Rane flags Rs 172-crore hit from seatbelt recall at ZF Rane

Chennai: Auto components house Rane Group has flagged a one-time financial hit after its associate company, ZF Rane Automotive India, recognised a warranty provision of about Rs 230 crore (around Rs 172 crore post-tax) following a global recall linked to seatbelt components supplied for overseas vehicle programmes.The provision relates to potential liabilities arising from corrective actions, including voluntary and regulator-mandated recalls of seatbelt buckle assemblies supplied for a global vehicle platform, including the Hyundai Palisade SUV sold in certain North American markets. Complaints had emerged over the unintended unlatching of seatbelts when the latch tongue was inserted slowly under extremely cold climatic conditions.
The carmaker has initiated in-vehicle inspections in North America. Rane management said the issue was climate-specific and not fleet-wide, with around 5.67 lakh vehicles in the US and about 44,000 units in Canada covered under the exercise. Globally, nearly 9.6 lakh vehicles across North America, Europe, the Middle East, and Australia are part of the programme.Responding to shareholder concerns over recurring warranty incidents across group entities in recent years during the Q3 earnings call, management acknowledged that the current case stemmed from a manufacturing defect at the supplier level.The defect was linked to a plastic injection-moulded component sourced from a Tier-2 supplier rather than ZF Rane's facility. The company has since shifted sourcing to an alternate global supplier and strengthened supplier quality controls, though recovery from the vendor remains uncertain.Unlike earlier warranty cases involving design-related issues in joint ventures, management indicated that compensation recovery may be limited given the size and financial capacity of the vendor involved.Given the safety-critical nature of seatbelt systems, the company opted to recognise the full provision upfront, though it is premature to comment on potential write-backs until inspections progress further. A clearer assessment is expected in the coming quarters, management said.Despite the recall, the group emphasised that relationships with global customers remain unaffected, and group companies continue to secure new business across geographies. The three group companies together secured one of their highest quarterly business orders of Rs 592 crore in the Dec 2025 quarter amid strong momentum across business segments.