InvestorQ : Why is the Tata Group planning to pick up a major stake in Big Basket?
vaishnavi mhatre made post

Why is the Tata Group planning to pick up a major stake in Big Basket?

vidhya Laxmi answered.
10 months ago

The Tatas are already in the midst of launching a separate digital property that would manage the digital initiatives of the entire group. But the immediate priority appears to get a hang of the retail market that is getting increasingly competitive.

In the midst of the emerging model in retail of going online, Tatas are likely to make their biggest move towards an Omni-channel model. They could begin by taking a 50% stake in Big Basket, the online grocery store with home delivery facilities.

The investment in Big Basket is expected to be worth $1 billion valuing the company at over $2 billion in overall terms. In fact, the Tatas have been in talks with other retail players too in the online space but the urgency is due to the moves of Reliance and Amazon in India.

Considering the pace at which RIL and Amazon are moving to dominate the retail space, the Tatas realize that apparently they don’t have the luxury of too much time on their hands. They will have to move fast to fully leverage the digital retail story emerging in India.

In addition, the Tatas have also been uncomfortable with the fact that too much of their group value is still being derived from TCS alone. This point has got recently highlighted in the ongoing tussle between the Tatas and the Mistry group over sale of Tata Sons stake.

The Tata group already has a strong retail franchise via its units like Titan, Tata Coffee, Westside, Lakme and Starbucks. This Big Basket deal will help them to consolidate all these retail interests. Above all, the association could give the Tata Group the much needed boost to grow beyond their traditional TCS dependence.