Ladies and gentlemen, good day, and welcome to Antony Waste Handling Cell Limited Q2 FY 2024 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be on 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jose Jacob, Chairman and Managing Director of Antony Waste Handling Cell Limited. Thank you, and over to you. Good afternoon, and thank you for joining us for our Q2 FY 2024 earnings conference call. With me, I have Mr. Shiju Jacob, Executive Director and Chief Risk Officer, Mr. Mahendra Ananthula, Group President, Operations, Business Development and Diversification, Mr. N.G. Subramanian, our Group CFO, and SGA, our Investor Relations Advisor. Our investor presentation for second quarter of 2024 is now available on the website of the stock exchange and also on our company website. First and foremost, I want to emphasize that our strong financial performance continued in our second quarter, with another all-time high quarterly core operation revenue of INR 200 crore, representing a 25% year-on-year increase with a steady growth strategy going forward. Notably, we continue to work to improve our operational efficiency, which is reflected in our improved EBITDA margins, which have increased by 210 basis points to 24.5% on year-on-year basis. Despite facing inflationary pressure on our core segment, we have successfully maintained and improved our EBITDA margins, partially due to increased volumes. We are working hard to strengthen the revenue streams that underpin our business, while also demonstrating our unwavering commitment to rigorously optimizing our cost structure. The core EBITDA margins achieved in the Q2 FY 2024 were consistent with our previous guidance, reinforcing our confidence in long-term stability and growth. The management has initiated a corporate restructuring with an aim at reducing managerial overlap. The board has proposed combining Antony Infrastructure and Waste Management Services Private Limited and KLE into AG Enviro. All of these are 100% wholly owned subsidiary of the listed entity. The merger aims to achieve a more straightforward corporate structure, improve operational and managerial efficiency, leverage combined assets for a more robust and a sustainable business, and realize cost savings while utilizing valuable resources more efficiently. With this, we plan to achieve a cleaner organizational structure. Our company is poised to embark on a promising growth trajectory. The company is actively pursuing opportunities in C&T, which is collection and transportation, and bio-mining projects, and it expects to provide a positive update on some of them in the coming quarters. Furthermore, we are on track to diversify our revenue stream by offering complimentary services. In a similar vein, we will launch a construction and demolition collection, transporting, processing and disposal project in Q4 FY 2024. Thank you, and now I hand over the call to our Executive Director, Mr. Shiju Jacob. Thank you, Jose, and good afternoon to all who have joined us on this call. In our line of work, maintaining close collaboration with the various stakeholders and ensuring the delivery of top-notch services are of utmost significance. A crucial aspect of this involves ensuring full compliance of our vehicles, addressing statutory dues, and adhering to all contractual obligations mutually agreed upon with our clients. Equally important is our focus on managing receivables. It's noteworthy that some municipal corporations still face challenges in constituting their standing committees due to the absence of elected members. This has been an historical issue, and our management has diligently worked to address it. The positive outcomes of these efforts were evident in the last few quarters. An escalation amount from one corporation, initially unapproved due to the lack of appropriate authority, has now been resolved. We have received a portion of the escalation in Q1, amounting to INR 7 crore, and in the current quarter. We have received acknowledgement for an additional INR 12 crore for the previous year's period. We are actively engaged with other municipal corporations to ensure similar acknowledgements, directly contributing to the company's margins outlook as per our guidance. Turning to our new business endeavors, our management continues to implement a cluster approach. While our legacy business maintains its expected performance, we have successfully secured new contracts in the CNT and mechanical sweeping sectors. A recent highlight is our winning of a CNT contract valued at INR 386 crore from Mumbai Municipal Corporation in the MMR region. In this 5-year contract with the option of a 2-year extension, the corporation takes responsibility for all capital expenditures associated with the project, enabling us to adopt an asset-light model and redirect capital resources to other promising opportunities. This contract wins builds on top of the recently two contracts bagged by the group. The two mechanical sweeping contracts, one from Pimpri-Chinchwad Municipal Corporation, involved the mechanical sweeping, street sweeping of major roads above 18 meters in PCMC area for a 7-year concession period at a cost of INR 80 crore, and another one from Nagpur Municipal Corporation. These wins not only provide traction for future growth, but also contribute significantly to our goal of achieving a 20%-25% compounded annual growth rate in our core revenues. In conclusion, these strategic initiatives underscore our commitment to operational excellence, financial prudence, and sustainable growth. We are confident that our focused efforts will continue to yield positive results and guide the company towards greater success. Thank you, and I now hand over the call to Mahendra Ananthula, our Group President, Operations and Business Development. Mahendra, over to you. Thank you, Shiju, and good afternoon to all. I would like to share the remarkable achievements of our Kanjurmarg facility and the recent commissioning of our state-of-the-art Waste-to-Energy plant at Pimpri-Chinchwad Municipal Corporation. In the last quarter, our Kanjurmarg facility has witnessed significant