Security & Surveillance Market - India January 2009

Executive Summary SAMPLE Drivers: Significant boost in demand from government and businesses post Nov-08 attack Challenges: Lack of awareness ; Disorganized industry; High import duties and taxes; Lack of many comprehensive solution providers Market Drivers & Challenges Business model Competition Market size : Estimated at ~USD XX mn in 2008; x% of total security market (incl. services) Growth : Historic rate of y%: Forecast z% till 2010; x% p.a. until 2012 Import driven market CCTV and access control systems are major segments Northern region is the largest market followed by South India Government and industrial are largest customer segments; residential is very small Government and large enterprises purchase primarily through tenders while most private companies solicit quotations or consider referrals; retail is a recent new format The distributor model is important in the Indian market Organized sector : Estimated ~x players (y major and z mid-sized) Unorganized sector : Estimated at x units but concentrating on basic, low-end products Despite many unorganized players, organized sector accounts for x% of industry revenue Segments Future Outlook Demand for reduction in import duties and taxes may materialize IP and video analytics technologies are important in the future Private equity investment is expected to increase significantly at least till 2010

Drivers: Significant boost in demand from government and businesses post Nov-08 attack

Challenges: Lack of awareness ; Disorganized industry; High import duties and taxes; Lack of many comprehensive solution providers

Market size : Estimated at ~USD XX mn in 2008; x% of total security market (incl. services)

Growth : Historic rate of y%: Forecast z% till 2010; x% p.a. until 2012

Import driven market

CCTV and access control systems are major segments

Northern region is the largest market followed by South India

Government and industrial are largest customer segments; residential is very small

Government and large enterprises purchase primarily through tenders while most private companies solicit quotations or consider referrals; retail is a recent new format

The distributor model is important in the Indian market

Organized sector : Estimated ~x players (y major and z mid-sized)

Unorganized sector : Estimated at x units but concentrating on basic, low-end products

Despite many unorganized players, organized sector accounts for x% of industry revenue

Demand for reduction in import duties and taxes may materialize

IP and video analytics technologies are important in the future

Private equity investment is expected to increase significantly at least till 2010

Market Overview Segments Business Model Drivers & Challenges Competition Future Outlook Key Developments

Market Overview

Segments

Business Model

Drivers & Challenges

Competition

Future Outlook

Key Developments

The Indian market for security and surveillance products is robust and growth is expected to accelerate in the future The Indian security market including human guards, electronic security systems, intelligence systems, fire protection and detection systems is worth ~USD XX mn Security and surveillance systems account for ~USD XX mn in 2008, according to estimates of industry experts Historic and forecast growth rates were earlier estimated at x% However, following the Mumbai terror attacks, security spending is expected to surge by y% over the next two years at the least India is an import-driven market with ~z% of security and surveillance equipment imported by foreign manufacturers with local presence or domestic importers/distributors SAMPLE A 2006 B 2007 C 2008 E 2009 F 2010 G 2011 H 2012 +x% USD mn Overview Estimated Market Size and Growth Source: Assumptions & factors Consensus on 2007 market size: USD XX mn 2006-2008 growth rate: x% 2008-2010: Average growth of y% Post-2010: Average growth of z% Terror attacks in Nov-08 spurring growth in 2009 and 2010

The Indian security market including human guards, electronic security systems, intelligence systems, fire protection and detection systems is worth ~USD XX mn

Security and surveillance systems account for ~USD XX mn in 2008, according to estimates of industry experts

Historic and forecast growth rates were earlier estimated at x%

However, following the Mumbai terror attacks, security spending is expected to surge by y% over the next two years at the least

India is an import-driven market with ~z% of security and surveillance equipment imported by foreign manufacturers with local presence or domestic importers/distributors

Assumptions & factors

Consensus on 2007 market size: USD XX mn

2006-2008 growth rate: x%

2008-2010: Average growth of y%

Post-2010: Average growth of z%

CCTV followed by access control systems are products that have the maximum demand CCTV Cameras, housings, monitors, DVRs and NVRs Accounts for large share of security budgets Expected to continue growing the fastest Access Control Becoming a norm in most organizations Cost inhibits sale of quality products Intrusion detection Small market due to lack of awareness Cultural factors such as community living and reliance on human security inhibit market growth Intercom (Audio and Video) Used primarily in apartments Retrofits negligible; mostly sold through builders offering it as a value add feature Others (X-rays, metal detectors etc.) Greater demand from government & retail establishments as security efforts are stepped up SAMPLE Product Categories Share of total market Source: Security Today “The Indian Security Industry Market”, May 2007 CCTV Z% Access Control y% Others x% Intercom w% Intrusion Detection v% Proximity Cards a% Swipe Cards d% Smart Cards c% Biometrics b%

CCTV

Cameras, housings, monitors, DVRs and NVRs

Accounts for large share of security budgets

Expected to continue growing the fastest

Access Control

Becoming a norm in most organizations

Cost inhibits sale of quality products

Intrusion detection

Small market due to lack of awareness

Cultural factors such as community living and reliance on human security inhibit market growth

Intercom (Audio and Video)

Used primarily in apartments

Retrofits negligible; mostly sold through builders offering it as a value add feature

Others (X-rays, metal detectors etc.)

Greater demand from government & retail establishments as security efforts are stepped up

Drivers & Challenges Rise in terrorist attacks and the November 2008 attack in Mumbai significantly pushing demand Retail and residential sector demand Corporate demand Government demand Drivers Lack of end-to-end solution providers High duties and taxes inflating prices Disorganized market Lack of awareness and attitude toward security Challenges

The market includes many unorganized participants but sales is concentrated with the largest players due to their capabilities The competitive landscape comprises organized and unorganized players Organized sector is estimated to comprise of ~x players including y major and z medium-sized manufacturers In comparison the informal or organized is estimated at x units However, industry estimates indicate that the organized sector accounts for bulk of sales Prominent organized players are Foreign companies with Indian subsidiaries Local companies in partnership with foreign firms Manufacturers of high-end security systems are few in number with the informal sector geared toward manufacturing basic, cheap equipment SAMPLE Competitive Landscape Market Structure Source: US Commercial Service “Surveillance Equipment – India”, Nov 2007; US Commercial Service “Safety and security for corporates – India”, Nov 2007; Business Standard “There's no business like security business”, Jan 2008; Israel Economic Mission in India “India Security Market 2004” y% b% a% Revenue Organized x% Players Unorganized 19%

The competitive landscape comprises organized and unorganized players

Organized sector is estimated to comprise of ~x players including y major and z medium-sized manufacturers

In comparison the informal or organized is estimated at x units

However, industry estimates indicate that the organized sector accounts for bulk of sales

Prominent organized players are

Foreign companies with Indian subsidiaries

Local companies in partnership with foreign firms

Manufacturers of high-end security systems are few in number with the informal sector geared toward manufacturing basic, cheap equipment

The future will likely see reduction of duties and taxes, shift toward IP and video analytics technologies, and PE investment Future Outlook Government may accede to industry demand for reduction in import duties and taxes to reduce cost and give citizens affordable access to security IP-based surveillance and video analytics are considered to be the future in India Private equity investment is expected to increase significantly at least till 2010 Duties & taxes Private Equity Products

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