Home linen major Welspun India Ltd (WIL) today said Cotton Egypt Association (CEA) has verified its quality and supply chain reliability processes while also announcing a pact to promote and market the African country's cotton products worldwide.
The agreement comes nearly six months after Welspun India was dropped by major US retailers, including Target and Walmart, for substituting Egyptian cotton with another type of non-Egyptian cotton to make bedsheets and pillowcases sold in the stores of the retailers.
"The Cotton Egypt Association, post verifying Welspun's quality and supply chain reliability processes, has granted the company the right to use the Egyptian Cotton logo for five years until 2022," the company said in a BSE filing.
Welspun had undertaken stringent audit and traceability programme to ensure the best product quality that is certifiable, verifiable and auditable, it added.
As part of their agreement, Welspun India will invest USD 3 million in a stage wise manner over next few years to support joint initiatives, it added.
"The two organisations will work together to create programmes for promotion of Egyptian Cotton logo in the retail markets across the globe," the company said.
The agreement will also help enhance the complete supply chain of the Egyptian cotton starting from cultivation to the final product, which will also benefit the Egyptian farmer and the industry as a whole, it said.
Commenting on the development Welspun India CEO and Joint Managing Director Dipali Goenka said: "We foresee an increase in demand for Egyptian Cotton and find an ideal condition for making Egypt one of our hubs for sourcing and manufacturing Egyptian Cotton products. We're looking at the best option to utilise this opportunity." She further said the company will help create marketing programmes and execute them using its extensive global network to promote Egyptian cotton.
CEA is established by the Egyptian Ministry of Industry and Foreign Trade and Alexandria Cotton Exporters Association and it is mandated to manage, promote and protect the Egyptian Cotton and the Egyptian Cotton Logo worldwide.
Last year, several foreign retailer as Target, Walmart, Bed Bath & Beyond and JCPenny has stopped sourcing Welspun India's Egyptian cotton products following lapses in supplies by the Gujarat-based firm.
This had started after Target Corporation after an extensive investigation had confirmed that Welspun substituted another type of on-Egyptian cotton when producing Bed sheets and pillows between August 2014 and July 2016.
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