To the Members
Your Directors have pleasure in presenting the Thirty Fifth Annual Report on thebusiness and operations of the Company together with the audited financial statements forthe year ended March 31 2019.
The Company's operations during the year ended March 31 2019 are summarised in thetable below:
| || |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Net Revenue ||25035.17 ||21350.52 ||70932.73 ||58333.73 |
|Revenue Growth % ||17.26 ||33.30 ||21.60 ||32.90 |
|Earnings before financial charges depreciation & amortisation and taxes (EBITDA) ||1433.14 ||1475.95 ||3651.59 ||3119.62 |
|Depreciation & Amortisation ||295.10 ||305.27 ||659.51 ||559.73 |
|Financial charges ||475.43 ||465.54 ||938.34 ||924.83 |
|Others (Other Income & other entries arising from business combination) ||214.88 ||84.28 ||(421.92) ||(5.45) |
|Earnings' Profit before taxes (PBT) ||877.50 ||772.78 ||2095.25 ||1874.31 |
|Provision for taxes ||(315.11) ||42.67 ||(51.54) ||244.03 |
|Net Earnings' Profit after tax (PAT) ||1192.61 ||730.11 ||2146.79 ||1630.28 |
|Earnings Per Share (Basic) in ' ||16.28 ||10.20 ||29.48 ||22.77 |
|Earnings Per Share (Diluted) in ' ||16.02 ||10.01 ||29.01 ||22.36 |
On a standalone basis the Company's revenues at ' 25035.17 Million during the yearunder review increased by 17.26% EBITDA at ' 1433.14 Million decreased by 2.90% andprofit after tax at ' 1192.61 Million increased by 63.35% as compared to the previousyear. Your Company continues to grow at a rapid pace and its revenue growth over the last5 years (CAGR) has averaged 25.4 % and is clearly the fastest growing company in securityservices in India. The Earnings per Share (Basic) for the year under review was ' 16.28when compared to '10.20 for the previous year representing a growth of 59.61%.
On a consolidated basis the Group's revenues at ' 70932.73 Million during the yearunder review increased by 21.60% EBITDA at ' 3651.59 Million increased by 17.05% andprofit after tax at ' 2146.79 Million increased by 31.71% as compared to the previousyear. The Group continues to grow at a rapid pace and its revenue growth over the last 5years (CAGR) has averaged 18.02 %. The Earnings per Share (Basic) for the year underreview was ' 29.48 when compared to ' 22.77 for the previous year representing a growth of29.47%.
The SIS Group is amongst the largest security and facility management servicescompanies in the Asia-Pacific region with revenues continuing to grow at a rate in excessof the industry growth rate.
Acquisition of SLV Security Services Private Limited ("SLV")
Effective September 012018 the Company has acquired 51% shareholding of SLV for anaggregate consideration of ' 505 Million. SLV provides man guarding electronicsurveillance event security/ management and security consulting services to a wide rangeof end user industries including industrial retail and residential etc. PresentlySLV's operations are focused primarily in the Gurgaon market with a small percentagecoming from business in other states including metros and Tier- I and Tier-2 cities inIndia. The acquisition would help the Company to gain market share in NCR (of whichGurgaon is a significant territory) where SLV is a leading player and post-acquisitionSIS + SLV will be the dominant player with a close to 10% market share in the Gurgaonmarket which is one of the top 8 and fastest growing markets for security services.
Acquisition of Rare Hospitality & Services Private Limited ("RHSPL")
Effective November 01 2018 the Company has acquired 80% shareholding in RHSPL for anaggregate consideration of ' 319.66 Million. RHSPL provides hospitality and facilitymanagement services across more than 20 cities and 10 states of India with primary focusin Western India and Healthcare segment. RHSPL has over 80 customers and provides servicesover 200 sites. The primary customer segments include healthcare / hospitals hotelstownships commercial and industrial. The acquisition would help the Company increasemarket share in the facility management services and also increase its presence in theWestern region and the Healthcare segment.
Acquisition of Uniq Detective and Security Services Private Limited along with itssubsidiaries ("Uniq Group")
Effective February 01 2019 the Company has acquired 51% shareholding in UniqDetective and Security Services Private Limited for an aggregate consideration of ' 515Million. Uniq Group provides security and facility management services across more than 4states of India. The primary customer segments include Automobiles Consumer andTechnology. Uniq Group has over 475 customers across south India. The acquisition wouldhelp the Company increase its market share by close to 75% in Bangalore region one of thefastest growing markets for security services.
