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Antony Waste Handling Cell Ltd
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Ladies and gentlemen, good day, and welcome to Antony Waste Handling Cell Limited Q1 FY '24 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Shiju Jacob, Executive Director of Antony Waste Handling Cell Limited. Thank you, and over to you, sir.
Good afternoon, everyone, and thank you for joining us for our Q1 FY '24 earnings conference call. With me, I have Mahendra, Group President, Operations, Business Development and Diversification; and Subramanian, Group CFO, and SGA, our Investor Relations adviser. Our investor presentation is now available on the websites of the stock exchanges and also on our company's website.
I would like to start by emphasizing our strong start to the financial period marked by impressive financial results. We have achieved a record-breaking quarterly core operating revenue of INR 179 crores, setting a high bar for performance.
Looking ahead, our outlook remains positive with expectations for a consistent growth trajectory in our core operations. Operationally, we have achieved a significant milestone by managing the highest volume of tons in a single quarter. Notably, our commitment to excellence is reflected in our improved EBITDA margin, which has surged by approximately 260 basis points to reach 22.9%.
This accomplishment has been made possible by the dedicated efforts of our team, who executed various contracts with remarkable efficiency. Despite encountering inflationary pressures impacting our [ cost ] segments, we have successfully navigated through these challenges. As we highlighted in our previous call, any softness observed in our margin was transitory and we remain optimistic about our future performance.
The EBITDA margin achieved in Q1 FY '24 aligned with our earlier guidance, reinforcing our confidence in sustained stability and growth moving forward. Over the past 2 years, we have strategically allocated a substantial capital expenditure, notably directed towards the development of our waste to energy plant. As we enter FY '24, this period sets the stage for a steady foundation of growth in our core operational revenue. Our growth journey is poised to gain further momentum with decommissioning of our collection transportation, processing and disposal of construction and demolition project, C&D, before the end of the fiscal year 2024.
Our business stands ready to embark on a promising journey of growth. The company is currently engaged in proactive pursuits within the space of C&T and biomining projects, and we anticipate sharing positive developments on these initiatives in the forthcoming quarters.
Our endeavors stand as a testament to India's steadfast dedication to uphold sustainable principles especially as it takes the lead within the G20, a pivotal platform for international collaboration and resolving critical global challenges. Our corporate undertaking mirrors this unyielding commitment to sustainability principles underscored by our resolute aim to provide value to each of our stakeholders.
Thank you, and now I hand over the call to Mr. Mahendra, our Group President, who overseas Operations and New Business Development. Over to you, Mahendra.
Thank you, Shiju, and good afternoon, all of you. As leaders in the industry with over 2 decades of experience, we have consistently employed cutting-edge metrologies and technologies, bolstered by dedicated and knowledgeable teams to responsibly manage municipal solid waste. Building upon the foundation, we successfully commissioned a state-of-the-art 1,000 tons per day integrated waste to energy plant at Pimpri-Chinchwad city. Earlier this month, a truly historic moment unfolded for the company as the Honorable Prime Minister Shri Narendra Modi inaugurated our advanced waste energy facility in Pimpri-Chinchwad. An outstanding facet of this project lies in its alignment with India's green energy open active policy, making PCMC the first-ever municipal corporation to utilize waste to energy plant-generated electricity for capital consumption.
Additionally, the entire project is designed to use the treated water from the sewage treatment plant, thus reducing the reliance on brown fresh water for its operations. This project has 2 benefits. Not only will the corporation save approximately INR 314 crore per annum by reducing their energy bill, but more importantly, this project will save about 7 lakh tons of carbon dioxide annually, equivalent to 1.5 lakhs of passenger cars' emissions.
Let me also talk a bit more about our current operations. The company has accomplished an unprecedented milestone by achieving an all trend higher in the volume of municipal solid waste management. We have also attained the highest ever quarterly core operating revenue setting a new benchmark for our achievements.
