Subsidiary
A company controlled by another company, whose accounts are consolidated line by line into the parent's.
How it is identified
Test: the parent controls the composition of the board or holds more than one half of the total voting power
Unit
qualitative
In depth
Consolidation brings 100% of a subsidiary's revenue, assets, debt and profit into the group accounts, with the portion belonging to other shareholders shown separately as non-controlling interest. This is why standalone and consolidated accounts can differ dramatically, and why a parent with pristine standalone numbers can sit atop heavily indebted subsidiaries. A wholly owned subsidiary is one where the parent holds the entire share capital. Subsidiaries in unrelated businesses, funded by the parent and loss-making, are a recurring pattern in Indian corporate governance failures.
Worked example
A parent reports standalone net profit of ₹120 crore and consolidated net profit of ₹45 crore. The ₹75 crore gap is subsidiary losses, entirely absent from the standalone statement a press release may have quoted.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Subsidiary” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.