Acquisition of SIS Henderson Holdings Pte. Ltd. along with its subsidiaries HendersonSecurity Services Pte. Ltd ("HSS") and Henderson Technologies Pte. Ltd("HT") ("Henderson Group") by SIS Group International Holdings PtyLtd. a subsidiary of the Company Effective February 28 2019 SIS Group InternationalHoldings Pty Ltd. a subsidiary of the Company has acquired 60% of shareholding in SISHenderson Holdings Pte. Ltd. for an aggregate consideration of ' 2280 Million.Henderson Group provides manned guarding services and building mechanical and electricalservices (including electronic security services). The primary customer segments includeresidential condominiums government and public transport and commercial spaces. HendersonGroup is a highly reputed brand in Singapore and has an impressive client portfolio. Theacquisition will give the Group an entry into the Singapore market and would help toexpand its presence in the Asia Pacific region.
Acquisition of Platform 4 Group Limited ("P4G") by SIS Australia Group PtyLimited a subsidiary of the Company.
Effective February 28 2019 SIS Australia Group Pty Limited a subsidiary of theCompany has acquired 51% shareholding in P4G for an aggregate consideration of ' 66Million. P4G provides guard services patrols and monitoring services and event services.The primary customer segments include manufacturing construction hospitality &commercial spaces. P4G is a highly reputed brand in New Zealand and has an impressiveclient portfolio. The acquisition will give the Group an entry into the New Zealand marketand will enable enlargement and expansion of the Australian business operations into NewZealand.
Private placement of NCD's.
On April 13 2018 the Company had allotted 1500 secured rated listed redeemablenon-convertible debentures of face value of ' 1 Million each aggregating up to '1500 Million on a private placement basis to eligible investors.
OPERATIONS AND BUSINESS PERFORMANCE
Security Services Security services - India
During the year we conducted a portfolio review exercise of our security servicesbusiness and as a result of which we discontinued unprofitable contracts. In spite of thisexercise the business recorded a revenue of ' 27123 Million during the year underreview representing a 26.15% growth over FY18. This year saw our security servicesbusiness establish a few landmarks:
a. We completed our first acquisition viz. SLV Security Services Private Limited andUniq Detective and Security Services Private Limited.
b. As a result of these acquisitions we believe that the SIS Group is now the largestsecurity service company in India.
c. We were awarded a three-year contract from Cognizant Technologies to providesecurity solutions across 47 facilities in India. As a result of this we have deployedaround 5000 security personnel in different categories across all 47 facilities.
The consolidated revenues and financial results include the financial results of SLVand Uniq for 7 months and 2 months respectively and hence the full effect of theseacquisitions will occur only in the next financial year.
The number of security personnel employed in India as on March 31 2019 was 144257.Significant operational improvements leveraging technology-based solutions havecontributed to a growth in productivity and operating profits during the year underreview.
During the year under review we also incurred significant costs on account ofdeployment of the three-year contract from Cognizant Technologies and provisioning onaccount of the receivables from certain customers who were going through an insolvencyprocess.
The EBITDA of the security services business in India however still improved from '1491.31 Million in FY18 to ' 1519.83 Million in FY 19.
Security services - International
The Group provides security services internationally through its subsidiaries in Australia New Zealand and Singapore. In Australia we operate through MSS Security Pty Ltd("MSS") and Southern Cross Protection Pty Ltd ("SXP"). In March 2019we completed the acquisitions of majority shareholding in Henderson Group and P4G therebyextending our international businesses to Singapore and New Zealand.
On a consolidated basis the Security services - International segment comprising MSSSXP Henderson Group and P4G recorded revenues of AUD 691.35 Million during the year underreview against AUD 603.46 Million in the previous year. This represents a growth of 14.56%over the previous year. In Australia our revenues grew by 13.64% which is noteworthyconsidering that the Australian industry is a fairly developed and stable market and itseconomy grew at 2.9% in 2017-18. MSS also handled the prestigious Commonwealth Gamessecurity project this year.
The newly acquired Henderson Group and P4G businesses are being consolidated only fromthe month of March hence the full effect of these acquisitions will occur only fromFY20.
The highlights of the year for the Security services - International segment were:
a. We continue to be No.1 in Australia with over 20% market share outpacing marketgrowth
b. New contracts representing annualised revenue of AUD 45 Million were won during theyear and an overall retention rate of 96% was achieved which is a strong indicator of thehigh levels of operational excellence in our Australia business.
c. We completed two acquisitions during the year as mentioned above and extended ourinternational businesses to Singapore and New Zealand.
