Tesco

Audit Body: Bureau Veritas CPS Report Ref: 10070710155 Date: May 22,2007
Sedex Nembers Ethical Trade Audit Report v1 01_07_2006.doc Page 1 of 19

Sedex Members Ethical Trade Audit
(Report)
Audit Conducted By
Third Party (Sedex Associate Auditor) First Party
Third Party (Commercial) Second Party
Third Party (NGO) Nulti-stakeholder
Third Party (Union)

Bureau Veritas
SEDEX Members Ethical Trade Audit

Audit Details

REPORT #: 10070710155
Date of Audit: May 22,2007
Audit Type: !nitial Follow-Up __ (1,2,3.) Re-audit
Previous audit date: N/A
Previous audit type: NfA Follow-Up __ (1,2,3.) Re-audit
Report Date: May 29,2007
Supplier Name: Ginger Clothing Pvt. Ltd.
Auditor Name{s): NS.Moovendran & N.Babukumar
Report Written by: NS.Moovendran
Report Reviewed by: Prashant Bhandare
Facility Country: India
Facility Name: Ginger Clothing Pvt. Ltd.
Facility Contact: Mr.Rahul Dev Singh
Contact Title: Factory Manager
Facility Address: # 3/275 Annur Main Road, Kittampalayam (Post) Karumatham patti,
Coimbatore- 641 659,Tamilnadu, India.
Facility Phone: +91-422-2362127/3097185
Facility Fax: //
Facility E-Mail: Rahul@gingerclothing.com
Time DAY 1Time Arrive On site: 11.00am Time Leave Site: 5.00pm

Products Being
Manufactured at Facility e.g.
garments, electricals, toys
Knitted Garments- Men's, Ladies & Children

This report provides a summary of the findings and other applicable information foundfgathered during the social audit conducted on the
above date only and does not officially confirm or certify compliance with any legal regulations or industry standards. The social audit process
requires that information be gathered and considered from records review, worker interviews, management interviews and visual observation.
Nore information is gathered during the social audit process than is provided here. The audit process is a sampling exercise only and does not
guarantee that the audited facility prior, during or post-audit are in full compliance with the Code being audited against. The provisions of this
Code constitute minimum and not maximum standards, and this Code should not be used to prevent companies from exceeding these
standards. Companies applying this Code are expected to comply with national and other applicable law and where the provisions of law and
this Code address the same subject, to apply that provision which affords the greater protection. The ownership of this report remains with
the party who has paid for the audit. Release permission must be provided by the owner prior to release to any third parties.

Audit Scope Details
Please select the Code and Additional Requirements that were audited against during this audit

ET! Base Code
A: Entitlement to Work 8 !mmigration
B: Code and System !mplementation
C: Sub-Contracting 8 Homeworking
Additional Requirements

D: Environmental

Note:
The main focus of this ethical audit is on the ET! Base Code and local law. The additional elements A,B,C,D will not be
audited with such depth or scope but the audit process will still highlight any specific issues.

Non-Compliance Table

Area of Non-Conformity
(Only check box when there is a non-
conformity)

Issue
ETI Base
Code
Local
Law
Additional
Elements
Rating
(Currently only to be
completed as a specific
client requirement)

1 Employment Freely Chosen
2 Freedom of Association
3 Safety and Hygienic Conditions
+ Child Labour
5 Wages and Benefits
6 Working Hours
7 Discrimination
8 Regular Employment
9 Harsh or !nhumane Treatment
A Entitlement to Work
B Code 8 System !mplementation
C Sub-Contracting 8 Home-working
D Environment

Sedex Nembers Ethical Trade Audit Report v1 01_07_2006.doc Page + of 19

Audit Overview

Facility Description:
(!nclude size, location, age, structure, number of buildings)

The audited factory Ginger Clothing Pvt Ltd., was established in April 2005 at # 3/275 Annur Main Road,
Kittampalayam (Post) Karumatham patti, Coimbatore- 641 659,Tamilnadu, India. The factory premises are situated in
a total area of 37,000 sq.ft and the factory has one main and two ancillary building blocks as follows.

Main Block: Office, Store room, Checking, Sewing, Cutting and Finishing
Ancillary Block 1: Canteen /Dining hall, Creche and Rest room
Ancillary Block 2: Dormitory (Not in use)

The factory employs about 182 employees (Staff-29, Workers-145 and Security-8) of them 63 were Male and 119
were Female. On the day of audit 110 employees were present (Staff-29, Workers-76 and Security-5) of them 48
were Male and 62 were Female.

