Tata set to enter e-grocery with competition panel approval on Bigbasket

Company to acquire 64.3 per cent stake in Supermarket Grocery

Tata Group is on its way to making its entry into the Indian online grocery segment.
 
The Competition Commission of India (CCI) on Thursday approved Tata Digital, a wholly owned subsidiary of Tata Sons, acquiring a majority stake in online grocery player Bigbasket.
 
The CCI has allowed Tata Digital to ac­quire up to 64.3 per cent of the share capital of Supermarket Grocery Supplies (SGS) and also have sole control over Innovative Retail Concepts, which operates Big­bas­ket’s online retail business. With this approval Tata Digital will give exit to investors Alibaba that holds around 29 per cent stake in the company, along with investors Abraaj Group (16.3 per cent), and IFC (4.1 per cent). Tata’s have finalized plans to acquire this stake for about Rs 9,300 crore (about $1.2 billion). Actis now owns the portfolios of Abraaj Group in MENA, Africa and Asia market. 

With this app­roval Tata Digital will give an exit to Ali­ba­ba, which holds around 29 per cent in the firm, and Abraaj Group (16.3 per cent) and IFC (4.1 per cent). Tata Group has finalised plans to acquire this stake for about Rs 9,300 crore (about $1.2 billion). Actis now owns the portfolios of Abraaj Group in MENA, Africa and Asia market. 

According to sources close to the development, the top management, including the co-founders and the chief executive officer, will continue with the company and the brand too will remain the same.
 
This will be the first foray of Tata Group into the Indian e-commerce market. Earlier this month, Tata Digital invested in online pharmacy 1mg. Acco­rding to reports, Tata Digital put in Rs 100 crore in 1mg through compulsory convertible debentures (CCDs).

 
K Ganesh, promoter of Bigbasket, said the finalising of the deal was an encouraging sign. “One of the criticisms of fast-growth new-age companies has been that value creation and capital appreciation have been with foreign investors and institutions though these companies operate in India. Great to see Indian business houses making bold moves to embrace the internet, technology-ena­bled business models in core sectors.
 
On the back of Zomato IPO news, this is good news for Indian investors. Tata is one of the most reputed brands and brings great synergies to Bigbasket,” Ganesh said.
 
According to Statista Research, as of 2019, Bigbasket had the highest market share, at over 35 per cent, among online groceries in India. Amazon and Grofers, the other competitors, were not far behind. The market value of online groceries was about Rs 100.7 billion that year.

 
According to a RedSeer report released in January this year, grocery in India is an $850-billion market, accounting for 66 per cent of the retail spend. About 95 per cent of the grocery market in India is led by local kirana shops, riding on their ability to provide convenient and localised service to customers.
 
With big names including Tata Group, Amazon, Reliance, and Walmart-owned Flipkart coming to this space, e-grocery is emerging as one of the most coveted retail segments. As marquee players line up, BigBasket will need serious money to remain a leader in the game, according to experts. Hence, a deal with Tata Group coming in as a strategic partner makes sense, they say.

 
Supermarket Grocery Supplies had reported a consolidated net loss of Rs 611 crore in FY20, a 6.7 per cent rise from Rs 572 crore in the previous year.
 
The company posted a 36 per cent jump in revenue at Rs 3,822 crore in FY20, according to business intelligence platform Tofler.