Varroc Engineering Limited · NSE:VARROC
Varroc Engineering — Non-Deal Roadshow (October 2021)
33 slides from Varroc Engineering's roadshow presentation, Oct 5, 2021
Slide 1: Intimation of schedule of investor meetings
Varroc Engineering Ltd. Regd. & Corp. Office L-4, MIDC, Industrial Area Tel + 91 240 6653700 email: varroc.info@varroc.com Waluj, Aurangabad 431 Fax + 91 240 2564540 www.varroc.com 136, Maharashtra, India CIN: L28920MH1988PLC047335 VARROC/SE/INT/2021-22/38 October 5, 2021 To, The Manager- Listing Th
Slide 2: Varroc Engineering Limited Investor Presentation October 2021
Varroc Engineering Limited Investor Presentation October 2021 Classification : Confidential
Slide 3: Disclaimer
Disclaimer This document and the information contained herein do not constitute or form part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries or affiliates in any jurisdiction or as an i
Slide 4: Presenters
Presenters Tarang Jain Arjun Jain T. R. Srinivasan Nitin Kalani Chairman and Managing President – Electrical Group Chief Financial Head of Treasury, FP&A Director Business Unit and Whole- Officer and Investor Relations time Director Total Experience: ~ 17 years Co-founded Varroc in 1988 Previously a
Slide 5: Table of Contents
Table of Contents 1 Company Overview 5 2 Key Credit Highlights 9 3 Business Strategy 24 4 Financial Performance and Highlights 28 Classification : Confidential 4
Slide 6: Company Overview
1 Company Overview Classification : Confidential
Slide 7: Global Tier-1 Automotive Component Manufacturing Company with a Global Footprint
Varroc Engineering Limited – Global Tier-1 Automotive Component Manufacturing Company with a Global Footprint Founded in 1988 in India by the Jain family Summary Shareholding Structure(4) Successful listing on the Indian Stock Exchanges in July 2018 Global Tier-1 automotive component company
Slide 8: Grown Rapidly Since Inception – Both Organically and Inorganically
Grown Rapidly Since Inception – Both Organically and Inorganically Acquired the Acquired Sa-Ba, an remaining 30% exterior automotive stake in Romanian lighting company in Electronics JV Turkey Raised additional Incorporated in Developed Electronic INR 7 billion in 1988 Acquired first A
Slide 9: Corporate Structure
Corporate Structure(1) Varroc Engineering Limited Foreign Subsidiaries Indian Subsidiaries 100% 100% 100% Varroc European VarrocCorp Holding Varroc Polymers Pvt. 100% Varroc Japan Co. Ltd. Holding B.V. B.V. Ltd. (Japan) (Netherlands) (Netherlands) (India) 72.78%* Duro valves India Pvt. Ltd. 100% 99.
Slide 10: Key Credit Highlights
2 Key Credit Highlights Classification : Confidential
Slide 11: Key Credit Highlights
Key Credit Highlights 1 Low Cost and Strategically Located Manufacturing and Design Footprint 2 Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies 3 Strong Competitive Position in Attractive Growing Markets 4 Well Positioned to Capture Industry Trends Relat
Slide 12: Low Cost and Strategically Located Manufacturing and Design Footprint
Low Cost and Strategically Located Manufacturing and Design Footprint 43(1) Operating Manufacturing Facilities and 15(1) R&D Centers Across Asia, Europe, Africa, North and South America 26 Manufacturing Facilities for India Business Co-location with customers ensures cost effectiveness and efficient
Slide 13: Low Cost and Strategically Located Manufacturing and Design Footprint (Cont'd)
Low Cost and Strategically Located Manufacturing and Design Footprint (Cont’d) Geographical diversification – Capitalizing on global growth opportunities while mitigating the impact of regional demand fluctuation Current Trend of Globalization to Localization is also beneficial for Varroc given its
Slide 14: Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies
Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies FY2021 Consolidated Revenue(1): INR 113 billion Breakdown by Segment Breakdown by Market Segment (2) Others Others 1.9% 5.0% Comprehensive range of Metallic engine agnostic products 5.4% Global Passenger
Slide 15: Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies
Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies Global Business with Diversified Product Lines – Diversified Product Portfolio catering to 2W, 3W, PV, CV and OHV Segments Global Lighting Head Lamps Rear Lamps CHMSL Fog Lamps Business Broad portfolio of
Slide 16: Diversified Business Across Product Portfolio (Cont'd)
Diversified Business Across Product Portfolio, Market Segments, Customer Base and Geographies (Cont’d) End-to-end capabilities with presence across various levels of automotive and LED component value chain ranging from product conceptualization, designing, R&D and engineering, testing and validatio
Slide 17: Strong Competitive Position in Attractive Growing Markets
Strong Competitive Position in Attractive Growing Markets Global Exterior Lighting Market for Passenger Vehicles Poised for Strong Growth(1) Varroc is well-positioned in Global (USD bn) Exterior Lighting Market(1) Exterior lighting market is 24.4 24.7 6.5% expected to outgrow the 6th largest glo
