SIS Limited (SIS) Earnings Call Transcript & Summary

Hi, everyone. Sorry for the slight delay in the initial start to the investor call and analyst call for SIS. As you all know, every year, we used to have a physical event in the first week of May in Bombay. But this year because of obvious reasons, we had to cancel that and move it to a webinar format. But yes, glad to be connected with you at least through this webcast format. I'm sure there will be some teething problems over the next couple of hours, but I'm sure you'll bear with me. So we have a agenda, which is packed for the next couple of hours. So we'll start off with all the BUs who are going to present their review for FY '20 and an outlook in the circumstances. Then we'll have Devesh, who is our CFO, who will -- sorry, just a moment. Yes, then we'll have Devesh, who's our group CFO, will talk you through the financials for the year and also some of the current trends we are seeing in the numbers. I'll have a short deck on the M&A strategy and about the outlook for the next couple of years. And finally, Rituraj will close off the initial session with a quick 10-minute discussion on the trends we are seeing, especially post-COVID and how we are repositioning SIS to capture the market and how we are moving ahead in the current uncertainty. And the last 40, 45 minutes, we'll spend on a question-and-answer session. So without delaying too much, I will hand over the call to my colleague, Mr. Tapash Chaudhuri, who is the Head for the India Security Business or the Chief Operating Officer for India Security Business. Over to you, Tapash, I will manage the presentation from my side.

Yes.

And do let me know if you can see the presentation at your end.

Hi. Good afternoon, everyone. This is Tapash Chaudhuri. So I take you through a few slides of our performance for Security Solutions in India. Now Security Solutions in India primarily consists of 5 companies. The main company, which is SIS India, and then we have the other 2 guarding companies, which we had acquired last year and last to last year, one was SLV, another was Uniq. SLV was primarily based in Gurgaon and across the country they have operations. And Uniq is primarily from -- operating from Bangalore, and they have a good presence in South India. So besides these 3 companies in guarding, so we have electronic security system company, which is Tech SIS. And then we have alarm monitoring company, which is named as Vprotect. So these are the 5 companies. Now all these 5 companies put together, we have 154,000 trained manpower on ground, operating from 170 branches. And they are scattered around 18,500 sites, which are owning by 6,000-plus customers. Now the next slide, if you go, you will find that the revenues for entire Security Solution, like previous year, we had INR 2,712 crore and the current year, which has ended in March 31, 2020, we finished at INR 3,528 crore, thus making a 30%-plus growth in terms of revenue. And in terms of EBITDA, it's about 40% growth in terms of EBITDA. Last year was INR 151 crore vis-à-vis the current year, it is about INR 211 crores. And if you see the quarter-on-quarter basis, even the fourth quarter of previous year, vis-à-vis the fourth quarter of the last year, there is a growth of 18.7% in revenue, and 0.3% in terms of EBITDA because in the last quarter, we had spent more than INR 5 crore towards procuring these PPE items for this COVID-19 and then arranging for the ration for these families of our guard ports and all. So almost about INR 5 crores spent on that. So after considering that, it's 0.3% in terms of growth on fourth quarter vis-à-vis the previous year. SIS India, which is the main guarding company, we grew at close to about 20% and touched the medical figure of INR 3,000 crore turnover. And margins also increased from 5.7% in FY '19 to 6.4% in the year ending 31st March '20 with operating leverages and greater solution mix. SLV integration, which is totally completed. SLV we acquired in September, October 2018 and 1 full year we got. First full year of operation under SIS umbrella saw revenue growth of 17%, which is the highest in last 5 years for SLV. And Uniq also bought in strong middle management and reached close to INR 200 crore turnover Uniq for the last year closing 31st March 2020. Let's go to the next slide, where we are showing that there is a 5-year CAGR of 27% growth and FY '15 onwards to FY '20, 5 years back, it was INR 1,039 crore turnover, and then now we are at INR 3,528 crore turnover. So steady revenue growth, coupled with greater depth in offerings. And increased market dominance, established clear leadership over the second player in guarding sector. SLV and Uniq acquisitions, well integrated and performing in line with initial estimates, ended the year with over INR 300 crore run rate in March 2020. And Vprotect also gained significant traction with close to 100% growth in sites and revenues. The next slide, which gives the market leadership to market share, where you will find that the worldwide, the per capita growth prospects in India. India has got the highest potential to grow. And it's clearly showing between 14% to 15% growth possibility even until 2025. So India has the lowest per capita spend among most developing and developed markets and the steepest growth opportunity. And also, if you see the combination of guarding plus systems and alarm monitoring, you'll find that 2014, which was 5 years back, vis-à-vis last year, it is almost doubled. And even the same trend continues till 2024, where the absolute INR for alarm monitoring and system goes much higher proportion, which is around 19%, 20% on this. So there is a CAGR growth now, INR 80,000 crore in FY '19 is the total potential for guarding sector or Security Solutions Sector, which tend to increase to INR 157,000 crore in FY '24. CAGR of 14% and tech solutions estimated to grow at over 19%. The COVID impact -- following slide, the COVID impact, essential services categorization, we supported hospitals, we helped grocery stores and we enabled essential manufacturing sector, facilities, banks, ATMs and assist in law and order. So 154,000 scattered on ground, front line staff; 3,000 officers, managers at 170 branches were at work to keep the society and business safe. The long-term trend in Security Solutions, the following slide, we'll find that industry, as I told, industry is around INR 80,000 crore in size, which is growth forecast at 14%. And then SIS, despite being the largest, the market share of SIS is less than 5%. So even INR 80,000 crore and then INR 3,000 crore or INR 3,500 crore turnover, which is not even 5%. So there is a big potential to go and improve this market share. Fragmented industry consolidation expected, especially on the back of COVID. And clients will focus on more compliant and reliable vendors. This particular situation, it will be survival for the fittest once this particular thing gets sorted out. And organizations like SIS and few other big companies, they will have more potential to grow even faster and take benefit of this particular sector. Solution focus will increase as clients focus on outcomes like safe access in place of guards and CCTV. So these are the projection for these Security Solutions in India. And SIS, as usual, has been doing fantastic. So that's all from my side, and we have got a lot of compliments from important customers. We have worked fantastically in this particular crisis period. And most of the companies, even if whether they have given certificates or they have not given certificates, but then everybody appreciated the kind of effort SIS has taken on ground to look after the frontline people and then providing them complete supports. So with this kind of a situation, actually, it has given a potential scope for SIS to come out from this normal trend, and SIS definitely will take benefit of this situation in future. That's all. Thank you.

Thank you, Tapash. I'll now hand over the call to Mike. Mike is the CEO of SIS International. He will walk you through the performance of SIS International for the year and what trends he's currently seeing in his regions. Over to you, Mike.

Could you hear me then before or not?

Now we can.

