Varroc Engineering Limited — Interim / Quarterly Report 2021

Feb 9, 2021

Varroc Engineering Ltd.

Regd. & Corp. Office

L-4, M IDC, Industrial Area Tel + 91240 6653700 Waluj, Aurangabad 431 136, Maharashtra, India Fax + 91 240 2564540

VARROC/SE/INT /2020-21/65 February 9, 2021

To,

The Manager- Listing The Listing Department, National Stock Exchange of India Limited Exchange Plaza, Plot No. C/ 1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai-400051 .

email: va rroc. info@varroc.com www.varroc.com CIN: L28920MH1988PLC047335

The Manager - Listing The Corporate Relation Department, Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai-400001.

BSE Security Code: 541578

NSE Symbol: VARROC

Sub: OutCome of the Board Meeting of Varroc Engineering Limited

Ref: Regulation 30 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") ·

Dear Sir/ Madam,

This is to inform you that the Board of Directors of the Company, at its meeting held today i.e. February 9, 2021, which commenced at 1:35 p.m. and concluded at :S :15 p.m. has, inter-alia, approved the Unaudited (Standalone and Consolidated) Financial Results of the Company for the quarter ended on December 31, 2020.

Pursuant to Regulation 33 of the Listing Regulations, we enclose the following:

• i. Statements showing the Unaudited (Standalone and Consolidated) Financial results of the Company for the quarter ended on December 31, 2020; and
• ii. The Limited Review Reports issued by the Statutory Auditors of the Company on the aforesaid Unaudited (Standalone and Consolidated) Financial Results

Further, these Financial Results will be uploaded on the Company's website www.varroc.com and will also be. published in Business Standard (English) and Loksatta (Marathi) newspapers.

Kindly take the same on your record and note the compliance.

arroc Engine ~~~ ::d l[;~~Je'. \J ~N""'~~ ...... ~ ~ - - - \ ~ Z:..i

Ajay Sharma ,_ '/* /:J • {.~&/ Group General Counsel and Company Secretary ~Y

Encl: a/a

Varroc Engineering Limiled Regislercd and Corporale Office: L-4, MIDC Arca, Wa luj, Aurangabad 431136, Maharashlra CIN: L28920MHI988PLC047JJ5 Tel: +912406653 700/6653 699, Fax: +91 240 2564 540 E-mail: inveslors@varroc.com

Slatement of unaudited standalone financial resulls for the quarter and nine months ended December 31, 2020
-------------------------------------------------------------------------------------------------------------	--

			Qua rter ended
			Nine months end ed	Year ended
		December	September 30,	Decembe r	December	December	Mar-ch JI,
Sr.No.	Particulars	JI, 2020	2020	JI, 2019	JI, 2020	JI, 2019	2020
			Unaudited	Unaudiled		Unaudilcd	Audited
		Unaudiled	(Rcslated	(Restated	Unaudited	(Restated	(Restaled
			refer note 2)	refer note 2)		refer note 2)	refer n ote 2)
I	Re venue from operations	7,909.55	6,960.96	6,238.68	17,382.80	19,376.07	24,981.50
2	Othe r income (refer note 3)	152.75	123.85	86.10	718.48	284.33	735.45
3	Total Income (1 + 2)	8,062.JO	7,084.81	6,324.78	18,101.28	19,660.40	25,716.95
4	Expenses
	(01) Cost ofm01teria1s consumed	5,404.99	4,449.63	3,914.53	11 ,407.3 1	11 ,876.76	15,461.27
	(b) Changes in stock of finished goods and work-in-progress	(259.54)	(59.14)	(90.94)	(357.22)	253.04	207.82
	(c) Employee benefits expense	665.26	541.58	566.20	1,657.79	1,772.53	2,462.00
	(d) Finance costs	128.68	160.85	105.86	420.83	335.41	450.75
	(e) Depreciation and amortisation expense	395.92	386.33	366.52	1,159.58	1,060.49	1,437.64
	(0 Other expenses	1,237.99	1,170.14	1.060.35	2.959.96	3.293.49	4.421.88
	Total ei:penses (4)	7,57J.JO	6,649.J8	5,922.5J	17,248.25	18,591.72	24,441.J5
5	Profil before tax (J- 4)	489.00	4J5.42	402.25	85J.OJ	l,068.68	l,275.59
6	Tax ex pense
	Current tax	77.51	102.95	80.44	180.46	189.21	170.00
	Short/( excess) provision for ta.x relating to prior periods	(34.27)	-		(34.27)		(l.79)
	Dcfcrredta.x	90.8 1	51.65	34.97	116.4 1	82.81	68.70
	Total tax expense (6)	134.05	154.60	115.42	262.60	272.02	2J6.91
7	Profit for the period (5-6)	J54.95	280.8J	286.84	590.4J	796.66	1,038.69
8	Other comprehensive income
	Items th at will be reclassified to profil or loss in subsequent periods
	(net of tax)
	Deferred hedging gains/(losscs) on cash flow hedges (net of tax)	(6.95)	(20.09)	0.82	(19.90)	7.45	21.72
	Items that will not be reclassified lo proril or loss in subsequenl
	pe riods (ne:I of tu:)
	Remeasurement of defined benefit obligation (net ofta.x)						(18.02)
	Other comprehensive income	(6.95)	(20.09)	0.82	(19.90)	7.45	J.70
9	Total comprehensive income for the period (7+8)	J48.00	260.74	287.66	570.5J	804.11	l,042.J9
10	P01id-up equity share capital	IJ4.81	134.81	134.81	134.81	134.81	134.81
	(F11ce value of the share in Re. I/- each)
11	Reserves excluding revaluation reserves '1S per balance sheet of						11,238.88
	previous accounting year
12	Earnings per share (of Re I/- each) (not ilrulualiscd):
	Basic & diluted	2.6J	2.08	2.IJ	4.J8	5.91	7.70

