Varroc Engineering Limited has informed the Exchange regarding Investor Presentation revised on the Unaudited Standalone and ConsolidatedFinancial Results of the Company for the quarter ended on June ...
Varroc l:ngineering Limit9d Regd. & Corp. Office
L-4, MIDC, Industrial Area Waluj, Aurangabad 431 136 Maharashtra, India
Tel +91 240 6653600 Fax +91 240 2564540
email: varroc.info@varroc.com www.v<1rrocarouo.com CIN: L28920MH1988PLC047335
varroc
VARROC/SE/I NT /2019-20/ 41
August 10, 2019
To, (1) The Manager- Listing
(2) The Mar~ager - Listing
The Listing Department, National Stock Exchange of India Limited Exchange Plaza, Plot No. C/1, G Block, Bandra-Kurla Complex, Sandra (East), Mumbai-400051.
The Co.rporate Relation Department, SSE Limited Phiroze J2ejeebhoy Towers, Dalal Street, Fort, Mumbai-400001.
NSE Symbol: VARROC
Dear Sir/ Madam,
BSE Security Code: 541578 Security ID: VARROC
Ref: Regulation 30 (read with Part A of Schedule Ill) of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("Listing Regulations")
Sub: Revised Investor Presentation - Financial Results for the quarter ended on June 30, 2019
Further to o·ur letter bearing no. VARROC/SE/INT /2019-20/39 dated August 09, 2019, please find enclosed herewith revised Investor Presentation on Unaudited Standalone and Consolidated Financial Results of the Company for the quarter ended on June 30, 2019.
Kindly take the same on record.
Thanking you,
Yours faithfully, For Varroc Engineering Limited
~
Rakesh Darji Company Secretary & Compliance Officer
Enc/s.: Revised Investor Presentation.
Q1 FY20 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.
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
l
a b o G
l
Industry Trends in Q1 FY20
-6.6%
-2.1%
-16.2%
6 0 4
,
3 1
,
0 6
9 1 4
,
4 1
,
6 5
3 0 4
,
6 5
,
3 4
4 4 5
,
4 6
,
2 4
7 8 7
,
5 6
,
7 6
6 6 8
,
3 5
,
8 5
• All major Passenger Vehicle
markets declined YoY in Q1
FY20
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
-10.1%
-11.6%
-12.0%
• Domestic Volumes in Q1
• The decline in China
accelerated from FY19 due to
slowing economic growth and
lack of govt. support.
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
I a d n
I
1 5 3
,
3 6
,
4 6
,
9 1 6 0 1 8 5
,
3 8 3
,
2 0 3
,
8 9 1
,
7 6 2
,
4 6 7
,
5 2
,
0 1
7 2 0
,
3 0 9
,
declined significantly over Q1
FY19; 2W declining (-11.7%). PV
by -18.4% and 3W by -7.3%
Q1 FY19
Q1 FY20
• Exports for PVs showed a 3.6%
YoY growth; 2W exports
continued to grow but at a
slower pace than last year
(+3.1%). 3W exports declined
by 13%YoY.
2 W
3 W
P A S S E N G E R V E H I C L E S
Sources: India Data - SIAM, Global Data – Production volume, © IHS Markit, July 2019. All rights reserved.
2
Business Highlights: Q1 FY20
• Revenue from Operations for Q1 FY20 declined by 2.0% YoY*
•
EBITDA for Q1 FY20 at INR 2,788 Mn*; +20bps YoY
• VLS: Revenue increased 1% in Euro terms; margin improved by 40bps YoY to 9.5%*
•
India Business: Revenue was almost flat against double digit decline in industry volumes; EBITDA margin maintained at 10.1%
• PAT for Q1 at INR 875 Mn a decline of 12.9% YoY as a result of:
• China JV incurred a small loss due to significant decline in revenue (-37.1% YoY) • Higher depreciation and finance cost largely driven by adoption of Ind AS115 and
Ind AS116 partially offset by higher tax credits in Q1 FY 20
• VLS business wins of Euro 93 Mn in first 4 months of FY20
•
India Business focus on technology driven futuristic products; gaining traction with key OEMs
Starting this financial year, erstwhile TRIOM business which is into international lighting products for 2Ws, has been integrated with VLS. Financial numbers for both the periods are accordingly adjusted to include TRIOM.
