Carnation Auto is a venture-backed initiative of Jagdish Khattar, former CEO of Maruti Suzuki. In October 2008, PremjiInvest and IFCI Venture Capital invested Rs 108 crore in Carnation Auto.
PremjiInvest, which is Wipro Chairman Azim Premji's private equity investment firm, put in Rs 80 crore to acquire a significant minority stake. That deal was said to have valued Carnation at around Rs 400 crore.
Speaking on the occasion, Jagdish Khattar, managing director of Carnation Auto, said, "The independent multi-brand concept is now well accepted by the industry and the customers alike. Our investors have shown tremendous confidence in our business model and in our team's ability to deliver in a short period of time. Given Gaja Capital's successful investing track record and extensive operating experience, I am confident that our partnership with them will further help consolidate our industry leadership position.”
Carnation Auto was advised by BMR Advisors in this transaction.
The 'after sales' car repair market is estimated to be over Rs 20,000 crore, including over Rs 6,000 crore of body shops and Rs 15,000 crore services and spares, and growing at a CAGR of over 20 per cent. The space is dominated either by the authorised networks or by the unbranded neighbourhood garages. India's pre-owned cars market worth is estimated to be over Rs 40,000 crore and more than 2 million used cars are sold every year.
In the next five years, the pre-owned car market is expected to grow at a CAGR of 15-20 per cent, of which the organised sector's growth is expected to be higher.
Carnation Auto has established 24 auto solution hubs in 16 cities across India. It claims that it has already serviced and delivered over 3.5 lakh cars since its inception. Out of the total 16, 12 hubs also deal with pre-owned cars. Carnation is also developing its e-business portal.
Carnation had earlier said it plans to establish its footprint in 65 cities through 100 locations across the country by 2013. It was looking at a mix of franchise model and joint venture model.
In another deal in the same business, Hyderabad-based auto repair services had raised $5 million Series A funding from IndoUS Venture Partners last May. The company was established in 2008 by Venu Donepudi and Vijay Gummadi, both auto experts with experience in the North American auto industry. The company is eyeing pan-India expansion by 2015 and also wants to increase its presence in Karnataka, Tamil Nadu and Kerala by the end of this financial year through a combination of company-owned and franchise facilities.
Kitara Capital also acquired a minority stake in Madurai-based TVS Automobile Solutions Ltd( for $17.2 million. TVS Automobile is a multi-brand car service network company.