Tata Group scouting for investors for new digital platform

Bloomberg September 29 | Updated on September 29, 2020 Published on September 29, 2020

Seeks to take on retail giants such as Amazon, Walmart and Reliance Retail

The Tata Group is in talks with potential investors about taking stakes in a new digital platform, people familiar with the matter said, seeking to modernise its consumer businesses as retail giants like Inc and Reliance Retail pile into the country’s fledgling e-commerce market.

Tata Sons, the holding company of the $113-billion coffee-to-cars conglomerate, is working with advisers to explore bringing in financial or strategic investors, including global technology companies, the people said, asking not to be identified as they aren’t authorised to speak to the media. The group plans to bring together digital assets across various Tata businesses to create the new entity, according to the people.

A Tata Sons representative declined to comment on the stake sale discussions.

Tata’s platform — an e-commerce gateway for its consumer products and services ranging from beverages to jewellery and resorts — may seek to compete with the ambitious plans of Reliance Group’s Mukesh Ambani, and Walmart Inc’s Flipkart to tap the nascent market of more than 1 billion consumers. Ambani, chairman of Reliance Industries Ltd, is looking to forge a digital empire, raising more than $20 billion from big-name partners including Facebook Inc and Google for his newly formed technology venture, Jio Platforms Ltd.

Also read: Why Reliance’s retail arm can attract more investments

Discussions with potential investors are at a very early stage and there’s no certainty they will result in a deal, the people said.

Adding heft

While bringing in outside investors would lend credence to Tata’s digital ambitions, it may also help the group pare debt after the coronavirus pandemic hammered its flagship businesses. Tata Steel Ltd’s group net debt was at $14 billion as of June 30, while the net automotive debt of Tata Motors Ltd., which owns Jaguar Land Rover, was around ₹480 billion ($6.5 billion).

Tata Group already has a bunch of entrenched consumer businesses, many of which also have an online presence. These include Tanishq jewellery stores, Titan watch showrooms, Star Bazaar supermarkets, chain of Taj hotels and a joint venture with Starbucks in India. The intention is to consolidate these currently fragmented web operations.

As part of that drive, the conglomerate is building an all-in-one e-commerce app for its swathe of consumer products and services, Bloomberg News reported last month. It is expected to be launched by end-2020 or early next year.

Also read: Tata Group is working on a ‘super app’

Talks with Walmart

Walmart is in talks with Tata about a possible investment in the planned app, Mint newspaper reported on Tuesday, citing people it didn’t identify. Natarajan Chandrasekaran, Tata Sons Chairman, is championing the group’s digitisation drive and Tata Digital’s head Pratik Pal is in charge of building the all-in-one app, a person told Bloomberg News last month.

Pal has three decades of experience at TCS, where he was global head of retail, and helped with the digital transformation of some of the world’s largest retail chains including Walmart, Tesco Plc, Aldi Inc., Target Corp., Best Buy Co. and Marks & Spencer Group Plc.

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Published on September 29, 2020