Tata's digital ambitions to get supercharged by N Chandrasekaran’s extension as chairman

N Chandrasekaran’s extension as Chairman of Tata Sons, announced on February 11, will turbocharge the digital ambitions of one of India’s largest conglomerates, as it races to roll out a super app combining its sprawling retail and technology ecosystem, people familiar with plans said.

Tata’s Neu super app is expected to formally launch in early April, a service where users can order medicines, buy clothes, and where reward points from disparate Tata services- from Starbucks Coffee to Vistara Airlines- can be used interoperably. Chandra, as he is known, will remain chairman for five more years and is expected to play a defining role in its digital strategy.

“Tata under Chandra's dynamic and visionary leadership is aiming to be a leading tech company by building a super app for all categories. This work has just started and it is important for Chandra to continue to build out Tata Neu to a leading position. Tech will disrupt all industries, it is just a matter of time. Companies that realise this and take aggressive bets will survive and flourish and capture most of the value created over the next decade,” said serial entrepreneur K Ganesh, also a promoter of Tata-owned BigBasket.

“I think it is a fantastic move to extend his tenure because digital and technology is a big focus area for Chandra. He is long on Electric Vehicles (EVs), electronics and healthcare. But acquisitions and investments are going to be very selective,” said a person close to Chandrasekaran, requesting anonymity.

Despite Tata’s recent acquisitions of grocer BigBasket, online pharmacy 1mg and investment in fitness platform Cure.fit, the company prefers building than buying, this person added.

To this effect, Tata Digital, its online arm, is also in talks to raise funds from external investors to build out the super app and ascribe a separate value to it.

Tata Digital is eyeing a valuation of $20 billion and has begun early talks with investors, with an aim to double its Gross Merchandise Value from $3 billion in March 2022 to $7 billion next year, as per sources and media reports.

“Mainly driven by (electronics retailer) Croma and BigBasket, they are targeting $7 billion GMV next year, so a 3X valuation (of GMV)  is possible. But they need to find a big strategic investor who can come in as anchor. The major VC, PE and sovereign wealth funds are unlikely to come in as anchors,” a person aware of the matter said.

Tata’s digital strategy is being spearheaded by Pratik Pal, CEO of Tata Digital for nearly three years, and a senior Tata Consultancy Services executive for 28 years prior, along with Cure.fit co-founder Mukesh Bansal.

While Pal takes care of product, technology and backend operations, Bansal focuses on growth, new categories to get into and research, serving as the front end of the operation, sources said.

Tata wants to roll out its super app in time for the Indian Premier League (IPL) cricket tournament, for which it won title sponsorship rights recently. It wants to generate buzz for the super app driven by the IPL, generally India’s biggest event in the summer months of April and May.

By looking to raise funds from external investors, Tata is trying to replicate rival conglomerate Reliance’s strategy. Reliance Jio raised over $20 billion at a valuation of $66 billion in 2020 from a veritable list of investors, ranging from private equity houses KKR and Silver Lake to technology giants Meta(Facebook) and Google.

“Chandra has shown great execution by buying market leaders in key categories to launch Tata's super app. Under his able leadership, Tata will continue to be a dominant business giant and transform to a tech-driven modern company,” Ganesh said.

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