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Why are Tatas keen to take over BigBasket?

Tata Group-BigBasket
(Image credit: Internet)
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Just as Reliance Retail, Amazon and Flipkart are battling it out for a chunk in India's ever-increasing online grocery market, another of India's top companies is said to enter the field with a major splash.

The news is that the Tata Group is in talks to have a controlling stake in one of India's established e-grocer: BigBasket.

As per multiple media reports, Tata is set to buy out many existing investors in BigBasket.

If the deal happens, the Tatas would come up with close to $700 million in cash to a caboodle of financial investors and equity funds, aside from China's Alibaba Group that happens to be the largest investor in BigBasket.

It is learnt that the existing investors don't mind selling their stake to Tatas.

But why BigBasket?

BigBasket, it is being speculated, will still be run by the current management and is planning to tap the stock market with an IPO, regardless of whether the Tatas buy into it or not.

Equity funds Temasek and Generation Investment Management are also looking to invest in BigBasket.

The Bangalore-based Big Basket is currently valued at US$1.3 billion and has presence in 26 Indian cities. BigBasket is the leader in the online grocery space with over 18,000 products and 1,000 brands available on its platform. 

It commands a market share of more than 50%, and it total revenue shot up by 70% and reached Rs 3,200 crore in 2019. 

Investment in BigBasket will make much sense as it has seen its business zoom in the pandemic-induced lockdown situation. Its new customers base shot up by a whopping 84% between January and July.

In general, grocery provides 40% volume of the total e-commerce sale in India. 

In money terms, online grocery market is expected to grow from $1.9 billion in 2019 to $3 billion by this year-end.

Tatas entering the field at the right time

tata group in digital retail

(Image credit: Tata Sons)

Tatas entering the online grocery business would cause further tizzy in a market dominated by the biggies, Amazon, Reliance Retail (Jio Mart) and the Walmart-owned Flipkart.

A report in the Mint newspaper said "for the Tata group, the deal is aimed at securing as much control as possible in India’s fast-growing e-commerce market before RIL and Flipkart become too big".

In August it was reported that the Tata Group was planning to launch a multi-utility app by December or early in 2021.

The app would also bring together multiple consumer services owned by the group including the brick-and-mortar Croma Retail stores, a multi-brand option for all consumer electronics products in India.  

N Chandrasekharan, the chairman of Tata Sons, the holding company of the group, had said that the super app would have a plethora of apps functioning independently. "This is a big opportunity for us as the Tata Group, depending on how you count, touches several hundred million consumers across India, if you were to take only the consumers walking into a Tata facility."

Over three decades as a journalist covering current affairs, politics, sports and now technology. Former Editor of News Today, writer of humour columns across publications and a hardcore cricket and cinema enthusiast. He writes about technology trends and suggest movies and shows to watch on OTT platforms.