During quarter 1 of this fiscal year, the company and its subsidiaries handled an impressive 1.2 million tons of waste, representing a significant 14% year-on-year increase. This can be attributed to the full-scale implementation of operations as recently acquired contracts, ramping up our existing collection and transportation sites and the increased tonnage processed at the waste processing operations.
Our core operations in the C&T business have been performing in line with our expectations. The C&T business segment per se for quarter 1 FY '24, the company effectively handled 0.45 million tons, reflecting a growth of about 11% compared to the previous year.
Additionally, the waste processing business managed about 0.75 million tons, demonstrating a growth of about 16% compared to the previous year. Our commitment to the circular economy extends cities we serve, where we integrate circular economy principles to amplify resource extraction and facilitates outreach initiative. More and more tenant producers are recognizing the value and potential of our Refuse Derived Fuel, that is RDF, as an alternative to coal as a fuel. We sold more than 27,700 tons of RDF in the current quarter, a whopping 44% increase over the previous year.
A point to note here is that the sale of RDF is currently a margin-neutral event, but we expect this to improve going forward. Further highlighting our dedication to sustainability and comprehensive resource recycling, we successfully recycled 365 tons at the our Varanasi site in the quarter 1 of this fiscal year.
On the waste processing segment, volumes handled at our operational sites have increased and disposal of processed waste such as compost and RDF has significantly improved. The start of our waste energy plant in Pimpri-Chinchwad, which was inaugurated by the Honorable Prime Minister, and our upcoming construction and demolition waste project in Mumbai, which is anticipated to commence operations by the fourth quarter of this fiscal year, the processing activities will witness a significant increase. We must mention that these processing projects normally have higher EBITDA margins as compared to the C&T operations.
On the business development front, we continue to meticulously assess new contracts against our stringent internal benchmarks. As we had mentioned in last earnings call, in the last quarter, we participated in a large C&T tender in North India and a biomining tender in South India. We are reasonably optimistic about the favorable outcome in both of these tenders.
Our transformative journey will continue in the coming quarters and many more going forward. Our dedication remains steadfast in upholding the essence of the significant event with harmony and fusion of leadership, visionary thinking and an unwavering pursuit of a greener and more sustainable future.
On to the financial aspects. We will get N.G. involved here. N.G., over to you.
Thank you, Mahendra, and thank you all for joining us. Our team continues to advance on our 2023, '24 priorities including increasing the profitability of our business through strong price discipline and an optimized cost structure. As I stated in May 2023, this year is all about getting our pricing escalations pass-through and cost control initiatives to be done. This is also the year of continuing to set ourselves up for the core long-term growth by delivering on what we can control.
Coming to the consolidated financial highlights of Q1 FY '24. We have reported operating revenue of INR 179 crores as against INR 156 crores in the same quarter last year, which is an increase of 14%. In the quarter, the tonnage handled was 1.2 million tons, as mentioned by Mahendra. This reflects the strong volumes growth of 14%. The first quarter, our operating EBITDA margin has expanded by 260 basis points, driven by a couple of factors. One is the pricing improvement; second is the escalation getting through our past period and a general increase in volumes. The margin growth has been aided let me reprise that by a few old escalations, which were not passed through coming into the system. And this is not reflecting the true reflective of the operational benefit that we have yet to benefit from the same contracts.
We delivered those results despite some things that we can't generally control like the stubborn higher OEM input cost inflation, and this margin was despite a 26% increase in the wage bill. The increase in the wage bill is mainly due to higher employee count arising from higher processing activities and the Nashik operations, which were absent in the year ago period and this has seen an increase of about 1,000 in our headcount. And this is also because of a PLI scheme related to staff salary increases initiated last year.
