Security Equipment and Services Market – India March 2012
Security Equipment and Services Market – India
March 2012
Executive Summary
Market
Security equipments and services market in India was valued at around INR xx bn in 2010 and is expected to reach
a market worth INR yy bn by 2015
The market is primarily expected to grow at a CAGR of y% wherein the maximum demands will arise from the
corporate and household segments
Currently, the market can be broadly segregated in to CCTV & other equipment, electronic access control, IT
security and private security service segments
Security equipments includes CCTV (79%), Intercom (3%), Intrusion detection (3%) and others (15%)
Electronic access control market covers
Segment
–
–
–
–
Biometrics is a foolproof system best suited for the private and Government sector organizations
Smart Card is used in the financial services, public sector market and transportation market
Proximity card is used in identification cards, payment cards and public transit fare cards
Magnetic Strip technology provides a medium level of security as it can be duplicated
CCTV and other Equipment
Driver
Driver &
Challenges
Competition
Electronics Access Control Equipments
Driver
– Government demand
– Corporate demand
– Retail and residential sector
demand
– Increasing security breaches
– Demand from upcoming government projects and
proposals
– Economic growth and rise in employable population
– Demand for better security from increasing R&D
centers
Challenges
– High duty and taxation
structure
– Competition from unorganized
players
– Insufficient Police
Protection
– Cost of Electronics
Challenges
Challenges
– Lack of proper training
– Fire arms not allowed
– Lack of awareness towards security and availability of
cheaper alternatives
– Lack of end to end solution providers
Domestics Player
Bartronics India Ltd
Private Security Services
Driver
Foreign Player
Bosch Ltd.
Honeywell International Inc
SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT
UTC Fire & Security
2
•Market Introduction
•Market Overview
•Types of Products
•Market Entry Strategy
•Vendor Opportunity
•Driver & Challenges
•Future Outlook
•Competition
•Strategic Recommendations
•Appendix
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Market Introduction – Products and Services
Security Equipment and Services
CCTV and other Equipment
Electronics Access Control
Equipments
CCTV
Private Security Services
Manned Security Service
Biometrics
IT Security
Detective Service
Intercom
Smart Card
ATM Security
Cash Transportation
Intrusion Detection
Others (X-Ray, Metal
Detector)
Proximity Card
VIP Security
Swipe Card
Special Event Security
Management (Exhibition,
Marriage, Common
Wealth Game)
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Security Equipment and Services – Market Overview
Market Size & Growth Figures
INR bn
CCTV & Other Equipment
Electronic Access Control
IT Security
Private Security Service
d
c
xx
b
a
0
2010
2011
2012e
2013e
2014e
20--e
20--
CCTV
EAC
IT Security
2015e
20--e
Private security service
Source: Security Today; Business Standard; ET; Business Line
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Demand for CCTV & other equipment is robust and growth
is expected to accelerate in the future
Overview – CCTV & Other Equipment
•Demand for security equipments, both for
residential and commercial purpose, has
increased many folds in recent time
These equipments include Close Circuit Camera
(CCTV), Intrusion Detection, Intercom and others
(Metal Detector and X-Ray’s)
•Market size of CCTV hovered at INR xx bn in
2011 and grew at yy% CAGR
However, following the terror attacks, security
spending is expected to surge by 40-50%
Market Size and Growth – CCTV & Other
Equipment
INR bn
d
j
xx
c
h
b
a
i
f
e
g
0
2010
2011
2012e
2013e
2014e
2015e
Market Segmentation (2009)
•India is an import-driven market with ~60% of
security and surveillance equipment imported
by foreign manufacturers with local presence
or domestic importers/distributors
CCTV
Others
Intercom
Intrusion Detection
