SEBI Orders Against Setco Automotive and Others for Fraudulent Practices
SEBI has issued an order against Setco Automotive Limited and others for alleged fraudulent practices. Allegations include diversion of ₹124.45 crore to promoter entities via marketing commissions and misappropriation of ₹81.96 crore through investments in SEPL. Subsidiary SASPL also allegedly misused funds, advancing money to TTPL at a low interest rate. Non-compliance with disclosure norms and CFO appointment timelines are also cited.
The allegations involve significant financial irregularities, potential fund diversion, and violations of securities regulations, which can have a substantial negative impact on the company's operations, financial health, and market reputation.
The SEBI order details serious allegations of fraudulent and unfair trade practices, fund diversion, and financial misrepresentation against Setco Automotive Limited, impacting investor confidence.
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.
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Setco Automotive Limited filed this with the NSE as a statutory disclosure, categorised under other regulatory filings. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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See the model portfoliosA plain-language summary of a public exchange filing by Setco Automotive Limited. Read the original for the full detail.