Indian salt-to-software conglomerate Tata Group is in talks to buy local health and fitness startup Cult.fit as it looks to strengthen its digital footprints across industries.
The Mumbai-headquartered giant is looking to rope in Cult.fit founder Mukesh Bansal in a leadership role in its digital arm Tata Digital, a report by local media Economic Times (ET) said, citing sources.
The 153-year-old conglomerate, which has a diversified business portfolio across sectors such as automotive, airlines, chemicals, defense, FMCG, finance, home appliances, hospitality industry, IT Services, retail, e-commerce, real estate, steel, and telecom, has been out in the market acquiring new-age internet companies that align with its vision of creating an online retail empire.
Over the last few years, it has been testing the waters in the digital space. It quietly rolled out several apps for e-groceries, online fashion and electronic shopping, doctor consultation, and personal loans, among others. When the COVID-19 pandemic hit the country in March 2020, leading to a steep rise in digital adoption among consumers and businesses, Tata began eyeing startups that could bolster its online presence.
In August 2020, Natrajan Chandrasekaran, chairman of Tata Sons, in an interview with UK-based Financial Times, revealed the Indian conglomerate’s plan to roll out a super app. Its retail offerings would include food and grocery, fashion, jewelry, consumer electronics, consumer durables, financial services, education, healthcare, and bill payments, among other things.
This February, Tata acquired e-grocer BigBasket for USD 1.2 billion, making it one of the strongest players in the space. Then last month, the company reportedly signed a definitive agreement to buy a 65% stake in online healthcare and pharmacy platform 1mg. With the acquisition of Cult.fit, Tata would be able to venture into the online fitness space.
Tata is likely to let the founders of these startups run the business to leverage their domain knowledge, expertise, and vision.
The right fit
Formerly known as Cure.fit, the startup was launched in 2016 by Ankit Nagori and Bansal—founder of online apparel company Myntra, which was acquired by e-tailer Flipkart in 2014. Cult.fit aims to be a pitstop for all health and fitness-related needs. All the services provided by the startup revolve around these two themes.
Eat.fit is its food delivery branch that offers healthy food, Mind.fit provides yoga and meditation classes, Cult.fit is a subscription-based chain of gymnasiums, and Care.fit is a chain of diagnostic centers. Apart from diagnostics, it also has online doctor consultation services as well as nutritionist consultation. Just before the onset of COVID-19 last year, the company launched its own line of grocery products called Whole.fit. Recently, it acquired California-based fitness company Onyx to foster its at-home fitness offerings.
The startup has raised USD 418 million to date from Temasek, Accel, Kalaari Capital, and RNT Capital, among others, and was last valued at around USD 800 million.
Over the last one and a half years, Cult.fit’s offline business has been adversely impacted. Last year, the company fired 10% of its staff or 800 employees and furloughed another 500 people. It also put on hold its plans to go deeper into smaller towns in the country as well as expand overseas. Instead, it focused on providing all its services online.
Although the company restarted its physical operations late last year, it had to shut down gyms and fitness centers again due to the second COVID-19 wave in April that saw the country’s healthcare system break down due to the lack of beds, medical oxygen, and medicines.
Getting Tata as a backer would aid the startup financially as well as allow it to leverage the conglomerate’s vast customer base across sectors. On the other hand, having Bansal onboard would help Tata to compete with bigwigs like Amazon and Flipkart as well as Indian oil-to-internet conglomerate Reliance.
“Bansal’s experience in scaling Myntra from a site selling personalized gifts to one of India’s largest fashion e-commerce players will be vital for Tata as it strings together a digital strategy,” the ET report said, citing sources. “Bansal could possibly play a wider role in Tata’s digital businesses, including those in which it recently picked up majority stakes, such as BigBasket and 1mg.”