June 06, 2011 (LBO) - Sri Lanka's Kuruwita Textile Mills slipped back into the red in the financial year to March 2011 with sales also down and a new managing director being hired to turn the company around.
The company, which is part of the Brandix apparel export group, said in a stock exchange filing it made a loss of 341 million rupees compared with a profit of 16 million rupees the year before mainly owing to high cotton prices.
The firm, which supplies treated fabric to garment manufacturers, had made a loss in the 2009 financial year too.
Annual sales fell 21 percent to five billion rupees in the financial year ending March 31, 2011 with a loss per share of 13.65 rupees compared with a profit of 63 cents the year before.
In the March 2011 quarter, Kuruwita Textile Mills made a loss of 59 million rupees, up 52 percent compared with the same quarter the year before, while sales fell 32 percent to 1.1 billion rupees.
Its quarterly loss per share rose to 2.36 rupees from 1.56 rupees a year ago.
Chairman Aslam Omar said the drop in the top line was the combined result of high raw material costs and the inability to pass on those costs to customers.
"The expansion in capacity that was effected during the year resulted in an increase in debt as the entirety of this expansion was debt funded," he told shareholders in a note accompanying the results.
"The long term gearing of the company rose to 14.33 percent from a virtually ungeared position."
Finance costs rose to 44.6 million rupees from 21.2 million.
"Although the benefits of this expansion could not be fully accomplished during the year, the management believes that this would enable substantial volume growth in the future," Omar said.
The company has hired Gamini Bandranayake as the new managing director as part of changes in its operating structure with emphasis on "improvement in efficiency levels as well as faster pace of response to customer needs," Omar said.
Bandaranayake will be "actively engaged in changing the course of fortunes of the subsidiary of your company and will be focused towards generating positive returns for the shareholders of Kuruwita Textile Mills," he said.
source - www.lbo.lk
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