Tata Group is gearing up to dominate the digital front by placing bets on e-commerce led growth!
According to the latest news, the Tata Group is planning to invest a whopping ₹3,500 crores in Tata Cliq, a group owned e-commerce venture.
The firm has increased its authorised share capital from ₹1,500 crores to ₹5,000 crores specifically for the upcoming influx of cash.
Tata UniStore Ltd, which owns the Tata Cliq brand, in their latest regulatory fining under the Registrar of Companies, stated that their board of directors, considering the funding requirements to effectively run its business, have recommended an increase in the authorised share capital of the firm via the issuance of equity shares. As per the filings, the paid-up share capital of Tata UniStore currently stands at ₹1,203.12 crores.
Now, along with the increase in their authorised capital, Tata UniStore Ltd.’s board of directors has also increased their borrowing limit up to ₹490 crores which only goes to further prove that this a well-thought move to prepare the ground for Tata Group’s war chest.
Mohit Yadav, Founder of Altinfo, a corporate intelligence firm, after analysing the financials of Tata Cliq’s parent company also expressed a similar opinion and added that the firm’s recent developments indicate the Tata Group has the intention of being invested in the e-commerce space in India for the long-term.
Till now, Tata UniStore Ltd, in this fiscal, has raised ₹30 crores from the Tata Group last April against ₹224 crores in FY18, ₹292 crores in FY19 and ₹311 crores in FY20. As per their latest filings under the RoC, the firm’s revenue jumped a whopping 144% to Rs. 266.03 crore in 2019-20 while their net loss surged by 9.7% to ₹270.64.
This, according to Yadav, indicates that Tata’s bet is well placed as Tata UniStore Ltd.’s top line seems to be growing on the back of a marginal increase in expenses only. Thus, if going forward UniStore is able to maintain its pace of growth, it will soon become EBITDA profitable.
Lastly, along with this development, the Tata Group has also placed another bet to gain big from the country’s digital ecosystem. Their long-touted and much anticipated super app is ramping up pace to unveil itself to the public as recent developments indicated their deal with the e-grocery startup BigBasket is very close to being solidified.
Therefore, all in all, moving forward, much like the Mukesh Ambani led Reliance Jio and its huge umbrella of offerings, the Tatas can also be expected to have a substantial amount of skin in the game of digitally-led businesses.
Now, if they will be able to match up to Jio’s offerings and whether the super-app will be a hit or miss among consumers, only time can tell. As of now, no response has been received from Tata UniStore’s CEO Vikas Purohit about their suspected upcoming plans. We will keep you updated. Until then, stay tuned.