To the Members
Your Directors are pleased to present the 37th Annual Report on the businessand operations of the Company together with the audited financial statements for thefinancial year ended March 31 2021.
The Company's financial performance for the year ended March 31 2021 is summarized inthe table below:
All amounts in Rs million except share data
| || |
| ||Financial Year 2020-21 ("FY 21") ||Financial Year 2019-20 ("FY 20") ||Financial Year 2020-21 ("FY 21") ||Financial Year 2019-20 ("FY 20") |
|Net Revenue ||30041 ||29959 ||91273 ||84852 |
|Revenue Growth % ||0.27 ||19.67 ||7.57 ||19.62 |
|Earnings before financial charges depreciation and amortization and taxes (EBITDA) ||1710 ||1912 ||5208 ||5204 |
|Depreciation and Amortization ||415 ||535 ||1130 ||1283 |
|Financial charges ||702 ||756 ||1273 ||1517 |
|Others (Other income and other entries arising from business combination) ||263 ||449 ||4778 ||531 |
|Share of Profit / (Loss from Associates) ||- ||- ||5 ||(44) |
|Reported Earnings/Profit before taxes (PBT) ||856 ||1070 ||7588 ||2891 |
|Tax Expenses ||285 ||(293) ||1154 ||(26) |
|Add / (Less): Exceptional Items ||- ||- ||(2762) ||- |
|Pro-forma Earnings / Profit after taxes (PAT) ||571 ||1363 ||3672 ||2917 |
|Add / (Less): One-off adjustments ||- ||(500) ||- ||(662) |
|Reported Net Earnings/Profit after tax (PAT) ||571 ||863 ||3672 ||2255 |
On a standalone basis the Company's revenues at Rs 30041 Million during the yearunder review increased by 0.3% EBITDA at Rs 1710 Million decreased by 10.6% and profitafter tax at Rs 571 Million decreased by 33.9% as compared to the previous year.
On a consolidated basis during the year under review the SIS Group's revenues at Rs91273 Million increased by 7.6% EBITDA at Rs 5208 Million increased by 0.1% and profitafter tax at Rs 3672 Million increased by 62.9% as compared to the previous year.
The SIS Group is continues to be amongst the largest security and facility managementservices companies in the Asia- Pacific region with revenues continuing to grow at a ratemore than the industry growth rate with clear leadership positions in India and Australiaand significant presence in Singapore and New Zealand.
Change of name of the Company to SIS Limited
The name of the Company has been changed to "SIS Limited" from "Securityand Intelligence services (India) Limited" and a fresh certificate of incorporationin the name of "SIS Limited" was issued by the Registrar of Companies on January13 2021.
Acquisition of Additional shareholding of SLV Security Services Private Limited
During the year under review the Company has fulfilled its obligations of making thepayment of all tranches through
the escrow mechanism for acquisition of 100% of the share capital of SLV.
Acquisition of the uniform business division of SIS Group Enterprises Limited on slumpsale basis
During the year under review the Company entered into a Business Transfer Agreementwith SIS Group Enterprises Limited ("SIS Group Enterprises") to purchase thebusiness assets liabilities and employees of the uniform business division of the SISGroup Enterprises on slump sale basis at an aggregate consideration of Rs 4.21 Million.The transaction was approved by the audit committee of the Board.
Acquisition of additional shareholding of Southern Cross Protection Pty Ltd
During the year under review a subsidiary of the Company acquired all the remainingshareholding and voting rights of 49% in SX Protective Holdings Pty Ltd ("SXP")a subsidiary of the Company for an aggregate consideration of Rs 1912.9 Million (AUD36.8 Million) and as a result SXP and its subsidiaries became wholly owned subsidiaries ofthe Company.
Acquisition of additional shareholding of Rare Hospitality and Services Private Limited
During the year under review the Company acquired the entire remaining shareholding of17.11% in Rare Hospitality and Services Private Limited ("RHPL") a subsidiaryof the Company for an aggregate consideration of Rs 56.3 Million and as a result RHPLbecame a wholly owned subsidiary of the Company.
Acquisition of additional shareholding of ADIS Enterprises Private Limited by DustersTotal Solution Services Private Limited
During the year under review Dusters Total Solution Services Private Limited a whollyowned subsidiary of the Company acquired all of the remaining shareholding of 49% in ADISEnterprises Private Limited ("AEPL") an indirect subsidiary of the Company foran aggregate consideration of Rs 9.8 Million and as a result AEPL became a wholly ownedsubsidiary of the Company.
Issue of Non-Convertible Debentures
During the year under review the Company has issued 1900 Secured Rated ListedRedeemable Non-Convertible Debentures ("the Debentures") of face value of Rs1.00 Million each aggregating to Rs 1900 Million on a private placement basis. TheDebentures carry a coupon rate of 7.90% p.a. payable annually and are redeemable at parafter 2 years from the date of allotment. The debentures are secured by way of securitycreated over a portion of the Company's shareholding in one of its subsidiary companies.
OPERATIONS AND BUSINESS PERFORMANCE
The financial year under review was an extremely challenging environment for theeconomic and business environment caused by the COVID-19 pandemic. This pandemic also tookhuge toll on both physical and mental health of the general population. The SIS Group roseto the challenge caused by this unprecedented environment and not only managed to keeprevenues and profits steady but also ensured the welfare of its employees and clients andimplemented several actions and measures to protect our frontline workers by ensuring asafe working environment for them.
During the year when several Governments announced the COVID-19 lockdowns at variouspoints of time all our businesses were listed as an essential service provider by therespective governments through various notifications both at Central and State level andacross all geographies in which we operate and as a result the SIS Group was in aposition to provide uninterrupted services throughout the lockdown period to ensure thatour customers could continue running their business smoothly. In several instances wewere also assisting multiple government agencies in discharging their duties successfully.At the same time the Group proactively implemented several measures to ensure the safetyand welfare of our employees at our offices and client sites and were able to ensureuninterrupted operations at client sites too.
Security Services Security services - India
During the year under review we consolidated our position as the largest securityservices company in India. Despite a challenging macro-economic climate marked by a steepGDP decline as a result of the COVID-19 pandemic we ensured uninterrupted operations forour clients and were successful in keeping our revenues relatively stable. This reflectsthe essential nature of our services the relative demand inelasticity and our strongexecution capabilities.
SIS continues to be the largest security service company in India and the resultsduring the year under review and the superior service provided to its clients hasreinforced this leadership position.
The number of security personnel employed by the Group in India as on March 31 2021was 152200. Significant operational improvements were achieved by leveragingtechnology-based solutions and it has contributed to the growth in productivity andoperating profits for the year under review.
In addition to the Group's implementation of several productivity measures thisfinancial year included significant cost saving initiatives that includes restrictedtravel reduced capex spend minimal conference related expenses. However suchproductivity efforts were offset by additional Covid related spends such as PPE KitsCovid training and welfare and additional expenses on employee accomodation and travel.This has decreased the EBITDA margins this year from 6.0% at Rs 2109 Million in FY20 to5.5% at Rs 1902 Million in FY21.
Security services - International
The Group provides security services internationally through its subsidiaries inAustralia Singapore and New Zealand. In Australia we operate through MSS Security PtyLtd ("MSS") and Southern Cross Protection Pty Ltd ("SXP"). TheInternational business has recorded its highest historical growth rate ending the year atRs 45303 Million in revenues which is a 22.3% increase over FY20.
On a consolidated basis the Security services - International segment comprising MSSSXP Henderson Group and P4G recorded revenues of AUD 850 Million during the year underreview against AUD 768 Million in the previous year. This represents a growth of 10.7% (ona constant currency basis) over the previous year. In Australia our revenues grew by23.5% while the broader Australia economy has shown a degrowth. While the generaleconomic environment was challenging due to the restrictions in travel and tourism as aresult of the COVID-19 pandemic the business rose to the occasion and reached out toclients to assure and ensure uninterrupted operations and its leadership position in thecountry resulted in selection by the government to provide security services to thegovernment's dedicated isolation facilities and quarantine hotels. This revenue more thanoffset the reduction of revenues from existing clients who were impacted by therestrictions in travel and tourism as a result of the COVID-19 pandemic. It is a testamentto the superior service offering of our business and a reflection of the essential natureof the business.