progress. The volume of municipal solid waste processed experienced a noteworthy improvement, reaching about 6,000 tons per day at an average, showcasing a remarkable increase of around 14%. This enhancement can be attributed not only to the improvement in MSW processing volume, but also to the strategic use of the sanitary landfill facility. Moreover, we have achieved record-breaking dispatches of refuse-derived fuel, that is RDF, totaling an impressive 59,000 tons. The surge in RDF dispatches can be attributed to the growing demand, which also resulted in a marginal increase in realization. It is worth noting that while the sale of RDF typically contributes lower margins compared to our processing arm, its pivotal role in waste management cannot be overstated. However, the pièce de résistance of our recent endeavors is the successful commissioning of our cutting-edge waste-to-energy plant at the Pimpri-Chinchwad Municipal Corporation, effectively this quarter. This innovative facility has already embarked on a transformative journey by initiating commercial power sales, supplying up to 8 megawatts of power to vital PCMC infrastructure assets, including the Ravet Water Pumping Station and the Chikhali Sewage Treatment Plant. It is essential to highlight that these power sales commenced on second October, and therefore, the reported numbers for the second quarter do not capture this significant development. Our waste-to-energy facility's power not only contributes to a cleaner environment, but also plays a crucial role in ensuring the uninterrupted operation of these critical systems. As we progress towards the end of fiscal year, our plan is to gradually, gradually increase the power supply, ultimately supplying almost 11.76 MW. This expansion represents a monumental step towards creating a greener and more sustainable energy ecosystem. The positive impact of this initiative cannot be understated, as the green energy generated is estimated to save approximately 700,000 tons of carbon dioxide emissions annually, equaling to the emissions of around 150,000 passenger cars. In the initial testing phase, the plant has shown promising results, generating approximately 2.9 million units of power and achieving a plant load factor of around 70%. Our commitment to excellence is further demonstrated by our ongoing efforts to rigorously test all aspects of the plants, aiming to take a full load and seeking clarification for fitness from Hitachi Zosen, our esteemed technical partners. In conclusion, these achievements underscore our dedication to environmental sustainability, innovation, and a commitment to creating a better and greener future. I extend my gratitude to each one of you for this unwavering support on this transformative journey, and I believe that this will continue in future as well. But let me also add that we are extremely delighted to provide an update on the operational performance of Antony Waste Management. In the second quarter of fiscal year 2024, our company and its subsidiary successfully managed an impressive 1.15 million tons of waste, showcasing a remarkable 9% year-on-year increase. This growth can be attributed to the full-scale implementation of operations in newly acquired contracts, the expansion of our existing CNT sites, and an increase in tonnage processed in our waste processing operations. Specifically, in the collection and transportation business segment, we efficiently handled 0.45 million tons in quarter two of FY 2024, reflecting a commendable 7% increase compared to the previous year. Furthermore, our waste processing business managed 0.70 million tons, marking an 11% increase over the previous year. On the RDF front, this quarter, our RDF sales reached a new milestone, totaling approximately 29,000 tons, which is a significant increase compared to about 10,500 tons in the same period last year, and about 27,800 tons in quarter one of in the previous quarter. Additionally, we sold around 2,200 tons of compost during the quarter. Although these figures softened on a year-on-year basis due to reduced fertilizer demand in Maharashtra and Gujarat, influenced by a weaker than expected monsoon, but our operational performance remains robust. In terms of emissions, our Scope 1 emissions increased from 5,830 tons of carbon dioxide equivalent in quarter one to 6,374 tons in quarter two, in line with the rise in tonnage handled. Meanwhile, our Scope 2 emissions decreased from 891 tons in quarter one to 625 tons in quarter two, reflecting fewer bio-mining and shredding activities. Our commitment to emission reduction is evident with avoided emissions of 1,379 tons in quarter one and 1,260 tons in quarter two. Our strong staff strength is at 9,814, and with the commencement of the Panvel project, we anticipate surpassing the 10,000 mark. On the Panvel front, we have already taken over several vehicles from the corporation and initiated operations on November first, handling approximately 420 tons per day. These activities align seamlessly with our expectations, marking a positive stride in our commitment to environmental sustainability and extending efficient waste management practices to our clients. We continue to actively pursue opportunities in CNT and bio-mining projects, reflecting our firm commitment to sustainability and creating value for our stakeholders. On to the financial aspect, let me get N.G. involved here. N.G., over to you. Thank you, Mahendra. In the second quarter of financial year 2024, the company achieved a significant milestone. As mentioned by Jose, we had an operating revenue of INR 200 crore, a robust 25% increase compared to INR 161 crore in the last, same period last year. On a half yearly basis, the company reported an operating revenue of INR 379 crore, marking a substantial 20% growth from INR 317 in the same period last year. The impressive revenue growth is largely attributable to the substantial increase in volume handled. On the consolidated EBITDA front, the group exhibited a noteworthy growth of 23% to INR 57 crore in second quarter, compared to INR 46 crore in second quarter of last year, and with the EBITDA margin of 