Note: *Assumptions– Consensus on 2007 market size: INR 15.8bn, 2006-2008 growth rate: 25%, 2008-2010: Average growth of 45%, Post-2010: Average growth of 25%
Source: Security Today; Business Standard; ET; Business Line
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Awareness among corporate about security is creating huge
demand for electronic access systems
Overview – Electronic Access Control (1/2)
•The early adopters for electronic access
control (EAC) were IT/ITES (Call centers/BPO )
•Electronic access control equipments have
gradually gained popularity among major
corporations
With the increase in employees, it has become
difficult for corporations to manage security
manually and are thus resorting to electronic
security systems
Various banks, financial services, insurance,
service industry, government agencies, public
sector undertakings, ministries and manufacturing
sector are adopting electronic access control
mechanism
Market Size and Growth - EAC
INR bn
j
d
xx
c
h
b
a
i
f
e
g
0
2010
2011
2012e
2013e
2014e
2015e
Market Segmentation (2009)
•Some electronic access control systems
includes Card Based (Proximity Cards, Smart
Cards, Legacy Technology Based Cards),
Biometrics
Based
(Fingerprint,
Face
Recognition, Voice/Signature Verification,
Hand Geometry, & Iris Recognition)
Proximity Cards
Swipe Cards
Smart Cards
Biometrics
Source: Security Today; Union Budget 2009-10
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Evolution of technology has also brought in threats from the
cyber space which in turn boosts the market further
Overview – Electronic Access Control (2/2)
•Tremendous advancement in the information
technology area has also lead to the evolution
of state-of-the-art IT security systems
•Need for the robust and cost-effective security
solutions is gaining a steady momentum in
India
•Valued at approximately INR yy bn in 2011-12,
the network security market is growing at a
CAGR of zz%
•Basically the market comprises of segments
including UTM (Unified Threat Management),
Firewall, IPS, SSN/VPN and content
management
•The primary drivers for this segment happens
to be the emergence of Smartphones and
cloud computing
•The market also exhibits a strong competition
amongst established and esteemed players
Market Size and Growth – IT Security
INR bn
e
c
b
k
xx
d
f
g
2010
2011
h
j
i
a
0
2012e
2013e
2014e
2015e
Market Segmentation – Sales (2011)
UTM
Firewall
IPS
SSN/VPN
Content Management
Source: Communication Today
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US, UK, Germany, Japan, and Israel are major exporters to
India
SAMPLE
Accounts for
nearly 45% of
Indian imports
U.K.
Germany
Emerging threat to Indian
manufacturers from
cheaper Chinese goods
Japan
Israel
Exporters from Hong
Kong, Taiwan, Korea
and Singapore
compete on price
S.E. Asia is major
source of smuggled
goods for grey
market
Major exporters
Minor exporters
Hong Kong, China, Singapore, Taiwan, Korea
• High dependence on imports since domestic production is low and concentrated in low-end, basic products, primarily
because most Indian firms have small-scale operations and limited technological expertise
• Due to technological advancement made in foreign countries, it is unviable for new Indian companies to start
indigenous development from scratch and invest large amounts of capital required for product development
Source: US Commercial Service; Israel Economic Mission in India
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Private security business is experiencing huge demand
primarily due to terror threats
Overview – Private Security Service
•Private security service primarily include
manned
guards,
detective
services,
investigation and security consultancies
•Manned based security service is experiencing
high growth rate primarily due to threat form
terror groups
Demand for security service has surged after
terror attack
Private Security workforce in India is ~5.5 mn
– Only 20% of workforce is constituted by women
Market Size and Growth – Private Security
Services
INR bn
j
d
xx
c
b
i
h
f
e
g
a
0
2010
2011
2012e
2013e
2014e
2015e
Segmented Market Share (2009)
