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Varroc Engineering Ltd reports Q1FY21 earnings

Posted On: 2020-08-14 05:14:20

Varroc Engineering Ltd. (Varroc), a global tier-I auto component group, today announced its results for the quarter ended June 30, 2020.

Consolidated Financial Performance for the quarter

- Revenue from operations for the quarter was Rs 17,747 million, a decline of 56% over Q1 FY20, mainly due to plant shutdowns caused by the COVID-19 pandemic.

- The Global Lighting Business (VLS) revenue declined 50% YoY in Euro terms. The India Business revenue declined by 71%.

- The reported EBITDA loss for the quarter was Rs 1,794 million.

- The EBITDA loss for India business was at Rs 251 million while VLS reported EBITDA loss of Rs.1,547 million.

China JV

- China JV recovered quickly from the Covid-19 impact and performed strongly in this quarter. Revenue grew by 30.5% YoY and EBITDA margin was (+)16.5% for the quarter as against (+)6.3% in Q1 FY20. Our share of the JV profit was Rs.110 Mn as against a marginal loss in Q1 FY20.

Depreciation and amortisation

- Depreciation and Amortisation expenses were higher due to capitalisation of new facilities.

Finance Costs

- Finance costs were higher due to higher average borrowings during the period, caused by the disruption to the working capital cycle.

Mr. Tarang Jain, MD, Varroc Engineering Ltd. commented, "As is required of any prudent business, we initiated a number of steps to mitigate the impact of the Covid-19 impact on the business. We are limiting capital expenditure in line with revised demand expectations, and it will be only about 60% of the capex incurred last year. We have also taken steps to reduce the fixed cost base through various measures, resulting in savings of about 20% overall. We have also prioritised securing and preserving liquidity till the operations have fully stabilised and visibility on business prospects has improved. These measures helped us weather the storm and navigate our way through the crisis and emerge stronger with a lower cost base and more efficient operations.

Going forward, our key areas of focus would be optimisation of cost structure, maximising capacity utilisation of investments made and cash flow generation."

Shares of Varroc Engineering Ltd was last trading in BSE at Rs.211.85 as compared to the previous close of Rs. 222.05. The total number of shares traded during the day was 36507 in over 1270 trades.

The stock hit an intraday high of Rs. 230.6 and intraday low of 203.95. The net turnover during the day was Rs. 7850258.

Source: Equity Bulls

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