25%, which reflects a significant increase of 210 basis points from the last year period. For the first half, the company registered a growth of 15% in EBITDA to INR 109 crore. The core EBITDA also displayed robust growth, surging 28% to INR 55 crore in second quarter of the current financial year, as compared to INR 43 crore in the same period last year. The core EBITDA margins stood at 25%. Excluding the escalation component of the previous period, the core EBITDA would align with the management's past guidance, standing at around 21.6%. The profit after tax for second quarter reached 32 crores, up from 28 crores last year, and for the first half, it stands at around 54 crores. As of September 2023, the group's total debt is around 370 crores. Net debt is around 294 crores, indicating a net debt to equity ratio of 0.4x. The weighted cost of debt is around 9.1%. During the first half, the total cash flow from operations stood at 92.5 crores, which is a substantial increase of 30 crores for the same period last year. Day sales outstanding remained at similar levels compared to the previous quarter. The company's focus continues to center on enhancing operational efficiency, improving liquidity, and fostering a positive financial environment in line with the goal of achieving a 20%-25% CAGR rate in core operating revenues in a sustainable manner. That's all from our side. Now we can open the floor for Q&A. Thank you very much. We will now begin the question and answer session. Participants present on the audio bridge who wish to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. The first question comes from Bhavya Gandhi from Dalal & Broacha Stock Broking. Please, go ahead. Yeah. Hi, thank you for taking my questions, and congratulations on good set of numbers. So my first question is related to vehicle scrapping, because I see in your investor presentation that you put a slide on vehicle scrapping. If you could throw some light to what kind of opportunity are we looking out in vehicle scrapping, land that we require, and what kind of revenue are we targeting or any, you know, early signs? Yeah, that's it from my end. That is first question, and another is with respect to debt. I'll take it later. Yeah. So, hi, thank you for your question. I mean, on the- we are, we are, very bullish about this vehicle scrapping facility as a business line because we not only feel that this is a project which or this is a business line which probably will add value to our, portfolio in the near future, but going forward, this entire recycling theme, is something that we are very positive about. Specifically on auto cycling, auto recycling, I mean, we have, we are on the drawing board stage. We have, we are trying to find the minimum, viable product, identifying the vendors and equipment, in terms of, and, and we also have zeroed down on a couple of locations where we would set up our first plant. So if all goes well, I think we can, we should be able to make some positive announcement on this front by the end of this year. So, would this business be similar to our company-level ROCEs only, or will it be lower or higher? If you can throw some light on this. Yeah. So the jury is still out on these projects. I mean, what we feel is that prima facie, in the initial few years, I mean, going forward, I mean, the main critical success factor of this kind of project is sourcing of vehicles, sourcing of the vehicles that need to be scrapped. Okay, so what we believe is that when we have a portfolio of about four or five projects, and we have a considerable experience in sourcing of these vehicles and tying up with suitable entities for sale of scrap, okay, that's when we will have some decent numbers to talk about. At this stage, we do not want to say anything about specific viability of these projects on an individual basis, but I think going forward, in five years from now, this should be a very profitable business segment. Sure. And, basically, our clientele would not be corporation over here, but would be some private players, right? So this is one of the reasons that... No, not really. So, and this is one of the reasons that why we are looking forward to do more of these recycling projects, because we want to add our non-municipal revenue. Right. Right. And are we looking at any other opportunities besides vehicle scrapping, having, you know, sort of non-government revenue? Because that, you know, significantly reduces our data dependency on corporations. Yes. So vehicle recycling and tire recycling are two specific opportunities that we are starting with. Of course, there were many, many, segments that we initially had longlisted. I mean, also we looked at plastics and batteries and so on. But out of that longlist, we decided to first attempt auto and tires, because that also has a lot of synergies with our existing business, where we handle so many trucks. Perfect. And with respect to your outstanding debt, if I'm not wrong, you mentioned about INR 294 crore of net debt, right? So how much is outstanding for more than a year? And, if you can throw some light from which corporations is it outstanding, and how long do we expect it to recover it back? Yeah. So we are talking about the total debt at that point of time, not debtors. So- Yeah. Of the- My bad, my bad. Yeah, debt. If you're talking about debtors amount, I mean, the total outstanding is around INR 110 crore, which is less than six months period. Less than six months. More than six months? More than six months is around INR 88 crore, which includes retention money and minimum reimbursement. Okay. And any which are, you know, facing any issues or litigations or any dispute, disputed amount? Yeah, that is around INR 6.8 crore for which, which is a qualified line item, which is mentioned in the note. So these are old dues which are gone into arbitration, which have been settled in favor of the company. Now, we have not realized the money because it's in, it's either in the Bombay High Court or it's in the Supreme Court, jurisdiction. So once the rulings come across, we will be able to realize the money from these two entities. Perfect. One