SIS Limited (SIS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q2 FY '22 Earnings Conference Call of Security and Intelligence Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vamshidhar Guthikonda. Thank you, and over to you, sir.

Thank you, Margaret. Good afternoon, everyone. A heartfelt welcome to our Q2 FY '22 earnings conference call. Along with me, I have our Group Managing Director, Mr. Rituraj Sinha; and Mr. Devesh Desai, our Group CFO. I hope everyone has had an opportunity to look at our results. The presentation and earnings notes were uploaded to the stock exchange and the website last evening. We are extremely happy to report one of the strongest ever quarters for growth in SIS with the revenues touching a historic high of INR 2,431 crores and close to INR 10,000 crore annualized run rate. After the second wave impact in Q1, the pullback in Q2 has been very impressive and much ahead of our expectations. The India Security vertical has had the highest-ever quarterly revenues and especially on the technology side, we have had some sizable and bluechip clientele wins, which have given our Vision 2025 plans, a great boost and also showcase the evolution of the industry. Our focus on segments like manufacturing, warehousing, pharmaceuticals is paying off with a lot of wins and new inquiries, especially from these segments. The Facility Management segment, after the steep decline in over the last 1 year of 115%, especially because many of the end user segments like the IT, ITES segment and all segment were closed for last part of the year, we've been very surprised by how fast the pullback has been. In Q2, we reached a segmental revenue of INR 336 crores, which is very close to our highest-ever quarterly revenue of INR 342 crores. We are just like 1% or 2% short, and that was in the Q4 of FY '20. So this is pretty comforting, and we are very confident that with the order book that we have and the festive season coming up, I think the next half is going to be a pretty solid half for the Security Management vertical. Australia, as we had communicated earlier and on expected lines, the ad hoc business related to COVID has really been easing off. But despite that, they had a decent quarter, it's only a marginal 3% decline, but we still have an 8% increase over the previous year. Furthermore, Australia has had extended lockdowns for the current year only the longest worldwide, which have hurt new tenders and also the cash collections. But hopefully, with Australia also easing off on its 0 COVID strategies and vaccination picking up, I think the next 2 quarters, the business is confident of new business picking up and also a revival of growth. Cash logistics has -- as we've seen over the last 3, 4 quarters has had a fantastic run. It continues its stellar performance. It has generated over 11% EBITDA margins, it's the highest in our industry. The Cash Logistics segment worldwide is the highest margin vertical among all our 4 -- 3 or 4 verticals that we have, delivering anywhere close to 15% to 20% margins across the world. And currently, we're at 11%, and we're confident that this number can go up over the next 1 or 2 years. Some of the new businesses that we entered into like cash profiting, cash deposit machines, have all been pioneering the solutions that we brought to the market, and they've seen some great traction when we go to the market. Most importantly, we managed to vaccinate fully, 84% of our employees and got 3.71 lakh-plus doses administered in a record time. And the balance few will be done by early December, and we'll be reaching 100% full vaccination. And this has given a great boost to our reopening and normalization of business. And also gives a great confidence to the clients. Many of them are insisting that the employees be fully vaccinated, before we take on a new client or any new orders. Margins have been flat for the previous quarter, despite some additional expenses on business revival on travel, vaccination. We have reopened hiring. We've added to our sales teams. I think we are ideally poised to capture the growth with the goal to unfold over the next coming 1 or 2 years. And as the business grows, in the next few quarters, I think we are confident of reverting to our historic margin profile. With those remarks, I now open the floor for questions. Margaret, can you enable the question queue, please.

[Operator Instructions] The first question is from the line of Rahul Chopra from HSBC.

I have 3 questions if I may. Can you guys hear me?

Yes. Go ahead, Rahul. I can hear you.

