100.

00
150.00
200.00
250.00
300.00
350.00

50.00
0.00
100.00
150.00
200.00
250.00
300.00
350.00

50.00
0.00
Q1 2010
Q1 2010
Q2 2010
Q2 2010
Q3 2010
Q3 2010
Q4 2010
Q4 2010
Q1 2011
Q1 2011

Total Exp.
Q2 2011
Q2 2011
Q3 2011
Q3 2011
Q4 2011
Q4 2011
Q1 2012
Q1 2012
Q2 2012 Q2 2012

Ope. Exp.
Sales

Q3 2012

Expense(s)
Q3 2012
Q4 2012 Q4 2012
Q1 2013 Q1 2013
Q2 2013 Q2 2013
Q3 2013 Q3 2013

Write-offs
Q4 2013 Q4 2013
Q1 2014 Q1 2014
Q2 2014 Q2 2014
Q3 2014 Q3 2014
50.00
100.00
150.00
200.00
250.00

0.00

-50.00
100.00
150.00
200.00

50.00

-100.00
0.00
Q1 2010 Q1 2010
Q2 2010 Q2 2010
Q3 2010 Q3 2010
Q4 2010 Q4 2010
Q1 2011 Q1 2011
Q2 2011 Q2 2011
Q3 2011 Q3 2011
Q4 2011 Q4 2011
Q1 2012 Q1 2012
Q2 2012 Q2 2012
Q3 2012
Q3 2012
Net Profit

Q4 2012
Q4 2012
Q1 2013
Q1 2013
Operating Profit

Q2 2013
Q2 2013
Q3 2013
Q3 2013
Q4 2013
Q4 2013
Q1 2014
Q1 2014
Q2 2014
Q2 2014
Q3 2014
Q3 2014
 50.00
100.00
150.00
200.00
250.00
300.00
350.00

0.00
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Sales
 0.00
50.00
100.00
150.00
200.00
250.00

Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
OP
 50.00
100.00
150.00
200.00
250.00
300.00
350.00

0.00
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Expense(s)

Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Ope. Exp.
Total Exp.

Write-offs
 100.00
150.00
200.00

0.00
50.00

-100.00
-50.00
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
NP
 100.00
150.00
200.00
250.00
300.00
350.00

50.00
0.00
100.00
150.00
200.00
250.00
300.00
350.00

50.00
0.00
Q1 2010
Q1 2010
Q2 2010
Q2 2010
Q3 2010
Q3 2010
Q4 2010
Q4 2010
Q1 2011
Q1 2011

Total Exp.
Q2 2011
Q2 2011
Q3 2011
Q3 2011
Q4 2011
Q4 2011
Q1 2012
Q1 2012
Q2 2012 Q2 2012

Ope. Exp.
Sales

Q3 2012

Expense(s)
Q3 2012
Q4 2012 Q4 2012
Q1 2013 Q1 2013
Q2 2013 Q2 2013
Q3 2013 Q3 2013

Write-offs
Q4 2013 Q4 2013
Q1 2014 Q1 2014
Q2 2014 Q2 2014
Q3 2014 Q3 2014
50.00
100.00
150.00
200.00
250.00

0.00

-50.00
100.00
150.00
200.00

50.00

-100.00
0.00
Q1 2010 Q1 2010
Q2 2010 Q2 2010
Q3 2010 Q3 2010
Q4 2010 Q4 2010
Q1 2011 Q1 2011
Q2 2011 Q2 2011
Q3 2011 Q3 2011
Q4 2011 Q4 2011
Q1 2012 Q1 2012
Q2 2012 Q2 2012
Q3 2012
Q3 2012
Net Profit

Q4 2012
Q4 2012
Q1 2013
Q1 2013
Operating Profit

Q2 2013
Q2 2013
Q3 2013
Q3 2013
Q4 2013
Q4 2013
Q1 2014
Q1 2014
Q2 2014
Q2 2014
Q3 2014
Q3 2014
 Sales Total Ope/ Exp. Write-offs NP OP
Q1 2010 100.00 37.50 22.50 15.00 62.50 77.50
Q2 2010 115.00 43.13 25.88 17.25 71.88 89.13
Q3 2010 132.25 49.59 29.76 19.84 82.66 102.49
Q4 2010 152.09 57.03 34.22 22.81 95.05 117.87
Q1 2011 173.38 65.02 39.01 26.01 108.36 134.37
Q2 2011 195.92 73.47 44.08 29.39 122.45 151.84
Q3 2011 219.43 90.43 57.51 32.91 129.00 161.91
Q4 2011 241.37 96.04 59.83 36.21 145.34 181.54
Q1 2012 263.10 103.10 63.63 39.46 160.00 199.46
Q2 2012 284.14 112.14 69.52 42.62 172.00 214.62
Q3 2012 281.30 112.30 70.11 42.20 169.00 211.20
Q4 2012 272.86 115.86 74.93 40.93 157.00 197.93
Q1 2013 245.58 318.95 82.43 236.52 -73.37 163.15
Q2 2013 252.94 93.01 90.67 2.34 159.93 162.27
Q3 2013 260.53 102.10 99.74 2.36 158.43 160.80
Q4 2013 268.35 112.10 109.71 2.39 156.25 158.64
Q1 2014 276.40 123.09 120.68 2.41 153.31 155.72
Q2 2014 284.69 135.18 132.75 2.44 149.51 151.94
Q3 2014 293.23 148.48 146.02 2.46 144.75 147.21
“ B i g B a t h ” A c co u n t i n g

