Setco Automotive Ltd Directors Report

Dear Members,

Your Directors are pleased to present the 43rd (Forty-Third) Annual Report on the business and operations of Setco Automotive Limited ("the Company") together with the audited standalone and consolidated financial statements for the financial year ended March 31, 2026.

This Report has been prepared in accordance with the applicable provisions of the Companies Act, 2013 ("the Act"), the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and other applicable laws, rules and regulations.

FINANCIAL PERFORMANCE

The financial performance of the Company, on a standalone and consolidated basis, for the financial year ended March 31, 2026 is summarised below:

(Rs. in Lakhs Except for EPS)

Particulars	Standalone 2025-26	Standalone 2024-25	Consolidated 2025-26	Consolidated 2024-25
Revenue from Operations & Other Income	348.21	272.99	81,674.00	73,033.47
Profit/(Loss) before Finance Cost & Depreciation	220.56	(319.16)	10,947.53	12,088.69
Finance Cost	3.08	31.29	5,579.39	21,741.08
Depreciation	-	-	2,915.05	3,208.74
Profit/(Loss) before Tax	8,507.45	(350.45)	1,315.87	(12,917.83)
Tax Expense	-	220.34	1,744.05	(284.97)
Profit/(Loss) after Tax	8,507.45	(130.11)	(428.18)	(12,632.86)
Other Comprehensive Income	-	-	47.33	(88.91)
Total Comprehensive Income	8,507.45	(130.11)	(380.85)	(12,721.77)
Non-controlling Interest	-	-	(415.80)	(2,135.68)
Profit/(Loss) attributable to Equity Holders	8,507.45	(130.11)	24.50	(10,586.09)
Earnings Per Share (Rs )	6.36	(0.10)	(0.01)	(7.86)

BUSINESS OPERATIONS

During the year under review, your Company recorded the following consolidated financial highlights:

- Revenue from Operations stood at Rs 804.92 crore in FY26, as against Rs 718.6 crore in FY25.

- EBITDA for FY26 reached Rs 97.66 crore as against Rs 109.2 crore in FY25. EBITDA Margin for the full year stood at 12.1% (compared to 15.2% in FY25).

A detailed discussion on the business performance and future outlook is included in Management Discussion & Analysis which forms part of the Directors Report.

SHARE CAPITAL

As on March 31, 2026, the issued and paid-up equity share capital of the Company was Rs 26,75,34,550 divided into 13,37,67,275 equity shares of Rs 2 each.

During the financial year under review, the Company did not issue equity shares with differential voting rights, sweat equity shares or bonus shares.

The equity shares of the Company continue to be listed on BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE"). The stipulated listing fees have been paid to both stock exchanges.

REGISTRAR AND SHARE TRANSFER AGENT

MUFG Intime India Private Limited (formerly known as Link Intime India Pvt. Ltd) continues to act as the Registrar and Share Transfer Agent of the Company.

DIVIDEND

The Board of Directors did not declare any dividend during the financial year ended March 31, 2026.

Subsequent to the close of the financial year, the Board of Directors, at its meeting held on May 26, 2026, declared an Interim Dividend of Rs 13/- per equity share (i.e. 650%) on 13,37,67,275 equity shares of face value of Rs 2/- each. The record date for determining the entitlement of shareholders to the said Interim Dividend was June 2, 2026.

Since the Interim Dividend was declared after the end of the financial year, the same has not been recognised as a liability as at March 31, 2026 and has been appropriately disclosed as an event occurring after the reporting period in accordance with the applicable Indian Accounting Standards.

TRANSFER TO RESERVES

The Board of Directors has decided not to transfer any amount to the reserves for FY 2025-26.

FIXED DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Accordingly, disclosure relating to deposits which are not in compliance with Chapter V of the Act is not applicable.

PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS OR SECURITY

Details of loans, guarantees, investments and securities, as applicable, under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Power) Rules, 2014, are provided in the notes forming part of the financial statements, forming part of this Annual Report. The Company has not provided any security in terms of the Section 186 of the Act.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report as stipulated under the SEBI Listing Regulations forms part of the Annual Report and provides, inter alia, an overview of the industry, business performance, opportunities and threats, risks, internal control systems and the financial and operational performance of the Company.

