Rane (Madras) buys HCL friction unit for ₹370 cr (2026)

Deal closure: acquisition effective August 20, 2026

Rane (Madras) Limited has completed the acquisition of the Friction Business Undertaking of Hindustan Composites Limited, with the transfer effective August 20, 2026. The transaction was executed as a slump sale for an enterprise value of ₹370 crore, with consideration payable in cash. The completion follows a Business Transfer Agreement (BTA) signed on June 30, 2026. Rane (Madras) has stated the transaction is expected to be earnings per share (EPS) accretive from year one onwards. For Hindustan Composites, the divestment marks a significant shift because the friction business accounted for 84% of its FY26 turnover.

What is being transferred in the slump sale

The deal is structured as a slump sale, meaning the friction business is being transferred as a going concern. The transaction includes the relevant assets, liabilities, contracts, and licenses tied to the development, manufacturing, and marketing of friction materials. These products serve automobile, railway, and industrial applications, as disclosed. As part of the acquisition, Rane (Madras) will also acquire the COMPO brand. The transaction also includes two plants, expanding Rane (Madras)’ operational footprint in the segment. The consideration of ₹370 crore is subject to transaction adjustments specified in the BTA.

Regulatory and legal framework cited in disclosures

Hindustan Composites has described the slump sale as being undertaken under Section 180(1)(a) of the Companies Act, 2013. It also referenced Regulation 37A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These references indicate the transaction required shareholder approval and compliance with listed-company processes. The agreement for sale was executed on June 30, 2026, with completion dependent on customary approvals and closing conditions. While earlier communication said completion was expected on or before September 30, 2026, the transfer has become effective on August 20, 2026.

Shareholder vote: postal ballot and special resolution

Hindustan Composites’ shareholders approved the slump sale via a special resolution. The postal ballot concluded on August 8, 2026, and the special resolution was passed on August 11, 2026. The company indicated the resolution received near-unanimous support from participating shareholders. The approval cleared a key condition precedent under the BTA for transferring a substantial undertaking. Management has positioned the sale as a way to unlock embedded value, reduce capital intensity, and simplify operations.

Use of proceeds: investments and a special dividend

Hindustan Composites has indicated that proceeds from the sale are expected to be deployed toward long-term investments. It has also stated that a special dividend to shareholders is expected as part of the post-transaction capital allocation plan. The consideration is to be received in cash, supporting the company’s stated intent to redeploy funds. Beyond these stated uses, the company has not provided additional allocation details in the provided information. The sale shifts Hindustan Composites away from a business that represented the bulk of its FY26 turnover.

Financial context: friction business classified as discontinued operations

Hindustan Composites reported consolidated profit after tax (PAT) of ₹8.68 crore for Q1FY27, up 16% year-on-year, with the filing attributing the performance primarily to the friction business. The company has also disclosed that the friction business is now classified as discontinued operations in its financial statements, following the proposed slump sale. Comparative periods were stated to be restated accordingly. This accounting change is consistent with the company’s decision to divest the unit and helps investors separate continuing operations from the business being sold.

Why the acquisition matters for Rane (Madras)

For Rane (Madras), the deal adds an established friction materials business along with the COMPO brand and two plants. The buyer has linked the acquisition to strengthening its presence across aftermarket, fleet operator, and distribution channels. Rane (Madras) has also communicated that the acquisition is expected to be EPS accretive from the first year. The transaction structure as a slump sale suggests Rane (Madras) is taking over a complete operating undertaking rather than buying selected assets.

Transaction timeline and key facts

Below is a summary of the principal details disclosed across the transaction communications.

Advisory and execution details mentioned

Khaitan & Co advised Hindustan Composites on the sale of its friction business to Rane (Madras) for a total consideration of ₹370 crore. The transaction, as described, remained subject to regulatory approvals and other closing conditions as part of the BTA framework. With the transfer now effective August 20, 2026, the focus shifts to post-closing integration for Rane (Madras) and capital deployment decisions at Hindustan Composites.

Market impact and what investors can track next

The divestment reshapes Hindustan Composites’ reported business mix because the friction business represented 84% of FY26 turnover. Investors will likely track how the company reports continuing operations after the reclassification to discontinued operations and how it executes on long-term investments and the stated special dividend. For Rane (Madras), the market will watch the integration of the acquired plants and the COMPO brand into its portfolio and distribution reach. Any further disclosures on transaction adjustments under the BTA, or post-closing operational updates, will add clarity on financial impact beyond the headline ₹370 crore consideration.

Conclusion

Rane (Madras) has completed a ₹370 crore slump-sale acquisition of Hindustan Composites’ friction business, effective August 20, 2026, following a shareholder-approved process anchored by the June 30 BTA. Hindustan Composites has positioned the sale as a value-unlocking and capital-lightening move, with proceeds expected to fund long-term investments and a special dividend. Rane (Madras) has stated the deal should be EPS accretive from year one, and the next set of company filings should show how both sides reflect the transaction in ongoing financial reporting.