The Tata’s are using Croma as the main seller for electronics and smartphones in its online platforms including the superapp Tata Neu. In fact, industry executives said Croma has been consistently burning cash to offer discounts which at present is one of the steepest in the industry.
Agencies
Tata-owned Infiniti Retail, which owns the Croma retail chain and online store, is doubling its authorized share capital to Rs 4,000 crore with the holding company, Tata Digital, going to pump in Rs 1,000 crore capital in the form of equity shares “to support the expansion plans and digital transformation of the company”, as per latest regulatory filings.
The Tata’s are using Croma as the main seller for electronics and smartphones in its online platforms including the superapp Tata Neu. In fact, industry executives said Croma has been consistently burning cash to offer discounts which at present is one of the steepest in the industry.
Infiniti Retail in the Registrar of Companies (RoC) filings said “Rs 500 crore is expected immediately and the balance in the next financial year.” It said at present, of the Rs 2,000 crore authorized equity share capital, the subscribed and paid-up equity share capital is Rs 1,790 crore.
While Infiniti Retail has not specified the expansion plans and digital transformation in the RoC filings, industry executives said the retailer is expanding both its store presence and going to burn more cash by way of discount primarily in its webstore and Tata Neu with the goal to shore up market share. Electronics and smartphones are the largest sales categories in Indian e-commerce accounting for over 50-55% of the total business in most marketplaces.
An email sent to Infiniti Retail chief executive Avijit Mitra remained unanswered till Sunday press time.
Mohit Yadav, founder at business intelligence firm AltInfo, said Croma's income has increased by 50% in FY22 in comparison to previous fiscal, but to achieve the same company's losses have increased by a whopping 330%.
“This exponential rise in losses leads one to assume that Tatas are finally relying on the cash-and-burn model to gain market share which is not a sustainable strategy in the long run. It will be interesting to see how a traditionally conservative player like Tata will proceed further,” he said.
As per RoC filings, Infiniti Retail grew revenue by 53% to Rs 8,337 crore in 2021-22, while net losses increased to Rs 445 crore from Rs 201 crore in FY21. Last fiscal, the company had launched an all-time record number of 56 Croma stores while the e-commerce sales grew by 204% and contributed 9% to overall sales.
Tatas have pumped Rs 500 crore into Infiniti Retail earlier this fiscal, while in FY22 and FY18 it had raised Rs 250 crore each and Rs 100 crore in FY20.
Tata Digital is the entity behind Tata’s e-commerce operations, being the holding company for Tata Neu and was the vehicle used to acquire online grocer Big Basket, online pharmacy 1 MG and others. It recently became the holding company for Infiniti Retail too.
In September, Tata Digital also sought to increase its authorised share capital from Rs 15,000 crore to Rs 20,000 crore, setting the stage for fresh capital infusion by its parent. It had said it was raising capital to repay existing debt, making investment in other corporate bodies, apart from meeting business activities and other general corporate requirements.
Agencies
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