An old Indian conglomerate seeks the elusive elixir of growth

From super-app to AI and semiconductor manufacturing, wherever N Chandrasekaran looks to grow, he may find rival Mukesh Ambani knocking on the door — or already inside the room.

By Andy Mukherjee for Bloomberg

The Tata Group has denied speculation that it is in talks to buy a stake in snack-food maker Haldiram’s. That’s just as well. The 155-year-old Indian conglomerate needs to work up an appetite for something a little more substantial — and modern. 

Tata Consumer Products Ltd., the owner of the Tetley tea brand, was uncomfortable with Haldiram’s Rs 82,992 crore valuation, Reuters reported September 6, citing sources who put the annual operating profit of the privately held business at Rs 1,659 crore. 

Rather than pay a multiple of 50 for an 86-year-old enterprise with limited room to grow, the Tata Group may want to double down on the Rs 16,598 crore it has invested in Tata Neu. The consumer super-app — a single platform that offers multiple services — was launched in April last year and revamped recently. With 35 million cumulative downloads as of June, the app has barely scratched the surface of India’s online commerce market, where Walmart Inc.-owned Flipkart and Amazon.com Inc.’s local marketplace boast hundreds of millions of shoppers. 

N Chandrasekaran, the chairman of the Mumbai-based conglomerate, has a couple of other routes to the information highway. His is going to be the first Indian company to assemble iPhones. The Tata Group is also partnering with Nvidia Corp. to develop an artificial-intelligence cloud in India. Still, not all clouds are rainmakers. Besides, from super-app to AI and semiconductor manufacturing, wherever Chandra, as the Tata chairman is known, looks to grow, he may find rival Mukesh Ambani knocking on the door — or already inside the room. 

Ambani’s Reliance Industries Ltd. has also announced a partnership with chipmaker Nvidia. The richest Asian tycoon wants to build a large language model tailored for India’s multilingual population. A semiconductor foray may also be in the cards. Ambani wants his own lock on new-age businesses as he pivots away from polluting hydrocarbons; he’s already ahead in the digital game.

For Chandra, speed is of the essence. His super-app has had a slow start even though he has plenty to sell. Croma is a Tata-owned electronics store. Westside is its fashion retailer, while Titan and Tanishq are its popular brands for watches and jewelry. 1mg is an online pharmacy Chandra acquired in 2021, shortly after buying a majority stake in BigBasket, India’s No. 1 e-grocer. Then there’s a joint venture with Starbucks Corp., as well as a food-and-beverage unit spanning everything from salt and water to tea and coffee.

On the services side, the group offers hotel stays at its marquee Taj properties, as well as flight tickets: Chandra is in the middle of integrating four airline brands under Air India Ltd. Tata executives estimate that their super-app can potentially absorb up to 80% of the spending on a big, fat, Indian wedding. Even then, implementing a one-stop solution — not only for special occasions, but also for everyday commerce — has proved challenging.

The conglomerate is not exactly a stranger to digital technologies. The subsea fiber network of Tata Communications Ltd. carries around 30% of the world’s internet routes, and Tata Consultancy Services Ltd. is India’s largest software code-writing firm. For the past seven years, the group has operated its own online shopping mall, Tata CLiQ. Yet, size and legacy come with dollops of cultural and operational inertia. The crucial supply chains that helped the group garner Rs 11,951,04 crore in revenue last year aren’t fully digitized.

This is where the e-grocer was supposed to do the heavy lifting. But before BigBasket could help other Tata Group firms bolster the tech for order management, warehousing and transport, its core grocery franchise came under attack from a pandemic-era explosion in quick commerce: home deliveries in 20 minutes. While that competition is far from over, the collateral damage may have been Tata Neu. The super-app project went on the back burner at BigBasket, as The Ken, a news website, reported earlier this year. 

Maybe Chandra needs a different beachhead for his digital campaign. In which case, he has to find it fast. Ambani, who runs India’s largest retail chain, is also struggling with grocery delivery by his network of mom-and-pop stores. But BigBasket’s advantage over Ambani’s JioMart is more than offset by the tycoon’s hold over more than 400 million users of his telecom unit. That’s a large captive audience for Ambani’s media offerings — from free Indian Premier League cricket to HBO and NBCUniversal shows. Besides, Ambani has just started a separate venture for consumer finance, which will do everything from processing payments and making loans to digital broking and asset management.

For the past two years, Ambani’s competition with billionaire Gautam Adani has been the most-talked-about corporate rivalry in India. Adani, too, harbored super-app ambitions before getting distracted by a short-seller’s report. The Ahmedabad-based group has rejected the allegations of stock-price manipulation and accounting fraud. Yet, intense global scrutiny of its governance practices refuses to go away. If Adani chooses to focus on his core infrastructure business, Ambani and Tata will be the strongest contenders for an Indian super-app, followed by ITC Ltd. The erstwhile Imperial Tobacco Co. of India is building a digital platform for farmers, with climate at its core.

Success is far from certain. Just because super-apps have worked in China and Southeast Asia, it’s not guaranteed that the Indian consumer will show the same enthusiasm for a one-stop shop that packs everything from content and communication to commerce. Yet, for Chandra, it may be a meatier goal. If, in the process of pursuing it, Vodafone Idea Ltd.’s struggling, cash-strapped Indian wireless carrier comes to him, then that’s the deal he should weigh. Let private equity munch on Haldiram’s. The Tata Group needs the elixir of growth, and not a snack-maker’s cash flows.