Statutory auditors Sharp & Tannan Associates issued a qualified opinion on the consolidated audited financial statements of Setco Automotive for the fiscal year ended March 31, 2026. The qualification stems from the failure to prepare consolidated financial statements for its UK subsidiary in accordance with International Financial Reporting Standards (IFRS) 10.

The disclosure was made pursuant to Regulation 33(3)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and a SEBI Master Circular dated January 30, 2026. This marks the first time this specific qualification has appeared in the company's audit reports.

Financial Overview

Despite the audit qualification, management stated there is no quantifiable financial impact on the reported figures. The consolidated results for FY26 show a turnover of ₹81,674 lakh against total expenditure of ₹79,221 lakh, resulting in a net loss of ₹4.28 lakh.

What the Numbers Show

The balance sheet reveals a significant negative net worth of ₹70,817 lakh, driven by total liabilities exceeding total assets by more than double. With total liabilities at ₹1,24,255 lakh against assets of only ₹53,438 lakh, the company’s capital structure indicates substantial leverage or accumulated losses impacting equity. The audit qualification specifically cites Setco Automotive (UK) Limited, noting that consolidated statements are necessary for a proper understanding of the group’s state of affairs under IFRS 10.

Management and Auditor Sign-offs

The declaration was signed by Aditi Pai, Company Secretary, on September 1, 2026. The statement on the impact of audit qualifications was countersigned by key leadership and audit partners:

• Harish Sheth, Chairman & Managing Director
• Vijay Kalra, Audit Committee Chairman
• Anurag Jain, Chief Financial Officer
• Pramod Bhise, Partner at Sharp & Tannan Associates

Setco Automotive Limited reported a significant narrowing of its consolidated net loss for FY26, driven by strong revenue growth and reduced finance costs. The group’s consolidated revenue from operations rose 12% year-on-year to ₹80,493 lakh, while the net loss for the period attributable to owners fell sharply to ₹12 lakh compared to a loss of ₹10,509 lakh in the previous fiscal year.

The standalone results showed a stark contrast, with the parent company posting a net profit of ₹8,507 lakh for FY26, reversing a net loss of ₹130 lakh in FY25. This turnaround was primarily fueled by an exceptional item—a reversal of provision for diminution in investment amounting to ₹8,290 lakh related to its subsidiary Lava Cast Private Limited.

Financial Performance

Consolidated revenue from operations stood at ₹80,493 lakh for FY26, up from ₹71,863 lakh in FY25. The fourth quarter saw revenue reach ₹25,063 lakh, a 19% increase over the ₹21,063 lakh recorded in Q4FY25. Other income contributed ₹1,181 lakh for the year, largely stable compared to ₹1,171 lakh in the prior year.

The consolidated profit before tax and exceptional items was ₹2,453 lakh for FY26, a significant improvement from a loss of ₹12,861 lakh in FY25. This operational improvement was aided by a substantial reduction in finance costs, which dropped to ₹5,579 lakh from ₹21,741 lakh in the previous year.

What the Numbers Show

The divergence between standalone and consolidated results highlights the structural changes within the group. While the standalone entity benefited from a non-recurring ₹8,290 lakh impairment reversal, the consolidated group absorbed ongoing operational losses from subsidiaries. Notably, the consolidated balance sheet reflects a negative equity of ₹73,492 lakh, indicating accumulated losses outweigh share capital. However, total borrowings decreased significantly to ₹107,041 lakh (combining current and non-current) from ₹111,556 lakh in FY25, suggesting debt reduction efforts are underway despite the negative net worth.

Corporate Developments

The Board of Directors approved the audited financial results on August 31, 2026. Key administrative changes include:

• Re-appointment of Harish Sheth as Chairman & Managing Director for three years effective January 1, 2027.
• Re-appointment of Udit Harish Sheth as Vice Chairman and Executive Director for three years effective May 1, 2026.
• Appointment of Aditi Pai as Company Secretary and Compliance Officer, replacing Hiren Vala who resigned.

Auditor’s Report and Regulatory Matters

Statutory auditors Sharp & Tannan Associates issued an unmodified opinion on the standalone financial statements but a qualified opinion on the consolidated results. The qualification arises because one subsidiary, WEW Holding Limited, did not prepare consolidated financial statements for its UK subsidiary as required by IFRS 10.

Additionally, the auditor highlighted material uncertainties related to going concern for several subsidiaries, including Setco Auto Systems Private Limited (SASPL) and Lava Cast Private Limited (LCPL), citing negative net worths and recurring losses. The company also disclosed an SEBI order from February 2026 restraining promoter directors from dealing in securities for two years, though this order has been stayed by the Securities Appellate Tribunal (SAT) subject to payment of monetary penalties.