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Varroc Engineering Limited Investor Presentation 2020
61938_rns_2020-02-13_4a0bc255-dd0b-477f-a1eb-f475b9ebceeb.pdf
Investor Presentation
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Varroc Engineering Ltd.
Regd. & Corp. Office
L-4, MIDC, Industrial Area Tel + 91 240 6653700 Waluj, Aurangabad 431136 Fax + 91 240 2564540
VARROC/SE/I NT /2019-20/80 February 13, 2020
To,
(1) The Manager- Listing (2) 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.
NSE Symbol: VARROC
email: [email protected] www.varroc.com varroc Maharashtra, India CIN: L28920MH1988PLC047335 EXCELLENCE
The Corporate Relation Department, BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai-400001.
BSE Security Code: 541578 Security ID: VARROC
Dear Sir/ Madam,
Sub.: Intimation of participation in Investor Conference.
Ref.: Disclosure under Regulation 30 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations')
Pursuant to Regulation 30 of Listing Regulations, this is to inform you that, the Company is participating in the following Investor Conferences:
| SI No. | Date* | Investor Conference/ Organizer | Venue | |||
|---|---|---|---|---|---|---|
| 1 | February 14, 2020 | Edelweiss India Conference 2020 | St | RegisMumbai | Hotel, | |
| 2 | February 17, 2020 | Kotak Chasing Growth | Trident, BKC, Mumbai |
*Meeting schedule may change due to exigencies.
The attached presentation will be presented at the said Conference.
Kindly take note of the above.
Thanking you,
Yours faithfully, . F r Varroc Engineering Limited
Ajay Sharma Group General Counsel and Company Secretary
Encl: a/a
Investor Presentation
October 2019
Varroc is a leading Indian auto component groupwith a global footprint
- Founded in 1988 in Aurangabad, India by the Jain family
- Successful listing on the Indian Stock Exchanges in July 2018
Two primary business lines:
1. Varroc Lighting Systems ("VLS"): global supplier of exterior lighting systems to passenger car OEMs
- 2. Varroc India Business: manufacturer and supplier of diverse range of Polymer, Electrical and Metallic auto components to 2W, 3W and 4W OEMs.
- Strong, long-lasting, growing customer relationships with marquee auto OEMs globally and in India
- Well-diversified global auto component business across geographies, products and customers
- Low cost, strategically located global manufacturing footprint
- 41 Operating plus 2 Upcoming Manufacturing Facilities and 16 R&D Centres across 5 continents (4)
- In-house R&D capabilities in India, Czech Republic, China(3), USA, Mexico, Germany, Italy, Romania and Poland
- ~1,400 R&D engineers(4); 185 patents granted globally(4)
- Experienced management team supported by reputed Board
- ~13,800 employees across the globe(4)
Leading
Tier-1 manufacturer and supplier to the Indian 2W and 3W OEMs(4)
6 th
Largest(1), fastest growing among top six global exterior auto lighting suppliers
INR 125bn/ USD 1.8bn FY19 revenue(2)
Business Overview
| ELECTRICAL -ELECTRONICS | POLYMER | METALLIC (Forging and Valves) | GLOBAL LIGHTING | IMES (International Forging) |
|---|---|---|---|---|
| •2W lighting for Indian•Digital clusters•Motors, Magnetos•Regulator & Rectifiers•Body switches, CDI,•Catalytic Converters | •Air Filter Assembly•Seating Assembly•Interiors (Instrumentpanel, Door panel etc.)•Painted plastic exteriorproducts•Mirror assembly | •Engine valves•Transmission gears•Crank pins, Links•Connecting Rods•Crankshafts | •Head Lamps•Rear Lamps•CHMSL•Fog Lamps | •Undercarriage Links•Drill bit cones &heads•UndercarriageSegments |
| India#7 Facilities – | India#14 Facilities – | India#5 Facilities – | Global PV lighting -10 FacilitiesCzech(2), China (2), Turkey (2),Mexico, India, Brazil, MoroccoGlobal 2W Lighting 3 -FacilitiesItaly, Romania, Vietnam | 2 Facilities -Italy |
| •Comprehensive solutions inelectrical-electronicscomponents, assemblies forautomotive applications.•1350+ employees | •One of the largest polymersolution providers to allmajor auto OEMs with apan-India presence•1940+ employees | •Offers precision forged &machined parts for enginesand transmissions•Supplies engines valves indomestic and internationalmarkets•1650+ employees | •Leading global supplier ofexterior automotive lightingsystems for PV•High end lighting systems forthe global 2W industry•2 more upcoming facilities•7870+ employees | •Manufactures hot steelforged parts for theconstruction and oil & gasindustries•135+ employees |
