market research report :security equipments and services market in india 2012

Security Equipment and Services Market – India

March 2012

Executive Summary

Market

Segment

� 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

– 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

� Security equipments and services market in India was valued at around INR xx bn in 2010 and is expected to reacha 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 thecorporate and household segments

� Currently, the market can be broadly segregated in to CCTV & other equipment, electronic access control, ITsecurity and private security service segments

CCTV and other Equipment Private Security ServicesElectronics Access Control Equipments

2SECURITY EQUIPMENT AND SERVICES MARKET - INDIA.PPT

Driver &

Challenges

Competition

CCTV and other Equipment

� Driver

– Government demand

– Corporate demand

– Retail and residential sector demand

� Challenges

– High duty and taxation structure

– Competition from unorganized players

Private Security Services

� Driver

– Insufficient Police Protection

– Cost of Electronics

� Challenges

– Lack of proper training

– Fire arms not allowed

Electronics Access Control Equipments

� Driver

– 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

– Lack of awareness towards security and availability of cheaper alternatives

– Lack of end to end solution providers

Domestics Player Foreign Player

Bartronics India Ltd Bosch Ltd. Honeywell International Inc UTC Fire & Security

•Market Introduction

•Market Overview

•Types of Products

•Market Entry Strategy

•Vendor Opportunity



•Driver & Challenges

•Future Outlook

•Competition

•Strategic Recommendations

•Appendix

Market Introduction – Products and Services

Security Equipment and Services

CCTV

Biometrics

Electronics Access Control

Equipments

Manned Security Service

Private Security Services

Detective Service

CCTV and other Equipment

IT Security


Intercom

Intrusion Detection

Others (X-Ray, Metal

Detector)

Smart Card

Proximity Card

Swipe Card

ATM Security

Cash Transportation

VIP Security

Special Event Security

Management (Exhibition,

Marriage, Common

Wealth Game)

Security Equipment and Services – Market Overview

2014e2013e2012e20112010 2015e

INR bn

xx

d

c

b

a

0

IT SecurityElectronic Access ControlCCTV & Other Equipment Private Security Service

Market Size & Growth Figures


Source: Security Today; Business Standard; ET; Business Line

2014e2013e2012e20112010 2015e

CCTV Private security serviceIT SecurityEAC

20-- 20--e 20--e

Demand for CCTV & other equipment is robust and growth

is expected to accelerate in the future

•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

Overview – CCTV & Other Equipment Market Size and Growth – CCTV & Other Equipment

INR bn

d

c

b

a

0

2015e

j

xx

2013e

h

2012e

g

2011

f

2010

e

i

2014e


Intrusion Detection

Intercom

Others

CCTV

•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%

•India is an import-driven market with ~60% of

security and surveillance equipment imported

by foreign manufacturers with local presence

or domestic importers/distributors

Source: Security Today; Business Standard; ET; Business Line

2015e2013e2012e20112010 2014e

Market Segmentation (2009)

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%

Awareness among corporate about security is creating huge

demand for electronic access systems

•The early adopters for electronic accesscontrol (EAC) were IT/ITES (Call centers/BPO )

•Electronic access control equipments havegradually gained popularity among majorcorporations

�With the increase in employees, it has becomedifficult for corporations to manage securitymanually and are thus resorting to electronicsecurity systems

Overview – Electronic Access Control (1/2) Market Size and Growth - EAC

2015e

xx

INR bn

d

c

b

a

0

j

2014e

i

2013e

h

2012e

g

2011

f

2010

e


�Various banks, financial services, insurance,service industry, government agencies, publicsector undertakings, ministries and manufacturingsector are adopting electronic access controlmechanism

•Some electronic access control systemsincludes Card Based (Proximity Cards, SmartCards, Legacy Technology Based Cards),Biometrics Based (Fingerprint, FaceRecognition, Voice/Signature Verification,Hand Geometry, & Iris Recognition)

Source: Security Today; Union Budget 2009-10

Market Segmentation (2009)

