Carnation in JV with Hyd firm

Carnation, promoted by Maruti Suzuki former managing director Jagdish Khattar, has signed a joint venture with the Variety Group to set up multi-brand auto solution hubs in Andhra Pradesh.

Carnation would hold a 51 per cent stake while Variety will hold the remaining. The Hyderabad-based group will invest Rs 40 crore in phases for setting up about 10 auto solution hubs including four in Hyderabad. Khattar and Variety Group founder K Sathya Reddy signed the agreement.

Speaking on the occasion, Khattar said Carnation auto hubs would offer service and maintenance, sales of secondhand cars, insurance services, and accessories — all under one roof. Later, it would sell new cars too. The company already has JV partners in Uttar Pradesh, West Bengal, Karnataka and Maharashtra.

With the car park, (the number of cars on road) expected to touch 15 million in 2012 from the present 11 million, there is scope for third party service providers to grow. Traditionally, most car owners move away from the manufacturers for service once the warranty expires, he said

Carnation, in which PremjiInvest had put Rs 80 crore, would open about 100 outlets across the country at an investment of about Rs 1,000 crore. A part of it would come from the joint venture partners while the company would contribute from the third year of operations. It has borrowed about Rs 250 crore for meeting the working capital and other needs.

According to Khattar, there are about 230 dealers across the country wanting to down shutters of the service outlets as margins are thin. Carnation, which has taken over three such outlets, would explore to acquire more.