A proposal by Tata Sons management to inject around Rs 7,000 crore into the group's digital consumer businesses has come under scrutiny from Noel Tata.
According to a report by Moneycontrol, the proposal was discussed during the Tata Sons board meeting on May 26 and covered digital businesses housed under Tata Digital, including platforms such as Tata Cliq, BigBasket and other consumer-focused ventures.
Noel Tata questioned both the size of the proposed investment and the assumptions used to justify the fresh capital infusion.
The funding proposal reportedly included projections showing that Tata Digital's businesses could continue to post losses over the next three financial years.
According to estimates presented at the meeting, cumulative losses could reach nearly Rs 9,000 crore during this period as the group continues investing in customer acquisition, scale and market expansion.
Management projections reportedly assumed annual revenue growth of about 45 percent over the next three years.
However, Noel Tata is understood to have questioned whether these forecasts were too optimistic, especially given that current growth rates across parts of the digital portfolio remain significantly lower.
He reportedly sought greater clarity on whether the expected returns justified the level of capital being committed.
Debate Over Strategic Priorities
Sources said Noel Tata raised broader questions about where the Tata Group should allocate capital among its newer businesses.
According to people aware of the discussions, he argued that sectors such as aviation and semiconductors have greater strategic and national importance.
The discussion reportedly included questions about the long-term relevance of owning platforms such as Tata Cliq, the group's online marketplace for fashion, beauty and lifestyle products.
The Tata Group has invested heavily in building its digital ecosystem through businesses including BigBasket, Tata Cliq, Tata Neu, Tata 1mg and Croma.
Competition And Profitability Challenges
Despite significant investments, profitability remains a challenge for several Tata Digital businesses.
The group faces intense competition from major players including Amazon, Flipkart, Reliance Retail, Zepto and Blinkit.
People familiar with the matter said concerns were raised about continued capital deployment into businesses that have yet to demonstrate a clear path to profitability.
The discussions focused not only on the immediate Rs 7,000 crore funding request but also on whether Tata Digital's investments are generating returns proportionate to the capital invested.
