SIS Limited (SIS) Earnings Call Transcript & Summary

Good afternoon, dear members. And a very warm welcome to all present here and also connected online to the company's 38th Annual General Meeting. I am Ravindra Kishore Sinha, Chairman of the SIS Limited. I hope all of you are safe and in good health. I sincerely thank you all for your esteemed presence, continued trust and support extended to the company. Now I would like to introduce the members to the Board and senior management present with us today: Sri Upendra Kumar Sinha, independent director of the company, who is attending this meeting through VC from New Delhi; Mrs. Rita Kishore Sinha, non-executive director, who is sitting right to me; Mr. Uday Singh, non-executive director, attending the meeting through VC from Bangalore; Mr. Thomas Fredrik Berglund, member of the advisory board, attending this meeting from -- through VC from Switzerland; Mr. Haakan Gustaf Oscar Winberg, member of the advisory board, attending the meeting through VC from Sweden; Mr. Amrendra Prasad Verma, independent director and Chairman of the Audit Committee and Stakeholder Relationship Committee. They are sitting next to me. Mr. T C A Ranganathan, independent director and Chairman of the Nomination and Remuneration Committee, attending the meeting through VC from New Delhi; Mr. Rajan Verma, independent director, who is just sitting on the right of me; Mr. Sunil Srivastav, independent director, attending the meeting through VC from Mumbai; Mr. Arvind Kumar Prasad, Director of Finance, who is sitting extreme left to me; and Mr. Rajan Krishnanath Medhekar, who is attending this meeting through VC from Mumbai; Mr. Rituraj Kishore Sinha, Group Managing Director, who is sitting on the extreme right; and Ms. Pushpalatha Katkuri, Company Secretary, sitting on the extreme left. I would also like to welcome Mike McKinnon, CEO and Vice Chairman, international business, who is attending this meeting on VC from Sydney, Australia; Mr. Dhiraj Singh, CEO, India, who is attending meeting on VC from New Delhi; Mr. Tapash Chaudhuri, CEO, security solutions, also attending the meeting through VC from New Delhi; and [ Bhaskar Bakhshi ], President, M&A, Investor Relations, of SIS Ventures. He is also attending the meeting through VC from New Delhi. Mr. Devesh Desai, Chief Financial Officer, who is just sitting in front of me; Mr. Brajesh Kumar, Chief Financial Officer, India manned guarding, who is also sitting just in front of me. In addition of that, we also have Mr. D.K. Saxena, partner of Saxena & Saxena, statutory auditors, participating through VC from New Delhi; and Mr. Sudhir V Hulyalkar, secretarial auditor, participating from -- through VC from Bangalore. I thank all the members for joining the meeting. The company has provided live streaming of the AGM for the members who are unable to attend the meeting at Patna. The Company Secretary has informed that we have sufficient quorum of members. As the acquired quorum is present, I call this meeting to order. The company has received a request from a few members to register them as a speaker at the meeting. Accordingly, the moderator will facilitate the session for the registered members once the floor is open for question-and-answer session. Now I will read the mandatory Chairman's speech. Dear shareholders, Board members and other invited guests, my colleagues on the Board of SIS join me in welcoming you to the 38th Annual General Meeting of the SIS. It is a real pleasure to interact with you in person after 2 years since we were forced to adopt a video format for the Annual Shareholders' Meeting in the year 2020 and the year 2021 due to COVID-19 pandemic. I would like to take this opportunity to compliment and express my gratitude to the entire health care [ fraternity ] and the government agencies in India and across the world for braving enormous odds to combat the COVID-19 pandemic. The timely rollout of vaccines and the stupendous exercise to ensure that all sections of our countrymen get vaccinated and protected against the coronavirus is unparalleled exercise across the world. Globally too, several governments and countries have rolled out vaccinated -- vaccination programs. And all these [ concerned ] efforts to address the pandemic-induced health and economic disruptions have helped the world to gradually return to the normal. At SIS too, the pandemic phase was a major challenge which brought out the best in us. I salute all the fortunate frontline staff, who were unrelenting in their dedication and stood out as COVID warriors during this phase, which we -- which will remain a matter of pride and inspiration for the entire SIS and for the society for many decades to come. The SIS culture which has been instilled and nurtured over the past many years helped us to overcome the odds and continue the -- continue to operate as normally as possible in these circumstances, thus ensuring 0 disruption in operations for our customers and for the group business and operations. Coming to the financial year 2021, '22. Despite the pandemic and its