I have 3 questions, if I may. So first question is, could you give a sense of the impact of operational gearing, if you strip off your contract mobilization cost and trading fees which you have incurred in Q2. So just want to understand basically if you strip off those exceptional it would still be at 5% margin. I just want to get a sense of that. Second question is around the growth in employees. I mean you said that -- you alluded that the growth -- the margin was lower because increasing number of employees training costs. But I can see you have grown 12% year-on-year on revenues in Securities. The employee growth is 26%, with a large revenue growth. So just want to understand. It's not your employees have grown by miles compared to revenue. So just want to understand the step-up in training costs what is still different this quarter? And the final question is in terms of Australia. Maybe a sense of what's happening in terms of underlying labor markets, in terms of labor's capital which we're seeing globally and then the language inflation and how difficult is to acquire new labor talent there in Australia?

Yes. So Rahul, I think you're voice was a bit muffled. So let me try to understand if I've got the questions right, before I have Rituraj and Devesh answer the questions. So your first question was on the India operational costs, right, which had incurred on the new training and onetime expenses, right?

Yes. Yes. Yes. Broadly.

Yes. So Rituraj, Devesh, do you want to take the question?

Yes. So thanks, Rahul. Thanks for those questions. This is Rituraj. So let me begin by saying that it's been a tremendous quarter for the Indian business in terms of revenue growth. The Security business grew 7%, 7.5% versus previous quarter and the FM business came in at almost greater than 10% versus last quarter. So it was phenomenal. The gross margin of these new contracts, we basically -- this revenue growth has come in from new contracts as well as service volume uptick in existing contracts. I can confirm that the gross margin line on new contracts is in line with what we've been doing in the past. So we are not sort of doing any discounting as far as that is concerned. Employee growth has brought in some additional costs on training and other aspects because we've had some exceptional headcount growth. There's also been vaccination-related expenses and various other such one-offs that have happened in the quarter. So yes, they have resulted in the India Security business reporting a lower EBITDA margin this quarter. But look, I think I stated this in the past, Rahul, that as long as growth is coming at same gross margin line, sooner than later in a few quarters, these one-offs will taper out, and we will be back to our pre-COVID 6% ballpark EBITDA margin line. Now coming to the international, the Australia piece you specifically asked about. Once you already captured that Australia has seen an exceptional Q2 with almost a 10-week or longer lockdown in Sydney and other major centers. But despite that, I think the important thing that I want to highlight in the Australia case is that even as the Australia group, this quarter looks very flat, I think the right way to look at it, right way to look at international growth story is to compare with the pre-COVID year 2019/'20, you need to look at the pre-COVID year. And when you look at the pre-COVID year first half versus FY '22 first half, you will see that our International business is almost 10% or bigger. The reason why it's looking flat is because FY '21 international business did a lot of quarantine work, a lot of temporary contracts, because of which they registered a 20% year-on-year growth, which is rather exceptional and definitely not a continuing phenomenon. It was the highest growth we have witnessed in international markets over 12 years when we've been in international markets. So 20% growth is not going to happen each year, Rahul. And FY '22, if you compare that to FY '20 for international markets, you will see that the business is trading well despite the lockdowns and the lower tender-related activity. But otherwise, I believe, in summary, that Q2 signals very strong growth across all the 4 verticals of SIS, and we are very hopeful that this will continue to roll into Q3 as well.

So he has one -- Rahul has one question...

Actually my question is Australia was more about the impact...

The question was on labor...

Labor shortage, I think we have labor shortage in Australia, you're right, Rahul. Labor shortage is a pressure in Australia, but then I think post lockdown, it can ease out. It's not significant. It's like 2%, 3% short staffing at this point in time. So I think it can be made up rather quickly. You will also note that SIS across India and Australia invests very heavily in supply chain. We run training centers, 20 of them in India, training academies. And we also run regional training establishments in all states of Australia. We just started -- during COVID period, we started another training facility for specialized staff for mining sector. So we have great confidence in our ability to recruit and supply, and that shouldn't be a deal breakup for international.