. # Excl Turkey acquisition impact *on a like-for-like basis, explained in subsequent slides
3
Varroc Group: Summary Key Financials Q1 FY20
Particulars
Q1 FY 20
Q1 FY19
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 (%) $
Share of net profits of JVs under equity method PBT - reported
28,701 28,701 280 11
2,970 2,788 9.7%
(1) 1,021
(INR Mn)
Growth (Y-o-Y) -1.9% -2.0%
23.2% 0.0%
29,270 29,273 165 96
2,412 2,786 9.5%
129 1,343
-101.1% -24.0%
PAT - reported
875
1,004
-12.9%
Net Debt to Equity (Excl. Impact of Leases: Ind AS 116)
0.73
0.55
Ind AS 116 impact on EBITDA and PAT for the quarter on consolidated basis at (+)INR 87 million and (-)INR 10 million, respectively.
*EBITDA = Profit before share of net profits of JVs 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 116, Start-up costs and other items as explained in later part of this presentation
4
Varroc Group: Business Wise Performance Q1 FY20
Q1 FY20
Q1 FY19
(INR Mn)
SBU
Revenue
Revenue Adjusted*
EBITDA #
EBITDA
Like-for-like % EBITDA Revenue
Revenue Adjusted*
EBITDA #
EBITDA
Like-for-like % EBITDA
Revenue Growth YoY
India Business
10,359
10,359
1,066
1,050
10.1%
10,431
10,431
1,051
1,051
10.1%
-0.7%
VLS (Incl TRIOM)
17,840
17,840
1,859
1,692
9.5%
18,046
18,050
1,264
1,639
9.1%
-1.2%
Others (IMES)
578
578
Elimination
(76)
(76)
33
12
33
12
5.7%
836
836
(43)
(43)
98
(1)
98
11.7%
-30.9%
(1)
Total
28,701
28,701
2,970
2,788
9.7%
29,270
29,273
2,412
2,786
9.5%
-2.0%
China JV - 50%
1,009
1,009
64
64
6.3%
1,605
1,605
214
214
13.3%
-37.1%
Euro Performance for VLS
Q1 FY20
Q1 FY19
SBU
VLS
Revenue
Revenue Adjusted*
EBITDA
EBITDA # Like-for-like
% EBITDA Revenue
Revenue Adjusted*
EBITDA
EBITDA # Like-for-like
% EBITDA
Revenue Growth YoY
228
228
23.8
21.6
9.5%
226
226
15.6
20.5
9.1%
1.0%
Exchange rates : INR/Euro Average for Q1 FY20 = 78.120; INR/Euro Average for Q1 FY19 = 79.871
• •
*For Q1 FY19 it includes impact of Ind AS 115 and excludes Interiors Business to make results comparable #EBITDA : like-for-like is as explained in next few slides
5
India Business : Financial Performance
India Revenue Split by Customer(1)
-0.7%
Q1 FY 20 %
Revenue
(INR Mn)
10,431
10,359
Q1 FY2019 Reported
Q1 FY2020
Revenue nearly flat in a tough external environment
27.1%
3.2% 3.9%
2.6%
9.9%
Bajaj
Honda
53.3%
Royal Enfield
Yamaha
Mahindra & Mahindra
Others
EBITDA
(INR Mn)
EBITDA variation analysis
Q1 FY 19 Vs Q1 FY20
Margin
10.1%
10.1%
1,066
1,051
1,050
Q1 FY2019 Reported
Q1 FY2020 Reported
Q1 FY2020 Adjusted
EBITDA margins flat YoY adjusted for impact of Ind AS116
EBITDA margin maintained in a declining industry
Note: (1) Based on management information system database Non-operating portion of other income not considered while calculating EBITDA
6
10501066717133616 1,051 95097099010101030105010701090Q1 FY19RevenueImpactRM ImpactOverheadsImpactOtherIncomeImpactQ1 FY20:Like-for-LikeInd AS 116impactQ4 FY2019:Reported Global Lighting Business (VLS): Financial Performance
Revenue (1)
(INR Mn)
50% China Joint Venture: Q1 FY 19 Revenue: 1605 Mn INR Q1 FY 20 Revenue: 1009 Mn INR
VLS Revenue Split by Customer(2)
-1%
Q1 FY 20, %
18,046
18,050
20.9%
21.5%
17,840
17,840
Q1 FY 19 Reported
Q1 FY 19 Adjusted
Q1 FY 20 Reported
Q1 FY 20 Adjusted
1.0% YoY revenue growth in Euro terms
EBITDA (1) & Adjusted EBITDA (3)
50% China Joint Venture: Q1 FY 19 EBITDA / Margin: INR 214 Mn / 13.3% Q1 FY 20 EBITDA / Margin: INR 64 Mn(3) / 6.3%
9.1%
1,639
9.5%
+3%
1,692
1,859
(INR Mn)
Margin
1,264
Q1 FY2019 Reported
Eur Mn
15.6
Q1 FY2019 Adjusted 20.5
Q1 FY2020 Reported 23.8
Q1 FY2020 Adjusted 21.6
5.4%YoY EBITDA growth in Euro terms
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
Others
16.3%
16.9%
10.6%
6.1%
7.7%
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 Q1 FY20 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 (Q1 FY19 small inventory sold), Ind AS 115 impact adjusted in Q1FY19, start-up costs and differential launch cost. Ind AS 116 impact excluded from Q1FY20 adjusted EBITDA but it includes Turkey.
