Varroc aims to regain peak turnover of Rs 12,000 crore by 2025; expects to be debt free in two years

Having exited its global lighting business, Aurangabad-headquartered auto component major, Varroc Engineering, is planning to regain its previous peak of Rs 12,000 crore in the next three years. It plans to do this by bringing back sharper focus on specific products and geographies and become debt free in two years.

The company will be investing about $100 million in the next three to four years in both Indian and global markets to fund its future growth

Tarang Jain, MD of Varroc Engineering told Autocar Professional, the company has defined a well-crafted strategy on focused products, focused customers and focused geographies.

“We are aligning our strategy with the customers' strategy and growing with them. We are fairly confident that whatever the market growth, we will grow by 8-10 percent faster than the market, because of cross selling and rising content per vehicle,” Jain said.

The cumulative turnover of Varroc has come down to Rs 8,300 crore including European and Chinese business, with the sustained growth in the domestic or India business, where the share of business has shot up to 75 percent, the Maharashtra-based auto component major expects to continue to outpace the market.

“Along with revenue growth, the focus is free cash flow generation and return on capital employed. We are left with debt, in the next two years, we want to be debt free,” assured Jain.

Varroc sold its global lighting business to Plastic Omnium and since then it has sharpened its focus on India and the growing electrification space in the country.

Jain says the external environment has truly experienced the ‘VUCA’ phenomenon (volatility, uncertainty, complexity and ambiguity) in the last three years with the government looking inwards and hence Varroc had to sharpen its focus back to the growing Indian market. He said the VUCA has impacted the developed world more and India has remained relatively insulated and that is why we shifted our focus back home.

“Our focus on India is towards EVs for two wheelers and three wheelers, more electronics, four wheelers lighting and plastic interiors and exterior systems. On the metallic side, we are not investing anymore on ICE engines, the future will be engine agnostic,” said Jain.

During the year the company’s order book stood at Rs 2,547 crore and out of that a third of the order book has come from the electrification business.

The products for electrification, plastic body, seats, LED lighting, electronics, but the company is aggressively looking at penetrating the powertrain side of EVs with a big focus on motor, controller, etc.

“We are expecting that we should move beyond Bajaj to other three or four customers in the coming year,” added Jain