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

hindustan composites has confirmed that its promoters and Persons Acting in Concert (PAC) have not created any encumbrance on shares during the financial year ended March 31, 2026. This disclosure was made to the stock exchanges in compliance with Regulation 31(4) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

The company submitted the declaration to the National Stock Exchange of India and BSE Limited on April 4, 2026. The confirmation explicitly states that neither the promoters nor the PACs have made any encumbrance of shares, directly or indirectly, throughout the specified financial period.

Promoters and PAC Details

The disclosure was made on behalf of 15 promoters and PACs associated with Hindustan Composites Limited. The list includes individual promoters as well as corporate entities.

The filing was signed by Naresh Patangi, Executive Director, Company Secretary & Compliance Officer of Rasoi Limited, on behalf of all promoters and PACs. The document was submitted from Kolkata and acknowledged the receipt of the declaration by the exchanges.