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The worst fear of Welspun, one of the leading exporters of home textiles, seems to have come true with another major importer indicating that it will also probe into the quality of supplies from the company.
US-based retailer Target Corporation had severed all ties with the company after it found the bedsheets and pillow cases supplied by Welspun between August 2014 and July 2016 were not made of Egyptian cotton as assured by the company.
On Tuesday, WalMart Stores, the world’s largest retailer, said it is already reviewing Welspun's cotton certification records to ascertain the quality of supply.
The examination is under way and Walmart plans to hold additional conversations with the supplier (Welspun). If any issue is discovered, the retailer plans to "handle it appropriately”, Walmart spokeswoman Marilee McInnis told Bloomberg. Welspun's leading customers in the US include Bed Bath & Beyond, Macy’s, JC Penney, Target, Kohl’s, WalMart, Costco and Home Depot.
Its leading customers in Europe include Carrefour, JYSK, Auchan, Kaufland and Rusta.
The company, which exports to over 50 countries, gets two-thirds of its business from the US.
The cancellation of trade ties by Target and investigation initiated by Walmart may lead to other leading importers follow suit, said analysts.
Welspun had said it outsources cotton, cotton yarn, fabrics, and hence, it is conducting audit on the entire supply chain.
The audit would provide clarity on gaps in the system, it added.
The plans to invest ₹800 crore this fiscal to expand its towel making capacity by 12,000 tonnes, bed linen by 18 million metres and rugs and carpets by 2,000 sq m.
Total capex also includes ₹250 crore to complete the modernisation of its Vapi plant initiated in FY-15.
The company invested ₹140 crore in the June quarter.
On the BSE, Welspun India shares plunged another 20 per cent to ₹66 on Tuesday.
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