BigBasket and Tata 1mg opt for debt over equity for expansion in FY25

Tata 1mg received board approval for offline expansion, which will be funded through debt, while BigBasket plans to raise $80-100 million through a mix of equity and debt

Two major digital assets of the Tata group - BigBasket and Tata 1mg -  are choosing debt over equity to finance their expansion plans this financial year, according to a report by The Economic Times.

Tata 1mg has reportedly secured board approval for substantial offline expansion. The expansion will be funded through debt, marking a shift from the usual equity financing.

Meanwhile, BigBasket, the group’s e-grocery platform, plans to raise $80-100 million through a mix of equity and debt.

The decision follows a directive from Tata Sons to increase reliance on debt capital for expansion and comes as Tata Sons temporarily halts funding for its e-commerce ventures.

Tata’s strategic shift in funding

Over the past two years, Tata Sons has invested over $2 billion into the superapp Neu and associated businesses. The current strategy aims to stabilise operations on the Neu platform before further equity investments are made.

Tata Digital’s new CEO, Naveen Tahilyani, has revamped the executive team to streamline leadership and enhance business focus. The restructured team is directed to focus on the firm’s loyalty programme and financial services to increase customer retention, as earlier reported by Business Standard.
 

 

Recently, HDFC Bank also announced changes to the Tata Neu Infinity credit card that would be implemented from August 1. Customers will earn 0.5 per cent back in NeuCoins on eligible UPI transactions, with an additional 1 per cent back for transactions made using the Tata Neu UPI ID. The total NeuCoins earned on UPI transactions are capped at 500 NeuCoins per month.

This shift to debt financing signifies a cautious yet strategic approach by the Tata group, ensuring continued growth and stability for its digital assets amidst a critical year.