Mumbai, Auto component maker Rane Group firm, Rane (Madras) Ltd, on Tuesday said it has entered into an agreement with Hindustan Composites to acquire the friction business for an enterprise value of Rs 370 crore.
As part of the acquisition, which is subject to terms of agreement, RML also acquires the brand “COMPO”, which reinforces Rane’s leadership position by expanding its reach across segments, distributors, fleet operators and aftermarket channels, the Chennai-based company said.
The transaction, remains subject to customary regulatory approvals and closing conditions, is expected to be completed by the end of the second quarter, the company said.
HCL’s friction business is a leading supplier of friction materials, with over six decades of experience across the automotive, railway, farm tractor, and industrial sectors, and having a product portfolio that includes brake linings, brake pads, brake blocks, clutch facings, and industrial friction products, backed by in-house R&D and a pan-India distribution network.
It operates two manufacturing facilities in Paithan and Bhandara in Maharashtra.
Based on the latest audited financial results, friction business reported revenue of Rs 315.04 crore and a profit before tax of Rs 40.29 crore.
Upon completion, the acquisition will create a Rs 1,000-plus crore friction materials business, establishing RML as the market leader across all major segments, it said.
“This acquisition leverages Rane’s ability to create a market-leading friction solutions platform. By integrating these complementary businesses, we are uniquely positioned to address the evolving needs of India’s transportation needs while driving operational excellence and long-term value for our stakeholders,” said Harish Lakshman, Chairman, Rane Group.
RML said it already has a leadership in the friction business, spanning passenger vehicles, two-wheelers, aftermarket and railways, alongside an export business aggregating revenue of over Rs 700 crore.
Besides this, the transaction is expected to unlock substantial operational synergies through manufacturing scale, an expanded distribution network and enhanced R&D capabilities, it said, adding the expanded footprint is expected to serve as critical launchpad for future business expansion. PTI