resultant disruptions in the 2 waves in between, this has been a record year for your company. We crossed new milestones and launched several new strategic initiative. I'm pleased to announce that the SIS Group crossed a significant milestone in its history in the financial year 2021, '22 with revenues exceeding INR 10,000 crores, which roughly translates to USD 1.3 billion. This is also the highest turnover which any service company or business support company has recorded in the country and any company has recorded in -- registered in Bihar and Jharkhand. We continue to be one of the leading companies in the security and facility management in Asia Pacific today and the clear leader in India in security solution business. Our security solution business in India grew in excess of 10%, and we continue to deploy technology-enabled security solutions to complement and supplement the traditional manned guarding services. Our VProtect business offers alarm monitoring and response solution to banks, retail chains, residences and financial services. And our Tech SIS business offers integrated ManTech solutions across a range of customers and industries [ together ]. Our international security solutions business continued to grow in spite of the disruption caused by the pandemic. Pleasingly, several of our customers in aviation sector, various universities and retail started to return to normalcy. And special events in large sporting events resumed during this year with our support. Our facility management solutions business continues to be the fastest growing in the group portfolio and grew by almost 24%. This business is in a strong growth mode, and we witnessed enhanced focus on hygiene and cleanliness in the post-COVID world. This is an achievement because, prior to COVID, people were not realizing the value of the cleanliness, hygiene. And the -- they were just taking it lightly, but post COVID, this business growth is due to this awareness and realization, after the COVID. The cash logistics solutions business, which is a joint venture with Prosegur, continues to consolidate its position in the market and ended to -- ended with the -- ended the year with a strong revenue growth and continues to be the second largest cash logistic business in the country. The business delivered a profit after-tax for the first time since its formation of the JV with the Prosegur. This is a good news which you must also be very happy, that our cash logistic business, after several years of continued hard work, has now come into a profit. We launched the SIS Ventures initiative to invest in next-generation ideas and cutting-edge technology solution for supplement to security and facility management solution being provided by the SIS Group and made our first investment in Staqu Technologies, an audio-video analytics company and video management platform company. We are now a family of more than 250,000 employees -- I don't call them employees. I call them the family members of SIS. It gives us immense satisfaction that SIS is among the top 5 private employers in India. If anyone will count to that -- who are the top 5 employers in private sector in India, SIS will be amongst them. We provide a regular, sustainable livelihood to such a large number of households. We have grown continuously without compromising on employees' welfare and benefits and ensure that we provide a safe and fulfilling work environment and which is the key to our ability to hire and retain the best talents in the market. Our superior workplace culture and environment have resulted in SIS being recognized as the great place to work for the second year in a row. And we were ranked as #4 amongst the best companies to work for in India. And mind it: These all ranking are given by the third-party audit agencies where SIS [ has no approach ]. They do it themselves. They do it. Additionally we were also rated as the best employer in the facility management category in India. Most importantly, the SIS Group also received the coveted recognition as one of the India's 22 best employers in the national -- nation builders category. [ So the ] agency [ which says ] that who are the -- which are the companies who are involved in the nation building. So SIS is on #22. It's a big achievement. At SIS, we believe that investors leveraging technology is the key enabler and differentiator for us. We continue to consistently invest in best-in-class system to help improve our customers' centric services, service delivery system; and also automatic -- automating business process to improve productivity and efficiency of operation. We commenced the rollout of first-of-its-kind app MySIS for our frontline staff, allowing them to carry out a range of processes and activities like attendance, leave management, payslip; and many much more applications which they can themselves log in and access too. The labor reform announcement by the government in 2019 through the introduction of [ more ] codes consolidation all -- of all labor-related legislation have the potential to be a game changer in