“There is a write-off, reported as a special item in the

financial statements, that represents more than 1% of the
book value of assets”

Source: Elliott, J.A. and W.H. Shah (1998), ‘Write-offs as as Accounting Procedures to
Manage Perceptions’, Journal of Accounting Research, pp. 91-119 [def. on pg. 92]
 C i p l a Ltd . (Rs. In Mn.)

Year Write-offs Total assets (TA) Write-off / TA

1999 0.5 8309.2 0.01
2000 22.5 10445.9 0.22
2001 31.9 14141.1 0.23
2002 0.5 18176.9 0.00
2003 2.5 22203.4 0.01
2004 2.7 26123.9 0.01
2005 1.3 34647.7 0.00
2006 111.7 44140.5 0.25
2007 12.1 57440.7 0.02
2008 16.2 76125.5 0.02
2009 369.8 85278.3 0.43
2010 595.8 89881.9 0.66
2011 1000.2 96371.9 1.04
2012 547.5 122321.5 0.45
2013 275.4 142729.9 0.19
2014 102.3 168662.9 0.06

Rs. 2891 Mn. ( Rs. 289 Crs. In last 6 yrs.) vs. Rs. 61.9 Mn. (Rs. 6.19 Crs. in first 7 yrs)
 B a j a j A u to Ltd .

Year Write-offs (Rs. In Mns.)

2007 88.9
2008 59.3
2009 208.7
2010 204.4 Rs. 138 Crs. Write off in 4
2011 392.7 years

2012 572.7
2013 7.3
2014 14.8
 Amrutanjan Health Care Ltd.
Year Sales Total expenses Write-offs Total assets WO/TA
Dec-98 601.8 553.3 0 302.6 0.00
Dec-99 640.1 580.8 1.5 334.9 0.45
Dec-00 655.7 596.6 0.6 376.4 0.16
Dec-01 708.6 675.3 0 451 0.00
Dec-02 779.5 778.3 0 526.7 0.00
Dec-03 771.1 759.3 3.4 575.2 0.59
Dec-04 760.6 750.1 3.7 532.9 0.69
Dec-05 804 792.4 0 376.4 0.00
Dec-06 829.4 786.5 0 412.5 0.00
Dec-07 858.4 823.4 0 475.5 0.00
Dec-08 962.7 1149.8 10 1117.5 0.89
Dec-09 939.2 920.8 3 1217.5 0.25
Dec-10 1079.4 1092.1 68.5 1561.7 4.39
Dec-11 1406.6 1519.9 201.8 1257 16.05
Dec-12 1424 1351.9 15.8 1281.1 1.23
Dec-13 1460.5 1350.5 0 1257.7 0.00
Dec-14 1717.1 1588.4 3.3 1318.9 0.25
 Hindalco Industries Ltd.

Extra-ordinary expenses Total assets

Mar-05 91 151239.6 0.06

Mar-06 52.2 189218.5 0.03
Mar-07 891.1 250277.1 0.36
Mar-08 31.5 309921.6 0.01
Mar-09 9.3 362701.4 0.00
Mar-10 12.2 419170.5 0.00
Mar-11 80.7 466727.8 0.02
Mar-12 0 557974.7 0.00
Mar-13 215.7 668004.4 0.03
Mar-14 4097.7 741387.4 0.55
4500
4000
3500
3000
2500
2000
1500
1000
500
0
 Extra-ordinary
Total assets
expenses

Year D L F Ltd. D L F Ltd.

Mar-05 5.1 23628.5 0.02

Mar-06 2.3 50267 0.00
Mar-07 2.5 112050.4 0.00
Mar-08 3.6 234420.9 0.00
Mar-09 6 251488.3 0.00
Mar-10 2.6 289508.8 0.00
Mar-11 3.2 347905.6 0.00
Mar-12 18.1 360911.3 0.01
Mar-13 31.4 370376.4 0.01
Mar-14 4848.2 376786.2 1.29
 Extra-ordinary
Total assets
expenses

Year I T C Ltd. I T C Ltd.