The EBITDA for the segment was AUD 32.9 Million against AUD 29 Million for FY18representing a 13.44% increase over the previous year.
Electronic Security Solutions
1. ManTech - Our electronic security business recorded a revenue of ' 240.20Million during the year under review compared to ' 149.60 Million in the previousyear. The business achieved significant traction with innovative projects and solutionsdeveloped for major oil and gas companies for securing their pipeline and transportationservices. We continue to explore and develop tailor made solutions for different industrysegments. We will continue to invest resources in these technology solutions as we believethat our clients and businesses in general are gradually seeking innovative and customisedsolutions from their key service providers and our investment will support our efforts tocontinue to provide such niche manpower-based technology solutions to the clients whichwill help solidify our leading position in the security services business.
2. Alarm Monitoring and Response - We provide these services to individual homesand small business and commercial establishments and operate this business under the brandVProtect. VProtect is the pioneer in providing Alarm Monitoring and Response services tothe Indian consumers and we are confident of using our early mover advantage to expand ourpresence. During the year under review we steadily expanded our presence in Gurgaon andthe number of sites secured by us increased from 371 in FY18 to 1350 at the end of FY19.We will continue to focus on providing these services to individual homes and smallbusiness and commercial establishments and will also seek to expand our service toadjacent territories and territories which have a high concentration of individual homes.
The Group's facility management business comprises:
i. Service Master Clean Limited ("SMC") Dusters Total Solutions ServicesPrivate Limited ("Dusters") and Rare Hospitality & Services Private Limitedin the business of housekeeping and cleaning services; and
ii. Terminix SIS India Private Limited ("Terminix SIS") a joint venture withTerminix in the pest control business
The year saw a significant increase in our facility management business with revenuesgoing up from ' 6744.85 Million in FY18 to ' 9499.17 Million in FY19 anincrease of 40.84%.
The facility management business has been focusing on the healthcare hospitality andcommercial facility segments and the acquisition of Rare Hospitality & ServicesPrivate Limited was a step in this direction of building specialised capabilities. We alsoincreased our B2G business with our Railways vertical expanding significantly with moreservices and more stations under coverage.
We also launched our Total Facility Management (TFM) programme which will targetselling integrated services to our customers.
The consolidated EBITDA of this segment also went up from ' 332.50 Million inFY18 to ' 639.90 Million in FY19 an increase of 92.45% and the EBITDA margin alsowent up from 4.9 % in FY18 to 6.7 % in FY19. All businesses contributed to this increasein revenues and EBITDA.
Terminix SIS continues to show strong growth albeit on a smaller base and theDirectors are pleased to report that the business has recorded another year of high growthin revenues of 31.60%.
Cash Logistics (a joint venture with Prosegur)
On a consolidated basis the cash logistics business' revenues declined by 7.93 % overthe previous year as a result of portfolio rationalisation resulting from a criticalreview of each contract in the business and the discontinuance of unprofitable contracts.We now operate over 2060 cash vans service 13700 ATMs and provide doorstep bankingservices across 10617 pickup points and also operate 58 vaults and strong rooms acrossthe country.
The cash in circulation in the economy steadily came back on track and reached levelssimilar to the levels seen before demonetisation.
During the year under review the Reserve Bank of India has issued guidelines andadvised the banks to put in place certain minimum standards in their arrangements with theservice providers for cash management related activities and also specified some financialbenchmarks to be met by the service providers. The Ministry of Home Affairs has alsoissued guidelines for standard operating procedures for providing security by the privatesecurity agencies to cash transportation activities. We believe these will strengthen theoperations of the industry improve the security measures and reduce the risk levels forthe industry.
In line with the RBI circular the joint venture has initiated steps and drawn up adetailed action plan to ensure compliance with these regulations.
The industries we operate in are closely linked to the overall economic growth of thecountry. India is currently one of the fastest growing major economies in the worldaccording to IMF/ World Bank.
Strong underlying GDP growth coupled with sound demand drivers augur well for theIndian security services industry in the near future. Frost & Sullivan has forecastthe Indian security services industry to grow at a CAGR of 20% over the period 2015-2020as compared to a CAGR of 18% over the period 2010-2015.
