New Delhi: Kwality Ltd said Friday its net profit saw steep fall to Rs 1.04 crore during the first quarter of the 2018-19 financial year, on poor sales. Net profit during April-June, 2017-18 stood at Rs 27.87 crore, the company said in a regulatory filing. Net income declined to Rs 1,265.78 crore from Rs 1,573.18 crore in the year-ago period. Kwality informed that it is currently facing an issue of receivables management. "This started when the company could not service its customers with the required goods due to liquidity crunch, a situation that emerged primarily towards the end of the quarter triggered due to non-disbursement of sanctioned working capital from banking partners," it said. This impacted the company's plans to monetise its investment already made on setting up of a new facility dedicated for high margin value-added products, it said. Further, considering significant delays in recovery of receivable balances, the lenders have proposed forensic audit and also the company has suo motu initiated a forensic audit to check the sanity and ability of the parties to pay, thereby enable fast monetisation, it added. In view of the consistent recession in the global market, Kwality has decided to discontinue in a phased manner its operation of the wholly-owned subsidiary "Kwality Dairy Products FZE", it said. "While the decision is expected to optimise the earnings on a long-term horizon, it has a short-term impact of delay in the collections from the parties to whom the company is no longer supplying the goods," Kwality said in the filing. During the quarter, few of the lenders have sold the shares of Managing Director Sanjay Dhingra, amounting to Rs 54.14 crore pledged with them till June 30, 2018. Shares of the company were trading 2.80 per cent down at Rs 20.85 per scrip on BSE.