Q3 20/21

Feb 11, 2021

Hello, everyone. On behalf of Equita Securities, I welcome you all to pre Q FY 2021 Earnings Conference Call of Anthony Waste Handling Cell Limited. From the management we have with us today Mr. Joss Jakob, Chairman and Managing Director Mr. Sidhu Jakob, Executive Director and Mr. Angi Subramaniam, Head of Accounts and Finance. I now hand over the call to Mr. Joss for his opening remarks, post which we can open the call for Q and A session. Over to you, sir. Good evening and a very warm welcome to everyone who has been on call. Along with me are Mr. Soumanayev, Head of Finance you and your families are safe and healthy and secure in this pandemic season. So we have uploaded our investor presentation on the stock exchange and the company website. Firstly, I would like to welcome our new shareholders and congratulate every shareholder of the company, namely employees, customers, business partners, investment bankers and others who made IPO listing successful. We were delighted to see such a strong response of our IPO of 9,520,000 equity share or face value of INR 5 at an issue price of INR 350 per equity share. The makeup of this share consisting of fresh issue of 2,700,000 equity shares and an offer for sale of 6,800,000 equity shares. Our share was listed on VSE Limited and National Stock Exchange of India Limited on January 1, 2021. This is our 1st conference call and therefore I would like to give a brief introduction of our company business and industry It is catering to that is municipal solid waste. When we talk about Indian municipal solid waste, that is an industry. We are the leading player with an established platform of around 20 years, providing full spectrum of MSW services, which includes solid waste collection, transportation, processing and disposal service across India, majorly catering to most families. We are also among the very few players who have pioneered in MSW collection and transportation sector. We have been house expediting land reconstruction and its management in a scientific manner. We are focused on the emerging waste management area like waste to energy and now more importantly in the area of biomining of legacy waste. So now moving on to 3 broad business areas, municipal solid waste, auction and transportation projects. So this service involves door to door collection of municipal solid waste from households, commercial establishments and other bulk waste generators. From a designated area like the community base through primary collection vehicles like compactors, dumpsters, hand pipers and transportation of these materials to the processing facility, transportation or landfill disposal site. These contracts are tendered out by municipal authorities and only have a tenure of 7 to 10 years, which slightly by tender for either the overall office city or part of the city. Currently, we have called such ongoing projects in this service. As mentioned, these are typically multiyear contracts and as is outstanding duration of ongoing contract is approximately 8 years. These contracts have embedded price escalation model as a fixed ordering to components of the world sale price index and ordering to the minimum basis of that particular stage, which provides adequate protection for our operating margins. Secondly, we have second business is the rehab MSW Processing Project. So these projects involve sorting and segregation of municipal solid waste received from the municipality. Both these contracts like CNT and MSW process are mutually exclusive contracts. So they are 2 separate contracts. The work in processing involves composting, recycling, shredding and compressing of the waste into RPSH's refuse derived fuel or generating power from the landfill gas as required. Currently, we have 2 large ongoing projects, normally tenure of such contracts are longer, which is around 21 to 25. One of our processing projects is at Candle Marg, Mumbai, which has a concession period exited in 2036. And the second one is at KC-twenty four, has had a concession fee excellency 2040. 3rd business is Contact and other service, which involves mechanized load shipping. With deployment of power shipping machine, manpower, comprehensive maintaining consumables, safe disposal of waste required for completion of the cleaning operation of the designated area. We have 4 such ongoing Makran shooting projects with an average outstanding duration of approximately 7 years. As of 20, we have undertaken more than 25 projects, of which 18 are ongoing projects. During that journey of 2 decades, we started the business with waste collection and transportation and focused to solid waste management, working with more than putting municipal coalitions. We have come a long way in the field of solid waste management with adoption of latest technology and innovation. By doing this, we have shown that we are not just final with solid waste collections and transportation but also have enriched experience in municipal solid waste processing. Our Our Anjumab project is the largest single location waste processing plant across Asia. The project tenure of 25 years starting from 2010 till 2036. Bilexelaxin, so there are the technology we have is bilateral active with a capacity of 6,500 tonnes per day and chemical landfill of 2 50 tonnes per day. We have a major recovery and composting facility capacity of 1,000 tonnes per day. Currently, we have a gap to energy where the lamprey gas is converted into power of 4.97 Megawatts, and we have got we are planning to double this capacity soon. Currently, the power generated is used for capital consumption. Currently, we handle more than 5,000 tonnes of waste per day in Ganges facility, and which is approximately 60% of total waste generated in the city of Mumbai. This project has been designed with 207,500 tonnes per day. Since