Khattar retired from Maruti Suzuki in 2007 and set up Carnation - a multi-brand car sales and service network.

Jagdish Khattar, the former managing director of Maruti Suzuki, has passed away after suffering a cardiac arrest. He was 78 years old.

Khattar joined Maruti Udyog Limited in 1993 as Director (Marketing). In 1999, he was appointed Managing Director. He retired from Maruti in 2007, post which, he set up a multi-brand car sales and service network called Carnation.

Khattar was an officer of the Indian Administrative Service (IAS). Before joining Maruti Suzuki, he served as the joint secretary in the Union Ministry of Steel and held various administrative positions in the Uttar Pradesh government.

Ex-Maruti MD Jagdish Khattar has issued an official statement in response to reports of the Central Bureau of Investigation (CBI) filing an FIR against him in a Rs. 110 crore bank fraud case.

Statement:

“Carnation Auto was a first mover to create an open multi-brand auto solutions platform for customers whose cars were outside warranty period and who felt pinched by high maintenance costs. It unfortunately became a bonafide business failure on account of many reasons including cartelization by auto majors by non-supply of genuine parts.

Carnation was a board managed company with the highest ethical standards and best management practices. Some of the most reputed investors in the country including Premji Invest and Gaja Capital were board members who, in their own interest, kept a tight vigil on its operations and finances. Each financial decision was based on comprehensive business plans and approvals. The company was finally sold to Mahindra Group. Post its failure as a business, an exhaustive and detailed independent forensic audit at the behest of the bankers under the resolution professional was conducted by a leading independent auditor and nothing was found amiss. Having found no lapses in operations or financial management the Bank has referred the matter to CBI as a part of the process followed by them. The company has not indulged in any wrongdoing. A search was conducted by CBI but nothing incriminating was found.

“I had invested my life savings in the company. I understand the bank is following a process. I have always made myself available and will continue to fully cooperate with all the agencies. The claims being made were examined in great detail during the forensic audit and we provided satisfactory replies on each. We were cleared in the forensic audit on each count. I have no doubt we will be vindicated again once the investigation is completed,” said Jagdish Khattar.

Mahindra First Choice Services (MFC) has acquired Carnation Auto India Pvt. Ltd. for an undisclosed amount. 

MFC will control key assets of Carnation's car-servicing business, the 'Carnation' trademark, its website, software licenses and workshop network. With this deal, MFC will add about 100 new outlets and service stations to its roster.

Mahindra First Choice plans to have 1,000-1,200 outlets in the next 3-4 years. The company is also looking to raise Rs. 120 crore and aims to achieve a turnover of Rs. 500 crore in the next 5 years. Currently, MFC services about 4.8 lakh cars annually, which is reported to rise to 6 lakh cars. The acquisition of Carnation will also allow MFC to expand its footprint into cities like Delhi-NCR and Mumbai.

Carnation was founded in 2008 by Jagdish Khattar, ex-MD of Maruti Suzuki.

Punjab National Bank (PNB) has filed for the insolvency of Carnation Auto India at the National Company Law Tribunal (NCLT). The multi-brand automotive sales and service company had taken a loan of Rs. 170 crore from PNB in 2009. As per the filing with the Registrar of Companies, the cumulative losses of the company during the years 2009-10 to 2013-14 stood at Rs. 278 crores, more than the total funds raised by them.

Carnation was established in 2008 with an idea to set up multi brand car dealerships and service centers in India. It was backed by former Maruti Suzuki managing director, Jagdish Khattar. Carnation managed to secure funds of Rs. 108 crore from PremjiInvest and IFCI Ventures, Rs. 84 crore by Gaja Trustee Co. Pvt. Ltd. in the first round of funding. However, car manufacturers didn't like the whole idea and the plan did not materialize.

Later that year, the company's model was changed to multi brand garages rather than the retail of cars. Khattar invested into opening workshops in many parts of the country. This time they faced another problem. The dealers and manufacturers were against selling of spare parts in the open.

In 2009, the company once again changed its business model and ventured into the used car market. They set up a used car channel which would use the earlier facilities that were planned for workshops. However, the sudden growth of online used car entities resulted in an organization that was unable to keep up with the times. The online counterparts also got funding of venture capitalists - giving them an advantage over Carnation.

Once the insolvency petition is submitted, the NCLT will appoint an Insolvency Resolution Professional (IRP) who will oversee the future of the company assets along with a committee of creditors. The committee will be given a time of 180 days - extendable to up to 270 days to find a solution, failing which the company will be liquidated. The management of the company is now handled by the IRP and the powers of the company's board of directors is suspended in the interim.

Source - Financial Express / Livemint

Used car sales and services firm - Carnation Auto is reportedly planning to enter the automotive spare parts business. This is part of Carnation's plans to spread its verticals into different automotive segments.

Carnation Auto, formed in 2008 by a former managing director of Maruti Suzuki, started operations with a capital-intensive model through company-owned used car dealerships. A couple of years later, the firm dumped this model and adopted the franchisee route. Carnation has also set up a dedicated service network, which is also being operated via a franchisee business model.

The company is now seeing an untapped potential in the spare parts business. As a result, the firm is planning to launch a range of Carnation branded spare parts by the end of FY 2018. As per current plans, Carnation won't manufacture the spare parts, and will rather source them from tier-II and tier-III component suppliers. These parts will then be sold under the Carnation brand.

Carnation claims that its experience in the car service domain from the past 8 years has helped it to recognize a few fast-moving spare parts that have substantial requirement in the market. The company will thus likely be starting with these fast-moving spare parts, before expanding its portfolio to less popular spares.

Carnation currently has presence in Delhi, Rajasthan, Uttar Pradesh, Gujarat and Maharashtra. The company recently clocked 100 franchisees, and is expecting to take the number to 150 by March next year. Carnation is thus planning to take advantage of its widely-recognizable brand name to enter the spare parts business as well.

Source: Business Standard