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"Sorry, but I have run out of business cards." One often hears this at various events, conferences, etc. Also, it's cumbersome to carry a stack of business cards in your suit pocket. Imagine a wristband with your contact details and official email address loaded on it. All you have to do is flash the wristband with the person you wish to exchange your card with. It's simple and futuristic, thanks to the radio frequency identification technology (RFID).
Riding on this technology is Rasilant Technologies, a Mumbai-based start-up founded by Sahil Anand and Shiladitya Mukhopadhyaya, two college friends who wanted to do "something" on their own. Anand came from a business family; it accepted his business proposal. Mukhopadhyaya, however, had to try hard to convince his family and work for its backing.
The two friends saw an opportunity in RFID; they thought as the technology was in a nascent stage in India, it offered good growth potential. "We saw an opportunity, as the market was very unorganised. There were only a few big companies and these weren't focusing on RFID as such," says Anand, co-founder and chief executive officer, Rasilant Technologies.
How does RFID work? Mukhopadhyaya, co-founder and chief technology officer, says: "RFID is basically a long-distance auto identification technology. It finds application primarily as advancement to barcode-based systems. For example, you don't have to worry about your money or coupons at a concert. We load your money on your wristbands and you are free to flash it at the counter. Or, enter the venue and exit at ease, without showing the ticket or a stamp."
He cites the example of a business conference. "People exchange cards, pick up brochures, etc. Often, they run out of business cards. With RFID, all your data are stored on your wristband and that automatically transfers your contact details to the other person's phone."
This is awe-inspiring. But is India, usually a laggard in adopting new technologies, ready to spend money on these innovations? An investment banker involved with the sector says RFID is yet to pick up pace. "The adoption of RFID in India continues to be a challenge because of the costs involved. Yes, it makes tasks such as security and inventory management, etc, easier. But, historically, Indian companies are apprehensive about spending money on technology when the same work can be done by cheaper manual labour," he says.
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RFID is growing in India, with its application cutting across physical access control, transit, cashless payments, animal identification, supply chain and retail. The growth of RFID technology is directly related to the growth in the automatic identification and data capture sector, a sunrise industry in India, expected to stand at about $100 million in the next two years. More specific to electronic access control, early adopters such as information technology, banking and services companies have high penetration, owing to compliance and regulatory reasons. Though the penetration of access security is growing in other verticals in the enterprise space, the vast majority of companies are not ready to invest in the new technology, as a cheaper manual security force is easily available. Rasilant has a very good mix of a strong vision for technology, dynamic and energetic people and a strong focus on customer needs. It has a sound business model and is very focused on its strengths. And, it is delivering on that, rather than trying to play in a broad spectrum. One area in which Rasilant has to work is alliances and partnerships. Since it is a small company trying to gain a foothold, it is imperative for it to partner a wider range of companies and leverage these partnerships to build customer confidence. Ranjit Nambiar, director (sales, identity & access management), South Asia, HID Global |
"We continue to push companies to adopt RFID, but they are apprehensive. Sometimes, a deal takes six to nine months to be signed but we are at it. Right now, we are spreading knowledge on RFID in the Indian market and as this increases slowly and steadily, we will be there to reap the gains," say Anand and Mukhopadhyaya.
"Things are changing now. Hopefully, in the next three to four years, the growth momentum would pick up," Anand says.
Industry experts say the office automation and security sector in India is pegged at $500 million and automatic identification and data capture (AIDC), which is where RFID comes in, currently stands at about $100 million.
Since 2008-09, the company has been growing at a compound annual rate of about 20 per cent. With modest revenue of Rs 35 lakh in 2006-07, Rasilant ended 2011-12 with revenue of about Rs 20 crore. For 2012-13, it expects to clock revenues of Rs 25 crore.
This is why Rasilant is focusing on asset-tracking projects. RFID-based asset tracking systems would be the norm for warehouse and inventory management systems in the near future. Rasilant is banking on the logistics and warehousing industry to drive growth in the coming years.
Though the acceptance of this new technology is slow, it's rising steadily. Saurabh Kumar, the company's chief operating officer, says a new disruptive technology takes time to be adopted. It needs acceptance from a big conglomerate; then, others notice it. For RFID, this happened when Walmart, the US retail major, decided to convert its systems to RFID and asked its global vendors to follow. Kumar adds though the process is still underway, this has given RFID a foothold. "RFID equipment is costly; the Walmart news brought down prices, as more and more companies started looking at it," he says.
After the Centre approved the inflow of foreign direct investment (FDI) into the retail sector in a major way, Rasilant is rubbing its hands with glee. Since the processes of multinational companies are streamlined and similar across the globe, a company such as Walmart would urge its vendors in India to use RFID. This is where Rasilant comes into the picture. The start-up is constantly pitching to vendors mandated by their global buyers to streamline their processes with a multinational company. Once the inflow of FDI into India's retail sector is substantial, RFID players in India, including Rasilant, would get the push they have been seeking to bring RFID into the limelight.
Though there are bigger players in the Indian market, such as Bartronics India, these companies are focusing on barcodes. Smaller players which entered the business because of short-term gains are either on their way out or have already left. The sector is unorganised, with only a few serious entities. An industry expert involved in supplying barcodes and RFID hardware said, "There is huge potential in the market and people have just recently started to take note of this. There is enough space for new companies such as Rasilant and major players to work alongside, and the latter wouldn't look at smaller contracts. This gives Rasilant an opportunity to create its space."
Funding
Since its inception in 2005-06, the company has worked on funds invested by the founders. "This is the time to shift gears and, therefore, we are approaching VC (venture capital) and PE (private equity) companies for funding," says Mukhopadhyaya. The company plans to raise $4-5 million to expand its business in cities such as Delhi and Bangalore, as well as a few smaller towns.
But can't one consider banks for funding of this sort? Why a PE or a VC fund? "This will give us a valuation and allow us to grow beyond what bank loans (which require collateral) can, especially in new markets in the UAE and Southeast Asian regions," says Mukhopadhyaya.
And, be it Instagram, WhatsApp or Rasilant, a ballpark valuation is important to making it big.
The future
To de-risk its business, Rasilant has diversified into office automation, ranging from fingerprint scanners to closed-circuit television cameras, an area in which it has worked with Zicom. Kumar says this segment currently earns the highest revenue for the company. It would also provide a cushion till India wakes up to RFID, he adds.
Ask Mukhopadhyaya what technology excited him the most after RFID and he is quick to quip, "It's near-field communication, and we are already working on it."