Okay. So I'll start again. Sorry. SIS International is market leader [indiscernible] including Singapore and New Zealand as well as our Australian operations. In Australia, we've got MSS security and Southern Cross Protection, which combined makes the #1 security business in Australia. In Singapore, we've got Henderson Security Services and Henderson Technology. We -- that's #3 in the Singapore market. And in New Zealand we have P4G is the brand we operate under, which is also incorporated through acquisitions we've made in the past 12 months, which is Triton and [ Best ]. As far as the monitoring center which brings a new alarm covering and [ Best ] has alarm responses within patrols. All up now, we have 9,500 employees in the SIS International business. We had a stellar year with a record margin improvement net to EBITDA margin from 4.4% to 6.1%. You need to recall MSS' margin percentage was dwindling year-on-year, just a little shy all the time, and it had to be arrested. So we set out a margin improvement focus rather than revenue-led budget. MSS revenue was up 1.6% year-on-year. But prior year included the comm gains and some other significant casuals. Our EBITDA has gone up in MSS full 0.9%. And our EBITDA dollars are up -- EBITDA is up to 22.8%. Those are up. MSS set out to improve the margins, and we did through some PIPs which is performance improvement plans, which delivered $2.6 million EBITDA to the business. We then add in the full year effect of the Singapore and New Zealand acquisitions, which have superior margins, given the product ranges we've got and add in also the SXP increase in margins that helped us deliver that move from 4.4% to 6.1%. If you see in the bar chart on the left for the year-on-year comparison, revenue-wise, we grew 11.7%, but we grew a disproportionate 43.3% in EBITDA. So we certainly did deliver on what we set out to achieve. If we look at the quarter-on-quarter for Q4, revenues are up 10%, and EBITDA is up 29.2%. So somewhat reflective of what we had for the year-on-year. We ended up there for the MSS. We had our best decade -- our best margin in decades. SXP integration is on track. They've moved into our facility. They had their highest ever revenues of $110 million, and their best ever margin of 9.3% EBITDA. Singapore continued to drive margins, 12.8% and retained their largest customer, which is the metro for 3 years. And then New Zealand, with the small bolt-on acquisitions of Triton and [ Best ] we did $97.2 million revenue. Process and technology innovations drive the productivity. We have an operating system here, which is our own called [ Roll-Call ]. That got a major overhaul. Now that's been over too for quite a while, called [ Roll-Call 2 ], including costings. Now [ Roll-Call ] is future-proofed for enhanced speed and functionality. There's no point in it doing an overhaul, unless we knew the system could handle the speed, we already had speed issues. And I'm pleased to say they've been fully overcome. We don't view that as an issue anymore from the business. Enhanced NOC capability and NOC, the National Operations Center. We trialed bringing New South Wales aviation and after hours together in 1 control room here in Sydney, just down the hall room away from me. That's been successful. So we're now looking at potentially bringing all rostering to City's National Center here, and that's part of our budget plan for FY '21. Online reporting and real-time reporting through the ISOPro product. It's a just a reporting tool that's very interactive with our customers. They're very happy with it. We're rolling it out to all of our national clients. We're fairly well through the process in the last financial year, and we'll finish that in the upcoming financial year. We've also got an MSS app, which will be a material enhancement in communication and efficiency. It will cover roster notifications and acceptances, late applications, payroll slips, sign-on and sign-off for your shifts, employee alerts, vacancy and shift broadcasting. MSS news, for example, in the coronavirus, we use pump out staff, [ boards ] and also employee benefits. On the COVID response in New Zealand and Australia has worked pretty well for us with -- Australia is still less than 100 deaths, it's not that tragic, but it's still a pretty good number comparatively. We're down to less than 10 new cases a day. We've had no deaths. We've only had 2 positive tests back there in Singapore. Government provided significant incentives to small businesses and wage subsidies to help the recovery. Unfortunately, there's no benefits for the Australian business there because we're over the thresholds. But we will get some grant in New Zealand. And in Singapore, we believe we're eligible and we're processing applications at the moment. Cash collections remained strong, which is our big worry that people would hold cash. Our customers have been fantastic. In fact, some customers buying earlier than normal. And our relationships with our clients are an all-time high. MSS had record collections of over $70 million in March. SXP and P4G had really strong performances at 29 and 45 days. Singapore has got a little bit of room to improve, but that's coming from a family-owned business to now internationally-owned business. And overall, our revenue is steady to date. We have had some permanent clients reduced their service base, particularly in aviation and also ground casino in Victoria. But offsetting that had additional work in our existing customers as well as additional work requests from new customers. And some of that where you would see the hotels where people are being quarantined for 14 days with 3 security offices in every floor. We did that in Perth, and we did it in Victoria. Now to your long-term trends, reduced its payments and retainments. There's currently a big drop-off in the number of tenders. We've had quite a number canceled, put on the shelf on hold. So that's good for us given we're the biggest in the industry. So we've got our clients who are increasingly safe in attrition. So what it'll do is it'll make it harder for us to win work because there won't be as much coming to market, we believe. Reduction in wage pressures. We have here in Australia, everybody call it the Fair Work Australia. That makes a wage determination for the low-income people on what sort of increase they'll get, which is effective July each year. It's been running at about 3.25% to 3.5%. We believe with COVID virus, there'll be a lot less pressure on pushing for wage increases. And hopefully, we won't get a 0 decision on that one. Now digital transformation to our [ Roll-Call ] project I mentioned already, employee self-serve and attendance portal and automation of customer invoices in [ Roll-Call ] is part of it. Solutions selling-wise, we've restructured our BD team. 60% of them now in place with 40% still to be recruited. We've had some early positives -- sorry, it's about having a greater array of dilutions, both inside our organization and our group companies and outside from security providers. That can be a good fit for our customers that we can go and put some technology in place and reduce the amount of guarding would increase our overall profit. So that's some early positives. We've had some cameras on some of the cruise ships. There's [indiscernible] temperature testing. And we've just done a quote with the Department of Defense for some [ clients ]. We can move on to the -- and that's it. So thank you, guys.

Sir, you'll have to unmute your audio on the right top.

Thank you, Vamshi, and good afternoon, everyone. And I hope everyone is safe and sound as well as with your families [ actually ]. So the Facility Management business, has seen a spectacular growth again in the last year. And ironically, the COVID situation has proven to be solid marketing effort actually for the whole business, and we'll come into that a little later. But first, go through what the performance was for last year. So as a business now, we are arguably the India's #2 largest FM provider, having more than 60,000 trained housekeeping staff, but not just housekeeping staff, it includes all the technicians and from all other disciplines of facility management. We manage about 4,000 sites of 1,500 customers. And we operate through 77 branches all across the country. The 4 main brands continue to be DTSS, ServiceMaster, RARE and Terminix SIS. So in the last year, the revenue grew by a solid 35%. And please note, this is almost entirely organic growth. The EBITDA growth was about 32% again on back of solid performance by all the businesses. ServiceMaster has had the best EBITDA performance ever. And still, even with this very high base continue to grow at a 25% rate, reaffirming our belief that even with a large base, we should be able to grow at the rapid pace that we have set in the past. And also the smaller -- relatively smaller businesses have a fairly long way to go, while they continue to log in high percent -- 35% growth rate. On a quarter-by-quarter basis, for Q4 '19 to Q4 '20 there was 24% growth on the revenue side and a 20% growth on the EBITDA side. All businesses have adopted the digitization efforts well in advance of the corona and something that we are seeing is of great value as we move into post-COVID era. Our investment in RARE business, which is health care-focused facility management company is clearly paying off now. And in last year itself, RARE has crossed INR 100 crores for the first time in 25 years of its business and in the first full year of our operation that we are managing as SIS. So together as the 3, 4 businesses in facility management, we are managing more than 300 hospitals as of now. And the team has done a spectacular job in providing health care support to the society and country at large during these times. So on a CAGR basis, we remain the fastest-growing facility margin group in India at a CAGR of almost 85% over the last 5 years time. In just last year itself, our organic revenue growth added was about INR 340 crores. And from any metric, we should be near the market leadership position soon. Every business has been enhancing its capability and across all service range from technical services, to smarter cleaning, to disinfection services and other value-added services, whether it's in the different sites, et cetera. Also, we have embarked upon the strategy of offering specialized solutions for various segments. And we had already developed specialized solutions for the health care segment right from developing our own proprietary iPortal app which manages portals within hospitals using ultraviolet infection control technology and all of that, we will definitely reap the benefits now in the coming years. So the facility management as a whole ended March 2020 at a run rate of about INR 120 crores, which, on an annualized basis, is almost INR 1,400 crores target. The smaller businesses, TerminixSIS, in particular, I'd like to mention, it clocked a 50% growth last year and notably EBITDA was 9% in Q4. Remember for the first few years, TerminixSIS was struggling to give a positive EBITDA. Now that it broke even from last year, it's on the upside where we see a very high EBITDA contribution from this business. And in the current environment, this is by far TerminixSIS is most rapidly growing and the most in-demand business amongst the whole group. This business also operates at a very high gross margin of 50%. And as it scales up, which the current environment gives us an opportunity to do so, the EBITDA levels will change towards 15% to 20% on an equilibrium basis. Last year, we had also started the 1 SIS initiative, which is bringing all the solutions within the SIS group, especially the bank security part, the entire IFM side under one umbrella and offer that to a client as one single solution provider. And that gives us another platform to play with in the likes of [indiscernible]. And I'm happy to say that on an annualized basis, we have clocked about INR 100 crores within this particular segment in the very first year. And we expect this to play a very strong enabling role in our transition towards solutions management for clients in the FM segment as well as in facilities. Railways, we continue to grow strong in that segment. It is a B2B segment that we are very bullish on, the railways. We believe that the railways department will continue to spend more, even more so now in maintaining the hygiene and cleanliness at the stations as well as on the trains. And I think I won't hesitate to say, we are the largest player in the railway segment as of now. The challenge I see in the business is the DSO. Across the businesses, we've seen a trend towards a higher DSO which has started to come down and RARE is leading the way in that, but there is room for improvement, and we are working very actively on that. There was another small acquisition that we did last year of a business called Adis and Adis specializes in MAP solutions for the pharmaceutical sector. And again, on retrospection response, this was a very good small bet that we made because if any of the segments that will grow in India and act as a hub will be the pharmaceutical sector. And we hope to bring all our solutions towards the pharmaceutical clients of Adis as well as bring Adis to our other pharmaceutical clients. So in terms of the potential, I think the business and a lot of this was pre-COVID, but I'll share my thoughts of what I think post-COVID too. We expect in the next 5 years, both the hard FM and soft FM to grow at about 17%, 18%. India is still amongst the lowest per capita spend amongst all the developing and developed markets, even though it's having one of the fastest growth. I see this changing rapidly in the time to come. India will have no choice but to spend more on keeping its staff, family, facilities safe and hygienic. And the first spend, per capita spend is definitely going to go up. And the net impact of that is going to be positive for the whole facility management. The COVID impact, it will have a temporary impact and the longer term, medium term, more structural impact. I think in the short term, apart from the lockdown impact, there has been a very high demand for our sanitization, disinfection, smart deep cleaning, intensive cleaning solutions that we offer to our clients as a solution. And we are getting an unprecedented number of orders. But in the last 10 days, we bought more than 100 orders that we are tracking in this particular segment. So I expect the demand to grow definitely on the onetime as business come back post lockdown. And our attempt and effort would be to convert many of these onetime requirements into more recurring requirements because the businesses would require them on a recurring basis. You cannot sanitize a workplace once and then go to sleep. We need to continuously keep your facilities on a sanitize basis. During the lockdown, we have so many spectacular stories of our people on the ground, I could write another book on them. We supported the 300 hospitals, as I said. Our people worked 16 hours at a stretch, wearing diapers at time, walking 3 kilometers each day to reach the hospital sites. But they were on the ground with a smile. We helped the essential services segment, whether it's on the retail side or some of the manufacturing. We works with a lot of BFSI banks segment. And some of the hotels that operated, whether as has quarantine center or otherwise. Our entire 60,000-plus frontline staff were available for the clients and the accolades that we got from our clients for this has kept the morale high, and the team is strongly driven now to deliver on the goodwill that we earned from all our clients. So as the last slide, in terms of how we see the future. As I mentioned, the health and hygiene are going to play a central place in every client's agenda. It is safety first and as equal to facility. So without us doing too much of marketing, I think this realization that has come to clients on their own. It is now not about just keeping the facilities aesthetically looking cleaner, it is about life and death. If you don't keep your facilities safe, hygienic, you are risking the life of your staff and consequently, your business also in a way. So this realization is definitely going to be there with the clients. And they will look at companies who can provide them the solutions at the very last mile, not at the strategy senior level, but people on the ground who can deliver this solution. And who are reliable, who can be with them in terms of crisis like we did in the past 60 days. There will be an increase in intensity of the hygiene requirement, intensity in terms of both the deeper cleaning, it is not just 1 level of surface cleaning. We will need to deploy stronger machines to degrease the whole surface as well as the frequency because any surface that's been touched becomes a vulnerable surface. And you need to keep addressing and cleaning that. So that is something that we expect will increase the volume of the work in a sense. A lot of clients will now realize that they will be focused on outcome-based solutions, and that is where we have a head start. We have solutions that can be measured on SLA basis, and we have the apps for that, and we are bringing it to our clients as of now. Integrated solutions, clients will want to have one single vendor now who can manage all their risks. It is a risk management profile. And when you outsource your risk management, you don't want it to give it to 3, 4 people manning the risk because that itself defeats the purpose. So as a group, we expect more integrated requirements to come from our clients. We've already seen that. The whole world, every business is going to see a strong shift towards digitization both internal as well as client-facing. We are lucky to have made a lot of long strides in both these areas, pre-corona. And we are going to expedite them, we are accelerating that, and we are putting them on ground on a rapid, rapid basis. And that is something that will be the new normal as we go faster in the future. So we hope to become bigger and better. And in the last 50 days, we've definitely seen how fast we can respond, and we hope to carry that in the future too. Thank you.