7
Global Lighting Business (VLS): EBITDA variation analysis
(Eur Mn)
+5.4%
• RM costs lower due to purchasing efficiencies and customer/product mix change • Overheads higher due to new locations and infrastructure being built to support future
revenue growth Launch activity during the quarter was lower as compared to Q1 FY19
•
8
20.5 21.6 23.8---0.1 6.7 0.2 -3.8 1.0 0.2 0.2 7.5 0.1 1.4 0.9 15.6 10121416182022242628Q1 FY19Ind AS 115impact not inQ1FY19Brazil,MorroccoStart-up Costsin Q1FY19Turkeyacquisitionrelated costs inQ1 FY19DiscontinuedInterior PlasticsBusiness in NAQ1 FY19:Like-for-LikeRevenueimpactRM impactOverheadsimpactOther incomeimpactQ1 FY20:Like-for-LikeStart-up Costsnot capitalised:Poland &ChennaiLaunch relatedcosts (lowerthan Q1 FY19)Ind AS 116impactQ1 FY 20 Highlights of Major Order Wins and Near Term Potential Business New Business wins: VLS / Recent orders: India
Near term potentials
VLS (YTD July)
Overall Net Business Wins of Eur 93 Mn - New Business wins - Eur 81 Million - Re-wins (net) - Eur 12 Mn
VW is set to become our second largest customer in FY20 & the largest in FY21.
Ford: In discussion for some programs in and outside of North America
China: Focus on locally strong players like Geely, VW-FAW.
India Business (Q1 FY20)
VW: New business won 2k Injection molding technology orders INR 590 Mn – Part business start in FY22
Bajaj: New business of INR 290 Mn/ re-wins INR 1160 Mn in Q1 FY20
Traction Motor & Controller: development in progress. Prototypes ready for 2W & development work is ongoing for 3W; in discussion with a few customers
HMSI: INR 640 Mn wins and re-wins for Polymer & Electrical products
ISG: In discussion with customers for near term supply
PSA: Export order for supply of Intake/Exhaust Valve for Euro VII Engine – INR 1040 Mn; SOP to start in FY21
M&M: Polymer orders for INR 300 Mn
RE: UCE BSVI Magneto replacement order for INR 450Mn; LOI to supply valves to J1 Engine for Jan2020 SOP
ThyssenKrupp: BSVI crankshaft replacement INR 450 Mn
Yamaha: New order for polymer body parts INR 90 Mn
In discussion with RE for more product categories in Metallic and Electrical business.
TVS: In discussion for more Electrical products Polymer products for M&M: Working on few products
11
R & D / Business Updates – Q1 FY20
Global Lighting Business • Updates on new locations
• Brazil: Industrialization on track to support our 2nd customer launch and ramp up by December.
This is full vehicle lighting including our first HL launch in Brazil.
• Morocco: Seven new projects will be launched in Morocco during FY20. Phase 2 extension is
on-track and likely to be ready by November 2019.
•
Poland: Construction activity on track; likely to start SOP in Q4 FY20
• Romania JV: Building shell ready and SMT machines being ordered.
•
VLS completed a fully functional demonstration vehicle in India, to show new lighting innovations directly targeted to the value conscious India market.
India Business •
EBU: Multiple customer enquiries for exploring supply of traction motor, ISG and telematics devices.
• Metallic: Success in securing order for Euro VII valves; exploring opportunities with other customers
to supply these products
•
Polymer: working with a large customer to supply complete body parts for 2W EV. SOP to start later this year.
12
Poland Manufacturing Plant : Const. Status
Outside view
Manufacturing Area – inside view 1
Roof insulation and proofing
Manufacturing Area – inside view 2
15
Thank
You