| 2W, 3W, PV & CV | 2W, 3W, PV & CV | 2W, 3W, PV, CV&OHV | PV & 2W | Earth-moving & Oil-drilling |
# Pantnagar facility is included in metallic but caters to all 3 verticals of India business. Global 2W lighting business is part of VLS and domestic 2W lighting business is part of Electrical and Electronics business India business also has a small After Market Division, Solar and Windmill units whish are not shown separately; Employees for these division and Corporate are over and above the divisional break-up shown above
Well Diversified Business Across Geographies, Product Groups, Customers and Segments
FY19 Consolidated Revenue: INR 120 bn (1) 100% China JV FY18 Revenue: INR 10 bn
7.7% 3.7%
Others
(4)
- Diversified business in developed and emerging markets with strong India presence
- Comprehensive range of engine agnostic products
- Diversified customer relationships; no customer has >20% share
- Presence in fast growing India 2W and Global PV lighting segments
Note: (1) 50% China revenues not included (JV accounted under equity method). (2) 4W – 4-wheeler (includes PV), 2/3W – 2/3-wheeler; data as per MIS (3) Customer A is an American multinational car manufacturer, Customer B is a large British car manufacturer, Customer C is an American electric car manufacturer, Customer D is an international automotive manufacturer, customer E is a large European car manufacturer and Customer F is a global automotive manufacturer headquartered in Europe. Based on MIS data; (4) Bajaj is the customer of the India Business; Customer A, B, C, D, E, F are mainly the customers of VLS 4
Varroc – The Transformation into a Global Auto Component Group
Low Cost, Strategically Located Global Manufacturing Footprint
41 Operating plus 2 Upcoming Manufacturing Facilities and 16 R&D Centers Across Asia, Europe, Africa, North and South America
India Business: Comprehensive Solution Provider to 2W OEMs in India
Diversified Portfolio Catering to 2W and 3W Segments
VLS: Wide Range of Lighting Product and Technology Offerings
Broad Portfolio of Lighting Technologies for PV OEMs Globally
- Full portfolio of head lamp and rear lamp providing a wide range of products
- Established presence in key emerging technologies such as LED, OLED Laser, Matrix
- Quick adoption of new technology to grow product portfolio
- Customized products for OEMs with long standing relationships
- Providing cost effective, cutting edge technology products
R&D Efforts Seek to Capitalize on Emerging Trends
Regulation change creates potential for suppliers with robust operational systems to cross sell product lines; core auto themes like lightweighting and affordability will continue to guide OEM decision making
Varroc — Key Strengths
Varroc Leadership
Tarang Jain*^ Managing Director
- Co-founded Varroc in 1988
- Nearly 30 years experience in the automotive industry
- Experienced management team
- Independent directors with experience across industries & practices
- Strong governance: Big-4 statutory and internal auditors; independent board committees
Naresh Chandra* Chairman and Non-Executive Director
- Total Experience: 35+ years in the automobile industry
- Previously associated with Kaycee Industries
Gautam Khandelwal Independent Director
• Executive Chairman, Nagpur Power and Industries Ltd
Marc Szulewicz Independent Director
• Ex-General Manager, Foreign equipment division, Plastic Omnium Management
Vinish Kathuria Independent Director
• Co-Founder and President of Rank software Inc.
Vijaya Sampath Independent Director
• Lawyer, ex-Group General Counsel for Bharti Airtel Ltd
Ashwani Maheshwari^
Chief Executive Officer and Whole-time Director
Note: * denotes member of Promoter Group. ^ denotes member of Board of Directors. Board of Directors • Previously worked as President at Birla Tyres at Kesoram Industries Limited, Senior Vice President – India Business division in ITC Infotech India Ltd
Stephane Vedie
President and CEO – VLS
- Total Experience: 13 years in Automotive Lighting
- Previously associated with Magnetti Marelli
- Total Experience: ~22 years
- Previously associated with Assa Abloy, Stanley Black & Decker, Schneider Electric, General Electric and Lucas TVS
T. R. Srinivasan Group Chief Financial Officer
- Total Experience: ~29 years
- Previously associated with Hindustan Lever Ltd, ATC Tires Private Ltd
Arjun Jain*^
Business Head – Electrical & Electronics Division and Whole-time Director
• Previously associated with Bain & Co India Pvt. Ltd.
