Hindustan Composites has dispatched postal ballot notices to seek shareholder approval for the sale of its Friction Business Undertaking to Rane (Madras) Limited for a lump sum cash consideration of ₹370 crore. The transaction, proposed as a slump sale, encompasses the manufacturing, development, marketing, and sale of fibre-based friction materials, including brake linings and clutch facings, along with related assets and liabilities. The strategic divestiture aims to unlock embedded value and streamline the company’s portfolio by reducing operational complexity, with proceeds expected to be deployed towards long-term strategic investments and a potential special dividend.

The Board of Directors approved the proposal on June 30, 2026, subject to necessary consents and shareholder approval via a special resolution under Section 180(1)(a) of the Companies Act, 2013 and Regulation 37A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The sale is anticipated to be EPS-accretive and will reduce exposure to a capital-intensive segment facing technological disruption and competition. The transfer includes the company’s manufacturing plants located in Paithan and Bhandara, Maharashtra.

Voting Process and Timelines

Only members holding shares as on the cut-off date of June 30, 2026, are entitled to vote on the resolution. The company has engaged National Securities Depository Limited (NSDL) to facilitate remote e-voting, which commences on July 10, 2026, at 9.00 A.M. IST and concludes on August 8, 2026, at 5.00 P.M. IST. Shareholders can also cast their votes via physical postal ballot forms, which must reach the scrutinizer by the deadline on August 8, 2026.

CS Manish Baldeva, Proprietor of M/s. M Baldeva Associates, has been appointed as the scrutinizer to oversee the postal ballot and e-voting process. The results of the ballot will be announced on August 11, 2026, at the company’s registered office. The resolution requires approval by a special resolution, and if passed, will be deemed effective from the closing date of the voting process.

Key Event Dates

The company noted that none of the promoters, directors, or key managerial personnel are interested in the proposed resolution, financially or otherwise. The detailed notice and explanatory statement are available on the company’s website and the websites of BSE Limited and National Stock Exchange of India Limited.

Hindustan Composites Limited has approved the slump sale of its Friction Business to Rane (Madras) Limited for a lump sum cash consideration of ₹370 Crore. The Board of Directors approved the transfer of the undertaking, which includes development, manufacturing, and marketing of friction materials for automobile, railway, and industrial applications, on June 30, 2026. This strategic move aims to unlock embedded value and streamline the company's portfolio by reducing complexity and simplifying operations.

The Friction Business Undertaking contributed significantly to the company's financial performance in the previous fiscal year. It achieved a turnover of ₹315.04 Crores, representing 84% of the company's total turnover for the financial year ended March 31, 2026. The net worth of the business under transfer stood at ₹69.52 Crores, which accounted for 7.50% of the company's net worth as of March 31, 2026.

The transaction is structured as a slump sale without values being assigned to individual assets and liabilities. It is subject to shareholder approval pursuant to Section 180(1)(a) of the Companies Act, 2013 and Regulation 37A of the SEBI Listing Regulations. The company will seek this approval through a Postal Ballot process. The Business Transfer Agreement is being executed on June 30, 2026, and the completion of the transfer is expected on or before September 30, 2026, contingent upon closing conditions.

Rane (Madras) Limited, the buyer, reported a turnover of ₹3,863.42 Crores and a net worth of ₹773.20 Crores for the financial year ended March 31, 2026. The buyer does not belong to the promoter or promoter group of Hindustan Composites Limited, and the transaction does not fall within related party transactions. The consideration of ₹370 Crore is subject to certain transaction adjustments specified in the agreement.

The rationale for the divestiture includes avoiding a significant upcoming capital expenditure cycle required to maintain the competitiveness of the Friction Business. The company expects the transaction to be EPS-accretive and to result in a more predictable earnings profile by reducing exposure to a capital-intensive segment. Proceeds from the sale, net of transaction costs and tax expenses, are expected to be deployed towards investments aligned with long-term strategy, with a portion potentially returned to shareholders via a special dividend.

Financial Overview of the Friction Business Undertaking

Transaction Details