Business Standard

Revenue outlook positive for security services MSMES


The ~1 trillion security services market in India is set for another year of 10-12 per cent healthy growth in the current financial year driven by the rising need for asset and individual protection and rapid urbanisati­on. The revival in commercial real estate after Covid-19 and growing private investment­s in the industry are other supporting factors.

In the next financial year, the revenue is expected to grow 9-11 per cent as Lok Sabha elections in April-may are expected to boost demand. This augurs well for micro, small and medium enterprise­s (MSMES), which account for 40-45 per cent of the overall industry revenue.

Security agencies offer services both manually and electronic­ally. Manual service involves providing security personnel to man public spaces, housing societies, commercial complexes, banks, etc. This accounts for

75-80 per cent of the pie. Electronic security services require a wide range of devices such as closed-circuit television cameras, metal detectors, burglar alarms, fire alarms, etc.

The industry is expected to experience a gradual shift from unorganise­d to organised market with rising demand for high-quality services from sectors such as data centres, residentia­l and commercial real estate. Over the years, the market has consolidat­ed as margin erosion forced some of the smaller players to exit the business.

Profitabil­ity of MSMES is likely to be more constraine­d than those of large players owing to lower working capital efficiency to offset labour wage inflation and limited ability to scale up operations (with no barriers to entry). Labour cost is the biggest input cost component. Further, any changes in compliance rules or minimum wages can impact the margins of the players.

 ?? ??

Newspapers in English

Newspapers from India