Wednesday, November 24, 2010

Sri Lanka Kuruwita Textile losses mount

Nov 24, 2010 (LBO) - High cotton prices has sharply increased losses at Sri Lankan fabric supplier Kuruwita Textile Mills, which is part of the Brandix apparel export group, a stock exchange filing said.

The firm, which supplies treated fabric to garment manufacturers, said its net loss rose 61.6 percent to 48 million rupees in the September 2010 quarter from a year ago while sales fell two percent to 1.2 billion rupees.

"I write to you at a time during which your company is battling the highest ever recorded prices in its raw materials, which has resulted in a number of adverse impacts on its financial performance," chairman Aslam Omar told shareholders.

He attributed the slowdown in sales to a “wait and see” customer response to rising cotton prices around the world throughout the first half of the financial year.

Pakistan cotton prices rose 104 percent to 9,660 Pakistani rupees a 'maund' (37 kilos) while India touched 44,000 Indian rupees a 'Candy' (170 kilos), up by 86 percent.

"This resulted in a decline in gross profits during the second quarter of the year to 26.2 million rupees in comparison to 35.2 million for the second quarter of 2009/10," Omar said.

"However, quarter-on-quarter your company has been successful in converting a gross loss of 98.4 million rupees during the first quarter to a gross profit of 26.2 million rupees during the second quarter."

Finance costs of the company have grown owing to interest cost in acquiring a new dyeing range to the company.

"Whilst cotton prices are expected to remain high going forward, your company will be working towards achieving more favourable results with the growth of shareholder wealth being its primary objective," Omar said.

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