Securing growth SIS is poised to maintain its leadership position in the security solutions space IS Ltd, one of the largest providers of security, facility management ‘and cash logistics services, has shown a great deal of resilience dur- ing this Covid-afflicted scenario when safety and security of workforce has become more important than ever. AS Sina: looking after his ‘people well a business that operates across 25,000 customer locations, spread over four ‘countries including Australia, New Zea- land and Singapore with over 2, 40,000 frontline employees, SIS’s exposure both in terms of health and safety risk ‘and business implications has been overwhelming, However, the largest private secu: rity services company in India with presence in all 28 states and formerly backed by one of the largest hedge funds in the globe, DE Shaw as also PE player CX Partners, has adapted to this, ever-evolving situation with a lot of grit and determination. The US hedge fund exited the company in 2007, selling its 14 per cent stake in 2013 to CX Part- ners which sold its 15.5 per cent stake in SIS in tranches in the last 2-3 years. While DE Shaw made seven-fold return on its Investment of 218 crore, the lat- ter made even more on Its investment of £194 crore, Amidst all sorts of challenges and headwinds, the Delhi-based company, formerly Security and Intelligence Ser vices (India) Lid, grew by 7.6 per cent to ‘around 29,127 crore during FY2, ‘even as Its net profit surged by around 63. per cent 0 €367 rote, The increase in profit has come on the back of steady gross margins coupled with strong overheads control mea: sures. While the Indian security business was almost stagnant at £3,488 crore, it was the over 22 per cent surge in the international security business at 4,530 crore in FY21 came to the compa- rny’s rescue, The total security solutions business contributes almost 88 per cent to the overall revenue, even as the seg: ‘ment employs around 1,60,000 people. The year was also marked by a steep increase in cash flaws with the compa: ny’s highest ever cash generation. In this uncertain condition also, the com- pany, a mega employer, added over 15,000 employees to its workforce which has more than doubled in the last four years. ‘The revenue has also kept pace with this, as it has also dou: bled from %4,567 in FYI7. Stories of grit In FY21, the company, which was the first security company to get listed in 1017, generated total operating cash flows of 2640 crore, a 318 per cent increase over the previous year. The company managed to bring down its 48Corporate Reports net debt to £376 crore at the end of FY21 as against 3703 crore in FY20, even as it paid out 2203 crore for the acquisition of security company, SxP in Australia. The momentum contin- uued during the first quarter of the cur rent fiscal year (FY22) as well with revenue expanding by 9.8 per cent to 2,379 crore, while PAT increased 2.5 per cent to around %60 crore, “While our performance can be attributed to the resilience of our busi- ness segments, which play a vital role in our economy, businesses and house- holds, it would not have been possible ithout the commitment, dedication and passion of our employees. The individual stories of grit, energy and unrelenting service spirit make me proud, The images and stories of our employees’ efforts during these last few months are a source of inspiration to everyone in the organisation,” says Ravindta Kishore Sinha, 70, chairman, sis Group. Sinha who strongly believes that motivated employees is the first step towards satisfied customers, states, “You look after your people, they will look after your customers.” He founded the business way back in 1974 as a small security firm with 14 guards in Ramgarh, Jharkhand, Today, the com- pany has transformed into one of the largest manpower security firms in the entire Asia-Pacific region, even as it has, added facilities management and cash logistics services to its offering, ‘A first generation entrepreneur has worked relentlessly to put up such a massive entity in the private security space where the company was the first entity to receive 180 certification in 1998, His dream of taking this business Rituraf: architect of game changing transactions public came to fruition in July 2017 ‘when it hit the market with an 1P0 of around 2780 crore and became the first to do so in the private security space. ‘The IPO was subscribed 7 times, In the last 12 months, the stock has gained ‘over 42 per cent ~ %356 on 12 October, 2020 to 8506 on 11 October, 2021. “Last one-and-a-half years have been a period of validation. Being in essential services, our demand has been quite inelastic and the phase also demonstrates resilience of our annu- ity revenue model, This performance ‘underlines two basics ~ even in crisis, ‘customers refrain from cutting essen- tial services margins and continue to prioritise payments as a business con= ‘Unulty imperative. Our customer base Is widespread and sector and geogra- phy agnostic that has helped us sail through the crisis with minimal