A write-off is an accounting action in which a company formally removes an asset — or a portion of an asset — from its balance sheet by recording it as a loss or expense in the income statement, reflecting the determination that the asset has no recoverable value. The most common write-offs in the Indian corporate context include bad debt write-offs (when trade receivables are deemed uncollectable), loan write-offs by banks and NBFCs (when non-performing loans are assessed as irrecoverable and removed from the gross NPA book after full provisioning), inventory write-offs (for obsolete or damaged stock), and goodwill or investment write-offs (when the value of an acquired business or investment is impaired). It is important to note that a bank loan write-off does not extinguish the legal obligation of the borrower — recovery efforts continue and written-off amounts recovered are credited back to income. For investors on Ventura Securities analysing company financials, sudden large write-offs can signal deteriorating asset quality, poor credit management, or aggressive accounting, making them important red flags warranting deeper scrutiny of balance sheet health and provisioning adequacy.
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