The 26/11 Mumbai terror attacks clearly brought awareness about security to India. The following months saw frenetic activity with businesses showing interest and creating outlays for advanced electronic security solutions. The domestic market for e-security products and services is currently estimated between $400 million and $450 million. This has interested large multinationals such as Tyco International to participate in domestic projects? for instance, Tyco has provided access control and video solutions to Delhi International Airport?s Terminal 3; the firm has build the command centre that can track both airplanes and ?stitch? and analyse people as they walk through different parts of the airport. Naren K Gursahaney, president of Tyco Security Solutions, speaks to Goutam Das about the e-security business and the Indian market. Excerpts:
Is the business of electronic security recession-proof?
I wouldn?t say it is recession proof; it is probably more resilient than some other industries might be. We have a very strong recurring revenue base, whether it is for monitoring services for residential and commercial customers or because of maintenance contracts. Just under 60% of our revenue is recurring?this piece is very stable. The remaining parts of the business are products and system installation. We performed well during the economic downturn but we still saw revenue and profitability declines; not to the magnitude other industries may have seen.
Some security vendors are taking a platform approach, like Apple, and are getting developers to create applications. Isn?t Tyco in this mould?
If I look at the ADT business (a division of Tyco), we are primarily a systems integrator. We integrate products that we make but we also include products that third parties provide?all the major names in the industry. We are focused on what?s the right solution for customers. I wouldn?t say we are agnostic. We have got a very strong product platform and it would be used where these products meet the customer?s needs. Where we don?t? have the right product and the customer has a preference, we integrate products from other players.
Globally, Tyco?s largest vertical is the residential market. Give us a sense of who is buying in India.
What we have seen over the last couple of years is a growing awareness of security and the need to make more investments. We have seen growth in the transportation vertical. With new airports coming in place in the country and old airports being upgraded, there are significant security systems needed whether it is access control, video and in the fire alarm side. We are clearly seeing growth in that sector. Traditional commercial is also showing growth with construction going up. In BFSI, we have seen good growth on a global basis.
Retail is a big spender on e-security in developed markets. What kind of interest have you noticed in India?
The nature of retail in India over the last decade has changed dramatically and you are seeing more western store formats. There is now a greater awareness on theft, whether it is customer, employee or a more organised theft. Retailers in India are running about one and half-two times the rate of theft we see globally. There will be investments in trying to protect assets. At the same time, we are also seeing interest in store performance solutions?tracking people?the number of people coming into the store and how and where they are spending their time.
Is RFID taking off?
There is a lot of interest in RFID at this stage. The issue in the past was that the cost of the tag was so high that retailers could not afford to use them at the item level. Now they can.