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* Net loss 24.9 bln yen vs 28.4 bln yen loss analysts' f'casts
MAYAPUR, India, Feb 10 (Thomson Reuters Foundation) - W earing thick gloves and a shawl wrapped around her face, Kanchen Kanjarya is busily picking cotton in the midday sun on her small farm in Mayapur in India's western state of Gujarat.
Kanjarya, 42, works up to eight hours a day on the six acre plot, one of millions of small holder farms in India supplying cotton to garment factories making clothes for Western brands.
But while the days are long and the heat can hit 35 degrees Celsius (95°F), Kanjarya is delighted to be among a small but rising number of farmers being trained to grow sustainable cotton that can cut water and chemical use and improve profits.
With the global cotton industry under scrutiny for using forced and child labour and polluting the environment, more Western companies are starting to work with farmers to clean up fashion's leading natural fibre - and its complex supply chain.
"With the extra money we can invest in our children's education, buy equipment, and repair our homes," Kanjarya told the Thomson Reuters Foundation outside her house in the small, dusty village of Mayapur, showing off her new toilet and shower.
"I have bought a tractor and also a motorbike for my son to get to his job. Two of my three daughters are teachers. This is good for the whole family and my children now have a future."
Kanjarya is one of 1,250 women farmers in Gujarat, India's biggest cotton and cottonseed producing state, taking part in one of a number of small initiatives led by companies to combat environmental problems and break the cycle of child labour.
For the past three years these women farmers have had classes and infield training twice a month in sustainable farming methods such as water efficiency, natural pesticides, and soil health, designed to increase cotton yields and income.
The pilot, by social enterprise CottonConnect, India's Self Employed Women's Association and funded by UK budget retailer Primark, has pushed up profits more than two-fold and is expanding to 10,000 farmers over six years, its founders say.
Elsewhere in India the C&A Foundation, affiliated with global retailer C&A (and in a partnership with the Thomson Reuters Foundation on trafficking), is working with various groups to help 25,000 farmers move to organic cotton.
And the non-profit Better Cotton Initiative, set up in 2005, has nearly 1,000 members including retailers like IKEA, H&M, Burberry and Adidas, committed to fair work practices in cotton and regulated use of land, chemicals and water.
"We are seeing an increasing trend for companies to get involved in cotton production," said Alison Ward, chief executive at CottonConnect which was set up in 2009 to work directly with farmers to address social and economic issues.
"The world is changing and it is starting to be far more about local sourcing but getting to the middle of the supply chain is a real challenge," she said.
Ward said only 10-12 percent of cotton globally is sustainable and it will take time, effort and investment to shift to farming methods that could boost profits and combat labour abuses in the crop historically plagued by slavery.
Industry experts say the cotton supply chain is the hardest to crack as the journey from field to store involves so many stages - from seed production, to cotton growing, to gins to separate seeds and fibre, spinning mills to garment factories.
The global cotton industry is also massive, estimated to support about 250 million people in about 85 nations, many poor, with an estimated four million cotton farmers in India.
A U.S. Department of Labor report in 2016 said forced labour in cotton had been documented in eight countries - with Uzbekistan and Turkmenistan widely condemned for state-sponsored forced labour - and child labour in 17 nations, including India.
India, the world's second largest cotton producer after China and ahead of the United States and Pakistan, is the only country named for having child and forced labour in both cottonseed production as well as cotton growing.
Indian group Glocal Research's 2014 study "Cotton's Forgotten Children" found the number of children under 14 working on cottonseed farms doubled from 2010 to 200,000 with small hands useful in cross pollination to produce hybrid seeds.
Director Davuluri Venkateswarlu said new research to be published this year showed the situation has not changed as more small farmers in India take up the profitable crop.
This meant the continuing use of child labour, as a recently enacted law allows children under 14 to work in a family enterprise as long as they also attend school.
"LONG WAY TO GO"
"In pockets of Gujarat and Rajasthan the situation has deteriorated and the issue is what defines a family enterprise and whether children registered for school do attend," said Venkateswarlu, blasting state governments for not doing enough.
He said interventions by such groups as the Better Cotton Initiative and CottonConnect involving companies were helping.
M. C. Karina, deputy rural labour commissioner for Gujarat, was confident the industry in Gujarat was free of child labour after a major drive to clean up cottonseed farms.
"We've been working on this concern for the last eight years and are now sure that not a single child is working on the cottonseed farms," he told the Thomson Reuters Foundation.
With the complexity and lack of transparency in the cotton supply chain, international brands are getting more involved for the sake of their reputation and to meet ethical commitments.
Katharine Stewart, Primark's ethical trade and environmental sustainability director, said her company set out to find an ethical and sustainable way to produce cotton at the same price as conventional cotton. Organic and Fairtrade has a premium.
Primark, part of Associated British Foods, sells low-priced clothes such as $5 T-shirts in 11 countries, and is constantly under pressure to explain how it makes clothes so cheaply without exploiting workers.
Stewart said the retailer, with a high volume, low cost business model, ensured workers were well treated in supplier factories and paid at least the minimum wage with regular and surprise audits but wanted to dig further into the supply chain.
"We thought it would be easier to go bottom up when you are talking about agricultural production and then work from both ends of the supply chain to join it all together," she said.
She said the Gujarat pilot proved sustainable cotton could be produced at the same price as conventional cotton but Primark would not give figures for the "significant" amount invested.
"We are looking and trying to do something about cotton and people are watching closely what we are doing," said Stewart. "But you have to pick where you are going to prioritise. You can't do it all at once."
Patricia Jurewicz, director of the Responsible Sourcing Network and creator of initiative Yarn Ethically and Sustainably Sourced (YESS) working in spinning mills, said the cotton supply chain remained tainted despite initiatives to clean it up.
"There are improvements little by little and the most where brands get involved in production as they don't want to be linked to abuse," she said. "But there's a long way to go".
($1 = 0.7997 pounds) (Additional reporting by Roli Srivastava in Mumbai, @BeeGoldsmith, Editing by Ros Russell.; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights and climate change. Visit news.trust.org)
* Net loss 24.9 bln yen vs 28.4 bln yen loss analysts' f'casts
* Image sensor business to return to profit, at Y120 bln (Adds division profits, background)