Understood. I mean this is just a follow-up on my first question, if I may, again, just to pick up on that. I mean obviously, you said the training fees and contract mobilization costs were probably the main reason for margin drag. From my understanding, you still charge your employees, I think, INR 5,000 when they do on board. So I would assume that most of the training cost is probably covered, correct me if I'm wrong? And on the contract mobilization, maybe you want to share some numbers, again, just a sense of how that will taper off going forward.

I wouldn't have specific numbers on contract-by-contract mobilization costs. So I will have to ask Vamshi to come back to you on that. But let me confirm that training and recruitment is a profit center for SIS. It is not a cost center. So we recruit more in India, and we result in making a little bit of money on that because all our training establishments run with job guarantees. People who train with us as long as they pass, they have a job guarantee. So that gives us leverage to charge a fee and make it a profit center to a certain extent. But then again, I think the real point I would like to establish, Rahul, going a little bit beyond your question is that there are 3 levers essentially in our business that determine our growth, revenue growth. First lever is existing contracts and additional work from that, which is very strong in Q2 and looks to be strong in Q3 as well. The second lever is new orders, which I think is very, very strong, both in Security and FM in India at this point in time. And the third and the mother of all levers is rate increase which hasn't happened for the last 18 months in a meaningful way because the economy has not really been in a position to digest a significant weight change by Government of India or the state governments. Sooner than later, there will be catch-up wage hike, and I think that will be a massive opportunity for us, because unlike staffing sector, our pricing model is cost plus percentage service charge, it's not fixed fee. So not only do we pass through all of the wage hike that happens to minimum wage changes, we are also in a position to then benefit because we charge a service charge as a percentage on a higher cost base. So I think all of those 3 indicators are pointing in the right direction as of right now. And we are hopeful that given that there is no disruption again for some or the other reasons, we are hopeful that we will look at a double-digit growth this year.

[Operator Instructions] The next question is from the line of Mukul Garg from Motilal Oswal.

I just wanted to start by following up on the previous question on the cost side. I know -- like you said some of this cost change on a quarter-to-quarter basis. But it's just purely excluding the so-called reopening cost, like you're deploying for new contract, which you highlighted as INR 20 crore increase in the monthly run rate or kind of travel and everything. How should we look at the margins on the India Securities business ex of the normalization this quarter with the expectation that it should eventually reach back to pre-COVID level, but just purely in the very near term, x of the incremental investment from your side, what would have been the profitability?

So I think it's -- without getting into the exact details and mechanics of it. Look, the fact is that are -- if you look at our facility management EBITDA margin change, you will see a very strong recovery there already versus Q1 as revenue picks up. In the SIS stand-alone, the SIS Security business that is not very evident because there's ESOP cost and then there's additional hiring costs and then there is travel costs and PPE costs, all of vaccination costs are booked in the stand-alone entity. So it's not easy for me to segregate and respond in very great specific details. That's the reason why I keep saying that the gross margin business, gross margin of the India Security business remains intact. Therefore, I have no reason to believe that the EBITDA margin profile will be any different than 6% that it was in the preCOVID period. It's a good question whether this will taper out in 1 quarter or it will take more than 1 quarter or 2 quarters to taper out. But fundamentally, the margin profile of India Security business remains unchanged. So you can model with 6%.

And Mukul, just to give you one specific example. At our scale, every cost adds up. For instance, just giving you a rough example, if you have 200,000 employees, and if you spend even INR 100 per month on masks for the employees. That's INR 2 crores a month on cost. That's INR 24 crores a year, right? Some of it might be passed on to the employees -- to the vendors, but some we might have to bear. Right? So on our scale, every small item like this adds up.

So just vaccination transportation, for example.

Yes, vaccination, the logistics of vaccination, transporting the employees to, everything adds up massively.

Fair enough. The second question was on the overall India business. And if I look at the Securities as well as the Facility Management, both of them did very well this quarter. I think they are now at the peaks of what you have done so far over the last few years. How -- there was a line in the release that the pipeline continues to be very strong. How are you seeing the outlook of that? And was there some tailwind from seasonality this quarter? Or do you expect that to continue to do well in Q3 and beyond as well?