Mar-05 10113.1 117785 8.59

Mar-06 678.7 133384.8 0.51
Mar-07 NA 152522.7 NA
Mar-08 NA 175686.4 NA
Mar-09 209.5 198077.3 0.11
Mar-10 308.8 233904.3 0.13
Mar-11 244.4 258714 0.09
Mar-12 116.2 294368.3 0.04
Mar-13 237.3 345487.2 0.07
Mar-14 129.5 397095.8 0.03
 Extra-ordinary
Total assets
expenses

Larsen & Toubro Larsen & Toubro

Year
Ltd. Ltd.

Mar-05 NA 112390.9 NA
Mar-06 559.1 134225.4 0.42
Mar-07 22 176303.5 0.01
Mar-08 NA 274326.9 NA
Mar-09 2820.8 376771.6 0.75
Mar-10 216.1 483715.5 0.04
Mar-11 NA 594625.4 NA
Mar-12 0 708371.7 0.00
Mar-13 90247.1 753894.9 11.97
Mar-14 0 811000.1 0.00
 Sun Pharmaceutical Inds. Ltd.

Extra-ordinary expenses Total assets EO / TA

8.3 32316.4 0.03
NA 36102.1 NA
NA 41522.2 NA
14.2 54743.8 0.03
4.7 62941.4 0.01
30.8 66093.3 0.05
3.9 76211.5 0.01
3035.3 92885 3.27
5.8 95287.2 0.01
28766.4 141224.9 20.37
 Tech Mahindra Ltd.

Extra-ordinary expenses Total assets EO / TA

3.2 6721.7 0.05
5.7 10237.9 0.06
5252 17628 29.79
4405 22497 19.58
9 29662 0.03
NA 58442 NA
NA 60934 NA
679 64441 1.05
0 74057 0.00
NA 155774 NA
B i g B a t h - M o d u s O p e ra n d i

Usual Suspects :
 Sale of discontinued operations

 Accelerated write-off of inventory, P&M

 Write-off of an investment gone down

 Write-off restructuring charges

Samsung: Big Bath Accounting

“The fourth-quarter loss was due to the business, not accounting. Our
marketing and management costs rose because we carried out more
marketing campaigns”.

Q4 2008 when it posted a record operating loss of 937 billion won against an
expected loss of around 400 billion won.

It was the first quarterly operating loss of Samsung since 2000, and was
caused by rising marketing and management costs of 4.4 trillion won, up 1.15
trillion won from the previous quarter.

Samsung Electronics’ average fourth quarter expenditures on marketing and

management from the previous quarter went up by 24.77 percent, from 2000
through 2007. For example, the difference was 503 billion won (22.15
percent) in 2005, 477 billion won (20.12 percent) in 2006 and 463 billion won
(17.7 percent) in 2007.
Big Bath at SBI

• 99% drop in Net Profit at Rs. 210 Mn. For Qq-2011 against Rs. 18, 670 Mn.
Q4-2010

• Provision for pension and gratuity, bad loans Rs. 60, 690 Mn (vs. 33,270
Mn. – 2010)

• New Chairman Appointed, April 2011, P. Chaudhuri

Some New Bank CEOs Take an ‘Earnings Bath’ When They Start
Brian Blackstone, Mar 3, 2014, The Wall Street Journal
http://blogs.wsj.com/economics/2014/03/03/some-new-bank-ceos-take-an-earnings-bath-
when-they-start/
G M Ta k e s ( A n o t h e r ) “ B i g B a t h ,” L o s s e s $ 1 5 . 5 B i n Q 2

J I M H E N R Y, M O N E Y W A T C H , A u g u s t 3 , 2 0 0 8
htt p://www.c bsnews.com/news/gm - takes - anot her - big- bath-loses- 1 5 5 b-in-q2/

General Motors took a "Big Bath" on Aug. 1. (2008) GM announced a whopping $15.5 billion net
loss for the second quarter, including a list of $9.1 billion in special items, for everything ranging
from a $1.6 billion write-down on the value of off-lease vehicles, to $197 million related to
settling a strike at supplier American Axle.

Just in the third quarter of 2007, GM reported an astounding $39 billion net loss, nearly all of
which was related to a $38.6 billion write-off for the value of tax credits the company had
accumulated.

GM pooh-poohed that result, arguing that it wasn't a quote-unquote "real" loss, and anyway, the
company could some day restore those tax credits, and boom, they'd be back on the books.
B i g B a t h a t C i s co

In 2001, Cisco wrote off more than $2.25 billion in inventory even though some of the inventory
was not worthless and would be sold in the future, thus resulting in pure profits from these
future sales.

 Eighty percent of the charge came from raw materials and 20 percent was from work in
process.
 Work in process, which primarily consisted of subassembly boards, checked in at $450
million.
 Of the raw materials, $300 million of the charge was related to memory products, specifically
DRAM, SRAM and flash-memory chips.
 Optical equipment, including lasers and modulators, represented $450 million.
 Electro-mechanical equipment accounted for $150 million.
 Non-memory components, including digital signal processors and other microprocessors,
checked in at $900 million.
T h a n k Yo u !