Car business

New Delhi, 29 June 2008: First Choice Wheels, the used car division of Mahindra & Mahindra plans to invest Rs.200 crore in the next five years for its expansion while its looking to go public in the coming three years. "By 2013 our plan is to have 300 outlets with presence in 92 cities. This could entail an investment of Rs 200 crore," First Choice Wheels CEO, Mr.Vinay Sanghi said.
The company currently has 70 outlets in 40 cities. First Choice had recently raised Rs 80 crore through private placement and preferential allotment, which was aimed at funding existing expansion programme."As of now we are looking at debt and internal accruals apart from the recently raised fund to finance our expansion. At the same time we are also looking at an IPO in three years time," Mr.Sanghi said.
Asked how much stake the company planned to dilute through the public offer, he said, "It is too early to say. As of now M&M has 73% stake in First Choice and will continue to be a majority shareholder." Elaborating on the expansion programme, Mr.Sanghi said after establishing strong presence in North, South and West India, the company was now looking at making inroads in the East.
We are looking at 10-12 cities in East, including Kolkata, Ranchi, and Guwahati. We need to have stronger presence in the region," he said First Choice would be following both company-owned and franchise model for its various outlets. "The majority say about 70% of the outlets, will be through franchisees while we will own the rest 30%," Mr.Sanghi said. He said that there would be about 30 super stores covering an area of about 40,000 sq ft which will act as a one-stop shop for used car buyers