Factory works from 08:30 to 17.20 hours with a lunch break from 12.40 13.10 hours and 2 tea breaks from 10.30 -
10.40 hours and 15.10-15.20 hours. As per reviewed records and worker interviews, overtime is carried out for 2
hours per day from 18.00 20.30 hours (3 to 6 days in a week). The working days are Monday to Saturday and
Sunday is weekly off day for all. The factory is manually recording the time In and Out of the workers. Workers are
paid on daily basis and the wages are distributed on or before 7
th
of every next month.

Based on the management interview, the factory didnt have any peak and lean season as the orders are distributed
evenly throughout the year. Factory provided attendance and payroll records for the last one year. Factory has
employed 8 security guards through Globe Detective Agency on contract basis.

Process Overview:
(!nclude products being produced, main operations, number of lines, main equipment used)

This factory is manufacturing and exporting mens, ladies and kids Knitted garments like T-Shirts, Outer wears.
Factory has not done any orders for the client so far. Factory has Cutting, Sewing, Checking, Ironing and Packing
processes inside the premises and the total production capacity is 75,000 pieces/month. Factory has Juki, Sirupa and
Brother branded sewing machines. 8 Ramsons branded Ironing machines in the ironing section and 2 stain removing
machines in the Finishing section, one needle detector (conveyor type) machine and one Strapping machine in the
packing section.

Attitude of Workers:
(!nclude their attitude to management, workplace and the interview process. Both positive and negative information should be included)
Note: Do not document any information that could put workers at risk

Auditors conducted interviews of 26 randomly selected workers individually and in groups. Interview was conducted
by the auditors confidentially without the presence of factory management. Workers were happy with the working
environment of the factory, both with respect to treatment by management as well as working conditions. Employees
were aware of workplace requirements. It was observed that the workers responded spontaneously and they were
not coached for interview.

Summary of Main Findings: (positive and negative)

Management stated they are in the process of implementing the WRAP requirements as they are going for WRAP
certification next month. The factory management was courteous during the entire audit process and adequately co-
operative.

Non-compliances were observed in the area of Working conditions are safe and hygienic like safety guards such as
needle guards/pulley guards were not provided to the machines and medical examination for the canteen workers
has been carried out.

Non-compliances were observed in the area of Living wages are paid like Overtime wages are not paid at double the
rate of the normal wages and the ESI Contributions/Deductions were not made on the overtime wages.
Non-compliances were observed in the area of Working hours are not excessive like Working hours exceed for
production workers and no approval to employ women workers after 7.00pm

Non-compliances were observed in the area of Code and system implementation like leave book was not issued to
individual workers and the renewed factory license was not obtained.

Non-compliances were observed in the area of environmental like Consent for operation/ NOC for air and water were
not renewed by the factory.

All the findings were discussed with the management in the closing meeting. The management was receptive of all
the findings and give the auditors the probable deadline to take appropriate corrective actions.

Worker Analysis

Permanent Temporary Migrant Agency
Worker numbers {male)
32 Nil Nil 7
Worker numbers {female)
113 Nil Nil 1

This Facility

Facility activities
e.g. growingfpackingfmachining
Cutting, Sewing, Finishing, Checking and Packing
Where appropriate records available to
verify hours of worker and wage
compliance:
Yes No
!f no" refer to
comments in
summary section
Applicable business and other legally
required licence numbers:
e.g. (liability insurance)
CB 1273+
Nonth(s) of peak season
(if applicable):
NfA
Normal Work Days: e.g. Non Sat
Nonday to Saturday
Nax. overtime hours found (per day,
week, month):
2 hoursf day, 15 hoursfweek and 29 hoursfmonth (April 2007)
What is the general overtime pay rate?
Double the rate of normal wages
Overtime paid correctly?
Yes No
Approx. 160 of the rate of normal wages given for overtime instead of
200
Combined hours (reg. 8 OT) over 60 per
week found?
Yes No
!f Yes" refer to
comments in
summary section

of piece rate workers
(if applicable)
NfA
!s there any night production work at the
facility?
Yes No
Factory works overtime maximum from 18.00 to 20.30 Hrs.
of workers living in dorms
(if applicable):
NfA
(Note: Factory has got 14 rooms at the dormitory, which were
used in the past. As of now, these rooms are kept unused due to
administrative reasons and the workers have been relocated to
their own living place out side the factory).
Are workers paid by cashfchequefBACS?
(if not explain)
Yes No
Wages paid by cash
Youngest worker found:
20 years 6 months
Workers under 18 subject to hazardous
work assignments?
Yes No
Were workers aware of the audit?
Yes No

Which time keeping system is used? Time cards Swipe cards Nanual Other:
!f applicable, name of union and union
representative:
NfA

!f no union what is parallel means of
consultation with workers?