Slide 18: Strong Competitive Position in Attractive Growing Markets (Cont'd)
Strong Competitive Position in Attractive Growing Markets (Cont’d) Strong Expected Growth in Indian 2W and 3W Markets(1) Varroc is well-positioned in Indian Auto Component Market (1) 2W Production Volume (mm units) 2nd largest Indian automotive component 30.4 10.5% India is one of the Company (1
Slide 19: Well Positioned to Capture Industry Trends Related Growth both Globally and in India
Well Positioned to Capture Industry Trends Related Growth both Globally and in India Strong Transition Trend Towards EV Driving Robust Growth Outlook for EV Passenger Vehicles(1) (million units) Transition towards EV expected to gain significant 30.8 35.1% momentum within the PV industry 49.1% E
Slide 20: India Ongoing Trends
Well Positioned to Capture Industry Trends Related Growth both Globally and in India (Cont’d) Supportive Trends Apart from Strong Expected Growth in Indian 2W / 3W Markets Well-positioned to Capture EV Trends in 2W / 3W India Ongoing Trends BS VI Transition – market Increasing content Electronic Fue
Slide 21: Strong and Long-standing Customer Relationships
Strong and Long-standing Customer Relationships Global Lighting Business – Customer Relationships Multi-year relationships with many customers across business lines OEMs Length of relationship Head Lamps Engagement across products Rear Lamps Small Lamps Electric Modules Global Lighting Business
Slide 22: Robust In-house Technology, Innovation and R&D Capabilities
Robust In-house Technology, Innovation and R&D Capabilities R&D efforts are directed towards ongoing trends – Enabling product delivery to customers in line with industry developments Increased Use Stricter Autonomous Connectivity Digitalization Sustainability, Electrification of Electronics Environ
Slide 23: Robust In-house Technology, Innovation and R&D Capabilities (Cont'd)
Robust In-house Technology, Innovation and R&D Capabilities (Cont’d) Product portfolio representing technological capabilities: Energy efficiency Efficiency and Safety and Style & Communication Cost Comfort Personalization C02 emission and power consumption reduction Style and personalization
Slide 24: Experienced Management Team and Technically Skilled and Motivated Employees
Experienced Management Team and Technically Skilled and Motivated Employees Experienced management Tarang Jain Managing Chairman Director team with deep industry Chairman and Managing Director and knowledge Co-founded Varroc in 1988 Over 30 years experience in the automotive industry Strong
Slide 25: Business Strategy
3 Business Strategy Classification : Confidential
Slide 26: Business Strategy Focused on Revenue Growth and Increased Efficiency
Business Strategy Focused on Revenue Growth and Increased Efficiency I. Focus on Operational Efficiency Continue to seek to improve efficiencies, streamline capacities and asset utilization and manage capital expenditure for each of the production facilities Launched Project RACE in June 2021 to
Slide 27: Significant Capex Cycle Completed in the Last 4 Years
Significant Capex Cycle Completed in the Last 4 Years Varroc Undertook Significant Capex Cycle …Capacity completion coincided with a Sharp Over FY2019 and FY2020… Slowdown in the Global Auto Industry(1) (INR bn) (INR bn) 9.1% High capex over past three 8.8% 71.4 68.9 69.3 years was primarily a res
Slide 28: Project RACE – Towards Continuous Improvement
Project RACE – Towards Continuous Improvement Launched in June 2021, Project RACE is a holistic program that aims to bring Global Lighting Business’ EBIT levels in line with best- in-class industry benchmarks over a period of 12 to 18 months Project Rapid Involves multi-step process – Achievemen
Slide 29: Financial Overview
4 Financial Overview Classification : Confidential
Slide 30: Summary Financial Performance
Summary Financial Performance Revenues (INR bn)(1) EBITDA (INR bn)(1) (2) 129.7 120.4 (US$1,746mm) 113.0 11.5 (US$1,620mm) 111.2 (US$1,521mm) (US$155mm) (US$1,497mm) 9.2 (US$124mm) 6.8 (US$92mm) 5.2 (US$71mm) (5) (5) FY2019 FY2020 FY2021 LTM Q1 FY2022 FY2019 FY2020 FY2021 LTM Q1 FY2022 Capex (INR bn
Slide 31: Key Credit Metrics
Key Credit Metrics EBITDA Margin (%)(1) (2) EBITDA(1) / Finance Costs (x) 11.9x 9.6% 8.3% 5.3% 6.6x 4.6% 4.3x 3.2x (6) (6) FY2019 FY2020 FY2021 LTM Q1 FY2022 FY2019 FY2020 FY2021 LTM Q1 FY2022 Total Debt(3) and Net Debt(4) / EBITDA(1) (x) Total Debt(3) and Net Debt(4) / Capitalization(5) (x) Total D
Slide 32: Debt Profile
Debt Profile Debt Profile as of June 30, 2021 Description INR million US$ million(1) By Currency Non-current Borrowings INR loans from banks / financial institutions (Secured) 4,009.89 53.97 Foreign currency loans from banks (Secured) 5,188.57 69.83 INR 23% FCY Deferred sales tax loan (Unsecured) 16
Slide 33: Our Core Values
0 69 120 91 155 213 71 71 71 130 177 211 23 112 155 98 153 62 191 191 191 Our Core Values Classification : Confidential
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