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Industry bigwigs on shopping spree for internet-based cos
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SME Times News Bureau | 19 Jul, 2021
The past one year has witnessed dynamic changes in several aspects and
internet and mobile penetration has been a major phenomenon. This growth
in the online space has led to major growth of internet-based companies
in India, in turn, making them attractive for bigger, deep-pocketed
businesses.
Several mega acquisitions have taken place in the
past one year, the latest being the announcement made by Reliance Retail
of acquiring controlling stake in the home-grown online search engine
platform Just Dial for Rs 3,497 crore.
Recently, Tata Sons'
subsidiary Tata Digital acquired a majority stake in Supermarket Grocery
Supplies Private Ltd, the company which is better known as BigBasket.
Further,
Tata Digital and Reliance Retail have acquired majority stakes in
digital health companies 1MG Technologies Private Ltd (1MG) and Vitalic
Health Pvt Ltd and its subsidiaries, collectively known as Netmeds,
respectively.
Both the business houses which are betting big on
the e-commerce space are adding these online companies to strengthen
their respective online offerings.
Speaking to IANS, Technopark
Advisors Arvind Singhal, Chairman of Technopak Advisors noted that it is
like "putting together a string of pearls" and completing the products
and services you offer.
This larger interest in the
internet-based companies can be attributed the business growth these
ventures have witnessed amid the pandemic.
India's internet
economy is booming aided by a surge in smartphone penetration and
declining internet costs. Internet penetration reached 56 per cent in
January 2021 and the country's internet economy is expected to grow from
$250 billion in 2020 to $335 billion in 2025.
While Covid-19 has
had a major impact on small-scale businesses, big technology companies
have benefited from the ensuing digitisation wave.
"We estimate
that the pandemic has hastened the digitisation process by 3-5 years as
the use of technology became imperative for clients to survive and to
capture future demand. In India, the pandemic has particularly fuelled
demand in areas such as online entertainment, edtech, ecommerce,
fintech, foodtech, gaming and healthtech," said a report by BOB Capital
Markets.
Singhal of Technopak was of the view that going ahead
more acquisitions by the industry majors would take place and this
competition would be in the best interest of the consumers.
Such
acquisitions and investments, he said, have a lot of indirect positive
outcome as they encourage other entrepreneurs with the hope of getting
major investments and acquisition offers in the future.
"Has
Reliance stopped looking for companies to acquire? Certainly no. Has the
Tatas stopped looking for companies to acquire? certainly not. We will
see many more such acquisitions." Further, this growth in the
internet-based companies will also spur interest among other major
businesses looking to strengthen their online portfolio and several more
mergers and acquisitions (M&A) may be in the waiting going ahead.
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