Mumbai: Home linen major Welspun, which was caught in trouble recently after some of its major US clients stopped sourcing its products, today said Walmart will continue to source from it barring those products made of Egyptian cotton.

Walmart last month followed fellow US retailer Target in recalling Welspun bedsheets and pillow covers after it came to light that the home linen it sold saying as made of Egyptian cotton were not in fact made from the premium yarn typical of the West Asian nation.

Walmart used to sell Welspun’s sheets and pillow cases under the labels of Better Homes & Gardens and Canopy. In a BSE filing today, Welspun India, which has appointed consultancy firm E&Y to look into the alleged lapses, said, “Walmart has assured us to do business together. We are working to implement stronger controls and to better label the products we supply to them.”

The B K Goenka-led company further said, “The product line in question with Walmart accounts for around 1.5 per cent of our business.”

“We take the current traceability concerns around some of our product lines very seriously, and have been working closely with our retailer partners to support their actions towards a comprehensive resolution programme,” Welspun said.

The Bentonville, Arkansas-based Walmart on the other hand said in a separate statement that “Welspun has not been able to assure us the products are 100 per cent Egyptian cotton, which is unacceptable. While the sheets are excellent quality, we are offering our customers a full refund.”

The Amercian retail giant was quick to add that it isn’t cutting ties with Welspun. Instead, it is working with Welspun to implement strong controls and better label the products.

The Egyptian cotton product portfolio accounts for 6 per cent of Welspun’s annual business. The company posted total net sales of Rs 5,387.66 crore in 2015-16.

The problem started after Egypt began to report massive drop in cotton production. As per reports, it produced just 1 per cent of the global cotton last year.

The US-based retail chain Bed Bath & Beyond and JC Penny are also conducting third-party audit of items sourced from Welspun, following lapses in supplies by the Gujarat-based firm to Target.