Welspun India shares ended 8.64 per cent down at Rs 49.70 after recovering in early trade on Friday. Its shares have witnessed a fall of 47 per cent in last 4 trading session. Welspun India shares have been witnessing pressure since the beginning of this week in the wake of low quality cotton used by it in the sheets and pillowcases supplied to Target Corp. As a fallout of this, Target Corp has said on Friday last week that it is terminating its business ties with the Gujarat-based textile company. Welspun India draws 10 per cent of revenue from Target Corp.
Welspun India shares were trading 5.33 per cent up at Rs 57.30 at 10.45 am. The scrip opened at Rs 55.50 and touched a high and low of Rs 57.80 and Rs 54.60, respctively, in trade so far. Sensex was trading 9.28 points down at 27,826.63 during the same time.The company on Thursday had clarified that the product in question by Target Corp accounts for about 1 per cent of the company’s sales. It said in a BSE filing, “Business with Target Corporation was approximately $90 million in FY16, which accounted for almost 10 per cent of our overall business. The product in question with Target specifically, represents about $ 8.50 million in FY16, which accounted for about 1 per cent of our overall sales and about 10 per cent of our business with Target.”
Welspun India has appointed an external auditor ‘one of the Big Four’ to look into alleged lapses in its products supplied to clients and expecting the process to get completed in about 6-8 weeks.
In the wake of low quality cotton controversy, US-based retail chain Bed Bath & Beyond, JC Penny and Walmart are also reviewing the products sourced from Welspun India.
According to media report, Target Corp is considering shifting the contract with Welspun India to Trident.