last question from my end. With respect to construction debris, that project is supposed to start in December, if I'm not wrong? No, as per the contract, we are supposed to start it by middle of February. Middle of February. Okay. And that's the only one contract which has been awarded as of now. And, do we expect further contracts in this space as well? There are many cities who are in the, I mean, planning for this construction debris recycling project. But yes, as of now, we have only one project, but going forward, we will be looking forward to getting more. Similar set of margins and ROCE levels? They are similar, yeah. More of a CapEx mode or an OpEx mode, if you can just broadly guide on that? Most of the time, the processing contracts are on a CapEx mode because the corporation will give you only land. I mean, that is like the biggest cost of any transaction, right? So they will give you land, and then they will ask you to set up the plant and do the random part of it. But in large waste processing contracts, we have seen that there is an element of capital grant that is involved. It could be anywhere between 8%-10% to 50% of the total capital outlay, but it's again, very, corporation specific and tender specific. Okay, got it. Thank you so much. I'll get back in the queue. Thank you so much. The next question comes from Harshal from Sparsh. Please go ahead. The person you are speaking with- ... The next question comes from Ansh Manek from Equirus Securities Private Limited. Please go ahead. Hi, sir. Thanks for the opportunity, and congratulations for good set of numbers. Sir, I would like to have the update with respect to the, collection part for few of the municipal corporation, where we have made the provision of around INR 20 crore in FY 2023. Yeah. So we have already realized around INR 15 crore from the old receivables from one of the corporations in the last 7 months, and there is a written confirmation from the client that the balance will be repaid within the end of the current financial year and maybe by the first half of the next financial year. So 25% of the old receivables have already been received by the company in that aspect. So, if I recollect, during the last quarter, we received around INR 6 crore. So, INR 15 crore for the first half would result into the INR 9 crore received during the second quarter, right, sir? Yeah. So for, during the second quarter, we have realized a tune of around INR 12 crore. Actually, this is for a period of December 2021 till March 2023. So that's the previous year item which we have recognized. That amount is around INR 12 crore. So if you were to strip out that, our core operating margin is still at a healthy 21.6%. Okay, got it, sir. Second question is with respect to the Bangalore project. There were reports that the municipal corporation would be issuing the fresh tender for the project. Any update on that part? So, the Bangalore corporation actually came up with a tender. They divided the city into four parts and came up with four projects, but then there were not too many... They didn't get a good response, and hence they have terminated that contract, or terminated that tender. So as we speak, I mean, our contract is till January of 2024, okay? And the client is now looking forward to bidding it out again at the citywide level. But as of now, they have not given us any deadline in terms of by when they would do that. What would be the outstanding amount for this specific project as of date? For Bangalore, the total outstanding amount is around INR 48 crore. 48. Okay, sir. Sir, my last question would be with respect to the construction and demolition contract. So, if you can highlight the process of the contract, what would be the byproducts like this? We have in Kanjurmarg, RDF, and compost sales. So do we have any other byproducts which would be also forming part of this type of contract? So in the case of the C&D project that we have with GNIDA, our revenue model is essentially hinging on the processing fee or the tipping fee which the client is going to give us. So that is going to be the primary revenue. Now, coming to byproducts, in all C&D projects, the byproducts are sand and aggregate, okay? Which are sold to the construction companies, and/or use it to make value-added products like paver blocks, tiles, and things like that. So that's the second line of revenue stream. So that you can say is similar to the RDF and compost business in the Kanjurmarg facility. So we'll have two revenue streams, but bulk of the revenue and the project is bulk of the revenue will come from the tipping fees, and the project is viable on its own based on tipping fees. Whatever comes by selling of the sand aggregates or value-added products comes as an upside. That would be an upside. Okay. Okay, sir. That's, that's all from my side. Thank you, sir. All the best. Thank you. If you wish to ask a question, you may press star one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. The next question comes from Harshal from Sparsh. Please, go ahead. Yeah. Hi, am I audible? Yeah, loud and clear. Yeah. So, so I have seen the results. So I have one question that we have, we wrote back excess liabilities of INR 9 crore during half year ended September 2023, which you can find it in cash flow statement, right? So the EBITDA percentage that we are considering right now, is that, that EBITDA percentage including this INR 9 crore or excluding this INR 9 crore? The amount is not fully been written back because that period is of multiple corporations and for multiple time frames. So the only amount that we have written back is of INR 6.78 crore in the first quarter. In the second quarter, the entire amount of INR 12 crore was not provided for in the past at all. So there was no provision to be made because we didn't recognize this escalation, since there was no standing committee in any of the corporations where this matter was pending. So once the corporation had given us an in-principle about, we have recognized the same in the first and in the second quarter. So, my point here is that EBITDA percentage that we are considering right