Noel Tata questions Rs 7,000 crore investment plan for Tata Digital companies

The Tata Sons management, during the board meeting in May, requested an approval for equity investment of roughly Rs 7,000 crore into the group's digital consumer businesses, according to media reports.

BigBasket, Tata Cliq, and other consumer-facing digital initiatives under Tata Digital comprise the digital consumer business. However, it is said that Noel Tata, Chairman of Tata Trusts, questioned the business plan's underlying assumptions as well as the amount of financing requested.

The plan was backed by estimates showing that, given the group's continued aggressive investments in expanding scale, customer acquisition, and market share, the companies are projected to continue posting losses over the next three fiscal years. Over the following three financial years, these losses might total Rs 9,000 crore.

Tata has reportedly questioned the proposal's basic assumptions, especially the growth forecasts that were used to back up the investment.

Even though current growth rates across areas of the digital portfolio are much lower, those present during the meetings reportedly said that the forecasts expected annual revenue growth of about 45 per cent over the following three years.

According to reports, Tata questioned whether the estimated losses accurately represented the risks involved with an ever more competitive online commerce sector and whether the estimates were unduly optimistic.

Meanwhile, Noel Tata argued that the group should give priority to allocating funds to its more recent ventures, it added.

He questioned the strategic value of keeping some digital commerce companies and saw Air India and the semiconductor industry as important national initiatives.

Tata Digital was founded in order to unify the group's digital operations in the areas of grocery, fintech, loyalty programs, commerce, and customer interaction. The company has developed a portfolio that includes BigBasket, Tata Cliq, Tata 1mg, Croma, and the Tata Neu platform through investments and acquisitions.

Even though the Tata Digital’s losses decreased in FY25, a few of the portfolio's companies still need a substantial amount of funding.

Furthermore, the report noted that BigBasket, Tata Cliq, and Tata Neu compete with companies like Amazon, Flipkart, Reliance Retail, Zepto, Blinkit, and Swiggy Instamart in fiercely competitive markets.