By Vivek K. Mobile: 09920183006 Email:email@example.com
Varroc Engineering Ltd. (Varroc), a global tier-I auto component group, today announced its results for the second quarter and half year ended September 30, 2018 (Q2 & H1 FY19).
Summary Consolidated Financials
Consolidated Financial Performance
Reported revenue from operations for the quarter was Rs 30,011 million, an increase of 24.1% over Q2 FY18. Revenue growth, on a like-for-like basis, excluding the impact of Ind AS 115, the Interior Plastics Business in North America (phased out during FY18) and Excise Duty, was at 26.5% YoY.
The India Business revenue increased by 27.4%, the Global Lighting Business (VLS) by 24.1% and Others by 47.4% over Q2 FY18, on a like-for-like basis.
The reported EBITDA for Q2FY19 was Rs 3,202 million, an increase of 43.0% YoY. EBITDA on a like-for-like basis was up by 21.7% YoY and the EBITDA margin on like-for-like basis for the quarter was at 8.6% as against 8.9% in the same quarter last year.
The EBITDA for India Business, at Rs 1,393 million, increased by 40 bps YoY to 12.1%.
The reported EBITDA of VLS was at Rs 1,640 million. On a like-for-like basis, the VLS EBITDA margin contracted to 5.8% from 7.1% in Q2 FY18, mainly due to the additional costs of rapid volume ramp-up.
The PAT for the quarter was at Rs 1,009 million as compared to Rs 926 million for Q2 FY18.
The profitability for the quarter was impacted by:
reduction in our share of China JV profit to Rs 73 million due to drop in revenue, caused by lower volumes of our key customers as well as decline in the overall market
higher effective tax rate in Q2 FY19 due to higher share of profits from India business and the additional tax credits availed in Czech Republic in Q2 FY18
on a net basis, Ind AS 115 adoption has a positive impact of Rs 109 million on the PAT for the quarter.
Our share of Revenue from China JV declined by 34.4% YoY to Rs 1,122 million and EBITDA on a like-for-like basis declined by 49.3% to Rs 113 million.
In our VLS Business, the Bulgaria plant (part of Turkey acquisition) is expected to start production in this month. For our under-construction Morocco plant, first SOP date is now advanced from April 2019 to February 2019.
In our India Business, the construction of the Halol, Gujarat plant is now complete and production is expected to start later this month.
On 18th September 2018, VLS signed an agreement with ELBA SA, Romania to establish a JV. The main objective of the JV is to manufacture electronic components for VLS business at a competitive cost.
Mr. Tarang Jain, MD, Varroc Engineering Ltd. commented, “During the quarter we faced a challenging macro-economic environment caused by Brexit uncertainty, US-China trade sanctions, increase in fuel costs and regulatory changes in Europe and India. This impacted industry growth in India and abroad. Against this background, we have manged to maintain our growth momentum and deliver satisfactory results for the quarter.
We are focused on improving operational efficiencies in the VLS business, the results of which should be visible in the later part of the year.”