Works Committee meetings
Was the union's or workers'
representative involved in the audit? (if
no, explain)
Yes No

The percentage of workers at the site
covered by collective bargaining with one
or more recognised trade unions
NfA
The percentage of workers at the site
covered by negotiation with workers'
representatives who are NOT members of
one or more recognised trade unions
NfA
Were workers aware of the code?
Yes No
Audit results reviewed with facility
management?
Yes No
Were union reps. or workers' reps.
present at opening and closing meeting?
Opening Yes No Closing Yes No

Audit Results by Clause

1: Employment
is Freely Chosen
ETI
1.1 There is no forced, bonded or involuntary prison labour. 1.2 Workers are not required to lodge
"deposits" or their identity papers with their employer and are free to leave their employer after
reasonable notice.

Non-compliance:
Nothing to report

Other potential issues:
Nothing to report

Current status: (!f there are no non-compliances then please summarise the systems that the factory has in place to meet this requirement)
Personal files of 26 workers (randomly selected) were verified. Files were documented with Worker's Job application,
Appointment letter, Personal details and Age proof documents. Workers were free to leave at the end of their shift and
the job after 30 days notice. Nanagement withholds no original document or deposit amount.

Best practices observed:
Nothing to report


2: Freedom Of
Association &
Right To
Collective
Bargaining Are
Respected:
ETI
2.1 Workers, without distinction, have the right to join or form trade unions of their own choosing
and to bargain collectively. 2.2 The employer adopts an open attitude towards the activities of trade
unions and their organisational activities. 2.3 Workers' representatives are not discriminated against
and have access to carry out their representative functions in the workplace. 2.+ Where the right to
freedom of association and collective bargaining is restricted under law, the employer facilitates, and
does not hinder, the development of parallel means for independent and free association and
bargaining.

Non-compliance:
Nothing to report

Nothing to report

No workers union existed in the factory. But factory has formed (alternatefparallel means) different works committees
like workers, sexual harassment, grievances, safety and canteen committees with employees as member of
committees. These committees meet once in two month f or monthly and are actively involved to identify and solve the
issues. !f any. Workers are free to express their views with the management either directly or through the suggestion
boxes fixed at factory. This was cross-verified through minutes of the committee meetings, worker and management
interview.

Nothing to report

3: Working
Conditions are
Safe & Hygienic

ETI
3.1 A safe and hygienic working environment shall be provided, bearing in mind the prevailing
knowledge of the industry and of any specific hazards. Adequate steps shall be taken to prevent
accidents and injury to health arising out of, associated with, or occurring in the course of work, by
minimising, so far as is reasonably practicable, the causes of hazards inherent in the working
environment. 3.2 Workers shall receive regular and recorded health 8 safety training, and such
training shall be repeated for new or reassigned workers. 3.3 Access to clean toilet facilities and to
potable water, and, if appropriate, sanitary facilities for food storage shall be provided. 3.+
Accommodation, where provided, shall be clean, safe, and meet the basic needs of the workers. 3.5
The company observing the code shall assign responsibility for health 8 safety to a senior
management representative.

Non-compliance:

Description of non-compliance 1:
No safety guards such as needle guards to 6 single sewing machines, pulley guards to 7 sewing machines and 2 Genset
motor were provided.
Local law:
According to Rule 53 schedule 1 of 3{3) of The Tamil Nadu Factories Rules 1950, -All Belts, Pulley, Gears,
Chains, Sprocket wheels, and other dangerous moving parts of machinery which either form part of the machinery or
are used in association with it, shall be securely guarded.
Recommended corrective action:
The factory shall provide necessary safety guards to all the machines and equipments as per local law.
Objective evidence observed:
During the factory tour, it was observed that needle guards were not provided to 6 single needle machines, pulley
guards were not provided to 7 sewing machines and 2 motor fan of Genset. Nanagement was receptive of the issue
and assured to take immediate corrective action.

