The first question is from the line of Abhinav Mandowara from Aequitas Investments.

For this quarter the revenue of A P Securitas was INR 332 crore, and EBITDA was INR 12.2 crore.

My next question was regarding the labor shortage. So we have been reading a lot about labor shortage across. So did we face it? And what is the outlook around that? Did it impact our margin? And going forward, how do we see it?

This is Rituraj, Abhinav. Nothing exceptional. I think every year, April through to June before the monsoon sets in, is a period where you witness shortages. And by about July when the farm labor returns to their blue-collar jobs, this subsides. So there is nothing exceptional to report.

So, you didn't find labor shortage and anything, any outlook around that?

No. I don't see any exceptional labor shortage and nothing which is unique compared to previous year trends.

Okay. My next question was regarding the wage hike that has happened across various States we have seen taking minimum wage hike. So how have you been able to guide that? Or has there been some lag?

So important question. I think labor codes model rules were notified finally by the Government on 8th of May, which triggered all State Governments to notify implementation dates for labor codes in their respective States. Across the country, State Governments have already floated draft model rules. Once the drafts are settled, then the new codes become fully operational. In that background, a few States have also taken this opportunity to pass through minimum wage hikes that had been held back awaiting labor code implementation. States like Haryana, Uttar Pradesh, Karnataka, Telangana, Uttarakhand , some examples which have passed through minimum wage hikes ranging from 20% to 47%. The average wage hike for the last 10 years, the annual minimum wage hike trend for the last 10 years in India or more recently post -COVID has been sub-5% actually. So, pre-COVID, if you take a 10-year window 2016 to 2026, it will be close to 9% year -on-year. And if you factor in COVID and what's happened since COVID, it will be barely 5%. So the States that I cited have clearly done exceptional minimum wage hikes. Now let me call out that this is, in essence, great news for SIS. Our contracts are set up such that every and all minimum wage hikes are passed through directly to client. So a minimum wage hike like this means a revenue boost. For the same volume, your price goes up. So you witness a revenue boost. Number two, because it is a pass-through, mostly it is a non-event on the gross margin line and it is a n EBITDA-accretive result. So to bring conclusion to my long -ish answer to a straightforward question, please don't see these minimum wage hikes as exceptions. This should be largely the pattern across most major States in the country. Minimum wages were held back by most States because they were awaiting labor code notifications. Over the course of the next 6 to 9 months, as the labor codes model rules get notified at different States, they will also come

through with some meaningful level of minimum wage hikes. It may not be to the extent of 45% or 47%, but it will certainly not be as feeble as the 5% average annual increase that we have witnessed. So this is a story in the making. But like Vineet called out, overall tailwind for SIS, we are very well prepared to pass these through. Actions are underway. Impact in Q1 is less evident because this whole thing started only on 8th of May. As you see Q2 and Q3, the impact should become more evident.

Okay. The next question is regarding the Cash business IPO. What is the status of it? And can you share us with the revenue and PAT number?

Well, I cannot share because the DRHP is filed, and we still have an active card. I can't share the financial performance details of the Company. I can only say that as of right now, we are waiting for a good time window. And in the IPO rush that we are witnessing right now, also given the fact that the peer comparables have witnessed significant de-rating, we are waiting on a more opportune time to take this Company to market.

The next question is from the line of Umang Shah from Banyan Tree Advisors PMS.

Congrats on a good set of results. So, one question I had was on the minimum wage hike announced by the Australian Government of 4.75%. We had signed a lot of contracts in Australia last year from Q2 to Q4. Now we understand that these hikes will not be automatically passed on, but they will be reset when the contracts are renegotiated. So in the meantime, what is the margin impact that you see for SIS for the entire year? Any rough idea?

No. Just one second. I think there's a big misunderstanding. When the minimum wage hike happens, our contracts have in-built rise and fall clauses, which basically means that we contractually have the right to pass through the higher wage cost of employees to the customer immediately. However, this has a time lag. You raise an invoice, the customer studies it, he processes the bill. Sometimes he pays on the current rate till the matter is settled and then he pays in arrears. So, there is a timing mismatch between the date on which the higher wages become effective and when we are able to fully claim and pass through. So, it is not , let me underline, this is not dependent on contract expiry date or contract renewal date. This is a routine operation. It happens every year. I will request Mur ali Krishna, who is our CEO, is on the call as well. So Murli, if you would want to add more specifics to what's happening in Australia. R. S. Murali Krishna Okay. So as Rituraj just said, all our contracts have a natural rise and fall clause....

Sorry to interrupt, sir. There is a disturbance in your voice. R. S. Murali Krishna Is it better now?

No, sir.

The next question is from the line of Parag Jhawar from Knightstone Capital Management.

Could you throw some light on the share purchase of Updater Services that you are doing? And please don't say this is a treasury operation.

It is a treasury operation.

But that's a single stock that you're buying. Is there any, is there something more to read...