Biometrics

Smart Cards

Swipe Cards

Proximity Cards

Evolution of technology has also brought in threats from the

cyber space which in turn boosts the market further

•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

Overview – Electronic Access Control (2/2) Market Size and Growth – IT Security

c

b

INR bn

e

d

a

0

xx

2015e

k

2014e

j

2013e

i

2012e

h

2011

g

2010

f


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

Source: Communication Today

Market Segmentation – Sales (2011)

SSN/VPN

IPS

Content Management

Firewall

UTM

SAMPLE US, UK, Germany, Japan, and Israel are major exporters to

India

Accounts for

nearly 45% of

Indian imports

Emerging threat to Indian

manufacturers from

cheaper Chinese goods

Exporters from Hong

Kong, Taiwan, Korea

and Singapore

compete on price

Israel

U.K. Germany

Japan


• 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

S.E. Asia is major

source of smuggled

goods for grey

market

Source: US Commercial Service; Israel Economic Mission in India

Major exporters

Minor exporters

Hong Kong, China, Singapore, Taiwan, Korea

Private security business is experiencing huge demand

primarily due to terror threats

•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

Overview – Private Security Service Market Size and Growth – Private Security Services

INR bn

d

c

b

a

0

e

xx

j

i

hg

f


�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

– Ratio of private security personnel to police in India is

2:1 and will soon reach 3:1

•Besides hospitality industry, demand is driven

by private firms in manufacturing, retail, real

estate, hospital as well as schools and colleges

Segmented Market Share (2009)

Security guards

account for majority

of the revenue

Organized

Unorganized

Source: India PE; Financial Express; IBEF; Security Management; India Journal

0

2010 2015e2014e2013e2012e2011

SAMPLE Government had passed Private Security Regulation Act and

permits CISF deployment for security as well

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

Government of India has passed a Regulation “Private Security Agencies (Regulation) Act, 2005”

• 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 oftrained personnel

• Various state governments have collaborated with Central Association of Private Security Industry to provide training toguards, wherein the government bears the expenditure


Source: CommOnlii; Indian Express

FDI

CISF

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

� 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

� 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

abc India accounts for the highest proportion of security

service installations

Geographic distribution

xxx

yyy

•xxx


www

zzz

Source: Security Today

SAMPLE Distribution Model – Indian Security Equipment Industry

Manufacturer Distributor End User

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


System Integrator Installers

OEM

Wholly owned subsidiary

Source: Security Today; Netscribes Analysis

Drivers & Challenges – CCTV & Other Equipment

Challenges

High duty and taxation structure


Drivers

Government demand

Corporate demand

Retail and residential sector demand

High duty and taxation structure

Competition from unorganized players

Future Outlook

Future will see reduction of duties and taxes, shift toward IP

and video analytics technologies and PE investment

xxx yyy

Duties and Taxes Products


xxx yyy

zzz

Private Equity

Major Public Companies - Summary

241,801.4

2,458,395.3

0

150,000

Net Profit/Loss

537.8

633.1

1,355.1

Size of the Bubble represents Market Capitalization in INR mn


Source: Annual Reports, Databases Note: All figures are in INR mn and are based on the latest financials available

-150,000

-11,000,000 0 11,000,000 22,000,000

Total income

cccbbb eeedddaaa

SAMPLE Public: Domestic Company – abc

Company Information Offices and Centres – India

Corporate Address

Tel No.

Fax No.

Website

Year of Incorporation

Ticker Symbol

Stock ExchangeHead Office


Source: Annual Reports; Databases; Company Websites

Key People

Products and Services

Stock Exchange

Category Products/Services

Name Designation

Note: The list of products and services is not exhaustive

HyderabadHead Office

Public: Domestic Company – Bartronics India Ltd. (2/3)

