Agni School of Business Excellence

Promoted by Agni Knowledge Foundations (Approved by AICTE, Govt of India. Affilated to Anna University, Chennai

Subject Outline
Subject for Subject Code Subject Title Subject Credits Section Instructor Office Phone Email : MBA Semester III (2012 -14 Batch) : BA9259 : International Trade Finance : 3 Credits : Finance Elective Class : S.Palaniappan : Agni School of Business Excellence : 04551-320611/22/33/44 : splvlcc@gmail.com

Instructors Profile: Faculty of Management Studies with 8 years of varied experience. He has 5 years of experience in industry and 3 years in Academics. He worked as Accounts Executive in SBI Factors and Commercial Services Pvt. Ltd. Also did marketing for FMCG products and full filled his entrepreneurial aspirations. In Academics he has handled finance elective papers and core papers in MBA program under Bharathidasan University for 3 years He is a MBA graduate from University of Madras. He did his project in the area of Credit appraisal and working capital assessment at Indian Overseas Bank-Adayar branch. Did his M.Phil Research program from Bharathidasan University and secured first class with distinction. Completed Tally graduate course, NCMP Level 2 certification from National Stock exchange, UGC-NET and TN-SET.

He has presented 8 research papers in various national and international conferences and published two research articles in international journals. Subject Description:
This subject provides an insight into the arena of International Trade and enlight the students regarding the financial aspects of international business operation. It also throws light on different aspects of international economic situations and issues concerned. Foreign exchange market is a inbuilt component of export finance and hence this subject help us to understand the nitty-grittys of foreign exchange rates, Spot Prices and Forward Prices and the factors influencing Exchange rates. It also provides tools for hedging against exchange rate variations by Forward, Futures and Currency options. Also throws light on FEMA and determination of Foreign Exchange rate and Forecasting. It helps to grasp the basics of export finance facilities available and enlight us on the related export documentation, formalities, procedures, risk management, and UPCDC norms. Export operations cannot run successful without the support and cooperation of Government. The subject also highlight the support given by Government of India for export operations in the form of Export Incentives, Duty Exemption, Concession, Marketing Assistance, EPCG, DEPB, Advance License, EPZ, EOU , SEZ and Export House.

Objective of the Subject:

Students should Understand the meaning, benefits and basis of international trade and economic environment Understand various INCO terms and appreciate various Pre-shipment and postshipment finance facilities available to exporters Understand the nitty-grittys of forex market and its management Have a basic knowledge about export documentations, formalities and procedures. Be able to appreciate various export promotions schemes of the Government.

Subject: International Trade Finance Units

Session Topics

Session Required

LEARNING OBJECTIVES On completion of this unit you should be able to:

Unit I

INTERNATIONAL TRADE 3 International Trade Meaning and Benefits Basis of International Trade Foreign Trade and Economic Growth Balance of Trade Balance of 3 Payment Current Trends in India Barriers to International Trade 3 WTO Indian EXIM Policy.

Understand the
meaning, benefits and basis of international trade and economic environment

Unit II

EXPORT AND IMPORT FINACE 2 Special need for Finance in International Trade INCO Terms (FOB, CIF, etc.,) Payment Terms Letters of Credit 4 Pre Shipment and Post Shipment Finance Fortfaiting Deferred Payment Terms EXIM Bank ECGC and its schemes Import Licensing 3 Financing methods for import of Capital goods. FOREX MANAGEMENT Foreign Exchange Markets Spot Prices and Forward Prices Factors influencing Exchange rates The effects of Exchange rates in Foreign Trade 3

Understand various INCO terms and appreciate various Preshipment and post-shipment finance facilities available to exporters

Unit III

Understand the nitty-grittys of forex market and methods of managing it.

