Honeywell Security Group, a strategic business unit of Honeywell Automation and Control Solutions, is a leading global manufacturer of electronic security systems. In India, Honeywell Security Group started its business in 2004. The group has a complete range of solutions across video surveillance, access control technologies, intrusion alarm systems and home automation systems, catering to the electronic security needs of various verticals like manufacturing, government, defence, transportation, retail, hotels, hospitals, corporate sector, IT, ITES, banking and residential market.
In a conversation with Srabani Sen of Electronics Bazaar, Vikas Chadha, director, South Asia, Honeywell Security Group, speaks about the company’s India strategy and its target sectors, while he takes her through Honeywell Security’s developmental roadmap in India
EB: How satisfied are you with the recent performance of Honeywell Security Group in India?
We are very pleased with our performance in India, as Honeywell is showing a high double digit business growth compared to last year. In fact, we are growing as per our strategic plans for India.
EB: What is your market share in India?
We need to understand that security is a much segmented industry in India. The segmentation levels are so high that not even a single company has a double digit market share. Within the security domain, there are MNCs like Honeywell as well as the Indian companies; and on top of that, you have the smaller importers. So about 50-odd companies are breeding in this sector; hence, the competition is very stiff. From the share of demand perspective, Honeywell is one of the leading companies in the security domain and definitely falls in the No. 1 category. We are strongly focused on growing faster than the industry.
EB: How is the demand for security systems shaping up in India?
India is in the first phase in adoption of security systems; it is still not a mature industry. However, since the Mumbai blasts, the government emphasis on security and the related spending has seen a gradual rise in adoption. In fact, this has created an atmosphere for some sectors to buy security systems, like the hospitality industry, in which a hotel cannot acquire a 5-star or 4-star tag unless it has all security systems in place. Banks are also driving the demand—RBI has clear guidelines that all banks have to have intrusion alarms and video surveillance systems. So there is a lot of impetus from the government side and we, therefore, see good demand coming from sectors like banking, commercial establishments, industrial sector, etc.
EB: With respect to future growth of Honeywell Security in India, where do you see the opportunities?
We actually cater to a lot of verticals. In fact, we have different teams to cater to different verticals. It is difficult to pinpoint just a few verticals that give us good business, but if I have to, I would say they are the banking and the industrial sectors. That does not mean we do not cater to other verticals. We are very strong in telecom, retail, commercial and hospitality. In future, too, we will focus on these sectors, as a lot of expansion will happen in these segments. Several oil and gas refineries are coming up. The power and the banking sector will also do well and add to the demand in the coming years.
EB: How important is the Indian market for the Honeywell Security Group?
Honeywell focuses more on two markets globally—India and China. The Indian security market is fast maturing with the world’s leading technologies coming into the country. As a global leader in safety, security and automation, we see huge opportunities and potential for growth in the Indian market.
India is an important market for Honeywell. Considering the overall revenue share of the company, India revenue might be minuscule, but it contributes a lot of growth to Honeywell and will continue to do so in future, as per our estimation. India is also important for us as it is a talent trove of engineers and other skilled hands. Honeywell invests over US$ 80 million a year in research and development. Honeywell Security Group has engineering ‘Centres of excellence’ in the US, Canada, China, Korea, India, Scotland, Germany and France, and leverages technologies that are developed elsewhere in Honeywell and brings them to the security business. In India, these centres are located in Bengaluru, Hyderabad and Madurai. A good number of products that are launched globally are actually developed in India.
EB: What are some of the cutting-edge technologies Honeywell Security Group is working on presently?
Constant innovation is a core competency of Honeywell. Software as well as hardware development for our products happen in India. A lot of technological developments are happening in different sectors. For instance, in video surveillance, we have come up with a complete range of new and advanced IP network based products. Our products are getting more intelligent and smarter—we are coming up with software like video analytics, which can help make security systems more productive.
Overall, we want to develop more products and solutions that can be integrated and can ‘talk’ to each other. Shortly, we will be bringing in a solution where the camera will talk to the access control devices and burglar/intrusion alarms, and make the users’ work easy. Theoretically, there could be a situation where, as soon as the burglar breaks into a home, the camera captures an image and sends it to the mobile of the user, alerts the nearest police station or command centre, and blocks the access control of the home.
EB: Where do you manufacture your security products?
Presently, it is more sensible to manufacture in China than in India. Hopefully, in the coming years, with the new manufacturing policy, India will become a destination for manufacturing as well. Presently, we have our manufacturing facilities in China, Korea, Mexico and the US. Certain products are manufactured in our facility in Dehra Dun.
EB: What is the type of customisation demanded by the customers?
Typically, it’s more on the software side. Customers usually ask for additional features to make the product more flexible; for example, an MNC wanted us to integrate its ERP package into the security software so that as soon as the attendance starts or the employees swipe their access cards, the data from the time and attendance software flows into the payroll software, and the monthly pay roll can automatically flow into the main access control software.
EB: What is your marketing strategy in India? How is it different from other countries?
In India, we emphasise a lot on utilisation and customisation. While in the US the security market is developed, here in India, it is still in the nascent stage. In the US you can look at a box solution, but in India you have to do a lot of customisation as per the requirements of the user. We talk to our customers, take their inputs and feedback, and actually develop systems around their requirements to make the product more useful. In India, many of the customers are first time buyers, so they want one solution to meet all their requirements.
EB: With the new manufacturing policy coming up in India, do you see security products being manufactured in India in the next couple of years?
No, it will still take some more time for India to start manufacturing these products. The economies of scale been reached in China are tremendous—they are basically supplying to the whole world. For it to become economical to manufacture these products in India, the country has to become a true manufacturing hub, and the scale of consumption has to go much higher and beyond the borders. I don’t see that happening in the next few years.
EB: Are you open to any collaborations/joint ventures in India?
We keep on exploring the right kind of companies. At this moment, Honeywell in India does not have any joint venture. If we enter into one, our role will be to provide technology as that is our forte. And we will look for a partner who can provide us a good footprint.
EB: What is your developmental roadmap in India for 2011-12?
India is one of the most important global markets for Honeywell Security and one of the fastest growing markets in the world. Keeping this in mind, we are confident about our growth in India, and will continue investing in this market. Today, the Indian consumers need to be educated about security systems and the latest trends and technologies, which can help them to lead a comfortable and secure life. Reaching tier II and III towns is our core strategy. There are certain regions and territories which we have not yet touched. We will continue to invest in order to reach these areas. Second, we will continue to do localisation and customisation as per the customer requirements. Third, we will keep looking for new verticals to venture into, where we can create a vertical oriented approach.
EB: What are the challenges Honeywell Security is facing in India?
The major challenge that we are faced with is to come up with a strategy of selling our products and solutions in the tier II and III cities. We have traditionally been catering to enterprise/corporate requirements; hence, the acceptance of our products in small towns will take time. We have to do a lot of value selling in order to succeed in tier II and III markets. In order to improve our footprint in such markets, we have our own people located at these cities, who are constantly in touch with the buyers; slowly, we have started catering to such markets.
EB: Where do you see the Indian electronic security market five years down the line?
This sector will grow much faster than anticipated, and there will be a number of alignments and realignments within businesses. In the next three to four years, there will be a good number of global players and a sizeable chunk of domestic players, so the competition will be tougher.