Tata to bring all its e-commerce businesses under Tata Digital
What's the story
In a bid to intensify its footing in the e-commerce space, Tata Group is consolidating its e-commerce business. Per regulatory filings, Tata Digital will become the conglomerate's sole entity for online shopping ventures. As part of the consolidation process, Tata CLiQ, the company's platform for fashion and luxury, will also be transferred to Tata Digital.
Context
Why does this story matter?
From now on, Tata Group's e-commerce platforms such as Bigbasket, Tata Neu, and Croma will be under the banner of Tata Digital. The group has been consolidating its business that's spread over various sectors through mergers and acquisitions. We will see more such moves in the future, as similar companies under one umbrella cut costs and help build a competitive edge.
Authorized capital
Tata has been incrementally increasing Tata Digital's authorized capital
In March this year, Tata raised Tata Digital's share capital from Rs. 11,000 crore to Rs. 15,000 crore. The authorized capital was further increased to Rs. 20,000 crore in September. Last week, Tata again increased Digital's share capital to Rs. 21,000 crore and infused Rs. 750 crore. The latest increment was done keeping in mind the repayment of debt and business expansion.
Tata CLiQ
Tata will transfer shares of UniStore to Tata Digital
Tata Group is also transferring the holdings of Tata UniStore, which was a joint venture between Tata Industries and Trent, to Tata Digital. Tata Industries had a 96.78% stake in UniStore. With this transfer, Tata CLiQ will be part of Tata Digital. Tata has valued UniStore at Rs. 750 crore. As consideration, Tata Digital will offer preference shares to Tata Industries and Trent.
Strategy
Consolidation will help smaller businesses scale up
Tata Group's plan to consolidate its e-commerce business under the Tata Digital umbrella is part of a larger group consolidation strategy. This will help the company take on established e-commerce rivals such as Amazon, Reliance Industries, and Walmart-owned Flipkart. The move will also help the smaller businesses under the company to scale up, which is required to be profitable.