And just before Rituraj answers that question, the FM business even in Q2, a couple of our biggest segments, like the IT, ITES segment, the retail and hospitality segments were still operating -- or railways, were still operating with very lean volumes, right? Most IT companies are still working from home. So in spite of that, we've been able to achieve this growth. So here -- and Rituraj can answer from here.

No, I think Vamshi has made a very valid point. I think, look, like I said, there are 3 levers. The existing customer full volumes is coming back, which is very good. The new order flow is very good. I think we've also shared with you the fact that Security business booked more than INR 5 crores of revenue in a single month new order wise. So I think both of those parameters are going very well, both for Security and for FM. And there is no seasonality for us. I mean it's not -- there is any bumper sale or anything like that in our business for Q3 as such in the festive season. But what then happens is that because there's more economic activity, generally, the volumes see an uptick. More people going to malls. They need more security. More people going to movie theaters, needs more staffing and so on and so forth. So I guess, while there is no seasonality, looking at the order book that we had in hand at the end of September, we feel quite confident about Q3.

Sure. And just a clarification on your comment of getting new business. Should we see that from a wallet share gain perspective? Or are people kind of giving out more business to you guys?

I think to some extent, this is market share consolidation, because what has happened in the COVID period is that several competitors of ours have not been able to cope with the business contingency planning aspect of managing a crisis of the scale that we experienced. So we have seen several customers opting to go with larger, financially more stable, and operationally more capable entities like SIS. So business has moved from smaller entities to larger entities, including SIS. The other thing that we're seeing is that as labor reforms are on the anvil, a lot of customers have started to factor the fact that they do not get away with cutting corners and working with vendors, who are basically not fully compliant. Customers do understand that the big change in the labor reforms is that the owners of compliance to labor laws shifts to the user of the service, not just the contractor. And I think that will be -- is driving some of that change as well. So I think it's generally a good trend, yes.

[Operator Instructions] The next question is from the line of Shyam Sundar Sriram from Sundaram Mutual Fund.

Really good revenue pickup on the India side and on the Facility Management business, per se. My question is twofold. One is, firstly, on the revenue side, in FM business, you did allude that even in second quarter, the activity levels in the IT, railways, hospitals has not really come back. But nevertheless, we have still reached very close to the pre-COVID levels of revenue per se. So if you can just help us understand what are some of your areas where we are getting the contract. So you did talk about market consolidating, and we are regaining that is very commendable. Are there any newer areas from which we are gaining a new contract that is 1 point. And therefore, can this business start growing, say, 15% to 20% on a steady-state basis for the next few quarters, per se. That is one part of the question. Second question is that this business -- facility business used to be a 7% kind of EBITDA margin. Are there any mix changes towards slightly lower margin businesses that has impacted the margin in the Facility Business per se because revenue-wise, we are very close to take over, but the margins are quite far away from what we used to do earlier. If you can also talk about that?

So it's a great question. I think let me again start with the second one first. The Facility Management gross margin profile remains unchanged. So that's the reason why you see a massive catch-up in the EBITDA margin from Q1 to Q2 as the revenue picked up, right? So the gross margins are intact, you will see 6%, 6.5% EBITDA margin in FM, hopefully soon enough. But the second question that you asked is actually very interesting. What happened in the COVID period for FM is that the FM business got the massive hit. The biggest hit segment was FM, and that was primarily because they were greatly dependent on IT, very dependent on transportation sector including railways and metros, airports, very dependent on hospitality, including hotels and malls, and they took the brunt of the beating because of this reason, right? But what that also did is that it forced us to look at other avenues a little bit harder than we did in the pre-COVID period. And that has brought us into manufacturing in a big way. Manufacturing has been the backbone of a large share of orders that we're getting this -- in Q2 period for the FM segment. And we are doing production support services. We are doing facility management, hygiene, other infection control measures and good amount of uptake even of One SIS, the bundled solutions, where we are doing more than FM. We are doing pest control with FM. We are doing some of the services with FM. So I think -- in short summary, FM did get worst hit because of COVID, but I am a strong believer that in the long term, FM will be the biggest gainer out of this health crisis called pandemic because the general awareness and willingness to spend on hygiene, on safety, on sanitation is at an all-time high. The first playbook expenditure that a business is willing to make on these services today is greater than what it was pre-COVID. So FM will continue to do well. It has tapped into new customer segments, and its original customer segments of IT and transportation and hospitality are bouncing back. So I think all put together, it's a good story there.

