Khattar draws up Rs 1,000 cr spread

Carnation, an initiative of Jagadish Khattar, the former MD of Maruti Suzuki, plans to invest Rs 1,000 crore in the next four years to set up a pan-India network of outlets to provide automobile solutions.

The venture will be an organised effort to provide car service facilities. Outlets will offer maintenance, repair and sale of accessories and spare parts. The outlets will also offer other related products such as automobile insurance.

“Each centre will be an automobile hub offering everything a car owner wants, from accessories and spares to insurance. We are also getting into the pre-owned car sales business. Eventually we will get into selling brand new cars as well,” Khattar said.

However, the outlets will remain brand neutral. “This practice of third-party service centres is there in other countries. Here, either we have company-operated or dealer-operated facilities or the ones that are operated by mechanics in the neighbourhood,” Khattar said.

The company is working on operating 10 outlets immediately in Uttar Pradesh, West Bengal, Karnataka, Maharashtra and Andhra Pradesh. One outlet will shortly start operations in Delhi.

While about 40-50 outlets are expected to go on stream by March next year, the company plans to have about 100 outlets in the next four years.

Carnation has so far received funding from Premji Invest of Rs 80 crore and IFCI Venture Capital of about Rs 28 crore. “I am raising another Rs 150 crore through debt. Rest of the funding will come in various forms. But, I am not looking got any further investors,” Khattar said.

For the current financial year, Khattar expects Carnation to clock revenues of
Rs 300 crore.

“Our effort is on bringing down the total cost in maintaining a car. We are also talking to some insurance companies. For instance, when a car comes for servicing, today the service centres show some parts for replacement. We are bringing in technology for repair and not replacement. This will save significant resources for the insurance company,” he said.

Khattar plans to take a joint venture route for expansion, rather than allow franchising of his brand. The partner will have 49% stake and provides funds while Carnation will have majority stake and control operations.