Tata Sons Anticipates Infusion into Digital Arm by the Mid of Next Year

Nitin Konde, Varun Bhardwaj

Dec 27, 2024 — 3 min read

Tata Sons Plans Infusion into Digital Arm by Mid-Next Year

According to media reports, the salt-to-software conglomerate Tata Sons only intends to invest in its digital division, Tata Digital, by the middle of 2025. To advance its growth portfolio until then, Tata Digital will need to rely on loan financing and internal resources. A media report claims that this choice is in line with the business' overarching plan to improve execution, accountability, and return on capital under the direction of Naveen Tahilyani, the company's new CEO. The report also emphasises how, while keeping an eye on expansion, Tahilyani has tightened spending controls across the Tata Group's divisions. This comes days after N Chandrasekaran, the chairman of Tata Sons, urged group company CEOs to pursue rapid expansion in spite of growing market uncertainty both domestically and internationally.

BigBasket Hitting the IPO in Coming Years

Blinkit, Swiggy Instamart, and Zepto are fierce rivals of Tata Digital's rapid commerce division, BigBasket, and they are all increasing their costs in an effort to obtain a competitive advantage in the market. In addition, BigBasket is reportedly considering using public markets for an initial public offering (IPO) in the upcoming years. It is important to remember that Tata Digital saw a positive turn in the fiscal year 2023–24 (FY24), reducing its standalone losses from INR 1,370 Cr to INR 1,201 Cr.

According to officials, Tata Neu is currently actively utilising a data-driven approach to reach all consumer access points within the system, including collaborations with outside parties. The majority of the additional capital for BigBasket and 1mg is being obtained through debt rather than a new equity injection as part of this approach. To date, Tata Sons has contributed more than $2 billion to the mega app developed by Tata Digital.ET previously covered the funding plans of e-pharmacy 1mg and e-grocer BigBasket.

Tata Group’s Current Financial Dynamics

Additionally, Tata Digital's overall revenue more than doubled from INR 204.3 Cr in FY23 to INR 420.5 Cr. Nonetheless, the first half of FY25 experienced single-digit revenue growth for a number of Tata Group entities, including Tata Consultancy Services (TCS), Tata Motors, Tata Steel, and Tata Power. This was further supported by a similar amount of enterprises experiencing a decline in their profitability. Additionally, Tata Digital saw a number of advancements in its brands, like Tata Neu and Croma. One of Tata Neu's biggest revenue generators, Croma, named Shibashish Roy as its new CEO this month with the goal of accelerating development after restructuring. During the same month, Tata Neu launched Neu Flash, a fast commerce delivery service aimed at customers in a variety of markets, such as electronics and groceries.

Tata Cliq made INR 78.5 crore in revenue and INR 175 crore in losses in FY23. For Neu, Tata Cliq is an essential business since fashion is a major sector for any e-commerce platform. To grow its fashion business, Tata Cliq, which is part of Tata Unistore and is run by CEO Gopal Asthana, is working closely with the Neu team. After Vikas Purohit left in October of last year, Asthana was named CEO.