ASSESSMENT CRITERIA To achieve the learning outcome you must demonstrate the ability to: Students will be evaluated based on their appreciation of significance of international trade and on the basis of their conceptual understanding of BOP statement and international economic issues like WTO, Exim policy, and trade barriers, through class room discussion, examination and case analysis Students will be evaluated based on their level of understanding of various INCO terms, preshipment and post shipment credits and role of EXIM bank and ECGC.by class room discussion, quiz and examination Students will be evaluated by their ability to appreciate the working of foreign exchange

Tools for hedging against 3 Exchange rate variations Forward, Futures and Currency options FEMA Determination of Foreign 3 Exchange rate and Forecasting.

Unit IV

Unit V

DOCUMENTATION IN INTERNATIONAL TRADE Export Trade Documents: Financial Documents Bill of ExchangeTypeCommercial Documents Proforma, Commercial, Consular, Customs, Legalized Invoice, Certificate of Origin Certificate Value, Packing List, Weight Certificate, Certificate of Analysis and Quality, Certificate of Inspection, Health certificate. Transport Documents - Bill of Lading, Airway Bill, Postal Receipt, Multimodal Transport Document. Risk Covering Document: Insurance Policy, Insurance Cover Note. Official Document: Export Declaration Forms, GR Form, PP From, COD Form, Softer Forms, Export Certification, GSPS UPCDC Norms. EXPORT PROMOTION SCHEMES Government Organizations Promoting Exports Export Incentives : Duty Exemption IT Concession Marketing Assistance EPCG, DEPB Advance License Other efforts Export Promotion EPZ EOU SEZ and Export House

market, rate determination, forecasting and management through class room discussion, quiz, case analysis and examination Have a basic Students will be knowledge about evaluated by export their ability to documentations, appreciate the formalities and need, procedures. significance and usage of various export documents through class room presentation, quiz and examination.

Be able to appreciate various export promotions schemes of the Government.

Students will be evaluated by their level of understanding about various export promotion schemes offered by Government of India through class room discussion, quiz and examination.

TEXT BOOKS 1. Apte P.G., International Financial Management, Tata McGraw Hill, 2008. 2. Jeff Madura, International Corporate Finance, Cengage Learning, 8th Edition, 2008.

REFERENCES 1. Alan C. Shapiro, Multinational Financial Management, PHI Learning, 4th Edition, 2008. 2. Eun and Resnik, International Financial Management, Tata Mcgraw Hill, 4th Edition, 2008. 3. Website of Indian Government on EXIM policy Websites 1 http://commerce.nic.in/ 2 http://www.ecgcindia.com 3 http://www.indiatradefair.com 4 http://www.fieo.org 5 http://www.ncti-india.com 6 http://sezindia.gov.in 7 http://eouindia.gov.in/ 8 http://dgft.gov.in 9 http://www.wto.org/ 10 http://www.worldbank.org 11 http://www.unctad.org 12 www.rbi org in 13 http://www.apeda.com 14http://www.iift.edu

Subject Culture and Pedagogy 1. Lectures 2. Student presentation and class room exercises 3. Group discussion 4. Case Analysis 1. Small Business Dilemma: Developing a multinational sporting Goods corporation Madura - Pg 24 2. Devaluation of currency - P.G Apte - page 88 3. Foreign exchange quotation - P.G Apte - page 185 4. Shrewsbury Herbal Products Ltd , Cheol S Eun & Bruce G Resnick - Pg 130 5. Small Business Dilemma: Exchange rate forecasting by the sports Exports Company - Madura- Pg 300 6. Small Business Dilemma: Ensuring payments for products exported y the sports exports company Madura- Pg 577 7. American Machine Tools Inc , - Cheol S Eun & Bruce G Resnick - Pg 497

Major Assignments: 1. 2. 3. 4. Presentational and analysis of Indias BOP position for the last 5years Chart presentation of Pre-shipment and post-shipment finance facilities Preparing export document set Documentation of EPZ, EOU and SEZ in Tamilnadu

ASSESSMENT: F inal student grade will be calculated as follows: Attendance- 5 Marks Assignment 5 Marks Written Midterm exams and Model Exams 10 Marks Scheme of Evaluation Grading System : Refer to Anna University website : Refer to Anna University website