Tata Group Mulls Pumping $2 Bn In Floundering Super App Tata Neu

Tata Group is reportedly mulling injecting another $2 Bn into its struggling super app Tata Neu in an attempt to bolster its digital business. 

Tata Group’s digital arm Tata Digital, which is the parent entity of the super app, will receive the additional funding over the next two years if the conglomerate decides to go ahead with the deal, people familiar with the development told Bloomberg. The fresh capital would help Tata Neu strengthen its digital offerings, fix technical glitches, and meet new spending needs, if any.

Tata Neu, which went live in April last year, integrates several services such as Unified Payments Interface (UPI), hotel and flight booking, shopping for groceries, electronics, and medicines, and more. However, the super app failed to receive any significant market traction due to tech glitches, poor user experience, and other challenges.

The report, citing sources, said that Tata Group has asked Tata Digital to find ways to boost the valuation of Tata Neu. However, deliberations are ongoing and the conglomerate could change the size and timeline of such a possible deal. 

There were reports in September last year that Tata Digital was looking to increase its authorised share capital to INR 20,000 Cr from INR 15,000 Cr while eyeing raising fresh funds from Tata Sons. In April 2022, Tata Sons infused INR 5,882 Cr in Tata Digital.

To bolster its digital presence, Tata Digital acquired companies including hyperlocal grocery delivery app BigBasket and epharmacy startup 1MG in 2021. The super app integrates products and services of various Tata-owned brands including Croma, CLiQ, Titan, Tanishq, Westside, and Air India.

However, Tata Neu has failed to take off and is expected to achieve just 50% of the sales target set for it for the financial year 2022-23 (FY23). It is likely to post sales of about $4 Bn in the year to March 31, compared to the $8 Bn target set at the beginning of 2022.

Tata Digital posted a 5.6X increase in its consolidated net loss to INR 3,052 Cr in FY22, while its total income tripled to INR 16,201 Cr in the year. 

The latest development comes at a time when the competition in the super app space is increasing. There were reports in November last year that billionaire Gautam Adani was set to launch a ‘super app’ in the next three to six months which would connect Adani airport passengers with the consumers of other Adani Group services.

Reliance has an existing super app called MyJio that already bundles a suite of over 20 consumer-facing mini-apps, including payment services such as UPI and others, entertainment mini-apps, and more.

As per an Inc42 report, India’s consumer internet market is expected to surpass the size of $1.6 Tn by 2025, growing at a compound annual growth rate (CAGR) of 28% during the 2021-2025 period.