Welspun India stock crashes as Target ends agreement for bad conduct
Moneylife Digital Team 22 August 2016
Minneapolis-based Target Corp, which serves guests at 1,797 stores and at Target.com, said it has decided to terminate it vendor agreement with Welspun Global Brands Ltd (Welspun Global), for supplying a substitute product. 
 
In a release, Target said, "Welspun Global, was one of the producers of Egyptian Cotton 500-thread count sheets under the Fieldcrest label for Target. After an extensive investigation, we recently confirmed that Welspun substituted another type of non-Egyptian cotton when producing these sheets between August 2014 and July 2016. We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them."
 
Welspun Global Brands is a unit of Welspun India Ltd. In a regulatory filing, Welspun 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 processes. This is an issue of highest priority for us and we will take all necessary steps to address it."
 
However, the markets did not take Target’s words kindly. On Monday, Welspun India hit its lower circuit to Rs82.30 on the BSE, while the 30-share benchmark Sensex was ended the day marginally down at 27,985.
 
Target says as soon as its investigation confirmed the substitution, it pulled all remaining products from Target stores and Target.com. "On 19 August 2016, we began reaching out to all REDcard and Target.com guests who purchased the sheets between August 2014 and July 2016 and offered them a full refund. We are reassuring our guests that this is not an issue of safety and there is no risk in continuing to use this product. Any guests who purchased the products from Target during that timeframe may submit this web form to request a refund in the form of a gift card," it added.
 

 

Comments
P L Despande pawar
10 years ago
Highly damaging to country's image. Welspun's explanation appears to suggest that they didn't know sbout it. Difficult to digest.
shadi katyal
Replied to P L Despande pawar comment 10 years ago
How can a company clain that they were not aware of the substitution.It may shock someof you but we lost our reputation long time ago when PSU like STC were exporters etc.
WE try to make maximum profit. I bought some undershirts of 105cm but id dsif on the shirts 103-105 cm and bet those are not even 104 but less. We have lost ethics in name of greed and thus intergity.
EDvedn Bangladesh whcih was a basket case is making more money in textile than we cvan dream off
Brian Fernandes
10 years ago
Honest people...something very difficult to find. Sad!
Virendra Sharma
10 years ago
What does it mean?Welspun has substituted with another Egyptian cotton then why Target is doing so?
shadi katyal
Replied to Virendra Sharma comment 10 years ago
Well spen substiututed with NON Egyptian cotton and thus misled the buyer TARGET who sold it as an Egyptian cotton.
In USA such cheating is not allowed and thus TARGET hs asked its customers to return and get paid. These are the ethics of US Business inorder to stay in business for generations and nnot for a quick profit ,
Kumar Swamy
Replied to shadi katyal comment 10 years ago
Yes, these kind of companies get away with all kinds of non-sense in India but NOT in USA. Enforcement of regulations and customer protection is something we can and should learn from them.
shadi katyal
Replied to Kumar Swamy comment 10 years ago
West is ruled by Law and Order and that is what British gave us first but could not change our culture of SUB CHALTA HAI BHAI.
We did have some ethics for first few years but now greed has taken over. We are beither patriots nor honest businessmen.
Look how we tried to even destroy Maggies by unproved charges. We still have to see any true and real report of socalled excessive lead and since all ingrediants wer Indegineous so where did the lead come from.
The damage done to the nation by such industrialist lasts for decades.
Nation is too busy ion religious issues but not in development
shadi katyal
10 years ago
Can anyone tell us that why we Indian manufccturers have to learn any ethics and greed plays a part. One wonder the lioabilities of foreign buyers and their commitments to the customers of the quality of a product but in India it seems the famours attitude SUB CHALTA HAI.
Can the Welspun give the reason of such a switch of cotton and not informing the client. Now Target will take back all that sold goods back and suffer a very big loss but WHEN AND IF OUR EPXORTERS WILL EVER LEARN???
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