Textile firm Welspun India Wednesday said it has received preliminary court approval for settlement of its litigation in the US with regards to labelling and marketing of Egyptian cotton products.
In May this year Welspun India had announced that company and its subsidiaries, which have been facing litigation in the US surrounding its premium cotton home textile products, have entered into a settlement agreement in the US.
The settlement agreement provides monetary payments to settlement class members not exceeding USD 36 million (about Rs 250 crore).
"The company received preliminary court approval for its settlement agreement, which is intended to resolve all pending legal claims in the United States concerning past marketing and labelling of the company's premium cotton home textile products," Welspun India said in a regulatory filing.
The plaintiffs in other pending litigations involving these issues have also agreed not to object to the settlement agreement.
The company has agreed to increase payouts to individual settlement class members without increasing the aggregate USD 36 million settlement cap, Welspun India added.
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"Based on expert advice, the provision already made by the company during quarter ended March 31, 2019 remains unchanged and adequate," the company said.
Welspun India said as per statutory procedure, the settlement agreement is subject to final approval and review by the appropriate courts in the USA.
Welspun had reported a consolidated loss of Rs 78.43 crore for the quarter ended March 31, 2019, due to exceptional expense of Rs 224.01 crore related to settlement of litigation in the US with regards to labelling and marketing of Egyptian cotton products.
In 2016, the US retail giant Target Corporation had terminated contract with the Gujarat-based textiles maker over alleged lapses in its products supply.
Welspun India had, later, appointed consultancy firm Ernst & Young to look into the alleged lapses.
Shares of Welspun India were trading 0.95 per cent higher at Rs 58.40 apiece on the BSE.