Indian Firm Admits 'Error' After Target Cuts Ties Over Cotton Dispute
August 25 2016 - 8:50AM
Dow Jones News
NEW DELHI—Welspun India Ltd., the Indian textile company accused
of selling fake Egyptian cotton sheets to Target Corp. and other
U.S. retailers, said it was modifying its supply chain and
reviewing its practices to address the accusations.
The company Thursday released a transcript of its conference
call with investors through the Mumbai stock exchange. Welspun was
addressing investor concern after Target said Friday it was cutting
ties with the company. The discount-retailer said an investigation
into Welspun's practices concluded the Mumbai-based company had
sold it phony Egyptian-cotton sheets.
Welspun responded on Saturday saying it had commissioned an
accounting firm "to investigate the root cause," of the problem.
The company has refrained from making other public statements this
week, even as other large clients including Wal-Mart Stores Inc.,
J.C. Penney Co. and Bed Bath & Beyond said they would conduct
their own investigations.
In the call with investors held on Monday, Welspun's Managing
Director Rajesh Mandawewala took responsibility for the mishap.
"Without any ambiguity the fault is on our side and so it is,
let's say, the error is from our side so I guess we have to take
responsibility for it," Mr. Mandawewala told investors, according
to the transcript.
He declined to say what, specifically, had gone wrong, saying
only that "in the manufacturing process you source a lot of
materials at various stages."
The dispute exposes the complexities of a global supply chain in
which each stage of production, from sourcing to stitching to
selling, can happen in different continents.
"The idea is to actually look at the entire supply chain and our
supply processes so that we can bring about robustness in the whole
process," Mr. Mandawewala said. The company said the accounting
firm would conclude its investigation in six to eight weeks.
Welspun's share price has more than halved since the Target
allegations surfaced Friday. Two-thirds of Welspun's sales come
from American retailers.
Write to Preetika Rana at preetika.rana@wsj.com
(END) Dow Jones Newswires
August 25, 2016 08:35 ET (12:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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