Welspun India shares bleed by 20% after Target Corp accuses over cotton supply
Shares of Welspun India has plunged over Rs 21 or 20% to Rs 83.30 after Target Corp stated of ending their business relationship with the company.
After an extensive investigation, Target Corp confirmed that Welspun subsituted another type of non-Eqyptian cotton when producing sheets between August 2014 and July 2016 without their knowledge of this substitution.
Target Corp said, "This was a clear violation of both Target’s Code of Conduct and our Standards of Vendor Engagement, and was contrary to the high ethical standards to which we hold ourselves, and our vendors."
Right after the investigation, Target Corp pulled out all remaining product of Welspun brand from their stores.
"We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them," added Target Corp.
After this announcement, investors dumped all their shares on BSE exchange.
Nearly 1,03,75,459 shares have been sold from the investors with no buyers.
Welspun India said in a release to the BSE on Saturday that it was investigating a product specification issue with one client program, without specifically naming Target Corp.
"We have initiated immediate actions to investigate the root cause. We are appointing external auditor (one of the Big Four) to audit our suply systems and processos. This is an issue of highest priority for us and we will take all necessary steps to dissolve it," It said in the statement.