Companies

‘Essential services witnessing higher demand’

Abhishek Law Kolkata | Updated on May 10, 2021

Rituraj Kishore Sinha

SIS India MD also sees spike in demand for facility management, security services

Essential services like security, facility management and cash logistics are either witnessing a demand recovery or steady flow across “pockets” in the country, says Rituraj Kishore Sinha, MD, SIS India.

While the country grapples with a deadly second wave of Covid-19 infections, there has been a rise in demand (for security services and facility management) from hospitals, nursing homes, warehouses and manufacturing facilities.

On the other hand, a “slow rebound” is happening in segments such as hotels, malls, offices, railways and airports – which remained closed for large parts of FY21, and are also facing the current brunt of state-wide lockdowns and restrictions. Some of these segments continue to face “low operating leverage” – working with a smaller workforce than required.

According to Sinha, March 2021 collections stood at over ₹860 crore, a near 14 per cent upward movement, from the ₹720 crore it reported in the 12-month-window on a same-month basis.

Breaking it down further, he pointed out that India’s security business saw a 102 per cent jump in March 2021 as compared to March 2020; while facility management continues to be down at 12 per cent on a full-year-basis.

SIS India is among the largest security services and facilities management companies in the country.

Delayed recovery

“There have been pockets of increased demand like hospitals, e-commerce and manufacturing. But in FY21, segments like hotels or malls or even railways and airports – that account for the facility management services – saw slower off-take. Most of these were closed for the majority of the year or operated at lower capacities. Even now some of these segments continue to be impacted with State-wise restrictions and work from home requirements,” he told BusinessLine.

“We believe that the current Covid surge may delay the recovery, but will help generate demand going ahead. Essential services will continue to see steady demand recoveries depending on the pockets and segments of impact,” Sinha added with reference to the facility management business.

Interestingly, the cash logistics vertical reported better than expected numbers. Higher revenues apart, it saw an “improved margin performance” with EBITDA at 8 per cent. Pockets of price escalation, diversified non-ATM business and steep increase in cash in circulation bode well for the vertical in the near future, he pointed out.

International business

SIS’s international business – security services – has been the outlier with over 22 per cent Y-o-Y growth in revenues to ₹4,530 crore in FY-21.

The EBITDA margin for international business was 6.4 per cent led by good margins on our ad-hoc business coupled with operating leverage impact.

“The SIS International vertical is the much needed bulwark to the volatility that the Indian economy has been undergoing. The steep growth in our international revenues is on the back of ad-hoc Covid contracts with the government in Australia and New Zealand along with rebound in the aviation and special events business,” Sinha added.

Published on May 10, 2021

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