Setco Automotive Board Approves Revised Plan to Merge Subsidiary Lava Cast

Setco Automotive Limited’s board of directors have approved a revised scheme to merge its wholly owned subsidiary, Lava Cast Private Limited (LCPL), into the company. The decision was made at a board meeting held on 23 October 2026.

The revised scheme supersedes the one approved on 23 March 2026, and was amended after feedback from management and advice from professional advisors and consultants.

Since LCPL is wholly owned by Setco, no shares will be issued, no cash consideration will be paid and the company’s shareholding pattern will not change.

LCPL’s entire equity share capital, held by the company and its nominees, will be cancelled once the scheme becomes effective.

The scheme is subject to approvals from the National Company Law Tribunal, the stock exchanges, the Securities and Exchange Board of India and other applicable statutory and regulatory authorities.

Entities Involved

LCPL manufactures basic precious and non-ferrous metals, including casting components for commercial and passenger vehicles. Setco manufactures hydraulics and other automotive components, including flywheels and related products for commercial vehicles, farm tractors and construction equipment.

According to audited figures as of 31 March 2026, LCPL reported standalone turnover of Rs 8,778.29 lakh and a net worth of Rs (13,670.76) lakh. Setco reported standalone turnover of Rs 115.00 lakh and net worth of Rs 15,894.68 lakh. Its consolidated turnover was Rs 80,492.66 lakh, with a net worth of Rs (70,817.01) lakh.

Related Party Status

The company said the merger does not fall under related party transactions under Section 188 of the Companies Act, 2013, citing General Circular No. 30/2014 of the Ministry of Corporate Affairs. It added that Regulation 23(5)(b) of the SEBI LODR Regulations exempts transactions between a holding company and its wholly owned subsidiary from Regulation 23(2), (3) and (4).

Rationale

The company listed the following objectives for the revised scheme:

• Combine business interests into a single entity and simplify the corporate structure
• Reduce the number of group entities and the managerial overlaps in running them
• Reduce regulatory and legal compliances and filings, including accounting, reporting, statutory and internal audit requirements and tax filings, and thereby administrative costs
• Consolidate the subsidiary’s operations into the holding company to augment growth and synergy

Overseas Restructuring

The board also gave in-principle approval to further evaluate rationalising the overseas corporate structure and operations through its overseas subsidiaries, with a view to consolidating the overseas businesses. The rationalisation may involve share buy-backs among the overseas subsidiaries, migration or transfer of business and operations, and liquidation or closure of certain overseas subsidiaries.

Terms, structure, valuation and consideration for each step will be evaluated on an overall and step-wise basis before implementation and final board approval. The rationalisation will proceed only after all required approvals, consents, permissions and sanctions from statutory, regulatory and other authorities and stock exchanges are obtained.