IKEA to stay with Welspun for now, but Target shadow looms large

Walmart is reviewing cotton certification records of Welspun India while IKEA will continue business ties as usual with the textiles supplier till the outcome of an ongoing probe by the Gujarat-based firm over lapses in its supplies to US-based Target.
According to a PTI report: Welspun, which was supplying bedsheets and pillowcases made of Egyptian cotton to Target, was alleged by the US-based retailer for substituting another type of non-Egyptian cotton when producing sheets supplied between August 2014 and July 2016.
Target has since then decided to terminate its contract with Welspun after an investigation.
Welspun on its part has said it has initiated immediate actions to investigate the root cause and was appointing an external auditor to audit its supply systems and processes.
A Walmart spokesperson was quoted by PTI as saying: “We are currently reviewing Welspun cotton certification records and plan to have additional conversations with Welspun. If we discover an issue, we will handle it appropriately.”
A spokesperson of the Swedish furniture retailer IKEA on the other hand was quoted by PTI as saying: “To our knowledge and according to our continuous verifying processes, the supplier delivers according to our agreements.”
The spokesperson was further quoted by PTI as saying: “However, we will follow their ongoing investigation carefully and await the outcome. Until then our business collaboration continues as usual.”
READ MORE: Target severs contract with Welspun India, Walmart orders review
IKEA does not buy products made from Egyptian cotton. From the end of fiscal 2015, IKEA reached the goal of 100 per cent cotton from more sustainable sources and Egypt does not have sustainable cotton programs related to Cotton from more sustainable sources.
Target had said that as soon as its investigation confirmed the substitution, it pulled all remaining product from Target stores and Target.com.
“We have informed Welspun that, due to this conduct, we are in the process of terminating our relationship with them,” Target Corp was quoted by PTI as saying.
Lenders to linen maker Welspun India told the company to come clean regarding the dispute over raw material used for bedsheets supplied to Target Corp.
This was conveyed in an emergency meeting held on Monday between lenders and the company officials. Banks have lent close to `2,000 crore to the company .
During the meeting, the lenders took stock of the situation and asked the company to revert within a fortnight on its exact position on the matter.
The company has conveyed that it would appoint an external auditor to audit the supply system and the processes.