Varroc Engineering, which manufactures lighting systems, plastics and metal components for automobiles, has lined up an aggressive gameplan. Varroc Lighting Systems (VLS), a 100 percent subsidiary of the $1.2 billion Aurangabad-based Varroc Group, is currently working on eight new automotive projects that span commercial vehicles and cars and is close to finalising a deal with a German luxury carmaker, which will be its first customer in the luxury car segment in India.
The new projects include the design and development of lighting systems for the upcoming models of passenger cars and CVs from Volvo Eicher Commercial Vehicles (VECV), Mahindra & Mahindra, General Motors India, Volvo, Volkswagen, Tata Motors and other marques too that the company has not revealed. Varroc will commence the supply of products currently under development in another 18 months. The lighting systems developed specifically for VECV vehicles are currently undergoing the testing and approval procedure.
At present, M&M is VLS’ largest customer, procuring both head- and tail-lamps for its XUV500 from the company as well as headlamps for the Scorpio and Bolero. While the Scorpio sells an average of 4,000 units a month, the Bolero, refreshed a year ago, sells around 9,500 units a month.
VLS also supplies to Tata Motors (headlamps for Indica Vista, Manza; headlamps/fog lamps for world trucks, headlamps for Safari Storme and Aria, tail-lamps for Sumo Grande and Xenon), GM India (head- and tail-lamps for Beat), and VW India (tail- lamps for Polo hatchback).
In the two-wheeler space, VLS supplies lighting systems to all the big names barring Hero MotoCorp and TVS Motor. Without disclosing the models and OEMs, Vineet Sahni, president – electrical division, Varroc Engineering, confirmed that the company is developing new lighting systems for some two-wheeler OEMs as well. According to him, an average of two years go into the design and development of external lighting systems for four- wheelers while the same typically takes about a year for two-wheelers.
On the global front, Sahni disclosed that VLS is making further investments to the tune of $30 million under various phases over the next five years in expanding the manufacturing facility of its Chinese arm, Varroc TYC (acquired as part of the Visteon Lighting deal in 2011). Bullish about the other emerging economies (specifically BRIC countries), VLS plans to set up a production facility in Russia within the next two years, followed by a facility in Brazil.
Though the locations and size of investments are not yet decided, Sahni revealed that the feasibility of these forays is in progress. “The teams of Varroc Lighting Systems in India and in Europe are jointly studying the prospects of setting up production plants in Russia and Brazil,” said Sahni.
Partnering China
Sahni confirmed these developments, on the sidelines of a recent visit of a 14-member trade delegation from the Foreign Investment Promotion Center of Commerce Bureau of Changzhou, China. This follows the recent acquisition by the Varroc Group in Changzhou. Varroc is the first Indian auto components maker to have two plants in Changzhou; its third plant will soon be operational in Chongquing area. The lighting business from Chinese operations stood at $130 million in 2012. The delegation, led by Fang Guoqiang, vice-mayor, Changzhou People’s Municipal Government, comprised members of various division directors such as commerce bureau, ministry of foreign affairs and others.
“This is the first time that a Chinese Economic Trade delegation is visiting India. Our foremost motive is to promote and encourage Indian companies to invest more in China. Our three-day tour is aimed at meeting potential Indian blue-chip companies and gathering information that will help us in building India-China relationship. China is a big automotive market and the trade potential between India and China is huge. We also met officials from the Tata Group of companies including Tata Motors,” Guoqiang told Autocar Professional.
“It is a pleasure and honour to host this high-powered trade delegation from Changzhou at our plant. Their visit to India shows their commitment to developing business relationships with Indian companies and Varroc Group too is committed to nurture this relationship,” said Sahni.
Eyeing the aftermarket
For Varroc, the lighting systems vertical stands at 50 percent of all operations which include electrical parts, polymers and metals. But the company is eyeing new pastures. It now plans to tap the growing aftermarket in India. However, it is still working on an implementation plan. “We are working out a business plan for the growing opportunities that exist in the aftermarket. Maybe going forward, we can service the customers jointly along with our OEM partners,” said Sahni.