Ladies and gentlemen, good day and welcome to Antony Waste Handling Cell Limited Q2 FY 2025 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jose Jacob, Chairman and Managing Director from Antony Waste Handling Cell Limited. Thank you, and over to you, sir.
Good afternoon, and thank you for joining us for our Q2 FY 2025 earnings conference call. With me, I have Mr. Mahendra Ananthula, our Group President, Mr. Subramanian, our Group CFO, and Jigar, our Investment Relations Advisor. I invite you to the presentation. For Q2 FY 2025, it is now available on the website of the stock exchanges and also on our company's website. For the quarter ended 30th September 2024, our operating revenue remained stable, reaching INR 200 crores compared to the same period last year. This softer growth was primarily due to the absence of one-time lump sum escalation receipt of serving growth in the prior period from one-off of collection and transportation Nagpur contract . If we were to assess for this one-off item and project rolloff, our core operating revenue had seen a growth of 6% on a year-on-year basis.
Our total operating revenue, inclusive of income from sale of recyclables and refuse-derived fuel, but exclusive of contract revenue, stood at INR 220 crores, reflecting stable year-over-year growth. During the quarter, our collection and transportation business saw year-on-year volume growth of 9%. Revenue on the year-on-year basis has seen a decline, and this is because of this one-time lump sum escalation receipt of INR 13 crores. However, if we talk about our processing revenue, it has grown by 22%, driven by power sales from our PCMC waste-to-energy plant, and I'm happy to say that our first WtE plant is working very optimally. EBITDA for the quarter stood at 49 crore, with an EBITDA margin of 21.4%. Going forward, with a significant investment in our C&T business, we believe our margin to improve.
I'm pleased to announce that our wholly-owned subsidiary, AG Enviro Infra Projects Private Limited, has achieved a significant milestone by winning a INR 976 crore collection and transportation contract with Navi Mumbai Municipal Corporation. This marks the third consecutive term that we have been awarded this contract, which underscores our strong track record and exceptional reputation in securing re-tendered contracts. Our continued partnership with Navi Mumbai Municipal Corporation reflects the trust they have in our operational efficiency, commitment to quality, and ability to deliver on large-scale urban waste management.
In addition, we are excited to report that our construction and demolition waste management site has now commenced operation. Initially, results are very promising, and we expect this facility to contribute meaningfully to both our operational goals and environmental sustainability objectives. By addressing C&D waste, we aim to support urban infrastructure projects while promoting the responsible recycling and reuse of materials.
Our CIDCO biomining project is also progressing on schedule, with steady advancement and successful early outcomes. As this project continues to ramp up, we anticipate it will play a vital role in our portfolio. Looking ahead, we are confident that our strategic investment in the C&T business, along with the efficient operation of our PCMC waste-to-energy plant, the successful launch of our C&D construction and demolition waste project, and the scaling up of biomining at our CIDCO project will enable us to deliver strong and sustainable long-term results. Together, these initiatives not only drive growth but also align with our commitment to building a greener, more sustainable future for the communities we serve. Thank you, and I'm now turning over to the operational aspect. Let me get Mahendra in. Mahendra, over to you.
Thank you, Jose. I would like to provide an update on the operational performance of Antony Waste Handling Cell Limited. We are pleased to announce the successful completion of our first anniversary of operating the waste-to-energy facility, which has achieved an impressive plant load factor of approximately 71% in the first year since its commissioning on 7th October 2023. This is significantly higher than the industry average of about 60% PLF for similar projects in the first year of operation. For the coming second year, we are targeting a PLF of about 75%. During the quarter, our PCMC waste-to-energy plant produced over 22 million green units in quarter two, advancing our goal of reducing fossil fuel dependence and lowering carbon emissions. We have also avoided 3,485 tons of CO2 equivalents. During this period, we managed approximately 1.19 million tons of waste, reflecting a healthy 4% year-on-year growth.
Excluding expired contracts, our organic volume growth was around 7% year-to-year, driven by the successful execution of new contracts, increased volumes, and existing C&T sites. In the C&T segment, we handled a record-breaking tonnage of around 0.49 million tons in quarter two, marking a strong 9% year-on-year growth. Please note that the tonnage handled excludes projects built based on fixtures, trips, or household counts. Our waste-processing business managed approximately 0.70 million tons in the second quarter. Our moat remains robust as we continue to deliver impressive circular economy-driven metrics. During the quarter, the company successfully sold approximately 30,500 tons of RDF and around 4,000 tons of compost in the first half of FY 2025. These totals reached about 64,750 tons of RDF and 10,200 tons of compost, representing year-on-year growth rates of 14% and over 100% respectively.