That was helpful. So the manufacturing contracts, just trying to understand vis-à-vis the other IT contracts per se, are these structurally slightly lower margins? Because typically, manufacturing businesses operate on very much lower margins in their own businesses. So therefore, when they try to outsource some of their noncore activities, is it fair to assume that -- so these contracts will be at a slightly lower gross margin on a more structural basis?

No. Actually, production support is a higher-margin business, my friend. Because you know what your -- like I've said this before, I think you really, really need to delink staffing from our service, right? So we are not in the business of provision of headcount. When we say production support, we are actually delivering either a packaged materials or a manufacturing site or a combination of services. That's what production support services are. It's not just providing 5 people, who stand in queue and do something. So therefore, I think the margin -- gross margin profile is certainly not driving it down. It will only add. Similarly, for health care, I think the services we started rendering for health care is going beyond standard cleaning now. They are talking about more and more infection control, higher frequency of cleaning. Facility management in IT and transportation has seen a complete transformation. People want their washrooms and meeting rooms and other common facilities cleaned at a much higher frequency. They want to use the best chemicals in business. They want to see proof of infection control through swab testing and other things, which never happened before. So all these things, as we move from service towards solutioning, the gross margin profile is only going to improve.

And also just to add to what Rituraj said, I think we also mentioned it briefly in our notes, I think we're also going to see vendor consolidation being an important part of the next 2, 3 years, where smaller vendors, noncompliant vendors are going to be viewed at more aggressively in terms of compliance regulations. I -- take the case of Hyderabad Metro, right? There used to be 3 vendors across the Hyderabad Metro as of last year, even during COVID. But now we are the only vendor across every station, across all the Hyderabad Metro network. And we're seeing that play out in other segments and other clients also. And this, I think, is going to be a big theme as we go forward.

Sure, sure. Sir, one question on the Security business. You used to talk of the technology led the remote monitoring purposes. How is that scaling up, if you can share your thoughts? Is it scaling up much faster than earlier? Any indication of how much is that kind of remote monitoring business size, per se, if you can just give some flavor of that business activity?

So to be precise, we have 11,000 connections in hand, 4,500 on our operational, rest are under execution. And this is completely manpower-less Security. There is no manpower involvement. It's alarm on OpEx model, 24/7 monitoring using video analytics and artificial intelligence, and response in emergency scenarios. It also has a value-added component where we are offering customers facility to -- like small insurance companies, they want their time. It is 6 p.m. They want somebody else to manage their air condition maintenance. You know they want somebody to go and clean their premises for an hour, twice a day. So we are bundling all of that in. So it's a new solution. 11,000 sites will get done, hopefully. And that's a very good point that we make at some point in time, we'll put it in our investors report or maybe ask you guys to come on a video call to show you how it works. I think this is the future of security. Not many people are actually tracking the fact that companies like ADT and Secom, which are global market leaders in this space, they have a massive premium valuation, because of this nature of services that they offer. We are the first-movers in this space in India, and we are looking aggressively to invest in this area as part of our Vision 2025 plan.

And Rituraj, currently on -- and on annualized basis, will this be like sub-5% or sub-2% of our total consol revenues?

I think sub-5% you can say.

[Operator Instructions] The next question is from the line of Vidit Shah from India Infoline.

