1965

Steel:1973

Sewing thread:1982

Fabric weaving:1990

Acrylic fibre: 1999

Vision

Rooted in Values,

Creating World Class Textiles.

Mission statement

Vardhman aims to be world class textile

organization producing diverse range of

products for the global textile market.

Vardhman seeks to achieve customer

delight through excellence in

manufacturing and customer service

based on creative combination of state-

of-the-art technology and human

resources. Vardhman is committed to be

responsible corporate citizen.

Logo of group

Major Highlights

Largest exporter of cotton yarns.

Largest range of textile products.

Second largest producer of sewing

thread in the country.

First in Indian textile industry to get

ISO certification in yarns and sewing

thread.

Group units

State Number of units

Punjab 8

Himachal Pradesh 9

Madhya Pradesh 5

Gujarat 1

Tamil Nadu 1

Business portfolio

Yarn

Fabric

Sewing thread

Acrylic fibre

Steel

Organizational hierarchy

Staff (S1 to S4)

Officers (O1, O2)

Executives (E1, E2)

Managers (M1 to M4)

Vice Presidents (AVP to Sr. VP)

Business Heads

Chairman and Managing Director

Functions of departments

MIS

Exports

Finance

Marketing

HR

Taxation

EDP & IT

Projects & Planning

SWOT Analysis

Strength

WeaknessOpportunity

Threat

Current ratio

2007-08 2008-09 2009-10

Current

assets (Rs.

Lac)

153628.45 161172.29 203654.93

Current

liabilities (Rs.

Lac)

26204.85 24142.11 26702.47

Current ratio 5.86 6.67 7.62

Quick ratio

2007-08 2008-09 2009-10

Quick assets (Rs.

Lac)

66592.12 99162.24 92909

Current liabilities

(Rs. Lac)

26204.85 24142.11 26702.47

Quick ratio 2.54 4.1 3.47

Debt-Equity ratio

2007-08 2008-09 2009-10

Debt (Rs.

Lac)

239123.43 394594.29 262079.79

Shareholders

’ fund (Rs.

Lac)

117213.90 127275.03 145584.96

Debt-Equity

ratio

2.04 1.95 1.8

Earning per share

2005-06 2006-07 2007-08 2008-09 2009-10

Earning per share (Rs.)

33.98 29.72 21.21 24.37 37

0

5

10

15

20

25

30

35

40

Rs.

Turnover of Vardhman group

2005-06

2006-07

2007-08

2008-09

2009-10

Turnover(Rs. Crore) 1957.25 2159.24 2346.36 2495.38 2767.22

0

500

1000

1500

2000

2500

3000R

s. C

rore

Segment revenue for 2009-10

10%

6%

20%

7%

3%

54%

Revenue of segments(Rs. Crore)

Sewing Thread

Steel

Fabric

Acrylic Fibre

Unallocated

Yarns

Letter of Credit

Foreign Bank Charges

When Exporter sends documents to

Customer’s bank in Foreign

country,Certain charges are deducted

by the customer’s bank on realization

of documents.These are Foreign

Bank charges

Definition

Discrepancy

Any deviations from the terms and

conditions of Letter of Credit

LC Charges

There are two types of LC charges

• Avoidable Charges

• Unavoidable Charges

Avoidable Charges

2.Acceptance Commission

3.Port Demurrege

1..Discrepancy Charges

4.Ammendment charges

Unavoidable Charges

1.Reimbursement Charges

2.Telex Charges

3.SWIFT Charges

OBJECTIVES

To understand each and every Foreign Bank

Charge and to know their nature that is on

which criteria are these charges levied.

CONT…

. To understand the nature of

discrepancies & their charges levied by

foreign banks

To justify amount paid as a bank charge

and seek further saving potential of the

paid expenses for future dealings of the

Group with the banks

Research methodology

Research design: Descriptive

Sampling

o Target population

o Sampling unit

o Sample size

o Sampling technique: Judgemental

Contd..

Data collection: Primary and

secondary

Limitations

Limited scope

Unavailability Of Charges in

certain case

Difficult to analyze the data

Data analysis

and

Interpretation

HONGKONG MARKET

FIG 4.5 LEAD TEXTILES LTD

HOJET TEXTILE LTD

KAPO’S TEXTILES LTD

FOUNTAIN SET LIMITED

Fountain Set limited’s discrepency detail was not

available .

MARUBENI HONGKONG

YUENSHING DYEING

CHINA MARKET

GUANGDONG ESQUEL LTD.

KOREAN MARKET

HANSOLL TEXTILES LTD

DONG-IL

Dong-IL discrepancy detail not avaible

YOONIA TEX CO. LTD

HANSAE FASHION

HANDSOME DISCREPANCY DETAIL

SAE-A TRADING CO., LTD

No discrepancy detail

ANALYSIS OF PRIMARY

DATA

Recommendations

HONGKONG MARKET

In cases of the discrepancy such as “late

shipment”, it should be taken care of that the

production schedules are met with and

accordingly the shipment is made.

In the case of“documents not as per LC”, the

documentation team can be asked to be a little

more vigilant and keep the customer abreast of

various problems faced during the same.

KOREAN MARKET

High number of intermediaries was of main

concern here, so it was recommended to open

an LC through a bank having lesser number of

intermediaries.

Customer wise bank was recommended in the

study in this light.

In case of Sea-A-Trading,LC should be opened

through Korean Exchange Bank, Citi Bank, as it

levies the acceptance commission and discount

charges on the buyer, less no. of intermediary banks.

In Handsome Textiles LTD., LC through Shinhan

Bank, as it levies the acceptance commission and

discount charges on the buyer, less no. of intermediary

banks, less discrepancy charges.

Hostar Company should open its LCs with CitiBank ,as

it has less no. of intermediary banks,low acceptance

commission.

CHINA MARKET

In the case of discrepancies such as “documents

not as per LC”, the documentation team can be

asked to be a little more vigilant and keep the

customer abreast of various problems faced during

the same