start, we have processed approximately 7,630,000 tonnes of paste at this site. For the 3rd fiscal year, key January 2021, we have processed around 1,230,000 tonnes, which compare against 1,590,000 tonnes handled in the world last year. Now I'll briefly share a few highlights. On the Indian municipal solid waste services industry. The industry side is estimated to be INR50 1,000,000,000. Increasing population, higher urbanization will lead to higher per capita base generation in India. Urbanization coupled with changing lifestyle pattern, increasing disposable income has paid weight for consumerism and have also contributed to higher weight generation in urban India. Over last 2 years, along with urbanization, we have also seen our industry learning more towards technology changes like mechanized family waste, collection and sweeping, GPS handled vehicle and RFID and it will be tracking system, etcetera, to bring in more efficiency and transparency. This outflows well for a technology driven, multiple solid base service player like us. Various initiatives taken by our government like Swartz Bharat initiative to keep India team and focusing on hygiene has led to much before increase in spending on solid waste management by various municipal coalitions. These initiatives have taken a new shape in this budget with an allocation of more than INR1.4 lakh growth over a period of next 5 years towards Urban Search Park Mission 2. This is expected to drive the Indian municipal solid waste industry towards a more efficient collection, transportation and processing of solid waste. Multipur solid waste generation is expected to grow at a cadre of 9% from 2020 to 115,000,000 tonnes per annum by fiscal 2025. The municipal solid waste management market, which is currently estimated at INR 5,000 crores in FY 2020, is expected to reach around INR9800 crores by FY 2025, a capital growth of 14 with a capital growth of 14.4%. As an organization, we are constantly striving on improving environment, social and governance parameters, which is ESD. We have an ESD policy approved by a Board that identify focused material areas for reasonable stewardship that impacts our business activities. We see a significant tailwinds and are confident that growth momentum will continue through coming period of all our businesses. I now hand over the conference to Mr. Subramalli, Head of Finance. Very good evening to all the participants. I will share the highlights of our financial performance. This is the 2nd consecutive quarter where we have demonstrated operational flexibility in a very difficult operating environment. We are committed to holding on to operational efficiency and even improving on them and the cost savings as the volumes turn positive again. For Q3 FY 2021 the performance on consolidated basis, the company has reported an operating revenue of INR 118 crores as compared to INR106 crores in Q2 FY 2021, reflecting a growth of 12% on a quarter on quarter basis led by growth in waste collection and processing. When we talk about operating revenue, we talk about MSW collection and transportation revenue and MSW processing revenues here. The total revenue which includes contract income from construction accounting as per Indus 115 and other which include sale of compose, sale of RDIOs and sale of scrap, that total revenue has actually increased by 6% to INR127 crores in Q3 'twenty one as compared to INR 120 crores in Q2 FY 'twenty one. EBITDA is up by 11% sequentially to INR 37 crores versus INR 33 crores earned in Q2 2021 with the margin at 28.6% versus previous quarter's 27.4%. The improvement in margins is driven by consistent and continuous efforts to control our project costs and improve overall operational efficiency. The profit before taxes stood at INR 22 crores for Q3 2021 as against INR 18 crores in Q2 2021 which is up by 23% with the PBT margin at 17.1%. Consolidated profit after tax stood at INR 19 crores for Q3 as against INR 18 crores for Q2 which is up by 9% sequentially with the FACT margin at 15.3%. Coming to business wise performance, the MSW CNT revenue is up by 12% at INR 81 crores. The growth is on account of increases in volume handled which rose by 8% in Q3 versus Q2 2021. The MSO processing revenue is up by 10% at INR 36 crores as compared to INR 33 crores in Q2. This improvement in waste processing volumes by 11% in Q3 versus Q2 resulted in this growth in this business. On the balance sheet front, our net debt to equity as of 31 December 2020 is 0.5x, an improvement over the 0.6x level as of March 2020. Total consolidated net debt on my books as of December 2020 stood at INR202.8 crores. Cash and bank balances is approximately around INR 40.9 crores, reflecting the net debt level of INR161.9 crores. Net worth of the consolidated entity is at around INR 336 crores. The current receivable days as of 31 December 2020 stood at 60 days versus 64 as of March 2020 and we shall continue to endeavor to reduce this further. That's all from my end and now I'm opening the door for Q and A. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer The first question is from the line of Isha Sarthak from RA Securities. Please go ahead. Hello. Yes, good evening. I have a couple of questions. My first question is, can you give some idea about MSW industry and what are the parameters that shows that this industry will grow and how can you benefit from it? So I just spoke about the industry because of such far as high India level. There is a huge presently it was in the past it was more conventionally handled. So manual handling was huge and manual handling of waste has to reduce. So another thing is as I said municipal solid waste at India level is around INR5,000 crores business and we believe that in next 5 years it will go to INR9,800 crores. And most of the municipalities are privatizing their operations because there's a pressure from Swachh Bharat, Avian and there's a team which comes from the central government to evaluate their performance and they are given rights based on that. And due to which they need to improve the present waste management system and that is the reason there is lot of bids coming up at India level opportunity for us. Okay, sir. Then sir, I wanted to ask about the Swachh Bharat Mission that was started earlier. So how have we got benefit from that? And also now in the budget, Urban Satchibharat Mission 2 has been announced. So how that would be helping us? So our business, the Muntva solid waste business has been evolving. And in the past, whenever correction transportation or waste process, we had to bring in our capital 100%. With such power machines, we are willing to invest in so around 40% and maybe more also in future. So that is a good opportunity for us because our debt will reduce and our investment for the CapEx for supposedly INR50 crores CapEx, around 40% of the government. And in certain cases, what we have noticed is like recently we won one contract where 100% CapEx, almost 100% CapEx were funded by the government. So this will definitely help our industry because ours its lot of capital has to be put in which will be supported by such partnerships where money will be put in such type of projects. Okay, sir. And my last question would be on the technology side that how well advanced are we and what are the scope of improvement that you are looking going ahead? Thank you. So we believe in bringing the best of ideas and technology in our business. So in Kaldurma, we bought in bioreactor technology, which is predominantly operational in America. We bought in waste composting technology where entire metal recovery facility was imported from U. S. And even the composting technology which is a SCAR system manual handling is almost negligible due to which we are producing high quality compost and there is a good demand for those compost. And we are selling around close to 2,000 tonnes per month of compost. So we always look out for the best technology, best area. And our culture and transportation, we have RFID on a bill which is tagged. We have GPS, we monitor it here and we have entire VIP system for a very strong process in our for in the operations and all this has benefited. So that is what and even base to energy we have tied up with the company for IPC who has built around 120 such plants worldwide and they are running very well. So we always evaluate and that's our strength. That is the reason we have done well in last 20 years. Okay, sir. Thank you. That's it from my side. Good luck for Q4. Thank you. Thank you. The next question is from the line of Anurag Goen from Ampersand. Please go ahead. Good afternoon. So just wanted to understand, as you mentioned that currently you're working on 18 sites. So is the are there any pipeline for the new sites that are the bidding or contracting? So next 12 months we are very excited because the law is coming up in all the A rated municipalities. And as you know, because of the pressure from the central government and this evaluation for all the municipality and to get better ranking all these municipalities are quoted tenders and we are confident that we will be getting a good share on this business. And we just don't go away. We look we do proper due diligence for the corporation. We check their finances. And if the money is there, then only we pay. And we always look to a criteria of 20% return on equity. And based on that, we bid so that we keep the company safe and we make a good amount of profit. And typically what is the in terms of years, what is the duration of the contract? Quotation is approximately 8 years, which is where we do collection and transfer of municipal solid waste from house to house. And waste processing is typically from 21 to 25 years. Okay. So this Sanjumark side we have for longer duration? Yes. We have Najal field which insured also. Just to add on that, waste processing projects are normally, as Joss mentioned of a really long duration of 20 to 25 where the entire cities or the bulk of the cities waste gets processed at a single location. So that is why the tenure is longer. For collection and transportation, it averages from 7 to 10 years. That's what the life of an asset is and that's how it's been tendered currently. Okay. And another question is, sir, if you see so all the municipalities normally who gives this contract, they already have contact either to you or someone else, right? So since the period of the contract is 7 to 8 years minimum, so normally, Habal, what is the period history in which this contract come for renewal? Like every year, 10 proposals across India are 15 or 20 kind of renewals or the bidding comes in the this thing? So, Hari, I'll tell you one thing. About 75% of solid waste in India is not scientifically processed, it is just openly tough, 75% of entire Indian base. And this has to be done scientifically. And therefore, there's lots and lots going to come in next 10 to 12 years. So there will be we may not wait for somebody to renew also. So there is a huge opportunity in waste processing site. And in as far as collection transportation, many municipalities are collecting and palpating in very conventional way like they used to use garbage dumpers, manual labels and all that. So they are also in process of privatization and modernizing their existing system. So there is an opportunity and recently we won one of the contracts where about 7, 8 months back where the municipality has not privatized, they have small, small operators, but they went for a model system. So there's a lot of modernization happening in Panu Teles. Okay, got it. And normally any contract that you got it, so what is the payback period