The Aurangabad-based Varroc Engineering, a global Tier 1 auto component group, is betting big on its global lighting business as it looks to adapt to the global EV megatrend in the automotive world. Speaking to Autocar Professional’s Nilesh Wadhwa, Tarang Jain, Managing Director at Varroc Group, says the company has invested 250 million euros (Rs 1,954 crore) and is in the process of setting up six plants across Europe and Asia to increase its global footprint.
On the lighting business and growth strategy
We play in two large businesses. Within India, we are a large player in the two-wheeler business with close to 85% of business being in two- and three-wheelers. This constitutes 35% of overall business. Globally, we are in the lighting business for passenger vehicles and are expanding quite well in that field.
If you notice, the period between October 2018 and December 2019 was a difficult phase with flat growth in the overall global lighting business. In fact, the Chinese markets have seen de-growth. Markets across Europe and North America have remained subdued as well.
But the good thing for us is that despite this muted sentiment, we have over the past two-and-a-half years won businesses worth a billion euros (Rs 7,818 crore). This comprises new businesses too and that has started playing out for us.
Our strategy has been to increase the lighting business. We have invested 250 million euros (Rs 1,954 crore) for expansion and are in the process of setting up 6 plants. New plants in Chennai and Romania will start over next 6 months. The rest are already operational.
We definitely expect that global automotive industry will be affected over the next few months because of China and the situation there as it is a key component supplier globally. But in terms of impact to our business, it will be restricted to regions. Our China plant supplies component to Chinese companies.
Moreover we are increasingly aligning our businesses with large customers like Volkswagen, Renault Nissan and have already won new businesses from them. That is why we have looked at expanding globally and set up plants in Europe too (Czech Republic, Poland, Romania)
Handling the EV megatrend
Electric vehicles are at an early stage. Today, we supply almost the entire electric-electronic system in IC-engine two- and three-wheelers. We are looking to do the same for electric vehicles. We are also in touch with start-ups and OEMs and hopeful that we will become one of the prominent suppliers in this particular market in India.
The government wants to promote new technologies like li-ion batteries and we are focusing on long-term EV plays. We are hopeful of winning new businesses in these sectors in FY2021 and start production by FY2022.