CHANGE IN THE NATURE OF BUSINESS

During FY 2025-26, the Board approved certain significant restructuring proposals towards the end of the financial year.

On March 28, 2026, the Board approved, subject to shareholders and regulatory approvals, proposals including change of the Companys name from "Setco Automotive Limited" to "Shilayan Industries Limited" and corresponding amendments to its constitutional documents, in connection with the proposed restructuring/divestment of its automotive business interests.

The corresponding resolutions were subsequently placed before shareholders at the Extraordinary General Meeting held on April 25, 2026.

MATERIAL CHANGES AND COMMITMENTS AFTER THE END OF THE FINANCIAL YEAR

Subsequent to March 31, 2026, significant developments took place in relation to the Companys investment in Setco Auto Systems Private Limited ("SASPL").

The Company had entered into a transaction with RSB Transmissions (I) Limited for divestment of its majority interest in SASPL. The transaction was completed on May 27, 2026, consequent to which SASPL ceased to be a subsidiary of the Company.

The final consideration was determined in accordance with agreed closing adjustments under the transaction documents. These developments constitute material events occurring after the close of FY 2025-26 and should be read together with Note disclosures to the financial statements.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During FY 2025-26, the Company undertook major corporate restructurings across its subsidiaries:

- Acquisition of LCPL Stake: At its meeting held on March 20, 2026, the Board approved the acquisition from SASPL of 1,34,60,000 equity shares (representing 10.32% of the paid-up share capital) of Lava Cast Private Limited ("LCPL"). Consequent to the completion of this acquisition, LCPL became a wholly-owned subsidiary of the Company.

- Scheme of Amalgamation: On March 23, 2026, the Board approved a Scheme of Amalgamation of Lava Cast Private Limited with Setco Automotive Limited under Sections 230 to 232 of the Act, with March 23, 2026 as the appointed date. As LCPL is a wholly-owned subsidiary, no shares will be issued pursuant to the Scheme, and there will be no change in the shareholding pattern. The Scheme remains subject to approval by the Honble National Company Law Tribunal (NCLT) and other regulatory authorities.

- Cessation of SASPL: Pursuant to the transaction with RSB Transmissions (I) Limited, SASPL ceased to be a subsidiary effective May 27, 2026.

The statement containing the salient features of the financial statements of subsidiaries in Form AOC-1 forms part of the Annual Report as Annexure C.

BOARD OF DIRECTORS, COMMITTEES AND MANAGEMENT COMPOSITION

The composition of the Board of Directors and its Committees, viz., Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee, are constituted in accordance with Companies Act, 2013 ("the Act") and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). The Corporate Governance Report contains the composition of the Board of Directors of the Company and its Committees.

All the Directors have affirmed compliance with the Code of Conduct of the Company. The Independent Directors have affirmed that they satisfy the criteria laid down under section 149(6) of the Act and Regulation 25 and other applicable regulations of the Listing Regulations, as amended from time to time. Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the proficiency test, if applicable to them. The Board of Directors at its first meeting of FY 2025-26 has taken on record the declarations and confirmations submitted by the Independent Directors. During the year, the Board had not appointed any person as an Alternate Director for an Independent Director on the Board. The Company has obtained a certificate from a Company Secretary in Practice that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as Directors of Companies by the SEBI / Ministry of Corporate Affairs or any such statutory authority.

As at March 31, 2026, the Board comprised Executive Directors and Non-Executive Independent Directors in accordance with the applicable regulatory requirements.

The detailed composition of the Board and its Committees, attendance of Directors and other disclosures are provided in the Corporate Governance Report forming part of the Annual Report.

DIRECTOR RETIRING BY ROTATION

In accordance with Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Urja Shah, Whole-time Director (DIN: 02675341) is due to retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

KEY MANAGERIAL PERSONNEL

During FY 2025-26, the Key Managerial Personnel of the Company included:

- Mr. Harish Sheth, Chairman & Managing Director;

- Mr. Udit Sheth, Vice Chairman;

- Mrs. Urja Harshal Shah, Whole-time Director;

- Mr. Anurag Jain, Chief Financial Officer*

- Ms. Aditi Pai, Company Secretary and Compliance Officer#

The Company designated the Chairman and Managing Director as Chief Executive Officer of the Company.

