th & 25 th October, 2016...F: Was the Sedex SAQ available for review? Yes No If No, why not? (Examples would be, site has not completed SAQ, site has not been asked to complete the

Audit company: SGS Bangladesh Limited Report reference: 4127446 Date: 24th & 25

th October, 2016 1

Supplier name: Indochine Textiles (BD) Ltd.

Site country: Bangladesh

Site name: HAMS Garments Limited

Parent Company name (of the site): HAMS Garments Limited

SMETA Audit Type: 2-Pillar 4-Pillar

Date of Audit 24th & 25

th October, 2016


th October, 2016 2

Audit Company Name:

SGS Bangladesh Limited

Report Owner (payee):

HAMS Garments Limited

Sedex Company Reference: (only available on Sedex System)

ZC1019028

Sedex Site Reference: (only available on Sedex System)

ZS1082597

Audit Conducted By

Commercial Purchaser

NGO Retailer

Trade Union Brand Owner

Multi-stakeholder Combined Audit (select all that apply)

Auditor Reference Number: (If applicable)

4127446


th October, 2016 3

Audit Details

Audit Details

A: Report #: 4127446

B: Time in and time out (SMETA BPG recommends 9.00-17.00 hrs. if any different please state why in the SMETA declaration )

Day 1 Time in: 10:25 Am Day 1 Time out: 04:30 PM

Day 2 Time in: 10:25 AM Day 2 Time out: 05:30 PM

Day 3 Time in: NA Day 3 Time out: NA

C: Number of Auditor Days Used: (number of auditor x number of days)

02 auditors and 01 observer in 1st day.

02 auditors in 2nd

day.

D: Audit type:

Full Initial Periodic Full Follow-up Partial Follow-Up Partial Other - Define

E: Was the audit announced?

Announced Semi – announced: Window detail: 3 weeks Unannounced

F: Was the Sedex SAQ available for review?

Yes No

If No, why not? (Examples would be, site has not completed SAQ, site has not been asked to complete the SAQ.)

NA

G; Any conflicting information SAQ/Pre-Audit Info to Audit findings?

Yes No

If Yes, please capture detail in appropriate audit by clause

H: Auditor name(s) and role(s): Day-1 Asadur Rahman-Lead Auditor Iffat Fatema Jahan – Member Auditor Mohammad Saiful Islam- Observer Day-2: Asadur Rahman-Lead Auditor Iffat Fatema Jahan – Member Auditor

I: Report written by: Iffat Fatema Jahan

J: Report reviewed by: Kanika Sarkar

K: Report issue date: 1st November, 2016

L: Supplier name: HAMS Garments Limited


th October, 2016 4

M: Site name: HAMS Garments Limited

N: Site country: Bangladesh

O: Site contact and job title: Mr. QHM Shamsuzzaman - Deputy General Manager, HR, Admin & Compliance

P: Site address: (Please include full address)

South Vangnahati (Capila para), Boiragirchala, Sreepur, Gazipur, Bangladesh

Site phone: +88-06-82552876, 82552880, Cell: +88-01713241001

Site fax: +88-02-9891171 (Head Office)

Site e-mail: [email protected]

Q: Applicable business and other legally required licence numbers: for example, business license no, and liability insurance

Trade License No: 171/16-17 Issued by Sreepur Pouroshova and valid until 30

th June, 2017.

Factory license no: 14453/Gazipur, issued by Bangladesh Government and valid till June 30, 2017. Fire License No: DD/Dhaka/21831/2009, DD/Dhaka/23111/2011, DD/Dhaka/23109/2011, DD/Dhaka/23110/2011, issued by Bangladesh Fire Service & Civil Defence Authority which is valid till June 30, 2017.

R: Products/Activities at site, for example, garment manufacture, electricals, toys, grower

Garments Manufacturer (Knit Items)

S: Audit results reviewed with site management?

Yes

T: Who signed and agreed CAPR (Name and job title)

Mr. QHM Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance)

U: Did the person who signed the CAPR have authority to implement changes?

Yes

V: Present at closing meeting (Please state name and position, including any workers/union reps/worker reps):

Factory – Hams Garments Limited Mr. QHM Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance) Mr. Sujon Khan- Manager (Admin, HR & Compliance) Mr. Ahmed Amir Faisal – Assistant Manager (Admin, HR & Compliance) Mr. Md. Zahid Hossain-Asst. Manager(Admin, HR & Compliance) Worker’s Representative: Ms. Shahanaj – Vice President. Mr. Sohel- Member


th October, 2016 5

W: What form of worker representation / union is there on site?

