Welspun India shares slide for third day as probe widens1 min read . Updated: 24 Aug 2016, 02:04 PM IST
Welspun shares dropped 10% on Wednesday to `59.30 in Mumbai
Hanoi: Welspun India Ltd shares tumbled by the daily limit for a third day as the controversy over the manufacturer passing off cheaper bed sheets as premium Egyptian cotton widened, with customers Wal-Mart Stores Inc. and J.C. Penney Co. now reviewing items to verify product claims.
Shares dropped 10% on Wednesday to ₹ 59.30 in Mumbai. The company has lost as much as 43% of its market value this week, the worst performance among India’s top 200 companies. J.C. Penney, the manufacturer’s fifth-biggest customer, said the company is reviewing its Welspun products. It’s too early to determine what actions the retailer might take, spokeswoman Daphne Avila said in an email Tuesday.
Target said on 19 August it had pulled sheets and pillowcases off its shelves after discovering they were mislabeled as Egyptian cotton. It also terminated all business with the supplier. Part of a roughly $3 billion conglomerate headed by Balkrishan Goenka—with interests spanning textiles, steel, pipes, energy and infrastructure—Welspun now faces one of its worst crises since being founded 30 years ago.
Welspun said it’s reviewing its supply chain and would hire a “Big Four" accounting firm to examine its processes. The company is engaging with key customers, managing director Rajesh Mandawewala said during a conference call Monday. The company manufactures every fifth towel sold in the US and counts Costco Wholesale Corp. and Macy’s Inc among its customers.
Wal-Mart, the world’s largest retailer, is reviewing Welspun’s cotton certification records and plans to hold further discussions with the manufacturer. The chain is also reviewing its other suppliers of Egyptian cotton products out of an abundance of caution, spokeswoman Marilee McInnis said Tuesday. Bloomberg