Hindusthan Insulators &

Sale of HSCL Stake: Proceeds and Status

Hindusthan Urban Infrastructure Ltd sold its 58.5% stake (8,45,91,312 equity shares + 70 nominee shares) in material subsidiary Hindusthan Speciality Chemicals Ltd (HSCL) to DCM Shriram Ltd (or affiliates).

Key Transaction Details

• Agreement Date: 12 June 2025 (Share Sale Agreement).
• Shareholder Approval: Via postal ballot (e-voting June-July 2025).
• Completion Date: 25 August 2025.
• Gross Consideration: INR 219.38 Crore (Rs. 219,38,90,660), "including adjustment of term debt as provided under the share purchase agreement". Subject to final adjustments for debt-like items.

Amount Received and Current Status

• Cash Proceeds Recorded: Rs. 3,930.19 Lakh (~Rs. 39.30 Crore) as "Sale Proceeds on Sale of Investments" in H1 FY26 (Apr-Sep 2025) cash flow statement.

• Escrow Amount: Rs. 3,979.70 Lakh (~Rs. 39.80 Crore) "lying in the Escrow account with State Bank of India (Converted into Fixed Deposits)" for:

  Purpose	Amount (Rs. Lakh)
  HSCL income tax demands	2,909.14
  Gujarat Industrial Development Corporation non-regulation charges	1,070.14
  Total	3,979.70

• Additional Adjustments: Payments to DCM under negotiation for losses from 1-25 Aug 2025 (inventory differences, vendor claims, dead inventory, ITC mismatch, etc.). "Once the final settlement is arrived, the Company shall pay to DCM."

Deployment of Proceeds

• Accounting Impact: Recorded as exceptional loss of Rs. 4,630.12 Lakh (~Rs. 46.30 Crore) in Q2/H1 FY26 and 9M FY26 results (carrying value exceeded net proceeds).
• Usage: Board authorized deployment "to invest the sale proceeds in deposits of scheduled banks... and/or to repay the existing loans... and/or for the general business purpose". Aligned with:
  • Rs. 94 Crore capex (Nov 2025) for 9,900 MT kiln capacity addition (by Jun 2026).
  • Rs. 210.32 Crore capex (Feb 2026) for Mandideep kiln expansion (dispatchable capacity to 19,500 MT by Dec 2026).
• Balance sheet reflects increased investments (Rs. 73.22 Crore as at Sep 2025 vs. Rs. 88.07 Crore at Mar 2025) and capex (capital WIP Rs. 145.96 Lakh at Sep 2025).

The bulk of consideration appears settled via term debt adjustment (HSCL liabilities), with limited direct cash inflow beyond escrow/net recorded proceeds. Escrow release pending tax/other settlements.