Target Entity: Friction business of Hindustan Composites Limited (HCL)

Type of Deal: 100% acquisition of business unit on slump sale basis

Stake/Capacity: Complete business transfer including assets, liabilities, contracts, licenses, employees, and intellectual property as a going concern. Includes two manufacturing facilities in Paithan and Bhandara, Maharashtra, and pan-India distribution network.

Deal Value: ₹370 crores (Rupees Three hundred and seventy crore) on a cash-free debt-free basis, payable on closing, subject to adjustments in accordance with the terms and conditions set out in the Business Transfer Agreement.

Funding Source: Cash consideration from internal resources. No specific details provided on funding structure or impact on capital structure.

Financial Impact:

  • HCL's friction business reported revenue of ₹315.04 crore and PBT of ₹40.29 crore in FY26
  • Historical turnover of HCL's friction business: ₹250.69 crore (FY24), ₹284.27 crore (FY25), ₹315.04 crore (FY26)
  • Combined entity expected to create ₹1,000+ crore friction materials business (RML's existing friction business aggregates over ₹700 crore)
  • Expected substantial operational synergies through manufacturing scale, expanded distribution network, and enhanced R&D capabilities
  • Specific revenue contribution, margin impact, or accretion/dilution expectations not quantified

Timeline: Expected completion by September 30, 2026, subject to fulfilment of customary closing conditions including receipt of necessary approval(s) and consent(s) as specified in the Business Transfer Agreement.

Strategic Rationale:

  • Establishes RML as market leader across all major segments in friction materials
  • Builds on company's established leadership in friction business spanning passenger vehicles, two-wheelers, aftermarket, and railways
  • Acquires the "COMPO" brand which reinforces Rane's leadership position by expanding reach across distributors, fleet operators, and aftermarket channels
  • Expected to unlock substantial operational synergies through manufacturing scale, expanded distribution network, and enhanced R&D capabilities
  • Expanded footprint expected to serve as critical launchpad for future business expansion
  • Addresses evolving needs of India's transportation needs while driving operational excellence

Approval Status: Board-approved on June 30, 2026. Subject to customary regulatory approvals and closing conditions as specified in the Business Transfer Agreement.

Reference Regulation: SEBI Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with SEBI circular No. H0/49/14/14(7)2025-CFD-POD2/1/3762/2026 dated January 30, 2026

Background on Acquired Business:

  • Business: Manufacturing and marketing of fibre-based friction material consisting of Brake Liners, Roll Lining, Brake Block, Clutch Facing etc.
  • Serves automotive, railway, farm tractor, and industrial sectors
  • Over six decades of experience
  • Date of Incorporation: July 01, 1964
  • Operates two manufacturing facilities in Paithan and Bhandara, Maharashtra
  • Backed by in-house R&D and pan-India distribution network

Transaction Details:

  • Not a related party transaction
  • Executed at arm's length
  • Includes non-compete and non-solicit restrictions on parties after closing
  • No governmental or regulatory approvals required beyond customary closing conditions