In New Zealand P4G continued to build on its market position and client base andenhanced its market share and service portfolio by acquiring the business contracts ofGuardforce Securities Ltd and Conroy Security during the year.
We continue to be No.1 in Australia with over 21% market share outpacing marketgrowth. Despite the low general economic growth both the Australia and New Zealandbusinesses showed strong margin improvements on the back of increased revenues continuedprofit improvement initiatives and productivity measures.
The EBITDA for the segment was AUD 55.3 Million (6.5% of revenues) against AUD 45.9Million (6.0% of revenues) for FY20 representing a 20.7% increase over the previous year.
Electronic Security Solutions
1. ManTech - Our electronic security business recorded a revenue of Rs 245.1 Millionduring the year under review compared to Rs 200.0 Million in the previous year. This isour highest ever revenues. We continue to sell and provide technology-based securitysolutions to our customers and by doing so we are innovating our modes of solutiondelivery.
Whilst we are making continued investments and improvements in our internal systems toimprove operational productivity we also look to expand our security business in anon-linear manner thereby reducing dependency on manpower and deploying customizedsolutions.
2. Alarm Monitoring and Response - We provide these services to individual homes andsmall business and commercial establishments and operate this business under the brandVProtect. During the year under review we expanded our presence in the B2B space bywinning marquee customers and a significant volume of new orders in the BFSI sector.
We have clearly established our capability of providing monitoring and responseservices to customer locations and sites pan-India and the number of sites secured by usincreased from 1350 (as on March 2019) to reach 3500 sites as on March 2021 and with aconfirmed order with two of India's leading public sector banking institutions to installmaintain and monitor alarm monitoring and response services for 8500 ATM sites to becommissioned in FY22.
We are confident of strengthening our presence further in this space with the BFSIsector constantly looking at innovative solutions to help their security needs. We arecontinuing to invest in the latest Artificial Intelligence and Machine Learning technologyto give us an added technological advantage over our competitors. We have recently won acouple of large sized contracts
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;
ii. Terminix SIS India Private Limited ("Terminix SIS") a joint venture withTerminix in the pest control business; and
iii. Adis Enterprises Private Limited ("Adis") specializing in Operations& Maintenance in the Pharmaceutical vertical.
The year saw a decrease in our facility management business with revenues going downfrom Rs 12802 Million in FY 20 to reach Rs 11273 Million in FY 21 a decrease of 11.9 %as a result of reduction in operations at certain highly impacted segments like RailwaysHospitality and IT/ ITeS.
: The healthcare expertise in our facility management
businesses proved particularly useful during the COVID-19 pandemic as our hospitaland pharmaceutical clients reached out to us to provide additional services for their deepcleaning disinfection sanitation and other surge work.
1 Our B2G business with our Railways vertical continues ; to expandwith more services and more stations under I coverage. However due to the stringenttravel restrictions
imposed for majority of the fiscal ended FY 2020-21 the
Railways business contributed only 6% of the overall business it usually generates.
I Terminix SIS continues to deliver a strong performance year: on-year especially inFY 21 with rising demands for one-time
sanitization fumigation and disinfection services. This has ' also helped thebusiness convert many of these one-time ; client into long term business relationships. Itrecorded a revenue growth of 25% over FY 20 with an EBITDA % of 21.4% for FY 21. Thebusiness continues to develop and deploy I newer solutions designed and sold duringCOVID-19 times where disinfection and hygiene requirements are taking more precedencethan usual.
The consolidated EBITDA of the facility management segment 1 went down fromRs 843 Million in FY 20 to Rs 394 Million in FY 21 a decrease of 53.3% whilst the EBITDAmargin reduced drastically from 6.6% in FY 20 to reach 3.5% in FY 21. The j decline inEBITDA and margins is largely on account of the ' impact of reduced revenues and operatingleverage impact.
The One SIS programme which was launched originally as I Totally Facility Management(TFM) programme in FY19 is ; spearheaded primarily by the FM business. It aims to providei integrated solutions comprising security services facility ; management pest controland other allied services to the clients under a common contractual arrangement.