*Mr. Anurag Jain was appointed as Chief Financial Officer and Key Managerial Personnel with effect from May 27, 2025, following the resignation of Mr. Kuldeep Singh as CFO with effect from April 18, 2025. This had already been recorded in the FY25 Directors Report because the appointment occurred before that report was approved.

Subsequent to the close of FY 2025-26, Mr. Hiren Vala resigned as Company Secretary, Compliance Officer and Nodal Officer with effect from May 27, 2026.

#Ms. Aditi Pai was appointed as Company Secretary and Compliance Officer with effect from July 13, 2026. She is an Associate Member of the Institute of Company Secretaries of India.

BOARD AND COMMITTEE MEETINGS

The schedule of meetings of the Board of Directors and Committees of the Board is circulated to the Directors in advance. During the year, eight (8) Board Meetings were held, the details of which are given in the Corporate Governance Report. The details of Committee meetings are provided in the Corporate Governance Report. For eligible matters, the Board/ its committee may also accord approvals through resolutions passed by circulation, between two meetings.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors of the Company have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of SEBI Listing Regulations and they continue to comply with the Code of Conduct laid down under Schedule IV to the Act. In terms of Regulation 25(8) of SEBI Listing Regulations, the Independent Directors have confirmed that they are not aware of any circumstance or situation that exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. The Directors have further confirmed that they are not debarred from holding the office of the director under any SEBI Order or any other such authority.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied with the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Act and applicable rules thereunder) of all Independent Directors on the Board.

Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors and complied with the requirements of passing proficiency test, as applicable.

PERFORMANCE EVALUATION OF THE BOARD

Pursuant to the Companies Act, 2013 and the SEBI Listing Regulations, the annual performance evaluation of the Board, its Committees, the Chairman and individual Directors was carried out for FY 2025-26.

In line with the statutory requirements enshrined under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board carried out a performance evaluation. A formal evaluation of performance of the Board, its Committees, the Chairman and that of the individual Directors was carried out for the financial year 2025-26.

The evaluation of Individual Directors was done taking into consideration the role played by each Director as a member at the respective meetings, in pursuit of the purpose and goals, participation at the meetings, independent views and judgement, initiative, ownership of value building.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of Committees, effectiveness of Committee meetings, information shared and participation of members. In respect of evaluation for performance of the Board, the parameters inter alia comprised of key areas such as Board composition, competency of Directors, diversity, frequency of Board and Committee meetings, information sharing and disclosures made to the Board and its Committees. The responses received on evaluation of the Board and its Committees and that of the individual Directors were shared with the Chairman.

The overall performance evaluation process for functioning of Board and its Committees was based on discussions amongst the Board Members, Committee Members and responses shared by each Member. The Board found that there was considerable value and richness in the discussions and deliberations. Based on the outcome of the evaluation, the Board and Committees have agreed for possible continuous improvisation to ensure better effectiveness and functioning of the Board and Committees.

Similarly, the Board at its meeting assessed the performance of the Independent Directors. The Directors were quite satisfied with the results of the performance evaluation of the Board & its Committees, Chairman and individual directors.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

In compliance with the requirement of the Listing Regulations, The Company continues to conduct familiarisation programmes for its Independent Directors to familiarise them with the Company, its industry, business model, regulatory environment, roles, rights and responsibilities and related matters. The details of familiarization program are explained in the Corporate Governance Report. The said details are also available on the website of the Company at the link https://setcoauto.com/policies-and-code-of-conduct-sasl/.

NOMINATION AND REMUNERATION POLICY

The Company has in place a Nomination and Remuneration Policy (the "Policy") pursuant to Section 178 of the Companies Act, 2013 and applicable provisions of the SEBI Listing Regulations.

The Policy governs, inter alia, appointment, remuneration and evaluation of Directors, Key Managerial Personnel and Senior Management.

The purpose of this Policy is to establish and govern the procedure as applicable inter alia in respect to the following:

a) To evaluate the performance of the members of the Board.

b) To ensure remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.

c) To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

The Policy is available on the website of the Company - https://setcoauto.com/policies-and-code-of-conduct-sasl/

AUDITORS AND AUDITORS REPORT

STATUTORY AUDITORS

The Board of Directors, at its meeting held on August 12, 2025, based on the recommendation of the Audit Committee, has recommended the re-appointment of M/s. Sharp & Tannan Associates, Chartered Accountants, as Statutory Auditors of the Company for a further term of five (5) years, i.e., from the conclusion of the 42nd AGM until the conclusion of the 47th AGM, subject to the approval of the Members at the ensuing AGM. The resolution for their re-appointment forms part of the Notice convening the AGM.

