Varroc Engineering Q3 results: PAT at Rs 384 cr, revenue rises 9.4%

Auto parts supplier Varroc Engineering on Wednesday reported a consolidated Profit After Tax (PAT) of Rs 383.9 crore in the December quarter, primarily driven by a tax benefit of Rs 313.1 crore.

The company had reported a consolidated PAT of Rs 21.8 crore in the year-ago period.

The revenue for the quarter rose 9.4 per cent to Rs 1,884.6 crore from Rs 1,722.8 crore a year back, the company said in a statement.

The massive surge in PAT was on account of tax benefit amounting to Rs 313.1 crore, it said.

"The tax benefit has come as we have written off the impairment-related losses pertaining to loan given to overseas entity of four-wheeler lighting business in Europe and America," Varroc said.

"Despite de-growth in overseas markets in the quarter, the overall revenue from operations grew 9 per cent year-on-year to Rs 18,846 million, the reported PBT (Profit Before Tax) was Rs 708 million, which includes profit from our joint venture of Rs 250.7 million," Varroc Engineering Ltd CMD Tarang Jain said.

Automobile production in India during the third quarter grew on a year-on-year basis for all segments with the passenger vehicle segment rising 5 per cent, commercial vehicle segment growing 5.9 per cent, whereas three- and two-wheeler segments registering strong growth of 13.4 per cent and 19. Per cent, respectively, he said.

"Our operations in the quarter mirrored the industry situation. Our revenue in India grew 20.1 per cent higher than both two-wheeler and passenger vehicle industry growth on year-on-year basis. However, our revenue from overseas operations had a de-growth as two-wheeler production levels went down in certain markets like Vietnam and Italy. In addition, our customer concentration in these markets impacted our revenue," said Jain.

"As we look forward in our overseas business, our focus is to drive customer diversification in the order book and hence mitigate our customer concentration risk. We also drive cost actions through insourcing and working capital optimisation. These efforts are likely to lead to a gradual recovery in overseas markets and improved financial performance in the medium term," he said.