Union (name) Worker Committee (Workers Participation Committee) Other (specify) None

X: Are any workers covered by Collective Bargaining Agreement (CBA)

Yes No

Y: Previous audit date: 15th & 16

th November, 2015

Z: Previous audit type:

SMETA 2-pillar SMETA 4-pillar Other

Full Initial

Periodic

Full Follow-Up Audit

Partial Follow-Up

Partial Other*

*If other, please define: Not applicable


th October, 2016 6

Guidance:

The Corrective Action Plan Report summarises the site audit findings and a corrective, and preventative action plan that both the auditor and the site manager believe is reasonable to ensure conformity with the ETI Base Code, Local Laws and additional audited requirements. After the initial audit, the form is used to re-record actions taken and to categorise the status of the non-compliances. N.B. observations and good practice examples should be pointed out at the closing meeting as well as discussing non-compliances and corrective actions. To ensure that good practice examples are highlighted to the supplier and to give a more ‘balanced’ audit a section to record these has been provided on the CAPR document (see following pages) which will remain with the supplier. They will be further confirmed on receipt of the audit report.

Root cause (see column 4)

Note: it is not mandatory to complete this column at this time.

Root cause refers to the specific procedure or lack of procedure which caused the issue to arise. Before a corrective action can sustainably rectify the situation it is important to find out the real cause of the non-compliance and whether a system change is necessary to ensure the issue will not arise again in the future.

See SMETA BPG Chapter 7 ‘Audit Execution’ for more explanation of “root cause’’.

Next Steps:

1. The site shall request, via Sedex, that the audit body upload the audit report, non-compliances, observations and good examples. If you have not already received instructions on how to do this then

please visit the web site www.sedexglobal.com.

2. Sites shall action its non-compliances and document its progress via Sedex.

3. Once the site has effectively progressed through its actions then it shall request via Sedex that the audit

body verify its actions. Please visit www.sedexglobal.com web site for information on how to do this.

4. The audit body shall verify corrective actions taken by the site by either a “Desk-Top” review process via Sedex or by Follow-up Audit (see point 5).

5. Some non-compliances that cannot be closed off by “Desk-Top” review may need to be closed off via a “1 Day Follow Up Audit” charged at normal fee rates. If this is the case then the site will be notified after its submission of documentary evidence relating to that non-compliance. Any follow-up audit must take place within twelve months of the initial audit and the information from the initial audit must be available for sign off of corrective action.

6. For changes to wages and hours to be correctly verified it will normally require a follow up site visit. Auditors will generally require to see a minimum of two months wages and hours records, showing new rates in order to confirm changes (note some clients may ask for a longer period, if in doubt please check with the client).


th October, 2016 7

Corrective Action Plan

Corrective Action Plan – non-compliances

Non-Compliance

Number The reference number of the

non-compliance

from the Audit Report,

for example, Discrimination

No.7

New or Carried

Over Is this a

new non-complian

ce identified

at the follow-up

or one carried over © that is

still outstandi

ng

Details of Non-Compliance Details of Non-Compliance

Root cause (completed by

the site)

Preventative and Corrective Actions Details of actions to be

taken to clear non-compliance, and the

system change to prevent re- occurrence (agreed

between site and auditor)

Timescale

(Immediate, 30,

60, 90,180,3

65)

Verificatio

n Method

Desktop /

Follow-Up [D/F]

Agreed by Management and

Name of Responsible

Person: Note if management

agree to the non-compliance, and

document name of responsible person

Verification Evidence and

Comments Details on corrective

action evidence

Status Open/Closed or commen

t

3: Safety and Hygienic Conditions No-1

New Issue title: Generator license expired. Description of non–compliance: License for using power generator (2.06 MW) was expired from 12

th July, 2016; However, factory

management has applied to the concern authority on 27

th July, 2016, noted through documents review.

ETI or Local Law requirement: In accordance with Energy Regulatory Commission Rules 2006, Rule 16 (1&3).

Nil It is recommended that factory management should have updated license for using power generator.

60 days

D Agreed. QHM Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance)

Upload required evidence in SEDEX database to close the issue.

