Dhelakhat Tea Annual Report & Financials

Dhelakhat Tea Co Ltd Balance Sheet (Rs in Hundreds)

Dhelakhat Tea Co Ltd Profit & Loss Statement (Rs in Hundreds)

Dhelakhat Tea Co Ltd Consolidated Cash Flow Statement (Rs in Hundreds)

Here is a summary of the Cash Flow Statement for the years 2024 and 2023:

Cash Flow from Operating Activities

Net Profit/(Loss) Before Taxation:

The company reported a significant net loss of Rs. (1,26,581) (in hundreds) in 2024, compared to a net profit of Rs. 2,10,326 in 2023. This substantial swing indicates a major decline in profitability, possibly due to increased costs, reduced revenue, or other unfavorable conditions.

Adjustments:

Depreciation: Increased slightly from Rs. 39,279 to Rs. 39,740, indicating steady investment in fixed assets. Depreciation is a non-cash expense, so it’s added back to the cash flow from operations.

Net Gain on Financial Assets (FVTPL): A gain of Rs. (2,699) in 2024, down from Rs. (7,393) in 2023, shows reduced income from fair-value assets, possibly due to lower returns on these investments.

Finance Costs: Increased to Rs. 5,953 from Rs. 2,802, reflecting higher borrowing costs, which may be due to increased debt or rising interest rates.

Working Capital Adjustments:

There was a significant cash outflow due to non-current/current financial and other assets (Rs. 59,052), suggesting increased investment in these assets.

Inventory adjustments led to an outflow of Rs. 47,191, in contrast to an inflow of Rs. 7,713 in 2023, indicating higher stock levels, which could tie up cash if sales don’t meet expectations.

Liabilities and Provisions provided a cash inflow of Rs. 53,937, indicating an increase in payables or accrued expenses, which deferred cash outflows.

Net Cash Used in Operating Activities:

Overall, operating activities resulted in a significant cash outflow of Rs. (1,35,893), compared to an inflow of Rs. 3,11,604 in 2023. This shift from positive to negative cash flow may indicate deteriorating core business operations or increased working capital requirements.

Cash Flow from Investing Activities

Capital Expenditures:

There was a large cash outflow of Rs. (2,32,014) in 2024 for the purchase of property, plant, and equipment (PPE), as compared to Rs. (58,375) in 2023. This suggests a major investment in long-term assets, which could be part of an expansion plan or a response to increased operational demands.

Net Cash Generated from Investing Activities:

The investing activities resulted in a substantial net outflow of Rs. (2,32,014), further decreasing available cash. High capital expenditure indicates the company 's focus on future growth, but it has an immediate negative impact on cash reserves.

Cash Flow from Financing Activities

Proceeds from Financial Borrowings:

The company raised Rs. 2,87,809 through borrowings, a major increase from the reduction in borrowings of Rs. (1,72,688) in 2023. This influx suggests that the company relied heavily on debt to finance its activities, likely to support the high capital expenditures in investing activities.

Interest Paid:

Interest payments were Rs. (5,953), up from Rs. (2,802) in 2023, reflecting the increased debt burden. Higher finance costs can impact profitability if not offset by income from new investments.

Net Cash from Financing Activities:

Financing activities provided a positive cash flow of Rs. 2,81,856, as opposed to a cash outflow of Rs. (1,75,491) in 2023. The reliance on financing suggests the company’s increased dependence on external funding to support its operations and investments.

Net Change in Cash and Cash Equivalents

The cumulative impact of operating, investing, and financing activities resulted in a net decrease in cash and cash equivalents of Rs. (86,051) in 2024, whereas there was a positive cash flow of Rs. 77,737 in 2023.

Opening Balance: The cash balance at the start of 2024 was Rs. 95,416.

Closing Balance: The closing cash balance dropped to Rs. 9,365, indicating a sharp decline in cash reserves, primarily due to significant outflows from operations and investments.

Financial Ratios of Dhelakhat Tea Co Ltd

Here is a summary of the financial and operational metrics for Dhelakhat Tea Co Ltd for the year 2024 and 2023:

Current Ratio (2024: 0.15, 2023: 0.36):

The current ratio measures the company 's ability to cover short-term obligations with its current assets. A decline from 0.36 to 0.15 indicates a worsening liquidity position, meaning the company might struggle to meet its short-term liabilities as its current assets are insufficient. This is far below the ideal benchmark of 1.0 or higher, which suggests potential liquidity issues and increased risk of cash flow shortages.

Debt to Equity Ratio (2024: 1.27, 2023: 0.43):

This ratio has increased significantly, suggesting the company has taken on more debt relative to its equity. A ratio of 1.27 implies that the company’s debt exceeds its equity, which can be a risky position, especially if revenues do not meet expectations. The rising leverage increases financial risk, as higher interest obligations might strain cash flows.

Debt Service Coverage Ratio (2024: -10.22, 2023: 76.05):

This ratio measures the ability to meet debt obligations with operating income. The negative ratio in 2024 indicates insufficient income to cover debt servicing, which is a concerning trend. The drastic decline from 76.05 in 2023 shows that the company’s ability to service its debt has sharply deteriorated, likely due to decreased profitability and cash flow issues.

Return on Equity (ROE) (2024: -15.89%, 2023: 5.81%):

ROE represents the return generated on shareholders ' equity. The negative ROE in 2024 indicates losses rather than gains, meaning that shareholders are not seeing returns on their investment. This shift from positive to negative suggests the company’s equity value might be eroding, which could discourage investor confidence.

Net Profit Ratio (2024: -3.40%, 2023: 7.30%):

The net profit ratio reflects the percentage of revenue that remains as profit after all expenses. The decline to a negative ratio in 2024 shows the company is operating at a loss, which could be due to higher costs, reduced sales, or increased financial obligations. This change from positive to negative net profit signals poor profitability and may indicate an unsustainable business model if not corrected.

Return on Capital Employed (ROCE) (2024: -6.73%, 2023: 29.69%):

ROCE measures how efficiently the company is generating profit from its capital. The drop from a robust 29.69% to a negative 6.73% suggests a major decline in operational efficiency and profitability. The negative ROCE in 2024 means the capital employed is not generating positive returns, which may result from ineffective use of resources or high financial costs.

Inventory Turnover Ratio (2024: -4.33, 2023: 0.56):

A negative inventory turnover ratio in 2024 is unusual and might indicate either a data error or significant issues in inventory management, such as excess stock or write-downs. The low turnover also implies that inventory is not moving as expected, possibly due to reduced demand, production issues, or obsolescence, which can increase holding costs and strain cash flows.

Trade Receivables Turnover Ratio (2024: 17.68, 2023: 20.73):

This ratio has slightly decreased, indicating a small decline in the efficiency of collecting receivables. Although still relatively high, the decrease suggests the company is taking a bit longer to collect payments from customers, which could impact cash flow if this trend continues.

Trade Payables Turnover Ratio (2024: 0.52, 2023: 0.48):

A slight increase in this ratio shows that the company is paying its suppliers slightly faster than before. While faster payments can strengthen supplier relationships, they also reduce cash reserves, which might not be ideal given the company’s overall cash flow challenges.

Net Capital Turnover Ratio (2024: -1.39, 2023: -2.72):

This ratio measures the revenue generated per unit of working capital. Although the ratio is still negative, the improvement from -2.72 to -1.39 suggests a slight enhancement in managing working capital. However, a negative ratio overall points to challenges in using capital effectively to generate revenue.