Tata Neu to receive US$2 billion in funding

Tata Neu to receive US$2 billion in funding
Tata Neu to receive US$2 billion in funding

Tata Neu is expected to meet just half the sales target in its debut year

India welcomed its first super app, Tata Neu, in April last year as super apps are umbrella mobile applications under which companies offer many services. The super app from Tata Group, which has garnered over seven million downloads within seven weeks of its launch, went live after several delays and months of testing by company employees.

Even though it has been available to the general public for almost a year, many claim Tata Neu to be a mess. The app houses the company’s brands across industries such as e-commerce, financial services, airline tickets, grocery, medicines, and hotels. Frankly, the Tatas have had a strong offline presence across various sectors.

However, until relatively recently, consumer tech remained an untapped market. So a few years ago, Tata started building its digital profile by acquiring startups like Alibaba-backed online grocery firm BigBasket and medicine delivery startup 1mg, along with an investment in health-and-fitness startup cult.fit to compete with tech giants like Amazon and Walmart-owned Flipkart.

Fast forward to today, Tata Group is considering injecting another US$2 billion of fresh capital into its super app venture as the salt-to-software conglomerate seeks to bolster its digital business. Tata Digital Pvt would receive the additional funding over two years should a deal proceed.

“The fresh capital could help online platform Tata Neu, which went live last April, to strengthen its digital offerings, fix technical glitches and meet any new spending needs,” said a person familiar with the matter.

How is Tata Neu doing?

Tata Group has asked Tata Digital to also look for ways to boost the valuation of the super app as part of the fresh round cash injection. The size and timeline have not been formalized as the deal is still unclear. “Any fresh capital would come as Tata Digital is reviewing its strategy and fending off entrenched e-commerce rivals such as Amazon.com Inc. and Walmart Inc.’s Flipkart.”

Frankly, Tata Neu ran into technical glitches and received numerous customer complaints soon since its launch. Tata Neu is expected to meet just half the sales target in its debut year. The super app will see sales of about $4 billion in the year to March 31, compared with the US$8 billion target set at the beginning of 2022.

What it appears like so far is Tata Neu still stands as an underwhelming performance of a project that Tata Group Chairman Natarajan Chandrasekaran championed as the future of the US$128 billion conglomerate. Unfortunately, the group is said to have yet to be able to raise cash from investors and fund its plans.

After all, the pressure is on Tata Group to get its super app on the right track before conglomerates led by Gautam Adani and Mukesh Ambani — Asia’s two wealthiest men — launch similar ventures.

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