India’s competition watchdog, The Competition Commission of India (CCI) nodded to Tata Digital’s acquisition of a majority stake in BigBasket without conditions. Tata Digital’s interest in BigBasket first became public the October of 2020. By acquiring a 64.3% stake in BigBasket, Tata Digital will become the leading player in e-grocery segment, setting the scene for a fierce competition with Amazon, Flipkart, JioMart, and Softbank Vision Fund-backed Grofers.
Tata Digital, a fully-owned arm of Tata Sons, will acquire 64.3% in BigBasket’s online business-to-business arm Supermarket Grocery Supplies (SGS), the business-to-business arm of BigBasket, through a mix of primary and secondary share purchases.
Afterwards, through a separate transaction, SGS will acquire ‘sole control’ over Innovative Retail Concepts (IRC), which looks after the business-to-consumer sales through the BigBasket online platform. This will give TataS a control over both the wholesale as well as retail business units.
The acquisition, estimated to worth around $1.2 billion, reinforces the Tata conglomerate’s digital play as coronavirus-induced lockdowns and curfews push India’s online shopping market.
The pandemic has hastened the implementation of technology, altering the way people live, work and consume as well as how companies work.
At present, BigBasket is the leader in the online grocery segment and has reported that it has crossed the $1 billion annual revenue run rate mark in September 2020, buoyed by the increasing demand for online groceries owing to the COVID-19 pandemic.
Tata Digital’s acquisition in BigBasket comes after India tightened norms for investments from Chinese entities. This has stopped Alibaba from upping its stake in the Indian e-grocer.
BigBasket will bestow wings to Tata conglomerate’s digital play along the lines of a super app, which will offer 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). Tata Digital will launch this super app in the fiscal year 2022.