VARROCNSE8 February 2019

Varroc Engineering Limited has informed the Exchange regarding Investor Presentation on Q3 Results 2018-19

Varroc Engineering Limited

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Varroc Engineering limited Regd. & Corp. Office I Tel +91 240 6653600

L-4, MIDC, Industrial Area Waluj, Aurangabad 431 136 Maharashtra, India

Fax +91 240 2564540

email: varroc.info@varroc.com www.varrocgroup.com CIN: L28920MH1988PLC047335

Vdrroc

VARROC/SE/I NT /2018-19/ 49 February 08, 2019

To, (1) The Manager - Listing

The Listing Department, National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G Block, Bandra-l<urla Complex, Bandra (East), Mumbai-400051.

NSE Symbol: VARROC

Dear Sir/Madam,

(2) The Manager - Listing

/ \

The corporate Relzation oef:)artment, BSE Limited Phiroze Jeejeeb .0 Towers, Dalal Street,

rt,

Mum/ 0001.

§>fSecurity Code: 541578

vsecurity ID: VARROC

Sub: Investor Presentation - Financial Results Q3 2018-19.

Please find enclosed herewith Investor Presentation on Unaudtted Standalone and Consolidated Financial Results of the Company for the Quarter and nine months ended 3pt December 2018.

Kindly take the same on record.

Thanking you,

Yours faithfully, For Varroc Engineering Limited

Rakesh Darji Company Secretary & Compliance Officer

Ends: Investor Presentation on Unaudited Financial Results for the Quarter and nine months ended 3l51

December 2018.

Q3 & 9M FY19 Results Presentation

Disclaimer

This presentation may include statements which may constitute forward-looking statements. All statements that address expectations or projections about the future, including, but not limited to, statements about the strategy for growth, business development, market position, expenditures, and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events and involves known and unknown risks, uncertainties and other factors. The Company cannot guarantee that these assumptions and expectations are accurate or exhaustive or will be realised. The actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. No obligation is assumed by the Company to update the forward-looking statements contained herein. The information contained in these materials has not been independently verified. None of the Company, its Directors, Promoter or affiliates, nor any of its or their respective employees, advisers or representatives or any other person accepts any responsibility or liability whatsoever, whether arising in tort, contract or otherwise, for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this document or its contents or otherwise in connection with this document, and makes no representation or warranty, express or implied, for the contents of this document including its accuracy, fairness, completeness or verification or for any other statement made or purported to be made by any of them, or on behalf of them, and nothing in this document or at this presentation shall be relied upon as a promise or representation in this respect, whether as to the past or the future. The information and opinions contained in this presentation are current, and if not stated otherwise, as of the date of this presentation. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness. The Company undertake no obligation to update or revise any information or the opinions expressed in this presentation as a result of new information, future events or otherwise. Any opinions or information expressed in this presentation are subject to change without notice. This presentation does not constitute or form part of any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of Varroc Engineering Limited (the “Company”), nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or to be relied in connection with an investment decision in relation to the securities of the Company therefore any person/ party intending to provide finance / invest in the shares/businesses of the Company shall do so after seeking their own professional advice and after carrying out their own due diligence procedure to ensure that they are making an informed decision. Neither the delivery of this document nor any further discussions by the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date. This presentation is strictly confidential, unless distributed via a public forum, and may not be copied or disseminated, in whole or in part, and in any manner or for any purpose. No person is authorized to give any information or to make any representation not contained in or inconsistent with this presentation and if given or made, such information or representation must not be relied upon as having been authorized by any person. Failure to comply with this restriction may constitute a violation of the applicable securities laws. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions. By participating in this presentation or by accepting any copy of the slides presented, you agree to be bound by the foregoing limitations.

