Setco Automotive Limited (SETCO) has received an order from the Securities and Exchange Board of India (SEBI) concerning alleged fraudulent and unfair trade practices. The order, received on February 5, 2026, details actions initiated against Setco Automotive Limited and other related entities and individuals. SEBI's investigation, spanning FY 2019-20 to FY 2021-22, focused on whether the company's financial statements were prepared in accordance with applicable accounting standards and if there were any violations of SEBI Act, PFUTP Regulations, and LODR Regulations. The core allegations revolve around the diversion of funds and misappropriation of assets. Specifically, the company is accused of diverting approximately ₹124.45 crore to a promoter entity, Setco Engineering Private Limited (SEPL), under the guise of marketing commission. This diversion allegedly led to overstated expenses and understated profits in the company's financial statements. Additionally, Setco Automotive is alleged to have misappropriated/misutilized ₹81.96 crore by investing in SEPL's Non-Convertible Cumulative Redeemable Preference Shares (NCCRPS) and subsequently impairing these investments, resulting in a diversion of ₹11.93 crore to SEPL. Further allegations include the misutilization and diversion of funds by its subsidiary, Setco Auto Systems Pvt. Ltd. (SASPL), to promoter entities like SEPL and Transstadia Technologies Private Limited (TTPL). SASPL allegedly advanced funds to TTPL at a lower interest rate than it raised them, leading to an impairment of ₹2.99 crore. The company is also accused of non-compliance with disclosure requirements, including not fully disclosing the cost of Non-Convertible Debentures (NCDs) raised from India Resurgence Fund (IRF), and not making transactions with its subsidiaries at arm's length. Furthermore, Setco Automotive allegedly violated regulations by not appointing a Chief Financial Officer (CFO) within the specified timeframe after the previous CFO's departure in November 2020.