– Ratio of private security personnel to police in India is
2:1 and will soon reach 3:1
Organized
Unorganized
•Besides hospitality industry, demand is driven
by private firms in manufacturing, retail, real
estate, hospital as well as schools and colleges
Security guards
account for majority
of the revenue
Source: India PE; Financial Express; IBEF; Security Management; India Journal
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Government had passed Private Security Regulation Act and
permits CISF deployment for security as well
SAMPLE
Government of India has passed a Regulation “Private Security Agencies (Regulation) Act, 2005”
Private
security
service
providers have to obtain a
license from the government
They have to maintain a register of
their employees, issue identity cards
and their uniforms and badges
Guards should have received
minimum 160 days training before
being deployed at client’s site
• Some States have their own regulation for the security industry like Mumbai, Maharashtra Security Guard Board
(MSGB), which was created in 1981 but they only regulate welfare of the guards rather than ensuring the creation of
trained personnel
• Various state governments have collaborated with Central Association of Private Security Industry to provide training to
guards, wherein the government bears the expenditure
Government Involvement
FDI
• Foreign security firms have been setting up business in India without any restrictions and Indian
partners have been developing their expertise from foreign tie-ups
In FY ‘10, the government is planning to restrict FDI investment by 49% in domestic private security firms
• In a major initiative, government allowed Central Industrial Security Force (CISF) to be deployed for
private security service
CISF
About 79 companies have approached the government for CISF protection
– 100 CISF personnel have been deployed at the Infosys campus in Bangalore
– Wipro, Reliance and Oberoi Hotel are also waiting for the deployment of CISF in their premises
Source: CommOnlii; Indian Express
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abc India accounts for the highest proportion of security
service installations
Geographic distribution
•xxx
xxx
yyy
www
zzz
Source: Security Today
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SAMPLE
Distribution Model – Indian Security Equipment Industry
The overall distribution model of security equipment market in India is a multi staged model wherein the product can
reach the end users through multiple channels
Manufacturer
End User
Distributor
System Integrator
Installers
OEM
Wholly owned subsidiary
Source: Security Today; Netscribes Analysis
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Drivers & Challenges – CCTV & Other Equipment
Challenges
High duty and taxation structure
Drivers
Competition from unorganized players
Government demand
Corporate demand
Retail and residential sector demand
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Future will see reduction of duties and taxes, shift toward IP
and video analytics technologies and PE investment
Future Outlook
Duties and Taxes
Products
xxx
yyy
Private Equity
zzz
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Major Public Companies - Summary
Net Profit/Loss
150,000
Size of the Bubble represents Market Capitalization in INR mn
2,458,395.3
1,355.1
241,801.4
0
537.8
633.1
-150,000
-11,000,000
0
11,000,000
22,000,000
Total income
aaa
Source: Annual Reports, Databases
bbb
ccc
ddd
eee
Note: All figures are in INR mn and are based on the latest financials available
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Public: Domestic Company – abc
Company Information
SAMPLE
Offices and Centres – India
Corporate Address
Tel No.
Fax No.
Website
Year of Incorporation
Ticker Symbol
Stock Exchange
Hyderabad
Head Office
Products and Services
Category
Products/Services
Key People
Name
Source: Annual Reports; Databases; Company Websites
Designation
Note: The list of products and services is not exhaustive
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Public: Domestic Company – Bartronics India Ltd. (2/3)