the industry in terms of compliance standards and benchmark; and also to provide the much needed and welcome clarity in terms of regulatory interpretation, consistency and predictability. The effective date of these codes is expected to be announced in the next -- near future, and the SIS Group has prepared itself for the notification and rollout of these codes by the government. The SIS Group business touches each and every sector of the economy and facets of our lives. The industry we operate in -- and the services we provide are closely linked to the overall economic growth of the country. The last financial year was a turbulent year for the Indian and also for the world economy. There were intermittent waves of COVID pandemic and geopolitical tensions in Europe towards the end of the year. However, coming off a lower economic base in financial year '21 -- India's GDP growth at 8.9% and -- in financial year '22. It is expected to grow at 7.2% in financial year '23, as predicted by RBI. This would make India fastest-growing major economy in the world. The SIS Group is perfectly positioned to benefit from the rebound in the Indian economy, which is now being bolstered by the PLI schemes rolled out across several sectors by government coupled with the huge infrastructure and CapEx development by both the government and private sectors. I am confident that, in order to capture these opportunities before us, all of us will demonstrate the necessary drive, quality, consciousness, work ethics, risk appetite and most importantly the culture of SIS. On behalf of the Board, I would like to thank all our stakeholders for their continued belief in SIS. We believe the key blocks are in place for our ongoing success, and I wish you all the best. With warm regards, I am your Chairman, R K Sinha. Now the notice of the 38th Annual General Meeting; and the annual report containing the audited financial statements, including the consolidated financial statement, for the year ended 31st March 2022; and Board and auditor's report have been sent to all members. These documents have also been made available on the company website. With the permission of the members, I would like to take the notice convening the meeting as read. The register of the directors and key managerial person and their shareholding register of contracts or agreement in which the directors are interested and copies of the audited financial statements are kept open for inspection by the members. Mr. -- Ms. -- Saxena & Saxena, statutory auditors, have submitted their report for the financial year -- financial statement for the year ended 31st March 2022. Members, please -- may please note that the statutory auditors have issued an unmodified opinion on both the stand-alone and consolidated financial statements and auditor's report -- does not contain any qualification or adverse remark. These being -- there being no qualification, the entire report is not required to be read in this meeting. And therefore, the auditor's report is being taken as read. We now come to the formal proceeding of the meeting, agenda items. We now take up the agenda for the meeting and the respective resolutions as set forth in the notice. Before we proceed, I would like to inform you that, as required under the Companies Act 2013, the company has provided all members the facilities to cast their votes electronically by remote e-voting at CDSL platform on the resolutions set forth in the notice. The remote e-voting commenced on 27th August 2022; and concluded, concludes -- concluded on 29th August 2022, at 5 p.m. Members who have not yet cast their votes electronically and who are present in this meeting hall have the opportunity to cast their votes through ballot papers. The Board of Directors have appointed Mr. Suryakant Kumar, practicing company secretary, as the scrutinizer to supervise the remote e-voting and ballot process at the meeting. Upon conclusion of the meeting, the scrutinizer will verify the votes cast by the members both through remote e-voting and ballot papers and issue his consolidated report of the total votes cast in favor or against in respect of the resolution set forth in this notice. I hereby authorize the Company Secretary to declare the voting results within the specified time line and place the results on the website of the company and submit the same to the stock exchange. The ballot boxes have been kept in the meeting hall, and the poll papers have already been distributed to all the members. Please note that the floor will be open for questions by members after all the resolutions are tabled. Item #1, adoption of the audited financial statement of the company, including the audited consolidated financial statements, for the financial year ended 31st March 2022, together with reports of the Board of Directors and the auditors thereon. As I am deemed to be interested in these next 2 agenda items, I request Mr. Amrendra Prasad Verma, independent director, to assume the chair and conduct the proceedings in respect of these 2 items, Mr. Amrendra Prasad Verma.

