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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 Q2 FY '23 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Jose Jacob, Chairman and Managing Director of Antony Waste Handling Cell Limited. Thank you, and over to you, sir.
Good afternoon, and a very warm welcome to everyone present on the call. Along with me, I have Mr. Shiju Jacob, Executive Director; Mr. Subramanian, Group CFO; and SGA, our Investor Relations Advisor. I hope you and your family have all had a good festive season. Our investor presentation is now available on the stock exchange and the company website.
First, I would like to provide some business updates. Our result in the solid waste business has been strong for the first 6 months of the year. We recorded a 16% growth in operating revenue of INR 316 crores due to a strong customer -- consumer economy, commercial, collection, MSW landfill volume and inflation aided price increase. Activities at our recent [ bank side ] have shown rapid growth and are ramping up at a good pace. We have executed our projects well and are in line with our expectations.
During the quarter, we have started a recycling business in one of the sites from where we collect MSW. This is not our contractual requirement, but in line with organization aim of sustainability and working in the forefront of creating a circular economics.
In this we will segregate the recyclables from the waste collected before sending the same across to the designated landfill site. This will help us generate revenue from the recyclables that we have segregated in this process. This is our first project and based on the satisfactory performance [consol] by approximate 62 tons being recycled in 2 months. We now plan to implement similar activities in all cities where the company has C&T operations.
For operational review and to add on recent news, I hand over the call to Mr. Shiju Jacob. Shiju Jacob, over to you.
Thank you, Jose, and I would like to again welcome you all to this call. To begin with, your company has secured a 3-year mechanical power sweeping contract in Nagpur as part of a cluster focused business strategy. The contract calls for supply of one suit of power sweeping machine and daily maintenance of 40 kilometers of road. We have already have -- we already have a C&T business in the city of Nagpur. So bagging additional project helps us leverage on our existing setup and exploit our product line. This follows the recently backed 5-year C&T contract for 2 zones in Nashik, namely at Panchvati and Satpur. We have completed the entire vehicle mobilization and the project will begin contributing to our revenues in Q3 FY 2023. Every day, we estimate that we will handle approximately 240 tons of Municipal solid waste from this project.
On the processing side, despite the monsoon conditions, we saw high level of biomining activity at our Kanjurmarg integrated waste processing site during the quarter. We managed to set a record quantity of compost during the quarter and we also shipped 10,734 tons of RDF. This is the direction the company intends to take throughout the year and into the future.
On to a more granular business-wise performance, at the MSW C&T project site, we have 13 ongoing projects. Our MSW C&T business volumes increased by 8.12% year-on-year to 0.42 million tons in Q2 FY '23.
Coming to MSW project -- processing project. The total tonnage processed during the quarter increased by 8.3% year-on-year to [ 0.62 ] million tons at our MSW processing project, which included Kanjurmarg, Pimpri Chinchwad and the Greater Noida biomining project.
Regarding our construction at Pimpri Chinchwad site. We now anticipate that our project will begin in Q1 '24, which was earlier planned to start on March '23 -- 2023. The reason for this 2 months delay is due to the global conductor -- semiconductor shortage, which has impacted the delivery of distributed control systems, control valves and transmitters. Corporations are in the process of coming out with more C&T and processing contracts. We will leverage our experience of biomining and waste to energy and on our C&T business line to bid for these contracts.
To sum up, we have had a good quarter, and we expect to continue our growth path in the coming time. We remain committed to advancing technology investments that differentiate us, automating processes to reduce service costs, and capitalizing on our sustainability for platform growth. Company is well poised to explore newer geographies, while dwelling upon cluster-based approach and areas of recycling, which is the need of an hour for the country. This is from my side.
I now hand over the conference to Mr. Subramanian, the Group's CFO.
Thank you, Shiju. Good afternoon, everyone, and thank you for joining us for our second quarter and the first half 2023 Earnings Conference Call. I will share the highlights of our financial performance. For the second quarter for the year ending March 2023, the operating revenue at C&T and pursuing revenue section, the company reported a revenue -- operating revenue of INR 160 crores against INR 143 crores in Q2 FY '22, which is up by 12% year-on-year.
For the first half, the company reported an operating revenue of INR 317 crores as against INR 273 crores last year same period, reporting 16% growth on a year-on-year basis. The increase in core revenue was driven by contribution from newly bid contracts, general increase in volumes in existing C&T processing contracts and also partially from the tipping fee increases which are built in, in the contracts.
On a sequential basis, given the full onset of monsoon, the construction pace is lower as compared to the first quarter of 2023, which has seen the contract revenue declining sequentially to INR 30 crores from INR 71 crores in Q1.
On the consolidated EBITDA front, the company registered a growth of 8% to INR 46 crores in Q2 FY '23 compared to INR 42 crores in Q2 FY '22 with an EBITDA margin being 22% for the quarter. For the first half, the company registered a growth of 12% year-on-year to INR 94 crores compared to INR 84 crores in the same period last year and the margin coming around to 21% for the first half.
