By Pranbihanga Borpuzari
The year was 2002. Somewhere in the UK, Rituraj Sinha was packing his bags to come back to India after quitting his job at a bank. Post 9/11, the security industry saw its biggest boom period. Everything Sinha saw around him in the West made him want to come back and join Security and Intelligence Services (SIS) (India) Ltd., a company that his father, RK Sinha, had founded.
With his father moving to the board level, Sinha was entrusted the affairs of the company. He got about his job by changing the fundamentals first.
Sinha says he had observed that the decision-making process at SIS was too slow and most processes were cumbersome. “When I came back, I was the only person with a laptop. We were still maintaining hefty files,” recalls Sinha, Group Chief Operating Officer, SIS. For the first two to three years, Sinha ensured that they were getting the basics right. “We streamlined and improved our sales processes, changed the way the company was recruiting and training, and even launched new products.”
Tweaking and fixing
Among the first changes brought about by Sinha was to make background check of all recruits mandatory. Then, the firm moved from a verbal-based training method to an audiovisual one.
Focus was placed on getting the personnel on the ground more polished. The IT sector had become highly demanding and they did not want a guard with a stick in his hand. They wanted someone more sophisticated who would not only ensure security but be polite, too. “To get everything going, I also needed to get our IT department in a solid shape. I remember going to IT firms and being told that we were too small a company to cater to or that they simply did not have anything for security companies,” says Sinha. “Eventually, we decided to write our own software codes for our services.”
In 2005, when SIS was gaining some traction, Sinha moved onto a three-year plan based on a two-pronged strategy. First, the company decided to aggressively increase its footprint across the country and secondly migrate from a mere guards providing company to a total security services provider. During these three years, the company expanded from 14 branches to 52 branches with a revenue growth of 50-60 percent. Expanding its portfolio, the firm also launched cash management services for financial institutions as another revenue stream. Led by demand from banks and their ATM networks, the cash management business garnered huge interest and the company was soon employing about 400 vehicles for the service. By 2008, SIS was the fastest growing security provider in the country, Sinha claims, clocking revenues to the tune of Rs. 146 crore. The year also brought the company to a seminal point in its history.
Leap of faith
“We came across a report that said the global security services market was worth $120 billion and about 70 percent of that came from western markets of the US and Europe, while Asia-Pacific contributed about 5 percent,” he says.
Sinha also noticed that security services were clocking growth of about 7 percent in the western world but in Asia-Pacific, it was growing at 15 percent, with India at the top with 25 percent growth. The third fact which struck him was that within the top ten players, there was no Asian company and only one out of the top ten had a presence in Asia Pacific. Call it the foolishness and courage of being young, he says, but there was a realization that something bigger could be done. “I must admit that we bit more than we could chew. I went after acquiring a company that was worth Rs. 1,200 crore ($300 million), six times our size,” he says. It was a radical thing to do, he admits.
He reasoned that in the Asia-Pacific market, Australia was most mature and India, the fastest growing. Outside of China, Australia and India put together was the largest market. If you are a leader in India and Australia, somewhere in the scheme of things you could end up being one of the largest in the region.
Deal down under
But not everyone thought like him. “I gave this rationale to a lot of bankers. But they would smile and show me the door. I had a very tough time trying to raise money,” he says.
For one, most bankers believed that it was very audacious for SIS to buy a company six times its size.
Most importantly, this would be the first global acquisition by an Indian company in the security space and SIS had not acquired even a single company in India.
It was clear to Sinha that if he failed, he would have to bet his house and everything for it. So at the age of 29, he put all his efforts into raising funds. From private equity to bank borrowing, Sinha connected all the dots he could to raise money. Finally, PE major DE Shaw invested a major chunk-Rs. 300 crore for a 14 percent stake.
In August 2008, the largest takeover deal in the Indian security space materialized as SIS bought Australia’s largest security agency, Chubb Security, for about Rs. 1,000 crore.
“I cannot count the number of sleepless nights I had during those days,” says Sinha. The bet has, however, paid off as Chubb is today bigger and more profitable than what it was before the acquisition.
For Ajay Relan of CX Partners, SIS has been on the radar from the time he was with his erstwhile employer, Citigroup Venture Capital India.
When DE Shaw looking to exit the company in 2012, Relan stepped in, and in July of 2012 made a commitment to invest upward of about `200 crore in SIS.
“What we found very unusual was not only the depth of the management team but also how strikingly effective it was in a mundane business like ‘man guarding’,” says Relan. “We looked at Sinha’s age with optimism because he brings in a lot of freshness and is never hesitant to accept new challenges. There is a fair amount of exuberance that youth brings into a company and we feel he connects with the older members of the management team very well without throwing his weight around.”
More to come
Sinha tells us point blank that he does not believe in reinventing the wheel. That is why, since the acquisition, he has also actively looked at several other opportunities and entered into a slew of partnerships: In May 2011, SIS and Prosegur, South America’s largest security services provider, entered into a joint venture to form one of India’s largest cash management services companies. This is the first strategic foreign investment in India’s cash management space.
In August 2011, SIS and Terminix entered into a joint venture to form one of India’s largest pest control services firms. The company also entered the mechanized cleaning services space in collaboration with US-based ServiceMaster Clean.
Sinha has, however, stayed true and firm to the core of providing manpower security to his homegrown clients.
“We were the first to enter Tata’s Singur plant and the last ones to leave it. From Formula One and the Kalinganagar project to handling thousands of containers that arrive at Mundra, and guarding IIFCO’s ammonia plant, the largest in the world, SIS has been in the midst of it all,” he says.
Sinha explains that to carry on the expansion, the company has invested `150 crore with a commitment to invest another Rs. 150 crore in the next two years. The firm is now 60,000 strong and adds about 800-1,000 employees every month across India and Australia. It expects to close the current fiscal at revenues of Rs. 2,950 crore. Sinha says that it is his belief that the next billion dollar security services company would come from India. “My optimism stems from the market potential.” According to ASSOCHAM, the security market in India is worth about Rs. 13,500 crore and growing at 15-20 percent per annum. It is expected to be a Rs. 50,000 crore market in 10 years time and account for
4-5 percent of the total global market.
“For this market to not generate a world class operator is not acceptable to me,” Sinha says, not betraying for one second who he is really talking about.
© Entrepreneur India April 2013
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