Unfazed by the impending electric mobility revolution that could affect its business, India Motor Parts and Accessories Ltd (IMPAL), the country’s largest retailer of automobile components, plans to expand into north India — mainly Punjab, Uttar Pradesh and the North East.

Narayanan Krishnan, Managing Director of the TVS Group company, believes that there is a lot of juice left before the EV revolution kicks-in. Even later, a vehicle would still need several parts such as wheels, brakes, steering and suspension systems, Krishnan told BusinessLine .

At present, the ₹500-crore company has 72 branches, pan India — all owned or leased with no franchisee. “We have not tapped the Indian market fully yet,” says Krishnan, adding that IMPAL would add at least 10 more branches in the next few years.

It certainly has the cash to expand. In recent years, IMPAL has also behaved like a PE fund.

Its value of investments in Sundaram Finance where it has a holding of 2.70 per cent, an associate company, doubled to ₹745 crore from ₹347 crore at the end of March 2020; it has picked up 4.50 per cent in TVS Group Company Wheels India for ₹50 crore and 1.70 per cent in Brakes India for ₹70 crore. It also upped its investment in Sundaram Finance Holdings Limited.

With all these, as on March 31, 2021, IMPAL had ₹1,226 crore in investments (mostly in associate companies Sundaram Finance, Wheels India and Royal Sundaram), up from ₹695 crore; its current investments, mostly in mutual funds, totalled another ₹183 crore, up from ₹165 crore.

Its net worth has doubled in the last five years, from ₹747 crore in 2016-17 to ₹1,432 crore in 2020-21. The book value works out to ₹1,148 a share.

Net profit improved between 2016-17 and 2020-21, from ₹32 crore to ₹50 crore. It paid ₹10 a share (100 per cent) as dividend in 2020-21 (₹18, in 2018-19.)

According to Krishnan, a third of the net profit comes from treasury activities.

Therefore, there is enough cash in the balance sheet to fund any expansion with a good business case.

The pandemic seems to have had a benign effect on IMPAL. “During a crisis, nobody buys new vehicles, which helps spare parts sales,” observed Krishnan.

Branch expansion will aid topline growth. Since 2015-16, the company’s turnover has remained in the neighbourhood of ₹500 crore.

Major restructuring

The TVS group is undergoing a major restructuring, having applied to the National Company Law Tribunal for permission for different factions of the group to go their own way.

Asked if the restructuring would affect IMPAL, Krishnan observed that the company has always competed with other auto components retailing companies of the group-oddly enough, the TVS group has as many as seven companies in the business of auto parts retailing such as Sundaram Motors and Madras Auto Service.

Furthermore, some group companies (Sundram Fasteners and TVS Tyres) have, in the past, opted to sell some of their products in the aftermarket directly through stockists, rather than through in-house retailers such as IMPAL or MAS.

As such, the restructure would have no impact on IMPAL, Krishnan said.