Zicom to sell security for Rs 225 cr

Agencies
Mumbai, Mar 6: 
Mumbai-based Zicom Electronic Security Systems said it has agreed to sell two of its security system business units to Luxembourg-headquartered Schneider group for Rs 225 crore, boosting its share price by 14%.
Zicom will sell its security business, which caters to the government and institutional markets, to Schneider Electric India, the Indian subsidiary of France’s Schneider Group.
Zicom’s chairman Manohar Bidaye told a press conference that the securities business was highly capital-intensive with a long gestation period making it an unprofitable proposition for him in the long run. “In view of this it seemed best to exit the business when the value is attractive and to focus on building the remaining business.”
The news of the deal sent the Zicom stock soaring. Its share rose 14% to close at Rs 127.80 in a flat Mumbai market, pegging the market capitalisation of the company at Rs 162 crore, lower than the value of the transaction which was for a part of its business. The topline of the business being sold is Rs 180 crore.
Olivier Blum, the country president of Schneider Electric, said his company chose to pay a premium as the replacement cost of setting up a similar business in India would be higher.
Zicom’s Bidaye said the proceeds from the sale will be utilised to retire debt and finance a foray into new industries, including renewable energy and aerospace engineering.