On November 7, 2023, Varroc Engineering Ltd., a prominent global tier-I automotive components group, disclosed its financial results for the quarter ending on September 30, 2023. Mr. Tarang Jain, Chairman and Managing Director, made the following remarks:
“The prevailing geopolitical complexities in Europe and the Middle East have introduced a degree of uncertainty into the global business landscape. The prospect of rising inflation due to surging oil prices may exert pressure on interest rates. Nevertheless, despite these global market uncertainties, we remain optimistic about the resilient and growing economy of India. The Indian economy has maintained its growth momentum throughout FY 2024 thus far. While urban demand has rebounded notably, we anticipate a concurrent rise in rural demand, especially during the ongoing festive season.
In the second quarter of FY24, we continued our commitment to enhancing operational and financial performance. Our revenue from operations demonstrated a 3% year-on-year growth, reaching Rs. 18,868 million, despite sluggish growth in international markets due to the holiday season in Europe. The reported Profit Before Tax (PBT) for the quarter stood at Rs. 739 million, which includes a profit of Rs. 80.6 million from our joint venture. Our balance sheet has been fortified in the first half of FY24 as we accelerated certain debt reduction initiatives in Q2, resulting in a significant reduction of over Rs. 2,714 million in net debt in H1 FY24, bringing our Net Debt/Equity ratio to below 1X. Our debt-servicing capability has also improved, with the Net Debt to EBITDA ratio now at 1.35X, compared to over 2.13X at the beginning of the financial year. The annualized Return on Capital Employed (ROCE) for H1 FY24 stands at approximately 23%.
We continue to earn the trust of our customers, leading to increased business awards. This is evident in our new order wins. In H1 FY24, our new lifetime order win amounted to Rs. 36.02 billion. In Q2 FY24, we expanded our customer base by supplying components for their Electric Vehicle (EV) models, winning business from two customers for components related to the EV powertrain. These new orders will bolster our presence in the EV component space. In Q2 FY24, approximately ~4.4% of our overall revenue came from supplying to EV manufacturers.
Our commitment to enhancing technical capabilities was further strengthened in H1 FY24, with the filing of nine patents in India and one overseas.
We remain dedicated to deepening our collaboration with Original Equipment Manufacturers (OEMs) and demonstrating our ability to provide advanced technology solutions at competitive costs. Our ongoing efforts encompass optimizing capacity utilization, prudent capital allocation, and cost reduction measures across the board to fortify our business.”
About Varroc Engineering Ltd.:
Varroc Engineering Ltd. is a globally recognized tier-1 automotive component group established in 1988. The group specializes in the manufacture and supply of electricals-electronics, polymers, metallics, and exterior lighting systems to leading Original Equipment Manufacturers (OEMs). Varroc possesses end-to-end capabilities encompassing design, development, and manufacturing for a wide range of vehicles, including two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and off-highway vehicles on a global scale. The group’s income from continued operations in FY23 amounted to ₹69,209 million. Employing more than 6,500 individuals, including over 750 R&D engineers, Varroc operates 36 global manufacturing facilities along with seven R&D centers and holds over 90 patents. The shares of Varroc Engineering Limited are listed on the National Stock Exchange (VARROC) and the Bombay Stock Exchange (541578). For further information about Varroc Engineering Limited, please visit www.varroc.com.