Setco Automotive : Outcome of Board Meeting

Sub.: Outcome of Board Meeting in accordance with SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015

Pursuant to Regulation 33 read with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we wish to inform that the Board of Directors of the Company in its meeting held today i.e. Wednesday, July 6, 2022 has, inter alia, approved the following:

1. Audited Standalone and Consolidated Financial Results of the Company for the quarter and financial year ended 31st March, 2022;
2. To take note of the resignation of Mr. Rovinder Kumar Singla as Chief Financial Officer of the Company

Accordingly, please find enclosed the following:

1. Audited Standalone and Consolidated financial results of the Company for the quarter and financial year ended 31st March, 2022;
2. Auditors Report in respect of the Audited Standalone and Consolidated financial results of the Company for the quarter and financial year ended 31st March, 2022;
3. Declaration in respect of Unmodified Opinion on Audited Standalone and Consolidated Financial Statement for the Financial Year ended March 31, 2022

The Board meeting commenced at 4:00 p.m. and concluded at 6:05 p.m.

Thanking you,

Yours faithfully,

For Setco Automotive Limited

Hiren Vala

Company Secretary

Encl: As above

V. PAREKH & ASSOCIATES

CHARTERED ACCOUNTANTS

37, HAMAM STREET, 2nd FLOOR, FORT, MUMBAI - 400 001.  : 2265 02 64⚫ 2265 35 55 ⚫ 2266 62 19 FAX : 2265 43 70 E-Mail :mail@vparekh.com

INDEPENDENT AUDITOR'S REPORT ON AUDIT OF STANDALONE FINANCIAL RESULTS

The Board of Directors,

SETCO AUTOMOTIVE LIMITED

Opinion

We have audited the accompanying Statement Standalone Financial Results of SETCO AUTOMOTIVE LIMITED ("the Company") for the quarter and year ended 31st March, 2022 being submitted by the Company pursuant to the requirement of Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the "Listing Regulations").

In our opinion and to the best of our information and according to the explanations given to us, the Statement:

1. is presented in accordance with the requirements of Regulation 33 of the Listing Regulations; and
2. gives a true and fair view in conformity with Indian Accounting Standard prescribed under Section 133 of the Companies Act 2013 (the "Act") read with relevant rules issued thereunder and other accounting principles generally accepted in India of the net loss and total comprehensive income and other financial information of the Company for the quarter and year ended March 31, 2022.

Basis for Opinion

We conducted our audit of the Statement in accordance with the Standards on Auditing ("SA"s) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Results section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India ("ICAI") together with the ethical requirements that are relevant to our audit of the Standalone Financial Results under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter

We draw attention to the following matters in the Notes to the Standalone Ind AS financial statements:

1. On 31st August 2021, the company has entered into Business Transfer Agreement (BTA) with Setco Auto Systems private limited (SASPL) (transferee company) (it was then wholly owned subsidiary company) to transfer its clutch manufacturing business on slump sale basis.
   The clutch manufacturing business is transferred w.e.f 07th September 2021 with assets and liabilities as per the Balance Sheet drawn as on 07th September 2021 resulting in long term gain of Rs. 13224 lacs transferred to capital reserve in compliance with Ind AS 103. (Refer Note No. 2 of the Standalone Statement).
2. The Company had impaired the Investment in Lava Cast Pvt. Ltd. (LCPL) by Rs. 8,290 Lakhs

SETCO AUTOMOTIVE LIMITED

benchmarking on the recent transaction by its Subsidiary SASPL, purchasing the Shares of Lava Cast at Rs.

1. 2.93 per share from a third party. (Refer Note no. 5(a) of the Standalone Statement).

2. The Company has made investment of Rs. 2336.50 Lakhs in 9% cumulative compulsorily redeemable preference shares of Setco Engineering Private Limited, a company in which directors have interest. As this investment is compulsorily redeemable on its maturity, the company has treated it as investment in debt instruments and valued at amortised basis. The company has provided 9% ECL for the loss of dividend in current year. The company is reasonably certain to recover principal amount and the accumulated unpaid dividend. (Refer Note No. 5(a) & 8 of Standalone Statement).
3. The Company' wholly owned ultimate foreign subsidiary Setco Automotive UK Ltd. has eroded net worth due to losses. The Company has made profits for the year but has incurred operating loss during the year. The company has provided for ECL on long outstanding dues from the SAUL. (Refer Note No. 5 (b) of the Standalone Statement).
4. Government of India has formulated the policy to scrap old Commercial vehicles older than 15 years in age.
   In view of new emission norms and reluctance of transferee company SASPL to take over such old stocks, the existing stocks of Rs. 4206 lakhs (at book value) of items/components whose utility is impaired, has been written down in accounts net of Scrap amounting to Rs. 3703 Lakhs. (Refer Note No. 5 (d) of the Standalone Statement).
5. There were long pending old debts, debit balance in vendor accounts and provision for bad debts, which were not to be taken over by the transferee company SASPL and hence, the company has written off net amount of Rs. 378 lakhs. (Refer Note No. 6 of the Standalone Statement).
6. Pending compliance of bank condition, company could not remit amount towards share capital to Setco MEA DMCC, resulting to non-issuance of share certificate to the company. The company has recognized it as investment in the wholly owned foreign subsidiary based on 100% control. The Company has decided to close this subsidiary vide Board Resolution dated 09.02.2021. However, due to the pending compliance procedures of DMCC, the Subsidiary could not be winded up. The matter will be handled afresh as per new guidelines to be complied.
   Further the Company had provided impairment loss against Trade receivable equal to the net assets deficit reported by the company till last year. During FY 2022-23, the company has received Rs. 272.13 lakhs from Setco MEA, DMCC. Based on the certainty of recoverability of dues, Company's ECL for the current year is not provided for. (Refer Note No. 10 & 5(c)of the Standalone Statement)
7. The Company has sold 30,70,000 number of shares of SE Transstadia at a price of Rs. 5 per share during the year based on Valuation Report. Thus, the company has incurred a loss of Rs. 1,381.50 lakhs on this transaction. The company has booked loss of Rs. 153.50 lakhs under OCI, net of opening provisions of impairment of Rs. 1,228.00 lakhs. (Refer Note No. 7 of Standalone Statement)
8. The company has not charged interest on unsecured loan to the subsidiaries. (Refer Note no. 13 of the Standalone Statement).

Our opinion is not modified in respect of these matters.

SETCO AUTOMOTIVE LIMITED

Management's Responsibilities for the Standalone Financial Results

This Statement, is the responsibility of the Company's Management and approved by the Board of Directors, has been compiled from the related audited standalone financial statements for the year ended March 31, 2022. The Company's Board of Directors are responsible for the preparation and presentation of the Standalone Financial Results that give a true and fair view of the net loss and other comprehensive income and other financial information in accordance with the applicable accounting standards prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 and 52 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Results that give a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Results, the Board of Directors are responsible for assessing the Company's ability, to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the financial reporting process of the Company.

Auditor's Responsibilities for the Audit of the Standalone Financial Results

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Results as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this Standalone Financial Results.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Financial Results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors.
• Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern.