Ladies and gentlemen, good day and welcome to the Q1 FY22 earnings conference call of Antony Waste Handling, hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anupam Gupta from IIFL Securities Limited. Thank you, and over to you, sir. Thank you, Rudraja. Welcome everyone to the results discussion for Antony Waste Handling Cell Limited, as well as the other future outlook. From the management, we have Mr. Jose Jacob, Chairman and Managing Director for Antony Waste Handling Cell, and Mr. N.G. Subramanian, the Group CFO, along with the SGA investor relations team. I will hand over to Mr. Jose Jacob for the initial remarks. After that, we can take the Q&A. Over to you, sir. Good afternoon, very warm welcome to everyone present on the call. Along with me, I have Mr. Subramanian, Group CFO, and SGA, our investor relations advisor. I hope and pray that you and your families are safe, healthy, and secure in these tough situations. We have uploaded our investor presentation on the stock exchanges and the company website. To start with, I would like to thank our employees for their courage and dedication towards their work, which enabled us to continue our operations smoothly even during the second wave of COVID-19, which was much severe than the first wave. The hard work enabled us to deliver the highest-ever quarterly revenue and EBITDA and net profit even during a challenging quarter. As economic activities were disrupted due to the second wave of COVID-19, we witnessed a little softness in the volumes on a sequential basis. Having said that, with economic activity returning to normalcy, we are witnessing recovery in volumes. The sequential improvement in revenue was also aided by price escalation benefit in our tipping fee. Moving on to the business performances. C&T projects, which is Municipal Solid Waste Collection and Transportation. In this service, we have 13 ongoing projects in these services. Our Municipal Solid Waste Collection and Transportation business registered a volume growth of 45% in Q1 FY22 as compared to Q1 FY21. However, on a sequential basis, it registered a de-growth of 4%. We continue to add new projects in this business and further focus on increasing our pipeline by bidding for new projects in this segment across municipalities. Municipal Solid Waste Processing projects. That is the second one that we do. We have two large ongoing projects, one in Kanjurmarg, Mumbai, which has a concession agreement till 2036. Second is at Pimpri-Chinchwad, Pune, and has a concession agreement till 2040. The volume of this business grew by 34% in Q1 FY22 as compared to Q1 FY21. However, on a sequential basis, it de-grew by 3%. Both our sites at Kanjur and Pimpri-Chinchwad Waste to Energy contracts continue to perform in line with our expectations. As you see that we have a record growth in profit, in business revenue, as well as EBITDA and profit. This has been very good for our company. Further, I'll go ahead on update on Pimpri-Chinchwad Waste to Energy. The work in progress is progressing at a site as per schedule. The civil work has already commenced in March 2021, and ancillary work order has been issued. As expected with the timeline committed to our client, we should have the Waste to Energy plant fully commissioned on or before March 2023. This is after taking into consideration the time delay due to COVID pandemic related commercial activity shutdowns. A further update on Varanasi, the project will be fully operational from mid-October. Work there has already started, and we are providing services to approximately 60% of the city. During the last quarter, we had announced the new project of biomining of legacy waste in Greater Noida. This is the first time we have won a legacy waste contract for biomining, though we are doing biomining in Kanjurmarg. This is part of our technology. The mobilization work has already started, and we expect commercial operation to kick off from mid-September. We are seeing good traction in our compost sales. Customers are accepting our product very well. During quarter Q1 FY22, our compost sales stood at 4,850 tons, which is at similar volume compared to Q4 FY21. On a year-on-year basis, it registered a growth of more than 570%. We have doubled our maturity plant capacity, which was commissioned during Q1 FY21. Basically, we have increased the capacity of compost production, and there's a good demand, and that's the reason we are seeing this exponential growth. Recently, CRISIL assigned CRISIL A2 for short-term bank facilities and CRISIL BBB+ stable for long-term bank facilities of our material subsidiary, Antony Lara Enviro Solutions Private Limited. The improvement in overall credit rating has led to reductions in our average cost of borrowing at a consolidated level from 12.4% as on March 31st, 2020 to 10.6% in Q1 FY22. I'll hand over to Mr. Subramani, our Group CFO, and he will take it on further. Thank you, Jose, and good afternoon to all. I would like to welcome again everyone to this conference call to discuss our first quarter results of fiscal year 2022. As