This is Vidit from IIFL. My question was regarding the Australia margins. We've seen like a decent improvement Q-o-Q despite the ad hoc high-margin contracts fading away. So could you explain what's driving this? Are new contracts coming in at higher margins? Or has there been any sort of cost rationalization?

No, I think it's -- I would very clearly urge everybody to please factor Australia margins exactly at the pre-COVID level of 5-odd percent, a little bit higher than 5%. What you're seeing right now is because of still a lot of temporary contracts are not completely out of the system. There has been cost rationalization or full costs are not in the business because there's no travel. There's a lot of things that are not happening currently. And this is not truly representative.

And also with the labor shortages as we indicated earlier, there's also a slight premium to what we are charging. That's why there will be a slight margin uptick you would have seen over the previous quarter. But yes, as and when the both restriction cease down and the labor shortages are out of the system, I don't think your ability to charge the premium will continue. So I think yes, like Rituraj was mentioning the real margin profile will be between 5% and 5.5%, which used to be the case before COVID.

Understood. Fine. And just another one around the OCF generation. Now that we started seeing high growth across India and -- what do we expect like a reasonable amount of OCF to EBITDA to be? Because if I actually back-calculate, OCF for this quarter was kind of negative, right, negative around INR 13 crores to INR 15 crores.

I will ask Devesh to answer that about the Australia OCF situation, but let me first give you an overview. Again, reinforcing something that I've said continuously over the past year. SIS has reported exceptional operating cash, singularly because our growth was significantly slower. Our business requires working capital. We are not staffing. We cannot collect and then pay. We are dealing with essential services workers. We pay regardless, and therefore, there is working capital involvement. The good side about working capital involvement is that you are also charging a much higher margin per head than any staffing company does. That's the reason why we are a 6% EBITDA margin business as against the 2% EBITDA margin globally that staffing companies do. And we -- all important aspect that we need to look at is return on capital, whether -- what COVID has proved for me, and this is a little bit of exchanging my personal note more than answering your question. I have been in this industry for 30 years, and I have no doubt in my mind ever that this business has potential to deliver a 20% plus ROCE. But honestly, I've never seen anything like COVID in my career, and I did not know what a slower growth or no growth situation will do to the ROCE line. What COVID has taught me is that this business has the potential to deliver a 20% plus ROCE with 20% growth and also with less than 5% growth because the working capital requirement adjust. So I think that, for me, is a very powerful learning from this, and hopefully, it will also give you some clarity. But coming to the question, I'll request Devesh to answer about the Australian OCF.

Thank you, Rituraj. Now what's happened in the total OCF scenario that India and basically Security and FM was on -- negative, but Australia was negative because of 2 reasons. Number one is, if you remember last year, last quarter, we had advised that the DSO was a historic low. In Australia, there was an unusual situation. It was not the normal situation. It was unusually low. So that is -- one effect of that is felt in this quarter. The second is that in our sun film protection business, we won several large new contracts while they were getting deployed, of course, in the initial periods of such large contracts, the DSO does go up because you need to do the transition and you need to do the invoicing and get the whole process side, then you start collecting it. So these are 2 reasons why the international DSO went up. But on a regular basis, our OCF is still above 40%. Our consolidated OCF EBITDA is still 40% in spite of the growth coming back to India Security and FM, and the international business, and in spite of this DSO aberration, we still on a consolidated year-to-date, 40% plus on each year.

Going forward, we may see Australia OCF going back -- going further down as these contracts start getting executed and...

OCF will only improve because this was...

DSOs sir.

Yes. OCF will improve there.

All right. Got it. Last question for me was regarding the FM business. Now the business is largely back to pre-COVID levels, but can you give an understanding of what the position of the IT, ITES and the railways bit is? I mean, are they -- how much of -- how much are they at currently compared to pre-COVID levels? So I'm just trying to figure out how much growth or backlog is there?