Thank you, Dhiraj. I now invite the Head of our Cash Logistics business, Mr. Oscar Esteban, who will walk us through what has been a year of probably a slight turnaround in the cash business, and probably we'll see more of it in the future. Over to Oscar.

Okay. So good evening to everybody. Another year here at this time in Delhi, not in Mumbai. So the cash business is the JV of SIS -- between SIS and Prosegur. Prosegur, the second largest cash management company in the world. Today, the JV is formed by 2 companies, SIS Cash and SISCO. We continue to be the second largest CIT company in terms of market share in India. As we pointed out last year or we depicted according to the changes in legislation that happened in India, we have to say this year that what we depicted that reality today is a fact. This year has been a year of turnaround of the cash business, as anticipated, in which we have deployed even some innovative solutions in line with the company vision that is being the leaders on innovation, paving the way for others to follow. So in the next slide, we have the main variables of the business. In terms -- sorry, has not changed from the last years, maybe the numbers, yes. But the 4 main business lines appear there, ATMs, DCB, CAT routes, the DCB, dedicated cash bank, so CAT routes, pickup points, what we call doorstep banking or cash pickup and delivery and the sorters, that is called CACP business that is deployment of sorters or cashiers in the bank premises or in our vaults. So the infrastructure and reach is similar to what we have, though we have reduced slightly the month forward. That is part of the efficiencies that we have been carrying out. Next slide, maybe the most interesting one of the whole presentation, which state the numbers. So this year, we have grown 14%, 13.9%, the revenue arriving to the highest figure ever in terms of turnover in the company. And all of that done by means of organic growth. As you know, in the past few years, there was some inorganic growth in some of the years, 2014, 2016. So this year, okay, in the last 2 years, there has not been any inorganic operation. In terms of EBITDA, the staggering increase has been from 0.6% EBITDA last year to 7% this year. And even we believe that this level is going to be -- overpass is going to be increased on the future. And when we compare the figures of the last quarter, we see similar effect in terms of revenue. And we have to tell, in terms of EBITDA, in terms of doing a comparison, an apple-to-apple comparison that the normalized Q4 EBITDA for last year was 2.2%. There were some one-offs effects that made, okay, what appears there that it seems that has happened a decrease when in reality, comparing apple-to-apple is an increase of 136% from 2.2% to 5.3% -- sorry, from 2.2% to 5.2% progress. What we have done in terms of revenues and in terms of EBITDA, in next slide, when we are dealing with the positive trends, we can see that. We have been -- because of the support of the new legislation, plus the internal efforts, we have been one of the first years that we have been able to increase rates in the -- in a broad way in the cash business. The -- we have been reorganizing the business line. So we have been focusing more on the non-ATM business line. So for you to know, ATM business line when arrived to the peak was 55% of the whole turnover and today is 35%. Even with this reduction, we have been able to increase and to arrive to the highest turnover ever, as I mentioned before. The reduction on deductions for the ATM business continue to be reduced. This year has been around 50% less. And we have been carrying out that we have started in the past. We have continued some efficiency measures, productivity enhancement, nonbillable OT, manpower reduction to make the business more efficient. And finally, though we have 2 separate companies, we have 1 single old track for the cash business in India, which has meant that we have rationalized the overheads. And overall, we have made some important organizational alignments. It's not here, but I have to say that in the last quarter, we have arrived clearly to generate positive cash flow. That was one of the targets of the business. About the long-term opportunities and challenges, the trends, we see a greater enforcement of compliance that at the same time is a challenge, as we commented last year, which means a shift from unorganized to an organized industry. The greater importance that is compared to the service excellence, there were opportunities, the tariff increase that we have commented that we have created the dynamics to do so. The industry consolidation before the COVID, we saw that the industry, there are some players that are weaker than in the past in the -- on the industry. Integrated currency chest solutions, the cash processing part in India is with banks and is a part that mostly has to be outsourced yet. Some innovative solutions that we have already started. We are the first cash management company to deploy an end-to-end solution involving CDMs, cash depository machines, and cassette swap model for ATMs that in line with international standards. About challenges, apart from compliance that I mentioned before, the high deductions in ATM continues to happen despite our decrease. The industry misalignment that is something that can happen at any point of time. CapEx for migration to RBI-MHA norms that is required to be able to cope with the new regulation. And the pricing increase for ATM that is pending much. We cannot finish without mentioning the COVID-19 situation in the last slide. So here, what we have seen in other countries has been a steep decline on volumes for a period of 2 months. Here, we can see somehow the future because we can see what has happened in other countries, especially in Europe where the volumes have decreased for 2 months steadily. India is not an exception. However, I will say the difference is that here because of the risk structure and because some other measures, we are able to preserve the bottom line and the -- the top line and the bottom line. Apart from that, we have been sanitizing cash banks, giving PPEs to all our staff, picking up the staff even from their homes to attend job. And here, you have some signs of appreciation from banks and ATM clients, we demonstrate that. Despite, I will say, and to send one light of hope, okay, in this gloomier scenario that we are facing, we have been able to deploy 3 key projects, 3 key innovative projects in India in the month of April, even with this situation: One has been the value cargo that we have started; second, offering a complete end-to-end innovative solution that I mentioned before by means of cash depository machines that is the first time that this happened in India from the final -- from the end customer, the citizen to the bank; and finally, a big project with the UP government for deploying 350 staff for a period of 4 months. So thank you very much.