noted in our business update, a broad-based trend on a year-on-year basis drove our performance across the board during the reporting period. The total consolidated revenue and adjusted EBITDA has increased by 56.7% and 55.1%, respectively, on a year-on-year basis. The increase primarily reflects continued improvement in pricing and volumes growth. The growth being reflective of the strength in commercial activities in the areas where we provide services. The profit before tax for the quarter ending June 2021 stood at INR 28.3 crores. This compares against INR 12.2 crores in the June 2020 quarter, and the profit before tax margin has also improved to 18.9% during the quarter. Profit after tax at consolidated levels stood at INR 22.4 crores for the quarter as compared to INR 11.3 crores in the year-ago period. Coming to business-wise performance, the Collection & Transportation revenue is up by 54% year-on-year at INR 94.7 crores. The growth being on account of increase in total C&T volumes by 45.8%, and coupled with an incremental revenue from the new project of Varanasi, which is still not fully operational. On a sequential basis, revenue from C&T is up by 15%. The MSW processing revenue is up by 45% at INR 36 crores as compared to INR 24.8 crores in the year-ago quarter, reflective of the improvement of 35% year-on-year in waste processing volumes from our Kanjurmarg and PCMC waste to energy sites combined. These trends reflected in a steady trailing 12-month adjusted EBITDA margin of 27% and helped report a trailing 12-month revenue of INR 535 crores at consolidated level. On the balance sheet front, our net debt to equity as of 30th June 2021 is 0.1x. The total debt as of June 2021 stood at INR 145 crores, and our net worth has improved to INR 473 crores. A word on our receivables. Despite the financial stress due to the pandemic-related expenses and also compounded by declines in property tax collection and other revenue sources drying out, the municipal authorities have reduced their non-planned expenditures and have prioritized payouts to essential service providers like waste management and primary healthcare service providers. This is reflected in the improving DSOs. For us, this has improved from a high of 71 days in June 2020 to 56 in June 2021. Once things stabilize and we are back to conditions similar to pre-COVID times, we expect our receivables to revert to the mean historical levels. I would also like to point out the following. As mentioned by Jose, our material subsidiary's credit rating has been assigned as CRISIL BBB+. Our weighted average cost of borrowing has come down to 10.6% versus 12.4% in FY21, and we continue to work on this front. Another highlight of the event is post the quarter end, the company has realized INR 11.19 crore of retention money held by our client, as per contract terms. These are normally reported as long-term receivables from our clients and are deducted from our billing as per tender conditions. In the past, certain sections of the investor community have raised concerns about such deductions, and I hope this development allays their apprehension. That's it from my end, and I will open the floor for Q&A. Thank you very much. We will now begin the question and answer session. The first question is from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead. Congratulations on a very good set of numbers and a very good recovery. Having executed such a complex project in Kanjurmarg with the help of a JV partner, do you feel that if any such project comes up of a similar magnitude, we can now do it alone without the JV partner? That's one. Second is there some development that any kind of municipalities is doing to ensure that lesser amount of waste even goes into the sea? Are we trying to develop some solutions for that? In waste processing, we have been doing from past five, six years. Our company has reached a stage where we can execute similar projects even without the support of a JV partner. Waste processing is not only confined to the one what we are doing, composting technology. There's waste to energy, a different technology, and even biogas. Depending upon our client's requirement, we will look for whether we go for a JV, if we need a technical assistant, or we go all alone. That is up to waste processing. Second question is, on the inflow of waste being generated from municipality, there's always a long-term plan that the waste generation from cities should reduce because of the stress that is added onto the environment. As of today, we don't see any concrete or substantial changes that's happening in the environment to reduce the inflow of waste or the generation of waste. Mr. Hawa, on that aspect, the status quo remains. How is the Pune execution of the waste to energy project doing? It's going fine, and the civil work is full swing. By March 2023, it will be operational. Mr. Khandelwal, does this answer your question? Hello? Answers my question. Thank you so much. Thank you. The next question is from the line of Arun Kejriwal from Kejriwal Research. Please