Sequentially, the wage and staff salaries have been up by approximately 4%. In short, the company registered a 7% increase of its EBITDA compared to INR 49 crores in Q1 FY '23 and EBITDA margin being 22.9%. This quarter's EBITDA is also a record-high quarterly EBITDA in absolute terms. Total PAT for the first quarter stood at INR 23 crores as against INR 29 crores in the same quarter last year. The difference being made by higher interest and depreciation expenses related to the incremental debt taken as the preprocessing site are also due to the CMC project. Gross debt of the group as of June '23 stood at INR 381 crores net debt is at INR 322 crores, reflecting a net debt to equity of 0.5x. The weighted cost of debt for the group stands at 9.7%, and the interest coverage is a healthy 5.6x. A word on the client concentration. Due to the consistent effort of the company over the last couple of years, the top 3 clients today contribute approximately 55% of our revenue. And this was a high 74% in FY 2019.
All these top 3 clients have a credit rating between AA and AA+ with stable outlooks. That's all from my end. Now we can open the floor for Q&A.
[Operator Instructions] The first question is from the line of [ Bala Murali ] from Oman Investment Advisors.
[indiscernible]
Sorry Mr. Murali, we are not able to hear you clearly.
Just a minute. Yes, I would like to know about this Pune project, waste to energy project. What kind of revenue we can generate from it in this year and next year?
So we will be seeing commercial operation of the PCMC waste to energy by the Q3 of the year. The plant load factors will be around 30% to 40% in the first -- in the third quarter, scaling up to around 60% by Q4. On a steady state of affairs, assuming 85% plant load factor, the project is likely to give an annual revenue of around INR 65 crores. So if you were to look at the revenue contribution, I would say around INR 18 crores to INR 20 crores of revenue would be recognized in the financial year ending March 2024. And if things go as per plan, around INR 58 crores to INR 65 crores in FY '25.
And other than this demolition Mumbai contractor -- demolition contractor, we don't have any other contract which can contribute to the revenue in this year or next year?
So yes, after the construction debris and the waste to energy, these are the 2 new projects that our revenue will be coming in. Additionally, the 2 small power sweeping contracts, which the company bagged, which is yet to start operations, which is in one in PCMC and in Nagpur. They will also start contributing from Q2/Q3 onwards. So these are the 4 contracts, which will be starting to generate revenue in the current financial year.
Okay. And at what volume, sir, we're able to generate some EBITDA [indiscernible] 27,000 tons dispatched. So if -- what would be the volume figure if we need to make some bottom line from that RDF?
Sorry, Mr. Bala, we couldn't clearly hear your question.
In RDF, we have dispatched around 27,000 tons, but it is breakeven as of now. So at what volumes we can be able to make some profit from that RDF sale?
So I mean, we will probably be making -- we will be breaking even at higher volumes, but it's not so much about the volumes. It's more about that as and when clients get convinced with the consistency of our RDF, they will be paying us a higher revenue. So we expect that when we hit a steady state of about 50,000 tons of sales, by that time we would be in a position to command a premium and hence a positive contribution in our RDF sale.
[Operator Instructions] The next question is from the line of [ Anirban Manna, ] an individual investor.
Thanks for a good set of numbers. So you mentioned about INR 55 crores to INR 65 crores of revenue in FY '25, incremental revenue. That's from Pimpri-Chinchwad plant project?
That's right.
All right. So in this year, we can do INR 18 crores to INR 20 crores from these projects. So what can be the total revenue means consolidated revenue, including everything in FY '24?
So on the core revenue front, I mean, we did around INR 675 crores last year. So we will be looking at around 18% growth on those numbers as things go as per schedule.
Okay. Meaning so only core revenue. And for contract?
Contract revenue, we don't foresee a significant balance of revenue here because the project at Pimpri-Chinchwad is almost completed, which means that we just need some couple of around INR 12 crores to INR 14 crores of remaining CapEx and these are administrative buildings and scaffolding and thereabouts. So we don't foresee a significant balance of project revenue for -- to be done in the current financial year.
Okay. Means -- the reason I'm asking because contract revenue has reduced significantly year-on-year because these quarter we have done INR 48 crores, last quarter, we did around INR 40 crores, but one year previous, like in Q1 FY '23, we did around INR 84 crores. So it reduced significantly, contract revenue, I am talking about. So that's why I'm asking.