We have historically grown at over 1.5 times the industry growth across geographies andwe believe that we are well placed to continue to outperform the industry in the futuretoo.
This growth comes on the back of continued urbanisation higher threat perceptioninadequate police force and shift from less-organised local players to well-organisednational players. All this is supported by good growth for all the underlying sectors thatwe service. Recent events and changes like demonetisation implementation of GST andbetter enforcement of PSARA are all going to accelerate the formalisation of thisindustry.
Our Australian business has demonstrated strong growth year after year and continues tomaintain its No. 1 position in the Australian market. With our strong brand name andcontinuous investments in people and technology we believe that we will maintain thismarket leadership position.
The facility management and pest control industry in India is still largely dominatedby unorganised players with localised operations. There continues to be a steady shiftfrom the unorganised to the organised players and this market is expected to grow ataround 20%. While IT/ITES have been the first users of such services we see an increasingshift towards outsourcing of these services by hotels hospitals retail airportsmetros commercial outlets and small retail or F&B outlets as well. The trend towardsoutsourcing non-critical operations (FMS being prime among them) continues to be strongand as the market and industry expands the scope of service offerings will expandbringing in more revenue for the industry. The "Swachh Bharat" initiative byGovernment of India is expected to provide a major boost to facility management andcleaning services.
The Government has started to wake up to the efficiencies that can be garnered throughoutsourcing and we expect to exploit this potential by building on the capabilitydisplayed through our award-winning services provided to the Railways and other governmentdepartments.
The cash logistics industry has seen slower growth over the past years due to slowdownin ATM expansion and the general structure of the industry. We believe that the ecosystemfor cash logistics is likely to undergo a significant shift with the new RBI regulationsand MHA guidelines being announced during the year under review.
The Reserve Bank of India vide its circular reference no. RBI/2017-18/152 dated April6 2018 has released a set of standards for service providers / sub-contractors in cashmanagement logistics who are engaged by the banks for this purpose.
In addition the Ministry of Home Affairs vide gazette notification dated August 82018 has issued the Private Security Agencies (Private Security to Cash Transportation
Activities) Rules 2018 which are the model rules regulating cash transportationactivities.
We are also witnessing increasing requirements from customers expressing an intent toinvest in and deploy electronic security systems as part of their security deployment.At the same time there is an increasing segment of consumers who are seeking to adoptelectronic security as a service ("ESAS"). This presents a huge opportunity forplayers such as SIS who have the ability to curate and provide man-tech solutions whichprovide integrated security solution to the customers.
Our focus remains to drive strong organic growth and at the same time continuously lookto expand on our service offerings by acquiring businesses in niche markets/territoriesand customer segments. We believe that by continuously investing in systems processestraining and recruiting the best personnel and managers we would be able to continue todeliver superior services to customers.
MATERIAL CHANGES & COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY FROM THE END OF FINANCIAL YEAR TILL THE DATE OF THE REPORT.
There have been no material changes and commitments affecting the financial positionof the Company which occurred between the end of the financial year to which the financialstatements relate and the date of this report.
Other significant matters from the end of financial year
Acquisition of shareholding in SIS Prosegur Alarm Monitoring and Response ServicesPrivate Limited.
On April 24 2019 the Company has acquired 50% shareholding in SIS Prosegur AlarmMonitoring and Response Services Private Limited ("SPAMRS") from Singpai AlarmsPrivate Limited in addition to the existing 50% shareholding held by it directly andindirectly. This acquisition would result in SPAMRS becoming a 100% subsidiary of theCompany effective this date. It is expected that this acquisition would result in agreater alignment with the group's strategy and would also enable the integration of thebusiness of SPAMRS with the existing business.
DIVIDEND AND TRANSFER TO RESERVES
The Board in its meeting held on May 2 2019 has recommended a dividend of ' 3.50 perequity share for the financial year ended March 31 2019. The proposal is subject to theapproval of the shareholders at the Annual General Meeting ("AGM") to be held onJune 28 2019 and if approved would result in a cash outflow of approximately ' 256.59Million.
In terms of the provisions of Regulation 43A of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") yourCompany has formulated a Dividend Distribution Policy. This Policy is available on theCompany's website www.sisindia.com.
As on March 31 2019 the authorised capital of the Company is ' 1350.00 Milliondivided into 135000000 equity shares of ' 10 each.
During the year under review 128888 equity shares of '10 each were allotted uponexercise of options under the Company's Employee Stock Option Schemes.