go ahead. Good afternoon, Jose and N.G. Thanks for taking my question. Couple of questions. One, between the previous quarter and now, any new tenders that have come up for bidding and where we have participated, and any progress on the same? Good afternoon, Arun Ji. Yes, in the last four months, I will not be able to give you specifics since the last quarter and this quarter. Over the last four months, we have seen a flow of contracts from a lot of city state capitals, and we have tendered our opinion and interest for six of them. These are still in the discussion stage. The few of them would be like the one in Delhi. The North Delhi Municipal Corporation is one of them, and there are landfill operations over there. There is a new tender for collection and transportation of waste in Pune. These are the areas that we are looking at. Not going into detail in that part. Fair enough. Second question. Sir, in terms of dividend, has the board formulated a policy? Because we have a lot of cash available on the balance sheet. Is there a dividend policy that has been debated and discussed, or you are still in the process of finalizing? We have a dividend policy which is being debated and finalized. We'll be putting it up shortly on our website. The topic is very much on the table of our discussions. We will have that out at the earliest, sir. Okay. One final question, if I can squeeze in. Just to understand, from the type of projects that have come up for bidding, what is the flavor you are getting that municipal corporations are back in business, they are still toying with the idea of having private contractors, or now that part of it is done and dusted, and they believe that this is not their area of expertise? As I always said, there's a Swachh Bharat program going pan-India level, there's lot of awareness in the municipal top bosses. There's a marking by Swachh Bharat team who comes and gives certain marks on state level and all that. The awareness has reached to a level where every municipal corporation wants to perform. One of the important area is municipal solid waste. They get a good marking, and due to which their standard improves. They want good players, and due to which we are getting good opportunities, and going next 10, 15 years, pan-India level, to have all this situation improve. We as a company is at the right spot, and we feel that this business is going to grow. Right. Thanks a lot. Thank you. Thank you, sir. Thank you. A reminder to the participants, to ask a question, please press star and one. The next question is from the line of Rohit Ojha, an individual investor. Please go ahead. Yes, sir. Good afternoon. You just mentioned that there is a tailwind of this Swachh Bharat, and also every municipal corporation wants to get better and we are in the right spot. From the business model, it appears to be very scalable. There is an opportunity. In 2010, we had 10 projects. In 2016, we had 16, and now we are at 16. In the count of projects, we have not really grown at all, I would say, in the last four, five years. When do you think can we hit a number like 30, for example? Is there a roadmap for this? Any roadmap? Yes, let me take this. If you look at the past, the kind of contracts that were available were of very small sizes of less than 100-200 tons, because those were the kind of cities in the past which are coming up for opening those contracts. Now we are seeing contract sizes of larger size and capacity and complex cities, where entire cities scopes are being given out, like the one we do in Noida or in Greater Noida or even Nagpur, PCMC. The entire city or half of the city is now given off as projects. We have seen that though the number remains stagnant, the size of these projects are significantly bigger than what it was in the past, and that is a trend that we are seeing. Lot of cities are still done by the government themselves. That is getting privatized, and they're doing it in large swaths of sizes. We do expect our number of contracts to increase, but it will not jump from existing 16 to 30 in four years or five years. It's a gradual increase that will happen, and we will keep working on that path. Okay. Thank you. My next question is that, I saw in the release that we've had a few completed projects, right? That means that these were projects where the tender probably ended, and we did not get a renewal. Can you give some comments on what was the reason for not getting those back? In the past, there were certain contracts that the company was doing, like in the cities of Poonamallee, Tambaram, Jaipur, and these were sub-economical sizes for us now that we are looking at completely modernized fleet of operations and their efficiency norms. If the tonnage is less than 100 or 150 tons, I'm not able to completely utilize my fixed assets and have a fantastic fixed asset turn, which will help me have a higher operating leverage. If I were to address a small portion of these markets today, this would be a very high cost to the local operators. We would not be in a sweet spot. That is one of the