Shares of Welspun India dropped by a maximum daily limit of 20% on Monday after Target Corp severed ties with the textile manufacturer over a cotton supply dispute, reported Reuters. According to Bloomberg, Target Corp found out last month that Welspun had substituted Egyptian cotton in about 750,000 bedsheets and pillow covers with non-Egyptian ones. These items were manufactured between August 2014 and July 2016.
In a company release on Friday, Target Corp said they informed Welspun that they are in the process of terminating the ties with the manufacturer. After the fiasco, Target Corp pulled the items from its stores – both online and offline – and notified customers that it will give them a refund on the products.
According to Reuters, officials of Welspun issued a statement on Saturday, saying that they had started an investigation into Target's claims. The company said, “We are appointing an external auditor to audit our supply systems and processes. This is an issue of highest priority for us.”
Welspun, touted as one of the largest textile manufacturers in the world, makes towels, bedsheets, carpets, and rugs for 18 of the top 30 global retailers. Apart from Target Corp, its other major clients include Walmart Stores, JC Penney Co and Macy's Inc. Welspun also manufactures towels for Wimbledon and the Rugby World Cup.