Hindustan Composites Sells Friction Business Undertaking in Strategic Divestiture
Hindustan Composites Limited has agreed on a major transaction involving the sale of its Friction Business Undertaking as a going concern. The business division, which focuses on the development, manufacturing, and marketing of friction material for automobile, railway, and industrial applications, is being sold to Rane (Madras) Limited (RML).The agreement details were finalized on June 30, 2026. The completion date for the slump sale is expected on or before September 30, 2026, subject to closing conditions. Hindustan Composites Limited is transferring this business to Rane (Madras) Limited, which does not belong to the Promoter or Promoter Group.
The transaction includes a consideration of INR 370 Crore, payable in cash, subject to certain adjustments specified in the Business Transfer Agreement (BTA). This acquisition represents a strategic move for Hindustan Composites Limited aimed at enhancing shareholder value and simplifying its operational portfolio.
Transaction Overview and Financial Details
The Friction Business Undertaking accounts for 84% of the company's turnover during the financial year ended March 31, 2026. The net worth contributed by this specific business unit is INR 69.52 crores, representing 7.50% of the total company net worth as of that date.The divestiture allows Hindustan Composites Limited to avoid a significant upcoming capital expenditure cycle required to keep the Friction Business competitive in an industry characterized by intensifying competition and technology disruption. The proceeds from the sale are intended to fund future investments aligned with the company's long-term strategy, with a portion potentially being returned to shareholders through a special dividend.
Rane (Madras) Limited is described as part of the Rane Group, a leading auto component group based in Chennai, and serves as a preferred supplier to major OEMs across various industry segments. The buyer’s operations encompass manufacturing automotive products such as Steering and Suspension systems, Brake components, Engine components, and Light Metal Casting components for passenger vehicles, commercial vehicles, farm tractors, two-wheelers, three-wheelers, railways, and stationery engines.
The key financial metrics related to the transaction are detailed below:
| Particulars | Hindustan Composites Limited (Seller) | Rane (Madras) Limited (Buyer) |
|---|---|---|
| Turnover | INR 375.01 Crores | INR 3,863.42 Crores |
| Net Worth | INR 926.65 Crores | INR 773.20 Crores |
| Area of Business | Friction Material Manufacturing (Automobile, Railway, Industrial) | Automotive Components (Steering/Suspension systems, Brake components) |
The transfer is a slump sale and is expected to make the company’s earnings profile more predictable and stable by reducing exposure to this capital intensive segment.
HINDCOMPOS Stock Price Movement
Shares of Hindustan Composites Limited shed 0.41% today, settling at ₹415.00 in the post-market session after a sluggish day of trading. The equity saw an intraday movement between a low of ₹411 and a high of ₹429, with a total traded volume of 4,435 shares.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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