This achievement highlights our commitment to sustainable circularity by converting inorganic fractions from municipal solid waste into RDF, aiding cement companies in meeting their ultimate fuel requirement goals. On the ESG front, our Scope 1 and Scope 2 emissions total approximately 12,800 and 1,700 tons of carbon dioxide equivalents in H1 of FY 2025 respectively, with avoided emissions amounting to approximately 6,800 tons. Our ground staff strength currently stands at about 10,252 people. As we navigate the evolving landscape of municipal solid waste management, we remain focused on driving sustainable growth and enhancing operational efficiency. We are confident that our track record, innovative approach, and commitment to excellence will continue to be our strength in achieving our objectives. Thank you, and I now hand over the call to N.G. for financial analysis.
Thank you, Mahendra. Good afternoon, everyone. For the second quarter of FY 2025, the company reported stable growth in its core operating revenue, reaching around INR 200 crores, consistent with the same period last year. Just to add color to what Jose had mentioned earlier, the year-on-year growth appears softer, primarily due to the absence of the one-time lump sum escalation receipt of INR 13 crores recorded in the prior period.
Adjusted for this one-off and the project rolloff, the core operating revenue showed a 6% increase on a year-on-year basis. The quarterly performance also appears soft due to the monsoon factor, which didn't allow us to optimally operate our construction and demolition waste project, which we plan to ramp up in the second half of the current financial year. Our total operating revenue, which includes income from sale of recyclables and RDF, excluding contract revenue, stood at INR 220 crores.
We have observed a notable shift in our revenue distribution from the second quarter of FY 2024 to the second quarter of FY 2025. In the same period last year, the revenue breakdown was 66% from C&T, 21% from processing, and 13% from contracts and others. For the last quarter that is Q2 FY 2025, this shifted to 62% from C&T, 26% from MSW processing, and 12% from contracts and others. Contract revenue in the second quarter of 2025 totaled INR 27 crores, a slight decrease from INR 29 crores in the same period last year. The group achieved a consolidated EBITDA of INR 49 crores with an EBITDA margin of 21.4%. Finance cost has increased from INR 7 crores last year to INR 12 crores in the last quarter, while depreciation has jumped by 54%. This is primarily due to the commercial launch of the waste-to-energy plant and the construction and demolition waste project.
As of September 2024, the group's gross debt stood at approximately 397 crores, with cash and bank balance of around 82 crores, resulting in a net debt of around 315 crores, indicating a net debt-to-equity of 0.4x. Additionally, the company has, during the quarter and subsequently, received 45 crores of the capital grant from the PCMC client, and the same has been applied towards debt reduction. The group's weighted average cost of debt is approximately around 9.6%. That concludes our remarks. We would like to open the floor for the Q&A.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yeah, hi. Thanks for the opportunity. My first question is related to the exact timeline. If you can give us what revenue are we going to book from each project, I'll ask project-wise for the current year as well as for the next year so that we can get a fair understanding of how the revenues will be leveraged. So first, from the Panvel Municipal Corporation, what sort of revenue is booked in this year and the next year?
Bhavya, you sound a bit low. Could you come a bit closer to your hands?
Yeah. Am I audible now?
Yes, sir, you are.
Yeah. So if you can just help me understand, what is the revenue for Panvel Municipal Corporation that we expect for this year and next year? That is my first question. Yeah. Similarly for other projects as well. I'll ask one by one.
Okay. For the first half of the current financial year, Panvel added around INR 17.7 crores of revenue, and the PCMC power sweeping and the PCMC waste-to-energy added around INR 5 crores and around INR 23 crores respectively. This is for the first year.
INR 5 crores? Mechanical sweeping, you said, INR 5 crores and?
PCMC Waste-to-Energy added INR 23 crores.
Waste-to-Energy added INR 23 crores. And similarly, when do we expect revenues coming in from CIDCO biomining and the C&T project at Navi Mumbai?
The C&T revenue from the new project will start from April 2025 onwards because the mobilization period is six months, so from the next financial year, we'll see revenue from the NMMC contract coming in, and for the CIDCO biomining I think the ramp-up will start in the second half, and the revenue will start fluctuating from December onwards.