Detailed medical examination has not been done for 3 canteen workers employed through contract.
Local law or ETI requirement:
According to Section 67 {A) of The Tamil Nadu Factories Rules, 1950, Every member of the canteen staff who
handles foodstuffs shall be medically examined by the Factory Nedical Officer or the certifying surgeon and such
examination shall include the following namely,-
(i) Routine and bacteriological testing of faeces and urine for germs of dysentery and typhoid fever at intervals of not
more than six months.
(ii) Routine blood examination at intervals of not more than twelve months.
(iii) Any other examination including chest X rays that may be considered necessary by the Factory Nedical Officer or
the Certifying Surgeon. Any person, who in the opinion of the Factory Nedical Officer as confirmed in writing by
the Certifying Surgeon, is unsuitable for employment on account of possible risk to the health of others, shall not
be employed as canteen staff.
Factory shall ensure that detailed medical examination, including the routine and bacteriological testing of faeces and
urine for germs of dysentery and typhoid fever, routine blood examination and other examination including chest X
rays to be done for the 3 canteen workers as per law requirement.
During the documentfrecord review and interview with the management, it was observed that 3 canteen workers have
not been medically examined (with all the necessary tests). However the fitness certificate has been obtained from a
medical practitioner for these 3 workers. Nanagement accepted the finding and assured to take corrective action
immediately.

Nothing to report

Factory has drafted/displayed the health and safety policy and formed health and safety committee to
take care of health & safety issues of the workers. Fire Safety, First aid activities (including training) are
followed as per the legal requirements and the records are maintained/ updated periodically. Factory
has given appropriate PPEs to the workers, wherever required. No hazardous process/materials
observed in side the factory.

Nothing to report

4: Child Labour
Shall Not Be Used
ETI
+.1 There shall be no new recruitment of child labour. +.2 Companies shall develop or participate in and contribute
to policies and programmes which provide for the transition of any child found to be performing child labour to
enable her or him to attend and remain in quality education until no longer a child. +.3 Children and young persons
under 18 shall not be employed at night or in hazardous conditions. +.+ These policies and procedures shall
conform to the provisions of the relevant !LO Standards.

Non-compliance:
Nothing to report

Nothing to report

Factory has not employed any workers less than the age of 18 years. Factory has framedfdisplayedfcommunicated
Child labor policy throughout the organization. As per the policy the factory shall not employ the workers less than the
age of 18 years. Before the appointment of a worker, the factory verifies the age proof documents and retains copies
on appointment. Auditors verified 26 workers personal files all of them were documented with valid doctor's certificate.

Nothing to report

5: Living Wages
Are Paid
ETI
5.1 Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry
benchmark standards, whichever is higher. !n any event wages should always be enough to meet basic needs and
to provide some discretionary income. 5.2 All workers shall be provided with written and understandable
information about their employment conditions in respect to wages before they enter employment and about the
particulars of their wages for the pay period concerned each time that they are paid.
5.3 Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages
not provided for by national law be permitted without the expressed permission of the worker concerned. All
disciplinary measures should be recorded.

Wages analysis
Sample size (number of wages checked and which weeks or months): 26 ( + from April 2007, 2 each from march,
April, may, June, July, August, September, October, November, December 2006, Jan, Feb, and Narch 07 ) were
reviewed in order to verify the overtime hour work performed and payment made thereafter

Legal minimum wage for standard time: INR S5.S3Jday and INR 2231.60Jmonth for Helpers (8 hoursfday
and 30 fmonth) as per Zone -C
Industry norm for this region: As per Zone -C wages.
Legal overtime premium for weekdays: Double the rate of normal wages
Legal overtime premium for rest days: Double the rate of normal wages
Legal overtime premium for holidays: Thrice the rate of normal wages

For the following table please select one worker's records from each Worker Type" and populate the boxes
Regular Day OT Rest Day OT
Statutory Holiday
OT Worker Type Pay
Period
(mmfweek)
Employee Namef
Staff !D#f
Dept
Contract
Nonthlyf
Daily
Regular
Working
Hours
Regular
Work
Pay Rate
Hour
Wage*
Hour Wage Hour Wage
Total OT
Hours
!ncentivesf
Bonusf
Allowances
etc.
Gross
Wages
Social
!nsurance
and Other
Deductions
Actual
Wage Paid
After
Deduction
Process
Operator
{Highest
paid)
April
2007
E.Ramesh/
1106-Cutter
138. 25 3450 26 717.60 /