Varroc Engineering Limited

Registered and Corporate Office: L-4, MIDC Area, Waluj, Aurangabad 431 136, Maharasht1 CIN: L28920MH1988PLC047335 Tel: +91 240 6653 700/6653 699, Fax: +91 240 2564 540 E-mail: investors@varroc.com

Notes to the Unaudited Standalone Financial Results:

• 1. The above results were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on February 9, 2021 and were subjected to limited review by the Statutory Auditors.
• 1. Pursuant to provisions of Section 230-232 of the Companies Act 2013, the Board of Directors of the Company on November 12, 2019 had approved the scheme of amalgamation ofVarroc Lighting Systems (India) Private Limited ('VLSIPL') (wholly owned subsidiary of the Company) with Varroc Engineering Limited with appointed date of April 01 , 2020 ('the Scheme'). National Company Law Tribunal (NCLT') approved the above scheme Vide its order dated November 02, 2020 and the merger became effective on December 7, 2020 on filing of the NCLT order the Registrar of Companies. The merger has been accounted for as business combination of entities under common control as per Appendix C to Ind AS 103 - Business Combinations. Accordingly, all the comparative periods presented in the standalone results have been restated to include the effect of this merger.
• 1. The automotive lighting plant of the Company (erstwhile Varroc Lighting Systems India Private Limited) at Pune, India was destroyed by fire on February 18, 2020. The insurance claim in this regard was settled in an earlier quarter and accordingly the other income for the nine months period ended December 31, 2020 includes an amount of Rs. 364.72 million being the excess of claim amount over net book value of assets destroyed.
• 1. The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.
• 1. The Company has considered the possible effects of the COVID-19 pandemic including the impact on sales projections for future periods and consequent impacts on the recoverable values of assets including property, plant and equipment, intangible assets, etc. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic and arriving at estimates, the Company, as at the date of approval of these financial results, has used internal and external sources of information. The Company has performed analysis on the assumptions used and based on current estimates, expects the carrying amounts of the assets to be recoverable as at December 31 , 2020. The impact of COVID-19 on the Company's financial results may differ from that estimated as at the date of approval of these standalone financial results.

Place: Pune Date: February 09, 2021

For and on behalf of Boa of Directors Varroc Engineerin Limited -

Tarang Jain ./ Chairman and Managing Director

SR BC & CO LLP Chartered Accountants

Ground Floor Panchshil Tech Park, Yerwada (Near Don Bosco School) Pune - 411 006, India Tel : +91 20 6603 6000

Independent Auditor's Review Report on the Quarterly and Year to Date Unaudited Standalone Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report to The Board of Directors Varroc Engineering Limited