Cash Logistics (a joint venture with Prosegur)
: On a consolidated basis the cash logistics business' revenues
: increased by 2.3% over the previous year. We reduced
: exposure to the ATM business and continue to focus on the
I non-ATM business which includes retail banking and cash: in-transit business. We nowoperate over 2119 cash vans
service 10800 ATMs and provide doorstep banking services across 11183 pickup pointsand operate 50 vaults and strong rooms across the country.
The migration to the Reserve Bank of India ('RBI') and the Ministry of Home Affairs('MHA') guidelines announced during ; FY19 has been slow but our patience and optimisticapproach with the banks meant that we did receive price revision on a select basis in FY21.
; The industries we operate in and the services we provide are closely linked to theoverall economic growth of the country. India's economy which was on a downtrend for thepast few years preceding Covid has worsened further with the ' steep economic shocks dueto the COVID-19 crisis. Various economic research houses were forecasting a 9-10% growth for the Indian economy this year coming off a low base in FY21 but these forecasts arebound to see some adverse impact from the Covid second wave in India.
However we believe that the SIS Group will possibly be the least impacted and thefirst to recover given the essential and relatively resilient nature of our services.
The longer-term trends however continue to be robust with the underlying drivers allshowing the right momentum. In the security services vertical this growth comes on theback of continued urbanization higher threat perception inadequate police force andshift from less-organized local players to well- organized national players. The FreedoniaGroup (a business research company) ("Freedonia") in its March 2019 report hasforecasted that the India security industry will grow from Rs 80000 Crores in FY19 to Rs157000 Crores by FY24 at a CAGR of ~14%. Out of this the technology led securitysolutions segment is estimated to grow at over 19% during this period.
Similarly in the Facility Management ('FM') vertical increased focus on healthhygiene and sanitation in the post-COVID-19 times will lead to newer solutions moreintensified cleaning reliance on professional vendors and greater outsourcing etc.Freedonia has forecasted that the FM vertical will grow from Rs 100000 Crores in FY19 toRs 230000 Crores by FY24 at a CAGR of ~19%.
We also believe that the ongoing COVID-19 crisis will provide us opportunities toincrease our market share due to our proven delivery capability and our unique ability todesign solutions to meet our clients' requirements. We have historically grown at over 1.5times the industry growth across geographies and we believe that we are well placed tocontinue to outperform the industry in the future too.
Our International business has demonstrated strong growth year after year and continuesto maintain 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 in Australia. Our international markets are better placed froma macro-economic and health standpoint and we believe that in FY22 too these geographieswill contribute healthily to reduce volatility in the overall group business.
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 slow but steadyadoption of the RBI regulations and MHA guidelines that were announced in FY19. We havesteadily moved away from the ATM business and now have a larger exposure to the DSB andCIT businesses. This coupled with steady tariff upticks are likely to hold the cashlogistics in good stead over the coming years.
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 can curate and provide man-tech solutions which provideintegrated 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/territories and customer segments.We believe that by continuously investing in systems processes training and recruitingthe best personnel and managers we would be able to continue to deliver superior servicesto 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.
Subsequent to the year-end 1500 Non-convertible Debentures of Rs 1 Million eachaggregating to Rs 1500 Million were redeemed/repaid on their maturity on April 13 2021.
OTHER SIGNIFICANT MATTERS FROM THE END OF FINANCIAL YEAR
Effective April 16 2021 the Company had acquired all of the remaining shareholding of49% in Uniq Security Solutions Private Limited ("USSPL") a subsidiary of theCompany for an aggregate consideration of Rs 510.20 Million and as a result USSPL andits 100% subsidiaries became wholly owned subsidiaries of the Company.
DIVIDEND AND TRANSFER TO RESERVES
The Board of the Company do not recommend any dividend on the Equity Shares of theCompany for the financial year ended March 31 2021.
In terms of the provisions of Regulation 43A of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 ("SEBI Listing Regulations") asamended from time to time your Company has formulated a Dividend Distribution Policy.This Policy is available on the Company's website at https://sisindia.com/investors/policies-and-code-of-conduct.
TRANSFER TO RESERVES
The company has not proposed to transfer any amount to the general reserve.
BUYBACK OF EQUITY SHARES
During the year ended March 31 2021 the Board of Directors and Shareholders haveapproved the buy-back of upto 1818181 equity shares of face value of Rs 5/- each(representing 1.24% of the total paid-up equity share capital of the Company as on March312020) from the shareholders/ beneficial owners of equity shares of the Company as onthe Record Date being April 9 2021 on a proportionate basis through the tender offerprocess as prescribed under the SEBI (Buyback of Securities) Regulations 2018 at a priceof Rs 550/- payable in cash for an aggregate maximum amount of Rs 1000 Million.
The Company has submitted a Draft Letter of Offer with SEBI and the stock exchanges onApril 1 2021 and the approval from SEBI is awaited.
|CREDIT RATING |
|Nature of Instrument ||Name of Credit Rating Agency ||Credit Rating Assigned |
|Non-Convertible Debentures ||CRISIL Ratings Limited ||CRISIL AA- (Stable) |
During the year under review 1663784 equity shares of Rs 5 each were allotted uponexercise of options by the employees under the Company's Employee Stock Option Plan.
As on March 312021 the authorised capital of the Company is Rs 1350.00 Milliondivided into 270000000 equity shares of Rs 5 each and the paid-up equity share capitalof the Company is Rs 741.51 Million consisting of 148301758 equity shares of Rs 5 each.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
Pursuant to Section 186 of the Companies Act 2013 ("the Act") read with theCompanies (Meetings of Board and its Powers) Rules 2014 disclosures on particulars ofloans guarantees and investments as on March 31 2021 are provided in the Notes to thefinancial statements.
During the year under review your Company has not accepted or renewed any depositswithin 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 maintains and practices the highest standards of Corporate Governance andadheres to the Corporate Governance requirements as stipulated by Securities and ExchangeBoard of India (SEBI) and the Act.
In terms of Regulation 34 of the SEBI Listing Regulations the Corporate GovernanceReport for the year under review is presented in a separate section and forms an integralpart of this Report. A certificate from a Practicing Company Secretary on its complianceis annexed to the Report.
CORPORATE SOCIAL RESPONSIBILITY
The SIS Group comprising SIS Limited and its subsidiaries associates and jointventures ("SIS Group") has been at the forefront of bringing social change inthe lives of thousands of people in India. It employs more than 220000 people of which alarge majority come from the less privileged sections of society with limited means foreducation development and livelihood. The SIS Group has been instrumental in improvinglives of these people through training development and providing them employmentopportunities.
Our Board of Directors our Management and all our employees subscribe to thephilosophy of compassionate
care. We believe that a business must give back to society and to the environment andcommunity in which they operate in such a manner that helps in building a secure healthyknowledgeable and a sustainable society and business. Corporate Social Responsibility(CSR) has been an integral part of the way that the SIS Group conducts its business sinceits inception. The SIS Group set up the SEWA trust for the betterment of lives of theemployees. The SIS Group has engaged in various activities in the communities that ouremployees live in which has benefited thousands of people over the years. The Company hasalso been at the forefront in imparting and encouraging skills-based training to peoplefrom backward and less developed communities across the country.
The Policy on CSR has been formalized 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 programmes or on theirinitiatives. The Company will recognize the efforts put in by employees in CSR activities.A widespread awareness of the CSR initiatives of the SIS Group will be conducted and theSIS Group seeks an active and wide participation from employees and encourages anysuggestions and project ideas from them.
The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company asadopted by the Board and the initiatives undertaken by the Company on CSR activitiesduring the year under review are set out in Annexure- I. The CSR Policy is available onthe Company's website at https:// sisindia.com/investors/policies-and-code-of-conduct.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION &REDRESSAL) ACT 2013
The Company provides a safe and conducive work environment to its employees and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules framed thereunder.Internal Complaints Committees have been constituted to enquire into complaints and torecommend appropriate action wherever required in compliance with the provisions of thesaid Act.
During the year under review your Company has received 2 complaints under theaforesaid Act and the internal review of both the complaints is under progress.
