Indian listed companies usually publish two sets of results for the same quarter: standalone and consolidated. News articles often quote one of them without saying which. A reader who then looks up the other sees a different figure and assumes somebody made a mistake. Nobody did.
What the two sets cover
Standalone results cover only the legal entity that is listed: its own sales, costs and profits. Consolidated results combine the parent with the companies it controls (subsidiaries), and include its share of associates and joint ventures. Transactions between group companies are removed, so the group does not count its own sales to itself.
A fictional example
Brahmaputra Holdings is the listed parent. It sells goods worth ₹400 crore itself. It owns a subsidiary, Brahmaputra Retail, which sells ₹300 crore to customers, of which ₹50 crore are goods bought from the parent. Consolidated revenue is not 400 + 300 = ₹700 crore. The ₹50 crore of internal sales is removed, giving ₹650 crore.
If the parent also holds a loss-making overseas subsidiary, consolidated profit can be well below standalone profit. If the subsidiaries are doing well, it can be above. For a holding company that earns mainly dividends from subsidiaries, standalone revenue may be tiny compared with the group.
Which should you read?
There is no universal answer, but a few guidelines hold.
- To understand the whole group a shareholder ultimately owns a stake in, consolidated is usually the better picture.
- To understand the parent entity itself, such as how much it can pay as dividends from its own profit, standalone is relevant.
- For companies with no subsidiaries, there is only one set.
- Banks with large subsidiaries often show both, and the gap can be informative.
The mistakes to avoid
- Comparing this quarter’s consolidated figure with last year’s standalone one.
- Comparing two companies when one figure is consolidated and the other standalone.
- Using consolidated profit with the parent’s number of shares without realising that profit attributable to minority shareholders is shown separately.
Always check the heading of the statement, and record which basis you used next to each number. If a figure seems wrong, the first thing to check is the basis. The wider routine for reading a statement is in this plain-language guide to quarterly results.
Why the choice affects dividends and debt
Some questions are naturally about the standalone entity. A parent can usually pay dividends only out of its own profits and reserves, so its standalone statement matters for that. Debt is similar: borrowings sit in specific companies, and the consolidated balance sheet adds them together. When you read about a group’s borrowing, check whether the figure is for the parent or the whole group, as the two can differ greatly.
Where the gap comes from
Several things cause standalone and consolidated figures to differ:
- Subsidiaries’ own business. Their revenue and profit are added.
- Sales and balances between group companies are removed.
- Dividends from subsidiaries. In standalone accounts, a parent may book dividends received as income. In consolidated accounts, these are removed because the subsidiary’s profit has already been counted.
- Associates and joint ventures. Consolidated results include the parent’s share of their profit, usually on a single line.
- Acquisition effects. Goodwill and fair-value adjustments appear only on consolidation.
Minority interest and attributable profit
If the parent owns 70% of a subsidiary, the consolidated statement includes 100% of that subsidiary’s revenue and profit, then shows the 30% belonging to other shareholders as “non-controlling interest”. The bottom line is split into profit attributable to the owners of the parent and profit attributable to non-controlling interests. When you compute earnings per share, the first figure is the relevant one.
Suppose Brahmaputra Holdings reports consolidated profit after tax of ₹120 crore, of which ₹18 crore belongs to minority shareholders. Profit attributable to the owners is ₹102 crore. Quoting ₹120 crore as the shareholders’ profit would be about 18% too high.
Quick sanity checks
- If consolidated revenue is much higher than standalone, most of the business sits in subsidiaries. Look at the segment note to see which.
- If standalone profit is higher than consolidated, check for dividends received from subsidiaries or for losses elsewhere in the group.
- If the two are almost the same, the subsidiaries are small relative to the parent.
- If a company reports only one set, it likely has no subsidiaries, associates or joint ventures.
Comparing two companies
The fairest comparison uses the same basis for both. Usually that is consolidated, because it reflects everything the group controls. If one company has a complicated group and the other a single entity, the consolidated figures capture that difference, while the standalone ones hide it.
The key is consistency. Pick a basis, write it down, and stay with it for every period and every company in your comparison. Switching halfway is the most common source of errors, and it is the easiest to avoid.
For more on how the two sets are built, when they diverge most and how to compare them correctly, see the difference between a company’s own results and its group results.
A good habit is to write “(C)” or “(S)” next to every number you note. It takes a second and prevents most errors.
