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July 09, 2007

Bartronics ventures into smart cards

Business Today has an article on how and why the erstwhile barcoding specialist, Hyderabad-based Bartronics, is now venturing into smart card manufacturing.

The idea of smart cards originated 18 months ago, courtesy Frost & Sullivan, which Bartronics commissioned to survey the market. Rao quotes a study by the consultants, which pegs the demand for smart cards at over 150 million units (in India) in 2007, and describes it as a space that is growing at a cumulative average rate of around 45 per cent. In India, much of this demand is coming from the telecom and banking sectors. "We intend to first break into the Indian SIM card market and dominate there as currently there is no domestic player here; this market itself is today valued at around Rs 100 crore annually," says Rao. He adds that in the next couple of years demand from the banking sector would pick up as banks begin to switch from the current magnetic tape cards to smart cards given the approaching Visa/Mastercard deadline on this (which is 2008 as of today, but which could be extended by a couple of years).

But if Bartronics decided to take the plunge into smart cards, it's not just because of the growth expected from the banking sector. The biggest trigger for the foray is a project that could well take it to the next level in terms of visibility and profile.

This is the Multipurpose National Identity Card (MNIC) project, which is proposed to be implemented by the Centre over the next five to 10 years. Early this year, the National Informatics Centre (NIC) approved its technology (for a scosta-based card-scosta standing for Smart Card Operating System for Transport Applications) which can be used for all government projects, including the MNIC project. "We feel we have a good chance for getting a share of the project as we are aware of what is required (the company has been part of a technical committee appointed by the ministry of commerce under NIC to define the standards and operating systems). We are an Indian company crucial for the project from a security point of view and, most important: By the time the project roll-out begins (expected in the next two years) we would be making over 50 million cards on an annualised basis. That's significant enough for the government to look at us as a serious player." Surely, even a small share of this business could prove to be a game changer for the company!

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.