Subsidiary
AccountingA company controlled by another, consolidated into its accounts.
In plain terms
The statement of subsidiaries names exactly which one is losing money.
1678 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Subsidiary opacity
Fundamental analysisLosses, debt or transactions parked in subsidiaries — often overseas ones — where they are harder to examine.
In plain terms
It shows as a large and growing gap between standalone and consolidated profit. A parent that looks healthy alone and weak consolidated is telling you where to look.
Material subsidiary
Regulation & taxA subsidiary whose income or net worth exceeds a defined share of the listed group’s consolidated figures, attracting extra governance obligations under the listing regulations.
In plain terms
A subsidiary large enough that it cannot be governed entirely out of sight. The threshold has been tightened over the years, so read the current definition rather than a remembered one.
Corporate guarantee
AccountingA parent company guaranteeing the borrowings of a subsidiary or group entity.
In plain terms
Not your debt until it is. Add guarantees to debt when stress-testing leverage.
Deconsolidation
AccountingAlso called: Loss of control
The removal of a subsidiary from consolidated accounts, line by line, when control over it is lost — with any retained interest recognised at fair value and the resulting difference taken to profit or loss.
In plain terms
Revenue leaves and so do the borrowings, which reads as deleveraging with no repayment. It also happens when a subsidiary enters insolvency and a resolution professional displaces its board.
DICGC
Regulation & taxAlso called: Deposit Insurance and Credit Guarantee Corporation
The Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank that insures deposits at covered banks.
In plain terms
Cover is automatic, the bank pays the premium and you cannot opt out. It pays up to the prescribed limit per depositor per bank, net of anything you owe that bank.
Foreign currency translation reserve
AccountingAlso called: FCTR
The reserve accumulating exchange differences arising on translation of an overseas subsidiary’s accounts into the reporting currency.
In plain terms
It can build quietly across six years of annual reports and is only properly visible in the statement of changes in equity. It reaches the profit line exactly once — when that operation is disposed of, which may be never.
Minority buyout
Fundamental analysisThe purchase by a parent of the shares in a subsidiary held by others, where control was already held — accounted for as a transaction between owners, with the excess over the carrying amount of the non-controlling interest charged directly to equity.
In plain terms
No goodwill and nothing through profit. Earnings per share rises whenever the profit picked up beats the after-tax funding cost, which holds across a wide span of prices, and book value per share falls at any price above the carrying amount bought out — so neither movement is evidence that the price was sensible.
Minority interest
AccountingThe share of a subsidiary’s profit, and of its net assets, belonging to other shareholders.
In plain terms
The older name for what Ind AS calls a non-controlling interest. Compute per-share figures after deducting it — from profit and from equity both — or you overstate earnings and book value together.
Non-controlling interest
AccountingAlso called: NCI
The share of a subsidiary’s profit and of its net assets belonging to shareholders other than the parent — presented as a separate line in consolidated profit and separately inside consolidated equity.
In plain terms
The Ind AS name for what older accounts called minority interest, and it has two halves. Ignore the profit half and earnings per share is overstated; ignore the equity half and book value per share is.
Royalty to parent
Fundamental analysisA fee, usually a percentage of sales, that an Indian subsidiary pays its foreign parent for brands or technology.
In plain terms
A related-party payment that moves profit from Indian minority shareholders to the parent. Watch for increases in the rate.
Translation effect
AccountingThe impact of exchange rates when converting a foreign subsidiary’s accounts.
In plain terms
It changes reported consolidated numbers without anything operational happening.
Upstreaming
AccountingMoving cash from a subsidiary up to its parent — by dividend, by repayment of an intra-group loan, or by a charge for interest, royalty or services.
In plain terms
Consolidated cash flow says what the group earned. Upstreaming is what it takes to get any of it to the entity whose shares are listed, and each route carries a different cost and a different set of permissions.
Cross-default clause
Fundamental analysisAlso called: Cross-default
A term defining a default under any other borrowing as a default under this one.
In plain terms
The transmission mechanism that turns one subsidiary's missed payment into a group-wide event, and the reason distress moves so much faster than the underlying deterioration did.
Equity attributable to owners of the parent
AccountingThe subtotal of consolidated equity belonging to the parent’s shareholders, before non-controlling interests are added to arrive at total equity.
In plain terms
The right denominator for book value per share, and for a return on equity whose numerator is profit attributable to owners. Mixing the two levels gives the flattering answer wherever the non-controlling share of profit is positive, and the pessimistic one where the partly owned subsidiary is losing money.
Free reserves
AccountingThe reserves of a company available for distribution as dividend under the Companies Act, as distinct from reserves earmarked or created for a specific statutory purpose.
In plain terms
The dividend constraint sits at the level of the company writing the cheque, never at the level of the group. A subsidiary with carried-forward losses still to absorb can be holding cash it is not permitted to distribute.
Profit attributable to owners of the parent
AccountingAlso called: Profit attributable to owners
The part of consolidated profit for the period belonging to the parent company’s shareholders, after the share attributable to non-controlling interests has been separated out.
In plain terms
The numerator of earnings per share, by definition. Consolidated profit before the split contains money belonging to the shareholders of a subsidiary, and dividing that by the parent’s share count is how a 33-times stock gets quoted at 21.
Registrar of Companies
Regulation & taxAlso called: RoC, ROC, MCA, Ministry of Corporate Affairs, AOC-4, MGT-7
The office under the Ministry of Corporate Affairs with which every Indian company, listed or not, files its incorporation details, annual accounts, annual return and charges.
In plain terms
Where an unlisted subsidiary’s own accounts live. The consolidated statement gives you one line; the registrar gives you that entity’s full balance sheet.
Standalone
AccountingAccounts covering the parent legal entity only.
In plain terms
Subsidiary profit appears only as dividends and subsidiary debt not at all. Rarely the right set.