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Drama of Depreciation

The very use of the two methods of accounting - accrual and cash - in the case of depreciation can result in significantly different profit figures

Companies include several non-cash items like depreciation in their profit and loss accounts. Depreciation is the method of distributing the heavy capital expenditure incurred to build an intangible asset over its useful period. Some companies charge depreciation more aggressively because of the nature of their businesses and assets. We have given here a list of companies that charge huge depreciation. This may result in a fall in profit before tax and net profit if one goes by the accrual method of accounting, while the cash method of accounting shows a higher profit. The result of higher depreciation write-off is reflected in the EPS, which is based on the net profit, and the operating cash flow per share, which is based on the cash generated.

Companies with high depreciation figures (FY14)

Company nameProfit before dep and tax (₹cr)Depreciation (₹cr)Net profit (₹cr)Earning per share (₹)Cash flow per share (₹)
Bharti Airtel229391565024986.2565.62
Federal-Mogul Goetze9666213.717.25
Flexituff International5327187.3626.01
Hindustan Construction236145811.257.79
Idea Cellular7564451919685.4722.85
Indian Metals & Ferro Alloys2021493915.0692.13
Meghmani Organics13480351.395.35
NCC208235100.1911.41
Nirlon7949323.5119.47
PVR143945012.1751.49
Raymond3561969515.4531.48
Rico Auto Industries1079430.221.51
Rolta India56436428417.5836.74
Ruchi Soya Industries203164130.4103.31
Sharda Motor Industries68461525.2583.2
Simplex Infrastructures2211366112.2540.14
Sterlite Technologies174101501.276.67
Sunflag Iron & Steel8061221.25.91
Trident5342681974.3916.65
Uttam Galva Steels296215352.4860.1
Wheels India94552823.61121.68