Contract revenue is reflective of the CapEx that the company is doing because these are predominantly related upon an extent of INR 115 crores, which reflects 2 projects under DBOOT where assets are transferred to the client. So the project revenue is something which reflects the construction fees of the waste to energy project is almost completed and we are referring to the waste to energy projects here. So we don't foresee any remnant of these contracts here.
Okay. Means it would be almost flat, like INR 40 crores on an average per quarter.
Even lesser than that going forward because the CapEx freeze is done from the company's point of view. The core revenue from that project starts coming in supplementing the number.
[Operator Instructions] The next question is from the line of [ Saumitra Joshi, ] an Individual Investor.
So there was a little disturbance on the large part of it. So I just need 2 or 3 clarifications here. So -- and please correct me if I'm wrong. So against an estimated revenue increase of around, I think it was in the range of 10% to 15% that we were expecting last quarter, has that guidance been increased to 18%? Is that our understanding correct? Has there been any change in that guidance or revenue increase for this year?
So the revenue increased guidance is reflective of the speed at which the commencement of operation is likely to happen. So we were expecting the projects to be ready by end of Q3. Now from the way that things are shaping up, by mid of Q3, it feels the numbers are likely to start coming in. So that is why the numbers are reflective of that. And these -- I again repeat these are 4 revenue trends that we're talking about.
And the second part would be, with respect to the margins. So firstly, congratulations on whatever you had predicted or had envisaged that has come to in this particular quarter. So for this particular year, what are the operating margins that we should consider in our calculation?
So the margins that we reported in Q1 would form the base for us. The are 2 factors which kind of will influence the margin expansion. One is lower contribution of the contract revenue, which has been a drag on the margins. Going forward, we -- the project revenue element is going to be smaller, so the pressure on the margin will ease by itself. That is one.
Second is, in the last couple of quarters, the company has proactively not recognized revenue, which were booked under the escalation for the various contracts because of absence of elected members of absence of elected members in various corporations. Now that thing has changed. People have started coming. [indiscernible] are happening. So we have started recognizing a few of these revenues. Bulk of it is still not recognized to the tune of around INR 14-odd crores from a single client, for example. So those things are getting rectified.
So going forward, absence of fewer project revenue; and secondly, billing as per the tender condition, which is core tonnage plus escalation, these will come in both our revenue aligned EBITDA numbers. So on a steady state of affairs, I would suggest a 23% to 24% to be a very conservative EBITDA number for the current financial year, and that will be built -- will form the basis for the period going ahead.
So from a calculation perspective, if we take around 22% on a very, very conservative basis, that should -- that is something that probably will do increase, right? Is our understanding correct?
That's a very safe assumption.
Sure. So that's the second part to it. Now the third part is, is there -- I was just going through all the different quarterly results. Now one thing that comes into our mind is there a seasonality aspect to the business? If yes, does it play out in the Q2 and the Q3 part of it? Or there is no such thing as seasonality and more or less over the quarters, maybe here and there, there might be some difference, but we do catch up and there's not a huge seasonality impact that we see.
The seasonality effect actually is not a major factor in the C&T contract. But in the case of our Kanjur project, where biomining is an important element and given the monsoon season in Mumbai, which is almost 3.5%.
So my question arrives from the monsoon season in Mumbai.
That's right. That's right. So to that extent, I mean, yes, our biomining activities come to a standstill or at least are much less intense than the normal month. But we use that time effectively for maintenance of our equipment. And secondly, it also overlaps with that of cement companies with the maintenance shutdown of cement companies. So to some extent, it pays out. But to answer your question, yes, I mean, it's an important factor in the case of Kanjur project.
But that would only be with respect to like the seasonality during the rains. So more or less, the rains have stopped now. So let's say, from now on, probably, the actual work will start with the impact would be more or less if there is any impact, that's only in the second quarter of it.
