Welspun India's shares have lost nearly 50% of their value since last Wednesday when one of its largest clients Target India decided to cut ties with it.
The shares of Welspun India were trading in the green on Friday morning, ending a nearly ten-day long losing streak for the company on the stock exchange.
Welspun India's shares opened higher on the BSE at open after the company issued a clarification sought by the BSE, in response to the accusations made by the US-based Target Corp.
On Friday, the shares opened at Rs 55.50 a piece, up slightly from its closing of Rs 54.50. In early trade, at 0926 hours, the shares were at Rs 55.60 a piece, up Rs 1.20 or 2.21% from previous day's close.
Buying at lower levels may have also contributed to the share price on Friday morning.
However, at the current levels, the share price was still nearly 50% down from last Wednesday, when they were trading at Rs 102 apiece.
Welspun India's investors have lost nearly Rs 5,000 crore after Target Corp, one of its largest clients announced its decision to severe ties with the company after it was found to have used cheaper quality cotton to make 'Egyptian Cotton bedsheets'.
The company's books are slated to take a hit because of Target Corp's decision as it received approximately $90 million business from the company in FY16, or 10% of the overall business, Welspun India said in a notification to the BSE.
In a clarification sought from the BSE, Welspun India said, that the company held a conference call with analysts and investors on August 22, 2016, at 8.30 am to respond to their questions.
Welspun India said it will be getting its entire supply chain reviewed by an external agency and will update the stock exchanges when they have updated information.
In the aforementioned conference call, Rajesh Mandawewala, managing director, Welspun India had said that the company was in the process of engaging one of the Big Four auditors, and the process could take six to eight weeks.
"This is a matter of highest importance to us and we are taking it very-very seriously. Our customers rely on us to maintain the highest standards of quality and compliance, Welspun remains committed towards this. We have been very particular about our quality standards, so we are taking this issue very-very seriously."
"We are in the process of appointing an external independent Big Four Auditor, to audit all of our supply systems and processes to understand the root cause. The audit will give us clarity on a number of questions, including where and how the issue occurred and what steps we will
need to take to tighten our processes," he added.
Several other retailers in the US, including Bed, Bath and Beyond and Ikea have initiated their own investigations into the products sourced from Welspun India.
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