and how much amount that you need to invest to execute that project? P. Vijay Kumar:] Yes. So it depends upon each and every project because the tender would specify the kind of work. So it will be very difficult to kind of give some rule to that. But for example, a collection transportation can be purely primarily collections and transported to the disposal site to a door to door collection to disposal site. The tender can also include road sweeping as part of the tendering. So normally what we see for collection transportation is a fixed asset turn of around 1x to 1x.25x is what we have seen historically. So that is the kind of a CapEx that needs to be done. These projects are of 7 to 10 years. So after that, there is no need to put incremental CapEx unless and unless any increases are around 25% to 30% over and above the estimated limits. Okay, understood. And on in the presentation, Page number 27, the Slide number 27, 27, you mentioned that revenue from operations based on the current projects. And you had given financial year 22%, 23%, 24%, but the numbers were missing. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes, because we would like to just go around because this is a very annuity based model. So when we're talking about revenue, these are the contracts that we already have. The increase in the revenue is from escalation and from tonnage. So we are estimating that these would keep on growing at an incremental pace. So we have just left it at that because these are all actual contracts that we have back. These are not any incremental new contracts that we are getting. So these are all on the same numbers. So irrespective of whether you get the new projects or not? Yes. Irrespective of adding new contracts, this is what my trend line is. But okay. It's just a diagram presentation, not the numbers that you've Yes, yes. Okay. Thanks and all the best. The next question is from the line of Arush Oberoi from Victor Delta Securities. Please go ahead. Hello. Yes, sir, I have a couple of questions. So first one is that what are the different geographies that you plan to track now? So we specifically have in Maratha, we have in North and so we have no problem going spanning the level. And our idea is when we win a contract, we have a strategy of cluster based businesses. So we try to win the cities nearby, which will reduce our cost overage and that is the strategy we look at. So but at the same time, we are open to bid any part of India as long as it fits in our financial due diligence where the municipality is doing well. They are financially funded and based on those we go and pick. Otherwise, we have no issue going to any part of India. Okay. So any new municipalities you're planning to work with? Yes, there are a few of them in line and we are going to we are looking at that. Okay. And second is that any new order to be started in the coming quarters that would add to our revenues? Currently, we have bid for a couple of contracts. So once we bag a contract, normally what happens is even if we bag a contract, there is a lead time around 3 to 6 months for mobilization of the assets. So even if we sign an LOA today, it will take 6 months for us to generate the revenue out of it. But yes, we are definitely in talks with few municipalities there in the tendering stage. We have already submitted few tenders. So once we get awarded some bill, we will definitely be informing you guys on that. Okay. And how confident are you to back those orders? So a decent amount of time and effort is spent by the company when we bid for a contract. So our strike rate is normally higher to that extent. So because a decent amount of time goes in doing a micro plan study, the road plan of that area, understanding the best judicious mix of assets that needs to be deployed, the potential increase that can be captured, a micro plan to that extent needs to be done and then costing gets worked out and then we sit and understand the potential for looking at the exigencies of growth in that particular geography and then accordingly we bid. So given the very scientific approach that the company adopts in bidding, our strike rate has been high and we always approach that method. So if we get a contract at a particular price, we definitely are sure of our margins and our return on equities and stuff. If the pricing is not correct, we don't rush into such contracts. Okay. Thank you. That was helpful. Thank you. The next question is from the line of Anupam Gupta from ISL. Please go ahead. Good evening, sir. Couple of questions. First is, what is the status of the increase in stake for the 2 subsidiaries for Kanjumarga and TCMC? Sorry, can you repeat the question, Anupam? So we were the stake in the 2 subsidiaries was going to increase because of the conversion of the So the new company is that kind of clearly says that the transfer of shares cannot be done in a physical format as in DMAT. So because of the corporate action pending documents we received from our Brazilian partner, this has been delayed by a quarter and we are expecting the team to visit Bombay in the by the end of this month or maybe at the early part of March. So we'll get that thing moving. Okay. Okay. And secondly, for the PCMC CapEx, what is the revised timeline? I think there's some months delay during this time after the IP, but what is the timeline for start of CapEx and completion of CapEx? So Anupam, yesterday we had a board meeting wherein the right issue was completed. So we are moving in the INR 40 crores of the IPO proceeds from Anthony Wish to AG Enviro as the equity component and that will be pushing down into the system. And accordingly, we have informed the lenders, so that will be a pro rated disposal of loans and the equity. So the CapEx has already been initiated. The work has already started. It will go