Sales fell almost five percent to 1.3 billion rupees over the period, the company, a unit of clothing exporter Brandix Textile Holding, said in a stock exchange filing.
The firm, which supplies treated fabric to garment manufacturers, said it had a loss per share of 5.01 rupees in June 2010 against a profit of 0.11 rupees the year before.
Kuruwita had made a marginal profit of 2.8 million rupees in the June 2009 quarter. Finance costs fell 73.2 percent.
Chairman Aslam Omar said past trends and effects of seasonality, which sees the first and second quarters of the year showing losses, continued this year as well.
"We believe this seasonality would remain during the second quarter as well. However, we are hopeful that strong third and fourth quarter earnings will provide the shareholders of the company with positive returns," Omar said.
" . . . open capacity in our production plant led to a decline in revenue," he said in a statement.
"This decline in top line was further aggravated due to the reduction in prices that we had to provide to our customers.
"Stiff competition that we had to face from low priced fabric mills of Pakistan and China further necessitated this price reduction."
During the quarter in addition to lower sales, the company was faced with an "unenviable position" of facing up to some of the highest ever recorded cotton prices, Omar said.
"The increasing demand for cotton in the Chinese market combined with lower cotton stock levels in Pakistan and India were the main reasons behind this surge in cotton prices."
This resulted in an 8.5 percent increase in cost of sales in comparison to the year before leading to a gross loss of 98.4 million rupees for the June 2010 quarter in comparison to a gross profit of 75.4 million a year ago.
Selling, general and administration costs jumped 28.4 percent on more spending on product development, a liaisons office in Pakistan from which it buys 50-60 percent of its greige imports and another in Bangladesh for marketing.
"Although in the short term this would have an adverse impact on costs we believe this will provide us an opportunity to achieve synergies both in sourcing and in marketing," Omar said.
source - www.lbo.lk
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