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 endeavorsto 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 the approval of the members for a period of three to five years or ashorter duration in accordance with any arrangements and/or guidelines as determined bythe Board from time to time.
The Policy relating to remuneration of Directors Key Managerial Personnel SeniorManagement and other employees is available on the Company's website at https://sisindia.com/investors/policies-and-code-of-conduct.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations a separate section onBusiness 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 by your Company withrelated parties were on an arm's length basis. There are no material transactions withany related party as defined in the Act. All related party transactions entered for theyear under review have been approved by the Audit Committee wherever applicable.
Since all the contracts/arrangements/transactions with related parties during the yearunder review were at arm's length and were not material disclosure in Form AOC-2 underSection 134(3)(h) of the Act read with the Companies (Accounts of Companies) Rules 2014is not applicable. The details of contracts and arrangements with related parties for thefinancial year ended March 31 2021 are given in the standalone financial statementsforming part of this Annual Report.
The Policy on related party transactions is available on the Company's website athttps://sisindia.com/investors/policies- and-code-of-conduct.
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 minimized 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.
The Board of Directors have formed a Risk Management Committee to frame implement andmonitor the risk management plan for the Company.
As on March 31 2021 the Committee comprises of the following directors:
1. Mr. Amrendra Prasad Verma Independent Director
2. Mr. Rituraj Kishore Sinha Managing Director and
3. Mr. Arvind Kumar Prasad Director - Finance.
Mr. Amrendra Prasad Verma is the Chairman of the Committee. The Committee isresponsible for monitoring and reviewing the strategic risk management plans of theCompany and ensuring its effectiveness.
During the year under review the Company has finalized the Risk Management Frameworkand created a risk library covering the identified risks pertaining to its businessoperations and the potential impact of such risks. The major risks have been identifiedand compiled by the Company and reviewed and approved by the Risk Management Committee.Risks are identified and prioritized based on the severity probability and potentialimpact on the Company. Process owners have been identified for each risk for monitoringand reviewing the progress of implementation of the risk mitigation plans.
The Risk Management Committee has reviewed and approved the risk management frameworkrisk library and risk mitigation plan and the Company is in the process of implementingthe action plans for managing the major 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 to deliver timely and relevant information to variousstakeholders to arm them with the necessary information and tools to enable them tocompete in a tough market and environment. We believe that IT and information systems arecritical in today's world and we have several dedicated groups of people constantly
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 emphasized 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. At the same timethe Group is strengthening its core business systems which will result in more robustcontrols and uniformity and consistency of practices and processes across the Group.
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 Officers 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 the 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 2021 the Company has 38 subsidiary companies 3 associates and 1 jointventure.
During the year under review the following entities ceased to be the subsidiaries ofthe Company as these entities have been deregistered:
1. Cage Security Guard Services Pty Ltd Charter Customer Services Pty Ltd SouthernCross FLM Pty Ltd and Eymet Security Consultants Pty Ltd effective February 4 2021; and
2. Cage Security Alarms Pty Ltd effective February 18 2021
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 companies is provided in the prescribed'Form AOC-1' in Annexure II to this Report.
The Policy for determining material subsidiaries is available on the Company's websiteat https://sisindia.com/investors/ policies-and-code-of-conduct.
Pursuant to the provisions of Section 136 of the Act the audited standalone andconsolidated financial statements of the Company have been placed on the Company'swebsite www.sisindia.com. Further the audited financial statements in respect ofsubsidiary companies are available on the website of the Company athttps://sisindia.com/investors/ financials-subsidiary-companies.
PEOPLE AND TRAINING
We continue to improve and develop tools and processes to recognize and rewardemployees at all levels across the Company. We deeply value their contribution to theCompany's performance every year by investing in their training and developmentprogrammes in addition to the leadership development programmes. The PerformanceManagement Process ("PMP") tool across the Group is designed to scientificallymeasure and track the performance of employees at all levels and we believe this will helpus to recognize and reward performance and also retain reward attract and sustaintalent and to have a common platform of performance management across the Group. The totalemployees in the SIS Group at the end of the year under review were more than 228000.
