[sharoncr_17]

Something somewhere reminds me of John DeLorean.

[GTO]

Vinod Agarwal drops an interesting email.

Would anyone choose Carnation just because they're a little cheaper than the authorised workshop?

Now a days, 99% customers don't have the time to spend a full day for their car service at workshop, so they drop their cars at their trustworthy workshop whether it is ASS or not. And now to build the trust, a workshop must use 100% genuine spares and have trained, competitive skilled workers.

Customers don't bother to spend 20-30% extra labour charges if they get better service. In the earlier days of our workshop (when we were not a MASS), we were charging Rs. 300 for Wheel Alignment for Tata Sumo/Estate while the Tata Dealer charged only Rs. 150, and we still had advance booking for the next day to do the wheel alignment as we only take 3 Tata Sumos for alignment (since our main focus is / was Maruti vehicles). We were charging more than MASS at that time for alignment!

[car.lover]

Multiple pivots and business models aside, Khattar was and is primarily a sales/marketing chap. For anyone who knows the MSIL structure, there are three completely different organisations within the company - Production, Sales&Marketing and then Service.
While dealer management / promotions, etc. were Khattar's forte - service is a completely different ball game. He succeeded in some extent to get the brand out and some buzz in the market... but failed at execution.
Service is very "delivery centric" and scaling it has many challenges - professionalism, talent retention, ethics, etc. Tough one for JK- and that too trying to get it done from a franchised model by mechanics one has no control over.....it was a matter of time!

[veyron_head]

With car service customers either go to the authorized service center for quality/service or go to a FNG (Friendly Neighborhood garage) for cost/quality. Now, it is extremely difficult to set up an 'organized sector' within the FNG market, because you need to charge more to maintain your standards but you are not authorized by the OEM to service their cars!

On another note, We are in an age where one mamooth loss making company can even acquire another loss making company - All out of investor money!! I am in a way surprised that Carnation, with their influential management back up, did not pool in more money from investors and decided to shut shop.

[ambujlal]

This was waiting to happen. I had tried Carnation a few times and the only thing consistent across few visits was the pathetic quality of service and exorbitant bills. It was a good idea but poorly executed. Instead of going pan India at once, they should have gone slow, build a brand image of a place where your vehicle's trouble would surely be fixed no matter what. But what they followed was the old model of "giving back a washed car as a serviced car."

[D33-PAC]

Sad to see another one bite the dust.

One of the earliest memories to me of how ruthless and sad entrepreneurship can turn out to be is my memory of a novice entrepreneur setting up his own after-sales/service garage under his own brand.

It was on the way to my school and I'd see his efforts to make it - he'd park his own car in front of the garage with the hood open to make it look like there was some activity there so people would know what's there.

Unfortunately he folded and I remembered what a rollercoaster ride business can be.

In today's market environment nobody is spared. From the small timer to the biggies like Vijay Mallya.

I guess Azim Premji will be fuming about this investment loss. He burned his hands on a venture named Subiksha before too.

[vigvr]

Originally Posted by Shreyans_Jain

The basic problem with Carnation, or with any third party service network is that car manufacturers will not allow access to spares and service manuals. Without that, the system just can't work.

Wonder how the spareshub guys get access. I attempted to get a certain part for my Volvo S60. All they needed was a part number.

[LazyGunner]

Originally Posted by car.lover

Service is very "delivery centric" and scaling it has many challenges - professionalism, talent retention, ethics, etc. Tough one for JK- and that too trying to get it done from a franchised model by mechanics one has no control over.....it was a matter of time!

Originally Posted by D33-PAC

It was on the way to my school and I'd see his efforts to make it - he'd park his own car in front of the garage with the hood open to make it look like there was some activity there so people would know what's there.

Unfortunately he folded and I remembered what a rollercoaster ride business can be.

"Delivery Centric", "professionalism", "talent retention" and most importantly "ethics" - key words to run a private (non-authorised) service center successfully. When I was angry at being taken for a ride by my authorised Enfield service centres, I decided to try my hand at opening my own Enfield service centre while trying address all the issues I faced with the authorised ones. Starting with 2 trained technicians and enabling them with right tools were only the initial steps. Going by crazy market for Enfields and their utterly ignored after sales experience, it was easy to become famous in the neighbourhood. All we needed to do was give good service - maintain the quality of your work, be ethical with your work, show that making money isn't your only agenda but you also care about your work. I saw our workshop growing. Soon enough we started sending people back saying we can take only so many vehicles a day. Growing in numbers was very important as we were making very little profit on every bike serviced. Our returns have to pay for rent, electricity, and salaries along with few other expenses.

Next challenge was to add trained technicians. While I was lucky to get two very good technicians in the beginning, I struggled to add more with same talent, ethics and the passion. Not to mention their exorbitant salary expectation. Thanks to online apps paying crazy salary to their half cooked mechanics using somebody else's money. While I'm not against paying well for a good, hard working employee I also have to see that my business sustains the expenses.

