Bartronics: Raising the bar

What’s common to sectors like healthcare, leisure & entertainment, transportation and the government? Answer: They’re all perceived to be less-prone to recession than most other industries. So, when you are present in these sectors—and, that too, in the US where the R-word is on almost every lip—you have to be in a relatively sweet spot. As far as Bartronics India—a domestic major in radio frequency identification (RFID) technology, bar-coding and smart cards—is concerned, the US is still a land of plenty.

Propelling Bartronics into another league are two acquisitions made in January 2008 in the US for $50 million, of Proximities Inc. and Software Research Group (SRG) America Inc. These were joint buyouts as one would make little sense without the other, explains Sudhir Rao, Managing Director, Bartronics India. That’s because Proximities Inc. is a pure-play technology company that has patents in RFID an area in which Bartronics is a dominant player in India, while SRG America Inc. is a pure-play software development company that is 10 years old and came with some 15 live customers in the key recession-proof sectors mentioned earlier. In leisure & entertainment, for instance, its customers include Disneyland and NASCAR (auto racing). Bartronics is one of the vendors involved in doing a pilot project for a cashless payment transaction system using RFID wristbands.

“In bad times our solutions are in greater demand,” says Rao. “That is a fundamental truth because we provide solutions in the automatic identification and data capture arena; these help our customers by providing them with accurate data and make them more efficient, productive and effective.” 

The Buyout Edge Acquisitions: Proximities Inc. and Software Research Group America Inc. (2008) Price tag: Roughly $50 million Financing: FCCB issue in Jan. 2008, which was fully subscribed for $50 million Benefits derived: Rapid scaling-up, broadened customer base and global footprint Integration achieved: Around 200 people have come on board, including the senior management of the acquired companies

Rao adds that inorganic growth was always a priority for Bartronics when it came to gaining a foothold in the US. “If we had to set up our own operations in the US it would take us a minimum of a decade to establish ourselves,’’ he explains.

In the very first year after the acquisition—the calendar year ended December 2008—the two entities in the US notched up a top line of $40 million. This will help Bartronics hit total revenues of Rs 500 crore for the year ended March 2009, a 78 per cent growth over the previous fiscal. A year later, Bartronics hopes to maintain the pace, and close with revenues of Rs 1,000 crore. “The reason for this confidence is we have become eligible to bid for larger projects,” explains Rao. Sure enough, the average ticket size of projects being executed has gone up from Rs 5 lakh to over Rs 1 crore. Rao gives the example of a recent project from the Delhi Municipal Corporation, which is worth Rs 5,000 crore in revenues over nine years, starting 2010.

— E. Kumar Sharma