Press Release

August 03, 2026

HINDUSTAN COMPOSITES LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	16.00	ACUITE A+ \| Reaffirmed \| Rating Watch with Developing Implications	-	RBI
Bank Loan Ratings	9.00	-	ACUITE A1+ \| Reaffirmed \| Rating Watch with Developing Implications	RBI
Total Outstanding	25.00	-	-	-
Total Withdrawn	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

Acuité has reaffirmed its long-term rating of ‘ACUITE A+’ (read as ACUITE A Plus) and its short-term rating of 'ACUITE A1+' (read as ACUITE A one Plus) on the Rs. 25.00 crore bank facilities of Hindustan Composites Limited (HCL). The ratings have been placed under 'Rating Watch with Developing Implications'.

Rationale for placing the rating on watch and reaffirmation
Rating Watch with Developing Implications reflects the proposed transfer of the company's principal operating business undertaking through a slump sale transaction to Rane (Madras) Limited. The proposed transaction is subject to shareholder approval and fulfilment of customary conditions precedent and is expected to be completed within the stipulated timeline. The rating watch reflects the uncertainty regarding the post-transaction business profile of the company, including the utilization of sale proceeds, sustainability of earnings from the continuing businesses, capital allocation strategy and the resultant impact on the company's financial risk profile and liquidity position. At the same time, the transaction could strengthen the company's balance sheet and financial flexibility through the receipt of substantial cash proceeds. Acuite will continue to monitor the progress of the proposed transaction, receipt of requisite approvals, completion of the slump sale and the company's strategy for deployment of the proceeds.

The reaffirmation factors in the healthy performance of the business undertaking proposed to be divested, which has been classified as a discontinued operation and continued to demonstrate improvement in revenue and profitability in FY2026, with the trend continuing in Q1FY27. The rating reaffirmation also factors in HCL's healthy financial risk profile, marked by a strong net worth position, sizeable investment portfolio and strong liquidity. However, the rating remains constrained by the moderately intensive working capital nature of the commodity trading business and the exposure of earnings to volatility in financial markets and investment returns. Going forward, the timely completion of the proposed transaction, utilization of sale proceeds, sustainability of returns from the investment portfolio and the company's ability to maintain a stable earnings and financial risk profile will remain key rating monitorables.

About the Company

Hindustan Composites Limited (HCL), formerly known as Hindustan Ferrodo Limited, was incorporated in 1964. The company has historically been engaged in the manufacture of friction materials and industrial products such as brake linings, roll linings, disc brake pads, clutch facings and allied products catering to the automotive, railway and industrial segments. In addition, HCL undertakes treasury and investment activities, including investments in equity, debt and private equity instruments. Further, HCL has entered into a Business Transfer Agreement for the proposed transfer of its Friction Business Undertaking on a slump sale basis for a cash consideration of Rs. 370 crore, subject to shareholder approval and fulfilment of customary closing conditions. The company also holds a strategic stake in a joint venture engaged in the manufacture of automotive braking system components.

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone approach while arriving at the rating of Hindustan Composites Limited (HCL). Further, its Joint Venture 'Compo Advics India Private Limited' (49 per cent holding of HCL), is considered to the extent of its contribution in the Profit and Loss Statements of HCL.

Key Rating Drivers

Strengths

Moderate operating performance albeit improved revenues
The revenue of the company improved and stood at Rs. 375.01 crore in FY26 as compared to Rs. 325.08 crore in FY25. The improvement in revenue was driven by increased demand and business from the composite segment. In Q1 FY27, the company reported revenue of Rs. 20.05 crore and a net profit of Rs. 1.93 crore. HCL's operating performance witnessed moderation during Q1 FY27 primarily on account of the classification of its Friction Business Undertaking as a discontinued operation pursuant to the proposed slump sale transaction. Consequently, the reported standalone results for Q1 FY27 largely comprise income from the treasury and commodity trading businesses, resulting in a lower operating scale and profitability compared to the corresponding period of the previous year. The operating profit margin moderated to 14.79 per cent in FY26 from 18.10 per cent in FY25. The PAT margin stood at 8.30 per cent in FY26.
Acuite believes HCL's ability to effectively deploy the sale proceeds and generate stable returns from its investment and treasury operations will remain a key monitorable over the medium term.

Healthy Financial Risk Profile
Hindustan Composites Limited has a healthy financial risk profile marked by a strong net worth position and comfortable debt protection metrics. The net worth of the company stood at Rs. 1146.61 crore in FY26 as against Rs. 1085.68 crore in FY25. The gearing levels of the company remained Nil as on March 31, 2026. The total debt of the company stood at Rs. 1.68 crore as on March 31, 2026, comprising long-term debt of Rs. 0.78 crore and current maturities of long-term debt of Rs. 0.90 crore. The interest coverage ratio stood at 189.11 times in FY26 against 656.14 times in FY25, while DSCR stood at 154.89 times in FY26 against 540.58 times in FY25.
Acuite believes the financial risk profile of the company is expected to remain healthy, supported by its strong net worth expected financial flexibility arising from the proposed business divestment.

Weaknesses

Moderately Intensive Working capital operations

Hindustan Composites Limited has moderately intensive working capital operations with gross current asset (GCA) days standing at 102 days on 31st March 2026 as against 103 days on 31st March 2025. The inventory days of the company stood at 24 days in FY26 as against 16 days in FY25. The average inventory holding period for the raw materials is around 15 days. The debtor days stood at 62 days in FY26 as against 66 days in FY25. The average credit period allowed to customers is in the range of 55- 60 days. The creditor days of the company stood at 106 days in FY26 as against 124 days in FY25. The average credit period received from customers is in the range of 110- 120 days.

