STUDY ON THE PRACTICES & ISSUES IN CSR IN A TEXTILE INDUSTRY

A report submitted in partial fulfilment of the requirement for the completion of Semester I in

Master of Fashion Management

Submitted by:

Bhanusree Malviya

Debadipta Ghosh

Nitika Singh

Rahul Hela

Rajkumar koli

Department of Fashion Management Studies

National Institute of Fashion Technology

Kolkata

1. CSR (Corporate Social Responsibility):-

Corporate social responsibility (CSR, also called corporate conscience, corporate

citizenship or responsible business) is a form of corporate self-regulation integrated into

a business model. CSR policy functions as a self-regulatory mechanism whereby a business

monitors and ensures its active compliance with the spirit of the law, ethical standards and

national or international norms. With some models, a firm's implementation of CSR goes beyond

compliance and engages in "actions that appear to further some social good, beyond the interests

of the firm and that which is required by law”. CSR aims to embrace responsibility for corporate

actions and to encourage a positive impact on the environment and stakeholders including

consumers, employees, investors, communities, and others.

2. Evolution of CSR in India:-

The evolution of corporate social responsibility in India refers to changes over time in

India of the cultural norms of corporation’s engagement of corporate social

responsibility (CSR), with CSR referring to way that businesses are managed to bring about

an overall positive impact on the communities, cultures, societies and environments in

which they operate. The fundamentals of CSR rest on the fact that not only public policy but

even corporate should be responsible enough to address social issues. Thus companies

should deal with the challenges and issues looked after to a certain extent by the states. [2]

Among other countries India has one of the oldest traditions of CSR. But CSR practices are

regularly not practiced or done only in namesake especially by MNCs with no cultural and

emotional attachments to India. Much has been done in recent years to make

Indian Entrepreneurs aware of social responsibility as an important segment of their

business activity but CSR in India has yet to receive widespread recognition. If this goal has

to be realized then the CSR approach of corporate has to be in line with their attitudes

towards mainstream business- companies setting clear objectives, undertaking potential

investments, measuring and reporting performance publicly.

Under the Companies Act, 2013, any company having a net worth of rupees 500 crore or

more or a turnover of rupees 1,000 crore or more or a net profit of rupees 5 crore or has to

spend at least 2% of last 3 years average net profits on CSR activities as specified in

Schedule VII of the Companies Act, 2013 and as amended from time to time. [9] The rules

came into effect from 1 April 2014.

SEBI, as per its notification on August 13, 2012, has mentioned that enterprises are

accountable to the larger society and "adoption of responsible business practices in the

interest of the social set-up and the environment are as vital as their financial and

operational performance". SEBI has mandated the inclusion of Business Responsibility

Reports as part of the annual reports of the Top 100 listed entities based on market

capitalization at BSE and NSE. It is mandatory to make these reports available on the

website of the company. For companies that do not belong to Top 100, inclusion of

Business Responsibility Reports is not mandatory, though SEBI encourages its inclusion in

the annual report and website.

3. Benefits of CSR:-

Improved financial performance : A recent longitudinal Harvard University study

has found that “stakeholder balanced” companies showed four times the growth

rate and eight times employment growth when compared to companies that focused

only on shareholders and profit maximization.

Enhanced brand image & reputation : A company considered socially

responsible can benefit -both by its enhanced reputation with the public, as well as

its reputation within the business community, increasing a company’s ability to

attract capital and trading partners. For example, a 1997 study by two Boston

College management professors found that excellent employee, customer and

community relations are more important than strong shareholder returns in earning

corporations a place an Fortune magazine’s annual “Most Admired Companies”

list.

Increased sales and customer loyalty : A number of studies have suggested a

large and growing market for the products and services of companies perceived to

be socially responsible. While businesses must first satisfy customers’ key buying

criteria – such as price, quality, appearance, taste, availability, safety and

convenience. Studies also show a growing desire to buy based on other value-

based criteria, such as ” sweatshop-free” and “child labor-free” clothing, products

with smaller environmental impact, and absence of genetically modified materials

or ingredients.

