Q4 20/21

Jun 28, 2021

Good evening and a very warm welcome to everyone present on the call. Along with me, I have Mr. Subramaniam, Group CFO and SGA, our Investor Relations Advisor. I hope and pray that you and your family are safe, healthy and secure in this tough situation. We have uploaded our investor presentation on the Stock Exchange list and the company's website. To dive into our call, at the onset, we have facilitated vaccination for all our frontline working staff with a view to give them better immunity. Being an essential service provider, we have been able to continue our services during these tough times and would like to thank all employees for their dedicated efforts. Their hard work has enabled us to report a stable financial and operational performance in a year, which began with unprecedented challenges due to COVID-nineteen. This being our 2nd earnings call, I would like to take I would like to start by giving a brief introduction of our company business and then our business highlights for Q4 FY 2021. We are one of the established player in the Indian municipal solid waste management industry with an established track record of around 20 years, providing a full spectrum of MSW services, which is municipal solid waste management, which includes solid waste collection, transportation, processing and disposal services across India, catered to various municipality. We have developed in house expertise in landfill construction and management in a scientific manner. We are focusing on the emerging waste management area like waste to energy as well as bio mining. We have presence across 3 broad business areas: Municipal Solid Waste Collection and Transportation Project. This service includes door to door collection of municipal solid waste from household, commercial establishment and other bulk waste generators. From a designated area through primary collection vehicle, we have 13 ongoing projects in this service alone. There are typically multi year contracts and average outstanding due registration of our ongoing contract is approximately 7 to 8 years. Multiple solid waste processing projects. This involves sorting and segregating the waste received from municipal solid waste through collection and transportation, where one is expected to generate composed, recyclable waste, shedding and compressing inorganic waste into reduced direct fuel As required, we have 2 large ongoing waste processing projects. These have a tenure of 21 to 25 years. Please note that collection and transportation and municipal processing are normally exclusive contracts. One is that Kanjalbagh Mumbai, which has a concession agreement pre 2,036. 2nd is at Pimprie Chinchwar Municipal Corporation and has a concession agreement till 2,040. The 3rd business is contract and other service which involves mechanic sweeping, which involves which utilizes power shipping machines, manpower, comprehensive maintenance, consumables, etcetera. Till now, we have undertaken more than 25 projects, of which 16 are ongoing projects. Company has in FY 2021 bagged 2 new projects, a collection and transportation project in Jansi, Smart City and another biomeric project in Greater Noida. They are currently under mobilization, and we expect the same to start generating revenue from October 2021. And as I say about biomining project in Greater Noida, biomining is mining of legacy waste, which is the first time we are hitting a legacy waste biomining contract. Now I will briefly share a few highlights on the Indian municipal solid waste service industry. As per few industry reports, the municipal solid waste management market is estimated at INR 5,000 crores in FY 2020 and is expected to grow at a CAGR of 14.4 percent over the next 5 years. Organizations resulting in changing lifestyle patterns and increasing disposable income has paved way for consumerism and have also contributed to higher weight generation in urban India. Over the last few years, we have also seen our industry leaning towards technological achievement advancement and this augurs well for our technology driven multiple solid waste service players like us. Various initiatives taken by a government like Swachh Bharat Mission with an allocation of more than 1.4 lakh crores over a period of 5 years towards Urban Swatch Bharat Mission 2 is expected to drive growth in Indian municipal solid base industry. Due to COVID-nineteen pandemic, the speed of modernization of waste collection and disposal in our country has hit a road bump, which we feel given the essential nature of the business will be back on track sooner than later. Coming to our business performance. Our municipal solid waste collection transportation business registered a volume growth of 2.1% in Q4 FY 2021 as compared to Q3 FY 2021. There was reduction in volume from continuing projects by 16% year on year. That is 12 months of operation in FY 21 due to business lockdown due to COVID. In this business, we continue to add new projects and further focus on increasing our pipeline by bidding for new projects. So we are bidding for new projects and many projects are in pipeline. For FY 2021, we saw a decline in total tonnage handle, excluding those projects with fixed shift and TRISS by 4.1% year on year basis and this stood at 1,290,000 tonnes due to MA COVID-nineteen pandemic. However, we believe such decline to be offset going forward from Sandesh contribution from our currently new project, which include Nagpur, Moira and Pimple Chinchur. Volume grew by 2.9% in Q1 FY 2021 as compared to Q3 FY 2021. Whereas the volume decline on annual basis was 2.4%. The decline was a result of a decline in commercial activity due to COVID-nineteen related lockdowns in the beginning part of the year. For FY 'twenty one, the total waste processed stood at 2,060,000 tonnes. Upon the low, there is a star success in the business climate during the 2nd wave of COVID-nineteen impact on business slowdown as compared to 1st wave of COVID-nineteen. We are noticing significantly lesser impact on inactivity, especially in terms of generation of waste from household as compared to the 1st wave. And even in commercial zone, we have noted activities which were completely absent last year. Since April 2021, we have seen sequential improvement in volumes in certain geographies that we operate. Both our side at Tanjuma and FinFRE continues to perform in line with our expectations as the commercial activities are recurring to normalcy with easing of lockdowns. On new business front, as mentioned earlier, we recently backed 2 new contracts, 1 from Gamsi Smart City Limited for door to door collection and transportation of municipal solid waste service in the city of Gamsi and the 2nd from Zagernorda Industrial Authority for Biomaggins at 1 of the old dump site. So this again I would like to emphasize is one of the first contracts the company has bagged in the bio mining of legacy waste business. And as I said in the past, legacy waste business PAN India is big and many sites have to be vacated from legacy waste due to the pressure from the courts and GT and also from the sensible. The MSW selection and transportation contract in Jamsi is for the period of 5 years, which is further extendable for 2 years. The