23rd May 2022
“2020 marks the start of a bull run for Indian start-ups”, this quote has been reiterated many times by various venture capitalists around the globe. And if the early market acquisition trends are anything to go by, we can indeed say that the time for the Indian start-ups has truly arrived.
Indian conglomerates like Tata Group, Reliance Industries, Vedanta, Adani, Jsw Group, and many more are in a race to acquire promising start-ups to help them complete their portfolios. This tug of war between the giants has excited the start-up founders. This has resulted in a crazier valuation that even the most bullish spectators won’t have anticipated.
Since its inception in 1868, the Tata group has been one of the mainstays in the Indian corporate industry and helped the Indian economy grow exponentially over the years. Over the years the Tata group has acquired many small start-ups and has nurtured them to grow and help them excel in their respective fields and gain new heights. But the Tata group has been a bit different in its acquisition strategy this decade and has been a lot more aggressive and agile in the acquisitions it has made. The experts believe that the reason behind these aggressive acquisitions could be to strengthen their e-tail platform and promptly move towards a market monopoly within this area.
Apart from these, the Tata group is also in talks with 5 major consumer-facing start-up brands for further acquisitions. Not only that, but the Tata group is also in
serious talks with a 24-year-old local search engine “Justdial” for their acquisition.
Some of the major acquisitions that we are going to have a close look at are:
Big basket is an online grocery shopping platform that enables its users to order daily use products just with the help of a few clicks and that too from the comfort of their homes.
Big Basket was founded by Mr. Hari Menon in the year 2011 and had attracted major investments from world-renowned investors like Jack Ma, K Ganesh, and many more. But the major breakthrough for the firm came when Tata Digital (an arm of Tata Sons) decided to acquire 64.5% of its share for a valuation of over $2 billion.
Before the acquisition by Tata Digital, the e-commerce giant enjoyed a market share of a little below 20% in the year 2020 which has now grown to 35% of the total market. The firm also has started servicing its debts and looks in much greener health than ever before.
To strengthen its healthcare footprint in India. Tata digital decided to acquire majority stakes in one of the fastest-growing e-health care firms “1 mg”.
1 mg was founded in the year 2015 with a vision to provide superior health services at affordable prices to its customers and to grow and improve its services, it decided to sell a large pair of its shares to Tata digital at $450 million.
Currently, 1 mg has acquired a 50% market share in the Indian pharma industry and is expected to grow at a rate of 50%- CAGR.
Although the Tata group has acquired many start-ups in this decade, its major acquisition came only in the form of acquiring the white elephant in the Indian aviation industry – Air India.
Air India was started by JRD Tata in the year 1932 and was one of the paramount airlines of its time known for its superior comfort and world-class services, but the airline was transferred to the Indian government in the year 1953 under the nationalization scheme and it has been reporting huge losses ever since.
In the year 2021, when the government decided to sell most of its stakes in Air India Tata sons were quick to pounce on the opportunity and grabbed it with both the hands and the latter is history. We all hope that the coming home of Air India works in its favor and the Tata’s can work around their magic and bring the airline back to its glory days.
In the end, we can say that TATA has built a name for itself which has been achieved through years of hard work and honesty toward whatever they have done. We sincerely hope that Tata can nurture these acquisitions and impart the same work ethics to them so that they can grow to become industry giants and help in the growth of the Indian Economy.