IFCI Ventures to invest Rs 280-mn in Carnation Auto

New Delhi: Mr Azim Premji would invest Rs 80 crore through his private investment arm PremjiInvest in the new venture of former Maruti Suzuki Managing Director, Mr Jagdish Khattar, for multi brand car sales and service outlets.

In addition, IFCI Ventures would also invest Rs 28 crore in Carnation Auto, the new enterprise of Mr Khattar. This would take the initial funding to Rs 100 crore for setting up the multi brand sales and service network.

The investment in the new business is estimated to be Rs 1,000 crore. Over the next five years, it plans to establish its footprint in 65 cities through 100 locations across the country. For the purpose of expansion, the new entity would float a separate realty company that would be responsible for acquiring land for setting up outlets.

“There will be separate company which in talks with a few investors who would be looking to buy stake exclusively for realty project,” Mr Khattar, Chairman and Chief Executive Officer, stated.

He, however, declined to reveal the various brands that he would sell or even the segment that his venture would cater to, saying, “We have not reached that stage where those details can be shared.”

By the end of current fiscal, the company would open its outlets in National Capital Region, Hyderabad and Cochin, which would later be increased up to 30 in the next year.

“We will become a one-stop-shop, not only for cars but also for car needs,” he said.

Carnation estimates that up to 60-70 per cent of the car owners go outside the manufacturers network post warranty. Hence, it would provide alternative to these customers as well as families owning multiple brands, fleet owners and corporates.

It would leverage the opportunity arising by the entry of several new players in the domestic car industry lacking the robust service network spanning various locations.

The concept of multi brand sales and service outlets, which is a common practice in many of the developed markets, seems to be now catching up in India too. Recently, Mr B V R Subbu, former Hyundai President and Director, Argentum Motors also tied up with a Japanese group, Gulliver International, to form a new entity Altius Auto World which would offer its after sales and service support through 20-30 outlets in a years time. Apart from these, Mahindra & Mahindra’ used car business, FirstChoice also has charted its expansion plans by setting up multibrand used car mega retail stores.