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Jagdish Khattar announces next venture - Carnation Auto; receives Rs 100 cr funding

03-October-2008
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Jagdish Khattar announces next venture - Carnation Auto; receives Rs 100 cr funding

Jagdish Khattar, Former MD of Maruti Suzuki, has announced his next venture – Carnation Auto – which aims to develop India’s independent multi-brand automobile sales and service network. Khattar also announced the company’s first round of funding of over Rs 100 crore from marquee names in the industry such as PremjiInvest and IFCI Ventures.

Elaborating on his vision for Carnation Auto, Khattar said, “Our Auto Solution Hubs will provide everything a car owner would need to maximise his ownership experience. The multi-brand concept will allow us to provide automobile manufacturers, especially new entrants and those with limited market share, small car park and capacity constraints, a more efficient route-to-market through faster nation wide retail presence, scale efficiencies and servicing support.”

New car sales are projected to be 3 million and the car park at 19 million by 2015. To meet the needs of these customers, an incremental investment of Rs 12,000-15,000 crore is required in the network, which would be challenging in the existing franchise model. Up to 60-70 per cent of car owners go outside of the manufactures’ network post warranty. Carnation Auto would provide an alternative to these customers as well as families owning multiple brands, fleet owners and corporates, all under one roof.

Khattar added that initially the company would focus on providing service, mechanical repair and body shop solutions across its facilities. The service and parts market is valued at just under Rs 15,000 crore. Carnation Auto plans to launch its service and sales network in 100 locations across 65 cities throughout India over the next five years. The first few Auto Solution Hubs would be operational by early 2009, which will include Delhi NCR, Hyderabad and Cochin. The total investment in the project is estimated to be Rs 1,000 crore.

In an effort to provide complete auto care solutions to its customers under one roof, Carnation is tying up with leading value added product and service providers for tyres, batteries, car detailing, accessorising, CNG/LPG fitment and windshield replacement, among other things. Carnation will subsequently also develop multi-brand facilities to retail new and pre-owned vehicles.

Carnation is in advanced discussions with some leading automobile manufacturers for strategic partnerships to meet the service needs of their customers.

PremjiInvest, a fund sponsored by Wipro’s Azim Premji, has committed to invest Rs 80 crore to acquire a significant minority stake in the company. Prakash Parthasarathy, Chief Investment Officer, PremjiInvest, and Syed Mustafa, also of PremjiInvest, would join the Board of Directors of Carnation Auto. IFCI Ventures is also investing Rs 28 crore.

Carnation Auto is creating joint ventures in some key states with those who have the capability of running successful automobile dealerships in their areas. This would provide Carnation Auto with not only critical local insights but also help in an accelerated rollout of its operations.

Talking about the brand name, Khattar said that the company had been named after one of the most popular flowers. “The identity has been built around the essence of the flower, but turned around into a graphic rendition to give a vibrant and spirited feel to the brand,” he added.

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