now, or the EBITDA number that we are considering, whether this is including this INR 9 crore provision which we wrote back or excluding this INR 9 crore? The reported EBITDA, the core EBITDA margin of 25.6% includes the escalation amount that we have received. If you were to strip out the escalation of the prior period, that is till March 2020, if you were to remove that, our core EBITDA margins is 21.6%. Okay. Okay, I understand. So, apologize again, because if you open your cash flow statement, right, you can find one line item of excess provision wrote back of approximately INR 9 crore credit. That INR 9 crore credit is there in your cash flow, if you open- That is not utilized. That has not been utilized because that is our ECL provisioning that we have kept. Okay. So that is the ECL provision, right? That is the ECL provision, right? Yeah, that's an additional provision which has been kept. Yeah. So we wrote it back in this year. No, no, we have not included that. As a policy, the company's, the board has suggested that we create an ECL provisioning because of the variability in the revenue recognition pattern. Given the past experiences, as a prudent, accounting policy, we have started creating an ECL provisioning, which is equal to around 1-1.5% of the revenue. That's how this kind of works out. It's also case specific, but that's the nature of the process here. Another question that I would have. I have seen the annual report for March 2023 and March 2022. I have seen that we are significantly irregular or delayed in payment of statutory dues, because if you see your accounts for the March 2023, right, we have approximately paid around 70 lakh or 80 lakh rupees towards delayed payment of statutory dues. Yeah. So let me just explain to you the reason why there is a delay in the payment of the statutory dues. These are predominantly related to a mismatch in the name of the UIN number of the Provident Fund employees. So what happens is, in January 2022 and in 2023 onwards, it was mandatory that the PF portal be seeded with the Aadhaar number of the employees and the PAN number. In bulk of our employees who are actually in the marginalized class of society, they don't have these details in place. The names do have a mismatch. For example, the Aadhaar card, the surnames are normally alphabets in our case. So there has been a mismatch. That is why the PF which has been deducted could not be paid to the PF portal. Now, this was the case for around 787 employees across our organization. The same has been addressed now. We have come down to around 82 employees, and the same will be redressed and updated by the end of the current financial year. So this is something which is a problem from the PF portal, where the company's not been able to correctly upload the challans in the name of the employee because of the name mismatch. Okay, I understand. But I have seen that in for two consecutive years, March, in March 2023, as well as in March 2022. Yes. We have a significant- So we have a significant amount of churn in our business. The attrition rates are very high, it's around 20%-24%. So a person who has worked in our site, like a driver or a laborer, if he discontinues his work, then that amount still has to be sorted out. It is very difficult for our company to kind of chase a person and get his documents and get it uploaded. So that is something that we are addressing. We have spoken to the PF commissioners and the authorities to allow us to have an offline portal where we can provide these documents, get it signed by the civil surgeon of the particular state to allow the change in name, because most of these people don't even have school leaving certificates. They are either fifth standard dropouts and stuff like that, and the PF portal needs a school leaving certificate of tenth standard, which is proving to be a difficulty for us. So this on, these are actual problems that we are facing at the ground. We are also approaching the NIC to find a option where this can be done off, off the system, so that we can, make it regularize the issue. Okay. Okay, and then there's one last question, and one last question. That we have been significantly high remuneration to non-executive directors, because I have seen, the remuneration that has been paid to non-executive directors towards commission and attending board meetings and all that thing, is INR 1 crore. So three directors, non-executive directors, we are paying, 30 lakhs, approximately 30, 30 lakhs each, each to each of the directors. So do you think that this, this payment of such amount, is justifiable considering the size and scale of the business, nature of the business, this, this quantum of remuneration is justified? Because I have seen other companies, you know, payment to non-executive directors, and it is not that as much as what we are, what, what I can see in, in, in your company. So the nature of our business, the nature of work, the time and effort that goes into kind of working with the clients and managing the workload is significantly different. I, I'm not sure about the peer comparison that you're making here, so I will not be in a position to compare whether it's in line or excess or below that. But, we feel that the remuneration for the non-executive directors to be in line with the time and effort. If you look at the business potential, the kind of growth, the kind of traction, it's a difficult job. It's the milk run starts at five in the morning. There are issues on the ground. The escalation is very rapid, so those things needs to be tackled. Unlike in industry, like in cement or a steel industry, where lateral recruits are possible, in waste management, it's very difficult to get replacement of these people who have got more than two and a half decades of experience in this business. Actually, is this margin of 24% including escalation or excluding escalation? Sorry, can you repeat that question? Is the 24%-25% margin that we are speaking, right? Is this including escalation cost or excluding escalation recovery? So this, the reported margin of 25% is including the escalation. So if I were to strip out