What is the synergy of Tata group buying a majority stake in Big Basket?

This announcement had been made some time back and the same had also bene reported in the press some time back. Now it has been made official and the Tata Group has also confirmed that it will buy 68% in online grocery start-up, Big Basket, for a consideration of Rs.9,500 crore. This will give an overall valuation of nearly $2 billion to Big Basket.

This deal would be in tandem with the Tata group’s plan to launch a "super app" at a group level that will tie in all the consumer facing businesses of the Tata group including watches, retail, FMCG products etc under one single platform. Big Basket has a strong franchise in the fresh merchandise market and it will be a great value addition for the Tatas.

This strategic move will give the Tata group the ability to take on the strong competition from the likes of extremely strong players like Reliance, Amazon and Wal-Mart in India's booming e-commerce market. While Amazon is present in a big way directly, Wal-Mart is present in Indian ecommerce through its Flipkart stake.

Among the big players, Reliance Retail is unique in the sense that it is rethinking the entire ecosystem underlying the ecommerce platform. Big Basket specializes in fresh merchandize and competes with Flipkart in Bengaluru. The existing promoters will stay on for now till the time the transition takes place smoothly.