Financial Snapshot
Total Income
Key Ratios
Net Profit/Loss
INR mn
INR mn
a
a
b
b
c
0
0
2008
2009
2010
2011
Financial Summary
Particulars
y-o-y change
(2011-10)
2011
2010
2009
2008
Profitability Ratios
Operating Margin
Net Margin
Profit Before Tax Margin
Return on Equity
Return on Capital Employed
Return on Working Capital
Return on Assets
Return on Fixed Assets
-5.08
17.34%
22.42% 22.73%
23.01%
0.75
11.21%
10.46%
3.47%
17.39%
-5.78
10.11%
15.89%
7.02%
21.42%
0.31
17.09%
16.78%
6.62%
17.29%
-3.04
15.82%
18.86% 18.46%
11.38%
-2.67
28.78%
31.45%
8.78%
27.40%
0.70
6.02%
5.32%
1.92%
7.40%
6.88
30.53%
23.65% 14.35%
27.53%
4.43
70.27%
65.84% 61.86%
69.21%
0.21
5.53%
5.32%
9.42%
6.27%
1.04
5.73%
4.69%
2.59%
1.22%
Cost Ratios
• xxx
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)
Liquidity Ratios
Current Ratio
Cash Ratio
5.68%
1.51
1.43
1.68
2.93
-28.99%
0.02
0.02
0.04
0.18
-14.70%
1.84
2.16
2.45
1.34
-12.83%
0.46
0.53
0.63
0.53
-36.13%
3.08
4.82
8.87
19.02
Leverage Ratios
Key Financial Performance Indicators
Indicators
Value (02/03/2012)
Market Capitalization (INR mn)
Total Enterprise Value (INR mn)
EPS (INR) *
PE Ratio (Absolute) *
Source: Annual Reports; Databases; Netscribes Analysis
Debt to Equity Ratio
Debt to Capital Ratio
Interest Coverage Ratio
Efficiency Ratios
Fixed Asset Turnover
Asset Turnover
Current Asset Turnover
Working Capital Turnover
Capital Employed Turnover
19.38%
2.68
2.24
4.09
1.57
4.69%
0.53
0.50
0.55
0.42
1.03
-4.71%
0.85
0.89
1.02
-15.37%
2.53
2.98
2.50
1.56
-5.83%
1.50
1.59
1.89
0.99
Note: * figures are as of 5th Mar 2012
SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT
Improved
Decline
18
Public: Domestic Company – Bartronics India Ltd. (3/3)
Key Business Segments
Key Geographic Segments
aaa
xxx
100%
100%
bbb
16%
18%
5%
3%
84%
82%
95%
97%
2008
2009
2010
2011
xxx
50%
100%
50%
0%
0%
2011
Business Highlights
Description
News
Overview
• xxx
Most Recent Auditor
• yyy
SAMPLE
Source: Annual Reports; Databases; Company Websites
Note: Business Segments and Geographic Segments are based on total revenues
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SAMPLE
Product Portfolio Matrix – Other Players (x/x)
Domestics Company
CCTV & Other Equipment
Access Control
Private Security
Foreign Company
CCTV & Other Equipment
Access Control
Private Security
Source: Company Websites; Databases
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Strategic Recommendations (x/x)
aaa
abc
•abc
xyz
•xyz
Source: Netscribes Analysis
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•Market Introduction
•Market Overview
•Types of Products
•Market Entry Strategy
•Vendor Opportunity
•Driver & Challenges
•Future Outlook
•Competition
•Strategic Recommendations
•Appendix
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Appendix
SAMPLE
Ratio
Calculations
Ratio
Calculations
Operating Margin
(Operating
Income/Revenues)*100
Current Ratio
Current Assets / Current
Liabilities
Net Margin
(Net Profit / Revenues) *100
Cash Ratio
{(Cash & Bank Balance +
Marketable Securities) / Current
Liabilities)}
Debt to Equity
Total Liabilities / Shareholders
Equity
Debt to Capital Ratio
{Total Debt / (Shareholders
Equity + Total Debt)}
Interest Coverage Ratio
EBIT / Interest Expense
Fixed Asset Turnover
Sales / Fixed Assets
Asset Turnover
Sales / Total Assets
Profit Before Tax Margin
Return on Equity (ROE)
(Income Before Tax / Revenues
*100
(Net Income / Shareholders
Equity)*100
Return on Capital (ROCE)
EBIT / (Total Assets – Current
Liabilities)*100
Return on Working Capital
(Net Income / Working Capital)
*100
Return on Assets
(Net Income / Total Assets)*100
Return on Fixed Assets
(Net Income / Fixed Assets) *100
Operating Costs (% of Sales)
(Operating Expenses / Sales)
*100
Current Asset Turnover
Sales / Current Assets
Administration Costs (% of
Sales)
(Administrative Expenses / Sales)
*100
Working Capital Turnover
Sales / Working Capital
Interest Costs (% of Sales)
(Interest Expenses / Sales) *100
Capital Employed Turnover
Sales / Shareholders Equity
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