• I. We have reviewed the accompanying state111 ent of unaudited standalone financial results ofVarroc Engineering Li111ited (the ·'Company") for the quarter ended Dece111ber 3 1, 2020 and year to date fro111 April 0 I, 2020 to Dece111ber 31 , 2020 (the "State111cnt'') attached herewith, being submitted by the Co111pany pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Require111ents) Regulations, 2015 , as a111ended (the ·'Listing Regulations'').
• 1. This State111ent, which is the responsibility of the Co111pany's Manage111ent and approved by the Co111 pany's Board of Directors, has been prepared in accordance with the recogn ition and 111 easure111 ent principles laid down in Indian Accounting Standard 34, (Ind AS 34) ·'lnteri111 Financial Repo1t ing'· prescribed under Section 133 of the Companies Act, 20 13 as amended, read with relevant rul es issued thereunder and other accounting principles genera lly accepted in India. Our responsibility is to express a conclusion on the State111ent based on our rev iew.
• 1. We conducted our rev iew of the State111 ent in accordance with the Standard on Rev iew Engagements (SR E) 24 10, ··Review of Interim Financial lnfor111 ation Perfor111ed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of Ind ia. This standard requires that we plan and perform the rev iew to obtain 111oderate assurance as to whether the State111ent is free of 111 aterial 111 isstatement. A rev iew of interim financial infor111ation consists of 111aking inquiries, primarily of persons responsible for financial and accou nting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
• 1. Based on our rev iew conducted as above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the recogn ition and measurement principles laid down in the aforesa id Ind ia n Accounting Standards (' Ind AS') specified under Section 133 of the Companies Act, 2013 as a111ended , read with relevant rules issued thereu nder and other accounting principles generally accepted in India, has not disc losed the information required to be disc losed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstate111 ent.

per Pa Partner Membership No.: I 05754 UDIN: 21105754AAAAAQ 153 1

Place: Punc Date: February 9, 2021

Varroc Engineering Limited Registered and Corporate Office: L-4, MIDC Area, Waluj, Aurangabad 431 136, Maharashtra CIN: L28920MHl988PLC047335 Tel : +91 240 6653 700/6653 699, Fax : +91 240 2564 540 £:.mail : investors@varroc.com

Statement of unaudited consolidated financial results for the quarter and nine months ended December 31, 2020

	Nine months ended					IRs. In million)
			Quarter ended				Year ended
Sr. No.	Particulars	December 31,2020	September 30,2020	Dec em her 31,2019	December 31,2020	December 31,2019	March 31, 2020
		Unaudited	Unaudited	Unaudited(Restatedrefer note 9)	Unaudited	Unaudited(Restatedrefer note 9)	Audited
I	Revenue from operations	34,926.55	29,161.46	28,038.12	76,834.94	83,771.22	111,218.68
2	Other income	219.32	231.57	95.90	950.90	501.51	988.86
3	Total income (1+2)	35,145.87	29,393.03	28,134.02	77,785.84	84,272.73	112,207.54
4	Expenses
	Cost of materials consumed	23,896.80	18,564.34	17,432.98	50,80 l.54	50,936.26	70, 193.63
	Changes in inventories of work-in-progress and finished goods	(819.02)	206.37	(160.82)	(329.38)	297.17	(332.12)
	Employee benefits expense	4, 154.46	3,782.85	3,977.57	11,324.70	11,873 .85	15,929.19
	Finance costsDepreciation and amortisation expense	378.802,247.19	442.752,270.31	365.971,940.25	1,253.096,586.45	1,029.805,252.57	1,391.677,318.64
	Other expenses	5,430.95	4,175.08	4, 172. 76	12,246.22	13,134.89	17,220.02
	Total expenses	35,289.18	29,441.70	27,728.71	81,882.62	82,524.54	111,721.03
5	Profit/ (loss) before share of profits of joint ventures, tax and	(143.31)	(48.67)	405.31	(4,096.78)	1,748.19	486.51
	exceptional items (3-4)
6	Share of Profits/(loss) of Joint Ventures	92.45	90.16	81.05	292.32	13.80	(91.65)
7	Profit/(loss) before exceptional items and tax (5+6)	(50.86)	41.49	486.36	(3,804.46)	1,761.99	394.86
8	Tax expense
	Current tax	181.02	264.58	237.57	445.60	657.55	344.26
	Deferred tax	60.00	164.61	(44.47)	(484.60)	(291.61)	25.54
	Total tax expense	241.02	429.19	193.10	(39.00)	365.94	369.80
9	Profit/ (loss) for the period before exceptional items(7-8)	1291.88)	1387.70)	293.26	13,765.46'	1,396.05	25.06
IO	Exceptional item -Tax Expense (refer note 4)	1,077. 76	-		1,077.76		-
11	Profit/ (loss) for the period (9-10)	(1,369.64)	1387.70)	293.26	14,843.22'	1,396.05	25.06
12	Other comprehensive income to be reclassified to profit or lossin subsequent periodsDeferred hedging gains/(losses) on cash flow hedges (net of tax)Exchange differences in translating the financial statements o1foreign operations	(6.95)163.0l	(20.09)(381.69)	0.82150.80	(19.90)(111.55)	7.45277.18	21.72786.92
13	Other comprehensive income not to be reclassified to profit orloss in subsequent periods
	Remeasurement of defined benefit obligation (net of tax)		-		-	-	(207.15)
14	Other comprehensive income/(loss), net of tax (12+13)	156.06	1401.78)	151.62	(131.451	284.63	601.49
15	Total comprehensive income/(loss) for the period (11+14)	(1,213.58)	(789.48)	444.88	(4,974.67)	1,680.68	626.55
16	Profit/(Loss) for the period attributable to:Shareholders of the CompanyNon-controlling interests	(1,387.25)17.61	(400.63)12.93	287.076.19	(4,865.06)21.84	1,377.3218.73	1.9123.15
17	Other comprehensive income/(loss) attributable to:Shareholders of the CompanyNon-controlling interests	156.06-	(401.78)-	151.62-	(131.45)	284.63-	602.72(1.23)
18	Total comprehensive income/(loss) for the period attributable
	to:Shareholders of the CompanyNon-controlling interests	(l,231.19)17.61	(802.41)12.93	438.696.19	(4,996.51)21.84	1,661.9518.73	604.6321.92
19	Paid- up equity share capital( face value of Rs l)	134.81	134.81	134.81	134.81	134.81	134.81
20	Reserves excluding revaluation reserves as per balance sheet						29,9 10.45
21	Earnings per equity share attributable to Owners [Nominalvalue per share: Re. 1 (Previous year: Re. !)](not annualised)
	Basic and diluted (in Rupees)	(10.29)	(2.97)	2.13	(36.09)	10.22	0.01

