Hyderabad: Fast growing demand from retail, automobile and logistics customers has helped barcode- and radio frequency-based identification (RFID) solutions provider Bartronics India Ltd more than triple its net profit to Rs4.55 crore in the three months to 31 March, a quarter in which it nearly doubled its sales.
Bartronics reported a total income of Rs18.62 crore in the fourth quarter of fiscal 2007, up from Rs9.63 crore last year. Net profit in the last quarter of fiscal 2006 was Rs1.47 crore. For the year to March 2007, the company reported an increase of 118.66% in revenues to Rs64.44 crore, up from Rs29.47 crore in the previous year, and a net profit of Rs13.46 crore.
In fiscal 2008, Bartronics expects its strong growth to continue. “We expect to close the current financial year with revenues of Rs200 crore and maintain a profit margin of 20%,” managing director and CEO Sudhir Rao said.
Investors and analysts see shares of the Hyderabad company, which listed on the Bombay Stock Exchange in January 2006 after a Rs48 crore initial share sale, as a stock that mirrors India’s booming retail and consumer sector.
“Premium solutions in the RFID sector, repeat orders from major overseas customers, and development of more than 100 solutions by our R&D and technology centre enabled us to achieve this,” Rao said. The company counts Hindustan Unilever Ltd, ITC Ltd, Whirlpool of India Ltd, Shoppers’ Stop Ltd, Pantaloon Retail (India) Ltd and Trinetra Supermarket Pvt. Ltd among its key clients in India.
Future growth of Bartronics, an analyst said, depends on how well the company can ramp up sales of smart cards, which work on chip-enabled technology and find use in credit cards and cellphone cards, and its ability to reduce prices of RFID tags. “The fate of the company clearly depends on the smart cards manufacturing,” said Sanjeev Rohra, an analyst who tracks small and mid-cap companies for Mumbai investment bank Edelweiss Capital Ltd.
Rohra added RFID could be a big opportunity for Bartronics, but the scale of demand for the technology in India is not clear given the high cost of tags. The cost of RFID tags are currently as high as Rs40 each, he said. Prototypes developed at Bartronics’ R&D centre helped with faster deployment.
“One of the main growth drivers during the financial year 2006-07 has been the solutions developed by us in the areas of materials and manpower tracking,” said Rao, adding that this has not only helped the firm in acquiring more customers, but also in reducing the turnaround time in solution deployment.
Bartronics completed some very large projects based on RFID technology for manufacturing, automobile, logistics, hardware and retail sectors. “Being a new technology area, this also ensured that the company provided premium solutions, thereby enhancing its profit margins,” Rao said.
Another factor that contributed to the growth was setting up of overseas branches for supporting customers in Malaysia, Dubai, Bangladesh and Sri Lanka. “This step also bore fruit this year as some of the customers in the supply-chain management sector rewarded the company with repeat assignments that were large-scale in nature and highly profitable,” Rao said.
Technopak Advisors, a retail consulting and research agency, predicts that by 2010, organized retailing in India will cross the $21.5 billion (Rs90,300 crore) mark from the current $7.5 billion.
India’s organized retail sector is growing by up to 40% annually—one of its fastest growing industries.
Rasul Bailay contributed to this story.