Yes. So September onwards, typically things start getting to normalcy in both biomining and even waste to energy project as we'll see in the future.
That's a trend. It's not something new, right?
It's not new. Yes.
[Operator Instructions] The next question is from the line of Ansh Manek from Equirus Securities Private Limited.
Sir, I have a couple of questions. The first one is related to the -- is there any element of revenue booking of previous years, which we did not recognized in earlier years and now has been booked in the current period?
Yes. Approximately INR 6.3 crores was a partial recognition of revenue, which was reversed in the previous period. So that will come through because the corporation released the same in due time. So that is sitting in the books, and that is also helping the margin expansion because there is no associated costs with this revenue.
Okay. And N.G. sir, second question. Last time, you had cited there was around approximate INR 20 crores of revenue, which was provided or not upon receipt of expense of the excessive elected corporate members. What would be the most [indiscernible].
Yes. So of the INR 20-odd crores, INR 6.4 crores has been recognized in the current quarter. The balance as and when the corporation releases the funds on cash, this is the company will recognize the same in the books or accounts.
And what will be the impact of current quarter. Sir INR 20 crores for the FY '23. So that must be some revenue or escalation part in the current quarter, which has not been recognized?
So both of them put together. So when we talk about INR 20 crores, this is all relative to FY '23 period. So going forward, once things stabilize and normalize, so we would recognize the escalation of the previous period and also raising builds for the current period, that's when the company is operating.
Okay. And sir, with respect to the Mangaluru project, there was some news article where it stated given the [indiscernible] of any extension of the project, if you can guide with respect to that part.
So we had a discussion with the client, and the client has given us a schedule for clearing all the outstandings over the next few months. So we have decided to extend our contracts. So the client will be extending our contract by 6 months, okay? And the client has started paying us. I mean, at least started sticking to the schedule they have given us.
So when I think the [indiscernible] expected to be settled for this project?
So a significant portion of the receivables should be cleared by the end of the calendar or by end of the fiscal year at the most. The corporation also initiated a new tender where the CapEx will be entirely funded by the client. The company is also really looking forward to participate in this tender.
The next question is from the line of Neerav Dalal from Maybank Investment Bank Group.
Sorry, to interrupt, Mr. Dalal, you are sounding very soft. Can you say speak a bit louder?
I had a few questions. First was in terms of new contract wins, has there been a slowdown in terms of decision-making? And when do you see this [indiscernible].
Not really, I would not say it is a slowdown. I mean, at least the area for operations where we focus on, as we had said in our speech, we have already bid for a large C&T contract in North of India. And then a couple of biomining projects down south. So we don't see any slowdown in terms of new opportunities. It is just that we want to be focused in the clusters that we are active in.
Got that. Got that. And also, I just wanted to understand in terms of the growth target that has been given of about 18% on the core business. So this core business would include the INR 15 crores, INR 18 crores of new MSW processing that will come in from the Pune project, right?
That's right.
And then other than that, where do you see the growth coming from? Does this assume any new contracts coming in? Or just the existing contracts?
So we have a few C&T contracts, as I said, that this project in North India, I mean as and when that happens and so on, that can be a big growth driver. Then some of the biomining projects, which are actually -- now there are a lot many opportunities of that system, which are short 2- to 3-year duration, and that gives us good top line.
So that is included in the 18% growth target on the core revenues that we are talking about? So it includes the existing business and expectation of some new contracts coming in?
Mr. Dalal, no, the 18% growth is based on all the contracts that's actually been signed and when the work is going on. All future contracts will add to this growth. But normally, there's a significant lead then that they have signed a contract to the time I recognize revenue is anywhere between 8 to 14 months. So 18% growth that the company is looking forward is based on the contracts, one, assets purchased and good to use kind of scenarios.
Got that. Got that. And that's just related to this. So in terms of the contracts that you already have, in which contracts do you see the additional bids coming in or where we haven't reached the steady state?
