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Varroc Engineering Limited Investor Presentation 2021
61938_rns_2021-02-19_646d9956-71fe-42a9-ab4d-b4cc42d723ba.pdf
Investor Presentation
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Varroc Engineering Limited
Regd. & Corp. Office
L-4, MIDC, Industrial Area I Tel +91 240 6653600 Waluj, Aurangabad 431 136 fax +91 240 2564540
email: [email protected] www.varroc.-...r.com Maharashtra, vcrroc India CIN: L28920MH 1988PLC047335
l
VARROC/SE/INT/2020-21/70
To,
The Manager- Listing The Listing Department, National Stock Exchange of India Limited Exchange Plaza, Plot No. Cf 1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai-400051.
. NSE Symbol: VARROC
The Manager - Listing The Corporate Relation Department, Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai-400001 .
BSE Security Code: 541578
Sub.: Intimation regarding participation in Investor Conference
Ref.: Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations')
Dear Sir/Madam,
Pursuant to Regulation 30 of the Listing Regulations, tliis is to inform you that, the Company will be participating in ongoing "Kotak : Chasing Growth Conference, 2021" which is being held till February 23, .2021 , organized by Kotak Securities Limited. It may be noted that the schedule will be subject to changes on the part of the investors / organizers/ management team. ·
The attached presentation will be presented at the said Conference.
We request you to take this on record, and to treat the same as compliance with the applicable provisions of the Listing Regulations, as amended.
Yours faithfully,
For Varroc Engineering Limited
Ajay Sharma Group General Counsel and Company Secretary February 19, 2021
Varroc Engineering Limited Corporate Presentation
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
- 43 Operating 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
- ~14,300 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 global exterior auto lighting suppliers
INR 115bn/ USD 1.54bn FY20 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 (Instrument panel, Door panel etc.) • Painted plastic exterior products • 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 • Undercarriage Segments |
| India# 8 Facilities – |
India# 13 Facilities – |
India# 5 Facilities – |
Global PV lighting -15 Facilities Czech(2), China (2), India (2) Mexico, Morocco, Turkey, Poland, Brazil, Bulgaria Global 2W Lighting 3 -Facilities Italy, Romania, Vietnam |
2 Facilities - Italy |
| • Comprehensive solutions in electrical-electronics components, assemblies for automotive applications. • 1350+ employees |
• One of the largest polymer solution providers to all major auto OEMs with a pan-India presence • 1940+ employees |
• Offers precision forged & machined parts for engines and transmissions • Supplies engines valves in domestic and international markets • 1650+ employees |
• Leading global supplier of exterior automotive lighting systems for PV • High end lighting systems for the global 2W industry • 2 more upcoming facilities • 7870+ employees |
• Manufactures hot steel forged parts for the construction and oil & gas industries • 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
FY20 Consolidated Revenue: INR 112 bn (1) 100% China JV Revenue: INR 8 bn
Note: (1) 50% China revenues not included (JV accounted under equity method) and other operating revenue not included(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,
- 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
Varroc – The Transformation into a Global Auto Component Group
Low Cost, Strategically Located Global Manufacturing Footprint
43 Operating Manufacturing Facilities and 16 R&D Centers Across Asia, Europe, Africa, North and South America
- • Manufacturing and R&D footprint spread across low cost countries
- • Proximity to OEMs leading to cost effectiveness and quicker turnaround times
- Pan-India presence enabling proximity to customers across key automotive hubs
•
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
10
Varroc Leadership
Tarang Jain*^
Chairman and 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
Marc Szulewicz Independent Director
• Ex-General Manager, Foreign equipment division, Plastic Omnium Management
Gautam Khandelwal Independent Director • Executive Chairman, Nagpur Power and
Vinish Kathuria Independent Director
• Co-Founder and President of Rank software Inc.
Vijaya Sampath Independent Director
Industries Ltd
• Lawyer, ex-Group General Counsel for Bharti Airtel Ltd
Arjun Jain*^
Business Head – Electrical & Electronics Division and Whole-time Director
Note: * denotes member of Promoter Group. ^ denotes member of Board of Directors. Board of Directors • Previously associated with Bain & Co India Pvt. Ltd.
