SUMMARY
If the deal moves through, the funds would be credited into the account of the conglomerate’s digital arm next year
Tata Group has asked Tata Digital to explore raising funds from global sovereign and financial investors for future capital requirements
This fresh capital infusion will enable Tata Neu to enhance its services, tide over technical issues, and accommodate any potential new expenditure requirements
With an eye on bolstering its digital arm, conglomerate Tata Group is reportedly mulling an additional investment of $1 Bn in its super app venture Tata Neu.
The conglomerate’s digital arm, Tata Digital, will receive the new funding in the coming year if the deal proceeds, Bloomberg reported.
The potential $1 Bn funding is expected to give a much needed boost to Tata Neu to enhance its digital services, tide over technical issues, and accommodate any potential new expenditure requirements.
Citing sources, the report said that the Tata Group has directed Tata Digital to optimise the operations of the super app and address any app glitches to enhance user-friendliness.
It is pertinent to note that Tata Digital is the parent company of Tata Neu and is responsible for operating the flagship online platform.
Not just this, the conglomerate also reportedly directed the digital arm to explore raising funds from global sovereign and financial investors for future capital requirements. It seems that the parent company wants Tata Neu to emulate competitor Reliance Retail’s strategy of raising big ticket funding from names such as Qatar Investment Authority, Abu Dhabi Investment Authority (ADIA) and KKR.
However, talks are still underway and the contours of the deal may change. As per the report, the proposed capital infusion is in addition to another $2 Bn that the digital unit has raised from Tata Group in the past one year.
The Super App Wars
Tata Neu, which went live in April last year, draws inspiration from China’s Alipay and WeChat. It brings together various services such as hotel and flight reservations, grocery and electronics, and pharmaceuticals under one umbrella.
However, the app was marred by multiple glitches, poor user experience and other challenges at the time of its launch. Since then, the app has reportedly not picked up considerable pace and is yet to gain any significant market traction.
Meanwhile, Tata Digital logged a 5.6X YoY jump in its consolidated net loss to INR 3,052 Cr in FY22 even as income tripled YoY to INR 16,201 Cr during the period.
However, it has left no stone unturned to strengthen its digital presence. Beginning 2021, Tata Digital undertook an acquisition spree and acquired names such as grocery delivery startup BigBasket and epharmacy platform 1mg. These came in handy as the super app brought other offerings from various Tata-owned brands, such as Croma, CLiQ, Titan, Tanishq, Westside, and Air India on Tata Neu.
The latest development comes at a time when competition is intensifying in the super app arena. Earlier, there were reports that billionaire Gautam Adani was looking to build a super app, connecting Adani airport passengers with services offered by the conglomerate.
On the other hand, Reliance already appears to have a well-oiled super-app machine in the form of MyJio. MyJio features a bundle of over 20 consumer-focused mini-apps, including services such as UPI payments, various entertainment mini-apps, and more.
The bouquet of digital offerings from India’s biggest conglomerates come at a time when more and more Indians are joining the digital sphere on the back of increased smartphone and internet penetration.
As per an Inc42 report, India’s consumer internet market is expected to reach a size of $1.6 Tn by 2025, growing at a compound annual growth rate (CAGR) of 28% between 2021 and 2025.