The profit before taxes front for the quarter, it was INR 31 crores against INR 28 crores, up 10% and for the first half, it stood at INR 66 crores, up 17%. Profit after taxes for the quarter is up by 17% at INR 28 crores and 22% up at INR 56 crores for the first half.
On the business-wise performance, the revenue from MSW C&T is up by 10% to INR 116 crores for the quarter. And for the first half, it's up by 15%. And as Shiju mentioned, the growth was on account of increased volumes in our existing contracts and ramping up of C&T activities in our newer contracts. The total MSW C&T volume is up by 8.1% for the quarter.
MSW processing revenue has increased by 19% to INR 45 crores. The revenue increased by -- to INR 86 crores in the first half, up by 17%. In general, we witnessed high input costs, repairs and maintenance related inflation and increase in logistic costs due to supply of compost and RDF. And as a result, our operating expenses as a percentage of revenue has increased by approximately 250 bps compared to last year. Over last year, we have made significant investments in our people, including proactive, adjustments and improvement benefit package and increased training.
Leading repair costs and transport costs remain elevated. Higher cost for part -- third-party services are factors which we continue to watch.
On the balance sheet front, our net debt to equity as of 30 September 2022 was maintained at 0.3x. Total debt as of 30th September stood at INR 189 crores and net debt is at INR 200 crores. The overall credit profile of the company has remained stable, and this has reflected in our overall interest cost improvement of 330 bps decrease in average consolidated borrowing cost from 12.7% in March 2021 to 9.4% as of September 2022. Our receivable days are in control, and we stood at 72 DSOs for the trailing 12 months ending September 2022.
That's it from our end, and we now open the floor for Q&A.
[Operator Instructions] The first question is from the line of Prashant Sharma from Quantum Securities.
Yes. Sir, I just want to know the status of the 2 new projects that we got, NMDC and Jhansi. Have they started contributing to our revenue because collection at our C&T revenue was almost flat sequentially. So just need to know the status of them.
So yes. So both Jhansi and NDMC have started their operation. So if you look at an equation basis, the decline in revenues, primarily due to INR 41 crores of processing costs, which is absent now. So that is one of the key reasons why you're seeing a fall in my revenue, which is offset by an incremental revenue, which has come from a core revenue section. So both on Jhansi and NDMC, the core revenues have started kicking in.
Okay. And regarding the new project that we got, what's the revenue potential for that?
If you're referring to the one of the power sweeping contract that we bagged in Nagpur...
Nagpur. Nagpur...
It's not a significant contract. So for us, it's just an incremental product supply that's happening in the same zone that we are operating in.
[Operator Instructions] The next question is from the line of Bhavya Gandhi from Dalal & Broacha.
Sir, I just wanted to understand how do we assess receivables? Because I think we classify them under other financial assets also. So if on 6 monthly basis, if you want to understand how much is the data outstanding, if you could just provide me the split, what is the number?
So if you were to include all the receivables in the financial assets, actual and current and non-current receivables, my total DSOs would be around 102 days as against maybe 92 days for the period last quarter. This includes certain receivables payable by the clients at the end of the project life. So going forward, I mean, as a management practice, we will start incorporating all receivables current, noncurrent and even the money which is payable at the end of the project as a separate line item, and we'll disclose that separately.
Okay. And in terms of absolute figure, what would it be right now at 6 months closing?
I just need to get back on that, but I will give it to you when before -- we have that thing corrected out.
Okay. Okay. And sir, with respect to MSW market, I see that we made some changes in the presentation that historically, we were projecting 14% sort of growth. Now we are projecting almost 11% sort of growth -- MSW market growth as a whole. Any reasons for downgrading the growth mentioned in this presentation?
See, we just got the latest update from the consultants over here. Because over the last couple of years, we have seen slight bit of degrowth in the corporation's spending patterns. So this is as per the report that has been given out by the market research company. Maybe with newer policies of government spending increasing over the next couple of years, we will again revisit this, but this is just the market report that we have got from the entity which we are sharing with.
Okay. Fair enough, sir. And also with respect to MSW processing, is it -- can you just elaborate on the margin because we have service concessional agreements also. So if you were to evaluate your P&L, how should one look at, maybe like what is our absolute EBITDA that we are generating if we remove the contract part out of it then?
So Bhavya, normally, we don't talk about segment-wise margins, processing or P&T per se. But given the complexities and the capital nature involved in processing, it is very fair to assume that the processing contracts have a higher margin as compared to C&T contracts. And going back to your question on the total receivables, including trade and financials, the total amount as of September stands at around INR 200.8 crores.
INR 200.8 crores. INR 201 crores, roughly?
INR 201 crores, yes.
[Operator Instructions] The next question is from the line of Ankit from JHP Securities.
Am I audible?
Yes.
In union budget, '22, '23, there was an increase in allocation of funds to municipalities, yes. Is there any change in government at center level, how it will impact our fund allocation?
So we don't -- see the fund allocation for OpEx and CapEx don't significantly change based on these rulings. Because this is slightly long drawn and depending upon the smart city budgetary allocation. The same will get allocated to different cities. But over the last couple of years, we have seen a significant spending increase in lot of the smart city areas that we have been targeting and working with. So the trend is very much on the northward side, and we see the same building up.
