The company, a unit of Germany's Graphit Kropfmuhl AG, said group net profit more than halved to 33 million rupees last year from 70 million rupees the year before.
Bogala Graphite group sales rose slightly to 399 million rupees in the year ended December 31, 2011 from 386 million the year before. Earnings per share fell to 70 cents in 2011 from 1.49 rupees the previous year.
"The lubricant plant which was installed during the year under review is beginning to pay reasonable returns," Bogala Graphite chairman Vijaya Malalasekara told shareholders in the firm's annual report.
"Our sales of lubricants to the South Asian market have increased. This appears to be an area of growth into the future."
The company was negotiating prices with key buyers, he added, but warned that the business could be affected by high oil prices, unsettled conditions in the Middle East coupled with the problems faced by the European Union and the slow recovery of the US.
Bogala Graphite had also renegotiated a loan taken from the parent firm to ensure longer repayment after the strengthening of the euro against the rupee impacted on cash outflows as debt is being repaid in euros.