the escalation of the prior period, which is till March 2022, which has been accounted now, the core operating margin would be around 22.6%. Okay. And how much is the escalation claim that we are expected to submit in next couple of months or next quarters? Which we are to be accounted. INR 14 crore, INR 14 crore from one corporation, the other corporation will be around similar lines. But, the timing of the same is something that the management will not be in a position to give today, because it's there are no standing committees, there are no elected members in those corporations, so it's, it's likely to get delayed. Okay. I don't have any other question. Thank you. Thank you for responding to my questions. Thank you. If you wish to ask a question, you may press star and one on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Your next question comes from Ansh Manek from Equirus Securities Private Limited. Please, go ahead. Thank you for the follow-up opportunity. Sir, I have a question with respect to the sustainable core EBITDA margin in the mid- to long-term. Our sustainable margin for us, if escalations and everything come on time, the core sustainable operating margin would be in the range of 22%-23%. I mean, 21%-23% would be a very safe range for us to work with, because 60% of our costs have escalations built into the system. So that kind of gets a pass-through benefit. So on a sustainable manner, 21%-22% is something which we can work. It's a EBITDA margin, right, sir, or EBIT margin? EBITDA margin. Okay, sir. Okay, thank you. That's, that's it for me. Thank you. Your next question comes from Bhavya Gandhi, from Dalal & Broacha Stock Broking. Please, go ahead. Yeah, thank you for the opportunity. Just wanted to know that any thoughts on repaying the debt in the long term? I mean, do you want to be, like, a debt-free company, or will debt keep sitting on our books? Because for our further growth, because as I understand, your ROCEs are lower than the rate of revenue growth. I mean, every year, either we'll have to do dilution for further growth or rely on debt. So, I mean, if you can throw some light on this, because we'll be growing faster than our ROCE or ROE rates, right? So that, that problem is a multi-pronged one. So yeah, as an infrastructure services company and the fact that we are working with only one kind of client, the ability to raise debt, is also a matter of the kind of financial viability and the flexibility that the management has. The BBB+ credit rating that has been given to us is backed by the fact that there is a decent amount of cash in the system, and the debt is also very easily serviceable. To be a debt-free company, it is easy for us, because basically, that would mean that if you stop bagging any contracts for the next couple... Within the next three and a half years, we can throw off enough cash to be a debt-free company. For the first half, the cash flow from operations was around, after working capital, around INR 90 crore, and the total debt is around INR 380 crore. So within 4 years, we will be a debt-free entity in that sense. We would always like to have some debt because that helps us in kind of bidding for multiple projects at the same time, not just bidding on one kind of a stream of revenue. Right. Right. Okay, fair enough. And, if you can throw some light, I know it's very early right now, but if you can throw some light, what would be the entire process of collecting construction debris? Say, the corporation will tell you, "Collect the debris from a particular building," or how is it like? I mean, if you can just explain the entire roadmap, how the process will be done on ground level. Yeah. So, I mean, as per the tender, I mean, we are supposed to collect waste from western suburbs of Mumbai. So that's the area of jurisdiction that we have in our scope. Okay, and then there are two types of segments, two types of customers, I would say. One are the builders. Builders who are taking up redevelopment projects and are likely to generate a lot of debris. So they are the people who are mandated to supply the waste to us, which we will carry and process at our site. The second would be the smaller, at the t hat you know, more at the, at the ward level or at the sector level, wherein people generating lesser quantity of construction debris, but they would like to keep it outside their building or small building or something like that. So you can say maybe some large builders and individual household owners who generate these two. So that's the, that's how the tender has specified these two type of customers. Right. And the payment will still be received from the corporation, although we might be picking maybe from a loader builder, but the payment still. Yeah, as per the MCGM bylaws, whoever generates construction debris as part of their construction activities is supposed to inform BMC, take their approval, and deposit them a specified amount of fees. Okay. Based on the volume of waste that they generate. That will accrue to the municipality, and our revenue will come from BMC, based on the weighbridge data at our processing site. Okay, there is no minimum offtake guarantee that they provide you, I mean, that this many tons would be guaranteed from the corporation? There is no offtake guarantee, but 600 tons per day is what the client has given, a lot of data, during the... I mean, in the tenders, in the tender document. So 600 tons per day is what we are working with. Okay. Do we require any complex machinery for this, you know, sort of conversion of this debris, or how is it like? A bit difficult for us to understand, so this is the question. ... Yeah, yes, I mean, explain it in distinct, simple, in simple distinct. So there are two main equipment. One is called the jaw crusher and so on, which is that you, when you get the waste, you will have very, very large size of the waste, right? So it has to be crushed. So that is called jaw crusher. So that is one equipment. And the second equipment is the main processing, the core part, which is what actually processes based on wet washing process. And that is something that we