Tata Sons has approached the Competition Commission of India (CCI) to pick up a majority stake in online grocery delivery platform BigBasket. The salt-to-software conglomerate intends to acquire the stake through its wholly-owned subsidiary Tata Digital.
The acquisition will propel Tata Group into the immensely competitive online grocery retail market, which saw manifold growth during the lockdowns due to the COVID-19 pandemic. The sector is currently witnessing a tough contest between Amazon, Walmart-owned Flipkart, Reliance Industries' retail arm Reliance Retail, and Grofers.
In the filing to CCI, Tata Digital Ltd (TDL) proposed to acquire 64.3 per cent stake in Supermarket Grocery Supplies Pvt Ltd (SGS), which handles business-to-business sales of BigBasket brand, through a combination of primary and secondary acquisitions in one or more tranches.
Tata Digital also said that SGS may acquire sole control over Innovative Retail Concepts Pvt Ltd (IRC), which handles business-to-consumer sales of BigBasket.
"At present, TDL is engaged in the business of providing technology services related to identity and access management, loyalty programme, 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.
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Tata Group has been planning to launch a "super app" that will tie in all its consumer businesses. It aims to gain an edge in the e-commerce market against its much bigger rivals like Amazon and Reliance. BigBasket competes with Amazon's 'Fresh' vertical and Reliance Retail's JioMart in the online grocery retail market.
BigBasket reported a 36 per cent year-on-year (YoY) increase in its revenue at Rs 3,818 crore during the financial year ended March 31, 2020. The company's expenses rose 31 per cent YoY to Rs 4,411 crore in FY20, The Economic Times reported, quoting documents sourced from business intelligence platform Tofler. Its losses also zoomed 26 per cent to Rs 710 crore during the year.