Open

No-2 New Issue title: Acid License is expired. Description of non–compliance:

Nil It is recommended that the factory management

60 days

D Agreed. QHM

Upload required evidence in

Open


th October, 2016 8

It was noted through documents review and management interview that acid usage permission of the factory has been expired on July 01, 2016. However factory management has applied for renewal on August 02, 2016 towards the District Controller, Gazipur. Local law and/or ETI requirement: In accordance with Rule 3 of Acid( Import, Production, Storage, Transport, Sales & Use) Control Rules 2004:

should take further action to collect the Acid permission.

Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance)

SEDEX database to close the issue.

No-3 Issue title: No accident / injury investigation system to find out the root cause

Description of non–compliance: It was noted through document review and management interview that factory has no accident / injury investigation system to find out the root cause of each accident/injury to take preventive or corrective action to prevent re-occurrence of same .type of accidents. Moreover, factory did not use prescribed form of Accident register for recording accidents/injuries, noted through documents review. Local law and/or ETI requirement: In accordance with the Bangladesh Labor Rules 2015, Rule-73(1) and form-28.

Nil It is recommended that the factory should investigate accident/injury to find out the root cause of each accident/injury to take preventive or corrective action to prevent re-occurrence of same type of accidents

30 days



Open

No-4 New Issue title: No canteen for workers. Description of non–compliance: Facility did not have any canteen facility for the

Nil It is recommended that the facility management should have

90 days

D Agreed. QHM Shamsuzzaman

Upload required evidence in SEDEX

Open


th October, 2016 9

employees from where they can purchase light food or snacks during their work period noted through plant tour & management interview. Local law and/or ETI requirement: In accordance with of Bangladesh Labor Rules 2015, Rules 87(1)

canteen for the employees as per law.

–Deputy General Manager (HR, Admin & Compliance)

database to close the issue.

No-5 New Issue title: MSDS, labelling & secondary containment missing. Description of non–compliance: During plant tour following issues were noted: No MSDS and labeling are provided for the chemical drums at maintenance room at shed 08 and chemical storage area at shed 01 and shed 06. No secondary containment was found under chemical drums at maintenance room and chemical storage area at shed 01 and shed 06. Local law and/or ETI requirement: In accordance Bangladesh Labour Rules-2015, Rule 68 (10) and with the ETI base code 3.1:

Nil It is recommended that factory should provide MSDS, labelling & secondary containment for the chemical containers used in those mentioned area.

30 Days



Open

No-6 New Issue title: Safety guard found missing and displaced with respective machines. Description of non–compliance:

Nil It is recommended that factory management should ensure

30 days

D Agreed. QHM Shamsuzzaman

Upload required evidence in SEDEX

Open


th October, 2016 10

Following issues were noted through plant tour that: Approx 15% eye guard of randomly checked flat lock machines were missing. Approx 20% eye guard of randomly checked flat lock machines and 15% overlock machines were found displaced during working hour at sewing section. Around 20% needle guards were displaced during working hour at sewing section. 1 out of 1 dryer machine’s Pulley cover was missing. Local law and/or ETI requirement: In accordance with Bangladesh Labour Law 2006, section 63(1) D (3)

availability of safety guards with all type of machines in the factory

–Deputy General Manager (HR, Admin & Compliance)

database to close the issue.

No-7 New Issue title: Workers was found not using PPE. Description of non–compliance: It was noted through plant tour that: Approx 20% workers of bartack machines were not using face mask during working period. Approx 20% overlock operator was not using face mask during working period. Local law and/or ETI requirement: In accordance with Bangladesh Labour (Amendment) Law 2013, Section 78 (1-a) and ETI Base Code 3.1:

Nil It is recommended that the factory management should ensure the use of PPE to the mentioned section workers during working period.

30 days



Open


th October, 2016 11

No-8 New Issue title: No electrical exit sign Description of non–compliance: It was noted through plant tour that no electrical exit sign was installed at 02 out of 02 exit of knitting section, 02 out of 02 exit of shed 04, 01 out of 02 exit of shed 05, 01 out of 01 exit of mezzanine floor of dyeing section. Local law and/or ETI requirement: In accordance with Bangladesh Labour Law, 2006, Section 62 (4):

It is recommended that factory ensure- Electrical exit sign at all required area of the building and shed.

30 days



Open

No-9 New Issue title: No secondary exit gate Description of non–compliance: One exit was found in sample section (Approx. 15000 sq.ft) at 1st floor of Building -1. Note that approximately 23-27 workers were found working in sample room. In addition, as per management statement that they will shift sample section very soon at 6

th floor.