Varroc Engineering Limited Registered and Corporate Office: L-4, MIDC Area, Waluj, Aurangabad 431136, Maharashtra CIN : L28920MH1988PLC047335 Tel : +91 240 6653 700/6653 699, Fax : +91 240 2564 540 E-mail : investors@varroc.com

Unaudited Consolidated Segment wise Revenue, Results, Assets and Liabilities

						(Rs. In million)
		Quarter ended		Nine months ended	For the vear ended
Particulars	December 31,2020	September 30,2020	December 31,2019	December 31,2020	December 31,2019	March 31, 2020
	Unaudited	Unaudited	Unaudited(Restatedrefer note 9)	Unaudited	Unaudited(Restatedrefer note 9)	Audited
1) Segment Revenue
(i) Automotive	34,416.07	28,746.45	27,431.90	75,515.43	81 ,987.69	108,967.10
(ii) Others	510.48	415.01	606.22	1,319.51	1,783.53	2,251.58
	34,926.55	29,161.46	28,038.12	76,834.94	83,771.22	111,218.68
2) Segment Results
(i) Automotive	278.09	453 .62	737.72	(2,728.87)	2,656.68	1,724.16
(ii) Others	(115.78)	(133 74)	0.03	(308 70)	(52.83 )	(95 .76)
Total Segment Results	162.31	319.88	737.75	(3,037.57)	2,603.85	1,628.40
Add/ (Less):
(a) Finance Cost	(378.80)	(442.75)	(365.97)	(1,253.09)	(1,029.80)	(1,391.67)
(b) Net unallocated (expenditure) I income	165.63	164.36	114.58	486.20	187.94	158.13
Profit/(loss) before tax	(50.86)	41.49	486.36	(3,804.46)	1,761.99	394.86
Segment Assets
(i) Automotive	100,394.06	94,368.58	87,990.95	100,394.06	87,990.95	100,808.11
(ii) Others	2,206.31	2,059.21	2,248.83	2,206.31	2,248.83	2,113.75
Total segment assets	102,600.37	96,427.79	90,239.78	102,600.37	90,239. 78	102,921.86
Add: Unallocated	6,971.38	7,689.74	6,972.96	6,971.38	6,972.96	7,100.87
Total assets	109,571.75	104,117.53	97,212.74	109,571.75	97,212.74	110,022.73
Segment Liabilities
(i) Automotive	50,340.86	41 ,627.45	35,695.78	50,340.86	35,695 .78	41 ,935.98
(ii) Others	716.45	561.97	740.63	716.45	740.63	551.15
Total segment liabilities	51,057.31	42,189.42	36,436.41	51,057.31	36,436.41	42,487.13
Add: Unallocated	33, 170.31	35,378.26	28,680.88	33, 170.31	28,680.88	37,241.10
Total liabilities	84,227.62	77,567.68	65,117.29	84,227.62	65,117.29	79,728.23

