Tata bets big on digital businesses, open to investment options in startups

The salt-to-steel conglomerate Tata Group is betting big on digital businesses to cash in the emerging opportunities during the post-pandemic world. Announcement of investment up to $75 million in fitness startup Cure.fit by Tata Digital is testimony of this fact. Tata Digital is the wholly-owned subsidiary of Tata Sons and is spearheading the digital transformation of all its consumer-facing businesses across verticals, including travel, retail, and financial services.

As per the current deal, Cure.fit founder and CEO Mukesh Bansal will join Tata Digital as president and will work closely with Tata Digital's CEO Pratik Pal. Though operations of Cure.fit has been disrupted badly due to the pandemic-induced lockdowns, the business model holds great potential in the long run.

Last month, Tata Digital acquired a majority stake in online grocery delivery startup BigBasket for around $219 million. Post this deal, Tata Group now has a major pie in the online grocery segment. It also puts the group in direct competition with other major online delivery firms including Grofers, Reliance Industries' Jio Mart, ecommerce giant Amazon Inc, and Walmart-owned Flipkart.

Similarly, Tata Digital is reportedly in talks with online pharma platform '1mg' for acquiring majority stake in the company since last November. Tata Digital has infused Rs 100 crore worth compulsorily convertible debentures or CCDs in 1mg in April this year, reflecting its interest in the healthcare platform.

With such aggressive deal lineups, Tata Group has sent a clear message to the market that it is not going to fall behind in the new age business space. The group has already shown its interest in launching a 'Super App' that will bring all of the conglomerate services and products in the consumer business under a single umbrella. Under this app the group's all retail companies such as Trent, Infiniti Retail, Tata consumer products, Titan and Voltas - and financial products companies - Tata Capital, Tata Asset Management, Tata AIA, Tata AIG are likely to be integrated. As the pandemic has shown gross migration of consumers towards digital platforms, even Tata Motors can sell cars, Tata Realty can sell flats and Vistara and Air Asia can sell flight tickets. Even Taj Hotels can it rent the rooms through this app.

The big bets of country's one of the oldest business conglomerate reflects that Indian startup ecosystem will hold a lot of sway in the coming decades. That is the reason that every established business house in India- be it Reliance Industries or Mahindra Group- is betting big on this space. Online financial services platform Paytm's plan to go public this year on Indian bourses gives credence to this fact. Through raising money from public, Indian startups have proven that they have come of age and are matured enough firms with proven business models. When Tata Group bets big on different consumer-facing startups, it is time for the market to take note and convinces itself about the future upside of these startups in coming years.