LD WELSPUN 2 LAST(bcm14)

Last month, Target Corporation, after extensive Last month, Target Corporation, after extensiveinvestigation, confirmed that Welspun substituted another typeof non-Egyptian cotton when producing bedsheets and pillowcases between August 2014 and July 2016. The retailer had said that as soon as itsinvestigation confirmed the substitution, it pulled allremaining product from Target stores and Target.com andoffered the customers full refund. Target said it would end all business with Welspun, oneof the world’s biggest textile manufacturers, as the vendorwas sending it phony Egyptian-cotton sheets. Sales to Target was around USD 90 million in 2015-16for Welspun and accounted for almost 10 per cent of itsoverall business. A Welspun spokesman said today that the total Egyptiancotton-based sales constituted only about 6 per cent of itsUSD 900 million sales. Others among top five of Welspun’s customers like BedBath and Beyond and JC Penny had said they would also reviewthe matter. Welspun is the biggest exporter of terry towels andbed linen to the US and the company says every fifth towelsold in the US is made by it and two-thirds of its totalbusiness comes from the American markets. After Target’s recall in mid-August, Welspun’s sharestanked by 47 per cent and touched a low of Rs 46.50 on August30. But since then it has recovered to Rs 59.10 and the shareclosed at Rs 56.60 on Friday on the BSE. Customers pay a premium for Egyptian cotton productsbecause they are perceived to be softer and more durable.Sheets made from cotton grown in other countries don’t alwayscarry the same cachet among Americans. Walmart is one of Welspun’s largest customers, whileTarget, JC Penney, Macy’s Inc, Bed Bath and Beyond Inc arealso leading customers. According to the US agriculture department, Egyptproduced just under 1 per cent of global cotton last year. Asper the Egypt Cotton Association, which licences the trademarkand certifies suppliers, 90 per cent of products labelled as`Egyptian cotton’ are inauthentic. The USD 3-billion Welspun Group has interests intextiles, steel, pipes, energy and infrastructure. PTI BEN KRKJMPTP