Stating that startups in e-commerce segment are asking for too high a price for divesting stakes, Tata Sons Chairman Emeritus Ratan Tata today took a dig at the fledgling sector, saying “valuations” and not “evaluations” are driving the play.
“It’s true that the valuations (of e-commerce) are very high and valuation seems to driving these companies more than traditional matrix of evaluation,” Tata said at the 107th Annual General Meeting of Indian Merchants’ Chamber.
Interestingly, Tata’s personal investment portfolio comprises equity interests in e-commerce start-ups, including Snapdeal, PayTM, Urban Ladder and Bluestone.
Tata, however, said the current trend is similar to what has happened elsewhere in other sectors.
“We have to give these young entrepreneurs a chance to prove themselves… shoulder to shoulder… with traditional business,” Tata said.
Asked about whether the e-commerce bubble will burst, the veteran industrialist said this is the new trend in the country’s commerce.
“It’s actually a feeling that e-commerce is really the new trend for the Indian commerce. It serves millions of people. It’s my personal money and not company’s money. I don’t see where the debate is,” he said.
“I believe that Indian enterprise needs to be encouraged. One needs to lend mentoring to young people, to give them a chance. One feels very proud when this new segment is emerging in the country,” he added.
Tata felt overseas investors in e-commerce companies will make sure that founders and the management maintain high standards of governance.
“The fact that they have external investors is very good because they will exit if they feel that the company is operating in a grey area,” he added.