Target Corp shock: Welspun India trades at 13-month low
Welspun India's share took a beatin after Minneapolis-based Target Corp, one of Welspun India's largest customers, cut ties with the company, accusing it of using lower quality cotton for making bedsheets between August 2014 and July 2016.
The share price of Welspun India has cooled down slightly compared to the two previous trading sessions where investors dumped the shares.
On Wednesday, the shares of Welspun India were down nearly 10% at Rs 59.30 from the previous closing of Rs 65.85 on the BSE.
Welspun India's shares have shed 20% of their value in two trading sessions.
The company's shares took a beatin after Minneapolis-based Target Corp, one of Welspun India's largest customers, cut ties with the company, accusing it of using lower quality cotton for making bedsheets between August 2014 and July 2016.
Target Corp said it had carried out an extensive investigation which revealed the breach of standards held by the US-based company, and of trust.
Target Corp said, "We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them."
Since then, the company's shares have tanked 42.25% from the last week's trading session when the share price was above the Rs 100-mark.
Now, Welspun India's shares are trading at a 13-month low.
Here’s how it has been performing in NSE since June 2015.
Nearly 62 lakh shares have been sold since the announcement from Target Corp, on the BSE, and 1.89 crore shares on the NSE.
Welspun India was one of the producers of Egyptian cotton 500-thread count sheets under the Fieldcrest label for Target Corp.
Target Corp said neither it nor Fieldcrest had any knowledge of the substitution. "As soon as our investigation confirmed the substitution, we pulled out all remaining products from the stores," the company said. They have also offered a full refund for its customers.
On August 22, Welpun India said, "We have initiated immediate actions to investigate the root cause. We are appointing (an) external auditor (one of the Big Four) to audit our supply systems and processors. This is an issue of highest priority for us and we will take all necessary steps to dissolve it."