reason why we are avoiding small cities. We are looking at large cities. The business potential in the large cities is significantly higher, because less than 70% of the state capitals have privatized. A, they are financially better off than smaller cities, and B, the size of the contract is something that makes our returns and financial asset turn and the fixed asset turn profitable. Okay. Got that. Sir, in past there have been cases where we have bid but we probably didn't win those contracts. Historically, what has been the reason for not winning those contracts? Is it possible for you to give some? Sorry, can you repeat that question? Your voice is very feeble. In the past, have there been cases where we have bid but not won the contract? What were the top reasons for not winning those contracts, if there have been such cases? As you are aware, it is not necessary we have to win all the bids. We have competition from companies. There are two, three quality players. Our strike rate has always been good because our pricing is competitive. We being the early players, we have better chances to price our bid on a competitive side. That is our strength. We also have a very firm pricing discipline when we bid for these contracts because approximately 60% of my expense, of total operating expense is labor and fuel. There are very little headroom that I have for going around with a project at low cost just to win the contract. We have a very stringent financial modeling and a financial discipline when we bid for those contracts. In scenarios where we would not have bagged the contract, it's basically below our threshold limit of comfort. Okay. Understood. Sir, my last question is that, do we see our margin creeping or crossing even 30% sometime now with normalization and with pricing benefits coming back? When do you think we can hit that? We saw those in FY 2020, I guess. Any comments there? The factor of EBITDA is driven by the product mix that we have. We have processing and we have C&T. As and when we see a higher mix of processing coming into my portfolio, my margins would be better in that, and we'll move northward. Okay. Right. Thank you, sir, for explaining all these things. Thanks a lot. I'm leaving PCMC, and I'd just like to say that I've seen some differences here, so yeah. Happy to know that. Thank you. Thank you. Ladies and gentlemen. The next question is from the line of Anupam Gupta from IIFL Securities Limited. Please go ahead. Hello. Hello. Yes. On the opening remarks, you mentioned that the Varanasi and the Greater Noida project will come up over this quarter and September for the Greater Noida project. Is the Nagpur project fully ramped up or it's still in the phase of ramp up at this point of time? Nagpur is already 100% active. I think you're talking about Varanasi. No. I was asking, Nagpur which you had started last year- Nagpur is completely operational since December 2019 onwards. Nagpur is completely operational for us. As Jose mentioned, Greater Noida biomining by end September or mid-October, we will have all those activities happening at full pace at Greater Noida and in Varanasi. Okay. Understand. Just secondly, I just wanted clarity on the proposed increase in shareholding, which you had to do for both the processing contracts. What is the status as of now there? Anupam, the same thing will be completed by 30th of September. We have received almost all the documents. The same has been given to the bankers. We will have the proportionate shareholding changes from 30th of September onwards. Okay. Shareholding from second half effectively. Okay. That's all from my side, sir. Thank you. Thank you. Thank you. The next question is from the line of Rajesh Kumar, an individual investor. Please go ahead. Sir, good afternoon. Am I audible? Yes. Good afternoon. Hope you and your workers' family, everybody is safe and healthy. Yes, sir. Thank you for your wishes. Same to you. Yeah. Thank you. Sir, my first question is, you have mentioned in the RHP that Indian Municipal Solid Waste is around INR 5,000 crore potential. Just wanted to know, does it cover all the tier one, tier two cities only, or does it have any limitation on the solid waste produced per day? Sir, this data is part of the study done from various sources, wherein the budgetary allocation of lot of municipal corporations which were available has been taken, and that forms the basis for this. This INR 5,000 crore is all inclusive of tier one, tier two, tier three cities, which have disclosed these numbers under budgetary provision under the fiscal norms. Okay. Sir, since Antony has its own business financial stringent parameters while bidding for this tender, keeping those in mind, out of this INR 5,000 crore, how much is for our grab? I mean, how much Antony can bid for the business? As I said, today with INR 5,000 crore, we have almost 10% market share, if you see that. What we believe is some of the municipalities is yet to privatize their operations. Some have to modernize. All of them are floating tenders by appointing top consultants, and