SEBI passes order against Setco Automotive and its directors
SEBI has issued an order against Setco Automotive Limited and its directors concerning alleged financial irregularities. Allegations include diversion of ₹124.45 crore via marketing commissions and misappropriation of ₹101.01 crore through investments in promoter entities. The company faces charges of non-disclosure of NCD costs and delayed CFO appointment.
The SEBI order involves significant allegations of financial misconduct, including fund diversion and misrepresentation, which can have substantial legal, financial, and reputational repercussions for the company and its management.
The announcement details an order passed by SEBI against Setco Automotive Limited and its associated entities, citing serious allegations of fund diversion, financial misrepresentation, and non-compliance with regulations. This indicates a negative development for the company.
Setco Automotive Limited has received an order from the Securities and Exchange Board of India (SEBI). The order, received on February 5, 2026, details actions taken by SEBI concerning alleged violations of SEBI Act and regulations. The company stated that the penalty has no impact on its day-to-day functioning and operations.
The SEBI order, dated February 12, 2026, investigated Setco Automotive Limited and related entities for potential violations related to financial statements and trading practices between FY 2019-20 and FY 2021-22. Key allegations include diversion of funds amounting to ₹124.45 crore to a promoter entity, SEPL, through marketing commissions and misappropriation/misutilisation of assets through investments in promoter entities like SEPL and TTPL, totaling ₹81.96 crore and ₹19.05 crore respectively. The company also faces allegations of non-compliance with disclosure requirements regarding NCDs from India Resurgence Fund (IRF), not transacting at arm's length with subsidiaries, and a delay in appointing a Chief Financial Officer (CFO).
Specifically, the company is accused of diverting ₹107.76 crore from its subsidiary, SASPL, to SEPL under the guise of marketing commission, despite evidence suggesting no actual services were rendered by SEPL. Furthermore, Setco Automotive invested ₹81.96 crore in SEPL's NCCRPS and impaired ₹11.93 crore of this investment. SASPL also invested ₹13.07 crore in SEPL's NCCRPS and advanced ₹5.98 crore to TTPL, impairing ₹2.99 crore of this advance. The order also notes a lack of transparency in disclosing the full cost of NCDs raised from IRF, which included a fixed interest rate of 5% and a redemption premium to achieve an Investor IRR of 18%.
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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.