During a Tata Sons board meeting in May, management sought approval for an equity investment of approximately Rs 7,000 crore into the group's digital consumer businesses, according to media reports. These businesses include BigBasket, Tata Cliq, and other consumer-facing digital initiatives under Tata Digital.
Noel Tata, Chairman of Tata Trusts, reportedly questioned the underlying assumptions of the business plan and the requested funding amount. The plan was backed by estimates suggesting that the companies would continue to incur losses over the next three fiscal years due to aggressive investments in scaling, customer acquisition, and market share expansion. These losses could total Rs 9,000 crore over that period.
Growth Forecasts Under Scrutiny
Tata questioned the proposal's basic assumptions, particularly the growth forecasts used to justify the investment. According to sources present at the meeting, the forecasts projected annual revenue growth of approximately 45 percent over the next three years, even though current growth rates across the digital portfolio are significantly lower.
He also questioned whether the estimated losses accurately reflected the risks associated with the increasingly competitive online commerce sector and whether the projections were unduly optimistic.
Priority for New Ventures
Noel Tata argued that the group should prioritize allocating funds to its newer ventures. He questioned the strategic value of retaining some digital commerce companies and highlighted Air India and the semiconductor industry as important national initiatives that deserve attention.
Tata Digital was established to unify the group's digital operations in grocery, fintech, loyalty programs, commerce, and customer interaction. Through investments and acquisitions, the company has built a portfolio that includes BigBasket, Tata Cliq, Tata 1mg, Croma, and the Tata Neu platform.
Funding Needs and Competitive Landscape
Although Tata Digital's losses decreased in fiscal year 2025, several companies within the portfolio still require substantial funding. The report noted that BigBasket, Tata Cliq, and Tata Neu compete in fiercely competitive markets against giants like Amazon, Flipkart, Reliance Retail, Zepto, Blinkit, and Swiggy Instamart.
The board's deliberation highlights the challenges faced by traditional conglomerates in navigating the digital economy, where high growth often comes with sustained losses and intense competition.