full throttle by the end of March onwards. So we expect the timeline of commencement of activity to be around 18 plus 2 months of construction phase. We would be completing our construction by in the same time. Okay. So basically end of 2022 broadly? End of 'twenty two and maybe mid of 'twenty three actually because that's 18 months construction fix. Okay, okay. Understand. Yes, that's it. Thank you. Thank you. The next question is from the line of Priyanka Singh from Aditam Securities. Please go ahead. Yes. Good afternoon, sir. I had couple of questions. So before starting, I would like to thank the thanks for a very detailed presentation. It is really very helpful. Coming on the question side, can you share some more details about your puncturemark site? And what is the scope to increase the business activities at this site? So Kanshu Mark, as I said, we are presently receiving around 5,000 tonnes and the plant capacity is around 7,000 tonnes. So it can increase. So as years pass by as per the contract, the waste and capacity, we will be taking in more waste. So we have 2 technologies there. 1 is bioreactor landfill where the base is put in a cell and it is decomposed and based on when we produce landfill gas and with the landfill gas presently we are producing electricity of close to 1 megawatt which is used for capping consumption. And going forward, we are looking forward to increase those capacity. If there's excess capacity, we can sell at the rate of INR 3.50 50. And as far as 1,000 tonnes, another 1,000 tonne, we have a technology where we have metal recovery facility and composting system. So what are the organic fraction we convert that into high quality compost and it is sold to a fertilizer company like Cripco and RCF. And what we have noticed is a lot of demand and we are planning to increase that capacity improve. Just to add a bit of color on that, the revenue on that is on a per ton basis for every tonne of waste that enters the Kanju facility. We charge the operation on a per tonne basis. And the revenue from sale of compost, RDFs, recyclables are all ancillary and additional and adds to our bottom line. Okay. Got it. And also can you explain how does this bidding process happen? So usually this is a technical and commercial grade and it is quality coming cost based bidding. So there's banking and marketing for the bidding process And there is a technical qualification and only those bidders who have past experience of waste collection, transport or waste processing is qualified. So there's an entry barrier. And based on that, only those operators who have such experience can build. And also nowadays they are giving marking because they want good operator to take up the contract. So it is not purely lowest bidder types. Most value is going forward to give contracts to companies who is technically number 1 and the marketing and based on the certain formula, they will they award a contract. So most of this base are prepared by top 4 top 5 consultants in the country because being a long term contract, the municipality prefers awards to have good operators. So that is so we have a technical base. It's a first is expression of interest, then there's a technical paid and then thereafter financial paid is open. Okay. Got it. Got it. And lastly, when you say that revenues from operations based on current projects will be growing for the next few years, So what would be the reason behind the things? Is it because of the escalation clause or something? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Partly historically over the last 20 years, what we have seen is the tonnage increases in a particular geography. For example, in cities like Navi Mumbai and Bombay, there is an organic growth in Tanez that we have noticed over the last couple of years and also the escalation which kicks in. So the escalation is linked to the minimum wage and certain contracts. They are also linked to the HSV component of the fuel. So those things add to that top line. So the combination of organic increase in tonnage plus your escalation that takes it. Okay, got it. Thank you, sir. Thank you. We have the next question from the line of Dipesh Keshav from Equinor Securities. Please go ahead. Hi, sir. So your tonnage has improved sequentially, but can you give a guidance like how it is like for the pre COVID levels in the Kanjumarg and in the CNTO patients, please? [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So Dipesh, we will not be able to give you site wise performance, but what we have seen is generally since June, July onwards, there has been a significant increase in tonnage. And from August onwards, it's almost strongly back. I mean the commercial activity and waste generation from the areas that we serve has improved significantly. Now are we out of the woods? The answer to that is cautious, yes. We are still around minus 3% to minus 5% from our pre COVID levels in certain cities. But we have seen a very good traction from the beginning of this year. So maybe the Q4 would show that we are finally out of the woods. Okay. Your revenue share of CNT segment has increased in the 9 months period and the processing has come down. So just wanted to understand like what kind of revenue share do you target over the next 2, 3 years? B. Balaji:] Deepesh, this was predominantly in Q2 and Q3. If you look at a 9 month number, the Q2 and Q3 were the worst of the COVID. So the base generation has sharply declined in the 2 processing zones that we had, Bombay and Pimple Chinchwood because the waste generation has declined sharply. So that is why you see a significant shift in the CNT versus waste processing. But going forward, we will be going back to our historical trend lines around 50% to 50% of CNT and around 45% to 50% of processing tracking. Okay. So like how many processing