Swedish home furnishing giant IKEA AB said it would continue doing business with Welspun India while it awaits the outcome of the Indian textile manufacturer's probe into its sales practices.
Welspun's shares have plummeted this week after U.S. big-box retailer Target terminated business with the firm, saying it had passed off cheap sheets as premium Egyptian cotton.
"To our knowledge and according to our continuous verifying processes, the supplier delivers according to our agreements," IKEA said in a statement issued on Wednesday in response to a Reuters inquiry.
"However, we will follow their ongoing investigation carefully and await the outcome. Until then our business collaboration continues as usual."
IKEA also said it did not buy products made from Egyptian cotton. It said that, from the end of its 2015 fiscal year, it only bought cotton from more sustainable sources whose standards were not met by Egyptian producers.