How much revenue for the year do you expect from CIDCO biomining?
We are looking at about INR 4 crores of revenue.
INR 4 crores. Okay. Last thing, for the construction debris, have we started booking revenue, and for the year, how much do we expect?
Sorry, can you repeat that question? We couldn't hear that clearly.
No. For the construction debris, have we started booking revenue, and what would be the revenue expectation for the current year?
For the construction and demolition waste, we have started booking the revenue. We started with C&T operations only in the month of August, so the ramp-up will happen in the current financial year.
Yeah. So as you mentioned, I mean, the C&T operations started in August. The processing plant operations started 10 days ago. So approximately going forward, we expect a revenue of about INR 3 crore per month.
INR 3 crore per month.
Okay. Starting from?
Yeah, I mean, starting from this thing, but as an average, I mean, for the next four months, so you can say that we will have about a revenue of INR 12 cores-INR 15 crores.
Got it. And just one more thing. We formed a subsidiary specifically to help corporates meet their EPR. If you can throw some light on this as well.
So the construction and demolition waste, according to the white paper that was quoted, for developers, approximately 10% of the materials that they use need to be from repurposed or recycled materials. So that is one of the mandates that has been quoted by the government. So the EPR is definitely a revenue generation point for the company in this aspect. But the main core revenue for us would be the tipping fees from the client. Sales or revenue from EPR would be additional over and above what we can get from the tipping fees.
Got it. And if you can just throw light on the projects which are completed and what was their revenue contribution last year and how much this year we are, I mean, if you can just light on the projects that you completed and their revenue contribution?
Only the project that was completed last year was the Bangalore Collection and Transportation Business, and that contributed for the same period last year, that is for the H1 FY 2024. It contributed around INR 17.4 crores.
INR 17 crores.
So if you were to look at it on an H1 to H1 basis, incremental revenue from new projects added around INR 45.8 crores. If you were to deduct the Bangalore revenue and the Nagpur escalation one-time thing, the increase in revenue, core revenue for the H1 period would be around 12% for the company.
Can you just repeat the last figure?
Total revenue from new projects would be around INR 46 crores. Revenue from expired projects, INR 17 crores from Bangalore, and Nagpur escalation was INR 13 crores, as you mentioned. So if you net up these two numbers, then we are looking at a core revenue growth of around 12.1% in the H1 period.
Okay. Got it. Fair enough. Fair enough. I'll get back into it. Yeah. Thank you so much.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Prakash Kapadia from Spark PMS. Please go ahead.
Yeah. Can you give us the core EBITDA and core margin reported during the quarter?
The core EBITDA during the quarter was around INR 48.9 crores, and the core EBITDA margin is around 20.1%.
Okay. And as we stand today, what's the outlook for the second half and anything new in pipeline in terms of newer geographies or derisking? Any updates on that?
For the second half of the year, we are looking at least a 15%-16% top-line growth, which includes the ramp-up of operation at the biomining of the C&T project, ramp-up of operations at our waste-to-energy entity, which will see an improved PLF post the maintenance shutdown, and sales from a C&D base. So that gives us comfort of achieving around 14%-18% kind of a growth in the second half itself. On the project pipeline, I mean, we are looking at a couple of waste-to-energy and a couple of C&T projects, mainly in the western region.
Okay. Thanks.
Thank you. The next question is from the line of Kashvi Chandgothia from JRK Stock Broking. Please go ahead.
Yeah. Hello. Hello?
Yes.
Can you hear me?
We can hear you.
Yeah. Hi. Thank you for the opportunity. So for my question would be to could you throw some light and more perspective on what are the future perspectives for the next year? And how are we looking forward to expand the margins?
So as I mentioned, we are looking at a couple of waste-to-energy and a couple of C&T projects. Okay. But most importantly, another major initiative which is still on the drawing board stage, but we are exploring setting up a large waste-to-energy project at our existing Kanjurmarg facility. I mean, as I mentioned, we are still exploring that. We are in discussion with BMC. We have a couple of rounds of meetings, and we have submitted a proposal, a brief concept, I would say, to them in terms of how we would like to take it as part of our existing mandate. So that's something which is going to be one of our major initiatives for the next year as far as the conventional business goes. Secondly, as we had always mentioned about our commitment to get into vehicle scrapping facility and so on.