.Varroc Engineering Limited Registered and Corporate Office: L-4, MIDC Area, Waluj, Aurangabad 431136, Maharashtra CIN : L28920MH1988PLC047335 Tel : +91 240 6653 700/6653 699, Fax : +91 240 2564 540 E-mail : investors@varroc.com varroc

Notes:

• The above results were reviewed by the Audit Committee and approved by the Board of Directors at its meeting held on February 09, 2021 and were subjected to limited review by the Statutory Auditors.
• 2 These unaudited consolidated financial results have been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of Companies (Indian Accounting Standards) Rules, 2015, as amended and in terms of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 read with SEBI Circular No. CIR/CFD/CMDl/44/2019 dated March 29, 2019.
• The Group received notice from a third party auto component supplier for certain alleged patent infringements in respect of s~me of the products supplied by an overseas subsidiary of the Group in the European region. The matter is under litigation and considering that the matter is technical and needs extensive evaluation, it is not possible to predict the potential outcome of this matter. Accordingly, no provision has been considered in respect of this matter in the results for the quarter and nine months ended December 31, 2020. The auditors in their review report have drawn Emphasis of Matter in relation to this matter.
• 4 The Czech subsidiary of the company had, in earlier years, recognised certain tax credits as deferred tax assets under two different incentive schemes available to the company. The management has reassessed the recoverability of these tax assets as at Dec 31, 2020 based on revised business plans, taking into account the impact of Covid-19 on the business volumes and profitability of the Czech subsidiary in the current financial year as well as future years. Based on this assessment, management concluded that there is an uncertainty on the recoverability of the deferred tax assets recognised under the first scheme, which expire by March 2024. Accordingly, the company has considered it prudent to write off these tax assets amounting to Rs. 1,077.76 million under the above mentioned scheme during the current quarter, and the same has been disclosed separately as "Exceptional Item" in the results. The management is working on various opportunities to utilize this benefit and this write off does not impact the eligibility of the Czech subsidiary to claim the incentive benefit in the event there are sufficient taxable profits available in subsequent years before expiry of the benefits.
• The "Automotive" segment consists of the business of automobile products consisting of auto parts for two-wheelers, three-wheelers and four-wheelers and related design, development and engineering activities and other services. "Others" comprise of forging components for off road vehicles and components for mining and oil drilling industry which is below the thresholds for reporting as separate operating segment. Investment in Joint Venture and corresponding share of profit/loss from joint venture is considered under unallocated assets and profit/loss respectively.
• 6 The Group's automotive lighting plant at Pune, India was destroyed by fire on February 18, 2020. The insurance claim in this regard was settled in an earlier quarter and accordingly the other income for the nine months period ended December 31, 2020 includes an amount of Rs. 364. 72 million being the excess of claim amount over net book value of assets destroyed.
• 7 During the quaf!er ended December 31, 2020, subsidiary company in Czech Republic has received a government grant of Rs. Nil (quarter ended September 30, 2020: Rs. 56.59 Million; nine months period ended December 31, 2020 : Rs. 215.47 Million) towards employee benefit expenses incurred during the lockdown imposed due to Covid-19 pandemic.
• 8 The deferred tax in "Tax expense" for the quarter ended December 31, 2020 includes a credit of Rs. 134.15 Million (Quarter ended September 30, 2020: Nil and Quarter ended December 31, 2019: credit of Rs. 73.40 million; Year ended March 31, 2020: credit of Rs. 387.19 million) recognized on tax incentive on eligible investments by the subsidiary in Czech Republic which can be utilized against future taxable income over I 0 years (Incentive Scheme expires in March 2030).
• 9 On August 30, 2019, the Group acquired "CarIQ Technologies Private Limited", engaged in supply of connected car platforms. During the quarter ended March 31, 2020, the Group finalized the allocation of the purchase consideration of Rs. 258.61 million to the assets and liabilities (including intangible assets viz. Technology platforms and Brand which were not recognized in acquiree's books) based on their acquisition date fair values. The consideration in excess of fair values of the assets and liabilities acquired was allocated to Goodwill. Since the Group has finalized purchase price allocation during the quarter ended March 31, 2020, the comparative information for the quarter and nine months ended December 31, 2019 have beeri restated after giving effect of such allocation.
• 10 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code \Vhen it comes into effect and will record any related impact in the period the Code becomes effective.
• 11 The Group has considered the possible effects of COVID-19 pandemic including the impact on sales projections for future periods and consequent impacts on the recoverable values of assets including property, plant and equipment, intangible assets, deferred tax assets, etc. In developing the assumptions relating to the possible future uncertainties in the economic conditions because of this pandemic and arriving at estimates, the Group, as at the date of approval of these financial results, has used internal and external sources of information. The Group has performed analysis on the assumptions used and based on current estimates, expects that the carrying amounts of the assets to be recoverable as at December 31 , 2020. The impact of COVID-19 on the Group's financial results may differ from that estimated as at the date of approval of these consolidated financial results.
• 12 Figures of previous year/periods have been reclassified/regrouped/restated, wherever necessary.

