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Published on: Oct. 18, 2021, 12:06 p.m.
How SIS secures growth
  • The company is one of the largest manpower security firms in the entire Indo-Pacific region

By Arbind Gupta. Assistant Editor, Business India

SIS Ltd, one of the largest providers of security, facility management and cash logistics services, has shown a great deal of resilience during this Covid-afflicted scenario when safety and security of workforce has become more important than ever. As a business that operates across 25,000 customer locations, spread over four countries including Australia, New Zealand 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 security 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 Partners 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 Rs18 crore, the latter made even more on its investment of Rs194 crore. 

Amidst all sorts of challenges and headwinds, the Delhi-based company, formerly Security and Intelligence Services (India) Ltd, grew by 7.6 per cent to around Rs9,127 crore during FY21, even as its net profit surged by around 63 per cent to Rs367 crore. The increase in profit has come on the back of steady gross margins coupled with strong overheads control measures. While the Indian security business was almost stagnant at Rs3,488 crore, it was the over 22 per cent surge in the international security business at Rs4,530 crore in FY21 came to the company’s rescue. The total security solutions business contributes almost 88 per cent to the overall revenue, even as the segment employs around 1,60,000 people. 

The year was also marked by a steep increase in cash flows with the company’s highest ever cash generation. In this uncertain condition also, the company, 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 doubled from Rs4,567 in FY17. 

 Stories of grit

In FY21, the company, which was the first security company to get listed in 2017, generated total operating cash flows of Rs640 crore, a 318 per cent increase over the previous year. The company managed to bring down its net debt to Rs376 crore at the end of FY21 as against Rs703 crore in FY20, even as it paid out Rs203 crore for the acquisition of security company, SXP in Australia. The momentum continued during the first quarter of the current fiscal year (FY22) as well with revenue expanding by 9.8 per cent to Rs2,379 crore, while PAT increased 2.5 per cent to around Rs60 crore.

“While our performance can be attributed to the resilience of our business segments, which play a vital role in our economy, businesses and households, it would not have been possible without 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 Ravindra 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 company has transformed into one of the largest manpower security firms in the entire Indo-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 ISO certification in 1998. His dream of taking this business public came to fruition in July 2017 when it hit the market with an IPO of around Rs780 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 – Rs356 on 12 October, 2020 to Rs506 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 annuity revenue model. This performance underlines two basics – even in crisis, customers refrain from cutting essential services margins and continue to prioritise payments as a business continuity imperative. Our customer base is widespread and sector and geography agnostic that has helped us sail through the crisis with minimal disruptions. 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.

Rituraj, son of Sinha joined his family business in 2002 when the revenue was only Rs25 crore. An alumnus of Doon School and Leeds University Business School, UK, he, in the last two decades, has been instrumental in shaping the exponential growth of the company from a man guarding company to a market leader in not only security but also in facility management and cash logistics solutions 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 partnerships with global market leaders. He has also been the architect of game changing transactions. In 2007, he closed the first private equity investment transaction in the Indian security sector.

He also received recognition for orchestrating the first cross border acquisition in the Indian security sector in 2008, when SIS made the landmark acquisition of Australia’s largest private security company (Chubb). In August 2017, he successfully listed SIS on the stock exchanges, thereby marking the first IPO by a security, facility management and cash logistics company in India. He is currently the Chair of the FICCI Private Security Sector Committee and Board of Director with Global Security Industry Ligue headquartered in Switzerland.

SIS which is currently the largest player in the manpower security services 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, Jubilant 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 some of its employees to the pandemic, it was proactively worked towards protecting and supporting this massive pool of workforce and their families. The company 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 Rs7 crore to more than 5,500 employees during this testing times. In a mega vaccination drive, the company has already vaccinated over 190,000 employees, most of whom are frontline workers engaged in essential services. 

This and many other health and safety measures undertaken by SIS have been well recognised. Backed by progressive employment policies and social impact, the company has recently been ranked 31 in the Great Place to Work (GPTW) ranking. In fact, in 2008, when the company introduced ESOPs to its managers and guards, it was the first manpower security company to do so. Again in 2018, when it crossed 2 lakh permanent employees’ mark, it was also the first one to do so.

“These recognitions are an affirmative endorsement by our employees, basis our actions during our Covid pandemic response. People welfare has been core focus of all our planning and interventions. The GPTW ranking is a tremendous ratification of our organisation culture, policies and employee motivation levels,” says Rituraj. 