Local law and/or ETI requirement: In accordance with Bangladesh Labour Rules, 2015, Rules: 54(1):

Nil It is recommended that factory should provide secondary exit gate at sample section.

60 days



Open

No-10 New Issue title: Inadequate knowledge of fire fighter Description of non–compliance: It was noted through randomly interviewed of fire fighters that they were not sufficiently trained as the listed fire fighters could not distinguish between the

Nil It is recommended that factory management should take necessary action to enrich the

30 days

D Agreed. QHM Shamsuzzaman –Deputy General


Open


th October, 2016 12

different categories of fire extinguishers and their proper use. Local law and/or ETI requirement: In accordance with Bangladesh Labour Rules, 2015, Rules: 55(10)

knowledge of fire fighters.

Manager (HR, Admin & Compliance)

No-11 New Issue title: Insufficient fire fighting equipments Description of non–compliance: It was noted through plant tour that: No fire alarm, fire alarm switch and hose pipe connection found for building 7(warehouse), shed 4 (grey store and batch) & shed 5 (yarn, gray & fabric storage area) Smoke detector was missing in 1

st floor & 2

nd floor of

building 7(warehouse) insufficient smoke detector was observed at ground floor of building 7(warehouse). ETI or Local Law requirement: In accordance with ETI Base Code 3.1:

Nil It is recommended that the facility management should install required fire fighting equipments at the mentioned areas.

90 days



Open

No-12 New Issue title: No safety instructions was posted. Description of non–compliance: It was noted through plant tour that: No safety instructions were posted for the exhaust fan of the factory.

Nil It is recommended that factory management should post safety instructions for the mentioned equipments of the factory.

30 days

D Agreed. QHM Shamsuzzaman –Deputy General Manager (HR, Admin &


Open


th October, 2016 13

No operational procedure was posted for the fire hose reel, fire alarm switch of the factory. ETI or Local Law requirement: In accordance with ETI Base Code 3.1:

Compliance)

No-13 New Issue title: Few areas were not mentioned in current floor layout plan. Description of non–compliance: Based from site tour, floor layout plan review and management interview, it was noted that sample section, Sub store, Finished goods area, carton area and idle machine area of the factory building 1 was not included in factory layout approval. Local law and/or ETI requirement: In accordance with Bangladesh Labour Rules 2015, section- 353(1)

It is recommended that the facility should collect approved machine layout plan for the Shed.

60 days



Open

Working Hours-6 No-1

New Issue title: Excessive working hour has noticed. Description of non–compliance: Based from provided document review (time record, salary sheet), worker and management interview it was noted that workers of the factory had worked more than 60 hours in a week, which is as follows – 41 out of 62 interviewed employees did 62 hours to 99.18 hours of work in a week in the month of

Nil It is recommended that facility management should maintain the working hours within 60 hours in a week.

60 days

Follow up

Agreed. QHM Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance)

Documents review and workers interview is required to close the issue.

Open


th October, 2016 14

September, 2016 (Current Month). Noted, daily maximum working hour was found up to 20.42 hours instead of 10 hours.

50 out of 62 interviewed employees did 61 hours to 102.07 hours of work in a week in the month of March, 2016 (Pick month). Noted, daily maximum working hour was found up to 23 hours instead of 10 hours.

26 out of 62 interviewed employees did 61.33 hours to 87 hours of work in a week in the month of December, 2015 (Off pick months). Noted, daily maximum working hour was found up to 15 hours instead of 10 hours. Local law and/or ETI requirement: In accordance with ETI Base Code 6.2 & 6.4

No-2 New Issue title: Workers are not getting 01 day off within 07 day period of work as per law. Description of non–compliance: It was noted through workers interview and documents review (time card, salary sheet) that workers of the factory were not getting 01 day off within 07 day period of work as per law. Workers were worked on March 18, 2016 and December 04, 11 & 18, 2015 which were weekly holidays (Friday) of the factory in the garments section. Moreover, facility provides day off rotation basis in the Dyeing & Knitting section but some workers found did not get weekly day off after working six consecutive

Nil It is recommended that factory should provide one day off within 07 day period as per law.

60 days

Follow up

Agreed. QHM Shamsuzzaman –Deputy General Manager (HR, Admin & Compliance)

Documents review and workers interview is required to close the issue.

