#### **Overview** Varroc Engineering Ltd is a leading global Tier-1 automotive component supplier, established in 1988 and headquartered in India. The company serves original equipment manufacturers (OEMs) across two-wheelers, three-wheelers, passenger vehicles, commercial vehicles, and off-highway vehicles. Listed on the BSE and NSE, Varroc operates with end-to-end capabilities in design, engineering, manufacturing, and validation. As of FY2024, its stand-alone operations generated approximately ₹45.35 billion in revenue, with 87% sourced from India and 13% from international markets. The company employs over 6,100 people and operates a vast global footprint, including **37 manufacturing facilities and 7 R&D centers across 8 countries**, including India, China, Vietnam, Romania, Italy, Thailand, Poland, and the Netherlands. --- #### **Strategic Business Segments** Varroc organizes its operations into the following core business units: 1. **Electrical & Electronics (EBU)** 2. **Lighting Solutions** 3. **Polymer Business Unit (PBU)** 4. **Metallic Business Unit (MBU)** 5. **Aftermarket Division (AMD)** 6. **E-Mobility & Connectivity (Varroc Connect, EV Components)** It serves a diverse customer base across multiple geographies, including major OEMs like Bajaj, Honda, Royal Enfield, Yamaha, Piaggio, Tesla, Volkswagen, and Skoda. --- ### **Strategic Growth Pillars (As of Nov 2025)** Varroc has restructured its long-term strategy around **three interconnected growth pillars** aimed at capitalizing on the global shift in mobility (CASE: Connected, Autonomous, Shared, Electric): 1. **Increasing Content per Vehicle** - Focus on **safer, smarter, and more sustainable mobility** through: - **E-Mobility**: Traction motors, BMS, DC-DC converters, onboard chargers, and e-transmissions. - **Connectivity & ADAS**: Telematics, driver monitoring systems (DMS), surround view systems, and lighting electronics. - **Advanced Lighting**: LED, Matrix, OLED, ADB, adaptive and intelligent lighting systems. - Product content per vehicle has expanded significantly—from ₹8,000–10,000 for ICE two-wheelers to ₹25,000–30,000 for EVs. 2. **Portfolio Optimization and Manufacturing Agility** - Exited China manufacturing operations post-legal arbitration (2024–25). - Established a **new export hub in Thailand (operational Oct 2025)** to leverage proximity to ASEAN markets, supply chain resilience, and competitive export opportunities. - Divested 4-wheeler lighting operations in Europe and the Americas to Plastic Omnium in 2023 (€600M deal), allowing strategic focus on high-return segments. - Merged **Varroc Polymers into the parent entity** to strengthen agility and capital allocation. 3. **Expansion into Adjacent Markets** - **Aftermarket**: AMD serves over 30 countries via 700+ distributors, with a 160,000 sq. ft. warehouse and 9,000+ SKUs. - **Exports**: Growing traction in Southeast Asia, Europe, and North America with localized production. - **Non-Automotive Opportunities**: Inorganic and organic growth in electronics and power management sectors. --- ### **Key Developments (2024–2025)** | **Area** | **Key Highlights** | |--------|-------------------| | **E-Mobility** | - Over **11% of revenue now from EV customers**; 55%+ of new business wins in EV segment.<br> - Secured long-term contracts with EV OEMs for **high-voltage electronics (inverters, BMS) and powertrain components**.<br> - Localized EV product suite valued at ₹35–40 billion; traction motors, controllers, and DC-DC converters in full production. | | **Lighting & Electronics** | - **Exterior and interior lighting** wins expected in coming quarters.<br> - China R&D center remains key hub for **4W lighting and ADAS**, supporting global customers.<br> - Developing **Matrix Pixel headlamps, slim projectors, and surface-LEDs** across 2W and 4W segments. | | **Manufacturing & Global Footprint** | - **Thailand facility operational (Oct 2025)** as regional export hub.