Zicom to re-enter government, institutional security system biz

Company may look to acquire smaller player in the domestic market to gain scale

With the new government at the centre focusing on smart-cities and increasing use of technology for surveillance, BSE-listed Zicom Electronic Security Systems is planning to re-enter the government and institutional security market. The company had sold this unit of its to Schneider Electronic in 2010 for Rs  225 crore.

The company may also look for acquisitions of assets in this segment as it targets to scale fast, said senior officials.

“We had taken a sabbatical from entering this segment. Now with the non-compete agreement coming to an end we want to re-enter this segment. We feel that we are missing out on a huge opportunity. Moreover, we have developed a command and control software which is useful for city management, and now we want to monetise this,” said Pramoud Rao, MD, Zicom.

The company said that it is too early to give a revenue target, Rao is aiming to get atleast sales execution of Rs  50-100 crore by FY16.

Rao also added that the company is yet to decide whether they want to build the business from scratch or go for an acquisition. He is also aware that Zicom will be competing with players such as IBM, Cisco and others when eyeing the government and institutional business. “We have our strengths. IBM and Cisco are very strong in networking, we are not. But we are very strong in security solutions,” he added.

When asked if the sell off of its security system was in haste, Rao disagrees. “I think we got out of that business as lot of IT services firm started to eye the segment. Though we had good product we could never match their balance sheet. So we went ahead and encashed the value we had created. I think the timing was right. Since after that not much happened in the segment other than the Commonwealth Games. Now the market looks more competitive,” he added.

Zicom reported revenue of Rs  926 crore for FY14 a growth of 35 per cent y-o-y and net profit of s 44.62 crore. At present, the business caters to the residential and enterprises segment and also has presence in the Fire protection market in the Middle East. In terms of revenue contribution, the fire protection business contributes 65 per cent to the revenue and residential and enterprises contribute about 35 per cent. Over the last four years, Zicom has focused on the residential and enterprises segment which has grown well for the company. (Source: India Infrastructure, 2014).