Increased ability to attract and retain employees : Companies perceived to have

strong CSR commitments often find it easier to recruit employees, particularly in

tight labor markets. Retention levels may be higher too, resulting in a reduction in

turnover and associated recruitment and training costs. Tight labor markets as well

the trend toward multiple jobs for shorter periods of time are challenging

companies to develop ways to generate a return on the consideration resources

invested in recruiting, hiring, and training.

Reduced regulatory oversight : Companies that demonstrate that they are

engaging in practices that satisfy and go beyond regulatory compliance

requirements are being given less scrutiny and freer reign by both national and

local government entities. In many cases, such companies are subject to fewer

inspections and paperwork, and may be given preference or “fast-track” treatment

when applying for operating permits, zoning variances or other forms of

governmental permission.

Easier access to capital : The Social Investment Forum reports that, in the U.S. in

1999, there is more than $2 trillion in assets under management in portfolios that

use screens linked to ethics, the environment, and corporate social responsibility.

It is clear that companies addressing ethical, social, and environmental

responsibilities have rapidly growing access to capital that might not otherwise

have been available.

4. Why CSR is important today?

A strategic approach to CSR is increasingly important to a company's competitiveness. It can

bring benefits in terms of risk management, cost savings, access to capital, customer

relationships, human resource management, and innovation capacity. It also encourages more

social and environmental responsibility from the corporate sector at a time when the crisis has

damaged consumer confidence and the levels of trust in business.

Through CSR, enterprises can significantly contribute to the European Union’s treaty objectives

of sustainable development and a highly competitive social market economy. CSR underpins

the objectives of the Europe 2020 strategy for smart, sustainable and inclusive growth, including

the 75% employment target. Responsible business conduct is especially important when private

sector operators provide public services.

CSR requires engagement with internal and external stakeholders so it enables enterprises to

anticipate better and take advantage of fast-changing expectations in society as well as operating

conditions. This means it can also act as a driver for the development of new markets and create

real opportunities for growth.

By addressing their social responsibility, enterprises can build long-term employee, consumer

and citizen trust as a basis for sustainable business models. This in turn helps to create an

environment in which enterprises can innovate and grow. The economic crisis and its social

consequences have to some extent damaged levels of trust in business, and have focused public

attention on the social and ethical performance of enterprises, including on issues such as

bonuses and executive pay.

Helping to mitigate the social effects of the crisis, including job losses, is part of the social

responsibility of enterprises. In the longer term, CSR offers a set of values on which to build a

more cohesive society and on which to base the transition to a sustainable economic system.

By renewing efforts to promote CSR now, the Commission aims to create conditions favourable

to sustainable growth, responsible business behaviour and lasting job creation for the medium

and long-term.

5. Textile Industry in India:-

The Textile industry in India traditionally, after agriculture, is the only industry that has

generated huge employment for both skilled and unskilled labor in textiles. The textile industry

continues to be the second largest employment generating sector in India. It offers direct

employment to over 35 million in the country. The share of textiles in total exports was 11.04%

during April–July 2010, as per the Ministry of Textiles. During 2009-2010, Indian textiles

industry was pegged at US$55 billion, 64% of which services domestic demand. In 2010, there

were 2,500 textile weaving factories and 4,135 textile finishing factories in all of India.

According to AT Kearney’s ‘Retail Apparel Index’, India is ranked as the fourth most promising

market for apparel retailers in 2009.

India is first in global jute production and shares 63% of global textile and garment market. India

is 2nd in global textile manufacturing and also 2nd in silk and cotton production. 100% FDI is

allowed via automatic route in textile sector. Rieter, Trutzschler, Soktas, Zambiati, Bilsar, Monti,

CMT, E-land, Nissinbo, Marks & Spencer, Zara, Promod, Benetton, Levi’s are the some of

foreign textile companies invested or working in India.

6. Raymonds:-

Incorporated in

1925, Raymond Group is one of India's largest branded fabric and fashion retailers. It is one of

the leading, integrated producers of suiting fabric in the world, with a capacity of producing 31

million meters of wool & wool-blended fabrics. Gautam Singhania is the chairman and

managing director of the Raymond group.