As we mentioned in the previous earnings call as well, we had decided to buy land instead of taking land on rent to set up this facility to de-risk this project. We have made progress. We have already identified the piece of land near Mumbai, and we have already submitted the application. The application has made progress within MIDC circles. Post-election, which is due sometime later this month, their land acquisition committee is likely to give the land to us, allot the land to us. These two projects that I mentioned, I mean, are the two we are going to focus on, these two initiatives in the next couple of quarters and years.
Okay. Thank you so much.
Thank you. A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Amit Rajput from Rich Capital. Please go ahead.
Hello. Am I audible?
Yes.
Thanks for the opportunity. Sir, could you please throw some light on your trade receivables and intangible assets? Because it was contributing around 18%-20% in your balance sheet.
So on the trade receivables, the long-term receivables is part of the retention money as per the tender condition, which gets released at the end of the contract. So the total DSOs, including long-term receivables, stands at around 112. Post a subsequent period after the quarter closed, I mean, we have received a significant amount of sums, and now our DSOs is around 72. So that's on the receivables front. Intangibles are basically money spent as capital expenditures in our Kanjur processing facility towards the material recovery and the composting plant and the waste-to-energy project. So these two are sitting as intangibles in the books of assets because these projects are on DBOT nature. And as per Accounting Standard 115, these need to be treated as either financial assets or as intangibles.
Okay. So what is your future plan for digestion business? Because as of now, most of the processing plants are in Mumbai, and you are mostly concentrated towards them. So.
So apart from the geographic thing, I mean, because apart from Mumbai, we also are present in the Delhi NCR region and so on. What we think is that opportunities are here much more than some of the other regions. Although we are looking at a couple of business opportunities in the states of Tamil Nadu and Karnataka, but these are still early days because not much progress has happened as far as those tenders are concerned. But geographically, we want to focus on western region by and large. And in terms of projects, as I mentioned, that was waste-to-energy and vehicle scrapping facility. That is going to provide us a lot of de-risking.
So is there any other contract other than waste-to-energy and vehicle scrapping from municipal corporation for solid waste management or processing side?
So in the municipal solid waste, I mean, apart from this, there is a Bio-CNG project that we are looking at. And then there are a couple of composting and MRF facility. But those sizes are smaller, so that's why we are focused more on the waste-to-energy and Bio-CNG to some extent.
Sir, my final question is regarding your guidance towards revenue and margins. Because in recent quarter, your margin has been hit by more than 50%. Because in quarter two FY 2024, your PBT margin was around 16%, and now it's standing at 8.4%.
Yeah. So one of the main factors for the fall in our pre-tax margins is increase in interest and depreciation cost. So that is also predominantly because of the waste-to-energy being put to action. So before that, it was under capital work in progress, right? So once the plant is commissioned and put to work, the interest and depreciation cost kicks in. And this was what we had already guided in the past. So the plan of the company is to reduce the debt, which is what we are doing, so that the conversion from EBITDA to pre-tax is a significant sum, which can help us roll out more business going forward.
So actually, the EBITDA margin is also seen as some fall because in quarter two FY 2024, EBITDA margin is standing at 24.6%, and now it is around 21.4%. Is there any sort of guidance which you wanted to give on the EBITDA side?
We stand by our previous guidance of a 22%-23% EBITDA margin for the financial year. So if we were to make those adjustments of escalations and revenue increase and everything, we would be looking at a 23%-24% margin on a YTD basis. But the company stands with this guidance of around 23% EBITDA margin for the financial year 2025.
Okay. That's all from my side. Thank you so much for answering my all questions.
Thank you. The next question is from the line of Yogesh from Eaton. Please go ahead.
Thank you, sir, for taking my question. Am I audible?
Yeah.
Yes, sir. My first question is on the CapEx. So what would be the CapEx like for FY 2025, 2026, and 2027?
For FY 2025, we're looking at a CapEx of around INR 78 crores, which includes the newly bagged contract for the collection and transportation business. In FY 2026, it will be around INR 25 crores. And in FY 2027, assuming we don't bag any contracts, we will have a repeat CapEx of around INR 25-odd crores related to Kanjurmarg and the waste-to-energy project. We don't see anything beyond that. Of course, this will change based on new project loops.
Sure. And the other one is on your debt reduction. So we have reduced some debt this year. So what would be the trajectory of debt in the next two years?
To put it into perspective, if the company doesn't bag any new contracts and we are able to generate the kind of cash flows from our existing projects to around INR 120 crores-INR 130 crores, we would be debt-free in a five-year period of time.
