EXCEPTIONAL AND

EXTRAORDINARY ITEMS IN
ANNUAL REPORT

Presented By : Muskan Tyagi (190010202011)

Neha Saini (190010202012)
 Table of contents

■ Introduction of Mahindra & Mahindra Ltd.

■ Introduction of ITC Ltd.
■ Exceptional and Extraordinary items
■ Exceptional and Extraordinary items appear in Company’s Annual Report
■ Nature of Exceptional and Extraordinary items
■ Extract from Annual Report
■ Interpretation of Cash Flow Statement of one of Selected Companies
■ References
 Mahindra & Mahindra Ltd.

Mahindra & Mahindra Limited is an Indian multinational automotive manufacturing corporation headquartered
in Mumbai, Maharashtra, India. It was established in 1945 as Muhammad & Mahindra and later renamed as
Mahindra and Mahindra. It is one of the largest vehicle manufacturers by production in India.
■ Customer service: 1800 425 1624
■ CEO: Anish Shah (2 Apr 2021–)
■ Founded: 2 October 1945, Ludhiana
■ Headquarters: Mumbai
■ Subsidiaries: Mahindra & Mahindra Financial Services Limited, MORE
■ Parent organization: Mahindra Group
■ Founders: Ghulam Muhammad, Jagdish Chandra Mahindra, Kailash Chandra Mahindra
 ITC Ltd.

ITC Limited is an Indian company headquartered in Kolkata, West Bengal. ITC has a diversified
presence across industries such as cigarettes, FMCG, hotels, packaging, paperboards and specialty
papers and agribusiness. The company has a total of 13 businesses in 5 segments.
■ CEO: Sanjiv Puri (5 Feb 2017–)
■ Customer service: 033 2288 9371
■ Headquarters: Kolkata
■ Revenue: 74,979 crores INR (US$11 billion, 2020)
■ Founded: 24 August 1910, Kolkata
■ Total assets: 77,367 crores INR (US$11 billion, 2020)
■ Subsidiaries: ITC Hotels, ITC Infotech India Ltd.
 Exceptional and Extraordinary items

Meaning Of Exceptional Items

■ An exceptional item is a charge incurred by a company that must be noted separately in its financial report in
accordance with Generally Accepted Accounting Principles (GAAP). Despite the name, such items are
considered to be ordinary business charges but they must be separated out for the sake of financial reporting
clarity.
Example of an Exceptional Item 
As an example, in early 2016, a British engine manufacturer announced it would be taking an exceptional
restructuring charge of GBP 75 million to GBP 100 million to account for the costs of shoring up its balance sheet
through job cuts. As a special charge, this doesn't rise to the standard of extraordinary but it does rate as an
exceptional charge for the sake of financial statement transparency. In addition to restructuring costs, examples of
exceptional items might include the costs of discontinued operations, legal settlements, and disposal of assets. The
retooling of a manufacturing facility might also qualify as an exceptional item.
 
Meaning of Extraordinary Items
■ An extraordinary item is an accounting term that refers to an abnormal gain or loss that is not
generated from the ordinary business operations of a company, is infrequent in nature, and is
unlikely to recur in the foreseeable future. Extraordinary items are disclosed separately in the
financial statements of the company.
Examples of an Extraordinary item
Examples of extraordinary items are losses from various catastrophic events, such as earthquakes,
tsunamis, and wildfires. While designating and estimating the effect from certain extraordinary
events (e.g., fires) was easy, other events with an indirect effect on companies' operations were
much more difficult to assess.
 
Exceptional and Extraordinary items that appears in
company’s annual report

In Mahindra & Mahindra Ltd.

■ Impairment of assets:
■ Property, plant, equipment & right-of-use asset
■ Intangible asset
■ Capital work-in-progress and Intangible under development
■ Others
■ Goodwill
■ Investment in associates and joint venture  
 (IN CRORES)
Particulars 2021 2020
Gain on change in ownership interests in 489.60 274.76
subsidiaries (resulting in loss of control),
associates and joint
ventures and change of relationships)
Impairments: -    
Property, plant and equipment and right-of- (74.74) (313.24)
use assets
Intangible asset (105.20) (95.57)
Capital work-in-progress and Intangible (1,043.24) (10.92)
under development
Others (25.20) ……….
Goodwill (192.85) (663.42)
Investment accounted using equity method (206.63) (362.89)
Total (1,158.26) (1,171.28)
Nature of exceptional and extraordinary items
■ Extraordinary items are generally disclosed in financial statement but exceptional items
are disclosed separately.
■ Exceptional items are part of company’s ordinary business but extraordinary are not.

In ITC Ltd. :
■ There is no exceptional & extraordinary item in the annual report of the ITC Ltd in
current year.
■ In year 2019-2020, the exceptional items are amounted (132.11).
 Cash Flow of ITC ltd.

  31st Mar, 31st Mar,

2021 2020
A. Cash flow from operating activities 12,527.09 14,689.66
A. Cash flow/used in investing 5,682.91 (6,174.02)
activities
A. Cash used in financing activities (18,633.83) (8,181.48)
Net increase / decrease in cash and cash (423.83) 334.16
equivalent
Opening cash and cash equivalent 677.04 342.88
Cash & Cash equivalent acquired on 56.95 ----
business combination
Closing cash & cash equivalent 310.16 677.04
References:

■ https://www.mahindra.com/investors/annual-report-FY2021/248/index.html
■ https://www.itcportal.com/about-itc/shareholder-value/annual-reports/itc-annual-
report-2021/pdf/consolidated-financial-statements.pdf