Setco Automotive Limited has informed the Exchange about Agreements
SETCO · price
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Setco Automotive's board has approved selling its 41% stake (~4.47 lakh shares) in material subsidiary Setco Auto Systems Private Limited (SASPL) to RSB Transmissions (I) Limited for an initial ~₹185 crore, with up to ₹71 crore of additional EBITDA-linked deferred consideration. A further 24% 'Residual Shares' will be sold to the same buyer by FY27-28 for up to ₹255 crore, subject to EBITDA milestones. The company also signed a 3-year non-compete agreement for ₹70 crore and will rename itself to 'Shilayan Industries Limited' as it must stop using the 'Setco' brand. SASPL contributed 96% of SAL's revenue (₹663 crore) in FY25, making this a near-complete exit from the core clutch business. Co-investor IndiaRF is also selling its 35% stake in SASPL to the same buyer for ~₹976 crore. SAL retains wholly owned Lava Cast Private Limited, which will get a 18-month supply contract with SASPL for ₹33 crore. An EGM is scheduled for April 25, 2026 to seek shareholder approval.
This is a transformational deal for shareholders — SAL is selling off the subsidiary that drives 96% of its revenue and will be left essentially as a cash-rich shell with a smaller casting unit (LCPL). Total potential inflows of ~₹510 crore (plus deferred earn-outs) could support a special dividend or capital return, but the stock is likely to face sharp repricing as the market digests the loss of the core business. The name change and brand exit also signal a clear break from the existing identity.