dis- ruptions. We are needed by customers, in good times, and even more so in a crisis. However, this was an immensely challenging task on the supply chain and logistics front, ensuring that our large pool of employees were able to serve our customers while ensuring their health and safety proactively,” says Rituraj Kishore Sinha, 42, group ‘managing director, SIS Group. Ritura), son of Sinha joined his fam- lly business in 2002 when the reve- nue was only %25 crore. An alumnus of Doon School and Leeds Univer- sity Business School, UK, he, in the last two decades, has been instrumen- tal in shaping the exponential growth, of the company from a man guard- ing company to a market leader in not only security but also in facility a) PATTERN % FINANCIALS (¢ crore) ul 9327 er ho Be an er ree | oe \ 5,833 228229 Pa FrCorporate Reports ‘The company is one of the largest manpower secuty firms in the entire Asia-Pacific region management and cash logistics solu- tions across multiple geographies. ‘Over the years, Rituraj has built a reputation for himself in the global security and business support services Industry by forging alliances and part- nerships with global market leaders. He has also been the architect of game changing transactions, In 2007, he closed the first private equity invest- ment transaction in the Indian secu- nity sector. He also received recognition for orchestrating the first cross border acquisition in the Indian security sec- tor in 2008, when Sis made the land- matk acquisition of Australia’s largest private security company (Chubb). In August 2017, he successfully listed SIS fon the stock exchanges, thereby mark= Ing the first 1P0 by a security, facility management and cash logistics com- pany in India. He is currently the ‘Chair of the FICCI Private Security See- tor Committee and Board of Director with Global Security Industry Ligue headquartered in Switzerland, Sis which is currently the largest player in the manpower security ser. vices space in India, serves more than 9,000 customers including over 280 Nifty 500 companies. Across various sectors, it has clientele in customers like Walmart, Amazon, Coca-Cola, DHL, Deutsche Bank, Hyundai, LG, JSW, Indian Oil, Vedanta, L&T, Nestle, Marico, Barclays, Sun Pharma, Jubi- lant Foods, Siemens, Westside, Blue Dart, Shell and many others. Covid Welfare Fund While the company, one of the largest ‘employers in the private sector, also Lost someof its employees to the pandemie, it ‘was proactively worked towards protect- ing and supporting this massive pool of ‘workforce and their families, The com- pany set up a ‘Hamare Heroes Covid Welfare Fund’ early on in the pandemic to offer medical and associated support to the families afflicted by Covid. It has already provided over &7 crore to more than §,500 employees during this test. ing times. In a mega vaccination drive, the company has already vaccinated ‘over 190,000 employees, most of whom are frontline workers engaged in essen tial services. This and many other health and safety measures undertaken by SiS have been well recognised, Backed REVENUE BREAKUP % Facies by progressive employment policies and social impact, the company has recently been ranked 31 in the Great Place to Work (GPTW) ranking. n fact in 2008, when the company introduced ESOPs fo its managers and guatds, it was the first manpower security com- pany to do so. Again in 2018, when it ciossed 2 lakh permanent employees! mark, it was also the first one to do so. “These recognitions are an air ative endorsement by our employ- ces, basis our actions during our Covid pandemic response. People welfare has been core focus ofall our planning and interventions. The GPTW ranking is a tremendous ratification of our organ- isation culture, policies and employee ‘motivation levels,” says Ritura} “AIL in all, in FY21, SIS clocked around 8 per cent growth and sus- tained its EBITDA level, with OCE up more than 3x (123 pet cent of EBITDA), Even as the second wave caused much, uncertainty, SIS has shown its busi- ness model is recession-proof, and that Inspires @ great deal of comfort," says an Edelweiss Research report. While commenting on the QI FY2 performance, another Edelweiss Research report states, “SIS, despite the tough environment, delivered yet another solid quarter with sales down only 3 per cent QoQ ~a positive. The domestic security segment was down 2 per cent QoQ, but has started to recover since June, Margin remained soft, but the management expects it to normalise in coming quarters. The facility management business, rela- tively more hit in the past year is also showing signs of recovery. The man- agement has indicated India busi- nesses should continue to improve hereon, while ad hoc international sales dip would be offset by recurring business coming back. By 2025, SIS envisions to double its market share across India businesses.” Recently, the company has also come up with its Vision 2025 plan in order to strengthen its position fur ther in the domestic market where despite being market leaders in secu rity services