Bleak days for textile major Welspun India; market reacts sharp

Country's one of the key players in textile industry, Welspun India being challenged by one of its leading global clients, has been fighting a tough battle when it comes to managing its net worth and also share values. 
Its scrips have been caught in the lower circuit in the third straight trading session. Welspun shares have slumped by 42 per cent on an intraday basis during last three days. On Aug 24, its shares managed to open at Rs 59.30 but caught on lower circuit once again, down by 9.95 per cent. Things for the company dampen further when Walmart, the third largest client of Welspun has raised fingers alleging that the company would review the supply chain and cotton certification records to take action if any quality issues found.

Earlier on Aug 22, Welspun India opened at Rs 82.30, down by 20 per cent from the previous close.
Target Corp, the second largest customer of the company and one of the world's biggest textile manufacturers has ended all the ties with the company. According to Target Corp, Welspun was supplying phony Egyptian cotton sheets. It discovered in July that some 750000 sheets and pillow cases have been mislabelled as Egyptian cotton quality. Target Corp has pulled the items sold under Fieldcrest label from its stores and has offered customers refund on the products, which were manufactured between August 2014 and July 2016 in its plant at Vapi in Gujarat.

Ten per cent of the revenue of the company comes from the Target Corp and in FY16, the company sales were 90 million USD. This is a huge loss to the company not only from the financial front but it has also affected the brand equity of the textile major.Fighting the issue, the company promoted by the Goenkas has appointed external auditor to audit the supply system and process of the company.