/

/

/ 26

/
4167.
60
414+61 3692.60
Process
Operator
{Average
paid)
April
2007
R.Baby/366-
Tailor
100 24 2400 29 580

/

/

/

/ 28

/ 2880 288+42 2070
Process
Operator
{Lowest
paid)
February
2007
C.Valarmathi/
56- Checker
95 20.5 1947.5 14 266

/

/

/

/ 14

/
2213.
5
234+35 1678.5
Note: Wages are in !NR- *ES! deduction not made form the overtime wages and Overtime wages paid at 160 instead of 200

Comments: Please state here any specific reasonsfcircumstances that explain the lowest and highest gross wages.
As per Zone-C job category and according to worker's competencyfperformance.

1. Contracted OJT premium for ...
Weekdays: Double the rate of normal wages
Rest days : Double the rate of normal wages
Holidays: Thrice the rate of normal wages
2. Actual OJT premium paid in sample for ...
Weekdays: 160 of the rate of normal wages
Rest days: NfA
Holidays : NfA
3. Average wage paid to operators: !NR 105f day and !NR 2730 f month for operator.

Non-compliance:

Overtime wages are not paid at double the rate of the normal wages.
According to Section 59 {1) of The Factories Act, 194S where a worker works in a factory for more than 9 hours
in any day or more than +8 hours in any week, he shall in respect of overtime work be entitled to wages at the rate of
twice his `ordinary' rate of wages. Where there is increase in working hours but the increase is below the maximum
working hours, a workman is entitled to proportionate extra wages for this extra work.
The factory shall pay the overtime wages at double the normal rate of wages for all the workers as per law
requirement.
Upon reviewing the workers payroll records and through employeef management interview it was observed that the
workers who have worked overtime work on regular days were not paid the overtime wages at double the rate.
Presently for 2 hours overtime work were paid at + hours wages, which is almost 160 instead of 200.
Nanagement acknowledged the finding and assured to take corrective action as per the local law requirement
immediately.
immediately.

ContributionsfDeductions were not made on the overtime wages towards the Employees State !nsurance.
According to Section 2{22) of The Employees State Insurance Act 194S, Wages means all remuneration paid
or payable in cash to an employee, if the terms of the contract of employment, express or implied were fulfilled and
includes any payment to an employee in respect of any period of authorized leave, lock-out, strike, which is not illegal
or layoff and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include-
a) any contribution paid by the employer to any pension fund or provident fund or under this Act;
b) any traveling allowance or the value of any traveling concession;
c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ;
or
d) Any gratuity payable on discharge
The factory shall ensure to make contributionsfdeductions for overtime wages paid to the workers towards the
Employees State !nsurance Scheme.
During payroll review, workers interview and as observed that the factory has worked overtime work in Production
sections. Factory has paid 160 of the regular wages for such work. But the factory has not made any ES!
contributionsfdeductions for the there after. Nanagement acknowledged the same and assured to take immediate
corrective action.

Nothing to report

26 payroll records were verified. Workers are paid wages as per the legal minimum wagesfagreement and they are
covered under the medical and social benefits of Employee State !nsurance and Provident Fund. All the relevant
documentsfrecords were available to verify these benefits made.

Nothing to report

6: Working Hours
Are Not Excessive:
ETI
6.1 Working hours comply with national laws and benchmark industry standards, whichever affords greater
protection. 6.2 !n any event, workers shall not on a regular basis be required to work in excess of +8 hours per
week and shall be provided with at least one day off for every seven-day period on average. Overtime shall be
voluntary, shall not exceed 12 hours per week, shall not be demanded on a regular basis and shall always be
compensated at a premium rate.

