Market regulator Sebi had approved the draft IPO proposal last month.

The IPO-bound Popular Vehicles & Services, which among the top 5 Maruti dealers nationwide, will be focusing more on the services side of the business when it comes to footprint expansion than sales, given the higher margin the vertical offers.

When it completes the Rs 800-crore OFS-only initial share sale, hopefully by later this month at a valuation of over Rs 1,550 crore, Popular will the only publicly traded auto retailer in the country as Sai Services has been taken private again. The market regulator Sebi has approved the draft IPO proposal last month.

The entire issue is an offer-for-sale by the private equity fund Banyan Tree which is selling its entire 34.01 per cent stake, and the company doing an OFS worth Rs 150 crore, according to Naveen Philip, one of the promoters and a non-executive director.

The promoters” (John K Paul, managing director and responsible for the Maruti Suzuki dealership operations); Francis K Paul (a whole-time director) and Naveen Philip, stake will continue to hold the present 65.79 per cent stake and the public holds 34.21 per cent in company”s total shareholding, Philip added.

Banyan Tree had invested $10 million in 2015 for a 34.1 per cent stake, he added. This investment also led to a name change as Popular Vehicles & Services and reconversion into a public limited company in 2018.

The city-based company, which began as a wholesale autoparts dealer way back in 1939 in Delhi, Bombay, Calcutta, Madras and Bangalore to supply to the war-time need of the army, began retailing vehicle parts from 1953.

“Given the much higher margin, we will be adding more service points than sales centres by a wider margin of at least 3:1 going forward and will add around 15 more service centres by the end of the year either through acquisitions or through organic growth,” Philip, a third generation from the Kuttukaran family, told PTI at his Kochi headquarters earlier this week.

As of now, as against 37 sales outlets across Kerala (28), TN, and Karnataka and Popular runs 83 service centres which does warranty service and body shop works and all other services, Philip said, adding the key is the higher margin from services especially from body shops. So network addition will more be driven by body shops, he added.

The company had revenue of Rs 3,916.34 crore in FY19, Rs 3,180.46 crore in FY20 and Rs 2,919.25 crore in FY21 from which it booked net profit of Rs 21.37 crore, Rs 12.49 crore and Rs 32.46 crore respectively with net margins of 0.55 per cent, 0.39 per cent and 1.11 per cent, respectively, primarily because of lower sales and higher services income, chief executive Philip Chacko said.

Sharing numbers, chief financial officer John Verghese said when it comes to operating margins, services and repairs contributed 35.86 per cent of the total margins in FY19, 53.20 per cent in FY20 and 50.85 per cent in FY21 as against new car sales fetching 40.24 per cent, 5.28 per cent and 22.38 per cent respectively, and new CV sales getting 21.12 per cent, 15.27 per cent and 13.93 per cent. Spare parts sales gave it the rest of the margins.

Again, during these three fiscals, services and repairs fetched 10.12 per cent, 14.62 per cent and 14.49 per cent of the topline respectively, while new PV sales contributed 59.92 per cent, 51.80 per cene and 50.43 per cent respectively to total revenue, new CVs fetched 20.29 per cent, 20.61 per cent and 21.01 per cent respectively, Philip said.

Popular was also one of the first 17 Maruti dealers from 1984 and the first dealership was opened in Trivandrum after Maruti wanted all the first dealerships to come up in state capitals. From there it has gone onto become one of the top 5 national dealers for the largest car maker and the largest in Kerala with over 25 per cent volume share.

It also is the largest dealers for Tata Motors” (since 1997) commercial vehicles in Kerala with over 30 per cent of volume and also in Chennai (since 2006) with over 20 per cent share.

Popular is present in the entire value chain of automobile retailing, also has market leading dealerships for Honda Cars (since 2008 under the Vision brand with seven showrooms in Kerala) and JLR (under the Marqland brand with three showrooms in Karnataka since 2010), offering sales both new and old PVs and new CVs, service and repair, spare parts distribution, apart from sale of third-party financial and insurance products, making it a diversified and fully integrated automotive dealership company. It also sells BharatBenz”s CV in Tamil Nadu since 2012.