You mentioned additional. Sorry, what word did you use? Additional?
So the contracts where we haven't reached the steady state. So hence, you will have some growth in those contracts vis-a-vis the last year to this year.
So projects in CCMP C&D operations and in Varanasi and Noida, where we have existing operations, we feel that the tonnages and household counts can improve, and that should kind of help us get the extra revenue. Also the user collection charges in Noida is something which we feel we need to concentrate better and that also adds to the top line.
And also the 2 power sweeping contracts that we bagged earlier this year. So one of them has just started commercial operations. That will start giving full revenue and the one at PCMC will start commercial operation sometime in quarter -- beginning of quarter 3.
Sure, sir. My last question is just related to tax rate. If you see the average tax rate for the current year -- for the current quarter is about [indiscernible] we've been having a tax rate of about 17.5% last year. So any change? And will this be the new tax rate...
So the tax rate will improve. They will inch up because my waste to energy product is up and running, and so that will start coming into the 25% tax plan. So my weighted average cost of tax that -- normally that we look at would be nearer to 17% to 20% because of most of the contracts being put into use.
Okay. Okay. So it is just because the -- so the contract revenues are lower, hence, the tax rate is higher. Is that...
Yes. So those are basically book entry value or promotional revenue coming through revenue and that sits on expense.
Okay. Okay. So it is that once the Pune project becomes steady-state, say, FY '25, you would have tax rates coming back to the 17%, 18% -- 17% to 20% or in the...
Would be around 20% to 22% because of the -- we have shifted to most of the companies to the new tax regime of around 25%. So the MAT benefit and everything will be housed by 2025, 2026. So going forward, 25% would be the effective tax rate. So that's how...
Or we should assume that for the full year, the effective tax rate would be anywhere between 20% to 25%. Is that the correct?
Yes.
The next question is from the line of Sandeep, an individual investor.
My questions have been answered.
The next question is from the line of [ Dipti Kothari ] from Kothari Securities.
So can you guide us with the future revenue growth, and what can we expect in FY '24 and FY '25 with the upcoming WD plants commissioning and C&D project next year?
So we would be looking at around 18% core operating growth for the current financial year. Going forward, assuming the contracts are steady state and we are able to hold on to the contracts and the existing bond prices, which are expiring gets renewed at similar rates, then we should be looking at, at least a 15% to 20% growth thereof if not more, but those are very conservative numbers to be.
And sir...
So the new projects will add to the top line.
Okay. Okay, sir. And sir, margins have improved year-on-year and quarter-on-quarter to 23%, which we had been guiding. So was there any one-off which improved our margin?
So whereas the one-off is, which you talk about escalation. But going forward, that one-off is going to be a permanent feature because in the past, the escalation, which is an integral part of our contract was not given or we didn't recognize it because of the absence of members. Now that has been rectified, and that is something which, on a steady state of affairs is given. So even if you were to exclude this, going forward, escalations will be an integral part. So our stadia of margins will form 23% as a base number. More importantly, absence of project revenue is also a positive flip on the margins for us.
Okay, sir. And so sir, what kind of margins can we expect going forward?
We are expecting anywhere in the range of 23% to 25% based on inherent core business projections.
Thank you. The next question is from the line of Palak Shah from [indiscernible] Securities.
I just have one question. So my question is regarding like our core revenues grew by 15% Y-o-Y, but bottom line decreased by 21%. So I just wanted to know is it because of increase in finance cost and income type. Like can you explain in detail on these 2 line items, please?
Yes. So the interest cost has increased from, say, INR 5.5 crores to INR 7 crores. So that was one of the reasons. The second is a rise in the income tax because of the higher deferred tax at my waste-to-energy project. So these are the 2 line items which you rightly pointed, which is discussed in my PAT for the quarter. So due to the base effect and everything that is why you're seeing it. And going forward, my finance cost will increase because we until now I have been capitalizing the interest cost at my waste to energy project, and that will be expensed out.
