Revenues rose 36 percent to 2.34 billion rupees, cost of sales rose at a faster 42 percent and gross profits fell 15 percent to 2.1 billion rupees, according to interim accounts filed with the Colombo Stock Exchange.
Interest expenses rose to 45 million rupees in the quarter from 27 million rupees a year earlier.
Chairman Aslam Omar said the gross profit margin fell to 6 percent in the quarter from 10 percent a year earlier.
"This reduction is primarily due to the aggressive marketing strategy followed by the company during the period which resulted in top line growth," Omar told shareholders.
"The management of the company are actively taking steps to arrest this trend and believe that this will be reversed going forward."He said the company was working on new customers and strengthening existing relationships and was also working on improving productivity.