Textile Industry is one of the oldest industries in Indian economy dating back several centuries. The industry contributed over $39.2 billion in export revenues and employs more than 45 million professionals.

The main operations of a typical company in Textile Industry are desizing, bleaching, dyeing, neutralizing, scouring, mercerizing, printing and finishing. Several of these operations discharge toxic effluents that cause soil contamination, pollute the air, groundwater and surface water. In addition, workers deal with hazardous chemicals and dangerous working conditions and require protective shields, acid resistant gloves, aprons, masks etc. As a result, a number of important Acts and compliances including EHS (Environment Health and Safety), Labour Laws and Factory’s act and associated licenses, registrations, approvals, returns, registers etc become critical.

Most midsize and large textile companies in this industry have seen a growth spurt leading to expansion and multi-location presence. In addition, exports to developed countries requires additional quality and other specifications to be followed, failing which, there is a business risk.

A strong and mature compliance program is critical for supporting business growth and scale in this industry.

Our Client

Our client is one of the large, publicly listed textile company serving a large number of international locations.The company is 25 year old with a reputation for creating quality products and patents. The client has 4 manufacturing plants and 2 offices with over 90 million meter production capacity. The client has over 3,000 employees including contract labour. They serve over 80 cities in India across 20 states and hundreds of multi brand retail stores.

The client had a manual compliance management program. They were using spreadsheets for tracking status of critical compliances. In addition, day to day follow up were done using email system. There were several instances of missed compliances every month leading to statutory notices and penalties. There were cases of missing documents such as copies of historical challans, working files and statutory registers.

Some of the key challenges are as given below:

  • Manual tracking of compliances across 2 offices and 4 plants
  • Poor understanding of various industry specific acts and their applicability such as Central Silk Board Act, Handlooms Act, Textile Committee Act, Jute Packaging Materials Act
  • Lack of clarity on a comprehensive list of applicable Acts and Compliances across the company
  • Manual search for applicable Legal Updates
  • No Central document repository of all Compliance documents
  • Several instances of financial penalties on account of delays and missed compliances
  • Multiple instances of missed display compliances
  • Lot of time spent on getting status of compliances across the company

Our client needed a compliance automation solution that could help them address day to day tracking of compliances for their entire organisation. Since they are a listed company, they needed a lot of help in tracking and monitoring their SEBI - LODR (Listing Obligations and Disclosure Requirements) Compliance as well. In addition, they needed an internal compliance tracking system to monitor non-statutory obligations as well.

Avantis Engagement

Avantis engagement started in June, 2017. A team of 3 SMEs (Subject Matter Experts) was constituted to work with the Compliance Officer and Company Secretary of our Client based in Mumbai.

Phase 1 - Business Discovery

This phase of the project focussed on understanding the client business to establish the applicability of Acts / compliances. Comprehensive information were collated via in-person interviews / meetings / discussions with key stakeholders in the company. The following items were collated:

  • Business Set up ( Entities, Sub-Entities, Locations, Number and Nature of establishments, Employee Strength, Global presence )
  • Products (Bedsheet, Fashion Bedding, Utility Bedding, Institutional Bedding )
  • Equipment & Machines (Lifts, weight machine, spinning machine, Knitting machines)
  • SEBI - LODR Requirements
  • Internal Compliance Requirements mandated by customer contracts

Phase 2 - Compliance Applicability Assessment

Avantis team identified several hoists, lifts, spinning machines, weighing equipment, Thread Winding Machines, Scutching Machine, Bleaching / Dyeing Machines, Label making machine, Knitting machines among others.

In addition, our client had to use Hygrometer to measure and control humidity in the factory. They were using a variety of packaging machines as well.

These equipment were located in various plants based in different locations leading to applicability of different Acts and Compliances.

Avantis identified over 95 applicable Acts with over 3,650 applicable compliances including time based, event based and on-going compliances. This included 850 event-based compliances. Over a hundred licenses, registrations, permissions, consent orders, approvals were also identified.

A gap assessment was done and it uncovered several critical gaps between statutory requirement and actual requirements which were to be met by the company.

Phase 3 - Implementation

This phase is the most critical phase of the project. During this phase, Avantis assigned a 3 member team of subject matter experts to work with the client’s project team. This phase lasted about 3 weeks during which the following items were accomplished:

  • Map the Client Organisation (Group, Entities, Sub-Entities, Locations, Departments, Equipment)
  • Review of identified applicable Acts and Compliances with respective department heads
  • Discussion on identified gaps with department heads and compliance head
  • Mapping of Compliances to specific users along with their roles
  • Hands on training sessions with user groups based on their locations and roles
  • Activation of system for a predetermined go-live date

The client was keen to leverage IOS and Android based mobile Apps to stay on top of their compliance. Our team helped them download the app and securely sign in and start using. A total of 90 users were identified across the organisation mapped to performer, reviewer, approver and management roles.

In Conclusion

Textile Industry in India is key to job creation and GDP growth. However, it is labour intensive, capital intensive and compliance intensive leading to a challenging business environment. The challenges become more complex if a company is listed on stock exchanges.

AVACOM is an excellent product that helps companies in this industry scale with ease. The product helps them bring in efficiencies, productivity gains and significantly reduce the costs arising out of penalties and delays. Avantis can help clients migrate to predictable, process oriented and digital compliance environment.

Project Highlights