ZiCom to restruct its business model

Zicom Electronic Security Systems surged 16% to Rs 131, after the company announced strategic restructuring in its business model.

The stock opened at Rs 113 and touched 52-week high of Rs 134. As many as 1.58 million shares have changed hands so far on the BSE, as compared to an average 83,000 shares that were traded in last two weeks.

Zicom has signed a Business Transfer Agreement with Schneider Electric for the integration of business comprising Building Solutions Group (BSG) and Special Projects Group (SPG) business that caters to institutional and government markets. The total consideration for the sale is for an amount not higher than Rs 224.75 crore.

“After 9/11 terrorist incident the security industry is undergoing sea change, particularly the integration business where we are dominant brand. The new business demands high level of Integrated Intelligent Building Management technology and knowledge for which the company will need to make huge investments, going forward,” said Manohar Bidaye, chairman, Zicom.

“In view of this change it seemed best to exit the business when the value is attractive and to focus on building the remaining retained business of Home and SME together along with the profitable Fire business which is strength of our subsidiary in Middle East” he added.

The company, which offers customized solutions to meet the security needs of residential, retail, commercial and industrial customers, posted 17% growth in net profit to Rs 9 crore (Rs 7 crore) during first nine months of FY10.

The promoters hold 18.38% stake as on December 2009, have pledged almost 50% stake. The promoters have pledged 1.1 million shares representing 9% equity capital.