Mumbai: Mumbai-based Zicom Electronic Security Systems Ltd has sold its core business to French company Schneider Electric SA for Rs225 crore in a all-cash deal.
The company will use the money to repay the Rs90 crore debt on its books and diversify into new businesses such as renewable energy and aviation engineering, said founder and chairman Manohar Bidaye.
Zicom’s main business relates to integrated security solutions such as closed-circuit television surveillance, access control cards and alarm systems, contributing 52% of the company’s Rs375 crore revenue and 48% of profit in the nine months ended December 2009. Zicom decided to exit the business as increased demand from large hotels, government installations and office buildings called for a high degree of sophistication.
Graphic: Paras Jain/Mint
“The new business needs a huge amount of investments going forward, so we thought it was best to pass it on to a company which had the technology,” said Bidaye.
Zicom will continue to sell home security equipment and provide technology to smaller offices through its retail arm. Besides, the company has also retained its fire safety business in Dubai known as Unisafe Fire Protection Specialist Llc.
“We will use the extra cash from this deal to invest in renewable energy like wind and solar energy and also in servicing aeroplane parts, details of which are still being worked out,” Bidaye said. “We are confident on entering these businesses on our own, but we are planning for some acquisitions in India.”
For France-based Schneider Electric, this is the third acquisition in 2009-10.
“The Indian market is very important to us and growing,” said Olivier Blum, country president, Schneider Electric India. “We have close to 8,000 employees in India, 12 factories doing research and development and manufacturing here. This is our fourth biggest market behind France, US and China and we expect to grow 20-25% going forward.”
Schneider will inherit Rs80 crore worth of projects, a Rs179 crore turnover business and a Rs1,400 crore security systems market growing at 30%, Bidaye said.