Kapston Services Ltd Management Discussions.



Theglobal economy was deeply impacted bytheCOVID-19 pandemic during FY 2020-21. The manufacturing and services sectors bore the brunt of extended lockdowns. Working from home became the new normal across the world. The pandemics impact still continues, although at a lesser degree, due to the breakout of second and third waves. The long shadow cast by the pandemic continues to put constraints on economic activity.


The Indian economy has suffered extensively due to COVID-19, with lockdowns adversely affecting all sectors, particularly the unorganised. Most software and professional services companies closed down their campuses. A large part of the urban workforce migrated to native places, delivering a serious blow to the already- distressed construction and manufacturing industries.


The Facilities Management Services sector, mainly consisting of security, housekeeping and engineering, faced problems on account of the closure of offices, commercial establishments, and several other facilities that require support services. Despite this, the Facility Management Services market size in India touched USD 150 billion in 2020. The industry is expected to grow at a faster pace on account of continued urbanisation and industrialisation. During this period, Kapston opened branches in various parts of the country and invested in building a robust staffing business.


Security Services

Rapid urbanisation across the country has increased the demand for security services. Also, a variety of factors today significantly contribute to the growth of the business. These include perceived risks and fears triggered by growing crime rate and terrorism, and a widely-held belief that public safety measures are not enough to protect human lives and properties. The security services market is seeing new opportunities, thanks to an improved economic environment and revival in construction activity.

Housekeeping Services

Housekeeping Services have been witnessing good demand due to the increase in office, manufacturing, and logistics space addition and absorption, among IT, pharma, services, tourism, entertainment, shopping, hospitality, healthcare and F&B-notwithstanding the temporary slowdown. More gated communities and premium living spaces are dotting the urban landscape, resulting in increased demand for comprehensive housekeeping services.

Staffing Services

In recent years, the Indian economy has witnessed a significant rise in the demand for staffing services. Deploying skilled manpower on key projects through staffing services is a popular trend across IT firms, especially those serving BFSI clients. According to a report published by the staffingindustry.com, the Indian staffing market was worth USD 5.2 billion in 2020. This is the fourth largest staffing market in the combined Asia and Oceania region, after Japan (USD 66.7 billion), China (USD 16 billion) and Australia (USD 15 billion). The most attractive markets for staffing are India and Malaysia, followed by China and Ireland.



The Make in India and Atmanirbhar Bharat Abhiyan missions launched by the government are expected to provide ample growth opportunities to Kapston. The Occupational Safety, Health and Working Conditions Code, 2019, is expected to encourage business organizations to hire Facility Management Services, for both short-term and long-term needs. The growing popularity of gated communities ensures sustained demand for integrated facility management services. All these positive developments are expected to maximise our opportunities in both existing and new markets.


Threat Mitigation
Predatory pricing by big players We are working towards creating a strong value proposition through a compelling services mix.
Technological interventions Expanding footprint with more vigour and pace, and actively considering foraying into new areas in FMS where the manpower need is high
Work from home Pivot to providing services for gated communities, mixed-use facilities and participation in other growth areas


On account of COVID-19, industrial and commercial spaces have not been attracting optimal use and occupancy. This situation is likely to persist, until the majority of population is vaccinated or attains herd immunity.

Ouremployees have expressed theirreluctancetoworkat places such as hospitals where the risk of infection is high. This has also triggered high attrition where employees are seeking opportunities at places with less virus risk, or shifting to new career paths. The management has been making extra efforts to motivate them to serve at these locations after investing in their safety. Our leadership has shown a great degree of commitment to proactively address this concern over the long term.

Our employees are also frequently affected by COVID-19. We have been working hard to handle these situations by employing best safety measures, and initiating strong backup plans to ensure minimal disruption to the delivery of services.


Over the years, Kapston has actively transformed into a leading manpower services company with deep and diverse expertise in hiring, training, evaluation, and employee retention. Our focus on service excellence helps us stand out. We engage dedicated recruitment teams and training centres that focus on matching job seekers with positions at our clients. We also have a strong management team that is attuned to the concerns—personal and professional—faced by our employees working in the field with a deep-seated intent to address them. This promotes a sense of loyalty among our employees.

Vertical-wise / product-wise performance

For the fiscal year under review, our staffing service began to generate revenues as an independent stream. The revenue from the new vertical in FY21 stood at Rs.419.61 lakhs. The revenue from soft services (comprising Housekeeping, Office Support, Pantry Services, etc.) has fallen by 8.8%, to Rs. 8,665.63 lakhs from Rs. 9,499.74 lakhs in the previous fiscal.

The revenues from our Security Services grew from Rs.11,468.03 lakhs in the previous year to Rs. 11,912.47 lakhs, translating to an annual growth of 3.9%. The Security Services accounts for 56% of our total revenues. Our Skill Development programs in partnership with the NSDC & Ministry of Rural Development contributed Rs. 135.40 lakhs as against Rs. 371.51 lakhs in the previous year.


1. Revenue:

The total revenue from operations stands at Rs. 21,303.86 lakhs against Rs. 21,339.27 during the previous year.

EBITDA stands at Rs. 1,691.39 lakhs as against Rs. 1,753.78 lakhs for the previous year.

2. Financing costs:

Our financing costs increased to Rs. 519.66 lakhs from Rs. 443.50 Lakhs in the previous year, on account of interest on term loans and lease finance costs considered under finance costs due to adoption of INDAS.

3. Depreciation:

Depreciation costs have increased by Rs. 100.31 lakhs on account of management estimates of the future useful lives of certain class of property, plant and equipment and intangible assets.

4. Taxation

Tax Expense (Deferred Tax and Current Tax) for the currentyear amount to Rs. 172.93 lakh against Rs.(10.45) lakhs in the previous year. We could not avail much benefit of deduction under section 80JJA of Income Tax Act, 1961. Since the addition to manpower was minimal on account of the pandemic.

5. Ratio Analysis


Risks Risk Mitigation
Economic Risk The company has been expanding its services and augmenting its revenues from promising areas to proactively minimise the impact.
People Risk The company has developed strong recruitment teams to overcome the attrition risk.
Financial risk The company presents a healthy balance sheet with prudent working capital management. In recent years, the company has offloaded unviable customer accounts, to reduce debtors outstanding.
Competition risk The company has deployed modern practices and processes to retain its competitive advantage and ensure loyalty among the workforce.
Covid 19 We are focusing on pivoting to new areas that have potential for high-growth and away from low-growth areas.
Efficiency Risk The company trains its talent to increase their competence in better discovering and serving market needs

Internal control systems and their adequacy

Our company has put in place standard operating procedures that ensure effective and transparent internal controls for efficient delivery of services. We follow strict procedures with regard to recording and providing reliable financial and operational information and complying with all statutory regulations and standards applicable to our business segments.

We have been refining our management methodologies by way of periodical reviews so as to realign our tactics to meet the changes on the ground. Thus we hope to achieve the goals both in the short run and long run.