They are clearly 25% lower than pre-COVID level. Even as of now, we track that very closely. But I think we want to see whether OCF will come back. We're not sure if 100% will come back or it will become 105% or will remain 90% to pre-COVID. So it's not so straight to compute that -- this 25% back to normal headroom. So please be mindful of that. But for the number you asked, we are at least 25% down both on railways and on IT from our pre-COVID normals. Just one last input I'll give you on this OCF question that you asked. Our guidance since the time we listed 18 quarters back has been 20% year-on-year revenue growth, 20% return on capital and 50% OCF to EBITDA. These are the numbers I worked with. This is what we stated from the beginning, right from our road shows. And going forward as well as things normalize post-COVID, this is what we want to be shooting for. So please do not factor higher OCF to EBITDA conversion. We want growth to come back, that's our primary focus. Our agenda is market share.

[Operator Instructions] The next question is from the line of Mehul Mehta from [ Aditi Service Securities ].

Am I audible?

Yes, sir, you are audible.

My first question is what would the monthly exit rate in terms of India Security and FM business revenue? Is it evenly spread out? Or like how is it?

So let me give you that number. The India Security business is -- at the end of September, is tracking at INR 328 crores. The Indian FM business is tracking at INR 119 crores. Just for reference, pre-COVID India Security business in March 2020 was INR 303 crores, now is INR 328 crores. FM was INR 116 crores in March 2020, now is INR 119 crores.

Sure. Another question is when you're guiding for INR 10,000 crores of annual run rate of revenue, would it mean that like for the next half, it would be INR 2,500 crores each kind of like and if I take broadly INR 5,000 crores or INR 5,200 crores in the remaining like more or less broad guidance. How should I...

Let me just clarify. It's not -- when I mean annualized, it's not for FY '22. It is just like INR 2,430 crores for Q2, that multiplied by 4, and we're close to INR 10,000 crores. It's more a...

It's a run rate. We look at our business from a run rate perspective, my friend.

It's not a FY '22 guidance.

So it's basically like quarter 2, what you have achieved based on that run rate like and you're annualizing it to INR 10,000 crores. Is that the correct understanding?

Not in -- same quarter. If we just take September monthly run rate, just annualize it, will be close to it.

Sure. One clarification I needed. In FM business, we have railway vertical, which is quite a significant shout out. But when I look at an annual report, when you view revenue breakup kind of from each segment or each vertical, railways doesn't figure out anywhere. So can you guys like where should I look for railways revenue?

Of government, let me check. I will get back to you. It should be in government funds.

No. But it would not be reported as special segment, my friend, because -- like we've said, it's an important segment, but then although INR 116 crore railway would not even add up INR 10 crores. So please understand that's again something I need to keep reinforcing repeatedly. Our business is completely customer segment agnostic. There is no single customer that adds -- contributes more than 2%, 2.5% of revenue. And there is no customer segment including the likes of banking and IT, et cetera, which are like more than 15% of our overall revenue. These services are needed by everybody. Everybody from your RWA, to your kid's school, to your office, to your mall that you visit, to the public utility you use every day, everything needs camera, guards and cleaning staff.

Yes. But in terms of railways, could you broadly mention like say, in FY '21, what would have been the contribution from railway segment to our revenue from FM segment?

Before COVID, the railway segment used to contribute 9% to 10% of the FM segment.

Of the FM.

FM, overall business. That has come down in FY '21, because the railways has -- business has come down. In FY '21, it should be around 5% also, again half the FM part. If you take the overall company, it's like very scarce.

So on normalized basis FY '20, if we take, it was around 10% kind of.

Yes.

Of the FM business. Not FM buying or something. Only FM business.

[Operator Instructions] The next question is from the line of Bhavik Dave from Nippon Indian Mutual Fund.

Just one question. I don't know if you've answered this, but our focus was on cross-selling or deepening our relationship with existing clientele across business services that we provide. Just wanted to understand from a qualitative or quantitative perspective, if you have 100 clients today, how many of them would have more than like a couple of services that they use from us? So any color on that. And how does that like shape up going ahead? So I wanted to understand that way.

