Welspun India records sharpest weekly fall; stock tanks 52%

Welspun India recorded its sharpest weekly fall, eroding more than half the wealth of investors holding the stock, on reports that  US-based retailer Target terminated an agreement, alleged for substituting another type of cotton instead of the contracted Egyptian for producing sheets supplied between August 2014 and July 2016.

The stock closed at its fresh 52-week low of Rs 49.40 on Friday, falling 52% from Rs 103.20 on August 19, 2016, wiping out Rs 5,406 crore from its market valuation. The company’s market capitalisation stood at Rs 4,963 crore against Rs 10,369 crore at the end of last week. The Nifty 50 index was down 1.08% during the week.

Welspun India on Friday has appointed Ernst & Young LLP to review company's supply chain systems and processes.

“This is an issue of highest priority for us and we will take all necessary steps to address it. We have an impeccable record of supplying quality products to our customers globally tor over two decades. We reiterate our commitment to the highest standards of customer service and compliance,” the textile company said.

The business with Target Corporation was approximately US$ 90 million in FY16, which accounted for almost 10% of the company’s overall business. The product is question with Target specifically, represents about US$ 8.5 million in FY16, which accounted for about 1% of the company’s overall sales and about 10% of its business with Target, it added.