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Saturday, Nov 27, 2004

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Tops Security plans to offer stake to foreign investor

Latha Venkatraman

Mumbai , Nov. 26

TOPS Security Ltd has finalised plans to offer a stake to a large foreign private equity investor.

The company, on an upward curve in a growing security market, will offer fresh equity to the investor if the deal is clinched.

Mr Diwan Rahul Nanda, Chairman and Managing Director, Tops Security Ltd, said the deal has been sealed but did not name the equity investor as due diligence is slated to commence in early December. The fresh equity offer precedes the company's entry into the capital markets with an initial public offer.

Mr Nanda, who is the promoter of the company, believes the growth trajectory at which the company is poised justifies an equity market offering. Tops Security has appointed a merchant banker for the IPO purpose. Currently, the promoters (Mr Nanda and his family) hold 100 per cent stake in the company.

Ahead of the IPO, which is likely to be done sometime early 2005, the Topsgrup will put in place a consolidation process which entails bringing all the companies as subsidiaries of Tops Security Ltd, the flagship of the group. These include Tops Sequipments, Territorial Guards, Thread Smith and Taylormade Facilities Management.

According to Mr Nanda, the global industry is around $21 billion; growing at 21 per cent compounded annual growth rate (CAGR). "We have been able to grow above the industry rate,'' he said adding that the company is expected to end 2004 with a turnover of Rs 145 crore, a 40 per cent growth over the previous year. Innovation has helped Tops to sustain growth, Mr Nanda maintains.

In India, there is a surge of interests in security solutions, particularly from the industry segment; though the household segment is also on an upward curve. Currently, margins in this business are considerably low but could pick up with heightened interest in security and innovative packages being offered.

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