Applicability of Ind AS on wholly owned subsidiary company (incorporated overseas)

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A UK-based manufacturing company is setting up a wholly owned subsidiary in Dubai and seeks clarification on the applicability of Indian Accounting Standards (Ind AS) for FY 25-26. The query explores whether Ind AS applies to the subsidiary, whether it's for single or group companies, and if two sets of financial statements are needed. While foreign operations can follow local regulations, their figures will need to be adjusted for the Indian parent's consolidated Ind AS accounts.

CA AJAY KUMAR AGRAWAL

CA AJAY KUMAR AGRAWAL (Querist)

09 January 2025 Dear friends,

We are a domestic Pvt Ltd company engaged in Manufacturing. We already have a (wholly owned subsidiary) domestic Pvt Ltd company. We are going to set up a new (wholly owned subsidiary) company in Dubai for manufacturing similar product, as produced in India. During next year the same will be operational.

I seek your valuable opinions on preparation of FS for FY 25-26 / applicability of Ind AS. Whether: -
1. Ind AS will be applicable.
2. It will be applicable on single or Group companies.
3. Do we have to prepare 2 sets of FS (one as per AS & other as per Ind AS)?

Thanks in advance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

09 January 2025 If IND AS becomes applicable to any company, then IND AS shall automatically be made applicable to all the subsidiaries, holding companies, associated companies, and joint ventures of that company, irrespective of individual qualification of such companies. In case of foreign operations of an Indian Company, the preparation of stand-alone financial statements may continue with its jurisdictional requirements and need not be prepared as per the IND AS. However, these entities will still have to report their IND AS adjusted numbers for their Indian parent company to prepare consolidated IND AS accounts.

CA AJAY KUMAR AGRAWAL

CA AJAY KUMAR AGRAWAL (Querist)

10 January 2025 Thank you sir. I feel that indirectly we have to prepare Ind AS compliant FS (consolidated). Also one set of AS compliant FS for our local use. Can you please specifically throw light if the company is incorporated in Saudi Arabia?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 January 2025 No idea on Saudi Arabia.

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