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Companies Reporting Exceptional Items Frequently

High frequency of exceptional items in the income statements of some companies obscures their earnings visibility

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Sometimes exceptional items appear in profit and loss statements of companies. As the name suggests, they are extraordinary transactions or events, other than the operations of a business, which do not occur frequently; for example, losses or a gains from the sale of assets, losses due to fire or losses due to theft. Generally, while analysing a company, exceptional items are skipped because they are expected not to occur again in the future. But we came across some companies which report exceptional items quite frequently. Such companies' net profits or losses are difficult to predict and are very irregular.

The table shows the list of companies which have reported exceptional gains or losses in almost all the past five years. In these companies, exceptional gains or losses make up a significant portion of the net profit or loss. Exceptional items are no more exceptional to the companies enumerated below and hence understanding their future prospects becomes a very difficult task. Exceptional items occur usually when a company has been restructuring itself for over a long period of time, as seen in the case of Suzlon Energy, which has been selling its assets to repay its staggering debt. Secondly, exceptional items also occur frequently when a company has a high revenue exposure to foreign countries as a result of fluctuating currencies, or when it's a commodity-based company like Tata Steel, Southern Petrochemical and MMTC.

Companies with frequent exceptional gains/losses

Company NameExceptional gain/loss TTMFY-14FY-13FY-12FY-11
Tata Steel837-28-739033623046
Shree Renuka Sugars-138-632-29938132
Godrej Industries170691659468
Hindustan Motors91105738651
Indo Rama Synthetics24-100-39-658
Strides Arcolab362-27700491
MMTC-61-209-257-100-5
Jubilant Life Sciences22-214-192-349-41
Suzlon Energy-6126-487-643227-253
Southern Petrochemical10763116124-638
GMR Infrastructure16921820777-162-799
Walchandnagar Industries242442-5
All amount in ₹crore