Welspun India: Reputation Management after Egyptian Cotton Mislabeling
Sandeep Puri
Asian Institute of Management, Manila, Philippines
Shalini Joshi
Blue Star Limited, India
Shamik Debnath
Asian Paints Limited, India
Babak Hayati
Asian Institute of Management, Manila, Philippines
Volume 12: 2019, pp. 13-26; ABSTRACT
Welspun India, a leading player in the Indian textile industry, passed through a difficult phase after the termination of its contract with US retailer Target Corporation over allegations of supply lapses and mislabeling cheaper cotton products as expensive Egyptian cotton. The contract termination in August 2016 between Welspun and Target, in which business was worth US$90 million in 2015-2016, cost Welspun almost 10 percent of its business. Following its rival’s decision, Walmart discontinued the sale of Welspun’s Egyptian cotton products. As Welspun considered ways to avoid future blunders and oversights in the aftermath of the serious mislabeling allegations, industry experts assessed the damage caused to the Welspun brand and its business. After losing a prime customer and at least 10 percent of its business after being caught out for the Egyptian cotton labeling fraud, Welspun needed a strategy to counter client withdrawals and its freshly invigorated competitors. The case analyzes steps Welspun could take to recover from the consequences of fraud allegations, restore its reputation, and regain the trust of disillusioned customers such as Target.
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