Over the last decade, India's largest private security company diversified its domestic play and opted for an aggressive inorganic route to expand overseas. The gambit seems to be paying off. But can it keep up the tempo?
Rituraj Kishore Sinha, group managing director, SIS; Image: Amit Verma
London, 2005. It was an audacious move. In fact, many labelled it as ‘outrageously reckless’, recalls Rituraj Kishore Sinha. Just three years into his stint at Security and Intelligence Services (SIS), the second-generation entrepreneur prepared a blueprint to diversify the private security business started by his father RK Sinha in 1974. Call it exuberance of the youth or brash confidence, Sinha, then 25, landed in London. The plan was to enter into the business of cash logistics in India, and the way to do so was to explore a joint venture with the best in the world: Securitas. “What do you mean by strategic alliance?” asked a baffled Thomas Berglund, the then president and CEO of Securitas. “Are you looking for a buyer?”
The MNC honcho was a little bemused. “Do you want to sell your company?” he quizzed. “No,” came the reply. “I don’t want to sell. I want to build,” underlined Sinha. SIS, an obscure, tiny company from India, which did not even have $5 million in revenue, was trying to get into a joint venture with a global Goliath with over $12 billion in top line. Berglund didn’t entertain the idea, and the deal didn’t happen. Next year, Sinha ventured into the cash logistics business on his own.
Two years later, in 2008, the young maverick was again getting ready to punch much above his weight. The world was in the midst of a deep financial crisis, but Sinha reckoned the timing was perfect to expand SIS outside India. “I was in talks to buy a guarding and patrol company in Australia, which was almost seven times my size,” he recalls. Back home, the reaction was along expected lines. “You are chewing more than what you can bite,” declared a few critics and business analysts. The company, they underlined, was spreading itself too thin. They were fair in their criticism. Just two years back, in 2006, SIS had made its first diversified bid. It was too early for the company to go global. The move could have been suicidal.
What, though, egged Sinha to act boldly was the war chest he had built. In 2007, US-based hedge fund DE Shaw reportedly picked up a 14 percent stake in SIS for around Rs300 crore ($75 million), valuing the company at about Rs2,150 crore ($525 million). A year later, SIS closed FY07 at Rs150 crore. Sinha was in a flurry of talks with private equity (PE) players to fund the deal. Everything was going according to plan.
There was a postscript, though. Global recession battered the asset class, PEs stayed away from the deal, and nobody was willing to get bruised in the whirlwind of 2008. Stranded, Sinha somehow managed to convince SBI to back the acquisition plan. In 2008, SIS bought Chubb Australia for $238 million from US conglomerate United Technologies Corp. Over the next decade, Sinha stitched a string of acquisitions—two in Australia and the rest across India, Singapore and New Zealand—and a flurry of joint ventures.