Tata Group is considering injecting another USD 2 billion into its super app venture as the salt-to-software conglomerate looks to strengthen its digital business, according to the sources.
If the deal goes through, Tata Digital will receive the extra funding over a two-year period, according to the sources. According to one of the people, the new capital could help the online platform Tata Neu, which launched in April, strengthen its digital offerings, repair technical glitches, and meet any new spending requirements.
The Tata Group has instructed Tata Digital to look for methods to increase the value of the super app, according to the person, who did not want to be identified because they were discussing private information. Deliberations are still underway, and the conglomerate may change the size and timeline of a deal, according to the people. Tata Group and Tata Digital representatives declined to respond.
Any new funding would come at a time when Tata Digital is rethinking its strategy and battling entrenched e-commerce competitors like Amazon and Walmart’s Flipkart. Tata Neu, India's first super app since at least mid-2020, was patterned after China's ubiquitous Alipay and WeChat, but it quickly ran into technical issues and customer complaints after its debut last year. Local behemoths Reliance Industries and Adani Group are also planning to launch their own super applications.
Tata Neu enables users to purchase groceries and electronics, as well as book airline tickets and restaurants from Tata brands. The program also includes a membership service and financial goods like bill payments, loans and insurance.
Tata Neu is anticipated to achieve only half of its sales target in its first year. According to Bloomberg News, the super app's sales will be around USD 4 billion in the fiscal year ending 31 March down from the USD 8 billion targets established at the start of 2022.
Tata Group has invested more than USD 2 billion in e-commerce over the last three years, acquiring companies such as e-grocer Bigbasket and e-pharmacy 1mg. According to Bloomberg News, the group's holding company, Tata Sons considered bringing in financial or strategic investors, including global technology companies, to support the super app in 2020.