Tata Group has sought Competition Commission of India’s approval on its deal to buy a majority stake in Bigbasket, indicating that the two enterprises have inked an agreement, it is learned. Usually, companies announce M&As before seeking regulatory nod. Since Tata Sons and Bigbasket are closely held, the two are under no obligation to announce the transaction.
Tata Sons refused to comment on the subject, a Bigbasket spokesperson said they had “no official comments to share at the moment”. India’s anti-trust body looks into competition issues around a deal and clamps down on unfair practices. The Bigbasket transaction will make Tatas the largest online grocer in the country even though it has a limited play in the space through StarQuik and Tata Nutrikorner. Bigbasket has the lion’s share in the grocery market, crossing $1 billion of annualised gross sales last year. Also, its monthly gross sales, after discount, reached $90-100 million in 2020. These indicate that it is the largest vertical e-grocery player, which would catapult Tatas to the top slot after the completion of the deal.
The $200-220 million Bigbasket deal is routed through a wholly owned arm of Tata Sons, the promoter of the $106-billion conglomerate. Tatas may end up with just under 70% stake in Bigbasket, valuing the online grocery company at $1.4-1.6 billion. Bigbasket and other e-commerce deals being stitched together by Tatas will intensify competition with the ambitious plans of Reliance Industries, Amazon and Walmart-owned Flipkart in one of the fastest-growing consumer markets in the world. It was also reported that Tatas was nearing a deal to acquire majority stake in e-pharmacy player 1MG.
Tatas, through its listed entity Trent, entered the online grocery business through my247market.com in 2015. It subsequently shut down the venture after it acquired the management team and technology infrastructure of the Gurugram based GrocerMax, now known as StarQuik, in 2017. In 2019, another listed group company, Tata Consumer Products, launched tatanutrikorner.com, which only sells the items it makes.
The Bigbasket deal will give wings to Tata Group’s digital play along the lines of a super app, which will provide customers a single point of access to a range of services including Qmin (a food delivery platform), Tata CLiq (a lifestyle online shopping site) and Croma (an electronics e-store). The super app will be launched by Tata Digital, a 100% subsidiary of Tata Sons, in fiscal 2022.
There is not much clarity on how the group plans to consolidate the fragmented web operations. Trent, while it plans to list its different brand apps on the super app, intends to pursue its own online play. StarQuik is majority-owned by Trent and its UK partner Tesco. The Bigbasket investment by Tatas will be one of the biggest M&As in the country’s burgeoning consumer internet sector.