Okay. So by FY 2029, basically?
Yes. If we don't bag any new contracts.
Sure. And just one question on the current quarter. So if I look at the revenue from the collection and transportation, about INR 152 crores we did. Sorry, INR 141 crores we did. Last time, it was about INR 152 crores. And this includes INR 13 crores of escalation. So if I exclude that, there has been a decline. No, no, sir. There has been an increase. But the volume has increased by about 1%. So what is that difference coming from?
You also need to remove close to INR 9 crores of Mangaluru revenues. So two things. One is the INR 13 crores of revenue from escalation and the nine crores of revenue from Mangaluru, which is absent in the current quarter. So you need to compare that. So on an apples to apples, the core operating revenue is up by around 9%, adjusted for the Mangaluru and the escalation items.
Okay. Sure. That is helpful. And just last one question. As you discussed that you are looking to set up maybe a waste-to-energy plant at Kanjurmarg. So I know still it is on the drawing board. But just to understand, will it be the size would be bigger than that at Chinchwad or something about that?
Yeah. It's going to be definitely much bigger than that. I mean, because also Mumbai is a large city. I mean, so we are looking at as of now, as we speak, we are looking at three lines of 1,000 tons per day each. So about 3,000 tons per day of waste-to-energy is what we are looking at, which is about four times that of the PCMC plant.
Sure. So Chinchwad is about 14 MW. So it would be about three times that capacity?
That's right. Yeah.
Okay. Yeah.
Four times, right? So see, typically in this, I mean, one should look at the intake capacity of the waste. So PCMC is, yes, 14 MW with 700 tons per day. This is about four times. Three and a half to four times is what we'll say. Yeah.
Sure. That is very helpful. Thank you very much. That's all from my side.
Thank you. Next question is from the line of Pushkar Jain from Sequent Investments. Please go ahead.
Hi, sir. Can you hear me?
Can you please speak louder?
Yeah. My question was in terms of the growth guidance for next two, three years and the sustained EBITDA margin. So what do you think will be our guidance for next two years?
Can you please repeat the question? We can't hear you.
Can you hear me now?
Yeah. It's better.
Yeah. So my question is regarding the sustainable revenue growth for next two, three years and the sustained EBITDA margin you think is possible in the next two, three years?
We are confident of growing the core revenue growth by around 25% CAGR over the next three to four years based on the existing contracts and the project ramp-up that we have at the PCMC and the construction and demolition waste. Our margin profile should be steady of around 23% over the next three to four years if everything goes as per our scheduled plan.
Thank you. And on the DSO, did I hear it correctly that it reduced from 112 to 72?
Yeah. The collections made subsequent to the quarter end.
How is it steep, sir? If you can explain in the details?
The DSO days, normally what happens is corporations release the payment after due diligence and records. The bills are raised at the end of the quarter. The payment gets released anywhere between 20-35 days after the period ends. Since the reporting end dates are for accounting purposes of the end of the quarter, that is why you see a lumpiness there. The realization happens during the quarter period.
Okay, so actually, the DSO days should be in the range of 75-85 normally?
So normally, yes. It's always on the same line. So around 72-74 days is what my rolling DSOs are.
Okay. Okay, sir. Thanks a lot for the question.
Thank you. The next question is from the line of Sujash Choudhury from Sujash Capital. Please go ahead.
Hello. Am I audible?
Yeah.
Actually, I have two questions. What's your plan about new technology in waste management or in electrical e-waste products?
So as we had mentioned in the previous earnings calls, I mean, we have prioritized in terms of what are the segments in circular economy themes that we want to diversify into. So to start with, we have focused more on the vehicle scrapping and tire scrapping facility.
So you are not in the focus of e-waste like battery or in the field of electricity?
Yeah. So e-waste, we are exploring. The market is not really sized, but we are exploring. We have been doing research on it. I think in future, we'll come up with e-waste too.
Okay, and are you planning for the private companies' CapEx also? Last time, you have said about the bottle waste management something.
Can you please repeat that question?
I'm asking you, are you looking not only in the government, but also in the private sector?
So basically, this municipal solid waste management is collected from all households and also by the municipal corporation. So it is controlled by the municipal corporation about 80%-90%. And in the smaller towns, it's the franchise. So it is not like we can just go and collect everywhere. At present, that size of market we are talking is very small. So we are focusing on the larger size market.