we are in the process of bidding those tenders and winning and modernize the Municipal Solid Waste Collection and Transportation. The potentials are there, and we can see business out there. All these INR 5,000 crore bids are not going to come overnight. It will take time as months pass by. Wherever it is coming by, we are bidding and we are taking that opportunity to grow our business. Okay. Sir, in our list of current projects, I don't see the major southern states, cities like Bangalore, Chennai, Coimbatore, Mysore, Hyderabad, or few other states like Orissa, Rajasthan and so on. Is that these cities are handled by our competitors, or these cities are yet to be privatized? See, in the southern part, we are already doing in Bangalore. Bangalore, they are in the process of modernizing. In the southern part of India, in Chennai, there is other bidder who have taken up the contract. In northeast area, we usually do a due diligence whether the municipal corporation has a fund. Our strategy also is to have a cluster formation. Suppose we win a city, we try to win nearby cities because that reduces our overheads cost and our management cost. Our strategy has been like that. If we win in one city, we look out for the neighboring city. At the same time, we look for a good opportunity if any bids are coming up as per our standards, which has been drafted by top four, top five consultants, and we have quality bidders coming in, then we bid for those tenders. Okay. Sir, next question is: Is it a norm that municipalities follow not to have a single vendor for both collection and transport, as well as the processing of the municipal solid waste, or as a company, we don't want to have both the contracts? It depends. Municipality, the problem is the waste processing contracts are typically 25 years because the capital involved is high and the project to start will take at least 2.5 years. Typically, Collection & Transportation is eight to 10 years. There's a lot of mismatch. What happens in some municipality, already there's a contract signed for Collection & Transportation. At that time, they cannot wait for the C&T, Collection & Transportation, tenure to get over to have together the same bid. That is one issue. Second thing is the risk. Municipality thinks that giving one operator to run the entire operation can be a risk, so they will evaluate. At the same time, there are municipalities who prefer to give a single contract to one operator. Majority of the municipalities prefer to have two separate contracts. It is not the policy of the company, but it is the policies of the respective municipalities. Absolutely. It is not the policy of the company. It is the municipal conditions. Okay. Sir, like in C&T contracts, this MSW processing contract periods are also extendable? Currently, sir, we have not seen any such contracts getting extended because these are normally long-tenured contracts and we are yet to see an operator complete a single large, long durational contract yet. It's only since 2008 have we seen such waste processing contracts being awarded in the country. As an operator, we are yet to face such situation. Yes. It is a 25 years contract and we don't know what's going to happen after. We have not seen anybody yet. We haven't seen a complete cycle. Okay. Sir, unlike the C&T and waste processing projects, the biomining projects seem to be short duration projects. Is there any chances that they could also contribute sizable revenues in the near future? Yes. We have taken up one contract in Greater Noida for biomining and typically these contracts are for 2.5 years. There are a lot of bids coming around for biomining, few of them here and there. We analyze and we see whether it is good to bid or not, and based on those things we bid. These are the three businesses where revenue can increase. Okay. Sir, particularly in the case of Greater Noida, we did not have any prior experience, still we have won that order. What is the basis for winning that order? We have an experience. In Kanjurmarg project, what we do, it's a bioreactor landfill. There is a biomining experience already because that technology includes biomining. Okay. That's a big experience. We already have a biomining experience and we were the first to have those experience. Okay. Sir, in the investor presentation, I think you have mentioned Indore, Delhi, Bangalore, Coimbatore, and those cities have started a biomining project. Just to get a flavor, how much time do you feel that they will take to award the tenders in the respective municipalities of these cities? Normally, sir, it takes around three to six months, depending upon how efficiently the department works and how inputs have been given to them from the ground departments. It normally takes anywhere from three to six months from the tender designing stage to the tender awarding stage. That means, is it fair to assume that by the end of this year, we could have come to know the status of these tenders also, like they would have also finalized the operator and all? Yes. Now, only problem