The Group owns apparel brands like Raymond, Raymond Premium Apparel, Park Avenue, Park

Avenue Woman. Color Plus & Parx. All the brands are retailed through 'The Raymond Shop'

(TRS) – One of the largest networks of over 700 retail shops spread across India and overseas, in

over 200 cities.

In addition, the Group also has business interests in readymade garments, designer wear,

cosmetics & toiletries, engineering files and tools, prophylactic sand air charter operations.

Raymond Ltd.

Raymond Ltd. is among the largest integrated manufacturers of fabrics in the world.

Raymond Apparel Ltd.

Raymond Apparel Ltd. has in its folio some of the apparel brands in India – Raymond

Premium Apparel, Park Avenue, Parx.

Color Plus Fashions Ltd.

Color Plus is among the smart casual brand in the premium category in India.

Silver Spark Apparel Ltd.

A garmenting facility in India that manufactures formal suits, trousers and jackets.

Celebrations apparel ltd.

A shirt manufacturing facility at Bangalore.

EverBlue Apparel Ltd.

A denim garmenting facility in Doddaballapur near Bangalore (India).

J.K. Helene Curtis Ltd.

A player in the grooming, accessories and toiletries category.

JK Files (India) Limited.

A player in the Engineering Files & Tools segment and the largest producer of steel files

in the world.

7. CSR activities in Raymonds:-

Raymond Ltd, India’s leading textile brand and world leader in Worsted Fabric and Garments,

on 15 May announced the launch of India’s first training centre to impart tailoring skills to under

privileged youth and tailors. Launched in Patna, Bihar by the State’s Chief Minister, Mr Nitish

Kumar, this Centre is geared to train 250 candidates in suit, shirt and trouser making in the first

academic year.

Raymond through this initiative aims to create a network of skilled stylist tailors across India for

sharing of knowledge and ideas, while providing customers with quality tailored garments. The

Raymond Tailoring Centre shall train over 10000 students in various aspects of tailoring

including suit, shirt and trouser making over the next five years. The minimum qualification for

admission to the Raymond Tailoring Centre is 8th standard pass.

At the time of enrollment, the student will need to pay the fees of Rs 2000 each for Shirt making

course and Trouser making course and Rs.5000 for Suit making. These fees are refundable once

the course is successfully completed by the student. The initial course fee is to ensure that the

Centre attracts serious candidates, in keeping with the high standards of its training modules.

Raymond, market leader in the fabric and apparel sectors is taking pioneering steps in

developing the ecosystem of the sector. The Company believes in the ideology of ‘Growing

Together’. It has been the Company’s endeavour to rejuvenate the fading art of tailoring and in

this direction has initiated several steps. The Raymond Tailoring Centre holds the vision of

imparting training skills to unemployed, underprivileged youth and the existing tailoring

community, by upgrading their current skill sets and encouraging employment and

entrepreneurship. This training helps them upgrade their tailored product quality in terms of

finish and style, earn better revenue and thereby improve their social and economic status.

Raymond launched its first such centre in Patna with the support of the Bihar Govt, and plans to

extend this initiative to other States with 20 more such tailoring centres over the next five years.

Mr Gautam Singhania, Chairman and MD, Raymond Ltd., said, “The tailoring community is one

of the key spokes of the textile and apparel industry. It is common knowledge that great fabrics

can be made into great garments only by great tailors. However, it is important for tailors to be

abreast of styling trends and be able to implement them in the garments to suit evolving customer

tastes, given constant up-gradation in fashion. Considering technological advancements in the

sector, our module includes training candidates on the latest modern technology machinery and

use of the worlds’ best tailoring practices at no financial expense to the students.

The Raymond Tailoring Centre has been established to help its candidates acquire these special

tailoring skills and bring in a sense of empowerment. Special focus shall be given to encourage

women to pursue our programmes, through special reservation for them. We are proud to have

the support of the Govt of Bihar in our first step in this direction.”

Raymond will assist the trained students in placements in the 680 The Raymond Shops and other

multi-brand outlets. Raymond will also provide them career opportunities in around 100

Raymond workshops which will be setup during this period. The trained tailors will be

encouraged to set-up tailor shops and Raymond shall support them in their endeavour in

becoming trained stylist tailors.