So are you planning to expand in other countries also or only focus in India right now in terms of waste management?
The waste management market is pretty good and big. We are not there. There's a huge opportunity in Thailand. There is.
Okay.
So there are some inquiries. There are some inquiries from the Middle East. Okay. But we are very clear that we would like to work there only if it comes without any investment. And our contribution will essentially be more of knowledge and mind game.
Okay. And what, sir? Right now, are you planning for something like raising money from market or something?
Currently, the kind of debt profile that we have and the financial flexibility that is more than adequate to meet our existing requirements and even the proposed capital requirements in our existing line of business. We will definitely reach out to the market if the opportunity increases and there is something which can be banked on.
Okay, and you are planning in South India, like Tamil Nadu and Andhra Pradesh, that you mentioned. So are you bidding for the contracts right now, or the contract is still going to be happening?
So the risk management committee at Antony's reviews all the proposals that have been given over time. We have definitely reviewed the projects in the southern part of the country. The management is definitely looking at those opportunities. And if it meets our equity and cash equity IRR thresholds, we will be bidding for the same.
Okay. Thank you so much.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Chandan Mishra from Finvestors . Please go ahead.
Thank you, sir, for giving me the opportunity. Am I audible?
Yes.
Sir, my first question is related to the projects. You have currently 24 running projects. What is the completion period for them?
The waste processing projects have a timeline of around 2042. The collection transportation project's average exit period will be till 2029.
My next question is regarding guidance, sir. Actually, I have joined late, so I have missed some part. Would you please provide me guidance for next year, sir, and this year end?
So we are confident of growing our company with a core revenue growth of around 25% over the next three to five years. And the EBITDA margins will be sustained around 23%-24% from the existing projects that we have.
Okay. Sure, sir. Thank you, sir.
Thank you. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yeah. Thank you for the opportunity. Just wanted to know in terms of ROC ranking, if you can provide which project uses the best-in-class ROC, if you can give the checking on that.
So ROC will ease up from now onward, given the fact that most of the capital phase has been over. So the denominator is almost going to stagnate going forward. But for the waste collection and transportation CapEx that we have incurred, so we see our ROC expand from Q4 of 2025 onwards. And that should average at least 75-120 basis points from the levels that we have achieved now.
I meant, if you can give a project-wise pecking order of ROC, whether it's waste-to-energy?
We would like to discuss the return metrics project-wise because it's a bit of a business-centric proposition here.
Only if you can just give me the pecking order . If you cannot mention the absolute number, that's fine.
So I mean, collection and transportation definitely gives a better ROC because the capital employed is not as high as a waste-to-energy or a waste-processing project. So the priority for ROC per se would be collection transportation, where the CapEx is provided by the corporation, followed by collection and transportation, where the CapEx is funded by the company. And third in that order would be waste-processing contracts. But the nature of the business is very different. The longevity, the stickiness, and the annuity modes also need to be considered when we are looking at the contract that we bid for.
Right. And in terms of cash IRR, also with the pecking order , it's the same?
No, that will be different because the ratios will be different. The clientele receivables are also different. So in a utopian environment, I think yes, the pecking order would remain the same because zero CapEx, better IRRs, low CapEx, slightly lower than better IRRs thereupon. But we prefer a long-term visibility for revenue, a stable work environment, and a counterparty risk which can be addressed and banked out.
Right. So I mean, just because in the [audio distortion], you mentioned that we evaluate each and every project. So what is the desired cash IRR target that we look internally for any project? A bare minimum, what would be the number?
So I mean, these are very dynamic in nature given the need and our proximity and the project aspects. But normally, the basic threshold will be at least a delta over the cost of borrowing that we have. And since we are in an infrastructure business, the cost of borrowing is anywhere between 9.5%-11.5%, depending upon the risk of the project and the execution of the same.
Right. Thank you.
Thank you. The next question is from the line of Prakash Kapadia from Spark PMS. Please go ahead.
Would you have the volume percentage of the C&T and the processing business ?
Sorry, are you asking about the C&T or the consolidation?
C&T and the MSW processing, the volume for the quarter or the first half, whatever can be with you.
It was around.
I mean, are you asking for this year's thing or this quarter?
Yeah, yeah, yeah. The quarterly.
Quarterly. Quarter, we did about 1.19 million tons. Yeah. Sorry. In the C&T segment, the collection and transportation segment, we did about 0.49 million tons in this quarter.
