SK Finance Annual Reports, Balance Sheet and Financials

SK Finance Limited Standalone Balance Sheet (Rs in Lakhs)

SK Finance Limited Standalone Profit & Loss Statement (Rs in Lakhs)

SK Finance Limited Standalone Cash Flow Statement (Rs in Lakhs)

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

Cash Flow from Operating Activities

The company generated a profit before tax of ₹48,476.09 lakh in FY 2024–25, showing a strong improvement over the previous year’s ₹39,932.13 lakh. This operating profit was adjusted for non-cash and non-operating items such as depreciation, impairment on financial instruments, employee share-based payments, finance costs, and investment-related gains. Significant adjustments included high finance costs of ₹97,120.26 lakh, large interest income of ₹2,12,020.20 lakh, and impairment losses of ₹23,876.97 lakh, reflecting the financial nature of operations. After these adjustments, cash generated from operations before working capital changes stood at ₹45,967.29 lakh, slightly higher than the previous year.

Working Capital Changes and Operating Cash Flow

Despite healthy operational performance, the company experienced a substantial cash outflow due to working capital movements, mainly driven by a sharp increase in loans of ₹2,43,253.29 lakh, indicating expansion of lending activities. Additional outflows came from increases in other financial and non-financial assets. These were partly offset by increases in other financial liabilities. After accounting for income tax paid of ₹7,328.58 lakh, the company reported a net cash outflow from operating activities of ₹2,11,212.02 lakh. This reflects that although the company was profitable, it deployed significant cash into business growth, especially loan disbursements.

Cash Flow from Investing Activities

Cash flows from investing activities resulted in a net outflow of ₹56,569.93 lakh, which was lower than the previous year’s outflow. The company made heavy investments in financial instruments amounting to ₹9,25,659.57 lakh, partially offset by redemptions of ₹8,51,358.48 lakh. There was also active management of fixed deposits, with redemptions exceeding fresh investments, helping to release liquidity. Capital expenditure on property, plant, and equipment remained stable, indicating controlled spending on physical assets. Interest income from investments further supported cash inflows.

Cash Flow from Financing Activities

Financing activities were the main source of liquidity, generating a net inflow of ₹2,65,351.46 lakh. This was primarily due to fresh borrowings of ₹5,98,035.49 lakh and issuance of debt securities worth ₹1,68,247.72 lakh, which more than offset repayments. Equity issuance was minimal compared to the previous year, indicating reduced reliance on shareholder funding. The company also met its lease and borrowing repayment obligations, reflecting disciplined financial management.

Net Change in Cash and Cash Equivalents

Due to the large cash deployment in operations and investments, partially offset by financing inflows, the company recorded a net decrease in cash and cash equivalents of ₹2,430.49 lakh during the year. Cash and cash equivalents declined modestly from ₹40,999.64 lakh to ₹38,569.15 lakh, showing that liquidity remained stable despite aggressive business expansion.

Ratios of SK Finance Limited

Summary of the Analytical ratios of SK Finance Limited for the year 2025 and 2024:

Debt–Equity Ratio

The Debt–Equity ratio increased from 2.88 in FY 2023–24 to 3.33 in FY 2024–25, indicating that the company has increased its reliance on borrowed funds relative to shareholders’ equity. This means that for every ₹1 of equity, the company now has ₹3.33 of debt, compared to ₹2.88 in the previous year. The rise in this ratio suggests an aggressive growth strategy, where expansion—particularly in lending or asset creation—has been funded largely through debt. While higher leverage can enhance returns in good times, it also increases financial risk, making effective risk management and asset quality critical.

Net Profit Margin

The Net Profit Margin declined from 17.35% in FY 2023–24 to 15.91% in FY 2024–25, indicating a reduction in profitability per rupee of revenue. This decline suggests that cost pressures, such as higher finance costs, increased impairment provisions, or operating expenses, grew faster than income. Although the margin remains healthy, the downward movement reflects moderation in profitability, possibly due to expansion-related costs or a more conservative provisioning approach. Sustaining margins going forward will depend on efficient cost control and stable asset quality.

Tier I Capital Adequacy Ratio (CRAR)

The Tier I CRAR decreased from 33.86% to 29.51%, reflecting a reduction in core capital buffers relative to risk-weighted assets. This decline is consistent with balance-sheet growth, where increased lending expands risk-weighted assets faster than capital. Despite the reduction, a Tier I CRAR of 29.51% remains significantly above regulatory minimum requirements, indicating strong capital strength and the company’s continued ability to absorb unexpected losses. The ratio shows prudent capital management even amid rapid business expansion.

Liquidity Coverage Ratio (LCR)

The Liquidity Coverage Ratio improved substantially from 168.85% in FY 2023–24 to 252.26% in FY 2024–25, demonstrating a significant strengthening of the company’s short-term liquidity position. This ratio measures the ability to meet 30-day stressed cash outflows using high-quality liquid assets. An LCR well above 100% indicates that the company holds ample liquid assets to withstand liquidity shocks. The sharp improvement reflects a conservative liquidity strategy, enhanced risk preparedness, and strong compliance with regulatory expectations.