For and on behalf of Board of Directors __yarroc Engineering ited

I

Date : February 09, 2021 Chairman and Managing Director

Ground Floor Panchshil Tech Park, Yerwada (Near Don Bosco School) Pune - 411 006, India Tel • +91 20 6603 6000

Independent Auditor's Review Report on the Quarterly and Year to Date Unaudited Consolidated Financial Results of the Company Pursuant to the Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended

Review Report to The Board of Di rectors Varroc Engineering Limited

• 1. We have reviewed the accompanying Statement of Unaudited Consolidated Financial Results of Varroc Engineering Limited (the ''Holding Company'') and its subsidiaries (the Holding Company and its subsidiaries together referred to as ''the Group''), and its joint ventures for the quarter ended December 31 , 2020 and year to elate from April I, 2020 to December 31, 2020 (the "Statement") attached herewith, being submitted by the Holding Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the ''Listing Regulations'').
• 1. This Statement, which is the responsibility of the Holding Company's Management and approved by the Holding Company's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid clown in Indian Accounting Standard 34, (Ind AS 34) '"Interim Financial Reporting" prescribed under Section 133 of the Companies Act 2013 as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Statement based on our review.
• 1. We conducted our review of the Statement in accordance with the Standard 011 Review Engagements (SRr·:) 2410, '"Review oflnterim Financial Information Performed by the Independent Auditor of the Entity" issued by the Institute of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We also performed procedures in accordance with the Circular No. CI R/CFD/CMD 1/44/2019 dated March 29, 2019 issued by the Securities and Exchange Board of India under Regulation 33(8) of the Listing Regulations, to the extent applicable.

1. The Statement includes the results of the following entities:

List of Subsidiaries:

Varroc Polymers Private Limited; Durovalves India Private Limited; Team Concepts Private Limited; Varroc Lighting Systems (India) Private Limited; CarlQ Technologies Private Limited; Varroc European Holding B.V.; VarrocCorp Holding B.V.; Varroc Japan Co. Ltd.; IMES, Italy; Varroc Lighting Systems Italy, S.p.A.; Varroc Lighting Systems Romania S.A .. ; Varroc Lighting Systems Vietnam Co. Ltd.; Varroc Lighting Systems SRO CZ; Varroc Lighting Systems, INC; Varroc Lighting Systems, GmBH; Varroc Lighting Systems, S.de.R.L.dc.C.V.; Varroc Lighting Systems SA, Morocco; Varroc do Brasil lndustria E Comercio LTDA; Varroc Lighting Systems, S.p.z.o.o.; Varroc Lighting Systems EndUstriyel Oriinler imalat ve Ticaret Anonim $irkefr if11Toc Lighting Systems Bulgaria Eood. Varroc Elba Electronics SRL, Romania. (~i ~

List of .Joint Ventures:

Nuova CTS, Sri, Italy; Varroc TYC Corporation BVI; Varroc Dell'Orto Private Limited.

1. Based on our review conducted and procedures performed as stated in paragraph 3 above and based on the consideration of the review reports of other auditors referred to in paragraph 7 and 9 below, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with recognition and measurement principles laid down in the aforesaid Indian Accounting Standards ('Ind AS') specified under Section 133 of the Companies Act, 2013, as amended, read with relevant rules issued thereunder and other accounting principles generally accepted in India, has not disclosed the information required to be disc losed in terms of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.