The MSW processing?
Processing is 0.70 million.
And would you have the first half number?
First half number. Yeah. So basically, quarter two in C&T, we did about nine. No, this was a year-on-year growth. I will get back to you.
You mentioned that you seem pretty confident of 22%-23% EBITDA and the core revenue growth being almost 25%. What gives you that visibility for second half?
So when we mentioned 25%, that's a CAGR over the next three to five years. It's not for the second half. One. Second is, our second quarter normally sees a spike in our repairs and maintenance costs. A bulk of our collection and transportation projects are entering in the fourth year of their operation. So it normally sees a significant repairs and maintenance cost coming in. So we have incurred a large amount of investment costs during the second quarter for the upkeep of those collection and transportation assets, which kind of gives us a longer payback over the next three to four years of the project life. So that kind of is the philosophy of Antony Waste, where we kind of do our entire repairs and maintenance. We don't capitalize them. We kind of affect the repairs and maintenance costs.
We do it during the middle of the project life so that the benefit is available for the balanced life of the project. The confidence that we get how we are providing for the guidance is basically because the collection and transportation and the waste processing are long-term contracts with a tonnage growth which is there for us. We exited the June quarter with an order book of around INR 8,300 crores to be spread over the next 12-14 years. That kind of has a huge revenue visibility for us without the escalation kicking. That kind of gives us a comfort on giving you the guidance. The positive for us is the ramp-up of CIDCO Biomining which is expected in second half. The concerning demolition waste which is yet to deliver those numbers. The base effect will help us deliver those numbers.
Okay. Thank you.
Thank you. A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Pushkar Jain from Sequent Investments. Please go ahead.
Hi sir. So actually, I missed on the ROC question. So what do you think is our steady-state ROC? We expect a steady-state ROC from where most of the CapEx is done.
So we should be in mid to low to mid-teens going forward because our denominator is going to be much higher than what it was historically. So anywhere between 11 %-1 4% over the next project rollouts should be our comfort zone, I would say.
Okay. Thank you.
Thank you. A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Haresh Swaminathan, who is an individual investor. Please go ahead.
Thank you. My first question is on the Mangaluru project. Have we received the full money from them now that we have discontinued operations?
We have received 70% of the total outstanding. The balance will be received over the next 15 months.
Okay. And secondly, can you mention the potential of the Click-to-Clean initiative? How much do we get from that initiative now? And how big is that?
So this has really got the traction. We have been able to work with a few large developers. We have got a large order from the Runwal Group to start on the Click-to-Clean business. So it has got a good traction. We will be able to give you better numbers by March end when the long-term contracts are signed off and we have a revenue visibility at that end.
Okay. On the Chennai project, can you mention the likelihood of us getting it?
The Chennai contract has a significant risk, the counterparty risk, because the buyer of the power and the recipient and the payment would be from the TNEB, which a lot of bankers are not making it bankable, so that is a contract that we will not be able to go ahead given the significant counterparty risk, and so currently, for the waste-to-energy in Chennai, we will give it a miss, but we are exploring other projects with the municipal corporation over there.
Okay. And my last question is, is there a likelihood, I mean, that's an open thought in my mind, that we look at something like a QIP, not at current price levels, but at whatever comfortable price levels, to strategic people, not bankers or not investment firms, but global firms like Waste Management, Inc. or global waste management companies, so that we also benefit out of their technological alliance or partnership. And our perception also goes up, and we can solve our debt issue without waiting for five years with no orders, as you said, because ours is a running business. So it is just a thought. I'm sure you are better equipped to handle these things. But this is just an open thought in my mind. If you'd like to comment now, or you can choose to just receive my suggestion. Thank you very much.
Yeah. So we have not specifically thought about any QIP with any strategic players in the current business. However, we are open to the idea of tying up for the new segment that we are trying to get into, which is our tire recycling or going forward if you get into e-waste or plastic processing. So for that, strategic tie-up with some of the global majors or technology suppliers or operators is something that we'll be looking forward to.
Thank you. Thank you. Thank you very much.
Thank you. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead.
Yes, sir. You mentioned about the ROC, [audio distortion]
Sorry, could you come a bit closer to your handset?
Yeah. Yeah. You mentioned about the steady-state ROC, in the low to mid-teens, 11%-14%. So if you can just throw some light on the ROE front, because ROC, I mean, if the cost of borrowing is closer to 9.5%, which even goes up to 11.0%. So 14%, isn't it a too low ROC with the level of risk, debt risk that we have in the business? So if you can throw some light on the ROE as well, steady-state ROE.