During the COVID-19 pandemic the Company enhanced and prioritized its focus on thehealth and well being of employees and on ensuring business continuity. We implementedenhanced policies and procedures that we constantly updated to reflect the underlyinghealth situation and comply with local regulations. We asked high risk employees tooperate remotely and securely and implemented a roster plan for other employees tominimise the risk of infection and keep them safe and secure. We also provided regularupdates and published educational material on precautionary measures to be adopted andpracticed by the employees. Infected employees were monitored on a continuous basis tillthe time of recovery and all guidelines and support in terms of home quarantine andhospitalization support were provided.
In our endeavour to protect the employees we commenced vaccination drives and haveenabled vaccination for almost 18000 employees till the end of April 2021.
The Board took cognizance of the pandemic and its impact on the overall businessenvironment and safety health and wellbeing of the employees and approved a specialexpenditure of Rs 50 Million to be spent on enhanced measures to protect our employees onaccount of the COVID-19 pandemic and on appropriating the same as part of its overall CSRobligations.
In the emergence of the ongoing massive second COVID wave the Company has adoptedvarious preventive measures and extended complete support towards testing andhospitalization.
During the year under review a special "Humare Heroes COVID Welfare Fund"was set up with an initial corpus of Rs 50 Million to extend medical and other assistanceto COVID infected employees and to assist and provide support in the welfare of ourfrontline staff.
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)
To reward employees for their contribution to your Company and to provide an incentivefor their continuous contribution to the organization's success the Company hasinstituted an employee stock option scheme namely ESOP 2016 on July 27 2016. ESOP 2016envisages the grant of such number of options (together with exercised options) enablingthe eligible employee stock option holders the right to apply for equity shares of theCompany.
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 https://sisindia.com/investors/investor-information/company-announcement.
The Company's Auditors Saxena and Saxena have certified that the Employee Stock OptionPlan of the Company has been implemented in accordance with the Regulations and theresolutions passed by the members in this regard.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
a. Pursuant to the provisions of Section 152 of the Act read with the rules framedthereunder Mr. Rituraj Kishore Sinha Managing Director and Mr. Arvind Kumar PrasadDirector Finance are liable to retire by rotation at the ensuing AGM and being eligiblehave offered themselves for re-appointment.
b. Appropriate resolutions seeking approval of the members forms part of the Noticeconvening the 37th AGM of the Company.
c. During the year under review there has been no change in the Board of Directors andKMP.
DECLARATION OF INDEPENDENCE
Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under Section 149(6) of the Actand Regulation 16(1 )(b) of the SEBI Listing Regulations and also confirmed that there hasbeen no change in the circumstances affecting their status as Independent Directors of theCompany.
COMMITTEES OF THE BOARD
As on March 31 2021 the Board constituted the Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee Stakeholders'Relationship Committee and a Risk Management Committee. A detailed note on thecomposition of the Board and its committees is provided in the Corporate GovernanceReport. In addition the Board constitutes other committees to perform specific roles andresponsibilities as may be specified by the Board from time to time.
MEETINGS OF THE BOARD
During the year under review 5 (five) meetings of the Board were held on April 302020 July 29 2020 October 29 2020 February 3 2021 and February 15 2021.
Pursuant to the provisions of the Act and SEBI Listing Regulations the Board ofDirectors have carried out an annual evaluation of its own performance its committees andindividual directors.
Further details regarding the evaluation are provided in the Corporate GovernanceReport which forms part of this report.
AUDITORS AND AUDIT REPORTS
Saxena and Saxena Chartered Accountants (Firm Registration No. 006103N) have beenappointed as the statutory auditors of the Company for a period of 5 consecutive yearstill the conclusion of 38th AGM to be held in the year 2022.
Pursuant to the provisions of Section 139(1) of the Act ratification of theappointment of the statutory auditors by the members at every AGM during the period oftheir appointment has been withdrawn from the said section effective May 7 2018.Accordingly no resolution is proposed for ratification of appointment of statutoryauditors at the ensuing AGM.
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 statutory auditors have confirmed that they satisfy the criteria of independence inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia and the provisions of the Act.
