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Published on 27/06/2018 3:13:57 PM | Source: Ventura Securities Ltd

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Business Overview

Founded in 1988, Varroc Engineering Limited (“Varroc”) is a global tier-1 automotive component manufacturer and supplier of exterior lighting systems, plastic and polymer components, electricals-electronics components and precision metallic components for passenger car, commercial vehicle, two-wheeler, three-wheeler and off highway vehicle ("OHV") OEMs directly worldwide. Varroc has a global footprint with 36 manufacturing facilities and 16 R&D centers. The company is one of the leading global passenger car lighting suppliers and amongst the top 2- wheeler automotive component supplier in India.

The company initially grew organically in India by adding new business lines such as electrical division and metallic divisions. In 2012, it acquired Visteon's global lighting business, now known as Varroc Lighting Systems. Prior to the acquisition of Visteon's global lighting business, in 2007, Varroc had acquired I.M.E.S (a manufacturer of hot steel forged parts for the construction and oil and gas industries) in Italy, and in 2011, it acquired Triom (a manufacturer of high end lighting systems for global motorcycle OEMs) with operations in Italy, Romania and Vietnam.

In 2013, Varroc Engineering expanded its global lighting business by acquiring Visteon's holding in a 50/50 joint venture with Beste Motor Co. Ltd. ("TYC") to manufacture automotive lighting in China, namely Varroc TYC (which wholly owns Varroc TYC Auto Lamps, which in turn wholly owns Varroc TYC Auto Lamps (CQ) (the company’s "China JV"). The company has end-to-end capabilities across design, R&D, engineering, testing, manufacturing and supply of various products across businesses.

Varroc has two primary business lines 1) Lighting Business, which designs, manufactures and supplies exterior lighting systems to PV OEMs worldwide through its subsidiaries forming part of the Varroc Lighting Systems (VLS) and 2) India Business, which offers a diversified set of products across three product lines, namely polymers & plastics, electrical-electronics and metallic components to 2W and 3W OEMs, including exports.

For FY17, the consolidated revenue from operations was Rs. 9608.5 crore with its largest customer contributing 17% of the total invoiced amount and the top five customers contributing 64.5% of the total invoiced amount. Further, the company derived 36.6% of the revenue from customers in Europe, 32.7% from customers in India, 20.4% from customers in the United States and the remaining from other geographies. 

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