Susceptibility to volatility in financial markets and economic changes
The profitability is mainly driven by robust margins generated from the treasury business. The company's profitability is also susceptible to the inherent risks associated with volatility in financial markets and changes in the economic environment. However, HCL has a well-defined risk management policy, which enables it to mitigate these risks to a certain extent. Further, the company is exposed to intense competition from organised and unorganised players in the composite business.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Sustained growth in revenue and net profitability margins above 10 percent
Sustained improvement in the financial risk profile

Potential triggers (individual or collective) for a downward rating action:

Significant decline in revenue and profitability
Increase in gearing levels above 1.1 times due to unexpected rise in debt levels or decline in net worth base

Liquidity Position

Strong

Hindustan Composites Limited’s liquidity position is strong, marked by high net cash accruals against no maturing debt obligations for the same period. The company generated cash accruals of Rs. 43.09 crore as on 31st March 2026. The cash and bank balance of the company stood at Rs. 2.11 crore as on 31st March 2026. The current ratio stood at 2.18 times in FY26 as against 3.98 times in FY25. The working capital operations of HCL is moderately intensive marked by its Gross Current Asset (GCA) days of 102 days in FY26 as against 103 days in FY25.

Outlook: Not Applicable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 26 (Actual)	FY 25 (Actual)
Operating Income	Rs. Cr.	375.01	325.08
PAT	Rs. Cr.	31.11	35.00
PAT Margin	(%)	8.30	10.77
Total Debt/Tangible Net Worth	Times	0.00	0.00
PBDIT/Interest	Times	189.11	656.14

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
25 Sep 2025	Secured Overdraft	Long Term	6.00	ACUITE A+ \| Stable (Upgraded from ACUITE A \| Stable)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A+ \| Stable (Upgraded from ACUITE A \| Stable)
	Bank Guarantee/Letter of Guarantee	Short Term	9.00	ACUITE A1+ (Upgraded from ACUITE A1)
03 Sep 2025	Secured Overdraft	Long Term	6.00	ACUITE A \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A \| Stable (Reaffirmed)
	Bank Guarantee/Letter of Guarantee	Short Term	9.00	ACUITE A1 (Reaffirmed)
05 Jun 2024	Secured Overdraft	Long Term	6.00	ACUITE A \| Stable (Upgraded from ACUITE A- \| Stable)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A \| Stable (Upgraded from ACUITE A- \| Stable)
	Bank Guarantee/Letter of Guarantee	Short Term	9.00	ACUITE A1 (Upgraded from ACUITE A2+)
08 Mar 2023	Secured Overdraft	Long Term	6.00	ACUITE A- \| Stable (Reaffirmed)
	Proposed Long Term Bank Facility	Long Term	10.00	ACUITE A- \| Stable (Reaffirmed)
	Bank Guarantee/Letter of Guarantee	Short Term	9.00	ACUITE A2+ (Reaffirmed)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Listing Status	Regulated By	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
ICICI BANK LIMITED	Not avl. / Not appl.	Bank Guarantee/Letter of Guarantee	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	9.00	Simple	ACUITE A1+ \| Reaffirmed \| Rating Watch with Developing Implications
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.00	Simple	ACUITE A+ \| Reaffirmed \| Rating Watch with Developing Implications
ICICI BANK LIMITED	Not avl. / Not appl.	Secured Overdraft	Unlisted	RBI	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	6.00	Simple	ACUITE A+ \| Reaffirmed \| Rating Watch with Developing Implications

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Dheeraj Salian
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below:

A. Rating Activity:

Sr. No.	Instrument / activity Name	Regulator of the instrument
1	Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities)	SEBI
2	Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities)	MCA
3	Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	SEBI
4	Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)¹	SEBI
5	Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)¹	RBI
6	Listed Commercial Paper and NCDs with original maturity less than 1 year	RBI
7	Unlisted Commercial Paper and NCDs with original maturity less than 1 year	RBI
8	Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs ²	RBI
9	External Commercial Borrowings and other similar borrowings	RBI
10	Certificates of Deposit	RBI
11	Fixed Deposits raised by NBFCs, Banks, HFCs, FIs	RBI
12	Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs	MCA
13	Inter Corporate Deposits/Loans extended by Corporates	MCA
14	Borrowing programme ³	-
15	Issuer Ratings ⁴	-
16	Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs)	SEBI
17	Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs	SEBI
18	Listed Security Receipts	SEBI
19	Unlisted Security Receipts	RBI
20	Independent Credit Evaluation (ICE)	RBI
21	Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs)	RBI
22	Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities))	SEBI
23	Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities))	MCA
24	Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) ¹	Investor-side Regulator such as IRDAI, PFRDA ⁵

¹Includes securitisation transactions involving assignee payout, acquirer's payout.

² Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions.
³The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators.
⁴ There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs.
⁵ These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.

B. Other activities:

Sr. No.	Activity Name	Regulator of the activity
1	Monitoring Agency	SEBI
2	Research activities, incidental to rating, such as research for Economy, Industries and Companies ⁶	Not applicable

⁶ permitted by SEBI vide SEBI Master Circular for CRAs.

Disclosure on instruments / activities and names of regulators:

A list of products/activities or ratings of instruments falling under the purview of various financial sector regulators (FSRs) along with the names of respective FSRs has also been duly disclosed by Acuite on its website. A link to the same has been provided below for ready reference:

https://acuite.in/Activities-and-Regulators.html

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer:

An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating.

Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.