Thank you. The next question is from the line of Jigar Shah from AK Securities.
Sir, I had just a couple of questions. So you have mentioned in the press release that you are awaiting results on some awarding. So can you share on the kind of projects we have bid for and how confident are we to win the same? And can you also share what are the contract additions we are expecting in FY '24?
So as we mentioned earlier, I mean, there's a large C&D contract in north that we have quoted for. There is a -- in fact, there are a couple of biomining contracts that we have quoted and also a couple of mechanical sweeping contracts.
So all in all, I think we are pretty -- reasonably confident, I would say. And then -- but anyway, I mean the results should be known in the next 1 or 2 months. So definitely by end of quarter 3, we should be in a fair degree to -- fairly comfortable position to comment on the success ratio. But all in all, our success ratio is something like we win in 2 out of every 3 projects that we bid for.
The next question is from the line of Rishikesh from Robo Capital. As we have no response from the current participant, we'll move on to the next that is from the line of Kaushal Kedia from Wallfort PMS.
Can you just throw some light on the escalation clause? You already say that going forward, there won't be any issue because it's inbuilt in the contract. Now approval will be given automatically. Is that what you mean?
Yes, yes. So the escalation was inbuilt in the tender and as per the tender process, but since the Standing Committee was not formed in most of the municipal corporations because of lack of elected members, this was held in abeyance for some time. Those things are getting rectified and getting processed now.
But how is it getting...
Just to answer your question, when we quote for a project, they quote a unit rate. Okay? And then after 1 year, typically, there is an escalation clause which kicks in, which is applicable -- which is renewed every quarter or every year, depending on the contractual clause.
So initially, the challenge was to get the escalation gain for the first time around. So now that it has happened, now it will be a regular practice to get that escalation over the years. We will be quoting with our base rates less the escalated amount.
But in historical contracts, that thing has changed. So how does it -- what have you done [indiscernible] because in terms of last quarter, what has changed that has made the change in the clause. Have you revisited the contract agreement [indiscernible] with the municipal corporation, what is it?
So we have not revisited the central clause. What has changed to the large contracts, which the company bagged at the end of 2018 and '19, they were due for renewal for escalation process 2020 and 2021. But that being COVID period and the absence of elected members that could not get acted upon in the due course of time. So hence, there was a delay in the first tranche, as Mahendra was mentioning. Now that is partly getting reflected on [indiscernible] clients. As and when the other clients kick in, those extra revenue will start pouring into the system.
So the escalation that you didn't recognize in quarter 4, when will you recognize it?
So some of the escalations were not recognized in Q3 and Q4. So a portion of that -- so that total quantum is [indiscernible] crores, of which INR 6.3 crores is recognized in the first quarter, the balance will be recognized as and when the same thing gets passed and the same thing is transferred to our bank account. So it's on a cash [indiscernible] that we will start recognizing the same. So we expect the entire thing to be recognized in the current financial year, maybe going forward, maybe into a quarter of the next financial year. But that's only to the historical escalations. Once these things get ratified, then I'll also do my current year's escalation. So that also comes into the system.
Okay. But how did it [indiscernible] Was the Standing Committee finally formed?
Yes. So the administrator who was the commissioner in this sense got the approval from the Chief Minister's office, and he got it approved under his guidance. So in absence of a Standing Committee, the commissioner is administrator for the municipal corporation. But since normally it is the Standing Committee, which is made up of elected members approved the budgetary allocation for the entire municipal corporation.
In the absence of an elected assembly, as you would say. I mean it goes to the Chief Minister's domain and he has to approve it, and that's how it gets passed and done. We hope most of the municipal operation elections happen in the year or two. So things will move back to normal.
[indiscernible]
I think these are getting rectified now. I mean, the last 2 years have been bad. Post-COVID a lot of focus on the government has been to get back to normalcy. And 2024 is when most of the elections, the general elections, everything is on card. So I think things should normalize.
