Dear Shareholders and Stakeholders,
It is with great pleasure and gratitude that I address you through our
annual report for FY 2024. Over the past year, we have navigated through a landscape of
unprecedented change and uncertainty. Yet, through it all, our resilience and commitment
have been unwavering. In this annual report, as I review our financial performance and
strategic initiatives, I do so with a sense of optimism and determination. Our successes
is a testament to the dedication of our team, the strength of our partnerships, and the
trust of our shareholders.
Throughout the FY 2024, we have navigated through various market
conditions like recession fear in developed economies and geo- political wars in various
regions.
Our commitment to innovation, quality, and sustainability has been
unwavering, driving our growth and securing the future. Discipline in capital allocation
is helping us emerge stronger and more resilient than ever.
The automotive industry is undergoing rapid transformation driven by
technological advancements, changing consumer preferences, and regulatory developments.
Our company has viewed these as opportunities and has continued to thrive, adapting
swiftly to the evolving market demands and leveraging opportunities for growth. The
Company is in forefront to make the vehicles safer and thus developing products with
connected features and innovative solutions. Automotive lighting technology for
four-wheelers as well as two-wheelers has evolved significantly over the years to meet
safety, regulatory, and technological advancements. Our LED lighting solutions are not
only more energy-efficient, durable, and technologically advanced but it also improve
visibility, safety and contribute to reducing the environmental impact of vehicles through
lower energy consumption. Our product offering for electric vehicle is to make the entire
ecosystem more sustainable. The shift towards electric vehicles (EV's) represents a
significant opportunity.
At Varroc we actively respond to this trend by developing innovative
solutions tailored to the unique requirements of electric mobility.
Our expertise in power electronics, connected solutions & LED
lighting. position us a key enabler in the transition towards a greener future for all
vehicles. Thus, we continue to put our energy, wisdom and capital towards our Vision -
"Create safe, smart and sustainable future mobility solutions for everyone"
I am pleased to report that Varroc Engineering Limited has delivered
improved financial results this year.
Our revenue has grown by 9.6%, reaching Rs 75,519 million, reflecting
the success of our strategic initiatives of becoming a system supplier and increasing our
content per vehicle. Our Profit Before Tax margin improved to 4.2% in FY24 as compare to
1.2% in FY23. Our ROCE have improved to 20.3% and leverage ratio have fallen to 0.64 in FY
2024. This improvement has also been validated by external rating agency and they have
upgraded the rating of the Company by one notch to AA- for long term and our short term
rating is at the top notch which is A1+. Our endeavour remains to continue this journey of
improvement in coming years also.
Speaking more on the operational performance in different geographies,
our India operations continued to deliver strong performance with growth of over 14.1%
whereas our overseas business was impacted due to significant degrowth in 2W automotive
sales and heavy concentration in under performing certain overseas markets. We are taking
several initiatives to grow our overseas business. We are working with various customers
on additional revenue opportunities.
We are also driving cost reduction efforts in these markets to improve
margins. The margin improvement efforts through backward integration initiatives like SMT
lines are already in place. With these actions, we expect to see revival of overseas
business in the next couple of years.
We remain committed to our strategic priorities of innovation,
operational excellence, and sustainability. Our focus on sustainability has led to further
strengthening our initiative towards ESG, underscoring our responsibility towards
environmental stewardship. This year, we undertook a comprehensive materiality analysis to
pinpoint the issues most significant to our stakeholders and businesses. This process
involved thorough assessments and interactions with our stakeholders, bringing to light
critical areas such as energy efficiency, carbon footprint reduction, water conservation,
and social responsibility. We aim to align our operational processes and decision- making
with the identified material issues to drive long term value and resilience.
In FY2024, we also got ourself certified by TISAX and received
certificate from ISO 27001:2022.
These certifications shows that Company has systematic approach to
managing sensitive information and is well equipped to handle confidentiality, integrity,
and availability of its information as well as of its stakeholders.
At Varroc Engineering Limited, customer satisfaction is at the heart of
everything we do. We have continued to strengthen our relationships with existing
customers while expanding our customer base globally. Our ability to deliver high-quality
products and superior service has enabled us to maintain strong partnerships and drive
long- term value for all stakeholders. We are further strengthening our offering and
capability in EV powertrain, functional system supplier in polymer, connected including
ADAS products and LED lighting.
Looking ahead, while the global economic environment remains uncertain,
we are confident in our ability to capitalize on opportunities. We will continue to
innovate by further strengthening our engineering capabilities streamline our operations
through further cost reductions and working capital optimization. Our endeavour will
remain to expand our presence through focused products to drive sustainable growth and
deliver value to our shareholders.
In today's competitive landscape, where technology evolves rapidly and
markets shift unpredictably, it's our people who remain our most resilient asset. Their
resilience isn't measured solely by their ability to adapt to change but by their capacity
to innovate, collaborate, and lead with integrity. As Chairman,
I take pride in our unwavering commitment to our workforce. We strive
not only to attract top talent but to empower and inspire them to achieve their fullest
potential.
Our success isn't just measured in profits and market share but in the
meaningful relationships we build, the positive impact we create, and the legacy we leave
behind.
We continue to boost employee engagement and foster a thriving
workplace. These efforts led to the company getting certified as a "Great Place to
Work" in Sep'23.
I would like to extend my heartfelt thanks to our employees for their
hard work and dedication. Their commitment and passion are the driving force behind our
success.
I also express my gratitude to our customers, partners, and
shareholders for their continued support and trust in Varroc Engineering Limited.
In conclusion, I am proud of what we have achieved this year and
excited about the future prospects of our Company. Together, we will continue to build on
our strengths, uphold our values, and create value for all stakeholders.
Thank you for your confidence in Varroc Engineering Limited.
Sincerely,
Tarang Jain
Chairman and Managing Director