Ratan Tata’s Tata Group plans big move, to put Rs 111760545000 in cash in…., set to challenge…
Tata Group, India’s largest industrial conglomerate, is preparing to make a bold move in the digital space. It is planning for rapid growth and profitability and is set to raise a massive $1.3 billion (approx. Rs 1,11,76,05,45,000) for its digital ventures grocery delivery platform BigBasket and online pharmacy 1mg.
Tata Group, one of India’s largest businesses, is preparing to make a bold move in the digital space. It is planning for rapid growth and profitability and is set to raise a massive $1.3 billion (approx. Rs 1,11,76,05,45,000) for its digital ventures grocery delivery platform BigBasket and online pharmacy 1mg.
According to sources cited by The Economic Times, Tata Sons has reached to top investment banks like Citi and Moelis to manage the fundraising process. The plan includes allocating $1 billion for BigBasket and $300 million for 1mg. Both companies operate under Tata Digital, the digital arm of the group.
Tata Sons Chairman N. Chandrasekaran has emphasized the need for accountability and profitability within the group’s digital businesses. He reportedly stated that open-ended funding will not continue and that these companies must begin to show tangible financial results.
Despite more than $2 billion being invested into Tata Neu its performance has not met expectations. So the group is now focusing on more direct, growth-oriented investments into its digital subsidiaries.
Challenging Blinkit And Zepto
Tata acquired BigBasket in June 2021, but since then, the grocery delivery platform has faced competition from Blinkit and Zepto in the quick commerce space. Although BigBasket offers delivery in four to five hours in select areas like Delhi-NCR, and even 30-minute delivery for select products, its quick commerce market share is just 10%.
Nearly 80% of BigBasket’s orders now come through the quick commerce model. Still their rivals are racing ahead. Tata plans to change this scenario by turning BigBasket into a multi-category quick commerce hub, also serving as a fulfillment platform for other Tata brands like Croma (electronics), 1mg (pharmacy), CaratLane (jewelry), and Zudio (fashion).
As part of its integration strategy, BigBasket is merging its BBdaily subscription service into the main app. The company’s quick commerce offering, BB Now,will become a multi-category player and it will enhance competitiveness and scale.
In FY24, over 95% of BigBasket’s revenue came from groceries. However, with this transformation, Tata is preparing BigBasket to become a full-spectrum delivery platform connected to its entire retail ecosystem.
Tata Group currently holds over 65% stake in BigBasket. Other investors include Mirae Asset Venture Capital and the UK’s CDC Group. The Bengaluru-based company was last valued at $3.2 billion. On the other hand, Tata holds around 63% in 1mg, which was last valued at $1.25 billion during a 2022 funding round. Investors in 1mg include Sequoia Capital, Intel Capital, Omidyar Network, and the Bill & Melinda Gates Foundation.
1mg is now planning to expand its physical presence and strengthen its quick delivery capabilities in diagnostics and healthcare services.
The fundraising process is expected to start by the end of this month. Tata is in discussions with global investors including Canadian pension funds and Asian sovereign investment entities like Temasek. One key criterion being considered is whether these funds have exposure to competing retail platforms.
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