and facility management, ithassub- percent market share. Now under the new vision statement, the company plans to double its market share over the next four years. “We believe that post-Covid, many e466Corporate Reports competitors will be under stress, which, will lead to organic market share gains for us. For instance, most leaders in these segments in developed markets have over 15-20 per cent market share. ‘The Indian industry structure will also mimic similar trends over time and we ‘would like to play an active role the: says Ritura} In another significant move, which is going to transform its offering and the entire approach, the company, as part of its new vision is now consciously looking to evolve from a service pro- vider to a solutions business. The company has been proactively intro- ducing new-age process and technol: ‘gies into its system to keep it robust. During Covid, the company has taken significant steps towards accelerating the adoption of technology - both for internal productivity and customer solution purposes, ‘Technology takes it ahead The company has been using a slew of Internal tools over the years to man- age all areas of Its operations - from Automated Recruitment Kiosk (ARK), SalesMaxx (CRM and sales), iOPS (inte! ligent operations) to iPorter (oper ations management for hospitals). While this constituted Version 1 of its technology efforts, over the last two years, the company has been investing in the next phase of technology, seck- ing to build sufficient scale potential to handle 4-5x the current volume of operations. Sis’salarm monitoring and response business, VProtect, has won orders to take the business to aver 12,000 sites, a 3x increase over the previous year. This ill make the company among the top three players in e-surveillance in India. The company Is poised to grab the leadership position in the indus- ‘try with a strong team and nationwide execution capabilities. Similarly, In its, system integration business at TechsIs, it has ended last year with highest ever revenues, “ALSIS, we have been at the forefront Of selling technology-based solutions. Leveraging modern technology will be a key enabler and differentiator for us, Wehave been consistently investing in best-in-class systems to help improve our service delivery, internal business processes, productivity and efficiency of operations. Whether in security or facilities management, with the added push in the post-Covid environment, ‘we aim to get at least 20 per cent of ‘our EBITDA from tech-based solutions. Going forward, companies will look to increase efficiency of operations ‘and increase allocation of their secu- rity and facilities management bud- {gets to blended solutions, which come at higher margins than our traditional business, While these goals are defi- nltely aspirational, we believe that our people are well placed to deliver on these ambitions with their renewed sense of purpose and commitment,” adds the group MD. ‘Over the years, the company has significantly ramped up its core busi- ness of manpower security solutions where the portfolio of services across India and overseas, includes security design and solutions, fire safety, event security, VIP protection, aviation secu- nity, emergency response, investiga- tion work and integrated technology solutions providing manstech solu- tons. Having emerged as the number ‘one player in Australia, the company hhas recently also entered Singapore ‘and New Zealand, In FY21, the international segment of the security solutions business con- tributed over 49 per cent to the total revenue of the company and turned ‘out to be big saviour for the company which faced demand contraction in the domestic demand, Over the years, ‘The company isthe secon largest player in city management in the country the international security services business which currently employs over 9,500 employees across 31 offices, hhas shaped up quite well ever since it entered Australia with the acquisition (in 2008) of Chubb Security Personne! Pty Ltd which was later renamed and. rebranded as MSS Security. MSS Security is the largest secu rity services provider in Australia where in 2017 it also acquired South: cern Cross Protection (sXP), Australia’s largest mobile patrol service company. In the last fiscal year, SIS acquired the remaining 49 per cent stake in SXP. The SXP business has continued to grow strongly in the mobile patrol- ling space and is now an A$120 mil- Tion business. The business recorded. significant growth recently on the back of offering ad-hoc casual guard- ing services to quarantine hotels and isolation facilities, coupled with incre ‘mental revenue from existing custom- ers to provide additional guarding During the pandemic, the local government In Australia decided to appoint private security agencies to safeguard its Covid-19 isolation facili- tes and quarantine hotels. Mss offered. customised safety and security solu tions to these facilities and will con tinue to offer some part of these services going ahead. In Australia where the company