Thank you, Oscar. The next session is on inorganic growth, M&A and inorganic growth and just a quick look at how some of the deals we have done in the past are shaping up and what kind of trends we are seeing in the M&A space and especially in the -- in a post-COVID scenario. What are the opportunities that might turn up. So just give me a second while I put up the presentation. Yes. I think some parts of our strategy, I think people who have been regular listeners to our analyst calls in the past, in other analyst meets earlier, I think our strategy would be -- thought would be familiar with it. I mean, it doesn't undergone a change. We are very -- our strategy is working, which is formulated to reinvest, pretty much remains the same. Not a lot of changes since the organization formed it. Our rationale for M&A is essentially what we always have stuck to, which is consolidating our market share in key geographies and customer segments. As we said, we have been historically a bit weak in a few markets where we were not in the top 2 or 3 players, so we wanted to beef up our presence there. There have been some skill sets which we wanted to add based on our future understanding on how the market is evolving and what kind of opportunities that we see. So what are the targets we look for when we do M&A? One is, obviously, market leaders who have been fatigued after years of growth and want to exit. Typically promoters who are like 50 to 60-year-old who may have successor issues, who have plateaued in terms of their growth. I think those are our ideal targets. We prefer recurring revenue business streams. There have been opportunities, which came to us in allied fields around security or facility management. But industries, which are -- I mean, the services which are of a project nature or which are nonrecurring, which is very difficult to predict, I think those are difficult sells for us from an investment committee and a charter point of view. So our core is to have the business which actually recurs through the lifetime of the company. And the last primary goal of M&A is we stick to our core. We don't like to be too adventurous in our M&A, we stick to what we are good at. We know 3 businesses, which are security, FM and cash. And those businesses have a lot of scope. And I don't think in the near future, we wish to venture beyond that. How do we go about our M&A and what is our approach? The first is obviously, alignment of interest, especially because most of our target companies are owned by individual entrepreneurs who built up businesses over the years. They are very close to the business. The customers are close to them. The employees are close to them. And we don't want to unnecessarily jolt any company by acquiring 100% and stepping in as a big brother on day 1. So we prefer a strong alignment of interest, which [Technical Difficulty] the structure we put in place. We don't buy 100% of a company on day 1. We buy a 50%, 60% or 70% sometimes and do a earn-out mechanism for the promoter over a 2 to 3-year period. And all our transactions have followed this method, and we have consistently seen that work for us. And the last step, obviously, is integration. We know that integration is extremely important, and it doesn't matter sometimes if you pay a few crores more or less for a deal. But if your integration does not work well, whether in terms of culture or financial and accounting systems, for people, the whole acquisition can fail. So this -- the strategy has been what it is for the last 2 years, but it's important to reiterate that. So that the audience knows that we are doing what we are good at, and we are sticking to the strategy which was annunciated. Quickly going to the next slide. There are a couple of slides, which I'll quickly run you through. I think in our couple of earlier conversations on our quarterly calls, you might have had this discussion, Dusters was a deal which we did 3 years back around this whole earn-out methodology targeting strong players, recurring revenues, the key micro markets like Bangalore, Bombay, where we're not pretty strong in. And Dusters was a company which was growing at probably 11% CAGR for the 3 years before we bought it. But for the last 3 years since then, it has consistently grown at 23%, 25%. And this year, it has ended at close to INR 800 crores. And similarly, the EBITDA also, which was growing at 33% CAGR for the prior 3 years is now -- the CAGR for the past 3 years is upwards of 50%. So I think there's a great deal of value that we have added after acquisition, which have made the revenues and EBITDA jump up in the manner they have. A lot of it comes down to integration, obviously, and a lot of it also because there is very strong alignment of interest between the promoters who exited 6 months back after their last tranche, and the SIS management and promoters. So the alignment of interest has been very key. And all that has enabled us to have an IRR in excess of 35% without attributing any kind of multiple arbitrage. This is purely on the basis of their cash flows. And if you go to the next slide, this is on SLV, the company we bought in Delhi, Gurgaon NCR, a couple of years back, September 2018, to be precise. Again, if you see the company had a 2-year CAGR of just over 4%, the couple of years before we bought it. But since then, it's been growing at over 12% in terms of revenues. Again, same kind of thesis, same kind of alignment of interest as we had laid out in Dusters. Delhi and NCR was a key market for us. We wanted to beef up our presence there. It's a great -- SLV is a great brand name in NCR. Over 70% of its revenues come from here. We acquired 51% for INR 50 crores initially. We had a very strong earn-out structure, pursuant to which we got 16% -- 16.4% to be precise, more equity for the same initial advance we gave of INR 50 crores. So that in a way ensured that even the targets which we had said if they are not met, we have a very aggressive clawback mechanism. So even a deal like this is likely to generate close to 40% IRR for us over the lifetime. The integration teams have done wonderfully well. We've got a new middle management team there, which is -- which will probably help us grow even faster in the near future. And as we indicated in the first slide on one of our rationales for doing acquisition, which was essentially building more skill sets and capabilities within the company. And a couple of acquisitions we did over the last 2, 3 years have been in that direction. One was SXP in Australia and one is Rare, SXP essentially a mobile patrolling company, which is essentially doing security services on a timeshare model where 1 guard goes around in a vehicle and inspects 5, 6, 8,10 establishments depending upon the SLAs. And we get paid per visit. So it's a very different model compared to a full-time person being stationed at a place. It takes us further along the solutioning model, and we are looking to use that knowledge to see how we can -- and whether we can launch something like that in India in over the medium to long term. Because -- and that's a model which can definitely scale, especially in a time where minimum wages keep rising and the availability of people also becomes difficult over time. SXP again, the -- before FY '18 when we bought it, it had flat growth. And over the last 3 years, the company has had CAGR of 9%, which, as you will understand, in a market like Australia is almost 3x the GDP growth. Coming to Rare, as Dhiraj had also indicated earlier, Rare was a company that we acquired primarily for its health care specialization. And Rare gets almost 60%, 70% of its business from the health care business, especially hospitals. Most of the important hospitals in Bombay, whether it's Saifee Hospital or Kokilaben, most of them are managed by Rare Asian heart hospital. And especially in times like this, those skill sets have come of use especially well. And we have leveraged that knowledge to help us build more solutions as we look into the post-COVID climate on what solutions will be more in demand for customers over the next 2, 3 years. Again, the company had flat growth before we bought, but over the last 2 years, the CAGR has been 10% in revenue. Quickly, looking at the last slide. So how do we see M&A over the next 1 or 2 years? India is going to be the focus for capital allocation in future, because we see a lot more opportunities here in our core segments. And as indicated in the first slide, there are markets and micro markets in India, where we are not very strong in, like the West, for instance. And that is something which we have been eyeing for some time. But as we've indicated earlier, we're not going to buy at any price. We were to be discrete and careful about it. But we'll continue to observe that region and see if opportunistic buys come up. We'll probably do more strategic larger deals rather than some INR 100 crore kind of deals, unless you're buying a company specifically for some skill sets or some niche specializations. We foresee a bit of stress in the next 1 year, especially in the smaller category of security and facility management vendors and companies. There'll be working capital stresses. There will be defaults. I think it's -- the situation will be more clear to us probably after Q1. And I think that -- I think post-H1, I think we would see a lot of M&A opportunities available at fairly attractive valuations. So this is something which we'll continue to focus on. And I think the next 2 years will bring very interesting opportunities from an inorganic point of view. And yes, as I said earlier, we might look at some niche adjacencies, which are smaller in size also from a solutions point of view. And as long as they add significantly in terms of knowledge and capabilities to us. So that, in a nutshell, is our inorganic strategy. I will quickly hand over the call to our group CFO, Devesh, who will take you through the FY '20 financials. And I'll quickly put up the presentation, give me a second, please. Devesh, over to you.

Can I start?

Yes, please go ahead.