Industry Trends in Q3 FY19

-4.6%

+2.1%

-15.2%

6 0 5

1 9

6 5

8 8 2

0 3

4 5

0 6 4

9 0

1 4

0 4 4

5 9

1 4

6 6 3

8 2

4 8

9 3 9

0 5

1 7

Q3 FY2018

Q3 FY2019

n o i t c u d o r P t e k r a M

s r a C r e g n e s s a P

a b o G

E U R O P E

N O R T H A M E R I C A

G R E A T E R C H I N A

+9.7%

+8.0%

9 3 6

4 5

2 5

1 5 0

4 6

7 5

1 8 6

1 8 2

4 9 2

4 0 3

-9.0%

3 4 2

5 7 9

Q3 FY2018

Q3 FY2019

6 5 1

7 8 8

Y o Y n o i t c u d o r P : d n e r T y r t s u d n

I a d n

• Global Passenger Vehicle

production declined in Q3 FY19

• Decline in Europe and China

due to the impact of ongoing

political uncertainties, EU diesel

regulations, US - China trade

sanctions and negative

consumer sentiments in China

continued in Q3 FY19

• Domestic Sales growth in Q3

was subdued with Passenger

Vehicles (-0.8%) and 3W (-6.8%)

declining YoY and 2W

slowing(+8.5%) as compared to

• Exports for PVs showed a 18.6%

decline YoY; 2W & 3W exports

continued to grow but at a

slower pace than in H1 (2W

+12% YoY and 3W +33%YoY)

2 W

3 W

P A S S E N G E R V E H I C L E S

Business Highlights : Q3 FY19

• Revenue from Operations for Q3 FY19 up by 18.3% YoY#

• EBITDA increased by 40% YoY*

• India Business: strong performance with 22.6% Revenue growth and 150 bps

EBITDA margin improvement

• VLS: Revenue growth of 8% in Euro terms in spite of challenging market

conditions; margin improved by 140bps YoY to 7.7%

• VLS: China revenue de-growth of 37.7% YoY; share of profit at INR 62 Mn as

against INR 278 Mn in Q3 FY18

• Tax rate higher in Q3 due to higher share of India profit and timing difference

for Czech tax credits

• Reported Consolidated PAT for the quarter at INR 1,022 Mn

• Brazil launch of 1st program with SOP in Jan. 2019 complete; Morocco on track

for SOP in February and work progressing on construction of Phase II

. # Excl. Ind AS 115 impact, revenue from the North America Interior Plastics Business and Excise duty in previous year *on a like-for-like basis, explained in later slides

Varroc Group: Summary Key Financials Q3 & 9M FY19

Particulars

Q3 FY 19

Q3 FY18

Growth (Y-o-Y)

9M FY 19

9M FY18

Revenue from Operations - Reported

Revenue from operations : like-for-like

Other income - Operating

Other income - Non operating

EBITDA - Reported *

EBITDA : like-for-like $

EBITDA Margins (%) $

29,550

29,276

106

2,779 2,737 9.3%

25,405

24,745

16.3%

18.3%

2,090 1,955 7.9%

33.0% 40.0%

88,831

88,029

434

187

8,392 7,872 8.9%

73,939

70,898

207

6,540 6,089 8.6%

(INR Mn)

Growth (Y-o-Y)

20.1%

24.2%

28.3% 29.3%

Share of net profits of JVs under equity method

278

-77.7%

264

532

-50.4%

PBT - reported

PAT - reported

Net Debt

Net Debt to Equity

1,266

1,259

0.6%

4,054

3,672

10.4%

1,022

1,170

-12.7%

3,035

3,080

-1.5%

22,018 0.7

14,520 0.6

51.6%

22,018 0.7

14,520 0.6

51.6%

*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 and other items as explained in slide no 9

Varroc Group: Business Wise Performance Q3 FY19

SBU

Revenue

Revenue Adjusted*

Q3 FY19

EBITDA #

EBITDA

Like-for-like % EBITDA Revenue

Q3 FY18

Revenue Adjusted*

EBITDA #

EBITDA

Like-for-like % EBITDA

(INR Mn)

