Walmart reviewing cotton certification records of Welspun -:- Equity Research

Global retail giant Walmart is reviewing cotton certification records of Welspun India in the wake of Target Corporation's decision to terminate contract with the Gujarat-based textiles maker over alleged lapses in products supplied to it. Confirming that Welspun supplies a number of products to Walmart, a spokesperson of the US retail major said: "We are currently reviewing Welspun cotton certification records and plan to have additional conversations with Welspun. If we discover an issue, we will handle it appropriately." The development follows Target Corp, which had after an extensive investigation, confirmed that Welspun that uses Egyptian cotton to make bedsheets and pillowcases sold by the retailer, substituted another type of non-Egyptian cotton when producing these sheets between August 2014 and July 2016. The retailer had said as soon as its investigation confirmed the substitution, it pulled all remaining product from Target stores."We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them," Target Corp said. Welspun on its part had said it has initiated immediate actions to investigate the root cause and was appointing an external auditor to audit its supply systems and processes. Shares of Welspun India were trading at Rs 59.30 on BSE post afternoon, down 9.95 per cent from previous close. The shares had crashed 19.99 percent yesterday to Rs 65.85 - its lower circuit limit - on BSE.