Have the Tata Group's "trump cards" failed? The company is facing a massive loss of 29,000 crores!
Tata Group's new businesses are projected to post significant losses in FY26, with Air India and Tata Digital being the biggest contributors. Mounting losses, slow progress, and misguided strategies are posing significant challenges for the company.
The Tata Group's fiscal year 2025-26 was not a good one. The group faced several management-related issues during this period. Meanwhile, some new businesses launched under Tata Sons have caused significant losses.
According to a report in the Times of India, some of the new businesses under Tata Sons are expected to incur a combined loss of up to ₹29,000 crore in FY26. This is significantly higher than the earlier estimate of ₹5,700 crore.
Losses in the first nine months of FY26 alone have reached ₹21,700 crore, significantly higher than the full-year figure of ₹16,550 crore for FY25. This is primarily due to Air India, Tata Digital, Tata Electronics, and Tejas Networks.
While losses had declined between FY23 and FY24, they increased again in FY25 and have increased even more sharply this fiscal year, pointing to a volatile but growing trend.
The widening gap between projections and actual performance was also a reason for the board meeting in February to postpone the reappointment of Chairman Natarajan Chandrasekaran for a third term. He is expected to present a plan to control losses in June. This is a major concern raised by Noel Tata.
Tata Digital performance
Tata Digital has emerged as a major concern among the group's new investments. Launched in 2019, the platform includes BigBasket, Tata 1mg, Croma, Tata CLiQ, and Tata Neu. The group invested over ₹24,000 crore in it. However, despite this investment, it has yet to generate profits.
Its total losses are estimated to exceed ₹5,000 crore in FY26, its highest ever. Losses in the first nine months alone have exceeded ₹3,750 crore, exceeding initial estimates for the full year.
Thomas Kuruvilla, managing partner at Arthur D Little, told ToI that while any new business takes time to establish, some mistakes were made. Frequent leadership changes, a slow pace of product improvements, and a focus on loyalty programs as the primary driver of growth all led to negative consequences.
Big Basket also lagged behind
Thomas Kuruvilla said that competitors outperformed BigBasket not in terms of brand, but in their operational capabilities. They excelled in the number of dark stores and the speed of delivery.
This is a fundamental function that may not seem significant, but Tata Digital underinvested in it.
The company incurred a loss of ₹4,610 crore in FY25, with BigBasket accounting for the largest share. Croma, Tata 1mg, and Tata CLiQ are next. A similar trend is expected in FY26.
Air India crisis deepens
Despite concerns about Tata Digital, Air India remains the largest loss-making company.
The airline's losses are projected to reach ₹20,000 crore in FY26, a tenfold increase from the earlier estimate of ₹2,000 crore, and it has already recorded a loss of ₹15,000 crore in the first nine months. In comparison, this figure was ₹11,000 crore in FY25.