EY to lead Welspun supply review

Mumbai: Welspun India has hired global consulting firm Ernst & Young (EY) to oversee a review into its raw material sourcing processes and the supply chain after one of its large American customers, Target, decided to terminate ties with the Mumbai-based linen maker for providing fake Egyptian cotton bedding products.
The Welspun India management has sought a third-party audit of its supply systems to ensure quality and safety of its products.The company hopes that the external audit will help it to recover the confidence and trust of its various stakeholders. After US’ second-largest discount retailer Target Corp decided to drop Welspun India from its vendor’s list last week, the B K Goenka-led company is trying to protect its reputation over alleged low-quality products. Already several of its US customers, including Bed Bath and Beyond — Welspun India’s largest client — JCPenney and Walmart have said that they are investigating the local firm’s supplies. The company’s 2015-16 annual report states that “every fifth towel sold in the US is manufactured by Welpsun India”.
The flagship company of the over $4-billion Welspun Group has lost nearly half of its market value (Rs 5,000 crore) since Target’s August 19 announcement.
Target Corp said that Welspun India’s products were made from inferior cotton and not from the superior Egyptian cotton. Welspun India sources Egyptian cotton from external parties and there could have been a problem with the origin of the raw material, said familiar sources, adding that it is finding out the root cause of this problem. The US accounts for two-thirds of Indian company’s Rs 4,961 crore revenues.