total contract price is INR21 crores per annum. The biomaning contract awarded by Greater Noida Industrial Development Authority is for a period of 24 months with an initial contract size of INR23.75 crores. We expect that revenues from these contracts will start coming in from Q3 and Q4 of current financial year. There are few business pipelines, but the timing of submission is the same or the same is uncertain due to the evolving pandemic situation. We continue to focus on contracts in newer multiple areas while continuing with our cluster based approach. Going forward, we see significant tailwinds in our business as various mutual corporations are inclined towards awarding solid waste management contracts to efficient 3rd party players like us. I now hand over the conference to Mr. Subramaniam, our group CFO. Thank you, Juss. Very good evening to all the participants. It was said many times last year that 2020 and the beginning of 2021 was a year like no other. For many reasons, it was an incredibly difficult and trying year. Our positive message internally was that great companies use tough times to better themselves and that's what precisely Anakrish did. I will share the highlights of our financial performance. For Q4 2021, the company reported an operating revenue of INR 120 crores as compared INR 118 crores in Q3 2021, registering a growth of 2% on a sequential basis. This is on the back of approximately 11% growth that we have reported in Q3. The growth in Q4 was driven by both tonnage collection and handling, which has seen a significant margin improvement from on a sequential basis, but on year on year basis it's been strong. The total revenue including contract and other revenues grew by 9% sequentially to INR 138 crores in Q4 2021 as compared to INR127 crores in Q3 2021. EBITDA is down by 6% at INR34 crores during the quarter with EBITDA margin at 24.7%. The main reason for the decline in margin has been the 15% sequential increase in other operating expenses mainly driven by higher fuel prices. The escalation kicks in later either annually or quarterly or monthly and hence that will be a timing issue of the impact and the relief coming in. Also the dip in margin is also due to the exclasia payment that the management has made to our employees for their efforts taken during these testing times. The profit before tax stood at INR 19 crores for the quarter as against INR 22 crores in Q3 2021 and profit before tax Mali was 13.7% during the quarter. Profit after tax stood at INR 16 crores for the quarter as against INR 19 crores in the previous quarter. Coming to business wise performance, the Muntherul Solar Waste collection and transportation revenue is up by 2% at 83 crores as compared to 81 crores during the previous quarter. The growth being on a half an increase in total MSW CNT volumes by 2.1% as compared to Q3 FY 2021. The MSW processing revenue is up by INR 3 percent INR 37 crores as compared INR 36 crores in the previous quarter. This is reflecting the slight improvement in the waste processing volumes by 2.9%. On an annual basis, our total operating revenue has risen by 7% from INR402 crores to INR429 crores. The growth being driven by 11% revenue growth in Collection and Aspiration business which registered a 4.1% volumes regrowth, the growth mainly coming from higher escalation during the year. We could sustain the overall revenue growth reflecting these kind of escalation which is built into our contracts, which is normally in the range of 4% to 8% underlying reflecting the underlying inflation of the key cost factors like diesel and wage increases. All the contracts that we have today have escalations. These are either fixed or variable which keep pace with the changes with the HSD component of WPI or the minimum wages of a particular state. To repeat, 100% of my revenues have escalation and of this 57% of my revenues are under variable escalation while 43% have a fixed escalation clause. Of the 43% with fixed escalation, 14% of our revenues are from old contracts which will roll off over the next 18 to 24 months And the same will be renewed or replaced under variable escalation format. On the balance sheet front, our net debt to equity as of 31st March 2021 was 0.3x as compared to 0.5x as of 31st December 2020. Total debt as of March 2021 stood at approximately INR150 crores, which compares against INR410 crores last year and our net worth has improved to INR442 crores versus INR400 crores last year. The current receivable days as of 31st March 2021 is 59 BSOs as compared to 60 in 31 March 2020 and our endeavor is to maintain this under current circumstances. Despite COVID and the stuff set around the system, we being in the essential services, the corporation and our clients have helped us maintain our operations and we are in constant communication with our clients in this regard. We keep a very acute watch on the residual position and that is what one of the key strengths and the key fact that the selection of clients is critical. That's it from me. Now I'll open the floor for Q and A. Thank you very much. We will now begin the question and answer session. The first question is from the line of Deepesh from Aquarius. Please go ahead. Yes. Hi, Joseph and Anil sir. Thank you for taking my questions. Sir, your other expenses have increased by 22% Y o Y. Now we understand the business inflation is the main cause. But just wanted to understand, is there anything else apart from that, just like your repair and maintenance costs or your higher outside vehicle hiring thing? Anything any one off that you want to highlight? Hi, Deepesh. No, bulk of the increase has been mainly because of fuel prices and the escalations that we have provided for in the Q4 since this was part of the transaction. So you see a dip in EBITDA margins. There has been 3 factors if you look at it mainly. One is the lower tonnage being processed in my collection and in my waste processing projects because of the beginning part of the year we have seen a fall in my waste processing by around 10.9% on a year on year basis. So that is reflected in a lower EBITDA margin because waste processing carries a higher EBITDA margin for us. Secondly, the diesel fuel prices which constitutes approximately 18% of my total operating cost that has increased significantly. It's jumped by around 41% to 39% depending upon the city that you stay in and we operate in. So that has a pass on effect but that comes to say lead time. So timing is one thing that has kind of hit our margins here. And thirdly is the ex ratio that the company has provided to its employees. These are the three key factors which has led to it in my EBITDA margins. Understood. So on the timing part, you spoke about that 57% of your contracts are variable and 43% are fixed contract escalation clauses. If you can give a sense how many what percentage of contracts have quarterly, monthly and half yearly price revision mechanism? Mainly, I'm asking this because the diesel prices have continued to increase in April, May June. So what is your broad outlook on the 1Q and the first half margin going forward? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So normally my annual margins come in, in the form of 60% of my revenue I have an annual escalation plus as compared to a monthly and quarterly constitute around 15% each. The balance 13% is a half yearly escalation for us. Okay. So there can be a like a decline in the first quarter and the second half also, right, because the diesel continues to increase. So Yes. So a couple of factors that have led to a foreign margin, not just the fuel price increase but also the decline in tonnage. Normal tonnage improved during the period of monsoon and also the part of my 3rd quarter. So right now I'm in the cusp of my increase in tonnage and also my escalation will kick in. So we believe the current and the margins in my first half is normally significantly better than the margins in my second half, of course, assuming the fuel price has been steady through this period. Right, sir. And also how many of your contracts currently will be on extension because I understand during the extension period you're not able to take any price hike, right? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. I would say around 8% of my revenue are under extension and these are now being entered by the government. The paper has already started through the various operations. It's because of COVID that they have not been able to rule it out. We are in constant communication with the corporation and they have after the second wave, they have already initiated action in that front. So we expect some movement in that area shortly. Understood, understood. And so you spoke about the volume impact in this lockdown that it is better than last year. But if you can just highlight this sequentially, how is it like from the Q4 of FY 'twenty one, if you look at Q1 FY 'twenty two, how much dip are you expecting in the volumes going forward? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So I actually, sir, it's not at a console level, but if you look at different regions, we have seen a different marked difference in the way the local economies have worked. We have operations in MMR region, we have operations in NCR region and we also have operations in Nagpur and Pimri Chinchur for example. We have generally seen the western regions have performed significantly better than the northern region in this aspect. Okay. Are your clients paying you on time? Because I understand that they are dealing with a lot of health care issues, right? So are there any receivable issues that you're seeing? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] No. Actually, if you look at the 1st phase and the essential services and kind of drawn the given us priority on the essential services and kind of drawn revenue from other departments. So the unplanned expenditures have been controlled by various corporations. We have not seen any significant stress in our current receivables, which is what the numbers are reflecting. Having said that, we are in constant communication with all our corporations, all our clients and we are in touch with them because this is something which is very crucial for our own working capital lines. Right. And lastly, sir, if you can just give us guidance on the CapEx and the gross debt outlook for FY22? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] On the CapEx over the next 2 years, we expect our increase into our waste to energy project to be set up, which would represent approximately around INR 200 crores of CapEx over the next 2 years and we also foresee CapEx over INR 20 crores to INR 30 crores for our other processing contract. We do not foresee any significant CapEx at our collection and transportation operations. The CapEx at CNT will be triggered only if we back new contracts. And the contracts as those have mentioned, the one in Jansi, the entire CapEx has been taken care by the operations here. So it's not a it's an asset light model in that scenario. As to the gross debt, how much debt you are I will be considering around INR 170 crores to around INR 180 crores on a gross debt basis for the next 2 years. Understood, understood. And mostly it will be the FY23, right, because FY22 it may not be Yes. It will be having a lag effect. It will start at Q4 FY 'twenty two and bulk of it will be in FY 'twenty three. Understood. And so this Ganzi and this GreaterNorda contract that you have recently bagged, I understand that asset light in nature of the Muncie Kalati will be doing most of the CapEx for you. So what kind of EBITDA margins like will you will that be in line with existing combined or they'll be materially lower than those combined? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] In case of Jansi, the capital is in reimbursements are it's been funded by the corporation. So the margins will be in line because it's on a different revenue model. It's not on Sunnage, it's on the number of households and units that we collect from. So the metrics will be different. In Greater Noida, the CapEx has been done by the company and it's a first of its kind bio mining. So to be honest, the margins, what we're targeting should be in line with our historical trend of waste processing and that is what we're working on. Okay. Great, sir. Thank you all the best. Sure. Thank you. The next question is from the line of Faisal Hawa from H. G. Hawa and Company. Please go ahead. Yes. So my question is that since we want to have a fan India kind of a presence in waste management, just into the cultural differences between each of the municipalities and even the difference in working style will be a tough So how are we actually doing it to face it management wise because management will have a certain bad time with individuals who are working in Bombay and surrounding? And secondly, do we have any kind of a progress report on the same fleet plant that you are going to convert waste to electricity? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So regarding, as you said, the cultural differences, Now what's happening is PAN India level, the garbage collection and transportation is done in a very traditional way. So it is not modernized. So many of the municipality want an operator who can modernize the existing system from the traditional method where manual handling is there and open dams and all that. Another thing is the existing labels in such conditions. They are not taken care of. They don't protective gear and they are not they don't have proper medical care. They are not paid in prudent fund. They are not paid prudent fund in ESAT because this business is not very organized people who are doing this. So when we go there, when we win the contract, first thing is we are getting modern equipments and existing people who are all there, the workers and everybody, we are we are rewarding the best of safety here. We are going forward and all the facilities. So all this thing is coming as a good yield and better living conditions, better operational conditions for the workers as well as the management of the municipality. So the municipality is very happy to receive us. If you say that we are coming, they like it because we are seeing what we are doing. So this work wherever we are going, we are going with a more modern method of operations, not with the same traditional way. So the competition is not much. And basically we recruit the local