Okay. And can you throw some light on the big contract that you said you [indiscernible]
So you're not audible. Your voice is not clear.
Is it okay now?
Yes. Slightly better. Yes.
[indiscernible]?
Sorry to interrupt. Sir, we are unable to hear you. Hello?
Yes. Hello.
Mr. Kedia, we are unable to hear you.
Can you hear me now? Hello?
Yes, sir. Please go proceed.
I'm saying you said you've already [indiscernible] some new contract. Is that C&T in the north?
That's right.
Okay. Okay. Will it be bigger than, say, Varanasi?
It will be of similar size or touch [indiscernible] here and there depending upon the number of bids the zone is awarded.
And when can we know about that?
So maybe by the end of September. See, it's all about the government agencies. Normally they get back to us by end of October, it's almost 2 months after we've submitted the bid. So maybe end of September or mid of November is when we expect. Before the December end, we should be in the know.
And how much percent -- given that, how much could it contribute to the revenue going forward?
It will be very preemptive and premature to give you that number because it's still the fact that you're back to [indiscernible] it still has a negotiation platform to be done with the corporation. So it's very premature right now to give you that number.
But approximately if you can share -- approximately, I know it's a very soft edge, but if this is to help us.
We would not like to expose that number here at this juncture.
The next question is from the line of Rishikesh from RoboCapital.
[indiscernible]
No sir, we are unable to hear you, Mr. Rishikesh.
Am I audible now?
Yes, sir. Please proceed.
Okay. Sir, you said the finance cost will be increasing going ahead. So can you like give a broad indication that what will it be going ahead? And from which quarter would it reflect?
So the interest cost will start kicking from the end of Q3 and Q4 onwards, and the quantum of increase would be to the tune of around INR 2.5 crores to INR 2.8 crores per quarter. That's the incremental number that we are looking at.
Okay. And would it be same with the depreciation? Will depreciation rise too?
Depreciation will also increase because of the plant will be put to operation. That will again increase by a similar number.
Okay. So even depreciation by Q3 or Q4, INR 2.5 crores to INR 3 crores per quarter will increase?
Yes.
Okay. Also, I missed your commentary on the contract revenues. What level of contract revenues you will see for this year?
We expect around an incremental INR 25 crores to INR 28 crores to be spent on the CapEx both at Kanjur and in PCMC waste to energy. So that's the incremental number we have. We don't foresee a significant spike after that number.
Sir, my question was with respect to the contract revenues...
I was talking about that. We had INR 14.7 crores in Q1, and we have an incremental INR 28 crores to be spent in CapEx. So that will add a contract revenue to say around [ INR 42-odd crores ] for the balance 3 quarters.
Okay. Okay. Got it. Got it. Also, sir, the consolidated EBITDA that we have achieved this quarter around 23%. Do we think this is sustainable for the rest of the year?
Yes, that's sustainable.
The next question is from the line of Gaurav Gandhi from Glorytail Capital Management.
Sir, just want to understand more about how the accounting is done as per Ind AS for the contract project reflected in project cost and revenue?
So as for accounting standard, [indiscernible] CapEx are made on certain projects, which are of DBOOT nature, I cannot recognize them in my books as plant and machinery. So this is the right to charge revenue. So we have a note on the revenue recognition on our website. I will ask Pratik or SGA team to also reach out to you. So the note is available on our website, you can easily download it. Reach out to Pratik and he can send you the note on that.
Okay. All right. And I mean, is it just a book entry, not realized in...
Yes. This is a book entry, this is a book revenue that is a expense but a true cash flow in the form of MAT limit.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Shiju Jacob for his closing comments.
I want to express my gratitude to our dedicated team who have worked tirelessly to achieve our goals. I also extend my heartfelt appreciation to our clients and stakeholders for their unwavering support. Together, we have built a strong and successful company, and I'm confident that our journey towards a cleaner and greener future will continue to be filled with success.
Thank you, everyone.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Antony Waste Handling Cell Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.