Financial Snapshot Key Ratios

Financial Summary

• xxx

Particulars y-o-y change

(2011-10)2011 2010 2009 2008

Profitability Ratios

Operating Margin -5.08 17.34% 22.42% 22.73% 23.01%

Net Margin 0.75 11.21% 10.46% 3.47% 17.39%

Profit Before Tax Margin -5.78 10.11% 15.89% 7.02% 21.42%

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%

Return on Working Capital -2.67 28.78% 31.45% 8.78% 27.40%

Return on Assets 0.70 6.02% 5.32% 1.92% 7.40%

Return on Fixed Assets 6.88 30.53% 23.65% 14.35% 27.53%

Cost Ratios

Operating costs (% of Sales) 4.43 70.27% 65.84% 61.86% 69.21%

Total Income Net Profit/Loss

0

INR mn

a

b

c

0

INR mn

a

b

2011201020092008


• xxx

Key Financial Performance Indicators

Indicators Value (02/03/2012)

Market Capitalization (INR mn)

Total Enterprise Value (INR mn)

EPS (INR) *

PE Ratio (Absolute) *

Operating costs (% of Sales) 4.43 70.27% 65.84% 61.86% 69.21%

Administration costs (% of

Sales)0.21 5.53% 5.32% 9.42% 6.27%

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 -12.83% 0.46 0.53 0.63 0.53

Interest Coverage Ratio -36.13% 3.08 4.82 8.87 19.02

Efficiency Ratios

Fixed Asset Turnover 19.38% 2.68 2.24 4.09 1.57

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

Working Capital Turnover -15.37% 2.53 2.98 2.50 1.56

Capital Employed Turnover -5.83% 1.50 1.59 1.89 0.99

Improved DeclineSource: Annual Reports; Databases; Netscribes Analysis Note: * figures are as of 5th Mar 2012

Public: Domestic Company – Bartronics India Ltd. (3/3)

Key Business Segments Key Geographic Segments

0%

50%

100%

2011

100%

xxx

84% 82% 95% 97%

0%

50%

100%

2011

3%

2010

5%

2009

18%

2008

16%

xxx

bbbaaa


SAMPLE Source: Annual Reports; Databases; Company Websites

Business Highlights

Description News

Overview • xxx

Most Recent Auditor • yyy

Note: Business Segments and Geographic Segments are based on total revenues

SAMPLE Product Portfolio Matrix – Other Players (x/x)

Domestics Company CCTV & Other Equipment Access Control Private Security

�

�

�

�

�

�

�


�

� �

�

Source: Company Websites; Databases

Foreign Company CCTV & Other Equipment Access Control Private Security

�

�

�

�

� �

�

Strategic Recommendations (x/x)

abc xyz

aaa


Source: Netscribes Analysis

•abc •xyz

•Market Introduction

•Market Overview

•Types of Products

•Market Entry Strategy




•Driver & Challenges

•Future Outlook

•Competition

•Strategic Recommendations

•Appendix

Appendix

Ratio Calculations

Operating Margin(Operating Income/Revenues)*100

Net Margin (Net Profit / Revenues) *100

Profit Before Tax Margin(Income Before Tax / Revenues *100

Return on Equity (ROE) (Net Income / Shareholders Equity)*100

EBIT / (Total Assets – Current

Ratio Calculations

Current RatioCurrent Assets / Current

Liabilities

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)}

SAMPLE


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

Administration Costs (% of Sales)

(Administrative Expenses / Sales) *100

Interest Costs (% of Sales) (Interest Expenses / Sales) *100

Equity + Total Debt)}

Interest Coverage Ratio EBIT / Interest Expense

Fixed Asset Turnover Sales / Fixed Assets

Asset Turnover Sales / Total Assets

Current Asset Turnover Sales / Current Assets

Working Capital Turnover Sales / Working Capital

Capital Employed Turnover Sales / Shareholders Equity

Thank you for the attentionThe Security Equipment & Services Market report is a part of Research on India’s Information Technology series. For more detailed information or customized research requirements please contact:

Kalyan BangaPhone: +91 33 4064 6215

E-Mail: [email protected]


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market research report :security equipments and services market in india 2012

Business

market introductionmarket overviewtypes

inr xx bn

security equipment

cctv

security today

services market

market size

inr mn