Revenue Growth YoY

India Business

10,567 10,567

1,257

11.9%

8,689

8,617

899

10.4%

22.6%

VLS

17,875 17,601

1,402

1,361

7.7% 15,767 15,180

1,096

961

6.3%

15.9%

Others*

1,251

150

12.0%

1,012

Elimination

(143)

(31)

(64)

9.1%

23.6%

Total

29,550 29,276

2,779

2,737

9.3% 25,405 24,745

2,090

1,955

7.9%

18.3%

China JV - 50%

1,029

7.2%

1,651

315

19.1%

-37.7%

Euro Performance for VLS

Q3 FY19

Q3 FY18

SBU

VLS

Revenue

Revenue Adjusted*

EBITDA

EBITDA # Like-for-like

% EBITDA Revenue

Revenue Adjusted*

EBITDA

EBITDA # Like-for-like

% EBITDA

Revenue Growth YoY

217

214

17.0

16.5

7.7%

206

198

14.3

12.6

6.3%

8.0%

Exchange rates : INR/Euro Average for Q3 FY19 = 82.3 ; INR/Euro Average for Q3 FY18 = 76.2

• •

Excludes Excise Duty, Interiors Business and impact of Ind AS 115 #EBITDA : like-for-like is for continuing operations and excludes impact of interiors business closure in North America and other items as explained in slide no 8

India Business : Financial Performance

Revenue

(INR Mn)

8,689

8,617

+23%

10,567

Q3 FY2018 Reported

Q3 FY2018 Adjusted

Q3 FY2019 Reported

Strong growth across divisions and customers

India Revenue Split by Customer(1)

Q3 FY 2019, %

26.7%

1.6% 4.6%

6.1%

8.2%

Bajaj

Honda

52.9%

Royal Enfield

Yamaha

Mahindra & Mahindra

Others

EBITDA

(INR Mn)

Margin*

10.4%

899

EBITDA variation analysis

Q3 FY 18 Vs Q3 FY19

11.9%

1,257

+39%

Q3 FY2018

Q3 FY2019

EBITDA margins increased by 150 bps YoY

EBITDA improvement as a result of higher revenue and operating leverage

* On Revenue excl. Excise Duty

Note: (1) Based on management information system database Non-operating portion of other income not considered while calculating EBITDA

12571320315017899 4005006007008009001000110012001300Q3 FY2018Revenue ImpactRM ImpactOverheads ImpactOther IncomeImpactQ3 FY2019Global Lighting Business (VLS): Financial Performance

Revenue (1)

(INR Mn)

50% China Joint Venture: Q3 FY 18 Revenue: 1651 Mn INR Q3 FY 19 Revenue: 1029 Mn INR

+16%

15,767

15,180

17,875

17,601

Q3 FY2018 Reported

Q3 FY2018 Adjusted

Q3 FY2019 Reported

Q3 FY2019 Adjusted

8.0% YoY revenue growth in Euro terms

EBITDA (1) & Adjusted EBITDA (3)

(INR Mn)

Margin

50% China Joint Venture: Q3 FY 18 EBITDA / Margin: INR 315 Mn / 19.1% Q3 FY 19 EBITDA / Margin: INR 74 Mn(3) / 7.2%

6.3%

7.7%

+42%

1,402

1,361

1,096

961

Q3 FY2018 Reported

Q3 FY2018 Adjusted

Q3 FY2019 Reported

Q3 FY2019 Adjusted

Eur Mn

14.3

12.6

17.0

16.5

31%YoY EBITDA growth in Euro terms

VLS Revenue Split by Customer(2)

Q3 FY 2019, %

17.4%

18.7%

12.8%

10.0%

6.1%

14.6%

20.4%

Customer A

Customer B

Customer C

Customer D

Customer E

Customer F

Others

VLS EBITDA margin variation explanation on the next page

Note: (1) China JV revenue and EBITDA not included in the reported numbers; (2) Total Revenue break-up in Euro for Q3 FY19 excl VTYC; 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 & customer F is a global automotive manufacturer headquartered in Europe (3) Adjusted for closure of Interiors Business in North America, Ind AS 115 impact removed & Excise Duty impact adjusted for VLS India

