Welspun India hires EY to probe USA export lapses

Target chose to sever all ties with its supplier after it was caught marketing and selling cheap bed sheets and towels as the higher quality, premium Egyptian cotton.

Trident is also one of the few companies in India that hold the capacity to manufacture more bed sheets since it is presently functional at only 50% of its full capacity.

The shares of Welspun India were trading in the green on Friday morning, ending a almost ten-day long losing streak for the company on the stock exchange.

Welspun India on Friday said it has appointed consultancy firm Ernst & Young (EY) to look into alleged lapses in its products supply after the US-based Target Corporation terminated contract with the textiles maker. “Trident is one of our current vendors”, said Target spokeswoman Molly Snyder.

On Friday, the shares opened at Rs 55.50 a piece, up slightly from its closing of Rs 54.50.

A Walmart spokesperson said, “We are now reviewing Welspun cotton certification records and plan to have additional conversations with Welspun”.

On Wednesday the company spokesperson had said JCPenney suppliers of private and exclusive brand products are required to certify the quality compliance of any raw materials used and when sourcing Egyptian cotton, manufacturers must provide a certificate issued by the Cotton Egyptian Association as an additional measure of authenticity. The company has since pulled the items from its shelves and offered refunds to customers.

Target has made a decision to terminate its contract with Welspun after an investigation. The stock jumped 6 per cent today, though analysts warned that the rally could get sold into like yesterday.

However, at the current levels, the share price was still almost 50% down from last Wednesday, when they were trading at Rs 102 apiece.

“We are in the process of appointing an external independent Big Four Auditor, to audit all of our supply systems and processes to understand the root cause”. These retailers have begun reviewing Welspun’s cotton certification records and product claims to decipher if they were also conned by the textile giant. Indian manufacturers have a 47 per cent share of the worldwide bedsheets market, and they have an 8 per cent cost advantage over Chinese suppliers, he said last August.