Varroc Engineering Ltd., a global tier-I auto components group, reported strong financial and operational performance for FY2024–25, reflecting its strategic focus on innovation, sustainability, and structural simplification. The company closed the year with robust free cash flow generation, margin improvement, and continued deleveraging, while positioning itself for long-term growth across both domestic and international markets.
FY25 Highlights
For Q4 FY25, Varroc reported consolidated revenues of ₹2,100 crore, reflecting an 11% year-on-year growth on a like-to-like basis, with Indian operations growing by 13%. The company recorded an EBITDA margin of 10.2% for the quarter, supported by gross margin improvement and operating leverage benefits. Profit Before Tax (before exceptional items and JV profits) stood at over ₹100 crore or 4.9% of revenue.
Throughout the year, Varroc implemented structural initiatives including the merger of VEL and VPL and the exit from its China joint venture, moves designed to simplify operations and enhance long-term profitability. While these led to some one-time exceptional items, they are expected to deliver operational and financial benefits going forward.
“We are pleased with the progress we’ve made in strengthening our balance sheet and improving returns,” said Tarang Jain, Chairman and Managing Director of Varroc Engineering Ltd. “These results underscore our continued focus on margin expansion, fixed cost control, and working capital optimisation – all of which enable consistent free cash flow generation.”
Strategic Initiatives: Innovation, ESG and International Growth
During FY25, Varroc intensified its focus on technology and sustainability:
- The company filed 25 new patents, bringing its total to over 120 filings.
- Renewable energy sourcing increased to 31% of total electricity consumption, up from 13% last year, reaching 45% in March 2025. Phase 2 of its renewable energy project is expected to push this beyond 50% in the coming year.
- In May 2025, Varroc completed the divestment of its stake in the China JV, realising net proceeds of RMB 290 million.
These moves are expected to enhance both Varroc’s ESG credentials and operational cost efficiency.
The company also secured net new business wins worth ₹1,173 crore in annualised peak revenues, with more than 55% from EV models. Encouragingly, a significant share of these wins came from overseas operations, setting the stage for improved global profitability from FY27 onwards.
Automotive Market Context
Segment-wise, Varroc reported YoY growth across most categories in Q4 FY25:
- Two-wheelers grew 5.8%, Passenger Vehicles 5.2%, Commercial Vehicles 3.1%, and Three-wheelers 9.5%.
- On a sequential basis, PVs and CVs posted strong growth of 20.4% and 20.9%, respectively, while 2Ws saw a marginal dip of 1.2%.
Despite macro headwinds including uneven consumption and global uncertainty, Jain remains confident in the industry’s trajectory. “While near-term challenges persist, we remain optimistic about the medium- to long-term growth outlook for the automotive sector. India’s steady economic expansion and evolving mobility landscape present significant opportunities for value creation,” he noted.