commands pole position in the security services space, It cater to key customers in aviation, wareCorporate Reports SIS operates acress 25,000 customer lacatlons, spread over four countries defence, healthcare, mining, natural resources, manufacturing, education, and heavy construction industries, besides providing solutions to several government organisations. In February 2019, the company acquired (60 per cent stake) Hender- son Security Solutions, Singapore's third largest security company and thus made its foray into that market, It is a premium security company with over 200 sites in Singapore, with cus: tomer segments that include residen- tial condominiums, public transport and commercial spaces. In February 2019 only, the com: pany entered the New Zealand market ‘ith the acquisition (81 per cent stake) of the country's fifth largest player, Platform 4 Group Ltd which provides security solutions, alarm monitor Ing, mobile patrols and event related solutions. During FY20, sis acquired Triton Security Solutions Ltd., a Christ- church-based alarm monitoring solu- tions player. These new acquisitions in New Zealand have enabled the com pany to deepen its footprint across the region, with a larger suite of security solutions, In March 2008, when the SIS saw its revenue cross %1,000-crore, it entered facility management space in India, partnering with ServiceMaster Cor poration, USA. It was an exclusive licence agreement with ServiceMaster for the ‘Service Master Clean’ brand, and associated proprietary processes, ‘operating materials and know-how to develop the facility management busi- ness in India. In 2016 when its revenue ‘crossed 24,000 crore, its acquisition of Dusters Total Solutions Services (78.72 per cent) made the company the fourth largest player In facility man- agement in the country. Offering an array of services Currently, backed by 55,400 employ- ees, SIS is the second largest player in the facilities management space In India, catering to 1,880 custom cers (6,360 sites) across diverse sectors. In the last six years, the business has grown at a CAGR of over 60 per cent, contributing %1,127 crore to Sis’s reve- nue in FY21, Apart from soft facilities man- agement services like cleaning and repair related services, the company has also built up strong presence in the hard facilities management space where it offers services such as pro- vision of receptionists, lift operators, electricians and electrical service and plumbers, Following the acquisition of Dusters, it also offer specialised healthcare’ services including crite ‘cal areas-cleaning in operation the- atres and intensive care units, HVAC and alr-conditioning maintenance, ‘warehouse, plumbing and water man- agement as well as pantry and stew- ard services, office assistance and help ‘desk and payroll management. In 2012, SIS also got into the Pest Control Segment by forming joint venture with Terminix, USA. It offers services under Terminixsis brand. Though the company forayed Into the cash logistics business in 2006, the real traction of the business started only in 2011 when it formed a joint venture, Sis Cash Services with Prose- gur of Spain, which is currently the second largest cash logistics service provider in India. Though the business generates around 2400 crore annually, It doesn’t show up in SIS's book since the company holds minority stake (49 per cent) in the]v, Through its varied service offerings pertaining to cash in transit, doorstep banking, ATM-telated, bullion and cash vaulting services, SIS Cash Ser. vices caters to a diverse set of clients that includes leading banks, financial institutions, the organised retall indus- ty and jewellery. processing units. Backed by 9,000 employees, it services in cities and towns across’ major cit- Jes (500 districts) such as Delhi, Chen- nai, Mumbai, Hyderabad and Kolkata, with a network of 68 branches includ: Ing shared branches, with 54 vaults and strong rooms. It operates more than 2,000 cash vans, both owned and leased. No doubt, SIS has made big strides in the last decade or so and emerged as the Largest manpower security services player In the country. While the com- pany has scaled up Its security services business over the yeats, thas also tried. to diversify its portfolio by getting into facilities management and cash logistics. This along with geographical diversification into overseas locations, will not only help the company scale up its business in a big way but also offer it better margins, Besides, these diversifications will also de-risk the overall business from market vagaries, something which has been well mank- fested during the pandemic period. Recently, the company has also come up with Vision 2025 plan where it wants to double Its market share in the next four years, even as it is now consciously trying to revamp itself Into tech-backed security solutions business from the current manpower. intensive security services company. With all these efforts and measures in place, SIS is well poised to expand its market share going forward, . +480