The embattled Indian firm posted pre-tax profits of $89.2 million(£56.2 million), down 76 per cent from $365.5 million (£230.5 million) in 2010.
However, Essar Energy’s 87 per cent owned subsidiary, Essar Oil, was recently forced to pay back $1.235 billion (£780 million) in deferred sales tax by the Indian Supreme Court.
When the sales tax repayment is included, the company actually suffered a pre-tax loss of $881.1 million (£556 million), plunging 341 per cent on 2010.
Naresh Nayyar, chief executive officer of Essar Energy, commented, ‘We were clearly disappointed that the Supreme Court of India set aside an earlier decision of the High Court of Gujarat which enabled us to benefit from a sales tax deferment scheme.
‘We are seeking a review of this decision. We are also in discussions with the government of Gujarat with regard to a suitable repayment schedule.
‘Simultaneously we are taking steps to ensure that the group has sufficient access to sources of funding and liquidity.’
Shares in Essar, which have lost two thirds of their value since the oil firm’s float in 2010, are currently leading the FTSE 100 down, trading down 8.41 per cent per cent at 115.4p at 9.50am.
Away from the issues over sales tax, the core of the company also suffered in 2011 and core earnings before interest, tax, depreciation and amortisation (EBITDA) was down 10 per cent at $624.8 million, well under analysts’ expectations of $685 million (£432.1 million).
Essar blamed extensive problems in India for its performance, such as a severe shortage of coal, inadequate gas availability and delays on government approval on projects.
Despite these issues, Essar maintained a bullish outlook and cited the ‘major shortage of power generation in India relative to demand’ and the Indian government’s target of $1 trillion (630 million) in infrastructure spending over the next five years as the rationale for long-term investment in the energy sector.