Varroc Engineering Limited, a global supplier of automotive components, posted a net loss of Rs 4.5 crore for the third quarter of FY24, ending December 31, 2024. This marks a sharp contrast to the profit of Rs 38.4 crore reported in the same period last year, primarily due to higher material and operational costs impacting profitability.
Revenue from operations increased by 10.1% year-on-year, reaching Rs 207.5 crore in Q3 FY24, up from Rs 188.5 crore in Q3 FY23. This growth was mainly driven by the automotive sector, where revenue rose to Rs 201.9 crore from Rs 184.3 crore.
Despite this growth, rising input costs significantly impacted the company’s bottom line. The cost of materials consumed surged 10.2% to Rs 133.2 crore, while other expenses rose by 2.1% to Rs 31.1 crore. Employee benefit costs also climbed 13.4%, reaching Rs 23.4 crore.
The automotive division, which makes up the majority of the company’s business, reported an operating profit of Rs 10.3 crore, slightly up from Rs 9.7 crore in the same quarter last year. However, the “others” segment saw a loss of Rs 70.8 lakh, worsening from a loss of Rs 39.9 lakh in Q3 FY23.
On a sequential basis, revenue showed little change, with a slight decrease of 0.3% from Rs 208.1 crore in Q2 FY24. However, profitability dropped significantly from a profit of Rs 5.8 crore in the previous quarter.
The company also experienced challenges from foreign exchange fluctuations, recording a loss of Rs 41.6 lakh compared to a gain of Rs 24.9 lakh in Q3 FY23. Depreciation and amortization expenses remained high at Rs 8.1 crore.
During the quarter, Varroc Engineering received an order from the International Chamber of Commerce, Singapore, related to an ongoing arbitration between its subsidiary, VarrocCorp Holding B.V., and its joint venture partners. The company has accounted for an estimated impairment loss of Rs 796.5 crore, which was disclosed as an exceptional item.
As of December 31, 2024, Varroc’s total assets stood at Rs 4,535.1 crore, with the automotive segment contributing Rs 3,706.5 crore. Liabilities totaled Rs 2,954.5 crore, including Rs 1,927.7 crore in segment liabilities. The company’s earnings per share (EPS) for continuing operations was a loss of Rs 3.10, down from a positive Rs 25.05 in Q3 FY23, reflecting the significant impact on profitability.
Looking forward, Varroc faces challenges from rising input costs and competitive pressures within the automotive component market. However, the growth in the automotive segment’s revenue suggests strong ongoing demand from OEM customers.
The company is also addressing regulatory issues, including GST-related matters, and has initiated appellate proceedings in response to demand and interest orders, confident in its ability to defend its position. These results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting on February 10, 2025. Varroc Engineering continues to focus on enhancing operational efficiency and implementing cost-control measures to improve profitability in the upcoming quarters.
Varroc Engineering Limited is a leading global automotive component manufacturer specializing in polymer, electrical, and lighting systems. Established in 1988 and headquartered in India, the company serves major two-wheeler and four-wheeler OEMs worldwide.
Varroc’s product portfolio includes advanced automotive lighting, precision metallic components, electronic systems, and exterior plastics. With a strong focus on innovation and sustainability, the company has expanded its footprint across Europe, North America, and Asia, operating multiple manufacturing and R&D centers. By leveraging cutting-edge technology and strategic partnerships, Varroc Engineering continues to drive excellence in mobility solutions for the evolving automotive industry.