Thank you, Chairman. So item #2, to appoint a director in place of Mr. Ravindra Kishore Sinha, who retires by rotation and, being eligible, offers himself for reappointment. Coming to item #3 is to appoint a director in place of Mrs. Rita Kishore Sinha, who retires by rotation and, being eligible, offers herself for reappointment. I now request the Chairman to continue with the remaining items of the agenda.

Thank you, Mr. Verma. Agenda #4 is appointment of S S Kothari Mehta & Company chartered accountants as statutory auditors of the company and to fix their remuneration. The text of the resolution and explanatory statement is provided in the notice circulated to the members. Item #5, appointment of Mr. Uday Singh as an independent director of the company. The text of the resolution and explanatory statement is provided in the notice circulated to the members. Item #6, reappointment of Mr. Sunil Srivastav as an independent director of the company. The text of resolution and explanatory statement is provided in the notice circulated to the members. Item #7, revision in the remuneration payable to non-promoter non-executive directors by way of a commission. The text of resolution and explanatory statement is provided in the notice circulated to the members. Item #8, alteration of the articles of association of the company. The text of the resolution and explanatory statement is provided the notice circulated to the members. Now we will come to the question-and-answer session. Ms. Pushpalatha?

Yes, so sir. So we have received requests from 2 shareholders for speaker registration. I request now to unmute [ Mr. Sarvjit Singh. Shrikant ], are you there?

Yes, madam. I'll do it.

Yes. Will you please unmute?

[indiscernible], can you unmute -- yes, yes.

Chairman, sir, can you hear my voice?

Yes. Please go ahead, sir.

[Foreign Language]

Thank you.

Thank you, [ Mr. Sarvjit Singh. Shrikant ], I request you to allow [ Mr. Abhishek ] [indiscernible] speak now.

Yes, yes.

[indiscernible]? [ This is Patna ]. Can you hear me, madam? Am I audible?

Yes, sir. We can hear you, sir. Please go ahead...

Madam, kindly enable the camera as well, madam moderator.

Yes, sure...

I think the camera is not enabled from your end, yes.

Yes, yes. Yes, sir, we are doing [indiscernible].

Yes. Sir, my name is [ Abhishek ], shareholder of the company, my DP ID [ IN301637 ]. And client ID is [ 41359155 ]. So first of all, I congratulate the management on the eve of annual general body meeting. So I trust all is well with you and family in this challenging situation. Our company deserves much more respect than the current market cap after completing more than a decade of successful operations, profitability, dividend history; and becoming one of the strongest brand in our respective segment. Sir, I would like to know how our business has been impacted in these past 3 years of this COVID time. The coronavirus and the subsequent lockdowns have left virtually no industry untouched after the COVID, so whether any employees have been sacked, [ hired ], salary cut [ and percentage of any ], I would like to know from you, sir, whether any salary cut has been taken by the management during the pandemic time. And sir, with -- company has undergone buybacks in the year 2021 and as well as now you are coming out with a buyback, so what is the price that the company has preferred for the buyback? I would like to know from you, sir. Kindly explain us on that. And we are not able to receive any dividend for the past 2 years, sir, so what is the reason the management is not able to come up with a dividend? [ It might not be the investor fraternity ], but we still have a lot of faith and hope in the management. [ And the ] company is doing very well. Our EPS has also come up. [ And we are really up. 6.549 ] is our EPS, so we are really thankful to the management for having -- rewarding the minority shareholders [ reserves ] to come. And sir, then I wanted -- I would request the management to kindly take part in con call, quarterly presentation meeting with global investors on a regular basis. And I hope that management is doing that, but if you can very well send a reminder by e-mail to the investor [ fraternity ], it will be helpful for us to join the investor call, sir. And what are the steps being taken by the management to reduce other expenses, legal and professional charges and the audit fee, sir? And myself and my team are running a legal firm [indiscernible], so I request [ your good selves ] to kindly [ enroll our firm in the impanelment ] of the company. Sir, I would request your management to kindly share the details of the concerned legal team from Chennai who is taking care of the -- your company so that I can send my credentials with them, sir. And I would love to work for our company, sir. And nothing much to ask, sir. I wish the company and the Board of Directors a great success and prosperity in the coming future. And one more shareholder, sir, from Hyderabad, [ Mr. Govin Zamani ], who has also registered a speaker but unfortunately is not able to find out the link, sir. But because it was a physical meeting, we really appreciate that management -- that you have conducted a hybrid meeting. You are the only ones, sir, who have conducted a hybrid AGM, physical as well as virtual. You are -- you should set as an example to other companies. [ The Patna company ] should set as an example for other listed companies on Bombay Stock Exchange so that they can also turn into the hybrid mode, sir, which is virtual as well as physical. This is a fantastic option available for the investor [ fraternity ], so we are really thankful for the management for conducting this option. And kindly allow [ Mr. Govin Zamani ], sir, who is also a speaker shareholder but have not received link. He'll have a word with you for a minute, sir...