On the ROE part, given the fact that my denominator is going to keep on increasing because we currently are not looking at issuing dividends, which is one of the ways of reducing our equity base. So we will see our ROE being single digits for some time. ROC is mainly a factor of the kind of capital that we are raising and the long-term duration of the construction phase. If you were to look at waste processing contracts, they normally take anywhere between 24-36 months for the construction phase. And they really are high in capital, and the balance sheet really gets added up by 25%-30% each time a new waste-to-energy or a waste processing contract comes in. Well, the revenue and the extra contribution is over the next 20 years, which kind of really gives a tag-along growth rate.
So, ROC, though you are saying is right, but from a waste processing and long-term annuity model, it's like any other infrastructure road sector kind of a company. But ROC is large upfront and then kind of petered off on the capital.
Right. Even if we take the average ROE, what would that number be somewhere if you can just throw some light on that? I understand the upfront.
We would be looking at around 8%, as has been a historical average. It was as high as 14%, but that was on a lower equity base. As and when we go with the corporate restructuring and changes that likely to initiate over the next couple of years, we would see an internal hurdle rate of around at least high teens to start with. I mean, that is something that we have as a goal post, but it's going to be at least a seven to eight-year kind of a work in progress for us.
I mean, the number looks really low when it comes to ROE as well. I mean, the level of risk that we have in the business, I mean, is it the reason that a lot of people don't bid for such kind of processing long-term contracts, or is it to do with the difficulty of this business? Or I mean, if you can throw some light on this, I think.
It's a combination of both. Most of the projects in the waste management require a significant debt-to-equity ratio. It's like 70/30 kind of a debt-equity ratio that you need to bid for this project. So that is why you are seeing a large equity component being invested in these kind of entities. Collection and transportation, normally you can get away with around 90%-95% debt-equity kind of a number. But the C&T business is a low-barrier kind of a thing, so you can exhibit multiple of them. But when we are talking about waste processing, the equity is a daunting number, which kind of doesn't allow a large number of players to enter the business. And also, there is a significant counterparty risk, which is something which doesn't allow a lot of players to get into the business.
So ideally, it is coming up everything. Isn't C&T project the best format to work with?
That is true because if you look at our revenue profile, in the past, it was close to 70/30, 70% being C&T and 30% being waste processing. That has moved towards 60/40 now for us. And that is also primarily because the margin profile is also different in C&T versus processing. The C&T margin profile keeps on a downward trajectory over the project line because of higher repairs and maintenance. And you're working with a multiple bouquet of clients, which have a very risk profile. While in the case of waste processing, you work with few clients, and the risk profile is much more evenly spread out based on your selection criteria.
Okay. Thank you. Thank you. That's it so far.
I mean, one has to also look at the entry barriers and where we can have a differentiation. So when it comes to collection and transportation today, I mean, depending on the size, I mean, even a regional player can compete against you, right? Because then it just boils down to the price. Whereas in the case of processing, I mean, it's actually much more technologically advanced. So the chances of smaller players getting in are extremely low. And people have tried in the past, but they figured out that it's a different ballgame. So that's why in the balance of things, I mean, I think we're supposed to have a balanced portfolio, a combination of C&T and processing projects for sustainability.
Got it. Fair enough. Thanks for the elaborate answer. Thank you, sir. That's it so far.
Thank you. The next question is from the line of Rishi from Greenco Securities . Please go ahead. Mr. Rishi, your line has been unmuted. Please go ahead with your question. Mr. Rishi, the line has been unmuted. Please go ahead with your question. As there is no response from the participants, ladies and gentlemen, due to time constraints, we have reached the end of our Q&A session. I now hand the conference over to Mr. Jose Jacob for closing comments.
I wish to convey my heartfelt gratitude to our committed team whose kind efforts have played a pivotal role in accomplishing our goals. We are continuously building on our capabilities to enhance our operational efficiency and service delivery. Our unwavering focus remains on delivering consistent operational and financial performance while creating long-term value for our shareholders. By investing in innovations and leveraging our expertise, we aim to strengthen our position in the market and drive sustainable growth for the future. I'm optimistic that our path towards a cleaner and cleaner future will be marked by continuous success. Thank you, and happy and prosperous New Year.
Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.