Welspun India Recovers After Slumping 5% As Wal-Mart Pulls Out Products

Welspun India shares pulled back after slumping 5 per cent to Rs 54 at day's lows. In noon trade, shares of Welspun India were up 1.3 per cent at Rs 57.50.

Welspun shares took a beating in early trade after Wal-Mart Stores said it will stop selling Egyptian cotton sheets made by Welspun India. Wal-Mart will pull the products from its stores and website.

The product line in question with Wal-Mart accounts for approximately 1.5 per cent of Welspun's annual business.

Wal-Mart however said it will not cut ties with Welspun but will work with the Indian company to implement strong controls.

"Welspun has not been able to assure us the products are 100 per cent Egyptian cotton, which is unacceptable," Wal-Mart said in a statement.

Last month, US retailer Target Corp severed ties with Welspun after accusing them of passing off cheap sheets as premium Egyptian cotton for two years.

The concerns over Egyptian cotton issue has led to a sharp selloff in Welspun India shares, which have halved from 52-week high of Rs 119.90, hit in June earlier this year.

Over the weekend, Welpun in a statement on Egyptian cotton concerns said, "We take the current traceability concerns around some of our product lines very seriously and have been working closely with our retail partners to support their actions towards a comprehensive resolution program."

"We have engaged a Big Four firm to review our processes. We are already installing technology to monitor our supply chain."

The affected products represent around 6 per cent of its annual business, Welspun added.