<br> - Manufacturing in: **India (14+ facilities), Romania, Vietnam, Italy, Poland**.<br> - In-house SMT lines expanded from 10 to 15 to meet rising electronics demand. | | **R&D and Innovation** | - Global network of **7 R&D centers (India, China, Italy, Poland, Romania)** with 800+ engineers.<br> - Over **125 patents filed**, with active development in adaptive lighting, AI in quality inspection, IoT-driven mobility.<br> - China R&D integrates **technology, cost efficiency, and speed** for global delivery.<br> - Leveraging **AI/ML, Microsoft HoloLens 2**, and digital twins to enhance product development speed and training. | | **Financial Performance & Capital Efficiency** | - **ROCE improved from 12% (FY23) to 23.6% (Q2 FY26)**.<br> - Strong **free cash flow generation** driven by working capital reduction and improved operational throughput.<br> - High-profitability business model emerging, with focus on margin expansion and capital discipline. | | **Strategic Partnerships & Acquisitions** | - Acquired **Team Concepts (90%)** to expand into automotive accessories.<br> - Joint Venture with **Dell’Orto** for Electronic Fuel Injection (EFI) systems in 2W/3W.<br> - **CarIQ acquisition (95%)** enabled launch of **Varroc Connect**, India’s first connected vehicle platform. | --- ### **Product Portfolio Highlights (Nov 2025)** | **Segment** | **Key Offerings** | |-----------|------------------| | **E-Mobility** | Traction motors, motor controllers, DC-DC converters, BMS, on-board/off-board chargers, e-transmissions (single/double-speed gears). | | **Lighting** | LED, Matrix, Xenon, Laser, ADB, ORIGAMI Light Engines, MLE.1 Matrix Controller, Welcome lamps, smart LCUs. | | **Electronics (4W & 2W)** | ADAS, DMS, telematics, infotainment, TFT clusters, switch systems, HMI, FOTA/COTA, BLE connectivity. | | **Polymer Solutions** | Painted body panels, 2K/3i molded parts, instrument panels, door trims, air filters, EV battery protection systems. | | **Metallic Components** | Engine valves (sodium-filled, titanium), transmission assemblies, crankshafts, gears, forged EV drivetrain parts. | | **Aftermarket (AMD)** | Hiker brand accessories, lighting, electricals, lubricants, engine parts – distributed in 30+ countries. | | **Connected Mobility (Varroc Connect)** | IoT-based telematics with big data engine (5B+ km data processed), OBD/BLE/TCU hardware, AI analytics, driver coaching, fleet management. | --- ### **Geographic Presence** - **India**: Core hub; 14+ polymer plants, 10+ electronics/lighting units, 5 metallic plants. - **Europe**: Romania (electronics, R&D), Italy (lighting), Poland (ADAS R&D). - **Asia**: Thailand (new export hub), Vietnam (2W lighting), China (R&D, JV for lighting), Japan (sales office). - **Other**: Netherlands (holding), global sales offices and logistics networks. --- ### **Customer and Market Positioning** - **Two-Wheeler Dominance**: Supplies nearly all major Indian OEMs; **75% revenue from 2W segment**. - **EV Market Penetration**: Over 55% of new business wins are from EV OEMs; products include full powertrain systems. - **Global Lighting Presence**: Leading supplier of 2W lighting in Europe and emerging supplier of 4W lighting in Asia. - **OEM Partnerships**: Positioned as an **"early development partner"** with deep integration into customer platforms. - **Aftermarket Strength**: AMD growing at >15% CAGR, reducing OEM dependence and improving profitability. --- ### **Recent Business Wins (FY25–26)** - **Lifetime business wins**: ₹10,847 million annualized peak revenue in 1H FY25, predominantly from EV platforms. - **Overseas wins**: - Front and Rear Drive Inverters and Interior Ambient Lighting for EVs (production starts FY27). - New order from a **premium European OEM (€3M/year)**, starting FY27. - **India growth**: Outperforming industry (20% YoY growth vs 15%) driven by increased electronics and lighting content.