With Coronavirus accelerating digital adoption in all industries at an unprecedented pace, e-commerce, with food and groceries in particular, have peaked in 2020. Such has been the peak, that large business conglomerates, such as Reliance, too have aggressively pushed their way into the space, pouring billions to get their platforms up and running. Joining Reliance, is another Indian business mega-conglomerate, the Tata Group. Tata Sons has officially applied for a go-ahead at the Competition Commission of India to acquire a 64.3% stake in BigBasket- the popular online grocery platform, through its wholly-owned subsidiary Tata Digital.
If the deal is approved, then Tata would be in a position to directly compete with Amazon’s ‘Fresh’ service, Flipkart, and Ambani’s Reliance Industries’ JioMart. Tata plans to buy the stake on a fully diluted basis through a combination of primary and secondary acquisitions, a filing with the CCI showed.
According to the filing, the proposed transaction “will result in the acquisition by TDL of a majority stake of and control over SGS.” SGS refers to Supermarket Grocery Supplies Pvt. Ltd., which handles BigBasket’s business-to-business (B2B) sales. Tata added that SGS may also acquire sole control over Innovative Retail Concepts Pvt. Ltd (IRC), which handles business-to-consumer (B2C) sales of BigBasket.
“At present, TDL is engaged in the business of providing technology services related to identity and access management, loyalty program, offers, and payments. The Tata Sons group, through its group entities, is engaged, inter alia, in the business of (a) business-to-business (B2B) sale of food and grocery, household products, and personal and beauty care products (relevant products) in India; (b) business-to-consumer (B2C) sale of relevant products in India; and (c) manufacturing and sale of certain packaged food and grocery products in India,” the filing said.
Tata Digital provides technology services related to identity and access management, loyalty programs, offers, and payments. The move to buy a majority share in BigBasket has been a work-in-progress for months now, and currently, all it is lacking is the approval of the CCI. If this comes through, this would boost Tata’s plan “super app” that will tie in all its consumer businesses. It will also mean the exit of two of the largest investors of BigBasket – Dubai-based private equity firm Abraaj and Jack Ma’s Alibaba.
BigBasket, founded in 2011, currently operates in 25 Indian cities. It reported a year-on-year increase of 36% in its revenue during the financial year ended March 31, 2020, counting revenue at ₹3,818 crore.