Now with a staff of 5 (4 technicians and a cashier), I'm running my Enfield workshop (albeit with very little but positive returns) with more than decent response for a little more than 15 months in Bengaluru. I still remember the initial days when I parked my own Enfield on one of the ramps, removed seats, tank and elevated it, making it look like some work was going on while dreaming about expanding my business to more branches in my city. Now I'm not so sure about expanding because I know how ASS work, make their money in dubious ways, how they treat their employees, their customers etc. It's hard to take that way for making money because it beats the whole intention of opening my own service centre.

Now when I sit inside the workshop receiving 10-12 vehicles on a Saturday and seeing the amazing work getting done on all the 4 ramps simultaneously while my own Enfield is looking all shiny and well cared for and parked majestically across the hall, I thank god I didn't leave my regular, well paying job as a software engineer in a hurry to change the way two wheeler service industry works in my city.

The whole point of my essay was - "while it's possible to run a good, honest automobile service centre successfully, it's not easy to make huge profits or sustain a disruption because you're always on the edge".

[V.Narayan]

Originally Posted by LazyGunner

"Delivery Centric", "professionalism", "talent retention" and most importantly "ethics" - key words to run a private (non-authorised) service center successfully.... Now with a staff of 5 (4 technicians and a cashier), I'm running my Enfield workshop (albeit with very little but positive returns) with more than decent response for a little more than 15 months in Bengaluru. ....Now I'm not so sure about expanding because I know how ASS work, make their money in dubious ways, how they treat their employees, their customers etc. It's hard to take that way for making money because it beats the whole intention of opening my own service centre.

The whole point of my essay was - "while it's possible to run a good, honest automobile service centre successfully, it's not easy to make huge profits or sustain a disruption because you're always on the edge".

Congratulations on setting up and building a successful, high integrity A.S.S. business for a product you love and understand. Building a brick and mortar service business in our country is a challenge on a good day. Having built an engineering services business in our country and overseas my take is as follows :-

Competition and price pressures are everywhere. But in our country the clientele are few who are willing to pay even a small price increase for a big improvement in quality & service. And there are the majority who are keen on paying the lowest price for the minimum pass standard of quality. When you add to this the cost of infrastructure and hidden costs of running a business the scales tip over.

Best of luck with your enterprise. As it is not your primary source of bread on the table - enjoy it.

[pannags]

Who would've imagined challenging the prospect of Carnation's coronation as the best place for ASS, given the fact that it was backed by the likes of Khattar.

I think stories of Bosch, Carnation and other failed ventures only go on to talk about the difference OEM backing can do when it comes to establishing trust.

Unless, someone would personally focus on delivering customer delight, like in the case of LazyGunner.

[GTO]

Excerpt from an awesome article on Carnation (paywall) - Link to full article on the-ken.com.

Carnation Auto has a negative net worth and total accumulated losses of about Rs 330 crore

On 27 September 2013, Carnation Auto India Private Limited took a loan from Punjab National Bank (PNB). Of Rs 105.75 crore. Sometime in April of 2015, the company started defaulting on its payments. As of March 2016, the company owed PNB close to Rs 116 crore. Rs 105 crore principal and Rs 5 crore in unpaid interest. This wasn’t the only default. Carnation had been running on fumes for a while, and for whatever little miracle it was hoping for, it had issued convertible debentures to IFCI Venture Capital Fund. It needed to pay back Rs 71 crore in the year 2016. This included premium on redemption of Rs 43 crore. Believe it or not, in the books of accounts, Carnation hadn’t even made a provision for this amount. Perhaps even if it did, it wouldn’t have made much of a difference, except on paper. Because the company has no money at all. To meet any of its debt repayment obligations.

Despite the fact that not much is left of Carnation today; only a small group of 30 employees, compared to the heydays of 2300 people. Despite the fact that the company has no money left in the bank. Despite the fact that Carnation’s actual revenue as of March 2016 is just about Rs 9 crore, and even with that, the company made losses of about Rs 12 crore.

[sleepyhead148]

Originally Posted by GTO

Excerpt from an awesome article on Carnation (paywall) - Link to full article on the-ken.com.

Oh I was about to quote this. Here's what BVR Subbu had to say about Carnation.

“Khattar is a friend,” he said. “We have fought very hard against each other. Like mad. It is like the Mahabharata story. But he is one of the few people I invited to my son’s wedding. But about Khattar and his business, I would like to keep that to myself. I have nothing to say.”

Also, the article lists out possible options for Carnation.

A. Existing shareholders, Khattar and his investors, Premji Invest and Gaja Capital bring in more capital in the company and settle the monies due, whatever amount is agreeable. B. A new investor comes in, one who sees value in Carnation and arrives at a settlement with the creditors, and then decides whether to run or shut down Carnation. C. There is no interest in the company and the creditors decide to liquidate the assets of the company, for whatever it is worth.