people. We don't take anybody. So go to UP, we recruit the local people. We advertise in the local newspaper. So entire management staff except for 1 or 2 to guide them and our team goes there for 1st 2, 3 months for getting the operation in place and we train our people and afterwards the local the people who are locally from that area, they manage the show. So that is it. I think second question, Mr. Faizal, I couldn't hear properly. Can you My second question is, the 23 is insured, we are going to set up a plant for to convert waste to electricity. What is the progress of that project? And are we making tangible strides towards getting it operational in 2022? Yes. So the residual waste to energy project is in 2 parts, one is COD1 and another one is COD2. COD1 is we have started receiving the waste and we have started processing and organic fractions are converted into compost. So that is completed and that is running more than I think 1 year or something. And we are charging a tipping fee and for which there is some revenue coming in. As far as power generation, that theory to work construction work is going on and it should take around 16 to 18 months to complete. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Faisal, just to add on that, the civil work has already started. We already made advances to the bulk manufacturers for all the fabrication parts to be shipped in. These being COVID times, everybody would need some firm orders in hand before they start the work and also because of these locking, unlocking policies. There is a decent bit of confusion that's happening on the layout and the form of project rollouts. But having said that, the civil work has started and the team there is very confident that they will be able to complete the construction in the allotted time. And if you could allow me a third question, since we are we have MIT as a shareholder in our company, Are we trying to take any kind of initiative to develop some new technologies that maybe in the first lab that you could absorb and process into our base or into our business model to create new materials or something like that? Faisal, right now, we are in touch not with MIT but with IIT Bombay to that angle. So yes, we are in constant touch. We take their help in understanding how waste can be processed better more efficiently and the carbon footprint can be captured reducing the greenhouse effect, can we tap the excess greenhouse that has been released from these kind of waste processing activities. So for example in Kanjum Marga, we extract entire methane that has been generated at our site and we are generating power to the tune of around 0.97 Megawatts. So that is one of the steps that we have done and we are also understanding how the base decomposes under very focused environment so that we can roll out similar projects across the country. To answer to your question, yes, we have reached out to the academic front and for better technology and to help us guide in resource extraction for pillars, but it's not in MIT but in IIT. And what is our research and development spend for you? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So the research and development front has spent not very significant at this stage. It would be less than a crores, but there are certain areas that the management has earmarked in the RDF technology about palletization and everything making it more efficiently driven. So that has been earmarked. The company wanted to spend more because of COVID and all the uncertainties there has been a slight lull in that but the work is very much on cuts. Once things stabilize and we have a clearer visibility of how future shapes would be, This is one area that the management has clearly indicated to work on. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Anupam Gupta from IISL Capital. Please go ahead. Good evening, sir. A couple of questions. Firstly, if you can list out a few projects where you are bidding right now in terms of C and P which can come up and similarly if there is anything which is coming on the processing side as well? Yes. So we are bidding in a few corporations for setting up our transfer station, collision transportation based processing. So most of these days are under preparation. They have appointed the consultant and we are in the process of bidding. And hopefully if everything goes fine we may win in coming months. Okay. So but is there so like in you had earlier highlighted that your capacity is to take INR 50 crores worth of annual projects. Do you think that sort of win is possible in this year given where the tenders are right now? So definitely, Anupam, we are definitely working with the corporations, but on the timing is something which none of the corporations are able to commit because of the evolving pandemic situation where the talks of the 3rd wave is also on cards. So we are definitely in talks with lot of corporation and few other corporation though talk is on SC at a very advanced level. But the timing and recognition of the same is depending on lot of moving variables which the corporation are not able to put a finger on today. Right. Understand. Secondly, as I understand, your contracts which are in extension do not have price escalation. But is there not a provision at all that given the sharp increase in fuel prices which you have seen that that can be reimbursed at all or will it always be fixed price during expenses? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So Anubhav, these are very client specific requests. So the company has raised these issues with the clients and they have mentioned that they will get back to us after a proper due diligence because these are public money. So before it's not a unilateral decision of a department, so they need to get a consensus from the general body of a corporation. So for example, in the municipal corporation of Bombay, they have allowed us to build us as for the minimum tonnage which was experienced during the February 2020 period despite the decline in tonnages. Now based on the similar recommendation by corporation, Other corporation are also taking it up positively. Now so these things take time and we are definitely expect some relief in that area. Okay. And just lastly, I wanted to understand what is the status of the is in stake in the Lara, so strategic stake from the Lara entity for your Pune and CCMC and Mumbai project which was supposed to happen. What is the status as of now? The Lara stake currently it's still at 36%. We expect that to be reduced 27% shortly. The reason is that there is a delay because of certain documents that needs to be received from the company, which is registered in Sao Paulo, Brazil because of the local condition they have not been able to get those same documents attested by the Indian Council over there. So once the documents are attested by the legal Indian Council in Brazil, the same will be needed over here to open the Demat account. We expect the entire exercise to be done via September 2021. September 2020. So just to clarify one thing, before it happens, the economic interest remains your economic interest remains at 50% till it happens, right? Yes. Okay, okay. Understand. Thank you. Thank you. The next question is from the line of Bijal Bakhari from Amit Jusani Financial Services. Please go ahead. Hi, sir. Good morning. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Tell me, sir, do we have a dividend policy, payout policy for the shareholders because you've not declared any dividend for the current year? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] This matter has been discussed at our Board and they will be formulating a dividend distribution policy shortly. It's something that the Board will decide and get back to you before the AGM. But nothing to be declared for financial year 2021? Is it something that will be decided by the Board and they will look at the conditions that is prevalent in the economy and the health of the company and the kind of future projects that the company is bidding for. I'm sure the Board will take all the viewpoints from all stakeholders and arrive at a decision. Thank you. Thank you. The next question is from the line of Nisha Desai from N. M. Securities. Please go ahead. Good evening, sir. So do we expect any additional set of customers? And what was the maintenance CapEx? So the capital that we foresee at our Tanjumak site will not be over and above the INR20 to INR30 crores that we anticipate over the next 2 years. We don't see any bit beyond that. We don't have any maintenance CapEx in our transportation business. Whatever money that we spend is OpEx out in the collection and transportation business. We don't build on creating higher book asset at my collection and transportation business. Okay. Thank you, sir. Thank you. The next question is from the line of Manik Malhotra, independent investor. Please go ahead. Am I audible? Yes. I just wanted to ask you 2 questions on the fleet side. So I just wanted to know whether our whole fleet is like runs on diesel or do we have small tippers which are running on CNG field? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So bulk of my machines, the compactors run on diesel because the road conditions that end up at the dumping grounds or the landfills are not great and you need a lot of power and CNGs are not equipped with those kind of engines today. So I would say a bulk of my machines are run on diesel, but we have few vehicles which do the primary collection which are CNG based. Our interaction is always on playing with manufacturers like Ashok Leyland and Tata to see whether future CNG machines will have enough and more adequate power to help the vehicles climb landfill kind of the situations. To answer your question, yes, I would say around 6% of my total vehicles are CNG, but 94% are still running on for 2 years. That's a constant attempt by the company to shift from diesel to CNG. We have tried using electrical vehicles, we have few sample pilot ones running around, but unfortunately the operating people are finding it slightly difficult when it comes to load carrying and load distribution. Okay. And one more question. This you have mentioned in your perspective that around lot of your fleet is having GCS for efficiency. So how is it going now? Are you doing anything tech driven for efficiency or for this route efficiency for like picking up the weights? Anything more, Sai? So we get to pandemic what we are looking at is how to optimize our route. So we are constantly working on the route. And since our vehicle is fitted with GPS, we can monitor the movement of vehicles and the collection of the base in particular road, if it is less, we can keep on changing the route. So that we keep on doing now because of this pandemic. In the past, we never faced something like this. One particular route, we used to collect suppose x amount of garbage with our sticks for the net and it was from escalation. Now this pandemic, our team and we have geared up to keep on improving or changing the road plans on regular basis since we and since all our vehicles are fitted with IT system, the GPS monitoring, everything, it will become very easy for us to modernize our current route plans. Thank you. The current participant has left the question queue. We'll take the next question from the line of Ankit Jain, individual investor. Please go ahead. Yes. Thanks for your wishes and we hope the same at your end. Sir, I have questions project wise. The first one is the consumer. So we are currently running there at 5,000 or 5,300 The current participant has left the question queue. We'll take the next question from the line of Kaeshev from Rakshan Investors. Please go ahead. Hi, sir. Thanks for taking my question. Sir, if we consider the Jhansi order in which you don't have to make any capital expense, So do we also have similar contracts from other municipalities running in which they procure the assets and we do the operations in? Yes. We are doing in Varnasi now where the entire CapEx except for our shipping machine is funded by the municipality. So and in the past we had bid even for our road shipping contract where the mission is funded by the municipality. So because of Sush Bharat, Vyan and all that there is a lot of funding in the central domain to fund the CapEx for even waste processing apart from election and transfer, which is a good news for company like us. So sir, like you said in the beginning of the call that the margins would be similar to your processing business otherwise. So but your patch translation would be superior, right, for these orders? So we were talking about collection and transportation. Jansi is a collection and transportation business and not a waste processing project. So the collection and transportation margins are normally lower than our waste processing businesses. Okay. So sir, like if we see consider the CNT segment only and if you compare the Jhansi order, so do we have superior IRR for these? IRR is superior because of very negligible CapEx, if you look at in that sense. If you look at on a mathematical modeling point of view, yes, the IRRs will be significantly better as the CapEx requirement is almost margin as compared to a similar sized project if the entire CapEx has to be put and also the tipping fee changes. So what normally happens in these are basically like a cost plus model that we work on. So the CapEx is there, then the tipping fee that the rate pattern that you charge to the corporation is different as compared to otherwise when the CapEx is done by the corporation themselves. But yes, it gives us significantly more flexibility when you are in a position to tell the corporation the number of vehicles that you want and you can add a buffer zone to it as well. Okay, sir. And these projects have similar receivable cycles as the other projects? Yes, they are very similar to the existing collection and transportation contracts And this particular one is a 5 year contract, which can be extended by 2 further years. Okay. So sir, if you combine the 2 recent wins, one is the buy mining order and the Janshi order, they totaled about roughly INR 50 crores worth of contracts. So they would be realized this in FY 2022 or? Not the financial not the entire 12 month revenue. We are expecting Jhansi to start providing revenue from October 2021 and Vahramasi will be fully fledged by September 2021. Greater Thanhayra II will start off 100% by October 2021. So the second half of my current year should see revenues from all these three contracts for 6 months that would be. Okay. And the combined potential revenues are combined of these three contracts put together? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So let me give you the thing. So what happens is if you look at my current order book, which is all the contracts that are back till date signed and mobilizing everything put together, at 100% normalcy, the company expects its core revenues to improve by approximately 80% to 20% year on year. But please note that these numbers that I talk about are core operating revenues from tipping fees. My project revenues will be recognized as to the indirect accounting norms as and when we execute the CapEx at our ongoing PCMC waste to energy project and any other incremental CapEx that are incorrect mined Kanjo waste processing site. These are one off revenue recognition as per the project accounting rules. So I request that the core operating revenue would be around 18% to 20%, add to that any other CapEx driven revenue will be sitting as a contract income in my books of accounts in this year and the next. Got it, got it, got it, sir. Thanks a lot, sir. That's all for me. Thank you. The next question is from the line of Dipesh from Equinorix. Please go ahead. Yes. Hi. Thanks for the follow-up. Joseph, any study you're doing or anything under consideration for the biomedical waste, which has become a very big problem nowadays? See biomedical based, presently, we are not looking into it because we are getting huge opportunities presently from municipal following ways. The thing biomedical waste is the size is on a smaller size and it is from city to city. So presently we are finding a lot of opportunity in municipal solid waste which is our core business. Okay. So biomedical will not come under the municipality other? No, that is a different business where we need to have 2 type of operations, incineration and now the clearing of recyclables. So there are 2 different opportunities. Got it, sir. And given your plan, the INR 200 to INR 250 crores CapEx over the next 2 years, just want to understand what kind of bandwidth you have to bid for any upcoming projects? Any debt to equity or debt to EBITDA targets you have in mind beyond which you will not go? Because currently my debt to equity is around 0.3 and even after the fully drawn down CapEx and debt related to my waste to energy project and everything, my debt to equity will be in the range of around 0.6 to 0.65 at the peak. So the company has a very healthy balance sheet as today's debt. We are also talking to various banks, reducing our existing interest cost by around 100 bps to 125 bps. So our headroom to borrow money for incremental business is still adequate and the company is can grow if the opportunity provides and it meets our financial requirement. There won't be any additional stress in my balance sheet. My cash flow from operations is around 110 odd gross. We foresee the same to be sustainable and these are during COVID time. So we believe the same cash flows to be available and that can help us fuel our future growth of around 20%, 25% CAGR as Dost mentioned. Okay, great. And lastly, sorry to harp on this, but how many contracts have seen price revision since January of this year? Sorry, I didn't get that. How many contracts? I've seen a price division since January of this year. Price division, there has been only one which was in Kanzuma, which is due on March 6 every year. So for that, that's the only contract that we got the price division. Everything else falls up to June, July. After June, July. So normally what we have seen historically is after the fiscal year ends, that's when most of the corporations award new contracts. So normally, the new contracts come in, in the month of May, June, July, that about. So that's how the cycle runs after the budget reallocation and everything is done. Okay. So after June, July only the revisions will happen. So till then, okay, right. So nothing special you can do because this is like unprecedented time, right, The oil price is going like anything. So like just like steel companies are passing on the price to the auto companies and all. So can't you just talk to the municipalities that you are not able to work under such margin pressure? P. Vijay Kumar:] We have already applied for minimum wage and for minimum tonnage increases request to the corporation for contract. And as this is as per the contract, it's also over and above the contract requirement. But having said that, Dipesh, the corporations have been making that payment on time regardless of the stress they might be facing internally. So we are in talks, we are talking to them and we are also raising these issues because the rise in diesel and fuel prices doesn't even it's not only a problem for companies like Anthony Waste but also for employees who work in these kind of corporations. So it's a matter which is well thought, well spoken and well raised at various levels. We would see the newer contracts have an escalation which is quarterly like the ones that we have in PCM3 and in Nagpur. So the newer contracts that the company is bidding for have these metrics of escalation even on a monthly basis. So that is one of the ways that the corporation will address this problem in future. But for existing contracts, the only redressal option that the company has is to request the various departments, which in turn will require the corporation finance departments for any additional scope for funds being released to the department. Got it, sir. And also when the volumes will come back, they will kind of like reduce the margin percentage, that will also help? Definitely. The margins, we have already seen a slight improvement in our tonnages over the last 3 months since March 2021 onwards. We are seeing improvement on a sequential basis. We pray that the unlocking speed and everything continues through the year end, we are not yet to deal with any adverse surprises. Got it. Thank you, all the best. Sure. Thank you. Thank you. The next question is from the line of Faisal Hawa from H. G. Hawa and Company. Please go ahead. Yes. Are we taking steps to cut down on the filth rate that happens at the stage of collection by employees in the dry waste because that's where we lose twice. We lose on the tipping fee as well as we lose on the economic value of the driver. So most of the drivers is preferred at the end of the election itself. So can we do something to really cut down on that? Actually, Mr. Hawad, when we talk about waste processing per se, the driving revenue for the company is tonnage, the kind of and sale of recyclables and what you're talking about is sale of your recyclables and scrap is very marginal to our business, not more than 1% or 1.5% of our revenue is from sale of plastics and other recyclables. So the pilferages actually doesn't bother us per se, but our revenue is purely driven by the tonnage and that's of more material importance for us. And our operations are not hit by these kind of minor filtration. But studies show that dry waste is almost 30% to 35% of the total waste collected in the cities. Yes. What you are saying is dry