Working hours analysis

Sample size checked {number of workers): (+ from April 2007, 2 each from march, April, may, June, July,
August, September, October, November, December 2006, Jan, Feb, and Narch 07 ) were reviewed in order to verify
the overtime hour work performed

Legal standard work-week {hours): +8 + 12 hours

1. Contracted standard work-week this factory {hrs) 4S as per the
production
appointment
2. Actual standard work-week averaged over sample {hrs) 4S
3. Lowest basic hours worked 40
4. Highest basic hours worked 4S

Legal permitted overtime hours: 2 hoursJday; 12 hoursJweek and 50 hoursJquarter
Any local waivers for this factory: Nil

Comments: Please state here any specific reasonsfcircumstances that explain the highest working hours.
To meet the committed delivery date and shipment urgency

1. Actual overtime hours {averaged over sample) 2 hoursfday; 15 hoursfweek
8 29 hoursf month
2. Range of overtime hours over all operators {quote highest and lowest) 0-2 hoursfday; 7 -15
hoursf week 8 7.5 - 29 hoursf
month
3. Peak seasons Evenly distributed throughout
the year

Non-compliance:
Overtime hours worked by the workers exceed the legal limits of 2 hoursfday, 12 hoursfweek and 50 hoursfquarter.
According to Section 64{4) of the Factories Act 194S, !n making rules under this section, the State Government
shall not exceed, except is respect of exemption under clause (a) of sub-section (2) the following limits of work
inclusive of overtime-
(i) The total number of hours of work in any day shall not exceed ten,
(ii) The spread over, inclusive of intervals for rest, shall not exceed twelve hours in any one day,
(iii) The total numbers of hours in a week, including overtime, shall not exceed sixty,
(iv) The total numbers of hours of overtime shall not exceed fifty for any one quarter.
Note: Quarter" means a period of three consecutive months beginning on the 1
st
January, the 1
st
April, the 1
st
July or
the 1
st
October.
Factory shall ensure to carry out the overtime hours within the legal requirements as specified in the law.
Upon reviewing the payroll and attendance records, it was observed that the workers in production sections are
working more than the legally prescribed overtime hours per day, week and quarter. The maximum overtime hours
worked by the workers is 2 hoursfday, 15 hoursfweek, 29 hoursfmonth (April 2007) and 70 hours fquarter
(January-Narch 2007). However the securities are working in three shifts and 8-hoursfshift bases and no overtime is
carried out. This was also confirmed with the workers through interview. Nanagement acknowledged the finding and
assured to take corrective action as per the local law.

Factory did not obtain the approval from the concerned authority for the employment of women workers after 7pm for
overtime hours.
According to Section 66 of The Factories Act, 194S, {1) {b) no woman shall be (required or allowed to work in
any factory) except between the hours of 6.00am and 7.00pm.
The factory shall obtain the approval to employ women workers after 7 pm for the overtime work as per law.
During review of the documents and workerf management interview, it was observed that women workers in the
production section are employed after 7.00pm for overtime work (from 6.00 to 8.30pm). But the factory did not obtain
approval from the concerned authority for the employment of women workers after 7pm. However the factory takes
care of the safety of the women workers back home. The management has accepted the finding and has assured to
make corrective actions accordingly.

Nothing to report

26 time records were verified. Factory has manual time card system to record the in 8 out time. As per these records,
the overtime work hours done by the workers exceed the legal limits of 2 hoursfday, 12 hoursfweek and 50
hoursfquarter. Workers and the Securities are provided with weekly off regularly. These were corroborated with
production records, notice on working hours displayed at notice board and workers interview.

Nothing to report

7: No
Discrimination Is
Practised
ETI
7.1 There is no discrimination in hiring, compensation, access to training, promotion, termination or retirement
based on race, caste, national origin, religion, age, disability, gender, marital status, sexual orientation, union
membership or political affiliation.

Non-compliance:
Nothing to report

Nothing to report

Workers are provided employment and remuneration based on their competency and job requirements and also
promotion 8 training opportunity is based on the workers willingness and competency. The factory has policy and
procedures on non-discrimination, which has been communicated to the workers. As per the workers interview there
were no practice of discrimination found in the factory.

Nothing to report

S: Regular
Employment Is
Provided
ETI
8.1 To every extent possible work performed must be on the basis of recognised employment relationship
established through national law and practice. 8.2 Obligations to employees under labour or social security laws
and regulations arising from the regular employment relationship shall not be avoided through the use of labour-
only contracting, sub-contracting, or homeworking arrangements, or through apprenticeship schemes where there
is no real intent to impart skills or provide regular employment, nor shall any such obligations be avoided through
the excessive use of fixed-term contracts of employment.