Global Lighting Business (VLS): EBITDA variation analysis

(Eur Mn)

+31%

1.8

0.1

16.5

2.7

0.6 -

17.0

14.3

1.1

1.0

12.6

1.8

2.7

Q3 FY2018 Discontinued

Interior Plastics Business in NA

Q3 FY2018: Like-for-Like

Revenue impact

RM impact

Overheads impact

Other income impact

Q3 FY2019: Like-for-Like

Ind AS 115 impact

Q3 FY2019: Reported

Launch related costs (lower than Q3 FY18)

Start-up Costs not capitalised : Brazil, Morocco & Poland etc

• Overhead costs, contained in spite of higher revenue •

Launch activity during the quarter was lower as compared to Q3 FY18 and as a result, launch costs too were lower on a comparable basis

Varroc Group: Business Wise Performance 9M FY19

SBU

Revenue

Revenue Adjusted* EBITDA

EBITDA # Like-for- like

% EBITDA Revenue

Revenue Adjusted* EBITDA

EBITDA #

Like-for-like % EBITDA

Revenue Growth YoY

9M FY19

9M FY18

India Business

32,495

3,744

11.5% 26,724

25,770

2,769

10.7%

26.1%

VLS

Others

52,642

51,841

4,209

3,692

7.1% 44,387

42,299

3,515

3,064

7.2%

22.6%

3,987

487

12.2%

2,981

276

9.3%

33.7%

(INR Mn)

Elimination

(294)

(48)

(152)

(20)

Total

88,831

88,029

8,392

7,875

8.9% 73,939

70,898

6,540

6,089

8.6%

24.2%

China JV - 50%

3,756

462

401

10.7%

4,706

719

15.3%

-20.2%

Euro Performance for VLS

9M FY19

SBU

Revenue

Revenue Adjusted*

EBITDA

EBITDA # Like-for- like

% EBITDA Revenue

Revenue Adjusted *

9M FY18

EBITDA

EBITDA # Like-for- like

% EBITDA

Revenue Growth YoY

52 VLS Exchange rates : INR/Euro Average for 9M FY19 = 79.87; INR/Euro Average for 9M FY18 = 74.22

7.1%

598

638

648

570

7.2%

12.0%

• •

R & D / Business Updates

Global Lighting Business •

CES Show Las Vegas: VLS showcased various technologies in the fields of personalization, connectivity/communication, innovative styling, and autonomous vehicles at the CES show.

Focused technologies and products showcased :

• Adaptive Driving Beam (ADB) Demo Box

• Concept Car showing how lighting can be used for personalization, communication and the

integration of sensors to support ADAS functionality

•

Low cost innovations Surface-LED to replace OLED, and low cost LED headlamps and matrix

R & D / Business Updates

Polymer •

Increased traction in the 4W segment with significant business wins from leading OEMs

• Our differentiated and unique molding technology for light weighting and paint elimination has won

business with a leading 4W player and has generated huge interest with 2W players

Electrical •

Developed in-house advanced telematics devices and progressing towards complete telematics solutions for 2W

•

In-house developed EV traction motor for 2W; prototype undergoing tests

Facility Readiness – Brazil Decorating / Cleaning

Molding

Assembly line

Construction Status – Morocco, Phase II

Phase II (Marked with orange outline)

Morocco Phase II – Construction activity progress

Metallic Structure – Phase II

Business Outlook

India Business

• Indian 2W/3W market : After a soft festival season, start to Q4 FY19 weaker

than expected

VLS Business

• Europe: Impact of Brexit uncertainty and new diesel regulations expected to

continue

• Czech: operational efficiencies at Czech plants started to show improvements

• Turkey: integration of acquisition progressing as planned; business

performance in line with expectations

• China: market sentiments continue to be weak. Recovery not expected until

second half of 2019

Thank

You

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Varroc Engineering Limited has informed the Exchange regarding Investor Presentation on Q3 Results 2018-19

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