Open


th October, 2016 15

days. For example one worker worked 25 days in March 2016 without any day off. As a result workers of the factory did not get one day off after seven day period of work. Local law and/or ETI requirement: In accordance with section 103 of Bangladesh Labour Law 2006 and ETI Base Code 6.6

Corrective Action Plan – Observations

Observation Number

The reference number of the observation

from the Audit Report,

for example, Discrimination

No.7

New or Carried Over

Is this a new observation

identified at the follow-up or one carried over (C)

that is still outstanding

Details of Observation Details of Observation

Root cause (completed by the site)

Any improvement actions discussed

(Not uploaded on to SEDEX)

Nil NA NA NA NA

Good examples

Good example Number

The reference number of the non-compliance from the Audit Report,

for example, Discrimination No.7

Details of good example noted

Any relevant Evidence and Comments


th October, 2016 16

5. Wages and Benefits No-1

Facility provides attendance bonus to the workers (Operator -BDT. 500; other Helper-BDT-300) for full present of the month.

Through workers interview and documents verification.

No- 2 Facility recruited disable worker (Total 16) in various discipline like cutting, quality etc. Through workers interview and documents verification.

No- 3 Donation for the annual sports to a kindergarten school beside the factory. Through documents verification

No- 4 Transport facility for the workers. Through workers interview and documents verification.

No- 5 Arrange early IFTER party for the workers. Through workers interview and documents verification.


th October, 2016 17

Confirmation

Please sign this document confirming that the above findings have been discussed with and understood by you: (site management) If actual signatures are not possible in electronic versions, please state the name of the signatory in applicable boxes, as indicating the signature.

A: Site Representative Signature:

Mr. QHM Shamsuzzaman

Title: Deputy General Manager (HR, Admin & Compliance) Date: 24

th & 25

th October, 2016

B: Auditor Signature: Asadur Rahman & Iffat Fatema Jahan

Title: Lead Auditor & Member Auditor Date: 24

th & 25

th October, 2016

C: Please indicate below if you, the site management, dispute any of the findings. No need to complete D-E, if no disputes.

D: I dispute the following numbered non-compliances: NA

E: Signed: (If any entry in box D, please complete a signature on this line)

NA Title Date

F: Any other site Comments: Nil


th October, 2016 18

Guidance on Root Cause

Explanation of the Root Cause Column If a non-compliance is to be rectified by a corrective action which will also prevent the non-compliance re-occurring, it is necessary to consider whether a system change is required. Understanding the root cause of the non-compliance is essential if a site is to prevent the issue re-occurring. The root cause refers to the specific activity/ procedure or lack of activity /procedure which caused the non-compliance to arise. Before a corrective action can rectify the situation it is important to find out the real cause of the non-compliance and whether a system change is necessary to ensure the issue will not arise again in the future. Since this is a new addition, it is not a mandatory requirement to complete this column at this time. We hope to encourage auditors and sites to think about Root Causes and where they are able to agree, this column may be used to describe their discussion. Some examples of finding a “root cause“ Example 1 Where excessive hours have been noted the real reason for these needs to be understood, whether due to production planning, bottle necks in the operation, insufficient training of operators, delays in receiving trims, etc. Example 2 A non-compliance may be found where workers are not using PPE that has been provided to them. This could be the result of insufficient training for workers to understand the need for its use; a lack of follow-up by supervisors aligned to a proper set of factory rules or the fact that workers feel their productivity (and thus potential earnings) is affected by use of items such as metal gloves. Example 3 A site uses fines to control unacceptable behaviour of workers. International standards (and often local laws) may require that workers should not be fined for disciplinary reasons. It may be difficult to stop fines immediately as the site rules may have been in place for some time, but to prevent the non-compliance re- occurring it will be necessary to make a system change. The symptom is fines, but the root cause is a management system which may break the law. To prevent the problem re-occurring it will be necessary to make a system change for example the site could consider a system which rewards for good behaviour Only by understanding the underlying cause can effective corrective actions be taken to ensure continuous compliance. The site is encouraged to complete this section so as to indicate their understanding of the issues raised and the

actions to be taken.


th October, 2016 19

Your feedback on your experience of the SMETA audit you have observed is extremely valuable. It will help to make improvements to future versions.

You can leave feedback by following the appropriate link to our questionnaire:

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http://www.surveymonkey.com/s.aspx?sm=riPsbE0PQ52ehCo3lnq5Iw_3d_3d

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