Consequently the paid-up equity share capital of the Company as on March 31 2019stands increased to '733.13 Million consisting of 73312673 equity shares of ' 10 each.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to Section 186 of the Companies Act 2013 ("the Act") disclosureson particulars of loans guarantees and investments are provided as part of the financialstatements.
During the year under review your Company has not accepted or renewed any depositwithin the meaning of Section 73 of the Act read with the Companies (Acceptance ofDeposits) Rules 2014 and as such no amount of principal or interest was outstanding ason the date of the Balance Sheet.
The Company's business and operations are managed by a professional team of managersled by the Managing Director under the supervision and control of the Board of Directors.The Company is committed to maintain the highest standards of Corporate Governance andadheres to the Corporate Governance requirements as stipulated by Securities and ExchangeBoard of India (SEBI).
In terms of Regulation 34 of SEBI Listing Regulations a separate report on CorporateGovernance along with a certificate from a Practicing Company Secretary on its complianceforms an integral part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
The SIS Group comprising Security and Intelligence Services (India) limited and itssubsidiaries associates and joint ventures ("SIS Group") has been at theforefront of bringing social change in the lives of thousands of people in India. Itemploys more than 215000 people of which a large majority come from the less privilegedsections of society with limited means for education development and livelihood. The SISGroup has been instrumental in improving lives of these people through trainingdevelopment and providing them employment opportunities.
Our Board of Directors our Management and all of our employees subscribe to thephilosophy of compassionate care. We believe that a business has to give back to societyand to the environment and community in which they operate in such a manner that helps inbuilding a secure healthy knowledgeable and a sustainable society and business.Corporate Social Responsibility (CSR) has been an integral part of the way that the SISGroup conducts its business since its inception. The SIS Group set up the SEWA trust forthe betterment of lives of the employees. The SIS Group has engaged in various activitiesin the communities that our employees live in which has benefited thousands of peopleover the years. The Company has also been at the forefront in imparting and encouragingskills based training to people from backward and less developed communities across thecountry.
The Policy on CSR has been formalised based on the vision and principles of the SISGroup. The main objective of this CSR Policy is to lay down guidelines to make CSR a keybusiness process for sustainable and beneficial engagement with the society and theenvironment in which the Group operates. It aims at enhancing welfare measures of thesociety based on the immediate and long term social and environment consequences of theSIS Group's activities. This Policy specifies the projects and programmes that can beundertaken directly or indirectly the modalities of execution and the monitoringthereof.
The scope of the Policy has been kept as wide as possible so as to allow the SIS Groupto respond to changing and immediate societal needs and maintain flexibility but at thesame time focus on a specific set of activities that bring long term benefit to society.
One of the internal objectives of the CSR Policy is to seek an active participation ofemployees of the Company at all the locations. Employees will be encouraged to volunteertheir time and effort in respect of SIS Group sponsored programme or on their initiatives.The Company will recognise the efforts put in by employees in CSR activities. A widespreadawareness of the CSR initiatives of the SIS Group will be conducted and the SIS Groupseeks an active and wide participation from employees and encourages any suggestions andproject ideas from them.
The Annual Report on Corporate Social Responsibility (CSR) Activities is enclosed as Annexure-I.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION &REDRESSAL) ACT 2013
The Company is committed to provide a safe and conducive work environment to itsemployees and has adopted a policy on prevention prohibition and redressal of sexualharassment at workplace in line with the provisions of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and the Rules thereunder.Internal Complaints Committees have been constituted to enquire into complaints and torecommend appropriate action wherever required. During the year under review nocomplaints were reported as per the Sexual Harassment of Women at Workplace (PreventionProhibition & Redressal) Act 2013.
NOMINATION AND REMUNERATION POLICY Directors and their Appointment
The Nomination and Remuneration Committee of the Board has approved the criteria fordetermining qualifications positive attributes and independence of Directors in terms ofthe Act and the rules made thereunder both in respect of Independent Directors and otherDirectors as applicable. This policy inter alia requires that Non-Executive Directorsincluding Independent Directors be drawn from amongst eminent professionals withexperience in business/ finance/ law/ public administration and enterprises. It endeavoursto create a broad-basing in the composition of the Board to make available the rightbalance of skills experience and diversity of perspectives appropriate to the Company.The Articles of Association of the Company provide that the strength of the Board shallnot be fewer than
three nor more than fifteen. Directors are generally appointed/ re-appointed with theapproval of the members for a period of three to five years or a shorter duration inaccordance with any arrangements and/or guidelines as determined by the Board from time totime.