that is happening is these tenders have been in designing phase for the last one and a half years. Because of COVID, these things have been put into a hold. The financials of the corporations also needs to be taken into consideration for the speed of new tenders coming out. Oh, okay. Sir, just to get an idea, how are the margins in this segment, sir? Is it similar to C&T or the waste processing? In our experience, since we don't have a standalone experience, but based on what we understand, this is in between these two projects, sir. This is towards processing, but it's not as high as processing. Okay, fair enough. Sir, if I am allowed to squeeze in one more question based on this one. Sir, once we start this Pimpri processing plant, the margins should go up further. Is it a fair assessment? Yes. Since it's a waste processing project, on a consolidated basis, the margin should head upwards. Okay. Now, on the long-term basis, is it possible to tell us what could be the sustainable operating margins? We always have a mix of C&T and processing, and we like to maintain the current mix, which is around 60-40 ratio, C&T and waste processing. We expect the margins to hover in the current range, would be a very conservative estimate from the management, sir. Sorry to interrupt. May I request Mr. Rajesh Kumar to please rejoin with you? We have participants waiting for the turn. Madam, last follow-up question, if I may know. Hello? Hello, sir. Sir, the last participants you said we have applied for six tenders. Is it possible to tell us how much of this is the C&T and how much is the processing one? It's 50/50, sir. 50. Thank you very much, sir, and wish you all the best. Thank you, sir. Yeah. Thank you. Ladies and gentlemen, to ask a question, please press star and one now. The next question is from the line of Sharad Teja, an individual investor. Please go ahead. Hi, am I audible? Yes. Yes. Yeah. Hi, congratulations on the excellent set of numbers. I don't have any question around the numbers or any kind of this presentation. I have one question around the Mangaluru City Corporation. I think I need some clarification around a news, because what I see is that Mangaluru City Corporation is not happy with your service. I'm not sure about the whole stuff, but what I am reading, I'm just telling that. Just need a clarification, because what I understand, after six months, your contract is getting, I think, closed, and after that there will be a renewal of contract. Before that, I think they are not happy with the service. Can you just clarify on this news, if you can, sir? The Mangalore contract is a 10-year contract and it's expiring in February 2022 as per the tender conditions. The fact is Mangalore, in the state of Karnataka, has been standing number one in the Swachh Bharat survey in the particular population category. The flow of information is different from what is happening at the ground. There has been certain instances, one being the landfill management, which is not in the scope of the company, is being poorly managed. That could be one of the reason why the SWM department is not satisfied as a whole. On the collection, transportation, and the sanitation work, which falls in the company's purview, we have done fantastic work to which the corporation has managed to get a number one citation on the Swachh Bharat survey because of the work, and this has been continuing for the last three years. Okay. Thanks for the clarification. How much Mangalore contract is contributing to the revenue percentage-wise? Percentage-wise, Mangaluru as of Q1 contributes to around 6% of my top line. Okay. It is negligible. Yeah. Okay, thank you. That was the only question I had. Thanks for clarity, Thank you sir. Sure. Thank you. Thank you. The next question is from the line of Richard D'Souza from SBI Mutual Fund. Please go ahead. Hi, good afternoon. Thanks for giving me the opportunity. Just wanted to ask on fuel cost escalations, how has they been managed in the first quarter? Going ahead, what is the learning? In your new contracts, will you have amended terms and conditions? Hi, Richard. Yes, the fuel contributes a decent chunk of our cost as you know. Fuel contributes around 19% of our total operating cost. The learning that we have realized over the last one year is nowadays, whenever we go for any pre-bid meeting, we make it a point to address it that the escalation should be on a monthly basis. If it's possible to have an average rate of fuel of that particular area to be the benchmark, it could be an IOC or a BPCL nominated one. If the escalations are not monthly, if it's semiannually or quarterly or annual, we are recommending to the corporation that instead of taking an end of the period number for calculating the escalation, they should take an average price for the period as the basis for the calculation. We have seen in the recent past that the prices spike up by 5%, 6%, then end of the quarter because of some requirement comes back to the same base. We might lose out on such situations. This is a change that we have initiated