Why Tata Sons' Digital Venture Needs Urgent Redesigning

Tata Sons Pvt. has invested Rs 18,943 crore into digital and e-commerce businesses through Tata Digital Pvt., according to the Annual Report 2023.

Tata Digital launched Tata Neu in April 2022, a super-app that looks to provide an integrated experience across various consumer categories like groceries, fashion and electronics, travel and hospitality, health and fitness, entertainment, and financial services on a single platform. That covers all its group businesses.

The group, which has about 70–80 million consumers across Tata brands, has yet to make a dent in the e-commerce space. It competes in a hyper-competitive segment with the likes of Reliance Industries Ltd.'s JioMart and AJIO, Amazon, Flipkart, Myntra and Nykaa. Its fintech offerings are yet to take off, though it has tied up with HDFC Bank Ltd. for credit cards and personal loans from Tata Capital.

The Tata Group made a late foray into e-commerce. Tata Digital, its key subsidiary in the digital space, invested in various verticals, including e-grocery, e-pharmacy, and e-healthcare, by acquiring stakes in non-Tata brands such as BigBasket, 1MG, and Curefit. In addition, it also acquired some of the Tata Group ventures, like electronics retailer Croma, from the parent and fashion platform Tata Click. The acquisitions were funded through a mix of external short-term debt and promoter funding. The debt was subsequently repaid through an infusion by Tata Sons.

Tata Digital acquired the BigBasket business for Rs 7,572 crore; it had revenue of Rs 8,502 crore in FY22, and this has risen to over Rs 9,600 crore in the financial year ending March 2023. Tata Digital has increased its stake to 84.41% in the company.

It acquired Tata 1MG, where it held 60.28%, at the end of March 2023 through a mix of cash and deferred payments amounting to Rs 1,168 crore.

Tata Sons also transferred its Tata Click business under Tata Unistore to Tata Digital for Rs 750 crore.