“All in all, in FY21, SIS clocked around 8 per cent growth and sustained its EBITDA level, with OCF up more than 3x (123 per cent of EBITDA). Even as the second wave caused much uncertainty, SIS has shown its business model is recession-proof, and that inspires a great deal of comfort,” says an Edelweiss Research report.

While commenting on the Q1 FY22 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, relatively more hit in the past year, is also showing signs of recovery. The management has indicated India businesses 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 further in the domestic market where despite being market leaders in security services and facility management, it has sub-5 per cent 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 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 there,” says Rituraj.

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 provider to a solutions business. The company has been proactively introducing new-age process and technologies 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 manage all areas of its operations – from Automated Recruitment Kiosk (ARK), SalesMaxx (CRM and sales), iOPS (intelligent operations) to iPorter (operations 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, seeking to build sufficient scale potential to handle 4-5x the current volume of operations.

SIS’s alarm monitoring and response business, VProtect, has won orders to take the business to over 12,000 sites, a 3x increase over the previous year. This will make the company among the top three players in e-surveillance in India. The company is poised to grab the leadership position in the industry 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.

“At SIS, we have been at the forefront of selling technology-based solutions. Leveraging modern technology will be a key enabler and differentiator for us. We have 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 security and facilities management budgets to blended solutions, which come at higher margins than our traditional business. While these goals are definitely 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 business 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 security, emergency response, investigation work and integrated technology solutions providing man-tech solutions. Having merged as the number one player in Australia, the company has recently also entered Singapore and New Zealand. 

In FY21, the international segment of the security solutions business contributed 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 international security services business which currently employs over 9,500 employees across 31 offices, has shaped up quite well ever since it entered Australia with the acquisition (in 2008) of Chubb Security Personnel Pty Ltd which was later renamed and rebranded as MSS Security. 

MSS Security is the largest security services provider in Australia where in 2017 it also acquired Southern 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 patrolling space and is now an A$120 million business. The business recorded significant growth recently on the back of offering ad-hoc casual guarding services to quarantine hotels and isolation facilities, coupled with incremental revenue from existing customers to provide additional guarding services. 

During the pandemic, the local government in Australia decided to appoint private security agencies to safeguard its Covid-19 isolation facilities and quarantine hotels. MSS offered customised safety and security solutions to these facilities and will continue 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, 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) Henderson 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 customer segments that include residential condominiums, public transport and commercial spaces.

In February 2019 only, the company entered the New Zealand market with the acquisition (51 per cent stake) of the country’s fifth largest player, Platform 4 Group Ltd which provides security solutions, alarm monitoring, mobile patrols and event related solutions. During FY20, SIS acquired Triton Security Solutions Ltd., a Christchurch-based alarm monitoring solutions player. These new acquisitions in New Zealand have enabled the company to deepen its footprint across the region, with a larger suite of security solutions. 

In March 2008, when the SIS saw its revenue cross Rs1,000-crore, it entered facility management space in India, partnering with ServiceMaster Corporation, 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 business in India. In 2016 when its revenue crossed Rs4,000 crore, its acquisition of Dusters Total Solutions Services (78.72 per cent) made the company the fourth largest player in facility management in the country. 

Offering an array of services

Currently, backed by 55,400 employees, SIS is the second largest player in the facilities management space in India, catering to 1,880 customers (6,360 sites) across diverse sectors. In the last six years, the business has grown at a CAGR of over 60 per cent, contributing Rs1,127 crore to SIS’s revenue in FY21. 

Apart from soft facilities management 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 provision of receptionists, lift operators, electricians and electrical service and plumbers. Following the acquisition of Dusters, it also offer specialised healthcare services including critical areas-cleaning in operation theatres and intensive care units, HVAC and air-conditioning maintenance, warehouse, plumbing and water management as well as pantry and steward 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 Prosegur of Spain, which is currently the second largest cash logistics service provider in India. Though the business generates around Rs400 crore annually, it doesn’t show up in SIS’s book since the company holds minority stake (49 per cent) in the JV. 

Through its varied service offerings pertaining to cash in transit, doorstep banking, ATM-related, bullion and cash vaulting services, SIS Cash Services caters to a diverse set of clients that includes leading banks, financial institutions, the organised retail industry and jewellery processing units. Backed by 9,000 employees, it services in cities and towns across major cities (500 districts) such as Delhi, Chennai, Mumbai, Hyderabad and Kolkata, with a network of 68 branches including 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 company has scaled up its security services business over the years, it has 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 manifested 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.

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