contracts do you plan to because I think one is already in the pipeline, right? So are you bidding for more processing contracts? Or will you bid only for CNT right now and maybe after the PCMC starts you will start bidding for new processing contracts? Toys? We are definitely looking at a mix of contracts right now. There is also a lot of bio mining contracts that's coming up, which is basically mining of legacy waste in cities. So lot of cities have waste dumping grounds actually like in Greater Noida, Delhi, Bombay, Bangalore, you go to any city they already have a dumping ground. So the corporations in that those cities are actually looking at ways of excavating and kind of rejuvenating that spaces. So we will be looking at a lot of different mix of projects. The key criteria for us is it should match the threshold of the returns that we want and of course the quality of the corporation's finances. So these two things are right. We will definitely go for a contract, but it will be a mix of both C and T and processing. So Deepak, good part is because of this first Bharat and all, we are willing to fund the CapEx in processing also. So if we are funding about 75% to 80%, we will definitely look into those projects because it is asset light and it's more better. So that's a very good thing and we are looking for such contracts. Got it. And because the EBITDA margin in this quarter though was better like from the sequentially it is better. But for the 9 months period, obviously, our revenues were lower because of the COVID time and the margin is also lower. So how do you see the margin shaping up for the next few quarters? Dipesh, the reason the Q3 margins were better than Q2 is a factor of two things. One is during Q2 a lot of auto ancillary entities were not working. So we could not get decent amount of spare parts and everything which was that my costs were kind of squeezed out. And but there was a startup expenses of Waha and RC which came in, in Q3. So that's why you can see some change in my EBITDA numbers in the for the 9 month period. Going forward, our margins would be tracking the historical levels of around 20% to 30%. And with higher processing being added, we will definitely be moving towards upper range of 30% than the other That is great, sir. Last question, Joe sir, in your presentation you mentioned that the user fee collection in Noida, right? So just wanted to understand how that is shaping up? Are you able to are the users actually paying you the fees? And do you think this model is scalable in other cities as well because that will considerably reduce the collection risk. So what we have noticed is whenever we are going to collect user fee, they are paying most of them. And what I understand and most of the most probably as I meet, I tell them that the use of the concept models will reduce the stress on the municipality on their finances. So this model can definitely replicate in many municipal areas where the citizens are very well-to-do and they want to pay for such services. And going forward, I believe that at an India level, this user model industry model collection will be implemented. Got it. Thank you and all the best. Thank you. The next question is from the line of Sourav Bockafal, a regional investor. Please go ahead. Hello. Thank you for the opportunity. I would like to ask what are the entry barriers in our book hub? So I said there is a quality count based bidding process. So first, there's expression most of the bids, they are expression of interest. And in that, they have entry barrier like only those operators who have certain experiences like 1,000 tons or 2,000 tons per day or who have processed some extra amount of tonnage of waste. So and thereafter, there is a technical evaluation where marketing is given based on the previous operations and all that. And afterwards, the financial business opened. So and off late, they are giving a marking they have got contract to operators who is the technical number 1. And they don't check that he has to be lowest also. So that is part of the trend. There's a formula fixed for that. So things are changing. And most of the municipality are having consultants, top 4 or top 5 consultant to prepare such standards. So it is most of the bid are as per international standards, which also is helping us. Okay. That was helpful, sir. And I would like to know, are we interested in business in East India? Like right now in the ongoing projects, I didn't find any business in East India. Why is it so? So I would say like many municipalities are in the process of preparing bids because it was all traditionally conventionally done, collision by manual loading and all that. And they were not aware there is good private operators and all who can really do good job. And they are now in the process of modernizing. And before I told you also 75% of municipal solid waste is just done openly anywhere here and there. And now because of legislation and the force are after all the municipality that they have to modernize their current collection system and waste processing. And due to which, the loss, bills are coming up and there's a good opportunity going forward for us. The next question is from the line of Anupam Gupta from IFL. Please go ahead. Thanks for the opportunity again, sir. Just wanted to get a sense on the waste collection trend. So you have given the numbers for 3Q. What is the trend we are seeing in the Q4 both for protesting as well as for C and P? We would be progressing see these projects are more like an annuity model for us. So what you see for a quarter is normally a reflection of what is expected to be going forward. So we have a very if you bag a contract for 7 years or 10 years, the performance is very simple. Our job is to pick up the garbage generated from particular transport and we build