M/s. Sharp & Tannan Associates have confirmed their eligibility for re-appointment and have declared that they are not disqualified to continue as Statutory Auditors of the Company in accordance with the provisions of the Companies Act, 2013 and the rules made thereunder.

During the year under review, there were no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.

The observations made in the Auditors Report are self-explanatory and do not call for any further comments under Section 134(3)(f) of the Companies Act, 2013.

COST AUDIT AND COST RECORDS

The appointment of Cost Auditor is not applicable to the Company under Companies (Cost Records and Audit) Rules, 2014. Further, the maintenance of cost records as prescribed under provisions of Sec 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.

SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT

Pursuant to Regulation 24A of the Listing Regulations read with provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, it is mandated that every listed entity and its material unlisted subsidiaries undertake a Secretarial Audit.

Further, listed entities are required to submit an Annual Secretarial Compliance Report, which shall be signed by the appointed Secretarial Auditor or a Peer Reviewed Company Secretary satisfying the conditions as prescribed by SEBI.

In alignment with the aforementioned regulatory framework including the amendments made by SEBI and the provisions of the Companies Act, 2013 regarding Secretarial Audit and appointment of Secretarial Auditor, the Members at 42nd Annual General Meeting held on September 25, 2025, approved appointment of M/s. Shravan A. Gupta & Associates, Practicing Company Secretaries (Membership No. 27484, CP No. 9990) a peer reviewed firm of Company Secretaries in whole time practice, as the Secretarial Auditors of the Company for a term of 5 consecutive years from the conclusion of 42nd AGM till the conclusion of the 47th AGM of the Company to be held in the year 2030.

The Board acknowledges the significance of robust compliance mechanisms and corporate governance practices within the Company. M/s. Shravan A. Gupta & Associates, Practicing Company Secretaries brings extensive experience in the field, and is expected to provide invaluable insights into the regulatory landscape, ensuring adherence to all relevant laws and guidelines as applicable pursuant to the Secretarial Audit guidelines.

The Secretarial Audit Report for the financial year ended March 31, 2026 is annexed herewith marked as Annexure A in Form MR-3 to this Report.

Pursuant to Regulation 24A of the Listing Regulations, the Company has obtained Annual Secretarial Compliance Report from M/s. Shravan A. Gupta & Associates, Practicing Company Secretaries on compliance of all applicable SEBI Regulations and circulars / guidelines issued there under and the same were submitted with the Stock Exchanges.

The observations and comments given by the Secretarial Auditor in the Report are self - explanatory and hence do not call for any further comments under section 134 of the Act.

SECRETARIAL AUDIT OF MATERIAL UNLISTED INDIAN SUBSIDIARIES

Secretarial audit of the material unlisted Indian subsidiaries, as applicable for FY 2025-26, shall be undertaken in accordance with Regulation 24A of the SEBI Listing Regulations.

REPORTING OF FRAUDS BY AUDITORS

None of the Auditors of the Company has identified and reported any fraud as specified under the second proviso of Section 143(12) of the Act.

COMPLIANCE WITH SECRETARIAL STANDARDS

The applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings respectively, have been duly complied by your Company.

CREDIT RATINGS

The Company has not issued any securities and does not have any fixed deposit program/borrowing or any scheme or proposal involving mobilization of funds in India or abroad during the financial year ended 31st March 2026, the Company was not required to obtain credit ratings in respect of the same.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that:

i. in preparation of the annual accounts for the financial year ended March 31, 2026, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii. appropriate accounting policies have been selected and applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2026 and of its profit and loss of the Company for the financial year ended March 31, 2026;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis

v. adequate internal financial controls have been laid down and such controls were operating effectively; and

vi. proper systems have been devised to ensure compliance with applicable laws and such systems were adequate and operating effectively.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

The Company undertakes various transactions with related parties in the ordinary course of its business. All transactions entered into with related parties as defined under the Companies Act, 2013 during the financial year, were in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The transactions entered into pursuant to the omnibus approval so granted and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly and annual basis.