internally that any pre-bid meeting that the company attends, this issue is raised and all the other operators have seconded this move. Okay. Is there a chance that your existing C&T contracts, you can renegotiate those terms, or those will continue as they are? We have approached municipal authorities and requested them to consider this as a special request. The same is being forwarded by the authorities to the standing committees. We are yet to hear from them on this aspect, Richard. Okay. Thank you. Thanks a lot, sir. Thank you, Richard. Yeah. Thank you. The next question is from the line of Depesh from Equirus. Please go ahead. Hi, Joe sir. Hi, NG sir. Thank you for the opportunity. I also have a question on the fuel part only. Last time you explained that most of the contracts will see a price renewal in July. Just want to check how many of the contracts have already seen the pass-through and how many contracts are still left? We have seen escalation come through for almost 65% of our contracts in the first quarter. The balance few will be happening by December. We expect some relief coming in the Q3 period and Q4. Okay. 65% you're saying happened in first quarter itself. Not in July? Not in July. Okay. Got it. Sir, is the price escalation good enough to take care of the fuel price hike? It is more than adequate, Depesh. Okay. Got it. Sir, in the last quarter, you spoke about the one-time ex-gratia payment to employees, right? Of around INR 2.3 crores. Sequentially, again, your employee cost has increased. Just want to understand what are the reasons for the same. Our wage bill has increased by 28% to INR 45.7 crores. This is mainly because of the start-up of the Varanasi expense, which has added around INR 3.7 crores to the increase. In the year-ago period, these were absent. This increase is from Varanasi. Secondly, the DA has been revised in the month of July 2020 and January 2021. That has also come and hit us. If you were to ask for a deconstruction of the 28% increase, 11% of the increase is coming from the new project, and around 15% of that impact is coming from DA revisions. Okay. Got it. Sir, last time you also highlighted that the NCR region is still seeing the lower volumes as compared to the pre-COVID levels. Just want to understand how the things are now. Is it back to the normal level? Yeah, it's improved a lot, and it's coming close to the normal level. Got it. Sir lastly, there were many projects which are running beyond their end date, right? Like maybe Thane and all. Any update on those? When will the new tenders get floated, or we'll continue to work on that? Presently, they are under the process. Because of pandemic, they are extending our contract from quite a few months. Once situation improves, they will think of floating new bids. I think next another four, five months, we'll come to know. Okay. Sir, in this extension that they have allowed you for four, five months, there is no price escalation thing, right? In these contracts. There are no price escalation for these extension periods because we have to get a specific approval for the same. These contracts, the assets are completely depreciated. It's a pure pass-through for us in those case. There is no asset amount. These are on a self-sustaining autopilot mode. Okay. Sir, overall, what is your view on the C&T margins? Because if the fuel price don't rise further, do you think these margins will sustain and improve going forward? Almost 100% of my revenue has escalation, right, of which I would say 57% of them are under the variable escalation clause. If you remember the previous quarter, we had a hit because of the escalations coming in of the timing effect. We believe even if the fuel prices oscillates between current price and another 5%-7% increase, the escalation do catch up in the forthcoming quarters, and margins of the C&T business is stabilized at these rates. Got it, sir. Thank you, and all the best. Thank you, Depesh. Thank you. A reminder to the participants, to ask a question, please press star and one. The next question is from the line of Meer Gen from LKP Securities. Please go ahead. Okay. Mr. Meer Gen, please go ahead with your question. Hello, sir. Am I audible? Yes. Yeah. Thank you for the opportunity. I have just one question on the receivables side. Are we facing any delay in getting receivables from the municipal corporations? Sorry. Can you repeat the question, please? Yeah, sir. I'm asking on the receivables side, are we facing any delays from getting receivables from our municipal corporations and other customers? No. Because of. See what has happened in the last three quarters, we have seen a significant improvement in our payment cycle. That is what is reflected in our DSOs, which has improved from 71 in the last year to 56 in the latest quarter. A lot of actually prioritize payment to these kind of expenditures. We are not expecting any delays in our regular payment from our existing clients. Okay. What will be the sustainable DSO days going forward? Honestly speaking, these are the best DSO rates that