The Policy relating to remuneration of Directors Key Managerial Personnel SeniorManagement and other employees is made accessible on the Company's official website at thefollowing link www.sisindia.com.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2) (f) of SEBI Listing Regulations a separate section ofBusiness Responsibility Report describing the initiatives taken by the Company fromenvironmental social and governance perspective forms an integral part of this Report.
RELATED PARTY TRANSACTIONS
During the year under review all contracts/arrangements entered into by your Companywith related parties were on an arm's length basis and in the ordinary course ofbusiness. There are no material transactions with any related party as defined in the Act.All related party transactions entered into during the year have been approved by theAudit Committee where applicable.
Since all the contracts/arrangements/transactions with related parties during the yearunder review were in the ordinary course of business and at arm's length and were notconsidered material disclosure in Form AOC-2 under Section 134(3)(h) of the Act readwith the Companies (Accounts of Companies) Rules 2014 is not applicable. The details ofcontracts and arrangements with related parties for the financial year ended March 312019 are given in the standalone financial statements forming part of this Annual Report.
The Policy on related party transactions is available on Company's website www.sisindia.com.
Risk management is the process of identification assessment and prioritisation ofrisks followed by coordinated efforts to minimise monitor and mitigate/control theprobability and/or impact of unfortunate events to of maximise the realisation ofopportunities. The Company has initiated a process of preparing a comprehensive riskassessment and minimisation procedure. These procedures are meant to ensure that executivemanagement controls risk through means of a properly defined framework. The major risksare being identified by the Company and its mitigation process/measures being formulatedin areas of operations recruitment financial processes and reporting human resourcesand statutory compliance.
The Risk Management Committee presently comprises Mr. Amrendra Prasad VermaIndependent Director Mr. Rituraj Kishore Sinha Managing Director and Mr. Arvind KumarPrasad Director - Finance. Mr. Amrendra Prasad Verma is the Chairman of the Committee.
The Risk Management Committee monitors and reviews the strategic risk management plansof the Company as a whole and provides necessary directions on the same.
The Board of Directors have approved the risk management policy and the main objectivesof the policy are (a) to ensure the key risks are identified assessed quantifiedappropriately mitigated minimised and managed; (b) to establish a framework for theCompany's risk management process and to ensure its implementation; and (c) to developrisk policies and strategies to ensure timely evaluation reporting and monitoring of keybusiness risks.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report for the year under review as stipulatedin SEBI Listing Regulations is presented in a separate section forming part of this AnnualReport.
INTERNAL FINANCIAL CONTROLS
Our rapid growth while a matter of great satisfaction continues to put pressure onour internal systems and processes. It is important that we work to ensure that thesecontinue to keep pace with the business growth and that our policies remain current andrelevant in the rapidly changing business landscape. Information systems are beingcontinuously evaluated and revamped in order to deliver timely and relevant information tovarious stakeholders so as to arm them with the necessary information and tools to enablethem to compete in a tough market and environment. We believe that IT and informationsystems are critical in today's world and we have several dedicated groups of peopleconstantly working to continuously evolve and improve these systems to keep abreast of thefast changing environment.
The Company's system of continuous internal audits ensures that laid down processes andpractices are followed and complied with and that quality processes are strictly adheredto. Financial discipline is emphasised at all levels of the business and adherence toquality systems and focus on customer satisfaction are critical for the Company to retainand attract customers and business and these are followed rigorously.
An Audit Committee comprising independent members of the Board has been constitutedwhich plans and monitors the various Internal Audit programmes and reviews the reports andaction plans arising therefrom. The Managing Director Director - Finance and the ChiefFinancial Officer are invitees to the meetings of the Committee.
The Internal Auditors who are an independent function within the Group reporting tothe Audit Committee review the adequacy and efficacy of the key internal controls. Thescope of the audit activity is guided by the annual audit plan which is approved by theAudit Committee of the Board. We also appoint professional and reputed audit firms fromtime to time to conduct internal audits of the larger and more critical operations of theGroup.
Besides the financial audits quality management system procedures are continuouslyaudited by internal and external auditors to ensure that Company's business practicesconform to requirements of customers.
