Tata group inks deal to buy 68 per cent stake in BigBasket
The Tata group is reportedly picking up 68 per cent in online grocer BigBasket for Rs 9,500 crore a deal that could see the exit of Alibaba and some other investors.
According to a TV report on Tuesday, the enterprise value — market capitalisation plus debt — of BigBasket has been set at Rs 14,500 crore. The top management of the online grocer, led by co-founder Hari Menon, is likely to stay for around three years.
The reported negotiations come at a time the Tata group is building a super-app that will offer a wide range of products under one roof.
The entry of the Tatas could increase competition in India’s online grocery segment dotted by players such as Flipkart, Amazon’s Fresh and Reliance Retail.
There have been reports of the Tatas planning to acquire online pharmacy firm 1mg.
“India’s e-commerce market is the largest opportunity in the country’s Internet industry. It was worth close to Rs 22,600 crore ($31 billion) in 2019, after expanding at an impressive five-year CAGR (compounded annual growth rate) of 39 per cent. We expect the industry gross merchandise value (GMV) to be worth $100 billion by 2025,’’ analysts at HSBC said in a recent report.
HSBC said online retail makes up just 4.7 per cent of the Rs 48 lakh crore Indian retail market. Apparel, footwear and consumer electronics (primarily mobile phones) account for 44 per cent of e-commerce sales in 2019.
The bulk of these sales are made in online marketplaces such as Flipkart and Amazon, aided by their distribution reach, ease of payment, and flexible return policies. The report said other categories were expanding rapidly from a small base. Home care items were growing the fastest.