Setco Automotive Ltd. Approves Stake Sale in Subsidiary, Plans Corporate Name Change
Setco Automotive Ltd. announced on March 29, 2026, that its board approved the execution of several documents related to a transaction involving its material subsidiary, Setco Auto Systems Private Limited (SASPL).Under the agreements, RSB Transmissions (I) Limited will acquire a 41% stake in SASPL for approximately INR 185 Crores. The consideration is based on SASPL’s financial position as of December 31, 2025, and is subject to adjustments. Deferred consideration may be paid based on SASPL's EBITDA performance and other milestones, potentially adding up to INR 71 Crores. The sale is expected to close within 120 days.
In addition to the initial stake sale, a Shareholders’ Agreement outlines the terms for the sale of the remaining 24% stake in SASPL to RSB Transmissions (I) Limited. This transaction, expected in the financial year 2027-28, could generate a maximum consideration of up to INR 255 Crores, subject to performance parameters and milestones.
As part of the transaction, the Company and its promoters have agreed to a non-compete undertaking for three years, with a payment of INR 70 Crores to Setco Automotive.
The company also plans to change its corporate name from “Setco Automotive Limited” to “Shilayan Industries Limited.” The board has approved a change in the registered office and modification of the company's objects clause, subject to statutory approvals.
The transactions require shareholder approval and a special resolution will be sought at an Extraordinary General Meeting scheduled for April 25, 2026.
India Resurgence Fund – Scheme 1 and India Resurgence Fund – Scheme 2 will transfer their entire stake (35% of the paid-up share capital) in SASPL and their non-convertible debentures to the purchaser. The total consideration for IndiaRF will be INR 976 Crores, with INR 934 Crores in cash and INR 42 Crores in Non-Convertible Redeemable Preference Shares.
Lava Cast Private Limited, a wholly-owned subsidiary of Setco Automotive, will continue to be owned and controlled by the company and has a manufacturing capacity of 25,000 metric tonnes per annum. Following the completion of the stake sale in SASPL, the purchaser has agreed to enter into a supply agreement with LCPL, securing production capacity for 18 months, with a one-time payment of Rs. 33 Crores to LCPL.
Arpwood Capital acted as exclusive financial advisor to Setco Automotive and IndiaRF, while Wadia Ghandy & Co. served as legal advisor to Setco Automotive.
Financial Details:
| Particulars | Amount (INR Crores) |
|---|---|
| Initial Purchase Consideration for 41% Stake in SASPL | 185 |
| Potential Deferred Consideration (EBITDA-Linked) | Up to 71 |
| Maximum Consideration for Remaining 24% Stake | Up to 255 |
| Non-Compete Consideration | 70 |
| Total Consideration to IndiaRF | 976 |
| One-time Payment to LCPL | 33 |
Source:
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.