Competence and experience of the auditor
Saxena & Saxena Chartered Accountants is a Peer Reviewed firm established in 1986having a PAN presence in India with head office at New Delhi along with branches inKolkata and Vadodara. The firm is managed by qualified and experienced partners havingexperience of more than 40 years in the field of audit of Indian companies as well asinternational companies. The firm is providing audit services to public sectorundertakings and various other reputed industrial houses for more than three decades.
Mr. Dilip Kumar Saxena signing partner of Saxena & Saxena was a Director inSyndicate Bank appointed by the Government of India and was the Chairman of the auditcommittee. He has extensive experience of more than 15 years in handling the annual auditsof corporates and public sector undertakings.
The firm is empaneled with Comptroller and Auditor General of India (CAG) Reserve Bankof India (RBI) Indian Bank's Association (IBA) for ASM (Agencies for SpecializedMonitoring) for conducting Forensic Audits.
Pursuant to the provisions of Section 204 of the Act read with the rules framedthereunder the Board of Directors had appointed Mr. Sudhir V Hulyalkar Company Secretaryin Practice to conduct the secretarial audit of the Company for the financial year endedMarch 31 2021.
The Secretarial Audit Report issued by Mr. Sudhir V Hulyalkar for the financial year2020-21 is provided in Annexure IV to this Report.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark.
COMPLIANCE WITH THE SECRETARIAL STANDARDS
Your Company is in compliance with the Secretarial Standards specified by the Instituteof Company Secretaries of India (ICSI) related to the Board and General Meetings.
REPORTING OF FRAUDS BY AUDITORS
During the year under review there were no instances of fraud committed against yourCompany by its officers and employees which required the auditors to report to the AuditCommittee and/or the Board under Section 143(12) of the Act and the Rules made thereunder.
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 and Rule 8 of the Companies (Accounts) Rules 2014 relating to Conservation ofEnergy Research and Development Technology Absorption are not applicable to the Company.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of the foreign exchange earnings and expenditure are as follows:
|Particulars ||2020-21 |
|Foreign exchange earnings ||- |
|Foreign exchange expenditure ||28.78 |
As per the requirements of Section 92(3) of the Act and the rules made thereunder theextract of the annual return as on March 31 2021 is available on the Company's website
at https://sisindia.com/investors/investor-information/ company-announcement.
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.
Your Company had neither filed any application nor any proceeding is pending under theInsolvency and Bankruptcy Code 2016 at the end of the year.
Your Company has established a Vigil Mechanism for reporting of 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 under review no personnel has been denied access to theChairman of the Audit Committee. The Whistle Blower Policy is available on the website ofthe Company https://sisindia.com/investors/ policies-and-code-of-conduct.
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 2021 theapplicable Accounting Standards have been followed along with proper explanation relatingto material departures;
Accounting policies have been selected and applied consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the Profitof the Company for the year;
Proper and sufficient care for the maintenance of adequate accounting recordshave been taken in accordance with the provisions of this Act for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;
The Annual Accounts have been prepared on a going concern basis;
Internal financial controls have been laid down and followed by your Company andthat such internal financial controls were adequate and operating effectively; and
Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
In view of the ongoing Covid pandemic members may note that the Notice of the AGMalong with the Annual Report 2020-21 is being sent only through electronic mode to those
Members whose email addresses are registered with the Company/ Depositories.
Members may also note that the Notice and Annual Report 2020-21 will be available onthe Company's website www.sisindia.com. websites of the Stock Exchanges i.e. BSE Limitedand National Stock Exchange of India Limited at www.bseindia.com and www.nseindia.comrespectively and on the website of CDSL www.evotingindia.com.
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 dematerialized form) or to theCompany/ Registrar and Transfer Agent (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 especially during the COVID-19 times and applaudthem for their dedication and commitment to your Company.
Statements in this Report describing the Company's objectives projections estimatesand expectations may be 'forward looking statements' within the meaning of applicable lawsand regulations. Actual results might differ substantially or materially from thoseexpressed or implied.
| ||For and on behalf of the Board of Directors |
|Noida ||Ravindra Kishore Sinha |
|April 28 2021 ||Chairman |