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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Kaveri Pharma Ltd has a wholly owned subsidiary, Kaveri Labs Pvt Ltd, whose financial year ends on 31 March, the same as the holding company. Kaveri Pharma's Board is preparing financial statements for FY 2025-26. Which statement is correct about consolidation under the Companies Act, 2013?

A company with subsidiaries must prepare consolidated financial statements in addition to its own standalone statements, and both are placed before the annual general meeting. Consolidation is not optional, is not limited to listed subsidiaries, and does not replace the standalone financial statements.

  1. AConsolidated financial statements are needed only if the subsidiary is a listed company
  2. BConsolidation is optional for the holding company, as only standalone statements are legally required
  3. CKaveri Pharma must prepare consolidated financial statements in addition to its standalone statements, and these are laid before the annual general meeting along with the standalone statementsCorrect
  4. DOnly consolidated statements need be prepared, and standalone statements are dispensed with

Explanation

A company having one or more subsidiaries must, in addition to its own standalone financial statements, prepare a consolidated financial statement of the company and all its subsidiaries, and lay both before the AGM. Consolidation does not depend on the subsidiary being listed, and it does not replace standalone statements. Hence option C is correct.

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