The all-time conglomerate Tata group is paving its way to add Big basket to its list of strategic businesses. The company is looking forward to the Competition Commission of India (CCI) for giving the final nod for holding up the majority stake in the venture.
A LITTLE INSIGHT INTO BIG BASKET
Big basket was founded in 2011 as an online grocery delivery platform headquartered at Bengaluru, India. It has its main focus on providing easy access to people to the convenience stores for the requisite home products. It was founded by Sudhakar, Hari Menon, Vipul Parekh, Abhinav Choudhari and Ramesh. It has made big in retail in recent years.
In 2019; it grabbed a huge investment of $ 150 million from Mirae, Alibaba Group and CDC Group. It made the valuation reach the point of over US $ 1 billion.
WHAT IS THE DEAL?
Tata Digital; a wholly owned subsidiary of Tata group filed a proposal with CCI to buy 64.3% of the Supermarket Grocery; that is responsible for the B2Bsales for Big Basket. The overall plan although is to lead the Alibaba group by owning a greater percentage of share in the company profile.
The question still pops that why now?
What lucrative has the Tata group seen that it planned to go for this move?
Why not 2-3 years earlier?
The answer is quite straight and simple. Pandemic brought a great rise in the demand for e commerce platforms delivering in the grocery domain. The decision to buy a established venture was more fruitful than to set up a new thing altogether that would require even more greater commitment of resources.
Therefore; Tata group straight away went for a high stake buying behavior to gain control over the desired market segment either directly or indirectly.
The group ahead is all in mood to bring up a strong and direct competition with the major players in the market like Amazon, Flipkart and Reliance Ventures. The group wants to tap the highly lucrative domestic online grocery business which is expected to take five folds growth in the coming timeline of 5 years.
WHY CCI NOD ESSENTIAL?
The CCI is the prime most authority set up in 2009 to ensure a proper competition environment in the country. It has replaced the MRTP Act in order to make market a balanced space for every company or operating venture altogether. Sustaining competition and protecting the interests of consumers is their main functional objective.
The commission always has a keen eye on such acquisitions in order to understand the dynamics of the consequences in a detailed manner. The recent Reliance and Future matter also made it quite essential to keep all the regulatory provisions in place while planning any such action.
The grocery sales is planning to reach a target of $359 billion till 2024.
Admist this ; if a 150 year old corporate group who has its diversified operations ranging from salt to steel to cosmetics; plans to get into the market; then its definitely not a big deal.
THERE ARE TOUGH CHALLENGES FOR THE GROUP AS THE MAJOR PLAYERS ARE TOO READY WITH THEIR INNOVATIONS. BUT IT’s WORTH INVESTING.