(i) Varroc Engineering Limited is a global tier-1 (tier-1 companies are companies that directly supply to original equipment manufacturers (“OEMs”)) automotive component group. They design, manufacture and supply exterior lighting systems, plastic and polymer components, electricals-electronics components, and precision metallic components to passenger car, commercial vehicle, two-wheeler, three-wheeler and off-highway vehicle (“OHV”) OEMs directly worldwide.
(ii) The company is the second largest Indian auto component group (by consolidated revenue for FY2017 and a leading tier-1 manufacturer and supplier to Indian two-wheeler and three-wheeler OEMs (by consolidated revenue for FY2017. They are the sixth-largest global exterior automotive lighting manufacturer and one of the top three independent exterior lighting players (by market share in 2016) . From FY2015 to FY2017 they had a compound annual growth rate (“CAGR”) of 17.57% in terms of revenue.
(iii) They commenced operations with their polymer business in 1990. They initially grew organically in India by adding new business lines, such as electrical division and metallic division. Subsequently, they diversified their product offerings and expanded their production capacity through various investments, joint ventures and acquisitions.
iv) Company’s Aquisition a) In 2007 they acquired I.M.E.S (a manufacturer of hot steel forged parts for the construction and oil and gas industries) in Italy.
b)In 2011 they acquired Triom (a manufacturer of high-end lighting systems for global motorcycle OEMs) with operations in Italy, Romania, and Vietnam. c) In 2012 they have done acquisition of Visteon’s global lighting business, now known as Varroc Lighting Systems.
d) In 2013, they expanded their global lighting business by acquiring Visteon’s holding in a 50/50 joint venture with Beste Motor Co. Ltd. (“TYC”) to manufacture automotive lighting in China, namely Varroc TYC (which wholly owns Varroc TYC Auto Lamps, which in turn wholly owns Varroc TYC Auto Lamps (CQ) (their “China JV”).
d) On February 13, 2018, they entered into a joint venture with Dell’Orto S.p.A., one of our customers, in India, for the development of electronic fuel injection control systems for two-wheelers and three-wheelers.
v) Financials For FY17, their consolidated revenue from operations was ₹96.1 billion with ₹61.2 billion from our Global Lighting Business, ₹31.7 billion from our India Business (₹14.8 billion for polymers/plastics, ₹9.0 billion from electrical/electronics/lighting, ₹5.4 billion for metallic components and the remainder from other sources) and ₹3.2 billion from our Other Businesses.
Objects of the Varroc Engineering Limited IPO:
Offer for Sale
The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and to carry out the Offer for Sale by Selling Shareholders.
Promoters of Varroc Engineering Limited Company are:
(i) Naresh Chandra is the Chairman and Non-Executive Director of our Company. He holds a bachelor’s degree in economics and a master’s degree in history from the University of Delhi. He also holds a diploma in business administration from the City of Birmingham College of Commerce, United Kingdom. He has over 50 years of work experience, with over 35 years experience in the automobile industry and has previously been associated with Kaycee Industries Limited. He has been associated with our Company since incorporation and became the Chairman of our Company in 1997.
(ii)Tarang Jain is the Managing Director of our Company. He holds a bachelor’s degree in commerce from Sydenham College of Commerce and Economics, University of Bombay and a diploma in business administration from University of Laussane, Switzerland. He has approximately 30 years of experience in the automotive industry. He has been associated with our Company since incorporation and was appointed as the Managing Director in 2001.
(iii) Ashwani Maheshwari is a Whole-time Director of our Company. He is also president of the metallic division of our Company. He holds a bachelor’s degree in engineering (mechanical engineering) from the Indian Institute of Technology, Roorkee (formerly University of Roorkee) and a master of science degree in leadership and strategy from the London Business School, London, United Kingdom. He has also successfully completed the executive development program at the Wharton School, University of Pennsylvania, USA. He has previously worked with The Tata Iron and Steel Company Limited as a graduate trainee, as a senior vice president – India business division in ITC Infotech India Limited and as the president – Birla tyres at Kesoram Industries Limited. He has been on our Board since March 2016.
(i) Authorized Share Capital
a) 250,000,000 Equity shares at FV@1
b) 250,000,000 Preferential shares FV@1
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue
a) 123,127,760 Equity shares at FV@1
b)11,683,770 Preferential shares FV@1
(iii) Present Issue OFS to public
( 201,21,730 Shares at FV@1)
(iv) Present Issue OFS to Employees
( 1,00,000 Shares at FV@1)
(v) Reservation for QIB [4,024,346]
(vi) Reservation for HNI[3,018,260]
(vii) Reservation for Retail[7,042,606]
(viii) Paid Up Share Capital after the issue
Detail of Promoters selling their shares via OFS
Name of the Promoter
No. of shares
Omega TC Holding Pte lt.
Tata Capital Financial Services Limited
Financials of Varroc Engineering Limited IPO:
1. Assets and Liabilities Key Parameters
2. Profit n Loss Key Parameters
3. Cash Flow Statement(all figures in Cr)
(i) Net Cash Generated from Operation
(ii) Net Cash Generated from Investment
(iii) Net Cash Generated from Financing Activity
(iv) Total[ (i)+(ii)+(iii) ]
a) The Revenue is growing at CAGR of 13.96% from FY15 to FY18.
b) The PAT is growing at CAGR of 10.43% from FY14 to FY18.
c) The EPS for FY18 is be 33.4
d) P/E= 28.95 at Cutoff price of 967.
e) P/B= 4.7 at cutoff price of 967.
f) The company is has total debt of around 1390 Cr on books as on 9MFY18.
g) Mcap/Sales(ideally <2)= 1.25 on FY18 sales( ideal).
h) The Company’s EBITDA Margins are in the range of 6-10% in last 4 years.
i) The Company is generating positive cash flows from operations from FY15-17- Big Positive.