Tata Sons Stalls Fresh Investments Into Its Ecommerce, Electronics Ventures : Report

Tata Sons has paused fresh investments into its ecommerce and omni-channel electronics ventures, including super app Tata Neu, Croma and Tata Cliq in FY24, for the first time in eight years.

The group is now shifting its focus towards revamping strategies, enhancing accountability, and boosting operational efficiencies to secure profitable growth, as per ET’s report.

It has invested an estimated INR 19,000 Cr till date in Tata Digital, the holding company for the group’s ecommerce businesses.

“There is a strategic reason for not making any equity infusion even as organisational changes are being made,” a source said as quoted by ET. However, new fund infusion will commence after the strategy and organisational changes for better operational efficiencies are in place.

Tata Digital, the holding company for Tata Unistore (which operates Tata Cliq), Innovative Retail Concepts (BigBasket), Tata 1MG Healthcare Solutions, and Infiniti Retail (which runs over 500 Croma stores), also owns the super app Tata Neu.

In FY23, the combined losses of Tata Digital’s key businesses, including Tata Digital, Croma, Tata Cliq, and BigBasket, surged to over INR 4,700 Cr from INR 3,130 Cr in FY22. To address this, new CEO Naveen Tahiliani has enforced strict cost management and is prioritising a data-centric approach to enhance operations as part of the company’s restructuring efforts.

While Tata Sons has strategically allocated significant capital to businesses requiring growth funding, there is now a firm directive to achieve profitable growth within a set timeframe, an executive said.

Businesses need to focus on effective ground execution to scale up. Until this is accomplished, fresh funding will only be considered if absolutely necessary.

Recently, Tata Digital, rejigged the senior leadership team of its super app Tata Neu three months after Naveen Tahilyani took charge as the new CEO of Tata Digital, replacing Pratik Lal.. Hardeep Singh Guru has been appointed as the new chief financial officer (CFO) while Gaurav Motani has been named as the new chief product officer (CPO).

The top-deck rejig was undertaken with a focus on streamlining the existing leadership structure of the company and making the digital juggernaut nimbler and business-focussed.

The change in strategy coincides with Tata Neu struggling to gain traction. Despite the conglomerate investing billions of dollars into the super app, it has not met expectations.