No, that is the single stock we have bought till now. That would be a more correct statement.

Fair enough, thank you.

The next question is from the line of Manoj Reddy Sama from Zen Wealth Management Services Limited.

My question is regarding outlay for this metro services business, for example, if we take the Hyderabad business, how many employee there?

I'm sorry, I don't think I have contract level details handy to respond to that question. In any case, SIS handles in India more than 16,000 different contracts. No single contract contributes more than 1% of revenue. So, I don't know what the intent of your question is, but if the question is around the significance of a contract or materiality of a contract, let me assure you that we have a very diversified portfolio of contracts and there is no risk to that count.

What I wanted to understand…

Sorry, I couldn't get the question.

Mr. Manoj, your voice is not audible. Can you please say the question again?

Since the line of Mr. Manoj is not audible…

Yes, just promote the others on the question queue as we...

The next question is from the line of Abhinav Mandowara from Aequitas Investments.

Hi, this is Riya from Aequitas. Just got a couple of questions. In terms of the India business, since we are expecting the new labor code to be implemented and you said the pass -on would be happening after some time. So there are 2 questions to it; one is, what is the minimum price hike which we would be expecting in terms of Government, etc.? And is there any conversation around it on the policy level? And second is in terms of India business, if you could help me, are these current margins sustainable going forward?

So India business margins, if you just look at the Indian side of the business, the margins are more like 5.1% for Security and 5.5% for FM. So if you do a blended average India business, probably we will be 5.3%, 5.4% ballpark range.

Are these margins sustainable? I would think so. And I have in the past also said that our objective is to move from this range to 5.5%, 6% ballpark range in India. So that's the answer to your second question. The first question is around minimum wage hikes. That's a great debate, Riya, what the wage hike will be and when the wage hike will come through. My guess would be as good or as bad as yours.

Got it.

In India, labor is a concurrent subject. Minimum wages are defined by State Governments. There we are talking about more than 30 State Governments, when they decide what level of wage hikes, they will pass through is very hard for anybody to predict with any degree of accuracy. What I can tell you is that the States that have so far increased their wages, Karnataka has probably witnessed one of the highest percentage hikes in excess of 20 -odd percent. Haryana, again, has been exceptional at 40% plus. U.P. came through at 23%, 24%, if I remember correctly. So these are abnormal. They are not in line with the 5% odd annual minimum wage hikes that have been coming through since COVID. But whether all States will follow similar pattern is very hard for me to say.

Right. But the State where we have seen this implementation already being done, you mentioned that you were able to pass on even prices which were higher than 10%, 12% and up to almost 20% to 30% also in few States. So how are these contracts laid down? The nature of the contracts involves complete pass -through? Or is it a one -on-one negotiation which we do with the customer?

There is no negotiation. Our contracts are structured on an open book costing where we define the minimum wage basis on which the price of a product category is built. So, let's say, for example, the minimum wages in a State is INR 100 and our price in that State may be INR 140. Now if the Government changes the minimum wages from INR 100 to INR 110, we simply reprice the contract basis that change.

Also, Riya, when you asked about the margin, see, ever since we've been interacting, the SIS flagship Security business, that operates at a consistent 5.5% type of margins . If what you're seeing change is post-acquisition, and the acquired asset had lower margin given the lower scale, they are 20% of our size. And then there is a clear path to integration and upping their margin profile also as a result of the synergies and the cost savings that will come. So, you will see on a blended basis, coming to the original margins that we used to operate over a period of the next 4 to 8 quarters. So that's why they are sustainable. It's only because of the acquisition effect you are seeing lower margins. And then FM, we have always been guiding that margins improvement started from 4% and it's as high as 5.5%. As I've always said, aspirationaly, we should be operating near 6%, but it will happen when it will happen, but we are at 5.5% consistent ly. So there is no margin threat as of now.

Got it. And in terms of the entire payment for acquisition has been done...

No, we only have acquired 51% stake in the Company, and we still have to acquire 49% subsequently over the next couple of years. The anniversary for that '28.

The next question is from the line of Umang Shah from Banyan Tree Advisors PMS.

I wanted to ask the question with labor codes getting implemented, there will be a level playing field between us and the smaller players who are not very organized. Can you tell us roughly what is the cost discount at which they were operating at because of not applying or not following the rules properly and with the labor code implementation, how much will that delta increase? Any rough idea would be great.

