By admin       2016-08-24

August 24, 2016 - Welspun India is locked in lower circuit for the third straight trading session down 10% at Rs 59.30 on the BSE, after a media report that US-based retailer, Wal-Mart, which said it would review the supply chain and cotton certification records of the company and take suitable action - if any quality issues are found in Welspun's supplies. Wal-Mart is Welspun India's third largest client. The exchanges, BSE and NSE, have lowered the daily permissible trading price limit of the stock to 10% from 20% with effect from Wednesday. The stock of Asia's largest home textile maker is currently trading at its fresh 52-week low, falling 42% in past three trading sessions from Rs 102.85 on August 19, after US-based Target Corp announced last week it was terminating business with the Indian manufacturer for substituting the cotton in bedsheets with a different type than the contracted Egyptian one. Welspun India said that it has initiated 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,” the company said on Saturday. Elara Capital recommends investors to reduce their positions in the near term, given lower visibility of earnings. In the medium to long term, we expect earnings to recover as the company focuses on improving its quality control processes and better sourcing of cotton, Elara Capital said in event update. Management failed to assuage concerns on how Target’s internal audit and third-party quality checks appointed by it failed to raise any alarms over a period of two years, it added. Till 09:29 am, a combined 234,638 equity shares changed hands on the counter and there were pending sell orders for 25.91 million shares on the NSE and BSE.

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