So I think that's a great question. The answer is that 90% of our customers are singles using customers, which means that the horizon for One SIS as a platform is humongous. And that's why it's one of the key ideas for Vision 2025.

Right. But in a sense that how do we -- what would be the benchmark that we set for us like in FY '22 by the end, what that number should be every year? How are we tracking that, if at all? If you can give some direction that will be very, very helpful for us to understand how incrementally without adding any cost with existing clients, we're able to add more revenue, which will directly flow into margins? So that would be interesting.

We have a budget for One SIS. We have 4-year financial model for One SIS, but we haven't really computed that in terms of what percentage of all customers will use because SIS portfolio keeps changing, if we acquire an asset, we will down the line, then that's a new set of customers, et cetera. So we haven't done it basis the number of customers that will use multiple services. We've simply built out an aggressive revenue scale up and growth model for One SIS. So maybe in one -- the coming quarters, we will put out a piece on One SIS and its road map, strategy and things like that.

Understood. And lastly, sorry, I think you've spoken about this. On the remote monitoring services that we are the future on security management. Sorry, I missed the comments, but where have we reached in that? Like how much -- what part of our securities India revenue would be from these remote monitoring services? And I understand that's a relatively higher EBITDA margin business, right? So...

So as of right now, we protect on our alarm monitoring business contributes not even 1% of the 321 -- INR 328 crores that the India Security business on a combined basis reported. So it's extremely, extremely small. But it is growing very rapidly. And it has potential to generate more than 20% EBITDA, which I think has the power to change the overall picture significantly. And that's why I said that we are looking to invest in that area very aggressively. We believe that the -- it is a wonderful solution where security can be delivered with little to no manpower enrollment, and therefore, it's usually more profitable.

Very specific industries, which have already started using this, F&B, banking and financial services where ATM is -- or a bank branch would be using this, but any other industries that have started to take on the services and which are the 2, 3 industries that would be focused -- would be our area of focus for us to scale up? Because we have a lot of services with oil and gas or gas distribution, solution companies where we have a very strong foothold. So will this -- will these services be -- are they warming up to this idea? Are you seeing that happening?

So as of right now, our focus is predominantly on banking, BFSI. And when I say banking, it's everything from banking to insurance company, offices to gold loan branches and things like that. So honestly speaking, our agenda is to try and get to 100,000 connections. And banking alone can deliver that. India has got 200,000-plus ATMs and 1 lakh of branches and gold loan branches and insurance companies, et cetera, et cetera, all put together. I think there are 4 to 5 lakh touch points just in the BFSI segment. We have like 11,000 of that. So I don't think we need to open up 6 segments to get to our goal post. But you're right, beyond banking, we have seen uptick a little bit in e-commerce, little bit in e-commerce logistics a little bit. And then we've seen uptick a little bit also on the residential side, but too small. And to be honest, our focus is very clear. We want to basically pluck the lowest hanging fruit rather than going all over the place.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Vamshidhar Guthikonda for closing comments. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you, everyone. That was a very interesting and engaging discussions with the analysts and investor community. India is poised at the cusp of a very huge CapEx revival as has been pointed out by various economic research firms. We believe that the economy is poised at an inflection point that has been much awaited for the past few years. And SIS is best placed to capture the additional demand for security, facility management and cash services that it has maintained. The advisory market is going to increase. The pace of formalization in the tax will increase with the roll out of labor reforms. And coupled with the steady change in customer behavior towards more technology-based solutions, we are confident of maintaining a growth, increasing differentiation with the peers and competitors, and accordingly, double our market share in all our segments as we have envisioned in the Vision 2025 plan. With this, I would like to conclude, and I would like to thank everyone for joining the call. I hope we've been able to answer most of your questions adequately. If anyone has any follow-up questions, feel free to reach out. Thank you, and have a good day.

Happy Diwali, everyone.

Happy Diwali.

Thank you. On behalf of Security and Intelligence Services Limited that concludes this conference. Thank you for joining us, and you may now disconnect your lines.