As the conglomerate tries to catch up with rivals such as Amazon and the rapidly expanding retail empire of Mukesh Ambani, Tata Group is in talks to tie up with Indian online grocery unicorn Big Basket, as reported by Financial Times.
An alliance with Big Basket, valued at $1.3 billion this year and funded by the Chinese internet group Alibaba, could help Tata boost its digital arsenal as coronavirus lockdowns propel growth in the online shopping market in India.
By the end of October, Tata and Big Basket will make a decision on the contract, a person close to the discussions said.
Another individual with knowledge of the potential transaction described it as a “strategic” partnership, with a 20 percent interest and two board seats being potentially purchased by the conglomerate.
Big Basket, based in Bangalore, operates in 26 Indian cities. During the Covid-19 pandemic, it became profitable and plans to almost double its revenue in the financial year ending March 2021 to $1bn.
For India’s burgeoning online grocery market, there is a heated rivalry. During the country’s coronavirus lockdown earlier this year, millions of middle-class Indians tried shopping online for the first time.
According to consultancy Redseer, only 0.3 percent of Indian grocery spending is currently online, but the market size of the sector is projected to rise from $1.9 billion in 2019 to $18.2 billion by 2024.
Mr. Ambani’s Reliance Retail, the country’s largest retailer, which has drawn investments from private equity groups including Silver Lake, KKR, and General Atlantic, is among the major players in the industry.
In August, Reliance purchased the Future Community retail chain, whose brands and supply chains would help support Reliance’s JioMart, an e-commerce network that links WhatsApp messaging apps with customers. For about 10% of Reliance’s Jio telecoms market, Facebook spent $5.7bn this year.
By improving their delivery services, Amazon and Flipkart, an Indian platform operated by America’s Walmart, have both been growing their own online grocery platforms.
The vast Tata conglomerate, which reported $113 billion in 2019 sales, has struggled to maximize profitability across companies ranging from steel-making and automobiles to tea.
Tata has sharpened its focus on its digital and consumer businesses under President Natarajan Chandrasekaran. Last year, to revamp its established grocery brands, such as Tetley Tea, it formed a consumer goods company and founded Tata Digital to foster technology ventures.