Financials & Share Details
Financial Summary : Key Performance Indicators
*Calculated using reported numbers on a trailing twelve month basis; Return on Equity calculated after considering imputed interest cost & liability portion of CCPS; FY15 and FY16 the ROE fluctuation is due to significant change in imputed finance cost on CCPS # Historical EBITDA margin is as reported / FY19 EBITDA margin is excluding non-operating other income 13
Financial Summary: Income Statement Q4 & FY19
| (INR million) | |||
|---|---|---|---|
*EBITDA = Profit before share of net profits of investments plus Depreciation plus Finance Cost less Non-operating Portion of Other Income $ like-for-like excludes impact of Interior Plastics business closure in North America and adjusted for comparative launch costs
Financial Summary : Segmental Break-up
| Fiscal year ending March 31,* | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (INR million) | FY16 | FY17 | FY18 | FY19 (like-for-like) | |||||
| Revenue | $\frac{9}{6}$ | $\frac{9}{6}$ | % | % | |||||
| Global Lighting Business | 48,198 | 58.6% | 61,242 | 63.7% | 63,211 | 60.9% | 72,668 | 60.4% | |
| India Business | 30,807 | 37.5% | 31,681 | 33.0% | 36,508 | 35.2% | 42,744 | 35.5% | |
| Other Businesses | 3,185 | 3.9% | 3,163 | 3.3% | 4,278 | 4.1% | 5,485 | 4.6% | |
| Eliminations | (212) | (533) | |||||||
| Total | 82,189 | 96,085 | 1,03,785 | 1,20,365 | |||||
| China JV $-100%$ | 12,235 | 15,339 | 12,287 | 9,470 | |||||
| EBITDA Margin | |||||||||
| Global Lighting Business | 6.5% | 6.2% | 7.3% | 7.1% | |||||
| India Business | 8.8% | 8.8% | 10.9% | 10.8% | |||||
| Other Businesses | 1.5% | 5.5% | 9.3% | 11.0% | |||||
| Total | 7.2% | 7.0% | 8.6% | 8.6% | |||||
| China JV | 13.4% | 15.3% | 15.6% | 11.4% |
***EBITDA = Profit before share of net profits of investments plus depreciation plus finance cost less non-operating portion of other income $ like-for-like excludes impact of Interior Plastics business closure in North America, Ind AS 115, start-up costs and launch costs 15
Financial Summary : Balance Sheet
| Fiscal Year Ending March 31, | ||||||
|---|---|---|---|---|---|---|
| $(INR$ mn $)$ | 2016 | 2017 | FY18 | FY19 | ||
| Assets | ||||||
| Non-current Assets | ||||||
| Fixed Assets | 24,263 | 26,881 | 31,480 | 45,593 | ||
| Others - Non-current Assets | 4,508 | 4,538 | 6,439 | 8,266 | ||
| Total Non-current Assets | 28,771 | 31,419 | 37,920 | 53,859 | ||
| Current Assets | ||||||
| Current Investments | 119 | 0 | 30 | 186 | ||
| Cash and Bank Balances | 1,772 | 3,541 | 3,289 | 1,608 | ||
| Others - Current Assets | 21,697 | 23,644 | 27,285 | 31,877 | ||
| Total Current Assets | 23,587 | 27,185 | 30,604 | 33,671 | ||
| Total Assets | 52,459 | 58,604 | 68,524 | 87,530 | ||
| Equity and Liabilities | ||||||
| Shareholder's Funds | ||||||
| Share Capital | 262 | 135 | 135 | 135 | ||
| Reserves and Surplus | 17,366 | 21,719 | 28,145 | 30,736 | ||
| Minority Interest | 203 | 202 | 208 | 241 | ||
| Total Shareholder's Funds | 17,832 | 22,055 | 28,488 | 31,112 | ||
| Non-current Liabilities | ||||||
| CCPS | 2,060 | |||||
| Long-term Borrowings | 5,573 | 7,553 | 6,361 | 5,806 | ||
| Others - Non-current Liabilities | 1,392 | 1,044 | 1,944 | 2,347 | ||
| Total Non-current Liabilities | 9,026 | 8,597 | 8,306 | 8,152 | ||
| Current Liabilities | ||||||
| Short-term Borrowings | 6,419 | 7,578 | 5,629 | 12,015 | ||
| Others - Current Liabilities | 19,182 | 20,374 | 26,102 | 36,251 | ||
| Total Current Liabilities | 25,601 | 27,951 | 31,730 | 48,266 | ||
| Total Equity and Liabilities | 52,459 | 58,604 | 68,524 | 87,530 |
16
Shareholding Details
* As on 04th October, 2019 for top 250 portfolios only. Shareholding under multiple portfolios/ plans clubbed together. Stake rounded off to nearest decimal
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