The Competition Commission of India has approved Tata Sons’ proposal to acquire up to a 64.3 per cent stake in BigBasket, a deal that will provide the diversified group a stronghold in the fastgrowing online grocery market. Food and grocery retail market constitutes the largest chunk of domestic retail trade.
In March, Tata Sons had sought approval from the CII for its $1billion deal to acquire the online grocer.
Under the deal, Tata Digital Limited — the group’s digital services subsidiary — will acquire a 64.3 per cent stake in Supermarket Grocery Supplies Pvt Ltd (SGS), which sells products to commercial units through business bigbasket.com.
In the next stage, SGS will take full control of Innovative Retail Concepts Pvt Ltd, which sells products to consumers through bigbasket.com.
Chinese retail giant Alibaba, which has a 29 per cent stake in BigBasket, will be offloading its entire stake to the Tatas through this deal. BigBasket has the largest market share among online grocers and with the Tata backing could be a bigger competitor for Amazon and Reliance Retail.
A whollyowned subsidiary of Tata Sons Pvt Ltd, TDL provides technology services related to identity and access management, loyalty programmes, offers and payments.An official release said Competition Commission of India (CCI) has approved the proposed deal of Tata group acquiring up to 64.3 per cent stake in Bigbasket.The deal involves TDL buying 64.3 per cent of the total share capital of SGS (on a fully diluted basis) through a combination of primary and secondary acquisitions, in one or more series of steps.
This is the first transaction."It is stated that subsequently, through a separate transaction, SGS may acquire sole control over Innovative Retail Concepts Pvt Ltd (IRC) (transaction 2). Transaction 1 and Transaction 2 are collectively referred to as the proposed combination."The proposed combination will result in the acquisition by TDL of majority stake of and control over SGS," the release said.
Founded in 2011, BigBasket operates in 25 Indian cities. It competes with SoftBankbacked Grofers as well as Amazon India and Flipkart.
Deals beyond a certain threshold require approval from CCI. The share of food and grocery retail in India rests at 65.9 per cent, a significant and the largest chunk of the overall retail market in the country, of market size of $560 billion, according to a 2020 report by Technopak Advisors. Of this, the reach and size of online food and grocery ecommerce rests at 0.5 per cent and $2.75 billion, respectively, as of FY20. A large part of the retail trade is still unorganised and dominated by small mompop stores or neighbourhood shops.
Over the next five years, however, the online food and grocery retail market is set to touch $28 billion with a 4 per cent penetration. This number will be nearly on a par with the size of modern trade or sales though large, organised food, and grocery retailers in the same period.In contrast, in FY20, 14 per cent of all apparel retail happened online, for consumer electronics the share was even greater at 26 per cent.“Since 2012 the growth of Indian Retail has also outpaced the overall growth of India’s GDP. This was primarily driven by increase of discretionary retail and that in turn was attributed to rising income and affordability of the consuming class . This is reflected in the falling share of food and grocery retail and the rising share of discretionary retail categories between FY 12 and FY 20," Technopak said in its estimates.
Tata Motors global design head
Tata Motors on Thursday announced the appointment of Martin Uhlarik as the company’s new global design head. Uhlarik, who takes over his new role from Pratap Bose, was till recently the head of design for Tata Motors European Technical Centre.
Uhlarik will report to Shailesh Chandra, president, passenger vehicle business unit at Tata Motors.