the company has ever achieved in the last eight years of working with these clients. If you ask the honest question, what is the DSO that we would like to live with, these would be the best rates. Historically, our DSOs average anywhere between 60 to 70 days. That is something which has been built into our system, and that is something that we have taken into consideration at the time of bidding for such projects. Currently we are at 56. Historically, we have been at 65, 70. We are happy to be in this range. Okay. Thank you. Sure. Thank you. Participants to ask a question, please press star and one. The next question is from the line of Dhruv Bhimrajka from Monarch AIF. Please go ahead. Good afternoon, sir. Sir, my question is related to your cost of debt, which was previously very high at 10.4%, but now it has reduced to 10.63%. How much scope do you see for further reduction in your cost of borrowing, given that after the IPO money you must have repaid debt also, and you might be getting a rating update in the coming time. Where do we see this cost of borrowing going further down? Hi. We are looking at least, if not at a 1% or a 0.75% improvement in our cost of borrowing over the next two quarters. That is something that we are working with our financers and bankers. Okay. Sir, then 0.75, even if it goes down by 100 basis, it would still be high at 9.63%. Don't you think so? It is higher because of the long-term risks associated with the kind of receivables. We have addressed that to our clients and bankers. See, in the past, the waste management industry was not favorably looked at because as part of the infrastructure space, the cost of borrowing was always higher. It's only because of our performance over the last five years of the traction and our ability to repay debt at an aggressive clip has given support and comfort to the lenders. The rate that you see today of 10.63 is reflective of the same lenders renegotiating on the rates because they would like to retain us as their clients when there are other lenders willing to come and take away the pipe. This decrease in cost of borrowing is reflective of the support and confidence that the finance industry now has with the waste management industry, especially with Antony Waste. Our businesses are steady in nature. They are more like annuity model. There is a contract which is signed with a quasi-government agency. The payment comes on time. There has been negligible financial stress despite COVID and all those situations. The EMIs have been going online, so that has given them a lot of comfort. The performance of the company. If you look at my balance sheet, it's pretty strong. My net debt to equity is.1x. I have around INR 97 crores in cash today, which can take care of my future receivable increases and still make my payment on time. From a lending perspective, from a credit risk perspective, I have significantly improved by two notches at least in one quarter, and we will work to get into the A category rating in the foreseeable future. Okay. Sir, just for you to understand another aspect. Because majority of your clients are municipal corporations, which are basically government-sponsored entities. Don't you think that the receivables from their end are much safer, and don't you think the banks would be viewing it in that sense? Is there something which I'm missing? The government agencies historically have been known to kind of not be very efficient paymasters on time. That has been one of the concerns for infrastructure companies from the banking industry. Even if your clients are Bombay Corporation or Pimpri-Chinchwad Corporation, if you are in a road repair or if you are in street lighting, they have historically faced some delay in releasing the payment because of the procedural delay that happens. Maybe that is one of the reason why banking industry doesn't give us such high rating despite the receivables are coming from almost a sovereign backed institutions. These are not. These are not state government, these are not central government, these are municipal corporations, which have a different identity of their own. Right. Okay. Very well, sir. Thank you so much for the answer. Thank you. Sure. Thank you. There are no further questions from the participants, I now hand the conference over to Mr. Anupam Gupta for closing comments. Thanks, Pooja. Thanks to the management for taking out time for answering the questions. I hand it over back to Mr. Jose for any closing comments that you might have. Hello, everybody. Thanks all of you for the valid questions. These are tough times and uncertainties ahead of us. We are hopeful that Indian economy will bounce back, and we'll see growth momentum going ahead. I would like to thank you all to participate on our earnings call once again. I hope we could address all your queries adequately, and for any further information, please call SGA, our investor relation advisors. Anyway, thanks once again. Please take care and stay safe. Thank you. On behalf of IIFL Securities Limited, that concludes this conference.