Welspun India was locked at 10% lower circuit at Rs 59.30 at 11:10 IST on BSE after reports that Wal-Mart Stores Inc. is reviewing Welspun's cotton certification records.
Meanwhile, the S&P BSE Sensex was up 36.23 points or 0.13% at 28,026.44.
On BSE, so far 1.43 lakh shares were traded in the counter as against average daily volume of 1.37 lakh shares in the past one quarter. The stock was locked at Rs 59.30 so far during the day, which is also a 52-week low for the stock. The stock had hit a record high of Rs 119.90 on 14 June 2016. The stock had underperformed the market over the past one month till 23 August 2016, dropping 38.4% compared with 0.67% rise in the Sensex. The scrip also underperformed the market in past one quarter, sliding 33.98% as against Sensex's 10.94% rise.
The mid-cap company has equity capital of Rs 100.47 crore. Face value per share is Rs 1.
As per reports, Wal-Mart Stores Inc., the world's largest retailer, said it is reviewing Welspun India's cotton certification records following Target Corp.'s decision to snap ties with the Indian textile maker over a cotton supply dispute. Walmart is Welspun's third-largest customer, behind Target. Target Corporation, one of Welspun's biggest clients, severed business ties with it earlier this week on charges that Welspun used cheaper quality cotton while supplying bed sheets between August 2014 and July 2016 without Target having any knowledge of this substitution. Target had pulled sheets and pillowcases off its shelves after discovering they were mislabeled as Egyptian cotton after a probe was initiated by it. Shares of Welspun India had hit 20% lower circuit in last two sessions following Target's announcement on Friday, 19 August 2016 of snapping ties with the company after violation of Target's code of conduct and standards of vendor engagement.
As per separate report, J. C. Penney Company, Inc. is also investigating Welspun's products after the issue.
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Welspun India in a statement on Saturday, 20 August 2016 confirmed that it encountered a product specification issue with one client program of its subsidiary, Welspun Global Brands. Welspun India said that it has initiated immediate actions to investigate the root cause of the issue. The company at that time said it is appointing one of the Big Four external audit firms to audit its supply systems and processes. This is an issue of highest priority for the company and the company will take all necessary steps to address it, Welspun had said in a statement.
Welspun India's consolidated net profit rose 10.3% to Rs 201.85 crore on 11.3% rise in net sales to Rs 1386.46 crore in Q1 June 2016 over Q1 June 2015.
Welspun India is the leading home fashions supplier in the USA and amongst the top 3 global manufacturers of bed and bath linen.
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