Non-compliance:
Nothing to report

Nothing to report

Sedex Nembers Ethical Trade Audit Report v1 01_07_2006.doc Page 1+ of 19
Workers are given continuous employment. Workers employment contracts were reviewed and the terms 8 conditions
were found as per law. Nore over as per the employee interviews, the workers are provided with regular work and they
were aware of legal wages and no issues were reported so far.

Nothing to report

9: No Harsh Or
Inhumane
Treatment Is
Allowed
ET!
9.1 Physical abuse or discipline, the threat of physical abuse, sexual or other harassment and verbal abuse or other
forms of intimidation be prohibited.
Non-compliance:
Nothing to report

Nothing to report

Factory has formed workers and grievance committee. The records related to the formation of the committeesf
activities of the committees were verified and found these committees are actively involved in the day-to-day affairs of
the factory. As per the observation and employee interviews no inhuman treatment is practiced in the factory.

Nothing to report

A: Entitlement to
Work &
Immigration
Additional Retailer Specific Elements
A1 Only workers with a legal right to work shall be employed or used by the supplier. A2 All workers including
employment agency staff, must be validated by the supplier for their legal right to work by reviewing original
documentation. A3 Employment agencies must only supply workers registered with them. A+ The supplier shall
implement processes to enable adequate control over agencies with regards the above points and related
legislation.

Non-compliance:
Nothing to report

Nothing to report

Factory has directly employed all the workers in production sections and has employed securities through `Globe
Detective Agencies' on contract basis as per the legal regulations. Workers are provided with appointment letters and
ensured that all the workers were above the legal minimum ages and the terms 8 conditions of contracts were as per
laws.

Nothing to report

B: Code and
System
Implementation:
Retailer Specific Additional Elements
B1 Suppliers are expected to implement and maintain systems for delivering compliance to this Code. B2 Suppliers
shall appoint a senior member of management who shall be responsible for compliance with the Code. B3 Suppliers
are expected to communicate this Code to all employees and to their suppliers. B4 Suppliers should, where
reasonably practicable extend the principles of this Ethical Code through their supply chain.

Non-compliance:
Factory did not issue leave book for the reference to individual workers.
According to the Rules SS of the Tamil Nadu Factories Rules 1950, (1) The manager shall provide each worker
who has become entitled to leave during a calendar year, with a book in form no 15 (hereafter called the leave book)
not later than the 31
st
January of that year. The leave book shall be the property of the worker, and the manager or his
agent shall not demand it except to make entries and shall not keep it for more than one week at a time.
The factory shall ensure to issue the Leave Book for individual workers in the prescribed formats as per law.
During the review of the documentsfrecords, it was observed that the factory has not issued any leave book for the
reference of individual workers. However the workers are provided with encashment of leave during the first month of
calendar year and the leave with wages register is also maintained. This was confirmed with workers through
interview. Nanagement accepted the finding and assured to take corrective action immediately.

Renewed factory license was not obtained as the present factory license expired on December 31, 2006.
According to Rule 6 of the Tamil Nadu Factories Rules 1950, (1) The limits specified in the license granted to a
factory in regard to horse power or the number of persons employed shall not be altered or the name of the factory
changed unless the license has been amended by the [Deputy chief !nspector of Factories| having jurisdiction over the
area where the factory is situated.
Factory shall ensure to obtain the renewed factory license as per law.
During review of the documents and management interview, it was observed that the present factory license expired
on December 31,2006 and the renewed license was not available though the factory had applied for renewal on
February 06,2007. Nanagement accepted the finding and assured to take corrective action immediately.

Nothing to report

Standing order, Fire license. etc., are documented and updated. !t was verified and found these documents are with in
the validity period during the audit.

Nothing to report

C: Sub-
Contracting &
Home-working:
C1 There should be no sub-contracting unless previously agreed with the main client. C2 Home-working should be
properly managed.

Note to auditor on home-working:
Report on whether it is direct or via agents. How many workers, relationship with factory and what control systems
are in place.


Summary of sub-contracting andJor homeworking.

