With festival boost and unlock, security services firm SIS India eyes growth pick-up

Abhishek Law Kolkata | Updated on November 21, 2020

Rituraj Kishore Sinha, Group Managing Director, SIS India   -  KSL

SIS India, the country’s largest security services and facility management provider, is looking at “back to growth” from the December quarter of this fiscal.

Improving monthly revenues and an uptick in sentiment during the festival season are seen as primary reasons for a faster turnaround.

According to Rituraj Kishore Sinha, Group Managing Director, SIS India’s consolidated revenues in the September quarter stood at ₹739 crore, compared to March 2020 revenues of ₹720 crore. This clearly indicated that the company was “well into the recovery phase”, he said.

Domestic revenues

The company’s India security revenues in September were 94 per cent of March revenue levels, while international operations were at 121 per cent.

The facility management segment was operating at 70 per cent of March 2020 levels. Covid-19 impact on the facility management segment was steeper due to Railways being non-operational, and key clients in the hotels and retail sector having lean operations, which resulted in a temporary pull back in service volumes.

With the festival season, and segments like multiplexes and malls steadily opening up, normalisation of service volumes is expected over the next three-four months. Since the facility segment contributes only 12 per cent of the group revenues, it is unlikely to delay the “V-shaped recovery outlook for H2 (October to March),” said Sinha.

“In March, we said essential services will be the least impacted and our Q2 results show that security services are amongst the first to recover. In Q3, we expect to be back to growth. Current trends in October have been positive,” he told BusinessLine.

Growth in India business is expected to be back to the pre-covid levels – of 20 per cent CAGR – in FY22.

Operations in the country account for 60 per cent of SIS India’s consolidated turnover with the remaining coming from operations in Singapore, New Zealand and Australia. Over the next two to three years, India-ops are expected to account for 75 per cent of group turnover.

Reducing debt

Incidentally, SIS India, witnessed one of its best quarters for the period ending September 30, 2020 with cash flows at a “historical high”. The operating cash flows to EBITDA on a consolidated basis was 188 per cent.

The increase in cash flow saw the company reduce net debt by ₹213 crore from Q1FY21 (Jan – Mar) to Q2FY21. Net debt at the end of Q2FY21 stood at ₹462 crore. Interest coverage ratio improved to 4.8 times (end of Q2); while the Net Debt to EBITDA came down to 0.9 as on September, against the 1.3 it had reported in June-end.

“We are comfortable with the debt position. Our target has been to keep Net Debt to EBITDA below 1,” Sinha said.

Published on November 20, 2020

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