India’s corporate behemoth Tata Group has taken one step closer to make a big dash entry into the burgeoning e-commerce market, after the Competition Commission of India (CCI) on Thursday gave a nod to Tata Digital Limited (TDL) to acquire 64.3% stake in BigBasket. This all-important regulatory approval will set stage for the clash of titans in India’s lucrative yet challenging online grocery market. The ‘clash of titans’ is obviously in reference to Tatas vs Ambani owned JioMart while deep-pocketed Flipkart and Amazon will be just as important participants in this enraging battle.
As per CCI’s notification, Tata Digital will gain controlling stake in BigBasket through two separate transactions. Tata Digital will first buy 64.3% stake in Super Groceries Supply, the B2B arm of BigBasket. The Super Groceries Supply will then subsequently buy controlling stake in innovative Retail Concepts, which operates BigBasket. Collectively, this will eventually give TDL a complete controlling stake in the Bengaluru based online grocery startup.
Notably, TDL’s acquisition of BigBasket includes a secondary component, which will pave exit for the largest stakeholder Alibaba and several other existing investors. Chinese e-commerce giant Alibaba, according to reports, currently owns 27.8% stake in the online grocery major.
This M&A deals marks one of the biggest M&A deals in the history of India’s fledging startup industry, which has witnessed the birth of several unicorns this year. This deal will also put Tata in a great advantageous position in the online grocery market, since BigBasket is a market leader in this niche space. Even though India’s overall grocery market is dynamic, it is still largely dominated by offline unorganized players. However, the entry of JioMart and now Tatas is likely to accelerate the penetration of organized players.
BigBasket had announced a loss of Rs 740 Cr in Fy20 compared to Rs 562 Cr in Fy19, a rise of nearly 26%. Its expenses for Fy20 stood at Rs 4,411 Cr while clocking a revenue of Rs 3,818 Cr.