waste, commercially very low. So there are dry waste at textile and broken plastics and broken things, which has no respectable value. So any tech portal we find, any some sort of yields and all that, we will take. But that weight is very marginal. That's what our calculation is. But we get lot of dry waste, which is shredded and converted to reduced demand fuel. So this is about 30%, which is we are getting. But recycling, many getting the benefits which we have no control. It is a municipality from households when we collect, there could be some Pratiwala and all taking it away. But overall, what we have noticed is the dry waste still constitutes 30% and is there. Resizable, which has a market value is and still we are getting this idea about 1% to 2% still is coming to our plant. But going forward, it varies because there are less rack tickers not even nimble compared to what we used to see in the past. So that's it. That's what is the Okay. Thank you. The next question is from the line of Ankitchen Jain, individual investor. Please go ahead. Sorry, sir. My line got disconnected last time. What I was asking was about Kanjarmad, currently we are running at 5,300 tonnes per day. So when this will go to 7,500 tonnes per day as per the contract? So there is a gradual step up as per the contract and this will be taken up gradually. So that is a step up mechanism. We normally don't comment on project specific information, but this is as per the tender norm. So there is an incremental shift that happens every 3 or 4 years. Okay. Sir, but there were we had read somewhere this IIT and other NGOs were doing some study about the impact there. Is it linked to anything to that report or anything? Sorry, that report would be shared by with the Bombay High Court. I mean that's not been shared with the company per se. So I think it should be there in the Justice Department's website. That has not been shared with the company. No, agreed. But that whatever the report findings is nowhere connected to increase in the capacity. No, no, no, no. That has nothing to do with the increase in the capacity because the zone and the area that has been earmarked for the waste processing at Kanjumak is earmarked for 7,500 tonnes per day. Okay Okay. So I just wanted to know you have mentioned you mentioned that around INR 20 crores to INR 30 crores need to be spent as a CapEx there for this project during the 2 years. Once that is done, is there any more CapEx to be done at this project? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Not immediately. There will always be some maintenance CapEx for our material recovery facility and our composting yarn, but that will be very insignificant as to the CapEx that we've already done today. It will be in the range of around 1% to 2% of the existing gross book, I would say. Okay. Okay. Sir, is there any provision for you in the agreement to go after 7,500 also or is 7,500 tonnes per day is final? More than 7,000 no, it's a contract, 7,500. 7,000. It still mentions that up to 7,500 tonnes per day is what the project is envisaged at in today's world. Future, we are not able to comment, but the project is technically designed to process 7,500 tonnes per day. Okay, fair enough. So now at the Pimpri project after this investment of 200 odd crores for the waste to heat and heat, Is there any other CapEx needs to be done in this project? No. After this CapEx is done, the plant is up and running. After that, there is no incremental CapEx required. Okay. Sir, as per the current time schedule for the Varanasi, have we received the work order for the remaining 4 zones? Yes, we have received the work order for the remaining 4 zones. The work has already started in surveying those areas. So we expect the survey to be completed shortly. And that is why we have mentioned that the revenue from Bangladesh will also tickle fully from September 2021 onwards. Customer procedure, yes. Okay. So this project agreement is also for 7 years? Sorry, I didn't get the last question. This project, this agreement, is it for 5 years or 7 years? Pramash is for 7 years. 7 years, okay. Sir, in this financial year, the compost volume has gone up by more than 100% or so. Any particular reason, sir? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So we have expanded our compost generation capacity where we doubled the maturity pad in 2019. So that came up for operations in mid of the last year. So if you see in Q2 and Q3, we have seen a sequential growth in that tonnage. And now I'm able to process significantly more tonnage and able to sell that same to our vendors. So this is one of the reason why increase in capacity, full utilization of the same and also ability to get buyers for my compost. These are all the three factors which has led to me doubling my sale of Compose in the current financial year. Okay. So this is what I want to know is sustainable for the coming years also? Yes. This is sustainable for my coming year and we are actually working at improving the quality and also increasing the capacity if it's possible during the dry season. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Okay. So just wondering how much revenue this generates, sir? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] It's very marginal. It's less than 1%. As I said, our sale of compost and sale of recyclables together constitute less than 1% to 1.5% of my total operating revenue. So these are bonuses as I would say. Okay, fair enough. Sir, my last question is about the notes you have mentioned, the note 5 and 6 regarding some pending dues from Municipal Corporation about that INR8.06 crores and all that whatever the numbers. I just want to know since how long these payments are pending? These have been pending for more than 3 years. So the certain dispute and certain redressal forums have to be completed. We expected all these actions to be completed by 20 20 2019, 2020. But due to COVID and all the things, all these discussions and actions and court proceedings have been put on a back burner by various jurisdictions. So that is one of the reasons why we have not been able to get this acted upon. But having said that, we have recognized and worked with certain corporations like Ulaas Nagar and Vivendi, which has come out for a settlement and we have already worked with them. Not all corporations have gone on an hibernation mode. Few corporations are still working on this zone. We expect to work on the other clients during the current financial year and try to find a resolution as fast as possible. Sir, this amount INR8.05 crores was earlier INR 13.5 crores as on September when you had come out with TRHP. Is that the correct amount? Yes. Earlier it was 13.5 crores. Now it has come down to 8 crores, correct? In the past, in 2019, this amount outstanding and qualified was After effective redressal, this amount has now after effective redressals this amount has now from the collections that have been made and exceptions and everything has been made by the clients. This amount today only INR8.05 crores from different municipal corporation. It's not a single corporation. There are multiple corporations involved here. Correct. Sir, my last question again pertain to the same note. Sir, you have mentioned that in the other financial assets under current subheading, there is INR74.45 crores is there in the balance sheet. Right. Is all these amounts pertain to minimum wages outstanding only? No, no, no, no. It's not just pertaining to minimum wages. There is also a retention money involved there. There is also see, as well as tender conditions, we need to provide for certain receivables, which will be paid by the corporation at the end of the contract. So there is approximately around INR 31 crores as retention money which is good money from existing clients which will be refunded to me at the end of the contract. Approximately around RsR9.2 crores is the minimum wage reimbursement which is expected from one of my other customers who is currently processing the same. And the minimum wage issue is around INR42, which is still there. So that is how the breakup is. Bulk of my money is under retention and reimbursement awaited from my such clients. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Okay. So that means the receivables would be RMB89.51 plus this RMB40 something. This is the major amounts which are receivables from the corporation, correct? Yes. This corporate though it's not current receivables, these are long term receivables because this is payable to the company and LO contract. If it has been a 1 year contract, then it will be realized within the 1 year. If it's a 5 year contract or a 7 year contract, accordingly the same gets released to us at the end of the project life. Okay. Thank you very much, sir. It is very helpful. Thank you very much and all the best. Thank you. Thank you. The next question is from the line of Manik Malhotra, individual investor. Please go ahead. Yes. Actually, my line got disconnected. I just wanted to ask one follow-up question that I'm just looking at the projects on which you are working. So when a tender comes, so do you focus on tenders which are coming from the same existing project side of the same state? Or are you focusing on the states where you are not working right now? So I just wanted to I'm just asking this. I just wanted to know the whether you are working on clustering strategy like you're making clusters and then to improve the efficiency? So, Anjal, I think that question. So, the idea is first thing is we only build tenders in those municipalities. A, that they should the tender should be of international standard, which is made by some top 4, top 5 consultants in the country, where it is complete modernization because our company believes in technology and new system to be implemented in this collection as per solid base management rule 2016. That is one strategy. Wherever any municipality comes up with this type of base, we are open and we bid. And second is cluster. So then we always like to win contract nearby cities because what we notice is when one city comes with a modern type of waste collection and transportation processing of waste, the neighboring city also would like to implement similar type of contract. So when those centers are done, we try to win that because our overall fuel comes on the lower side, we can manage the operation much easier. So that is the reason we look at cluster based approach. But any part of India, we are open to bid provided it suits with our requirement to bid. At the same time, municipal fees, financial health rules will be checked what is the credibility and how our money can be saved, protected in when after execution, our payment should be on time and all that. So based on all these due releases, we then we analyze and then we Thank you. Ladies and gentlemen, we will take the last question from the line of Ankit Jain, individual investor. Please go ahead. Thanks for the follow-up. Sir, I had only 2 questions. One is this Pimpri project with the capacity is 1,000 tonne per day. Is there any provision to increase the capacity in future? P. Vijay Kumar:] The plan in this case is ratio energy design for 1,000 tonnes per day because of and 40 megawatts unit. So we cannot increase capacity at the moment for this. That's right. Okay. And my second question is, we must have already quoted for some of the projects during the course of the year. Is it possible to share us only how many number is there in pipeline? How many of that are the waste to heat treatment type of thing? Just to understand how big these opportunities is becoming in India. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] In the waste to energy zone, there are very few I would say not more than 2 projects which are up for under the discussion stage across the country. There is some contract which has been issued from NTPC for biomethanesion work, but most of the work that we are looking at and that has been issued by various corporations are in the area of waste processing using either I know. So, yes, so I just want to clarify one thing. When municipality go for waste processing, they decide which technology they prefer. Now the Municipality do not have larger land and the land is very expensive. And moreover, the municipality is rich where they can grant some money as for YBMCa funding. In such cases, they offer waste to energy projects. And there are municipality where little bit more land, land is not expensive. They prefer waste composting, whether that is metal recovery income composting. So the technology is selected by the municipality based on the land and in their financial credibility. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Okay. Sir, what I actually wanted to ask you was in between CNT and waste processing projects, how many are there for us to grab as and take? And what is the revenue generation opportunities of these projects? So of those lines that we are targeting, it's always a mix between waste processing, collection and transportation because waste processing project takes around 1.5 to 2 years of mobilization as compared to a 6 to 8 month mobilization period for CNT. Your question on the number of projects that the company is bidding or is looking for, I would say that the business development team is looking at around 8 projects as of today. Few of them are in advanced discussion stages with the corporations and concerned them on the inputs. So I would say around 8 projects are there on the pipeline for us in the current as of today, I would say. And what could be approximate value of these contracts total, sir? I don't want individual. Total, is it something around INR 200 crores? No, they are significantly bigger than those. It should be in the range of INR 280 crores to INR 340 crores annualized. Annualized, correct. Okay. Thank you very much, sir, and all the best. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Jose Jacob for closing comments. So dear participants, we are seeing various municipalities to privatize municipal solid waste management and come out with contracts for the same, which ensures good growth momentum for us, and we are confident enough to capitalize on these opportunities. I would like to thank you all to participate on our earning calls. I hope we could address all your queries adequately. And for any further information, please contact HEA, our Investor Relation Advisor. Please take care. Stay safe. Thank you very much.