have procured from a company called CDE Asia, which has supplied similar machinery for similar plants to at least 10 other projects in the country. So we have gone for vendors with experience. These are the two set of equipment, which forms the crux of the plant and machinery. Perfect. And where would this land be located, where we'll be carrying out this entire processing? This is at Dahisar. Dahisar. Okay. Okay, fair enough. Thank you so much. Yeah, really helpful. Yeah. Your next question comes from Harshil from Sparsh. Please go ahead. Hello. So just wanted to understand that how much percentage of revenue that you are expected to get from non-government business over the next 2-3 years, over a period of time? Because we are right now, what I understand is significant revenue is coming from government source, government municipality agency, municipal corporations. So how much percentage we wanted to diversify over a period of next two-three years? Thank you. So, I mean, you know, it's difficult to put a number, and we don't want to put a number, but, but let's say, going forward, let's say in five years from now, we want to have about 15%-20% of non-municipal revenue. In five years from now. Do we plan to get into any other waste management, say, for example, any corporate waste management, or do you wanted to focus on e-waste management? Or do we wanted to have any such strategy, or do we have any plan to focus on those businesses or business streams? As I explained at the beginning of this call, that in this entire recycling or the circular economy theme, we explored several segments. There is recycling of different types of waste. So we looked at e-waste, we looked at plastics, we looked at tires, batteries, auto recycling, and so on. And we found, we thought that, given our experience, our synergies with existing core business, it is worthwhile to start with auto and tire recycling, and that's why we are working more on that, those two segments. As and when things evolve in e-waste and plastics and other batteries, I mean, we will be exploring that as well. Okay. Okay, I apologize, because I could not attend at the beginning of the call, so I was not aware about it. Anyway, thank you. And how much revenue that you are expected to generate from vehicle and tire scrapping over a period of next five-seven years, or when we start that the work on ground? So how much portfolio of or of the percentage in terms of percentage that we look to generate revenue from those streams? Too early. It is too... I mean, it's very early to give any number or commitment on that. I mean, because as is said, that, you know, these segments are contingent on, on first of all, it was contingent on the government coming up with a clear policy, which they have done, which is a very huge, which is a huge positive. And then comes the point of view of the implementation of this, right? So we see more traction in auto recycling and so on. That's why we thought we'll get into that. But in terms of the size, in terms of viability, in terms of, you know, how the consolidation will happen in this business, that is something which probably is too early, you know, very early days for this segment. Okay. Okay. And one last question, that how much the currently I can see the receivable of around INR 250 crore in Maharashtra, right? And we have a balancing size of INR 1,260 crore. So approximately one-fifth of receivable is one-fifth of our effect is locked in receivable. So how much sustainable receivable that we expected to see on a over a period of time? Because INR 250 crore on a revenue of INR 800 crore or INR 900 crore, do you think that is it on higher side, or this would remain sustainable over for a longer period of time? So the receivables, you need to look at it in two points. One is there is also an unbilled revenue component, which sits, which is like one month of revenue, because the billing for waste management, let it be collection, transportation, or processing, is on a monthly basis. So end of the month, the bill gets raised, so that component sits as receivables, as an unbilled revenue, which is not sent out, one. Second is also the tender has a retention policy, wherein percentage of a revenue is kept on hold and released to the operator at the end of the contract. So these are the two components which kind of adds to the number of around 200+ that we are referring to. The retention amount by itself is around INR 48 crore, and your unbilled revenue would be in the range of around INR 70 crore-INR 80 crore. So both of them together is around INR 120 crore by themselves. So the net effective receivables that we should be worried about or looked at would be in the range of INR 120 crore-INR 130 crore odd. And the management is very astutely aware of the money that gets stuck here, because this money would actually help us fuel our growth. If you look at the days sales outstanding, we have been trying to work it around. It's still at 78, if I'm not wrong, and that is something that the management is definitely working on. Any benefit from that will definitely help us for the equity contribution on new projects for us. Okay. And do we have any plan to give any dividend in this year? The board is considering this option, but there are the technicalities of which we need to look at. At the standalone level, the company's projects are not significant. The company has a lot of revenues in the downstream entity, which is your AG Enviro and Antony Lara. So as part of that, we have started with the first step of merging two of our wholly-owned subsidiary into one large wholly-owned subsidiary. Maybe it's a long-term process for us to kind of make it streamlined and push the funds into the listed entity to make it the most tax efficient way of declaring dividends or taking the funds out. So that is one way that we are looking at. But to answer your question, the board has discussed about dividends at various forums, and we definitely would be looking at that sometime in the next year. Thank you. Thank you. Your next question comes from Uma, from Go India. Please, go ahead. Hi. Am I audible? Yeah. Okay. Just