The Directors believe that the Company has in place adequate internal financialcontrols with reference to financial statements. The Company's internal control systemsare commensurate with the nature size and complexity of its business and ensure propersafeguarding of assets maintaining proper accounting records and providing reliablefinancial information. Internal Audit team of the Company evaluates the functioning andquality of internal controls and reports its adequacy and effectiveness through periodicreporting. During the year under review such controls were tested and no reportablematerial weakness in the design or operation were observed.
SUBSIDIARIES/ ASSOCIATES AND JOINT VENTURES
As on March 31 2019 the Company has 38 subsidiaries 3 associates and 2 JointVentures.
During the year the following entities have become the subsidiaries of the Company:
a. Effective September 12018 the Company acquired 51% of the outstanding equityshares of SLV Security Services Private Limited.
b. Effective November 1 2018 the Company acquired 80% of the outstanding equityshares of Rare Hospitality and Services Private Limited.
c. Effective February 1 2019 the Company acquired 51% of the outstanding equity ofshares of Uniq Detective and Security Services Private Limited.
d. Effective the close of business on February 28 2019 the Company through itswholly owned subsidiary acquired 60% of the outstanding equity shares of SIS HendersonHoldings Pte. Ltd.
e. Effective the close of business on February 28 2019 the Company through itswholly owned subsidiary acquired 51% of the outstanding equity shares of Platform 4 GroupLimited.
Pursuant to the provisions of Section 129 (3) of the Act a report on the performanceand financial position of each of the subsidiaries associates and joint venture companiesis provided in Annexure II to this Report.
The Policy for determining material subsidiaries is available on the Company's website- www.sisindia.com.
PEOPLE AND TRAINING
Your Company's foundation and core of its philosophy is its commitment to its HumanResources. We continue to improve and develop tools and processes to recognise and rewardemployees at all levels and we value their contribution to the Company's financialperformance over the years. We continue to invest in the training and development of allour employees and launched a fresh round of leadership development programmes across thegroup during the year under review which is expected to continue well into the nextfinancial year. Our competency-based systems have recently undergone a transformationalchange and we implemented a new Performance Management Process ("PMP") in theCompany. We have now rolled out the new PMP to other subsidiaries associates and jointventures in the Group. The new PMP is designed to scientifically measure and track theperformance of employees at all levels and we believe this will help us to recognise andreward performance and also retain reward attract and sustain talent and to have acommon platform
of performance management across the Group. The total employees in the SIS Group at theend of the year under review were more than 215000.
PARTICULARS OF EMPLOYEES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in Annexure III to this Report.
EMPLOYEE STOCK OPTION PLAN (ESOP)
Disclosures with respect to stock options as required under Regulation 14 of the SEBI(Share Based Employee Benefits) Regulations 2014 ("the Regulations") areavailable on the Company's website www.sisindia.com
The Company's Auditors Saxena and Saxena have certified that the Employee Stock OptionSchemes of the Company have been implemented in accordance with the Regulations and theresolutions passed by the members in this regard.
DIRECTORS AND KEY MANAGERIAL PERSONNEL ("KMP")
Changes in Directors
a. Mr. Jayanta Kumar Basu resigned from the Board effective October 9 2018. The Boardplace on record their appreciation for the valuable contribution made by Mr. Basu duringhis tenure.
b. I t may be recalled that the members in the extra-ordinary general meeting held onMay 31 2014 appointed Mr. Ravindra Kishore Sinha as Chairman of the Company for a periodof 5 years effective May 15 2014. The Board in its meeting held on May 2 2019 on therecommendation of the Nomination and Remuneration Committee recommended for the approvalof the members the re-appointment of Mr. Ravindra Kishore Sinha as Chairman for a periodof 5 years effective May 15 2019.
c. The Board at the meeting held on May 2 2019 on the recommendation of theNomination and Remuneration Committee recommended for the approval of the members there-appointment of Mr. TCA Ranganthan as Independent Director for a period of 5 yearseffective July 30 2019.
d. The Board at the aforesaid meeting on the recommendation of the Nomination andRemuneration Committee recommended for the approval of the members continuation of Mr.Devdas Apte as an Independent Director till the remaining period of his current term i.e.September 24 2022.
e. Appropriate resolutions seeking approval of the members forms part of the Noticeconvening the 35th AGM of the Company.
f. Mr. Devdas Apte Mr. Arun Kumar Batra
Mr. Amrendra Prasad Verma Mr. Rajan Krishnanath
Medhekar Mr. TCA Ranganathan and Mrs. Renu Mattoo Independent Directors haveconfirmed that they meet the criteria of Independence as prescribed under the Act and SEBIListing Regulations.