1. Number of sub-contractorsJagents used 2
2. Number of homeworkers Total: NJA Male:NJA Female:NJA
3. Is there a facility policy on sub-contracting? No (Under drafting)
4. Is there a facility policy on homeworking? NfA
5. What checks are in place to ensure no child
labour is being used and work is safe?
No checks performed
6. How does facility ensure worker hours and
pay meet local laws for homeworkers?
NfA
7. What processes are sub-contracted? Printing 8 Embroidery
S. What processes are carried out by
homeworkers?
NfA
9. Are written agreements in place for homeworkers
that include regular employment?
NfA

Non-compliance:
No non compliant issues found

Potential issues:
Nothing to report

Factory doesn't subcontractfout source any of the production processes as all the processes are carried out internally.
But factory is outsourcing Printing and Embroidery processes from outside suppliers. Factory is in the process of
drafting and implementation of Supplier control procedures presently as the factory is going for WRAP certification in
next month.
Subcontractor Details:
Printing: Nithunram Tex, Dharapuram Road, Tirupur, (Contact-Nr.Raaju)
Embroidery: Tiptop Embroidery, Palladam Road, Tirupur, (Contact-Nr.Jagan)

Nothing to report

Additional Requirements

D: Environmental

D1 Suppliers shall seek to make continuous improvements in their environmental performance and, as a minimum,
comply with the requirements of local and international laws and regulations. D2 The supplier shall be aware of
and comply with their end clients' environmental requirements.

Non-compliance:
Consent for operationf NOC for air and water were not renewed by the factory.
According to Section 24& 25 of the Water {Prevention & Control of Pollution) Act, 1974, No person shall,
without the previous consent of the State Board establish or take any steps to establish any industry, operation or
process, or any treatment and disposal system or any extension or addition thereto, which is likely to discharge,
sewage or trade effluent into a stream or well or sewer of on land.
According to Section 21 of the Air {Prevention & Control of Pollution) Act, 19S1, Restrictions on use of
certain industrial plants. - [(1) Subject to the provisions of this section, no person shall, without the previous consent of
the State Board, establish or operate any industrial plant in an air pollution control area.
Factory shall ensure to obtain the renewed consents for Air and Water from Local Pollution Control Board as per the
local law.
Upon reviewing the records, it was observed that the factory has not renewed the consent order for Air and Water and
the present consents expired on Narch 31,2007. How ever the factory has applied for the renewal on April 0+,2007.
Nanagement agreed to take corrective action immediately.

Nothing to report

Nothing to report

Nothing to report

Worker Interview Summary

Total N of group interviews
+ [1 Nale 8 3 Female groups|

Total N of individual interviews
N2 F+
Total N of interviewed workers (maleffemale)
N7 F19
!nterviews were done in private and the confidentiality of the interview process was
communicated to the workers?
Yes No
!n general, what was the attitude of the workers towards their workplace? Favourable Non-favourable !ndifferent
What was the most common worker complaint?
Nil
What did the workers like the most about working at this facility?
Good working environment and timely
disbursement of wages

Any additional comment(s) regarding interviews:
Nil

Local Law

Legal work-week (total hours):
Total 60 hours - +8 Regular hours in a
week as per section 51 and 12
Overtime hours per week as per
Section 6+(+) of The Factories Act,
19+8
Legal maximum allowed overtime hours (per day, week, month):
2 hours f day, 12 hours f week and 50
hours per Quarter as per Section 6+(+)
of the Factories Act, 19+8
Legal minimum work age:
Above 1+ Years for Restricted work
and Above 18 years for unrestricted
work
Legal minimum wage(s):
!NR 85.83f day and !NR 2231.60 f
Nonth for Helpers category in Zone-C
Legal overtime wage(s):
Twice the normal rate of wages as per
section 59 of The Factories Act, 19+8.

Agency Workers (Workers sourced from a local agent who are not directly paid by the factory)

Number of agencies used (average)
One - `Globe Detective Agency (for security guards)
Were agency workers' agefpayfhours
included within scope of this audit
Yes No

Community Benefits (Please list below any specific community benefits that the factory management stated
that they were involved in, e.g. H!v programme, education, sports facilities)
Factory has provided health and safety awareness programmes to the workers.


Photo Form

Factory Exterior view Factory Exterior view Factory Name Board

Finishing section Canteen 8 Dining hall Creche

Sewing machines without Pulley
guards
Sewing machines without needle guards Genset motor without Pulley
guards

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Audit Body: Bureau Veritas CPS Report Ref: 10070710155 Date: May 22,2007

Sedex Nembers Ethical Trade Audit Report v1 01_07_2006.doc Page 1 of 19

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