Essar Ports Annual Report and Financials

Essar Ports Limited Consolidated Balance Sheet (Rs in Crores)

Essar Ports Limited Consolidated Profit & Loss Statement (Rs in Crores)

Essar Ports Limited Consolidated Cash Flow Statement (Rs in Crores)

Summary of the Cash Flow Statement for the years 2025 and 2024:

Cash flow from operating activities

The cash flow statement of Essar Ports Limited reflects a significant deterioration in operating performance in FY2025 compared to FY2024. The company reported a sharp fall in profit before tax from ₹225.77 crore to ₹16.29 crore, largely because the previous year included substantial one-time gains such as the disposal of a subsidiary, which inflated earnings. In FY2025, the absence of such exceptional income exposed the underlying weakness in core operations. Adjustments further indicate mixed trends: the share of profit from associates improved, and both depreciation and finance costs declined, possibly due to a reduced asset base or deleveraging. However, interest income provided only limited support. As a result, operating profit before working capital changes turned negative at ₹-2.81 crore, compared to a positive ₹51.21 crore in FY2024. Working capital movements added further pressure, with only a small inflow from receivables but a larger outflow due to reduction in payables, suggesting settlement of liabilities. Consequently, cash generated from operations turned negative at ₹-5.81 crore, and even after tax refunds, net operating cash flow remained almost flat at ₹-0.12 crore, indicating that the company is struggling to generate cash from its core business.

Cash flow from investing activities

In the investing activities segment, the company appears to have adopted a conservative and liquidity-focused approach during FY2025. Capital expenditure was negligible, indicating limited expansion or asset creation. The company recovered funds through repayment of loans from related parties and generated inflows from mutual fund investments, which supported overall cash generation. Unlike FY2024, where there were large outflows towards investment in CCDs of associates and significant inflows from sale of investments, FY2025 lacked such major transactions, resulting in a more normalized but lower investing cash inflow of ₹4.52 crore compared to ₹20.27 crore in the previous year. This suggests that the company is currently prioritizing capital preservation and liquidity management over aggressive growth or expansion.

Cash flow from financing activities

The financing activities show a continued trend of deleveraging and reduction in financial obligations. During FY2025, the company repaid unsecured loans amounting to ₹7.93 crore and incurred minimal finance costs, reflecting a lower debt burden. Unlike the previous year, there were no fresh borrowings, whereas FY2024 saw significant inflows from unsecured loans along with large repayments of long-term borrowings. The net cash outflow from financing activities stood at ₹8.16 crore, lower than ₹78.92 crore in FY2024, indicating reduced financing activity but continued outflow due to repayments. This highlights a cautious financial strategy focused on reducing liabilities rather than raising new capital.

Net Change in Cash Position

Overall, the net cash position of the company weakened during the year, with cash and cash equivalents declining by ₹3.76 crore to ₹0.71 crore at the end of FY2025, compared to ₹4.48 crore in FY2024. Although the decline is smaller than the previous year, the closing cash balance is critically low, indicating a thin liquidity cushion. In summary, the cash flow statement reveals that Essar Ports Limited is currently facing weak operating cash generation, relying on modest investing inflows while continuing to reduce its financial liabilities. The company appears to be in a transition phase, focusing on balance sheet strengthening and liquidity management, but the lack of strong operating cash flows remains a key concern from an investor’s perspective.

Financial ratios of Essar Ports Limited

Summary of financial ratios for the year 2025 and 2024:

Current Ratio:
The current ratio of the company increased significantly from 15.74 in 2023–24 to 37.89 in 2024–25. This indicates an exceptionally strong liquidity position, meaning the company has more than sufficient current assets to cover its short-term liabilities. However, such an unusually high ratio may also suggest inefficient utilization of current assets, with excess funds possibly lying idle instead of being productively invested.

Debt-Equity Ratio:
The debt-equity ratio declined from 0.02 in 2023–24 to negligible or nil in 2024–25, indicating that the company is almost debt-free. This reflects a very conservative capital structure with minimal financial risk. While this enhances financial stability, it may also imply that the company is not leveraging debt to amplify returns, potentially leading to suboptimal capital structuring.

Debt Service Coverage Ratio:
The DSCR improved sharply from 9.38 to 40.39, showing a substantial increase in the company’s ability to service its debt obligations. This high ratio indicates that earnings are more than sufficient to cover interest and principal repayments. However, such an elevated level again suggests either very low debt or underutilization of borrowing capacity.

Return on Equity:
The ROE declined drastically from 0.08 to 0.01, indicating a significant fall in profitability from shareholders’ perspective. This suggests that despite strong liquidity and low debt, the company is generating very low returns on its equity base, pointing toward inefficiency in utilizing shareholders’ funds.

Trade Receivables Turnover Ratio:
The trade receivables turnover ratio decreased from 1.38 to 1.00, indicating slower collection of receivables. This suggests that the company is taking longer to collect payments from customers, which could affect cash flow efficiency and may point to relaxed credit policies or operational inefficiencies.

Trade Payables Turnover Ratio:
The trade payables turnover ratio increased significantly from 0.90 to 14.95, indicating that the company is paying its suppliers much faster than before. While this may improve supplier relationships and credibility, it could also strain working capital if payments are made too quickly without optimizing cash flow cycles.

Net Capital Turnover Ratio:
The net capital turnover ratio showed a slight increase from 0.04 to 0.05, indicating marginal improvement in the utilization of working capital to generate revenue. However, the ratio remains very low, suggesting inefficient use of capital and low operational efficiency.

Net Profit Ratio:
The net profit ratio declined sharply from 5.95% to 0.96%, reflecting a significant reduction in overall profitability. This indicates rising costs, declining revenue margins, or both, and signals weakening operational performance.

Return on Capital Employed:
The ROCE decreased from 0.08 to 0.01, indicating poor utilization of total capital employed in generating profits. This suggests that the company is not efficiently deploying its long-term funds, which aligns with the low profitability indicators observed in other ratios.

Return on Investments:
The ROI also fell from 0.08 to 0.01, reflecting a sharp decline in returns generated from investments. This indicates that the company’s investment decisions are yielding minimal returns, further reinforcing concerns about inefficient capital allocation.