Okay. Good afternoon, everyone. So in FY '20, we had revenues of INR 8,500 crores, which represented a 20% increase over the previous year. We ended the year with a monthly run rate of INR 728 crores, setting us up for almost INR 9,000 crores in the next year. Our EBITDA at INR 520 crores was 42.5% greater than the same period last year. And the EBITDA margin increased from 5.1% to 6.1% for the entire year, driven by improved performances across all the businesses. Our normalized PAT at INR 292 crores was 36% higher than the same number last year. And the return on net worth -- adjusted return on net worth using normalized PAT was 22.1%. We have a comfortable leverage position of 1.1x of net debt to EBITDA, excluding lease liability. And we'll talk about the normalized PAT and the net debt to EBITDA a bit later. If you look at our last 12 quarters trending, we have been growing at an average CAGR of 5.8% on revenue. And we have been growing our quarterly CAGR at 6.9% as far as EBITDA is concerned over the last 12 quarters. When we go on to our revenue and the revenue mix between geographies and between business segments, you will notice that we have 44% of our revenues coming from our international business and 56% coming from our India businesses, a bit of a change what we saw 2 years back, where it was the other way around. And pleasingly, the EBITDA is also now following the same trend of 56% from India and 44% from international businesses. When we look at our business segments to which we are exposed, if you look at the pie chart on the right side, you'll see this is the -- we represented the India business segments, the business segments which we serve in India. And we have only 9% of our revenues coming from hotels, restaurants, retails, which we all think is a risk business for the next few months. And on an overall group basis, this segment represents only 5% of our group revenue. So we are well derisked. We don't have a huge exposure to this sector, and that's why we believe our downside on this is extremely limited. If we go to P&L, which we -- I'm sure everyone has had a look at. The only 1 item I would like to highlight and draw attention to is the PAT. As you know, in the middle of the year, the Finance Minister in India had announced a new tax regime. And over the last 2 quarters, we were evaluating whether we move to the new tax regime or the old tax regime. Would like to inform you that after evaluation for all India companies, we have decided to move to the new tax regime of effective rate of 25.17%, no MAT, but we are able to continue deductions on the 80JJAA. As a result of this decision, we have had to do 2 things. We have had to write-down our deferred tax assets, which were built up at the rate of 34.94%. And the MAT credit, which is no longer available, has also to be written down. All those entries have been passed in Q4, and that is why you will see the Q4 reported number is a bit of an abnormal number. And that is why we have represented a pro forma profit, which would have taken place, which would have been achieved had we not had these entries. That's INR 107.4 crores for the quarter and INR 291.7 crores for the full year. As far as balance sheet is concerned, I would only like to draw attention to 2 or 3 items there. Number one is, as I mentioned earlier, the net debt by EBITDA is at 1.14 without considering the lease liabilities, as we all know, the lease liabilities, accounting and operating lease accounting was changed during the year. It created a liability in the books and a corresponding right to use of the asset. That's reflected in the books in this year. At 1.14, we believe it is a comfortable level of leverage and gives us headroom to raise funding and grow further. The noncurrent financial liabilities, you'll see has reduced primarily because we were able to settle SLV. We were able to settle DTSS during the year. And SXP, which is expected to be settled during this year has been moved from noncurrent to current because it is expected to be settled in the next 12 months. Working capital increase was due to normal business growth, as you would appreciate. And as far as the noncurrent assets are concerned, it's primarily increased due to the capital expenditure. A significant portion of it was on account of lease liabilities, which was around INR 111 crores during the year. And we had some goodwill true-up in a couple of acquired businesses during the year. As far as the capital employed and leverage is concerned, I've mentioned about the net debt to EBITDA, which is at 1.14, excluding lease liabilities. Pleasingly, our interest coverage is at 4.5x which is significantly higher than the 3.8x, which the BSE 500 companies report on an average. Our gross debt went up due to 3 reasons. Number one is our working capital requirement. We had a New Zealand acquisition during the year, which picked up AUD 8 million debt. And we've completed the final settlement of DTSS and [ SMC ], which served to reduce the net debt. That was around INR 90 crores. I would also like to point out that our leverage of 1.14 is well in line, in fact, much lower than what our global peers report. Which is somewhere in the range of 2 to 5. So we are very comfortably placed even if you compare us globally. Lastly, I would like to take you through the tax flows, the OCF and EBITDA and cash flows. You will see that our OCF to EBITDA consolidated is 29% during the year, whereas it was 56% in the previous year. Part of the reason -- a significant reason for that is because of the shutdown and the offices shutdown during March, which actually served to delay some collections, which we normally would have got in the month of March. We bought most of them in the month of April, and we're getting some of it in May, but that was around INR 80 crores of money, if that had come in as expected in March in line with earlier year's trends, our consolidated OCF would have remained at 56% as compared with the previous year. Thank you, Vamshi, I'll just hand it back to you now.

Thank you, Devesh. I'm sure there'll be a bit more questions for you after the final session by Rituraj, who we'll turn to right now. Rituraj is the group Managing Director for the SIS Group. He will take us through some trends and opportunities and -- in the uncertainties currently, which we are facing amidst the COVID environment. Over to you, Rituraj, just give me a second while I pop up the presentation. Please go ahead, Rituraj. Rituraj, we can't hear you.

Can you hear me?

Yes. Yes.

