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Market Research Report :Security Equipments and Services Market in India 2012


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Indian security equipment and services market is primarily boosted by the rapid urbanization and the ongoing globalization wherein need for robust and updated security technologies is gaining momentum with each passing day. Off late criminal activities coupled with the dawn of terrorism has triggered the demand for both security equipments and private security services by leaps and bounds. The industry is expected to attain a CAGR of more than 25% to reach nearly INR 600 bn by 2015.

The market primarily comprises of multiple segments including CCTV & other equipments, electronic access control, IT security and private security services. “Basically the demand for security equipment is seen mostly from the residential and commercial and enterprise segments of the market, wherein frequent criminal activities and the lurking danger of potential terrorist attack is stimulating the market by manifolds,” says Mr. Kalyan Banga, Product Manager at Netscribes. The market gets a further boost from occasional special events such as the recent commonwealth games held in New Delhi. Players operating in the Indian market space hail mostly from the unorganized space, on the contrary, 80% of the revenue generated within the market comes from the organized market, i.e. the players with ISO certification. “Speaking of players, it is observed that vendors in the market prefer to import products primarily from UK, Germany, Japan and Israel,” added Kalyan.

Government of India (GoI) has also taken various initiatives intended for the upliftment of the overall industry, which in turn acts as a boon for the players operating in the market. Allowance of FDI and the permission for CISF deployment as private security forces happen to be some of the major initiatives taken so far. Additionally, GoI has also signed pacts with Israel for the facilitation of better homeland security. State governments have also played their role by entering into collaborations with CAPSI for the setting up of training centres for security guards, so as to provide an enhanced security cover to the nation.

With constant growth in competition, market entry strategy is the key to success for any new vendor looking to venture into the industry. “Analysis shows, import of equipments happens to be the most preferred route for vendors,” noted Kalyan. Additionally, vendors also collaborate with local firms to distribute their products or indulge in self production of equipments.

The report begins with an illustration which briefs about the several segments within the market. The segments have been well highlighted for the better understanding of readers. Market overview section begins with the graphical representation of the overall market size and forecasted growth figures and the break up of these figures for the years 2010, 2012 and 2015. Moving along, the report elaborates on each individual market s

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Market Research Report :Security Equipments and Services Market in India 2012