Emphasis of matter

1. We draw attention to Note 3 of the accompanying consolidated financial results in respect of litigation relating to alleged patent infringements. In management's view, the matter is technical and needs extensive evaluation and hence it is not possible to predict the potential outcome of this matter. Based on a legal opinion obtained, the Group believes that it has grounds to defend against the said allegation and accordingly no provision has been considered in respect of this matter in these results.

Our conclusion is not modified in respect of this matter.

Other matters

• 1. The accompanying Statement includes the unaudited interim financial results/statements and other financial information, in respect of:
  • 7 subsidiaries, whose unaudited interim financial results/statements include total revenues of Rs 7,690 million and Rs 18,043 million, total net profit/(loss) after tax of Rs. (587) million and Rs. ( 1,525) mill ion, total comprehensive income/loss of Rs. ( 587) mi II ion and Rs. ( 1,525) million, for the quarter ended December 3 I, 2020 and for the period from April 1, 2020 to December 31, 2020 respectively, as considered in the Statement, which have been reviewed by their respective independent auditors.
  • I joint venture, whose unaudited interim financial results/statements include Group's share of net profit/( loss) of Rs. 110 million and Rs. 350 million and Group's share of total comprehensive income of Rs. I I 0 mill ion and Rs. 350 million for the qua1ter ended December 31, 2020 and for the period from April I, 2020 to December 31, 2020 respectively, as considered in the Statement, whose interim financial results/financial statements, other financial information have been reviewed by its independent auditors.

The independent auditors' repo1ts on interim financial statements/ financial information/ financial results of these entities have been furnished to us by the Management and our conclusion on the Statement, in so far as it relates to the amounts and disclosures in respect of these subsidiaries and joint ventures is based solely on the report of such auditors and procedures performed by us as stated in paragraph 3 above.

1. Certain of these subsidiaries and joint ventures are located outside India whose financial results and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been reviewed by other auditors under generally accepted auditing standards applicable in their respective countries. The Holding Company's management has converted the financial results of such subsidiaries int . ventL~ re s

SR BC & CO LLP

Chartered Accountants

located outside India from accounting principles generally accepted in their respective countries to accounting principles generally accepted in India. We have reviewed these conversion adjustments made by the Holding Company's management. Our conclusion in so far as it relates to the balances and affairs of such subsidiaries~joint ventures located outside India is based on the report of other auditors and the conversion adjustlllents prepared by the Jllanagement of the Holding Company and reviewed by us.

• 1. The accompanying Statement includes unaudited interilll financial results /statelllents and other unaudited financial information in respect of:
  • 5 subsidiaries, whose interilll financial results/statements and other financial information reflect total revenues of Rs 206 lllillion and Rs 489 Ill ill ion, total net profit/(loss) after tax of Rs. 80 lllillion and Rs. 27 Ill ill ion, total colllprehensive income of Rs. 27 million and Rs. 27 lllillion, for the quarter ended December 31, 2020 and for the period frolll April 1, 2020 to Decelllber 31, 2020, respectively.
  • 3 joint ventures, whose interim financial results/statements includes the Group's share of net loss of Rs. ( 17) million and Rs (58) million and Group's share of total comprehensive loss of Rs. ( 17) million and Rs. (58) lllillion for the quarter ended December 31 , 2020 and for the period from April I, 2020 to December 31, 2020, respectively.

The unaudited interim financial statelllents/financial information/financial results and other unaudited financial inforlllation of the these subsidiaries and joint ventures have not been reviewed by any auditor and have been approved and certified by the Managelllent and our conclusion on the Statelllent, in so far as it relates to the affairs of these subsidiaries and joint ventures, is based solely on such unaudited interilll financial statelllent/financial results and other unaudited financial information. According to the information and explanations given to us by the Managelllent, these interim financial statelllents/financial information/financial results are not lllaterial to the Group.

Our conclusion on the Statement in respect of matters stated in para 7, 8 and 9 above is not modified with respect to our reliance on the work done and the reports of the other auditors and the financial results/financial information certified by the Management.

For S R B C & CO LLP

per Pau Partner Membership No.: I 05754

UDIN: 21105754AAAAAR5780

Place: Pune Date: February 9. 2021