There were no materially significant transactions with the related parties during the financial year, which were in conflict with the interest of the Company and hence, enclosing of Form AOC-2 is not required. Suitable disclosure as required by the Indian Accounting Standard (IND AS) - 24 has been made in the notes to the Financial Statements.

The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Companys website at the link https://setcoauto.com/policies-and-code-of-conduct-sasl/.

The details of related party transactions as per Indian Accounting Standards (IND AS) – 24 are set out in Note 26 to the Standalone Financial Statements of the Company.

CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility Committee pursuant to Section 135 of the Companies Act, 2013.

The composition of the CSR Committee and the Annual Report on CSR activities for FY 2025-26 is provided in Annexure B to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The disclosure pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the applicable Rules shall be made based on the Companys FY26 operations.

The details of foreign exchange earnings and outgo are provided in the notes to the standalone and consolidated financial statements.

A. Conservation of Energy: Operations are not inherently energy-intensive; however, conservation measures and employee awareness programs are routinely implemented.

B. Technology Absorption: Proprietary heritage clutch technologies are utilized under the Lipe brand. Most components are sourced indigenously except for critical imported components.

C. Foreign Exchange Earnings and Outgo: Details of earnings and outgo are disclosed in the Notes to the standalone and consolidated financial statements.

CORPORATE GOVERNANCE

We comply with the Securities and Exchange Board of India (SEBI)s guidelines on Corporate Governance. A report on Corporate Governance along with a certificate from the Secretarial Auditors of the Company regarding the compliance with provisions of corporate governance as stipulated under Schedule V of the Listing Regulations forms a part of this Annual Report.

All Board members and senior management personnel have affirmed compliance with the Code of Conduct for the year 2025-26. A declaration to this effect signed by the Chairman & Managing Director of the company is contained in this Annual Report.

The Chief Executive Officer/Chief Financial Officer (CEO/CFO) certification, as required under SEBI Listing Regulations, is contained in this Annual Report.

RISK MANAGEMENT

The Company has a well-defined process in place to ensure appropriate identification and mitigation of risks. Risk identification exercise is inter-woven with the annual planning cycle which ensures both regularity and comprehensiveness. The identification and mitigation of strategic, business, operational and process risks are carried out for all functions. Your Company is committed to managing the risks in a proactive and efficient manner.

Your Company, through its risk management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors.

ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Act, the draft annual return as on 31st March, 2026 prepared in accordance with the provisions of Section 92(3) of the Act is made available on the website of your Company and can be accessed using the link https://setcoauto.com/category/setco-automotive-limited/. The Annual Return will be submitted to the Registrar of Companies within the timelines prescribed under the Act.

INVESTOR EDUCATION AND PROTECTION FUND

As per section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and subsequent amendments thereto ("the Rules"), all shares in respect of which dividends have not been paid or claimed for seven consecutive years or more shall be transferred to Investor Education and Protection Fund (IEPF).

INTERNAL CONTROLS

The Company has in place a well-established and robust internal control systems which are commensurate with the nature of its business, size & scale and complexity of its operations. Internal control systems comprising of policies and procedures are designed to ensure sound management of the Companys operations, safe keeping of its assets, optimal utilisation of resources, reliability of its financial information and compliance. Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of the Companys operations. The Audit Committee also periodically reviews the adequacy and effectiveness of internal control systems and provides guidance for further strengthening them.

During the year under review, no material observation has been made by the Internal Auditor or Statutory Auditors of the Company in relation to the efficiency and effectiveness of such controls.

INTERNAL FINANCIAL CONTROLS

The Company has appropriate internal control system in place to ensure reliability of financial reporting, orderly and efficient conduct of business, compliance with policies, procedures, safeguarding of assets and economical and efficient use of resources. Appropriate review and control mechanisms are in place to ensure that such control systems are adequate and operate effectively.

Audit Committee and the Board review these internal control systems to ensure they remain effective and are achieving their intended purpose. The Companys internal audit team conducts periodic audits, checks and has laid down controls to prevent, detect and correct any irregularities in the operations of the Company.

