Fundamental Glossary / Management & Corporate Governance
Related Party Transactions (RPT)
Deals between the company and its promoters, subsidiaries, key managers, or their relatives and entities.
Formula
Disclosed in the financial-statement notes and, above thresholds, approved under SEBI's related-party rules. Material transactions require additional process, including shareholder approval where the rules say so.
What it means
Related-party deals are not automatically abusive. A subsidiary sale, a lease from a promoter-owned building, or a brand royalty can be legitimate.
They are the channel through which value can leave the listed company: high royalties, loans that are not repaid, or purchases above market price.
How to read it
Compare the size of related-party purchases, sales, loans, and royalties with revenue and with profit. A royalty that consumes a large share of profit is a structural leak.
What to watch
Arm's-length language in the note is management's assertion. The audit committee's approval is process. Neither replaces reading the amounts and the trend.
This note explains the term. It is not a research recommendation, a target price, or a comment on any security. Ratios and regulatory thresholds change; use the latest filing or circular for a live figure.