& Decker, Schneider Electric, General Electric and
Stephane Vedie
- President and CEO – VLS
- Total Experience: 15 years in Automotive Lighting
- Previously associated with Magnetti Marelli
Rohit Prakash^
- Total Experience: ~30 years
- Previously worked with Sogefi Engine systems India, NTTF Industries Ltd and at FIEM industries
T. R. Srinivasan Group Chief Financial Officer
- Total Experience: ~30 years
- Previously associated with Hindustan Lever Ltd, ATC Tires Private Ltd
11
Lucas TVS
Financials & Share Details
Financial Summary : Key Performance Indicators
ROCE & ROE trend*
%
Reported EBITDA and Reported EBITDA margin #
INR Billion, %
0.8 0.5 0.3 0.7
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
0.8
Multiple (x)
1.4
Debt to Equity
Financial Summary: Income Statement Q4 & FY20
| (INR million) | ||||||
|---|---|---|---|---|---|---|
| Q4 FY20 | Q4 FY19* | % Change | FY20 | FY19* | % Change | |
| Revenue from Operations - Reported |
27447.5 | 31534.0 | -13% | 111218.7 | 120364.7 | -8% |
| Revenue from Operations : like-for-like | 27447.5 | 31379.0 | -13% | 111218.7 | 120282.1 | -8% |
| Other Income - Operating |
479.4 | 226.1 | 925.7 | 650.2 | ||
| Other Income - non-Operating |
7.9 | 59.8 | 63.2 | 257.7 | ||
| EBITDA : Reported | 1158.3 | 2855.9 | -59% | 9133.6 | 11237.8 | -19% |
| EBITDA : like-for-like | 985.2 | 3030.2 | -67% | 8478.5 | 11798.9 | -28% |
| EBITDA % | 3.6% | 9.7% | 7.6% | 9.8% | ||
| Depreciation & Amortisation | 2066.1 | 1529.7 | 35% | 7318.6 | 5656.4 | 29% |
| Finance Cost | 361.9 | 258.6 | 40% | 1391.7 | 968.5 | 44% |
| Share of net profits of JVs under equity method | -105.5 | 50.8 | -91.7 | 314.5 | ||
| PBT - Reported |
-1367.2 | 1178.3 | 394.9 | 5185.2 | -92% | |
| Tax | 3.9 | -111.0 | 369.8 | 898.4 | -59% | |
| Tax rate | -0.3% | -9.8% | 76.0% | 18.4% | ||
| PAT - Reported |
-1371.0 | 1289.3 | 25.1 | 4286.8 | -99% |
*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
| FY20 | FY19* | Revenue | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| SBU | Revenue | Revenue like-for-like |
EBITDA | EBITDA # Like-for-like |
% EBITDA | Revenue | Revenue like-for-like |
EBITDA | EBITDA # Like-for-like |
% EBITDA | Change YoY |
| India Business | 38,253 | 38,253 | 3,901 | 3,832 | 10.0% | 42,720 | 42,720 | 4,623 | 4,623 | 10.8% | -10.5% |
| VLS (Incl TRIOM) | 71,054 | 71,054 | 5,116 | 4,531 | 6.4% | 75,101 | 75,018 | 6,385 | 6,946 | 9.3% | -5.3% |
| Others (IMES) | 2,291 | 2,291 | 100 | 100 | 4.4% | 3,076 | 3,076 | 303 | 303 | 9.9% | -25.5% |
| Elimination | (380) | (380) | 15 | 15 | (533) | (533) | (74) | (74) | |||
| Total | 1,11,219 | 1,11,219 | 9,134 | 8,478 | 7.6% | 1,20,365 | 1,20,282 | 11,238 | 11,799 | 9.8% | -7.5% |
| China JV - 50%@ |
3,981 | 3,981 | 230 | 230 | 5.8% | 4,731 | 4,731 | 578 | 578 | 12.2% | -15.9% |
| Difference with FS >> |
0 | (0.0) | 0 | 0 | |||||||
| Euro Performance | Euro million | ||||||||||
| FY20 | FY19* | Revenue | |||||||||
| SBU | Revenue | Revenue like-for-like |
EBITDA | EBITDA # Like-for-like |
% EBITDA | Revenue | Revenue like-for-like |
EBITDA | EBITDA # Like-for-like |
% EBITDA | Change YoY |
| VLS -Euro | 901 | 901 | 65 | 58 | 6.4% | 928 | 920 | 79 | 86 | 9.3% | -2.1% |
Financial Summary : Balance Sheet
| Fiscal Year Ending March 31, | |||||
|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | |||
| Non -Current Assets |
|||||
| Fixed Assets | 31,480 | 45,593 | 52,448 | ||
| Others - Non -Current Assets |
6,439 | 8,355 | 7,881 | ||
| Right of use of asset | - | 8,282 | |||
| Total Non - Current Assets |
37,920 | 53,948 | 68,612 | ||
| Current Assets | |||||
| Current Investments | 30 | 186 | 40 | ||
| Cash and Bank Balances | 3,289 | 1,634 | 10,688 | ||
| Inventories | 8,641 | 8,904 | 10,758 | ||
| Receivables | 14,027 | 13,495 | 10,893 | ||
| Other -Current Assets |
4,616 | 9,156 | 9,031 | ||
| Total Current Assets | 30,604 | 33,376 | 41,411 | ||
| Total Assets | 68,524 | 87,324 | 1,10,023 | ||
| Equity and Liabilities | |||||
| Shareholder's Funds | |||||
| Share Capital | 135 | 135 | 135 | ||
| Reserves and Surplus | 28,145 | 30,529 | 29,910 | ||
| Equity attributable to owners | 28,280 | 30,664 | 30,045 | ||
| Minority Interest | 208 | 241 | 249 | ||
| Total Shareholder's Funds | 28,488 | 30,906 | 30,295 | ||
| Lease liability | - | 6,522 | |||
| Long Term Borrowings | 6,361 | 4,572 | 9,002 | ||
| Other Non -Current Liabilities |
1,944 | 4,137 | 4,232 | ||
| Total Non -Current Liabilities |
8,306 | 8,709 | 19,756 | ||
| Current Liabilities | |||||
| Short Term Borrowings | 3,439 | 12,015 | 17,004 | ||
| Finance Lease obligations | 59 | - | 604 | ||
| Current Maturities of LT debt | 2,130 | 7,806 | 9,418 | ||
| Trade Payables | 19,794 | 20,322 | 23,646 | ||
| Others Current Liabilites & provisions | 6,308 | 7,566 | 9,299 | ||
| Total Current Liabilities | 31,730 | 47,709 | 59,972 | ||
| Total Equity and Liabilities | 68,524 | 87,324 | 1,10,023 |
16
Shareholding Details
* As on 04 December, 2020 for top 250 portfolios only. Shareholding under multiple portfolios/ plans clubbed together. Stake rounded off to nearest decimal
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