the corporation. So these are long term more than an annuity kind of a model. So it's very it has a very high predictability in the revenue generation and then the cost structure. So we don't believe in giving a near term or short term earnings guidance. What I was referring to was basically that was so in your view, was CQ fully recovered in terms of pace for both processing and C and P? And versus 3Q, do you still if it was not fully recovered, it will 4Q see some significant or slightly higher growth than what the normal should be? So Q3 CNG operations has recovered significantly, but it's still not near the pre COVID levels. That is what you wanted to understand. Yes, we are still not at the pre COVID levels in the collection and transportation area. In waste processing, we are almost back to pre COVID levels. Okay. So basically, Q4 can still see some from that angle as the recovery happens for C and T? T? Yes. Okay, okay. Understood. Thank you. Thank you. The next question is from the line of Nitin Jagdale from Green Capital. Please go ahead. Hi, good afternoon to Suju and Yoss and welcome to the Indian Capital Markets. My question is strategic in nature. In 2012, 2013 2014, you had done one project for the Delhi NCR. And now if I look at the spread of projects and all your current assignments, your spread of Delhi NCR strategically should increase, right? Because the governments in Delhi NCR in terms of state governments and few governments, there's a huge potential working with NBMC MCB. Can you just talk a little bit about strategic viewpoint of the company in terms of how to enter the north and take away more of the market share there in terms of waste management because it's a great opportunity? Thank you. So in the north, as you said, most of the municipality are preparing the bids. The bids are not yet out. So there is a process and definitely we are looking and we have won few contracts there, which you can you might have seen. So there's a lot of potential there. We are definitely will be bidding. But I know that during the COVID period, most of the multiple years are very busy in managing this issue of the pandemic and they didn't have time to prepare base. Now they're all under process of making tender. So definitely we look forward to build those municipalities in the market. Okay. And do you work more also with the resident welfare associations because there are prime objectives of giving out waste management and segregation in colonies and in areas? Or do you only work with the municipalities? So we have a specialty job. We work with the municipalities and are contracted to the municipalities. We have also seen a higher kind of an activity and engagement that's happening at the grassroots level, especially in certain cities where a closer association at bulk generators is a possibility, which is that is the offering. Okay, great. That's all from my end. And I think that from a 1,000 crore market company, we should aim to become a 10,000 crore market company. You are in a great industrial space. And please create wealth for your investors and continue to have the faith. Thank you. Thanks, Akbar. Thanks, Akbar. The next question is from the line of Saurav Shah from QRC Investments. Please go ahead. Yes. Hi, good evening gentlemen and thanks for taking my question. First question is just very basic on Slide 27, you've given your 10 year number of projects and revenue history. I just wanted to understand what happened between 2015 2020 for the sharp jump in revenues, which is almost fivefold. And there has been a very small increase in the number of projects. So is it that this is the time during which we have done some big projects on some of the bigger municipalities? If that is the case, which one are these? So I just said because of loss of Swazpa, Naviyan, Pan India level and every municipality wants to modernize. And due to which we have the price for them, we are getting an opportunity to win a lot of contracts. And that is one of the reasons we are winning. And anything else anything you want to add? Yes. What has happened is also the nature of the contractor side. So the privatization of the municipal solid waste has taken a racial phase in India. It's only in the last couple of years we have seen a large number of cities privatizing the work. So the scope of work and the size of the contracts have been remarkably higher over the last 4 to 5 years. And that is what you see in the kind of the number of projects that we had in 2010, 2015. There were smaller projects and smaller sizes, But what we are now seeing and what the company has capitalized is bigger contracts with select clients with a very good financial profile. And that is what the trend will be for the company going ahead. Okay. Secondly, some of the past projects that we had, which you have highlighted on one of the other slides, what was the reason for us either to not win the bid or somebody else getting the contract away from us, if you can sort of just help us understand what are the competitive dynamics in the industry and who are your main competitors? So in the past, we used to take contracts where the size of small. So now we only look our strategy is to build into Olikoz, Mujibali where the waste generation is around 200 tonnes per day. So there's a minimum level of tonnage to be produced. And another thing is we target to achieve and we'd like to pay with a 20% return on an investment. Yes, you can go ahead, please. So we look at this 20% ROE and also the municipalities where the wage generation should be at least 200 tonnes per day because there is much bigger size of municipalities where we have better opportunities. So all the past projects are in a way willingly given up either because of the scale or the financial parameters not being met. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Exactly. So these were smaller contracts and we felt that there were so many other contracts coming up which were fitting our criteria both operationally and financially that we went with letting go of the old contracts and bagging newer contracts. Okay. And who are our main competitors? There are very few large organized players in the industry. Some of them would be companies. They are almost all of them are understood. We have R and K Enviro is one of them, there is BVG, there is global Enviro. So they are very regional specific players, but not the nationwide exposure will be very few. Okay. And just looking at the current projects, is there a move from municipalities that over time they want the same company to be sort of doing the C and T sweeping and the processing as well? Or what is that a trend that is visible? Because in some cases, unless I have misunderstood this, PIMPRI and Tanjur where you have your MSW processing, are you also doing all of the other waste management for those municipalities as well? So municipality is usually they like to have separate contract for collision and and base processing because giving one single contract for the entire process from CNT to waste of it is a little bit of risk for the municipalities. And also most of the operators also don't want to do that. So that is one of the reasons we have covered, but maybe 1 or 2 contracts they are giving and that's clear, I think, somewhere. But most of the municipality are looking to have 2 different contracts. One of the reasons is collection and transportation contracts are typically 7 to 10 years where the life of the asset is not more than 10 years. And waste profit is 25 years. So these two contracts have awarding these two contracts, it's a complex issue for the municipality. Okay. Yes. You said that even we prefer to not even the operators don't prefer to do end to end given a choice, even you would prefer to not expose yourself too much to a single disadvantage. Is that the case? That is also case. And the other thing is it's a complex thing like your vehicle life is only for 10 years and Muztabali can it's the problem for Muztabali is about 25 years contract even for collection and transportation. Okay. We could easily give a 25 year contract, right, and it would just mean that you modernize your fleet after 10 years or 9 years or whatever after the useful life. I mean, if that is the norm, that's fine. And finally, Yaron hasn't broken up, but at least just qualitatively, if you could explain, in the three business lines, what is the profitability like for us between CNC processing and others? Hi, Ajay here. So that is very competitive and a very pricey information, so which we will not be able to share at this stage. No, I'm not looking for numbers. Even if you could if it is possible to share which one is more or less profitable, just at least grade them if you could. I will not be able to give you any direction in that strategy. Fine. And my final question is that you mentioned that your growth from existing comes from increase in tonnage over time as urbanization and I guess practice is improved and escalation. So what is this escalation amount typically? Is it linked to an index? Because you mentioned that it's linked to the minimum wage in the state, but I guess other than that there are fuel costs, etcetera, lot of other things that do it. So what is this escalation linked to? So the tender clearly says that for any waste management, waste processing and collection and calibration, the main cost, operating cost would be labor and fuel. And so there are the tender clearly mentions that there is a weightage that's assigned to the rate which is awarded. A certain percentage of the rate is assigned to the fuel component, which is the HSD component or the wholesale price index and certain component is assigned to the minimum wage of that particular state. So any change which happens gets reflected on the rate that has been awarded to the operator. So in the past, these kind of calibrations were done on an annual basis, but over the last 5 years, we have seen the frequency of calibration has significantly improved. In certain contracts, it's on a quarterly basis and in certain contracts, it's even on a monthly basis. So that is the kind of an escalation metric that's being awarded. So basically, if fuel prices, let us say, were to go up by, let's say, INR 10 a liter over the next 3 months, in the ensuing quarter, you would get that sort of compensated and your pricing would go up to that extent. Is that fair? Yes, that on the same is right. So basically there will be a mismatch at the most for 1 month to 3 months, but otherwise you should get back into the sort of linked pricing? Yes. These are various projects. So maybe Sudden Time is on the same month itself, Sudden Time takes us accordingly. And across about your payment terms are 60 days for all your clients and all municipalities across projects and geography? So it's different for different job openings, but yes, the weighted average since it's a service industry and we are in essential services, our payment cycles are very much in line and it's improving further on. So we have seen the fact that even during COVID times and you were among the front runners there, so we had managed to be on the ground throughout the entire period. So receivables, even during these tough times for the corporations and for the companies like Anthony, was still being on good grounds. So 60 days is what we have been working. It's coming from 64 to now it's 60. We are constantly working and kind of trying our best to kind of bring it even closer to maybe 45% or 50%. But that's the target that we are working internally. Okay. Thank you very much. This is a very helpful call. Wish you all the best. Thank you. Thank you.