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Security-service SMEs to grow at 18-20%, expects CRISIL Research

More than three-fourths of the SMEs in the industry are present in the manned guarding segment

Business Standard 

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Over the past three fiscal years, providers of security services, where (SMEs) have 60-65 per cent market share, have logged a compound annual growth rate (CAGR) of 18-20 per cent. expects them to grow at a similar pace over the next two fiscal years, too.

Growth is being driven by infrastructure development, urbanisation, the growing incidence of crime and terrorism, and the low police to population ratio.

In terms of infrastructure development, the overall urban housing stock and commercial stock has grown at a CAGR of five per cent in the last three years (calendar years 2015 to 2018) and is likely to continue the same momentum over the next three years as well. However, increasingly, development of residential townships has been gaining momentum in the outskirts of metro cities on account of availability of large land parcels.

According to United Nations data, 34 per cent of India’s population lived in urban areas in 2018. The number is expected to increase further to 37.4 per cent by 2025. This trend is also expected to drive growth for the industry.

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Data from the Bureau of Police Research and Development shows that in 2017, India had 150.75 police personnel per 100,000 people, compared with a sanctioned strength of 192.87. Such a yawning gap between actual and sanctioned police personnel will continue to drive the growth of the industry.

Further, a number of value-added services being offered by companies like site-specific training, supervisor patrols at all sites, high-tech surveillance systems, biometric technologies, remote-sensors and cyber security, among others, are expected to drive growth.

More than three-fourths of the SMEs in the industry are present in the manned guarding segment. Other segments, such as cash management services and electronic security services, are dominated by organised players because of the far higher investment requirements.

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Despite the high-growth phase, the industry has challenges such as tough licensing norms, unavailability of trained personnel, high attrition and heavy working capital requirements, and these will continue as key monitorables.


First Published: Tue, December 25 2018. 02:36 IST