Okay. First of all, thank you, everyone, for joining this call, and my apologies for the technical glitch. Also, you've been very patient to hear through all of the different segmental reports. But I think it was very essential for you to have clarity that for SIS Group, it is more or less business as usual. But anyways, thanks for holding your patience. I'll just now run you through what's been happening on the COVID situation, I am sure that you have a bunch of questions around that. I will quickly wrap this up and then open up for questions, which I guess everybody is waiting for. So first up, Vamshi, if you can just go to the next slide, please? I will give you an update around the COVID situation in 2 parts. First is the 30-day response, starting 6th of March to 6th of April, and then the 100-day plan that we announced for Q1, starting 6th of April up until 15th of July 2020. So just getting into the 30-day piece first, the first 30 days. I guess, it was very helpful for SIS that we have a Singapore operation and the COVID crisis impacted Singapore starting Jan and early February, which sort of gave us a sense on how large and all-encompassing impact of COVID could be. With that insight, we started to prepare our business continuity plan for COVID situation across the group. And on 6th of March, almost 2 weeks before the Indian government declared a national lockdown, SIS had created its business continuity plan for site operations continuity, office continuity. We had taken out a whole bunch of advisories, awareness training programs, and we created the COVID strategy team including the SBU heads of all SIS companies and group management committee members. So my request is that Vamshi, could you go mute please, I think -- so 6th of March, we did that. And after that, 22nd of March, India declared a national lockdown. I think the most definitive thing that I wanted to share with you, what the lockdown did apart from impacting the entire country is, for the first time, it declared private security, hygiene and sanitation, cash logistics type services as essential services in the same way, it declared banking, health care, pharma and e-commerce as essential services. So this sort of underlines the importance that this sector has in the continuity of economy and service to society. And we were amongst the 5, 7 sectors that have continued to operate at full capacity throughout the lockdown. And this is very clearly evidenced even in our March P&L results, where our March revenues are higher as compared to January and February despite last 10 days of lockdown. We've taken all necessary precautions with regard to the PPEs and all the other things that one needs to do. We have -- as of the -- as of last evening, the situation is that SIS has roughly 52 people who are COVID positive, all of them are frontline staff. 90% of the 52 people actually work in Mumbai, Delhi or Ahmedabad, 3 cities. 11 of them have fully recovered after contracting COVID, they are fit and fine. 42 -- 41 of them are currently under treatment. All of them are stable. SIS also took the initiative on 8th of April to create a COVID fund. It's called the SIS Group Humare Heroes COVID Fund. It's a INR 5 crore fund. Basic objective is to extend financial assistance for loss of pay for testing, for medical care to the COVID-positive people who contract the disease while at work in duty. Mind you, all these people are fully covered under ESIC. They are fully covered under medical insurance. We also have a life cover that SIS SEWA Trust extends. Over and beyond all of this, as adjusted to the frontline employees, and we have 2,30,000 of them who have continued to work despite the lockdown, we decided to announce this COVID Humare Heroes Fund. This fund is -- INR 3 crores is contributed by way of donation by the promoter family. So it has no bearing on the SIS financial results. INR 2 crores has been set aside by SIS stand-alone entity, should the need arise to consume that fund. So far, we have not even used INR 5 lakh of the fund because it has luckily not impacted to an extreme extent. Having said that, I think we ran the first 30 days very tightly. All operations ran. Invoicing was done in full. The health impact was mitigated to a large extent. Customer appreciation, client feedback is at an all-time high. For the month of March end and April month, we've had the least client attrition in the last 5 years of SIS. Security just became or facility management type work, just became a business continuity imperative, and that's evident from the situation that we witnessed in the last 50 days. Moving on to the next slide. Obviously, it dawned upon us that COVID is not going to go away in the next 2 or 3 or 4 months. So we started to plan ahead. The first objective at hand, obviously, is to protect the Q1 results. So 4th of -- sorry, 6th of April, we launched the 100-day plan. It's a 6-agenda item plan of action. And you can, I'm sure, see it on your screen now or you have access to the Google Drive link where all the slides are. Basically, 6 agenda items that focus -- first one, focusing on operational normalization. The objective is, obviously, that we want to prevent COVID impact and loss of life as a result of that for our front-line workers. But we also want to ensure that we have no contract losses and the site operations run uninterrupted. So there's a whole bunch of actions under that, that all businesses are undertaking. That's agenda 1. Agenda 2 was P&L preservation for April, May and June. The objective being that Q1 FY '21 must be similar to Q4 FY '20. That's the broad objective. We want to try and maintain our P&L. Cash flow wise, 3 simple actions, extract, increase and contain. We've been trying to extract as much collection as we could. Devesh already mentioned to you that we had a record collection in April month, which is the first month of the year. We collected INR 497 crores, which is higher than our monthly invoice value. So I think we're trying to collect as much as we can in this crisis. We are also parallelly trying to increase our working capital lines just as a backup, should the need arise. So far, the need has not arisen. As of May payroll cycle, which is getting paid effective today, 5th of May, we are not using CC lines to any greater extent. The collections are more than adequate to meet our basic wage payment and other statutory compliance needs. But regardless of that, we are trying to arrange the lines for a rainy day, just in case the need arises. Last is to contain unnecessary expenditure. SIS has gone on a CapEx freeze. We are also cutting down all nonessential expenditure where we can. Agenda #4 was cost management. We are looking at a 25% cost cut. Excluding employee wage costs. We are not cutting anything on the employee side, employee costs, but cost on employees like rental, like travel, like other costs, plus other costs like consultants and other such expenses, we are trying to cut at least 25% of that. Next item, the first 4 actions are more defensive in nature, trying to mitigate the impact of COVID. Action -- agenda #5 was basically to seize the demand recovery. I will talk about it a little later on my last slide. But rather than allowing our 300-plus sales force to sit idle, we have gone on a little bit of a sales overdrive even amidst this corona crisis, and I'll talk to you about that. Last action was to fast-track the digital transformation of SIS. I think the investments we have made in the last 3 to 5 years, some of which we showcased for you at the analyst meets that we had in Bombay, in the last 2 years. Some of you may have seen all the IT investments in ARC and SalesMax and MTrainer and various other tools. I think without those tools, we would be far more severely impacted in a corona crisis than we actually ended up being. So I think that technology investments have clearly paid off, both in India and internationally, and we intend to fast-track our technology in development and implementation across the board, so as to prepare SIS for a contact-less or less-contact world post corona. Jumping to the next slide. Some clear trends are emerging. Security has moved up the priority order. We see more CXOs and heads of HR coming to security and hygiene and infection control discussions. People are extremely worried about the hygiene and infection control at their sites. They don't want to open post lockdown unless the office premises or manufacturing facility is ready to receive employees with all COVID SOP precautions. So security and facility management, particularly hygiene infection control have really become a big priority across industrial segments, which is a very, very good news for us and also assures us of demand resilience in the coming period. In a situation where most industrial segments are complaining about no sales and demand decline, I think we are going to witness an increase in demand in the next 3 to 6 months. Second is, it's very clear that the operating expenditure on hygiene is going to go up for all manufacturing establishments and all office complexes. To put it very simply, if I give you an example, if you had 1 guard at the office reception pre-corona, you're going to have 4 now because one will be required for fever check; second will be required for queue management and social discipline; third is going to be required for PPE distribution; and the fourth 1 stays there for the visitor access control. So the number of people and amount of technology required for COVID compliance goes up. Similarly, for hygiene and infection control, if your wash rooms or cafeterias are cleaned twice a day, the frequency of cleaning and the use of chemicals, use of machines is going to go up considerably, which is going to boost operational expenditure on items that we provide. We see a clear shift -- trend #3, we see a clear shift towards bigger brands and expertise. People are not running towards the cheapest provider of security or the cheapest provider of disinfection services. Larger companies especially are looking for reliable brands who have the necessary expertise to safeguard their territories. We see a convergence of hygiene access control and disinfection, and we have repositioned SIS to take care of this new trend, and Vamshi already touched upon the fact that we anticipate some interesting inorganic opportunities, not in the immediate term, but more like 12 to 24 months from now, we believe that there will be some interesting inorganic opportunities. My last slide is basically about how we have repositioned SIS. If you can see the last slide, Vamshi, if you can help me with that. SIS is the only entity in the Indian space, which is a market leader in security, but it is also a market leader in hygiene facility management services, and it is also a market leader in cash logistics and logistics services. So if you look at my last slide, I have presented to you the circle of safety. The circle of safety is a concept that we are pushing now, repositioning SIS from a security provider or an FM provider to a partner, ensuring a circle of safety for our customers. The idea is very simple. We are talking to our customers to say that whether it's your entry gate and the need to do fever check, PPE distribution there or after your entry gate, it is inside your workplace to clean your washrooms, to disinfect your manufacturing plant or it is safe logistics or it is production support staff or it is artificial intelligence-based COVID SOP compliance dashboards, SIS is in a position through its different arms to provide all these services to you. This is what we are terming as a circle of safety. I'm very pleased to share with you that this program was launched as a part of our 100-day plan on 17th of April. In the last 2 weeks itself, we have reached out to more than 12,000 customers through our SalesMax portal through video conferences, pitching this idea. We have secured, like Dhiraj mentioned, more than 100 orders in the last 2 weeks. There is very good interest in the circle of safety concept, which is proof of fact that SIS is a step ahead in trying to assure our customers that we are ready to help them in the post-corona world. So that's all I had to say. I'm sure that you have your questions. I will like to summarize by saying that COVID will impact probably everything that we know, every business segment that we know. But I'm -- based on last 40, 50 days, I can say that we have a plan to tackle the COVID situation. So far, our planned basis April billing basis collections, basis site operations. So far, our plan, as of 5th of May, seems to be on track across SIS group entities. Basis what I've seen in the last 40, 50 days, I can say that probably security, facility management and cash logistics as segments are going to be least impacted by COVID. And probably they will be the last to be impacted. Why I'm saying least to be impacted? Because of the trend I'm seeing in terms of billing and what's happening now. But also last to be impacted because I believe that we could only get impacted if India goes into a very deep financial crisis or a deep recession as a result of this. Obviously, at that point in time, anything and everything will get impacted and so will SIS Group businesses. But in the coming 2 to 3 months basis what I'm seeing in April, I think we are going to be least impacted amongst other sectors. We are looking at this as a problem. In terms of safeguarding the life of our people who are at work, but we are also seeing it as an opportunity to differentiate SIS group vis-à-vis other competitors. For the longest time, people have confused us with staffing. I think that question around service versus staffing has been sort of answered by the essential services categorization for all times in the future. So I think those are my closing remarks. Thank you very much for listening very patiently. We are now open for questions. I guess, Vamshi will moderate.

Yes. Thank you, Rituraj. First, I will take the questions that came up on the webcast. There have been a few questions on the phones, but we'll take the questions that are on the screen right now. The first question, I think this is probably more for Rituraj is, from Paras of Enam. With the -- post the lockdown, do you see any kind of supply side disruption with the reverse migration of workers to the rural areas? How do you manage the situation in such a eventuality?

Thanks, Paras. So far, we have not seen reverse migration at all, reason being that essential services workers are like health care workers. They have an obligation to turn up for duty. And so far, our people have behaved very responsibly. Our branch teams, especially our branch heads have led in a way that we have had least attrition type issues. That's the reason why we've continued to operate at literally full capacity. After the lockdown opens, there will probably be some migration of people wanting to go back home, that's natural. I don't think that can be stopped after the lockdown is ceased. But what I'm also seeing is that in the current circumstance, lockdown will be followed by a deep joblessness across India. So whoever has a job, which pays minimum wages, has basic social security, including health care cover. And the kind of effort we have made to look after our people through all the actions one has taken, I don't see people abandoning good jobs when the joblessness in the economy is at an all-time high. So short answer, am I very worried about reverse migration and its impact on SIS business? Not for the moment. But these are very uncertain times. I can't say what it will look like 1 month later. But based these last 50 days, we don't see that to be our biggest worry.

Thank you, Rituraj. The other question again from Paras of Enam. Probably this is for Devesh. Can you walk us through the other income of INR 48 crores in the balance sheet P&L [ side and also the nature of it is ]? Over to Devesh.

Okay. I guess this is pertaining to the other gains and losses item which is there in the P&L. That's primarily on account of 3 factors. #1 is we finished the settlement of SLV. That provided a gain to the P&L. Because the liability we had created in the books was more than what we ultimately paid out because SLV chose to cash out 1 year early. The second item pertains to the future liability of Henderson, that was impacted by an exchange rate difference. So that was a bit of a loss into the P&L on account of exchange rate. And the third item was on account of the rupee development, rupee-denominated bonds, which are there between India and Australia. That had a gain because of the exchange rate movement. So there are 3 items which were in the other gains and losses. They are extraordinary one-off, it can be backed out.

Thank you, Devesh. The next question is from Ramneet of Motilal Oswal. The question is what are the current DSO levels? And how do you see the trend evolving in there?

So I will -- like Devesh has already covered, our DSO got impacted because the last 10 days of March, a lot of customers could not settle dues. Devesh has already quantified the amount as INR 80 crores. This money got stuck largely with the likes of Culture Ministry, Archaeological Survey of India, Tata Group, Aditya Birla Group, JLL, the ITC company, Indian Railways. So large customers, basically. This money has since come through. If I was to give you context, if you adjust for this INR 80 crores that was supposed to be collected before March 31, but actually came through in April, our normalized DSO right now is not 66 for security, it's more like 62 for security business. And for FM business, it is not 78, 79, it is more like 72 or 73. So our DSOs are very much in line with previous practices. The aberration you see is basically because of the last 10 days of March, which has since got normalized. As I said, we collected INR 497 crores, which is almost significantly higher than our billing for the month of March itself.

