Sri Lanka fabric maker in Rs626mn December quarter loss

Feb 02, 2011 (LBO) - Sri Lankan fabric maker Hayleys MGT Knitting Mills made a loss of 626 million rupees (5.6 million US dollars) in the December 2010 quarter following provisioning after an audit inquiry into a fraud, a statement said. The company said the discrepancies forced it to make an additional provision of almost 1.2 million US dollars for trade receivables and of just over two million dollars for inventories.

Updated The firm, a unit of the Hayleys conglomerate, said gross sales rose 13 percent to 13.3 million US dollars in the quarter from a year ago.

It had made a net profit of 197,422 dollars in the December quarter of the year before.

Fitch Ratings Lanka in December downgraded Hayleys MGT Knitting Mills rating to 'BBB(lka)' from 'BBB+(lka)' with a negative outlook after the fabric manufacturer warned of losses when an inquiry revealed discrepancies in inventory and accounts receivables.

The Hayleys MGT Knitting Mills stock exchange filing said a special audit verification had been done by B R De Silva , Chartered Accountants and S J M S Charted Accountants on trade receivables and inventories.

The probe had revealed "there were discrepancies between the value of physical balance of inventor