Subsidiary

A subsidiary is a company that is owned or controlled by another company — the parent company or holding company — through ownership of more than 50% of its voting shares (or effective control through other means), making the subsidiary a separate legal entity but one that is subject to the parent's strategic direction and consolidated in the parent's financial statements. Subsidiaries allow large groups to segregate business lines, limit liability, optimise taxes across jurisdictions, and ring-fence regulatory risks in specific sectors. In India, the Companies Act, 2013 defines a subsidiary clearly and mandates consolidated financial reporting for groups with subsidiaries. Wholly owned subsidiaries (100% owned) provide full control and simpler governance; partial subsidiaries allow co-investors or minority shareholders. For investors on Ventura Securities analysing large Indian conglomerates, holding company structures, or groups with multiple listed subsidiaries, understanding subsidiary relationships — including intercompany transactions, upstream guarantees, and the valuation discount or premium applicable to holding companies — is essential for accurately assessing consolidated group value and identifying intra-group risk exposures.