Vamshi, I'd just like to clarify what Rituraj said that -- so that everyone know that the INR 497 crores, which Rituraj referring to as the collection of March was only for India.

Yes. Thank you. The next question is from Aditya Shah. His question was new commercial and infrastructure projects are unlikely to occur for a while even after the end of COVID. What's our growth plan in the absence of new infra or commercial creation?

No. So I think we -- firstly, our exposure to construction and infra is limited to a few percentage in the overall revenue pie. Our dependence on new construction and new infra is not high. Number two, as of right now, if you look at this circle of safety concept, our focus has shifted back to existing clients. We are concentrating on increasing share of wallet with existing clients because our existing clients are -- 250-plus of the BSE 500 use our services. So these are large clients. They want to move to more sophisticated and expert providers. They have an all-India requirement, which the smaller agencies cannot cope with. A lot of small agencies, small providers failed them during lockdown. They could not operate, whereas we stood by each of these customers through this crisis period. So our focus is clearly right now on increasing share of wallet with existing customers, and that's what the circle of safety program is. Our massive advantage is the fact that we have multiple services that we can cross-sell. For security customers, 97% of our security solution customers do not use SIS brands for facility management and vice versa. More than 90% of our facility management customers do not use SIS as their security partner. There is a tremendous opportunity that we were undermining because we had too much growth coming from other sources. COVID has forced us to mine existing customers fully and that's what we are doing with circle of safety program, which is now on your screens. And like I said, we've seen very good traction in the last 2 weeks, and I don't see that contraction in new infrastructure or construction could meaningfully impact our growth prospects.

Thanks, Rituraj. Next question is from Ravi Bhatia of ADIA. So he has a couple of questions. One is some of the services we're talking about like production support, plumber, electrician, employee bus pickup appear to be new. How prepared are we for these? And the second question is, most of our clients will be under severe financial pressure, do you foresee any bad debts?

Thanks, Ravi. It's very good to have you, a long time. First question, production support services are not new to us. DTSS and ServiceMaster always provided production support staff, just that it was not our big focus service ever. Because we've always focused on more specialized solutions. But what has happened is this idea basically came through because the pharma companies that were operational through lockdown, everybody from Dr. Reddy's to Cipla to Sun pharma, so all these companies are SIS customers. And we came across requirement, special requirements from these pharma companies saying they don't have loaders and packers and other support staff. Because of the lockdown, they can't come and they started asking us whether we could take on this requirement. And we've basically taken a cue from this customer input. I mean 30% of our revenues in India come from manufacturing sector: pharma; auto; cement; steel; all put together represent more than 30% of our customer base. So production support seems to be a service that we have undersold. We have the capability, but haven't marketed to the extent we should have. Taking a cue from customer and looking at the migrant labor situation that will emerge more and more, we will exploit this opportunity the fullest. Your second question was about -- what Vamshi?

Bad debts. The...

Yes, I think -- like I said, the April collections have been very robust, Ravi, in India, with INR 497 crores. Customers are actually prioritizing our payments at the moment because they don't want security staff to go away or any kind of noncompliance on hygiene and other services. So we've moved up the payment priority. We can clearly see that. The INR 497 crores is not our usual April collection number. It's rather special. And I think that's a reflection on customers giving adequate priority to services like this. Having said that, if there is a large impact on the cash flow cycle of the entire Indian economy, in some way, means it will impact every single business, including ours. I'm not saying that, that will not be the case for SIS. But as of today, 5th of May, basis of April collection, we have no reason to believe that our working capital cycle will prolong drastically or our bad debt will shoot up through the roof. I think lesser on bad debts, I think, because, Ravi, you have to acknowledge the fact that SIS works essentially with market leaders. We operate at higher price points. SIS brands are more expensive. So if you pick any segment, whether it's telecom or steel or education or whatever segment you pick, we work with the top 3, 4 entities in that segment. So we tend to work more with the -- even in an impacted segment like hotels, for example, we would work with the Oberoi's and Taj Group more than we would work with Four Points Sheraton or the likes of Lemon Tree. So I think the larger entities are more compliance oriented. They are also better funded. So I don't see a tremendous worry around bad debts as such.

Thank you, Rituraj. The next question is from Omprakash of Spark Capital. I think Devesh can answer this. So he wanted to understand what are the pending payments and schedule for the same regarding the other acquisitions which are supposed to be paid out?

So as far as schedule is concerned, we have certain protections, which will fall due for payment in Q3 of this financial year. The next is Uniq, which would also -- which is a security company we acquired in Bangalore in 2019. That second tranche payment should also fall due sometime in that Q3 period. We have RARE, which was facility management company, which was acquired in 2018, Bombay and Western India based, that should fall due around the Q2 or Q3 of this year. We have 3 scheduled settlements, which are due in FY '21.

We have no more questions in the queue. Can I ask the operator to see if there are any call -- questions on the call and the audio line?

Sure, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Dipan Mehta from Elixir Equities.

This is Dipan Mehta from Elixir Equities. My question is regarding the other income. So if you basically take out the other income, which is of a onetime nature, then actually, the operating profit margins have reduced significantly. Is that a correct understanding?

The other gains and losses are approximately INR 45 crores. If you reduce that, we're still more than what we had last year. But you must also appreciate that with the new tax regime being adopted, the amount of deferred tax asset being created is also less. So if you want to compare, then we'll have to bring down the deferred tax asset created of last year and then do a comparison, and then we'll possibly be back to square one, which is a 36% increase.

Yes. I think Dipan, I think your specific question was -- just to answer that, other gains which are profitable do not fall part of EBITDA. That is shown as part of tax. It is not -- the EBITDA will not be affected by that line.

So whatever in the presentation you have shown in terms of EBITDA margin and increase in EBITDA and all is net of all these onetime income?

Yes, the EBITDA does not include the other gains and losses. The other gains and losses are impacting into PAT and not into EBITDA.

Okay, sir. And second question is regarding any cost increases, which would be more of a permanent nature because of the present pandemic. I'm sure you have to spend much more in terms of providing security and keeping your employees safe. So how is -- are those costs being passed on to your customers? Or have you got to absorb them at this point of time?

Well, let me take that one. This is Rituraj here. The cost of personal protective equipment in most instances is currently borne by SIS for the month of April because all our customers are in lockdown and they are currently not available in site -- on site, et cetera, et cetera. But starting now, we have already initiated conversations to charge back cost of PPE and other exigencies to customers. So this will not be an increase -- a permanent increase in cost structure for SIS. This will be charged back to customers starting the month of May. Number two, I must also point out that interestingly enough, a large number of customers are asking us to provide PP equipment to them for their use as a consumable. They want us to purchase, stock and manage distribution of PPE at their premises with a profit margin. So PPE, I see less chance of PPE becoming a cost center for us. I see more opportunity for PPE to become a profit center as security guards and sanitation staff will be the people who will be procuring these items and distributing these items in the longer term at different types of customer sites.

Okay, sir. Again, I want to go back to this other income because I'm seeing your group overview in the press note over there, it is showing INR 47.4 crores as other income and share of profit/loss in associates. So is that recurring or nonrecurring?

The other gains and losses include 2 items. As you correctly said, one is the share of income from associates, which is primarily a cash logistics venture. That, as you can see, has turned the corner, it's delivering EBITDA profit. This year we hope it will deliver also a PAT profit. So that will be -- to some extent, that will be a recurring line. There's another line of INR 45 crores, which I explained was nonrecurring, which I explained the 3 items on account of the settlement of SLV and exchange rate differences on the Singapore dollar and the Aussie dollar, also the Indian rupee. Depending on how the currency works between Aussie dollar, Singapore dollar and Indian rupee, that much may recur again, but the SLV gain on settlement was one off.

Sir, whether INR 47.9 crore, which is around Page 5 because of which you have a 46.5% increase in earnings before tax, how much it is onetime nature? And how much it is recurring, sir? Because if it is onetime nature, then the numbers look -- would not be as high as 46.5% earnings before tax. So INR 127.9 crores you have reported versus INR 87.9 crores.

As I explained, the 3 items are amounting to INR 45 crores. Out of INR 45 crores, INR 12 crores is on account of exchange rate differences. Now it all depends on how the currency moves. Whether that INR 12 crores will recur or come down or go up, it's actually very difficult to say at this point.

And I think just -- just repeating the question, these are not a part of EBITDA. I think they are the part of PAT, not EBITDA, right? I think we already clarified that. Let's move to the next question. There is 1 question online from 2, 3 people. I think, it's from Tejas of Old Bridge and Locus Investment, Akhil Dhawan. What are the -- can you provide an estimate of the total one-off payments we have to make in FY '21?

