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Formation Carpet's sister concern, Hoste Hainse, was registered a week before Formation Carpets was registered in 1990. The sole purpose of Hoste Hainse was to ensure sound working conditions of the employees of Formation Carpets, not only the employees, but also their children. Efforts like a complementary day-care and pre-school facility for the children of the weavers so that these children would be looked after while their parents were working and also ensuring that these children would not end up playing on the streets were the first efforts of Hoste Hainse. As the children grew up, Hoste Hainse started to become involved in obtaining full/partial scholarships for them. This catapulted Hoste Hainse into the education sector. What started as a simple scholarship project for five children is now an organization that supports over 1500 children all over Nepal. More information @ hostehainse.org.

The founder of Formation Carpets, Sulo Shrestha-Shah, has been instrumental in spearheading these kinds of social "business with ethics" aspects of the business (perhaps even more than the business itself), which resulted in her being awarded the MAHR Human Rights Award in 1997.

Sulo Shrestha-Shah's work in anti-child labor activities led to the formation of the RUGMARK label in 1995.

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