It seems the trouble is not over yet for Welspun India as it shares continued to plunge on Wednesday as an impact of Target Corp’s decision to sever business ties with the company over alleged cheap quality used in bedsheets and not Egyptian cotton. The share price of the company hit the lower circuit for third day in a row and was down 9.95 per cent at Rs 59.30. Sensex was trading 42.98 points down at 28,033.19. The company’s has wiped off Rs 4,375 cr in terms of market cap (m-cap ) in the past three trading sessions to Rs 5,958.02 cr from Rs 10,333.60 crore on Friday.
US retail giant Target Corp on Friday said it is severing ties with Welspun India after probe confirmed that the Indian company used a non-Egyptian cotton to make sheets and pillowcases. “As soon as our investigation confirmed the substitution, we pulled all remaining products from Target stores and Target.com. We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them,” Target Corp had said in a statement last week. Welspun India draws 10 per cent of revenue from Target Corp.
As a fallout, Walmart is also reviewing the quality of products supplied from Welspun, according to Wall Street Journal report as quoted by Reuters. Welspun India according to reports have Bed Bath & Beyond, Macy’s, JC Penney, Target, Kohl’s, WalMart, Costco and Home Depot as leading customers in the US. Its leading customers in Europe include Carrefour, JYSK, Auchan, Kaufland and Rusta.
Welspun India on Monday had informed the Bombay Stock Exchange that it has ordered the probe in the matter and retierated its commitment to quality.