Jagdish Khattar starts car servicing business

Carnation, the multi-brand car servicing major, has announced plans to roll out its own brand of auto spare parts by mid-2010. "We'll be launching our own brand of genuine car spare parts," said Jagdish Khattar, CMD of Carnation, at the formal launch of nine service outlets.

The nine outlets have actually been functioning for several months already; company executives say 7,000 customers have come in till now.

Company officials said they have begun importing specialised auto components from countries like Thailand and Taiwan to service luxury car brands like Honda and Toyota.

"Taking advantage of the free trade agreement between India and Thailand, we are importing car spare parts. Further, we are currently exploring options to engage domestic auto component vendors to contract manufacture car ancillaries for us, which will be sold under the Carnation brand name."

The domestic market for auto ancillaries is around Rs 20,000 crore (Rs 200 billion). Vendors supplying auto parts to Maruti Suzuki and Hyundai are required to manufacture exclusively for the company. But executives in these companies say certain auto components that are not proprietary in nature are permitted to be manufactured and sold on a non-exclusive basis.

Carnation executives say it's here they would sell their private label of auto components, where quality is guaranteed. "Our positioning will be between the genuine authorisd spare parts and the grey market," says one Carnation executive.

The company,which has raised around Rs 108 crore from investors like Azim Premji and IFCI Ventures, plans to raise an additional Rs 180 crore (Rs 1.8 billion) primarily by way of debt funding from banks. The company expects its turnover to touch Rs 70 crore (Rs 700 million) by the end of financial year 2009-10. "By the third quarter of the financial year 2010-2011,we expect to break even," says Khattar.

Carnation plans to open an additional 30 multi-brand servicing outlets by the end of 2011. And plans to foray into the used car business and then into selling new cars in the next three years.

Khattar says the revenues from all these business units would result in increased turnover and cash accruals. But refused to give a forecast.