Retirement by Rotation
In accordance with the provisions of Section 152 of the Act and the Articles ofAssociation of the Company Mr. Uday Singh and Mr. Arvind Kumar Prasad retire by rotationat the ensuing AGM and being eligible offer themselves for reappointment. The Board hasrecommended their re-appointment.
COMMITTEES OF THE BOARD
As on March 31 2019 the Board has constituted the audit committee the nomination andremuneration committee the corporate social responsibility committee and thestakeholders' relationship committee. A detailed note on the composition of the Board andits committees is provided in the Corporate Governance Report. In addition the Boardconstitutes other committees to perform specific roles and responsibilities as may bespecified by the Board from time to time.
MEETINGS OF THE BOARD
During the year ended March 31 2019 four meetings were held on May 9 2018 July 252018 October 24 2018 and January 30 2019.
The evaluation of all the Directors and the Board as a whole was conducted and theevaluation process has been explained in the Corporate Governance Report.
AUDITORS AND AUDIT REPORTS
The members of the Company at the 34th AGM held on June 28 2018 have ratified theappointment of M/s. Saxena and Saxena Chartered Accountants (Firm Registration No.006103N) as Statutory Auditors for their remaining period until the conclusion of 38thAGM.
The Auditors' Report does not contain any qualification reservation or adverse remarkand the auditors have issued an unmodified opinion on both the standalone and consolidatedfinancial statements.
The Company has appointed Mr. Sudhir V Hulyalkar Company Secretary in PracticeBangalore to conduct secretarial audit of the Company for the financial year ended March312019.
The Report of Mr. Sudhir V Hulyalkar is provided in Annexure IV forming part ofthis Report.
COMPLIANCE WITH THE ICSI SECRETARIAL STANDARDS
The relevant Secretarial Standards issued by the Institute of Company Secretaries ofIndia (ICSI) related to the Board Meetings and General Meeting have been complied with bythe Company.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION
Considering the nature of activities of the Company the provisions of Section 134(m)of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 relating toconservation of energy Research and Development Technology Absorption are not applicableto the Company.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of the foreign exchange earnings and expenditure are as under:
|Particulars ||2018-19 |
|Foreign exchange earnings ||98.40 |
|Foreign exchange expenditure ||66.14 |
The Annual Return of the Company has been placed on the website of the Company and canbe accessed at www.sisindia.com.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS IF ANY
During the year under review no significant or material orders were passed by theRegulators or Courts or Tribunals which impact the going concern status and the Company'soperations in the future.
The Company has established a Vigil Mechanism for reporting concerns through theWhistle Blower Policy of the Company. The Policy provides for a framework and process forthe employees and directors to report genuine concerns or grievances about illegal andunethical behavior that could adversely impact the Company's operations businessperformance. During the year no personnel has been denied access to the Chairman of theAudit Committee. The Whistle Blower Policy is available on the website of the Companywww.sisindia.com.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of the provisions of Section 134 (5) of the Act the Directors of your Companyconfirm that:
In the preparation of the accounts for the year ended March 31 2019 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures.
The Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the Profit of the Company for the year.
The Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
The Directors have prepared the Annual Accounts on a going concern basis.
The Directors have laid down internal financial controls to be followed by yourCompany and that such internal financial controls were adequate and operating effectively.
The Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
The Company sends the Annual Report to its members in electronic form whose emailaddresses are registered with the Company/Depository Participants. For members who havenot registered email addresses physical copies are sent in the permitted mode.
In case of any change in your email address you are requested to please inform thesame to your Depository (in case you hold the shares in dematerialised form) or to theCompany/RTA (in case you hold the shares in physical form).
Your Directors place on record their gratitude to the Central Government various StateGovernments and Company's Bankers and advisors for the valuable advice guidanceassistance co-operation and encouragement they have extended to the SIS Group from timeto time. The Directors also take this opportunity to thank the Company's customerssuppliers and shareholders for their consistent support to the Company.
Last but not the least the Directors also sincerely acknowledge the significantcontributions made by all the employees for their dedicated services to the Company.
Statements in this Board's Report describing the Company's objectives projectionsestimates and expectations may be forward looking statements' within the meaning ofapplicable laws and regulations. Actual results might differ substantially or materiallyfrom those expressed or implied.
| ||For and on behalf of the Board of Directors |
|Hyderabad ||Ravindra Kishore Sinha |
|May 2 2019 ||Chairman |