India is the fifth largest market for Swedish security company Gunnebo Industrier AB. It will be the fourth largest next year, because of its rising need for security systems, said chief executive and president Per Borgvall. Gunnebo had an revenue of €580 million (Rs 4,025 crore today) in the previous year, 6% of it coming from India. The country’s growing economy and its fight with terror are driving the demand, Borgvall said in an interview on Thursday during a visit to the capital. Edited excerpts:
Considering the global economic situation, companies are looking at reducing costs. How much are they willing to spend on security systems?
The experience of securities is both good and bad. In tough times, the need for security will not decrease, (but) rather increase because of the risk exposure and other issues. Also, when we have political unrest, riots, etc., that also increases the demand for security.
Outward growth: Borgvall says his firm plans to supply from its Halol factory to the Asian region
Also, during financial troughs and crests, you will see banks or big corporations holding back investments, postpone or delay them. You can never avoid that in our industry either. But you can say that we are less dependent on the financial cycle compared to other very capital-intensive businesses.
There are situations which differ from market to market, but in India, there are two main drivers of this trend. The first one is that it (India) has an extremely fast-growing economy now, which reflects on infrastructure spending or banks’ expansion. The other element with India is that you have had significant problems with terrorists attacks, which have caused problems over the years. That has to be taken very seriously.
Per Borgvall of security systems firm Gunnebo says terrorism and a growing economy are fast making India one of its top markets.
How sophisticated are security systems employed by Indian corporations or government compared with other nations?
I have the luxury of travelling the world and you see the differences in all sectors, be it buildings or other infrastructure. I am not sure that there are role models on a global level as local adoption is very important. Therefore, you have to be very careful about measuring the standards of Indian security. I am not sure what works elsewhere will also work in India, as you need to have local adoption. But what you can say is that there is a clear trend of increased need for technology into the Indian security set-up.
What are your focus areas?
The international focus we have is around four business areas. The first one we call is bank security. This is extremely important for us on a global scale. The second area which is important from the India point of view is secure storage. This caters to the market outside the banking landscape, which is the government, embassies, military and corporations including the small organizations, among others.
The third business area where we have also started to expand is entrance control. Its importance is obvious as it is for the buildings, airports, railway stations or whatever it could be. The fourth area where we have started playing a much more active role in India is global services. That’s about maintainance, spare parts, etc. Traditionally, we have been very strong in bank security and now we are stepping up investments in areas such as entrance control and electronic security.
Which banks in India do you service?
Seven out of 10 top banks are our customers. We service most of the top establishments in any country.
What is the size of market you see in India?
Indian market is the fifth biggest market in the group. By March next year, it will be the fourth largest. With the current growth rate, it would be soon be the second biggest market. Today, the biggest single market is France.
France is accounting for 20% turnover. It might take a few years for India to come to that level. Certainly, it could be the single largest market with its kind of growth.
What are your India investment plans?
We are investing around €2.5 million. It is both expansion building and machinery. We are also increasing the capacity of the Halol (in Gujarat) factory. It will increase 75%.
Do you have plans to export from your factory in India?
We have plans to supply from our Halol factory to the Asian region. But first, we have to cope with the growth in India and be able to satisfy our Indian customers, where we are currently under pressure because the market is growing.
You have been here since 1930. Why are you launching yourself in a big way now?
You have to look where the opportunities are... The recent growth in India is actually not that old. Let’s say the take-off of the Indian market is not 50 years old; it is actually quite new from my perspective as well. Previously to this (job), I have spent more than 15 years investing heavily in China in other positions I have held.
I have extensive experience to see markets changing. I think we are about to see a rapid change in the Indian market… It is more or less impossible to have a five-year prospective plan and totally impossible to have a 10-year prospective plan. So it’s a very interesting time here.