Other income

Income that did not come from selling the company's products. Interest on surplus cash, dividends from investments, foreign-exchange gains and profit on the sale of an asset land here; government incentives can sit here or, as export incentives often do, in other operating revenue inside revenue from operations, so read that note too.

A mid-cap engineering firm reports profit before tax of ₹840 crore, of which ₹210 crore is other income. A quarter of the pre-tax profit came from somewhere other than engineering, and the operating business is smaller than the headline suggests.

Treat the line as a question. Interest on a real cash pile is repeatable and belongs in the valuation, at a different multiple. A one-time gain on selling land isn't repeatable at all. An export incentive is repeatable until the scheme changes.

One quick test separates the two kinds. Take five years of the other income note, split each year into recurring items and one-offs, and compute what share of pre-tax profit each contributed. A company whose recurring other income is a stable 3% of profit is uninteresting on this measure. One whose reported growth over five years disappears when one-off gains are removed has been growing its disposals while the business stood still, and that's a finding no summary metric would have surfaced.

In an Indian annual report, the note that breaks other income into its parts is one of the highest-value pages.