Business Today

The defenders

CRON Systems is working with defence forces to secure the borders.
By Devika Singh        Print Edition: August 13, 2017
The defenders

The western borders of India are often considered the most sensitive territory that the armed forces have to guard against intrusion. And people like Rakesh Sharma, a former Inspector General of the Border Security Forces (BSF), Jammu Frontier, know it only too well, especially how arduous the task is and the chances of human errors slipping in.

"There can be misjudgement in detection as it is difficult to keep a human being alert and active for day and night," explains Sharma. To avoid such trip-ups, the BSF decided to deploy cutting-edge technology that would add an extra layer of protection in the surveillance system. The solution they wanted was a virtual wall that would alert troops about intrusion attempts and help them decide on further action in real time.

So, Tushar Chhabra, co-founder and Chief Executive of CRON Systems, stayed at the borders for six months and interacted with the troops to come up with the product called Kavach. Simply put, the intrusion detection system creates a virtual wall with the help of poles that work on transmitter-receiver topology. The transmitter emits infrared and laser rays, and the receiver constantly senses them. Whenever there is an intrusion attempt, the receiver is not able to sense the uninterrupted beams and raises the alarm. What's more, The virtual wall comes paired with a quick response tool, a console unit that displays the status of the Kavach units, and also alerts security personnel (in the case of an intrusion) using CRONet, the company's encrypted wireless communication network. Then there is MICRON, a control-and-command platform, which manages all these units, analyses the data received and predicts future intrusion attempts.

Besides Kavach, the start-up has developed an array of interesting products, keeping in mind the requirements of the armed forces. Integrated as a whole, these devices offer a comprehensive perimeter security solution, a field where CRON wants to carve a niche for itself.

The start-up has already tied up with 200-plus original equipment manufacturers for sourcing parts for its products, which it assembles at its facility in Neb Sarai, New Delhi. However, the designs are its own and a team of electrical and mechanical engineers have been hired to design those. To ensure that its products have the best possible technology edge, CRON is also working with overseas companies - an Israel-based drone manufacturer for drone integration and a defence robotics company for integrating its rovers with CRON's surveillance systems. The start-up currently employs 36 people but plans to expand its team to about 100 by the end of this year.

The Playing Field

CRON has done ample research in several high-tech areas, including the Internet of Things (IoT), lasers, artificial intelligence, automation, encrypted communications and data analysis, which has helped it develop extremely sophisticated intruder detection and deterrence solutions. But its foray into the defence space has not been smooth. Chhabra says the biggest hurdle was getting permission to stay in borders areas, but convincing investors was not easy either. "We are talking about defence hardware. So, most people ask if it is such a great idea, why somebody has not done it before. It is not easy to convince people."

Nevertheless, the start-up has managed to raise an undisclosed amount in pre-Series A funding from venture capital firm YourNest. According to Girish Shivani, one of the founding partners at the VC firm, investment decisions become easier when the product has been tested in the market and has found a good response. That is what has made the cut. Add to that a sound revenue model and a diversified expansion plan and the future looks promising.

"Our business model is simple. We start with direct sales, and after that, most of the money comes from annual maintenance contracts, upgrades and services," details Chhabra. The company also charges for its CRONet and MICRON services.

The BSF and Indian paramilitary forces are among its key customers. But the company says it will soon cater to the Indian Army. CRON has recently completed its first product pilot on the western border and now plans to set it up across a 50 km stretch. Chhabra says the basic cost for securing per km is about Rs 25 lakh.

The company did not disclose its financials, but as per a filing with the Ministry of Corporate Affairs, it clocked Rs 8,47,555 in revenue between October 2015 and March 2016, and incurred losses of more than Rs 26,000 over this period. CRON claims it will break even by the end of the current financial year and also come up with several products which are in the pipeline. Plus, it is upgrading all its existing systems. Its primary aim is to secure India's 15,000 km long border, but in the long term, the company wants to expand beyond government business and get into the fast-expanding B2B space.


A Future beyond Defence?

According to Dhiraj Mathur, a partner of PwC, defence is the space for companies that either have a significant size and experience or a huge manufacturing capability. He, however, agrees there might be scope for start-ups in niche areas, "something so novel that no one has done it so far; small things, where the investments required are relatively low, and there is a large demand."

With India's defence spending at Rs 2.74 lakh crore in the 2017/18 Union Budget and the government's initiative to encourage homegrown products, the outlook is positive. Even then, CRON's dependence on defence projects may hinder its future growth as these chunky contracts only come up once in two-three years.

Aware of this shortfall, the co-founders have already started looking at the commercial and residential establishments for growth. "Perimeter protection is one of the largest markets in the world. Everybody is trying to secure their perimeters. So, there is a massive market. Also, our primary goal is to automate perimeter protection. So the products will keep evolving," says Chhabra. ~

@DevikaSingh29

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