INDIAN ACCOUNTING STANDARDS (IND AS) 2015

The annexed financial statements comply in all material aspects with the Indian Accounting Standards (Ind AS) notified under section 133 of the Act [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of your Company for the financial year ended 31st March 2026 have been prepared in accordance with the provisions of the Companies Act, 2013, Listing Regulations and the Accounting Standards. The audited consolidated financial statements, together with the Auditors Report, form a part of the Annual Report.

However, a statement containing salient features of financial statements of subsidiaries as per Section 129 (3) of the Act, is included in this Annual Report in form AOC-1 as Annexure - C to the Directors Report. Pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements, the consolidated financial statements, along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company and can be assessed using the link https://setcoauto.com/financial-statements-of-subsidiaries/.

HUMAN RESOURCES

The Company continues to recognise human capital as an important organisational resource and focuses on employee engagement, capability development, performance management and creation of an inclusive workplace.

The endeavor is to build and strengthen organizational capabilities thereby enabling the Organization to sustain attractive growth in a dynamic business environment.

PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WORKMEN AT WORKPLACE

In accordance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the company has framed a Policy on Prevention of Sexual Harassment at Workplace and constituted an Internal Complaints Committee for Prohibition, Prevention and Redressal of Sexual Harassment and matters connected therewith or incidental thereto covering all the related aspects.

All employees (permanent, contract, temporary, trainees) are covered under the policy. During the year under review, there were no cases reported under the said scheme during the financial year 2025-26.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a robust vigil mechanism through its Whistle Blower Policy approved and adopted by Board of Directors of the Company in compliance with the provisions of Section 177 (10) of the Act and Regulation 22 of the Listing Regulations.

The Policy also provides protection to the employees and business associates who report unethical practices and irregularities.

Your Company has adopted a Vigil Mechanism / whistle blower Policy to enable employees to raise concerns about unacceptable, improper practices and/or any unethical practices being carried out in the organisation without the knowledge of management. This Whistle Blower Policy will also be applicable to the Directors of the Company.

The Audit Committee oversees the vigil mechanism. No employee has been denied access to the Audit Committee. The Audit Committee reviews on a quarterly basis, reports made under this policy and implements corrective actions, wherever necessary. The policy has been appropriately communicated to all the employees and posted on the Companys website at the link https://setcoauto.com/policies-and-code-of-conduct/. No such fraud or wrongful conduct was reported during the year under review.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS, COURTS OR TRIBUNALS

During the financial year under review and up to the date of this Report, the following significant regulatory matters are brought to the attention of the Members:

Order passed by the Securities and Exchange Board of India

- SEBI Order: On February 5, 2026, SEBI issued an order in respect of past transactions, restraining promoter directors from accessing the securities market for two years, levying monetary penalties, and directing certain refunds/restitutions. A corrigendum was subsequently issued on April 13, 2026.

- Honble SAT Relief: The order was challenged before the Honble Securities Appellate Tribunal (SAT). By an interim order dated May 8, 2026, the Honble SAT stayed the operation of the SEBI order subject to penalty deposits and compliance conditions. The matter remains sub judice and is not expected to have a material adverse impact on current operations.

INDUSTRIAL RELATIONS

The relations with the employees have continued to remain cordial.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosure pertaining to remuneration and other details as required under the section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are not applicable to the company.

PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

There are no proceedings against the company under the Insolvency and Bankruptcy Code, 2016.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. The Company does not Issue equity shares with differential rights as to dividend, voting or otherwise.

2. The requirement to disclose the details of the difference between the amount of the valuation done at the time of one-time settlement and the valuation done while taking a loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

3. There has been no issue of Equity Shares (including Sweat Equity Shares) to employees of your Company, under any scheme.

4. The Managing Director has not received any remuneration/commission from subsidiary of the Company. The Whole-time Director has received remuneration from subsidiary of the Company.

5. None of the Auditors of the Company have reported any fraud as specified under the second proviso of Section 143 (12) of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).

6. The Company does not have any scheme or provision of money for the purchase of its own shares by employees/ Directors or by trustees for the benefit of employees/ Directors.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the contribution, commitment and cooperation of the employees of the Company.

The Board also acknowledges the continued support received from shareholders, customers, lenders, bankers, suppliers, business associates, government authorities and other stakeholders.

For and on behalf of the Board of Directors

Setco Automotive Limited

Harish Sheth

Chairman & Managing Director

DIN: 01434459

Place: Kalol

Date: September 4, 2026