wanted to understand, you've mentioned some three new projects. Could you throw some light on the numbers of those projects? And the- We were talking about a Panvel collection and transportation, We're talking of Panvel, this thing, which is about INR 376 crore of revenue over 5 years. You know, where the client has the option of extending it by another 2 years. So there is one collection and transportation project. The second one is the mechanical treating contract in, which is for a municipal corporation. So that is about, let's say, a seven year contract, it's about INR 80 crore of revenue. And the third one, probably, you are referring to the hardcore mechanical contract. That has already started, so that is about twelve crores, if I'm not wrong. That also is a seven year contract. Okay. And, the margins would be similar to the, to the- Yeah, similar, similar kind of margins, yeah. Okay. Thank you. Thank you. Your next question comes from Bhavya Gandhi, from Dalal and Broacha Stock Broking. Please, go ahead. Yeah. Thank you for your question. I just wanted to know, is there any thought process behind this group restructuring? Are we planning to, you know, sort of delist, relist or, you know, create some value addition out of this, different entities within the main entity itself? Yeah, that's the first question. So the idea behind the corporate restructuring is just to clean up the corporate structure, because there were multiple subsidiaries and all of them are wholly-owned subsidiaries. So that adds to a line of compliances, additional managerial oversight. So just it was purely meant to clean up the org structure, have two, three lines of activity, processing, collection, transportation, thereabout. So that was the reason. The main reason why these companies were formed was because of the Section 80-IA of tax benefit under the minimum alternate tax. So since that is no more required, we wanted to do that, and we just got delayed on that as well, and now we are just trying to get it done. Right. And with respect to vehicle scrapping, will there be a tendering process or we have to, you know, sort of go to the customers directly and ask for the scrappage? If you can just throw light on that front as well. So, the vehicle scrapping policy is that you have to apply with the State Transportation Department for the license to set up this plant. Okay? And then they have already issued guidelines in terms of what all need to be there. For example, there need to be two acres of land, and then there are a few more conditions that one has to meet, based on which license will be given. So these are merchant plants, so there is no tendering required as far as getting these projects are concerned. For the vehicles... But if your question is also about how will we source the vehicles, is that the question? Yeah, source as well as license. If you can throw some light on the license as well. So I didn't understand what do you mean by license, and if there's a difference between the tender and license, getting a license, I mean- So it's like this. So when we are, Okay, let's say if we want to do a project in, state of, in the city of Bangalore, okay? So then we have to go to the, to the Bangalore City Transportation Department, Transportation Commissioner, and then- Okay. apply for a license. So Okay. There are certain conditions which they have given. If we meet that, including- Okay. having land of minimum 2 acres and so on, so then the commissioner will give us approval, or you can say license or approval for setting up this facility. Okay? Okay. Setting up this facility is like setting up any other factory, which is infinitely going to be a merchant plant. So that's why, to answer your question, there is no tendering process required to get such projects. It is based on our own market study and survey, and the attractiveness of the location, that we can decide which city or which state we want to go to. Okay. Similarly, on the sourcing part, so then once you get the license, how do you source the scrappage? So the sourcing of vehicles, I mean, as per the policy, any vehicle, any diesel vehicle which is more than 10 years, or any petrol vehicle which is more than 15 years, need to be scrapped. So which basically means that that vehicle owner has to come to such a facility, apply, I mean, give the vehicle for scrapping, and then we as a facility will have to scrap it and cancel the registration of that vehicle at the Vahan website, which is the MoRTH website for registered vehicles. And then give him a certificate within a specified number of days. So that would mean that the vehicle is officially scrapped. Okay? And in terms of sourcing of these vehicles, either customers can come to us because, I mean, there would be not too many such facilities in a given city. So depending on what is convenient, the vehicle owner can approach us directly or, but then apart from that, we also will have a website. We also have an app under which people can actually sign up for that. Then there are also these insurance companies or these, you know, the police department or dealers, you know, who have this inventory of old vehicles. So that would be sourced from that. The tendering for such vehicles would only be in the case, because I think some of these PSU, public sector undertakings, PSUs or government departments, they auction their scrap vehicles, so for that they will have to bid. Okay. Got it, got it. Thank you so much. Really helpful. Thank you so much. As there are no further questions from the participants, I now hand the conference over to Mr. Jacob for closing comments. I wish to convey my heartfelt gratitude to our committed team, whose tireless efforts have played a pivotal role in accomplishing our goals. My sincere appreciation goes out to our valued clients and stakeholders for their unwavering support. Together, we have forged a robust and successful company, and I am optimistic that our path towards a cleaner and greener future will be marked by continued success. Wish you all a joyous Diwali and a prosperous new year. Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.