For a few months now, the FM world has been abuzz with the announcement that SILA has acquired Forbes Facility Services. In an exclusive joint interview, Rushabh Vora, Co-Founder & CEO, SILA and Vinay Deshmukh, CEO, Forbes Facility Services spoke to Mrigank Warrier, Assistant Editor, Clean India Journal about what prompted the acquisition, how the two companies will synergise, how this will influence existing and future clients, and how they will co-exist.
What was the impetus behind SILA looking to acquire other facility management companies?
Vora: Soon after we started the business in 2010, we realized the importance of creating operating leverage and cash conversion if we were to succeed given the market dynamics, margins, pricing, and structure of contracts. Hence, we focused on building technology and systems that enable us to extract the potential gains that arise from scale. Acquisitions allow us to scale faster and create the operating leverage that is required for a low/mid margin business like this to succeed in the long run.
We are fortunate to have a strong investor in Norwest Venture Partners, that believes in our team and our ability to bolt-on high quality companies, such as Forbes Facility Services (now FFS), onto our platform.
It’s early in the journey; however, the deal has already been accretive for us, and we continue to look for more companies to invest in and partner with over the course of the next few years.
” Both the companies will continue to run independently; the business and P&L will stay separate. SILA will add Food Services (via FFS) to its service offerings, and FFS will adopt best-in-class technology at its clients’ premises to enable increased efficiencies in service delivery.” – Rushabh Vora
What made Forbes Facility Services (FFS) the ideal organisation to acquire?
Vora: While evaluating a potential partner or acquisition, we typically assess the following – (i) the quality of the management team and the culture, (ii) the level of corporate governance, (iii) the quality of client contracts. FFS exceeded our expectations on all three fronts. We then use our technology to try and create operating leverage.
Vinay has built a super business. High on ethics and values, which is in line with our ethos at SILA. Furthermore, FFS is probably the leading organised player in the manufacturing/industrial facility management space, which is a key focus area for us too. The company also adds industrial food services to our group’s service offerings.
Going forward, how will the strengths of the two organisations synergise?
Deshmukh: This will be a very complementary relationship when it comes to business segments and geographies. We will use each other’s strengths to build our capabilities together. For example, SILA has a very robust Technology Platform and well-rounded ESG strategy, which we would like to capitalise on. FFS also provides Food services, which can be offered to the customers of SILA.
Vora: There are multiple synergies that arise from an acquisition of this nature. We have identified areas of strengths and improvement areas for both the entities. The companies will learn from one another’s strengths and use a common technology platform to drive financial and operational synergies.
Additionally, with this deal, we have an additional 5,500 employees of FFS that can benefit from our foundation, which is called the SILA for Change Foundation, aimed at providing educational opportunities for all our frontline employees.
We are focused on continuing to grow sustainability; this acquisition will help us improve our EBITDA growth rate as operating leverage starts to set in.
“We will use each other’s strengths to build our capabilities together. For example, SILA has a very robust Technology Platform and well-rounded ESG strategy, which we would like to capitalise on. FFS also provides Food services, which can be offered to the customers of SILA.” – Vinay Deshmukh
How does the acquisition affect business strategy and operations?
Vora: The business strategy for both companies does not change. Both the companies will continue to run independently; the business and P&L will stay separate. SILA will add Food Services (via FFS) to its service offerings, and FFS will adopt best-in-class technology at its clients’ premises to enable increased efficiencies in service delivery.
Both can compete for the same customer, or bid for a single customer together, and extract synergies at the bottom line; this will differ from customer to customer.
What market segments will both companies target in the near future?
Deshmukh: We are looking to broaden our reach in the industrial and off-shore segment. However, SILA also has a strong presence in commercial complexes and malls; they can help us generate leads in this sector, where we don’t have a presence. FFS’s presence in segments such as Food, Pharma, Education and Industries would help strengthen the presence, abilities for remote site management and to attract and retain talent.
Vora: SILA will continue to grow its business in the Commercial, IT, Malls, Airports and High-End Residential space. Forbes will continue to deepen its presence within the industrial belt, warehousing, logistics, offshore facilities etc.
As a group, we have become one of India’s largest service providers for the industrial sector.
What is the one trait that you liked most in the other company?
Vora: At SILA, we are a young team with a lot to learn. There are a lot of aspects that we like about the FFS team; picking one is tough. Their discipline, the quality of customers and the ability to remain process-driven is admirable. We have a lot to learn.
Deshmukh: There is so much we like about SILA as an organisation. If I had to pick one thing, it would be how customer-oriented they are, be it in lead generation, operations, or anything else. This is a major strength and is something we’d really like to emulate.