Well, it's impossible for me to say what is the degree of non-compliance a smaller operator might be opting to. So it can be anything. I mean, you could be non-compliant to PF, you could be non- compliant to PF, ESI and bonus. You could be non -compliant to minimum wage as well. You could be non-compliant to almost everything and reduce your cost. I think the important thing I would like to register for everybody who's following SIS in particular and labor code impact in general, if somebody was to ask me what is one of the most significant changes in labor codes, I would point to the definition of the term employer. The definition of the term employer in the 4 labor codes clearly states, and if I can quote for you, that an employer is a person on whose payroll an individual works, but is also the person on whose premises or whose establishment the individual works. Why this matters is because in the past, a customer who wanted to circumvent the laws to cut cost could have easily given a contract to a noncompliant vendor and assumed that the onus of all compliances has now shifted from the customer on whose site the g uard may be working to the contractor who has given non-compliant rates. So outsourcing had become a method to circumvent compliance costs. The Government has now plugged that gap. The Government's new definition says that if I have a guard working on my premises and he is not getting PF or he is not getting the applicable minimum wages or he's not getting bonus or all 3, I am under obligation as the principal employer to ensure that all his dues are paid whether or not the contractor is able to fulfil compliances. This is a tectonic shift. This basically means that the arbitrage discussion, which was always there in this industry, there's a cost arbitrage operating with the non or the lesser compliant players. That conversation has completely shifted now to the customer's doorstep. Whether a customer hires a fully compliant agency or he hires a less compliant agency, the onus of all compliances rest with the customer as well, number one. And number two, not just in theory, the customer has to disclose under his LIN number , there is an equivalent of a GST number now called LIN number, labor identification number. And all filings have to happen on Shram Suvidha portal, just like you file for GST on GST network.

So as a customer has to, under his LIN number, show that he has outsourced security to SIS and facility management to DTSS and what he is paying these agencies and what these agencies are paying to their respective employees. If there is a default by SIS or DTSS, the principal employer still remains under obligation to discharge all such dues to employees because they are working at his establishment, on his premises, so he is ultimately the principal employer. This is a tectonic shift. It has not happened before in this industry. I am pretty confident that once this is fully implemented in letter and spirit across the country, this will result in a fundamental shift in the organized versus unorganized share of the market. This is the reason why in Australia, 90% of customers use only compliant providers. In India, maybe 30% or 40% of the customers use compliant operators. It is just the difference in regulation between Australia and India. So that clarity that the labor cod e has brought in will certainly create a more level playing field in the times to come.

The next question is from the line of Anant Mundra from Mytemple Capital.

Sir, just had one question. What is the latest update on the ELI scheme? Is it active? Or is there some implementation issues still with?

No, it is active. The scheme is implemented. Anything in particular you want to know? The scheme is active...

Okay. So, have we worked out any benefits that could accrue to us?

Well, a large chunk of the benefits actually go to the employee himself, right. So, the scheme is designed such that if anybody joins a company and he continues to work for 12 months, then the Government will pay him INR 15,000 directly to his personal account. And then there is a small frugal benefit that the job creator gets. But the employment -linked incentive is predominantly aimed at benefiting the individual employee more than the employer per se.

As there are no further questions from the participants, I now hand the conference over to Mr. Rituraj Sinha for closing comments.

Thank you, everyone, for joining the call. It's been a pleasure talking to you and very happy to report that SIS has got off to a solid start in the first quarter. Number two, that finally, labor code implementation has started, and we see it as a tailwind. Number three, we are very happy to be one of the first few to use the open market route to buy back and our buyback should be opening next week. So, it is completely designed for our minority shareholders. Promoters are not participating. I would encourage everybody to take the maximum benefit. We have left a handsome premium on the table up to INR 478.5. And I hope that we are able to allocate capital back. Like Vineet mentioned, this is our ninth action to return capital to employees, 5 buybacks and 4 dividends. So shareholders, this is the ninth occasion where we are returning capital back. We

are very happy that as a profitable cash -generating business, we have given back INR 700-odd crore to our shareholders since IPO. I would draw your attention to the last but probably a very important aspect, which is that our return ratios, they bottomed out at 11.8% ROCE in Q1 of FY '25. And in Q1 FY '25, our return on equity was down to only 9.4%. Today, 2 years later, our ROCE is at 16.7% and our return on equity is at 15.8%. We hope to execute with discipline. Our objectives are very clear. India has roughly 5,000 listed companies. If you filter with significant businesses, let's say, INR 500 crore in PAT, that would leave less than 500 -odd companies, maybe 10%. Amongst those 500 companies, if you filter how many deliver a 15% annualized growth consistently with a 15% plus return profile consistently, that brings the count to less than 100 companies. We want to drive SIS into that box of 100 companies in this country which deliver INR 500 crore plus in PAT and our material businesses with consistent year -after-year 15% growth in profits and 15% or greater return profile. So that's what we are shooting for. FY '26 was a year of rebound. We delivered 15 and 15, and FY '27, I hope will be an inflection year or the second year where we'll be in that zone, hopefully. So, thank you very much for your support, your conviction in SIS through the thick and thin. I wish you all the very best. I hope to see you next quarter. Bye-bye.

Thank you. On behalf of SIS Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Disclaimer: This is a transcription and may contain transcription errors. The transcript has been edited for clarity. The Company takes no responsibility of such errors, although an effort has been made to ensure a high level of accuracy.