Former Maruti SuzukiBSE 0.01 % MD Jagdish Khattar- promoted multi-brand car service company Carnation Auto is facing bankruptcy. A corporate insolvency resolution process has been initiated against the company by its creditor Punjab National BankBSE -1.38 % (PNBBSE -1.38 %), which has asked for expression of interest for a resolution plan from interested parties.
Carnation was formed in a blaze of high profile investments in 2008-09 after Khattar retired from Maruti Suzuki.
Top investors in the company include the likes of Premji Invest and Mumbai-based Gajaa Investment, which together is understood to have pumped in around Rs 220 crore into the business.
Speaking to TOI, Carnation Auto founder and chairman Jagdish Khattar explained how the company is looking at the insolvency resolution process to sort out its debt and start afresh on a clean slate.
“There is around Rs 100 crore of debt to PNB,” he said. “This (insolvency resolution) is a process and our investors (Premji Invest and Gajaa) are supporting it and have told PNB that they too are open to give a resolution plan. Besides there are three-to-four other parties keen on coming on board but they want the company to sort out the debt first. Our investors have written to PNB that they want Carnation to stay a going concern. Carnation under its new dispensation will surely use this (insolvency resolution) to resolve the past and look to the future,” he added.
And while he will no longer be a promoter, Khattar is open to being a part of the process of rebuilding Carnation if the new dispensation wants it. Apart from Premji Invest and Gajaa, IFCI Venture Capital also has some zero coupon optionally convertible debentures in Carnation. When contacted a source close to Premji Invest said, “We’ve been supporting Carnation since 2008 and we will continue to do so and want it to remain a going concern.”