  1. 1. Security Equipment and Services Market – IndiaMarch 2012
  2. 2. Executive Summary 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 Market 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 – Biometrics is a foolproof system best suited for the private and Government sector organizations Segment – 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 Electronics Access Control Equipments Private Security Services Driver Driver Driver – Government demand – Increasing security breaches – Insufficient Police – Corporate demand – Demand from upcoming government projects and Protection – Retail and residential sector proposals – Cost of Electronics Driver & demand – Economic growth and rise in employable population Challenges Challenges – Demand for better security from increasing R&DChallenges – High duty and taxation centers – Lack of proper training – Fire arms not allowed structure Challenges – Competition from unorganized – Lack of awareness towards security and availability of players cheaper alternatives – Lack of end to end solution providers Domestics Player Foreign PlayerCompetition Bartronics India Ltd Bosch Ltd. Honeywell International Inc UTC Fire & Security SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 2
  3. 3. •Market Introduction•Market Overview•Types of Products•Market Entry Strategy•Vendor Opportunity•Driver & Challenges•Future Outlook•Competition•Strategic Recommendations•Appendix SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 3
  4. 4. Market Introduction – Products and Services Security Equipment and Services Electronics Access ControlCCTV and other Equipment Private Security Services Equipments CCTV Manned Security Service Biometrics IT Security Detective Service Intercom ATM Security Smart Card Cash Transportation Intrusion Detection Proximity Card VIP Security Special Event Security Others (X-Ray, Metal Management (Exhibition, Swipe Card Marriage, Common Detector) Wealth Game) SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 4
  5. 5. 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 2015e 20-- 20--e 20--e CCTV EAC IT Security Private security serviceSource: Security Today; Business Standard; ET; Business Line SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 5
  6. 6. Demand for CCTV & other equipment is robust and growth is expected to accelerate in the future Overview – CCTV & Other Equipment Market Size and Growth – CCTV & Other Equipment •Demand for security equipments, both for INR bn residential and commercial purpose, has d increased many folds in recent time j c xx i These equipments include Close Circuit Camera h (CCTV), Intrusion Detection, Intercom and others b g f (Metal Detector and X-Ray’s) a e •Market size of CCTV hovered at INR xx bn in 0 2010 2011 2012e 2013e 2014e 2015e 2011 and grew at yy% CAGR However, following the terror attacks, security Market Segmentation (2009) spending is expected to surge by 40-50% CCTV •India is an import-driven market with ~60% of Others security and surveillance equipment imported Intercom by foreign manufacturers with local presence Intrusion Detection or domestic importers/distributorsNote: *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 SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 6
  7. 7. Awareness among corporate about security is creating huge demand for electronic access systems Overview – Electronic Access Control (1/2) Market Size and Growth - EAC •The early adopters for electronic access INR bn control (EAC) were IT/ITES (Call centers/BPO ) d j •Electronic access control equipments have xx i c gradually gained popularity among major h corporations b f g With the increase in employees, it has become e a difficult for corporations to manage security manually and are thus resorting to electronic 0 security systems 2010 2011 2012e 2013e 2014e 2015e Various banks, financial services, insurance, service industry, government agencies, public Market Segmentation (2009) sector undertakings, ministries and manufacturing sector are adopting electronic access control Proximity Cards mechanism Swipe Cards •Some electronic access control systems Smart Cards includes Card Based (Proximity Cards, Smart Biometrics Cards, Legacy Technology Based Cards), Biometrics Based (Fingerprint, Face Recognition, Voice/Signature Verification, Hand Geometry, & Iris Recognition)Source: Security Today; Union Budget 2009-10 SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 7
  8. 8. 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) Market Size and Growth – IT Security •Tremendous advancement in the information INR bn technology area has also lead to the evolution e xx k of state-of-the-art IT security systems d j i •Need for the robust and cost-effective security c g h f solutions is gaining a steady momentum in b India a •Valued at approximately INR yy bn in 2011-12, 0 the network security market is growing at a 2010 2011 2012e 2013e 2014e 2015e CAGR of zz% Market Segmentation – Sales (2011) •Basically the market comprises of segments including UTM (Unified Threat Management), UTM Firewall, IPS, SSN/VPN and content Firewall management IPS •The primary drivers for this segment happens SSN/VPN to be the emergence of Smartphones and Content Management cloud computing •The market also exhibits a strong competition amongst established and esteemed playersSource: Communication Today SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 8
  9. 9. US, UK, Germany, Japan, and Israel are major exporters to India SAMPLE Accounts for nearly 45% of Emerging threat to Indian Indian imports U.K. Germany 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 developmentSource: US Commercial Service; Israel Economic Mission in India SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 9
  10. 10. Private security business is experiencing huge demand primarily due to terror threats Overview – Private Security Service Market Size and Growth – Private Security Services •Private security service primarily include INR bn manned guards, detective services, d j investigation and security consultancies xx i c h •Manned based security service is experiencing g b f high growth rate primarily due to threat form e a terror groups 0 Demand for security service has surged after 2010 2011 2012e 2013e 2014e 2015e terror attack Private Security workforce in India is ~5.5 mn Segmented Market Share (2009) – Only 20% of workforce is constituted by women – Ratio of private security personnel to police in India is Organized 2:1 and will soon reach 3:1 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 revenueSource: India PE; Financial Express; IBEF; Security Management; India Journal SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 10
  11. 11. 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 They have to maintain a register of Guards should have received providers have to obtain a their employees, issue identity cards minimum 160 days training before license from the government and their uniforms and badges 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 • 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 FDI 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 premisesSource: CommOnlii; Indian Express SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 11
