Welspun India’s scrip witnessed severe drubbing for the fourth day in a row, falling over 8 per cent on Thursday amid a host of negative news following US-based Target Corp’s decision to terminate its contract with the company for alleged lapses in products supplied to it.
According to a PTI report: The stock plunged 8.26 per cent to settle at Rs 54.40 on BSE. During the day, it dipped 9.94 per cent to Rs 53.40, its lower circuit limit.
Shares of the company witnessed some recovery by rising over 5 per cent during morning trade but failed to hold on the momentum and slipped in the negative zone.
At NSE, shares of the company tanked 9.15 per cent to close at Rs 54.05.
In four days, the company’s scrip has declined by over 47 per cent, wiping out Rs 4,867.3 crore from its market valuation, which currently stands at Rs 5,465.70 crore.
Welspun India is appointing an external auditor, ‘one of the Big Four’, to look into the alleged lapses and expects the process to be completed in about 6-8 weeks.
“JCPenney is conducting a thorough investigation of its Welspun textiles to ensure the integrity of its product claims,” a company spokesperson was quoted by PTI as saying.
It further 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.
A Walmart spokesperson was quoted by PTI as saying: “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.”
A spokesperson of the Swedish furniture retailer IKEA was quoted by PTI as saying: “To our knowledge and according to our continuous verifying processes, the supplier delivers according to our agreements.”
Welspun supplied bedsheets and pillowcases made of Egyptian cotton to Target. The US-based retailer alleged that Welspun substituted another type of non-Egyptian cotton when producing sheets supplied between August 2014 and July 2016.
Target has since then decided to terminate its contract with Welspun after an investigation.