Setco Automotive Sells 41% Stake in SASPL for ~₹185 Crore, Plans Name Change
Setco Automotive will sell 41% stake in SASPL for ~₹185 Crore, with potential deferred consideration. Remaining 24% stake sale for up to ₹255 Crore expected in FY28. Company plans to change its name to Shilayan Industries Limited. EGM on April 25, 2026.
The sale of a material subsidiary, the significant financial implications (₹185 Crore initial, up to ₹255 Crore future), and the proposed name change represent a substantial strategic shift for the company, impacting its structure and future direction.
The sale of a subsidiary stake for a significant amount, coupled with potential deferred considerations and a clear path for brand change, indicates a strategic move likely aimed at unlocking value or focusing on core operations, which is generally viewed positively by the market.
Setco Automotive Limited has announced the approval and execution of several transaction documents related to the sale of its stake in its material subsidiary, Setco Auto Systems Private Limited (SASPL).
The company will sell 4,47,847 equity shares, representing approximately 41% of SASPL's paid-up share capital, to RSB Transmissions (I) Limited for an initial consideration of approximately ₹185 Crore. This amount is subject to adjustments based on SASPL's net debt and working capital as of the closing date. Additionally, Setco Automotive is eligible for deferred consideration linked to EBITDA milestones, capped at ₹71 Crore, and non-EBITDA deferred consideration based on specified receipts and recoveries by SASPL.
Furthermore, Setco Automotive has agreed to sell its remaining 2,62,153 equity shares (approximately 24%) in SASPL to RSB Transmissions (I) Limited. This sale, expected in FY 2027-28, could yield a maximum consideration of up to ₹255 Crore, contingent on achieving agreed performance parameters, including EBITDA-linked milestones.
A non-compete agreement has also been executed, wherein Setco Automotive and its promoter group will not engage in competing businesses with SASPL for three years post-closing. For this undertaking, RSB Transmissions (I) Limited will pay Setco Automotive ₹70 Crore as non-compete consideration.
As part of the transaction, Setco Automotive and its promoters will cease using the 'Setco' brand. Consequently, the company's Board has approved a change in its corporate name to 'Shilayan Industries Limited', subject to regulatory approvals. The company also plans to change its registered office and objects clause in the Memorandum of Association.
The transactions are subject to shareholder approval, and an extraordinary general meeting is scheduled for April 25th, 2026.
In a related development, India Resurgence Fund's entire stake in SASPL (35%) will be sold to the Purchaser, and their non-convertible debentures will be redeemed for an aggregate consideration of ₹97.6 Crore, part of which will be settled via preference shares.
Lava Cast Private Limited, a wholly-owned subsidiary of Setco Automotive, will continue to be owned by the company. SASPL has agreed to enter into a Supply Agreement with Lava Cast, reserving production capacity for SASPL for 18 months, for which Lava Cast will receive a one-time payment of ₹33 Crore.
The Board meeting where these approvals were granted commenced at 6:00 PM and concluded at 11:30 PM on March 28, 2026.
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Setco Automotive Limited filed this with the NSE as a statutory disclosure, categorised under other corporate actions. 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.