So we believe that we are adequately covered as far as the liabilities are concerned for these payments in our books. We expect that we will not be incurring any payment beyond the liabilities which are in the books. At this point, that's all I can say.

Yes. And just to add to that, as you would know, the final payment which would be due to the sellers will depend upon the final EBITDA and the particular [ attributes ] that we have agreed to them. And under this kind of environment, it is very difficult to arrive at the number that will be due to them because we have to see how things unfold over the next few months before we actually have a sense on what would be the number that is due. But as Devesh said, what we have provided in the books is actually more than sufficient probably to cover that. Operator, any other questions on the call?

Yes, sir. The next question is from the line of Abhijit Akella from IIFL.

Just if you could talk a little bit about what the monthly revenue run rate looks like for the month of April and what the headcount looks like as of April 30?

I think Vamshi or Devesh will correct me, but I think it's roughly INR 770 crores, right, for the month of March.

So the March -- the March closing run rate was around INR 728 crores.

Sorry, it was INR 728 crores.

And April is pretty much similar.

Yes. What I was actually looking for was your -- so you've disclosed that the Security India business ended March at about INR 304 crores and Facilities ended at about INR 114 crores. If you could give us some sense of what that number looks like in April, that will be helpful.

April invoicing is still happening. But I mean as of right now, because the services performed in April were not materially different from services performed in March, I don't think it will be a very different number, Abhijit. But I will just wait for the invoicing cycle to be completed. Maybe if you connect with Vamshi in 2 days' time, you'll probably get to know.

That's great. And second, just on the international business margins which have really spiked this quarter, should we assume that these are sustainable levels now going forward?

Well, like Mike explained, this is not a one-off. It's actually the change that Mike has orchestrated by way of accretive acquisitions. These are EBITDA margin-accretive acquisitions. SXP operates at close to 8.5%, 9% EBITDA margin. Henderson operates at close to 10% EBITDA margin. So it's just a combination that has given a substantial change in the margin profile of SIS International on a combined basis. And this is largely a recurring feature, subject to minor aberrations and changes, ups and downs that happen quarter-to-quarter in most businesses. The overall profile changes from 4%, 4.5% to 5.5%, 6%. That is something you could work with.

Got it. And last thing for Devesh quickly. One is on the tax rate. What should we assume now next year onwards? And lastly, on the other income, you -- I just missed the breakdown of the 3 items that you gave. If I'm correct, is INR 12 crores attributable to the FX fluctuations across all geographies, and the remaining INR 33 crores is the SLV-related amount. Is that correct?

Okay. So 2 questions for me. Number one is what you should -- how we should look at the tax rate. I think if you back out the INR 45 crores of one-off item and see the Q4, it should be pretty much that number, INR 107 crores minus INR 4 crores, it may be like INR 52 crores or something is reasonable to look at from a Q4 point of view. As far as the breakup of the other gains and losses are concerned, it is actually a INR 12 crore loss and INR 57 crores gain. So that makes it INR 57 crores minus INR 12 crores, INR 45 crores. So the ForEx loss was INR 12 crores, net of Henderson and RDB and INR 57 crores was the gain on the SLV settlement.

The next question is from the line of Sudheer Guntupalli from Motilal Oswal.

My question is to Devesh. So now that we have written down the accumulated MAT credit and moved to the new taxation system. So my doubt is, will the carryforward benefit of Section 80JJAA from the previous 2 years, will that also be forfeited or that will still be carried forward?

Okay. Just to clarify that, when you -- when we have the option of taking the new tax rate, which is a lower tax rate, the only deduction which has allowed to be continued in the 80JJ deduction. So that deduction continues. The only difference is that the deferred tax asset and the rate at which that asset was created at 34.94%, that has been written down to a 25.17% rate. So what is now sitting in the balance sheet as of 31 March 2020 will certainly be allowed to be carried forward, and the benefit will be available to us in the new regime. Apart from 80JJ, the only other benefit, which has been continued is the 80M deduction on intercompany dividend. Normally, the deduction are forfeited and anyway as a group, we were not even availing of the other benefits. So that way we are like better off in the new regime.

Sure. So that means, actually, this 80JJAA benefit is actually staggered over a period of 3 years. So from the previous 2 years whatever is the accumulated one, it can be carried forward?

Yes, it has been carried forward -- it will be carried forward. The only thing is in the balance sheet, we have reduced the amount on the asset to reflect the new tax rate. That's all.

Sure, Devesh. That's very helpful. And secondly, in Facility Management Services segment, going forward, maintenance schedules at most of the clients may increase. Given facility management contracts are actually negotiated on an outcome basis, can the increase in schedules be duly and proportionately monetized? Or it has to be done as normal contract only?

No. Sudheer, I think there's a massive upside opportunity on the FM side because any pricing on an outcome-based contract is first basis a certain job scoping and a frequency. So if the frequency changes or the scope of job changes, the outcome-based pricing also will change. So on the FM side, there is going to be a significant opportunity as a result of this particular feature. Not just on the hard FM side, as you know, what you're mentioning, mechanical, electrical, plumbing, HVAC type maintenance, but also on basic, what we term as deep cleaning services or intensive hygiene solution, the frequency is going to go up. People -- the services that were rendered once in a week or once in a month, people are talking about bringing that type of sanitization and disinfection to be carried out end of every working day, overnight. So if this actually converts into orders, I mean you can just multiply it once in 7 days service becomes a daily service, what impact that could have.

Sure, Rituraj. And one last question on the FM side only. So now many government bodies may be coming up with increased requests for sanitization or fumigation kind of services. So how are we engaging with them at this juncture? So those, let's say, municipal bodies or state governments or central government bodies, which were earlier not our clients and probably maybe relying on localized and small players, so they might be incrementally -- there is a scope that they can become our clients. So how are we engaging with them at this juncture?

So like I've said in the past, in the SIS ecosystem, we look at government as 4 different entities. The entity right on top is what we call central government or central PSU. So central government is number one, central PSU is number two. Number 3 is state government and state PSU. Number 4 is the local government and municipal government, right? We choose not to work with number 3 and number 4. So we don't intend on taking on contracts from municipalities. We would rather not take on business from state governments and state PSUs. Our government business only means either direct central government, like Ministry of Railways or it means central PSU, like ONGC, GAIL, Indian Oil Corporation and the likes of that.

I have a couple of other questions on the panel. I think I'll be able to quickly address them on the call as well. So one was from Aasim of IDFC. Whether the payments for the 3 acquisitions later this year would take our stake to 100% in all of them? Yes, by the end of FY '21, after the payments for all the -- these acquisitions are done, we would be at 100% in each of these transactions, SXP, Henderson and Uniq. Other question from Vaibhav of Ashmore. What was the reason for reduction in headcount in India Security business from a quarter-on-quarter basis?

Reduction in headcount?

The small 300, 400 kind of difference in the headcount between December to March.

So there's no material reduction or change in headcount at all. In fact, the same people are performing more duties today. We don't -- we haven't -- could be the speed of headcount change may alter a little bit because we haven't mounted many new contracts as of 1 April or 1 May, as we would generally do. So that may result in some changes on the pace of scale up, but otherwise, there's no decline for sure.

Any other questions on the phone, operator?

Yes, sir. We take the question from the line of [ Aditya ], an individual investor.

My question is regarding the contracts that we have. What is the average duration of the contracts that we get in the different segments? And what is the average size that we've so far with each contract?

So let me take that, [ Aditya ]. So most of our contracts are for 1 year. But actually, in our line of business, actually, the contract tenure doesn't matter because contracts keep renewing. We have 93%, 94% person contract retention. And in Australia, the contract retention is probably upwards of 97%. So the tenure of the contract actually does not matter much in our line of business. Because in most of the cases, unless you elevate some operational issues or some financial issues, the contract gets renewed. Well, I think last, the couple of questions, I think it's only 35, 40 minutes after scheduled end at 6:00. I'd take last couple of questions from the operator.

Sir, as of now, nobody in queue.

Great. Yes, I think the queue online has also -- I think we answered most of it. I think a couple of others, I'll probably respond to them to through mail, I have their email id. Yes, I think that brings us to an end. Hopefully, the investor webinar, despite the initial glitches, was useful to all the investors and analysts. We obviously would have loved to meet all of you in person. But I think personal meetings are going to be, I think -- I don't know would happen in the near term, at least for the next quarter or 2. But we will look forward to meeting all of you soon. And if any of you had any questions on any of the presentations we made today or the earnings, please reach out to me, and I would be glad to help you get the right response from Devesh or Rituraj or the IR team. And yes, thanks to all of you once again, and stay safe, and we'll see you again. Thank you.

Thanks, everyone. Thank you.

Thank you.

Thank you very much, sir. Ladies and gentlemen, on behalf of Securities and Intelligence Services India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.