Other income

Income that did not come from selling the company's products. Interest on surplus cash, dividends from investments, foreign-exchange gains, profit on the sale of an asset, and government incentives all land here.

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 rather than an answer. Interest on a genuine cash pile is repeatable and belongs in the valuation, at a different multiple. A one-time gain on selling land is not repeatable at all. An export incentive is repeatable until the scheme changes.

A quick discipline 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 rather than its business, and that is a finding no summary metric would have surfaced.

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