Godrej Security scouting buyouts

Godrej Security Solutions, the Rs600 crore division of Godrej & Boyce Mfg Co, is scouting acquisitions in the US and European markets to grow its international business as the market witnesses a consolidation worldwide.

The need for acquisitions arises as the company aims to be the number three player in the $2.8 billion security solutions market globally by 2016-17 from the sixth position currently.

The home-grown maker of safes and surveillance systems is reviewing proposals from a few medium- and small-sized companies in these markets and is likely to wrap up some acquisitions over the next two years, Mehernosh B Pithawalla, assistant vice-president and head, marketing and international business, Godrej Security Solutions, said.

There are over 50 companies in the US and Europe that make safes and vaults with turnover ranging €10-50 million.

Many of these companies are finding it tough to sustain business as the growth in most markets is slow, costs are surging and so is competition.

“A lot of consolidation is taking place worldwide. Where our strongest markets traditionally have been Africa and Middle East, we are now strongly looking at Europe,” Pithawalla said.

The international business contributes 10% to the company’s revenues and is likely to touch 15% next year.

“Our interest in acquisitions is for three reasons - we will get access to technology and local manufacturing, the access to local brands and an established distribution,” he said, but did not disclose any further. In the domestic market where Godrej is the market leader in safes and vault equipment through banking sector and institution business, Pithawalla said, the home security segment is growing the highest as consumers buy more products like safes, video door phones and CCTV cameras.

“The home security segment is growing by 50%, led by high growth products like safes and video door phone. Next year the home security category should alone contribute Rs120 crore to the turnover and beyond that too we should grow by 40-50%,” he said.

He attributed the growth to company’s investments in expanding distribution reach to 2,000 outlets from 600 a year ago.
With further penetration in general trade, Godrej Security plans to cover 5,000 outlets.  The company also plans to invest Rs40 crore in the next two years to expand distribution and introduce products.