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| Ratan Tata And Mukesh Ambani |
In the fast-evolving landscape of Indian conglomerates, the Tata Group faces the challenge of finding substantial growth opportunities while fending off competition from Mukesh Ambani's Reliance Industries Ltd. This article explores the options available to the Tata Group, emphasizing the importance of a modern and dynamic approach.
Tata's Response to Haldiram's Valuation
Recently, Tata Consumer Products Ltd., the proud owner of the Tetley tea brand, considered acquiring a stake in snack-food giant Haldiram’s. However, the $10 billion valuation seemed steep for a company with an annual operating profit of $200 million. This raises the question: should Tata invest elsewhere?
Doubling Down on Tata Neu
Instead of pursuing a stake in Haldiram's, the Tata Group might want to focus on its $2 billion investment in Tata Neu. Launched as a consumer super-app, Tata Neu aims to provide multiple services within a single platform. Despite having 35 million cumulative downloads as of June, it still has vast untapped potential in India's online commerce market.
Chandra's Ambitious Ventures
N Chandrasekaran, the chairman of the Tata Group, has embarked on ambitious ventures. The Tata Group is set to become the first Indian company to assemble iPhones and is collaborating with Nvidia Corp. to develop an artificial-intelligence cloud in India. However, competition with Reliance looms large in every sector.
Reliance's Countermove
Mukesh Ambani's Reliance Industries Ltd. has also partnered with Nvidia, aiming to tailor a large language model for India's multilingual population. Ambani's plans extend to semiconductor manufacturing as he pivots away from hydrocarbons, positioning himself as a leader in the digital realm.
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| Bloomberg Data |
Chandra's Need for Speed
The Tata Group's super-app has faced a slow start, despite offering a plethora of services, including Croma, Westside, Titan, Tanishq, 1mg, Starbucks, and a comprehensive food-and-beverage unit. Integrating these offerings into an all-encompassing solution remains a challenge.
Digital Transformation Challenges
While the Tata Group is no stranger to digital technologies, its size and legacy have resulted in cultural and operational inertia. Critical supply chains remain under-digitized, hindering progress.
BigBasket's Hurdles
The Tata Group's acquisition of BigBasket was intended to bolster tech capabilities, but it faced stiff competition from the rapid growth of quick commerce during the pandemic. As a result, the Tata Neu super-app project was delayed.
The Need for a Different Approach
Chandra may need to explore alternative strategies for his digital campaign. Ambani, despite challenges in grocery delivery, has a massive user base through his telecom unit, making it easier to promote his media and financial services offerings.
Corporate Rivalry in India
The rivalry between Mukesh Ambani and Gautam Adani has captured the nation's attention. While Adani focused on core infrastructure, Ambani and Tata are prime contenders for the Indian super-app space, with ITC Ltd. also in the mix.
The Uncertain Path of Super-Apps
Success in the super-app space is not guaranteed, as Indian consumer preferences differ from those in China and Southeast Asia. Nevertheless, for Chandra, it represents a promising avenue for growth.
Conclusion
In conclusion, the Tata Group must navigate the ever-changing landscape of Indian business with agility and innovation to compete with Reliance. Rather than pursuing a stake in Haldiram's, doubling down on Tata Neu and embracing the challenges of the digital age could be the key to achieving substantial growth. The Tata Group's journey in the digital realm is poised to be a defining chapter in its storied history.
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