  12. 12. abc India accounts for the highest proportion of security service installations Geographic distribution •xxx xxx yyy www zzzSource: Security Today SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 12
  13. 13. 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 Distributor End User System Integrator Installers OEM Wholly owned subsidiarySource: Security Today; Netscribes Analysis SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 13
  14. 14. 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 SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 14
  15. 15. Future will see reduction of duties and taxes, shift toward IPand video analytics technologies and PE investment Future Outlook Duties and Taxes Products xxx yyy Private Equity zzz SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 15
  16. 16. Major Public Companies - Summary Net Profit/Loss 150,000 Size of the Bubble represents Market Capitalization in INR mn 2,458,395.3 1,355.1 241,801.4 537.8 0 633.1 -150,000 -11,000,000 0 11,000,000 22,000,000 Total income aaa bbb ccc ddd eeeSource: Annual Reports, Databases Note: All figures are in INR mn and are based on the latest financials available SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 16
  17. 17. Public: Domestic Company – abc Company Information Corporate Address SAMPLE Offices and Centres – India Tel No. Fax No. Website Year of Incorporation Ticker Symbol Stock Exchange Head Office Hyderabad Products and Services Category Products/Services Key People Name DesignationSource: Annual Reports; Databases; Company Websites Note: The list of products and services is not exhaustive SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 17
  18. 18. Public: Domestic Company – Bartronics India Ltd. (2/3) Financial Snapshot Key Ratios Total Income Net Profit/Loss y-o-y change Particulars 2011 2010 2009 2008 INR mn INR mn (2011-10) a a Profitability Ratios Operating Margin -5.08 17.34% 22.42% 22.73% 23.01% b Net Margin 0.75 11.21% 10.46% 3.47% 17.39% b Profit Before Tax Margin -5.78 10.11% 15.89% 7.02% 21.42% c Return on Equity 0.31 17.09% 16.78% 6.62% 17.29% Return on Capital Employed -3.04 15.82% 18.86% 18.46% 11.38% 0 0 Return on Working Capital -2.67 28.78% 31.45% 8.78% 27.40% 2008 2009 2010 2011 Return on Assets 0.70 6.02% 5.32% 1.92% 7.40% Financial Summary Return on Fixed Assets 6.88 30.53% 23.65% 14.35% 27.53% Cost Ratios • xxx Operating costs (% of Sales) 4.43 70.27% 65.84% 61.86% 69.21% Administration costs (% of 0.21 5.53% 5.32% 9.42% 6.27% Sales) Interest costs (% of Sales) 1.04 5.73% 4.69% 2.59% 1.22% Liquidity Ratios Current Ratio 5.68% 1.51 1.43 1.68 2.93 Cash Ratio -28.99% 0.02 0.02 0.04 0.18 Leverage Ratios Debt to Equity Ratio -14.70% 1.84 2.16 2.45 1.34 Debt to Capital Ratio Key Financial Performance Indicators -12.83% 0.46 0.53 0.63 0.53 Interest Coverage Ratio -36.13% 3.08 4.82 8.87 19.02 Indicators Value (02/03/2012) Efficiency Ratios Market Capitalization (INR mn) Fixed Asset Turnover 19.38% 2.68 2.24 4.09 1.57 Total Enterprise Value (INR mn) Asset Turnover 4.69% 0.53 0.50 0.55 0.42 Current Asset Turnover -4.71% 0.85 0.89 1.02 1.03 EPS (INR) * Working Capital Turnover -15.37% 2.53 2.98 2.50 1.56 PE Ratio (Absolute) * Capital Employed Turnover -5.83% 1.50 1.59 1.89 0.99Source: Annual Reports; Databases; Netscribes Analysis Note: * figures are as of 5th Mar 2012 Improved Decline SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 18
  19. 19. Public: Domestic Company – Bartronics India Ltd. (3/3) Key Business Segments Key Geographic Segments xxx aaa bbb 100% 100% 5% 3% 16% 18% xxx 50% 100% 50% 95% 97% 84% 82% 0% 0% 2011 2008 2009 2010 2011 Business Highlights Description News Overview • xxx Most Recent Auditor • yyy SAMPLESource: Annual Reports; Databases; Company Websites Note: Business Segments and Geographic Segments are based on total revenues SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 19
  20. 20. 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 SecuritySource: Company Websites; Databases SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 20
  21. 21. Strategic Recommendations (x/x) aaa abc xyz •abc •xyzSource: Netscribes Analysis SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 21
  22. 22. •Market Introduction•Market Overview•Types of Products•Market Entry Strategy•Vendor Opportunity•Driver & Challenges•Future Outlook•Competition•Strategic Recommendations•Appendix SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 22
  23. 23. AppendixRatio SAMPLE Calculations Ratio Calculations (Operating Current Assets / CurrentOperating Margin Current Ratio Income/Revenues)*100 LiabilitiesNet Margin (Net Profit / Revenues) *100 {(Cash & Bank Balance + Cash Ratio Marketable Securities) / Current (Income Before Tax / Revenues Liabilities)}Profit Before Tax Margin *100 Total Liabilities / Shareholders Debt to Equity (Net Income / Shareholders EquityReturn on Equity (ROE) Equity)*100 {Total Debt / (Shareholders Debt to Capital Ratio EBIT / (Total Assets – Current Equity + Total Debt)}Return on Capital (ROCE) Liabilities)*100 Interest Coverage Ratio EBIT / Interest Expense (Net Income / Working Capital)Return on Working Capital *100 Fixed Asset Turnover Sales / Fixed AssetsReturn on Assets (Net Income / Total Assets)*100 Asset Turnover Sales / Total AssetsReturn on Fixed Assets (Net Income / Fixed Assets) *100 (Operating Expenses / Sales) Current Asset Turnover Sales / Current AssetsOperating Costs (% of Sales) *100Administration Costs (% of (Administrative Expenses / Sales) Working Capital Turnover Sales / Working CapitalSales) *100Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Capital Employed Turnover Sales / Shareholders Equity SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 23
  24. 24. Thank you for the attentionThe Security Equipment & Services Market report is a part of Research on India’s InformationTechnology series. For more detailed information or customized research requirements pleasecontact:Kalyan BangaPhone: +91 33 4064 6215E-Mail: kalyan.banga@netscribes.comResearch on India is a product of Netscribes (India) Pvt. Ltd. Research on India is dedicated to disseminating information and providing quickinsights on “hot” industries in India and other emerging markets. Track our new releases and major updates in these industries onAbout NetscribesNetscribes is a knowledge-consulting and solutions firm with clientele across the globe. The company’s expertise spans areas of investment & business research, business &corporate intelligence, content-management services, and knowledge-software services. At its core lies a true value proposition that draws upon a vast knowledge base.Netscribes is a one-stop shop designed to fulfil clients’ profitability and growth objectives.Disclaimer: This report is published for general information only. Although high standards have been used the preparation, Research on India, Netscribes (India) Pvt. Ltd.or “Netscribes” is not responsible for any loss or damage arising from use of this document. This document is the sole property of Netscribes (India) Pvt. Ltd. and priorpermission is required for guidelines on reproduction. SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT 24