Okay. So do State government have any control over municipal council decisions?
Normally, municipalities by themselves are authorities. And the State government doesn't have any significant influence in the municipal corporations decision-making process.
[Operator Instructions] The next question is from the line of either Neerav Dalal from MIB Securities India.
I had a couple of questions. First, on the CapEx side. If you see this year, we have a CWIP on the fixed asset side as well as that on the intangible. I believe the intangibles would be the Pune facility. So I just wanted to understand in terms of the fixed asset CWIP would -- what would that be? That is my first question.
And second question is in terms of FY '23, what would be the growth drivers in a sense, the new projects which were -- which are partly there in FY '22, which would be -- which could be the revenue drivers of FY '23. That is number two.
And number 3, was the volume growth lower than what we were expecting at the start of this quarter. So these are my 3 questions.
Right. So to answer your first question, the CWIP in the financial assets, partly referred to assets that have been procured and deployed for the Nashik C&T contract because these are not transferable to the corporation end of the project life. And also certain CapEx that we have incurred and we are ongoing at our waste-to-energy project and the consumer side, wherein, these are used for generating RDF and Compost, which are not transferable to the corporation. So those CapEx are sitting as much CWIP in the financial assets today.
On the tonnage growth expectations and the trend, we have seen an 8% growth from organic sites per se. I mean that is pretty much in line with the historical trend and there has not been on the lower side of our expectation.
Normally, in a base case scenario, we look at 3% to 6% growth in organic base being generated. 8.2% also shows an incremental tonnage growth coming from new projects of Jhansi, which is on a unit base, and that is not coming into my tonnage base revenue model. So 8.2% is over and above the revenues growth that I've seen in Jhansi and in Varanasi. The contribution from newer projects that is NDMC and Jhansi, last year, NDMC had only 8 days of operation. Jhansi was less than 1 quarter of revenue. So I think this year, we will be looking at a full year revenue contributions coming from both these 2 sites.
NDMC, it's not still 100% mobilized by the end of the current quarter. We would see 100% assets being mobilized. As part of the asset is still to be provided by the corporation.
Got that. Got that. Just a follow-up in terms the CapEx thing. So for the current year, what should one look at as the CapEx? And if you could just remind us in terms of what would be going towards the Pune project. And then what would be going towards our -- the other business?
For the Pune project, we are estimating an incremental CapEx of INR 67 crores, bulk of it, this will be spent in Q3 and Q4. Maybe part of it will be in Q1 based on the Independent Engineers' Certification. So but INR 67 crores is what we expect at the waste-to-energy plant to be done. At the Kanjur site, we are looking at our incremental CapEx of around INR 12 crores for the second half of the current financial year. We don't see any incremental CapEx at our collection and transportation businesses. If at all it's there, it's going to be in the tune of around INR 1.5 crores to INR 3 crores. But that is depending upon the tonnage improvement that is likely to happen. As of now, it's not happening. So maybe we will defer this to the next financial year.
Got that. And just lastly, in terms of what -- how do you see the visibility in terms of new contracts? If you could just give us some indication in terms how much you -- how many contracts have you bidded for, bid for? And when do you see the outcome? And what is -- what you're expecting in terms of new deals coming up for bidding so some idea on that.
Presently, we are working on 4 to 5 new bids and we are working -- we hope that our site rate has always been good in the past. So we can -- we maintain those site rates. So maybe in a couple of months, we can come out with the number of contracts what we are willing.
Right. So has there been any slowdown in terms of the bidding process? Or this is what is expected?
Normally, the speed of LOAs and that converting into confirmed orders, it takes some lead time and the only change that has happened over the last couple of years is because of COVID, the decision-making process has got delayed because of events beyond the control.
And more importantly, a large corporation -- I mean a large number of corporations, we have seen the elected bodies yet to be elected. And them to start working full stream. So example, corporations like BMC, Navi Mumbai, Nagpur, there are no standing committees, there are no committee members or the corporation is yet to be formed. Even MCD got an election due in next month. So large number of corporations, the election is due and then the work continues. The normal work will continue. So we have seen a delay over the last couple of years, partly COVID and partly procedural. This has not been the thing in the past, but this is something that we are now seeing getting addressed proactively.
[Operator Instructions] The next question is from the line of Anurag Patil from Roha Asset Managers.
Sir, now that the [ C&T ] project has delayed till Q1 FY '24. In second half, what kind of contract revenues we can expect to recognize? How much can spill over to Q1 FY '24?
So Anurag, we expected the project to be up and running by March 2023. Now because of this delay, what -- certain equipment we were supposed to reach our site by November end and February, that is getting pushed to March. So we are expecting the delay of around 2 to 2.5 months from our initial expectation.
And the total CapEx spending is around INR 67 crores, maybe around 80% of that will be done in the current year and the balance 20% will be -- might fall into the first quarter of the next year. All efforts are on to coordinate with the vendor and trying to kind of jump the queue and try to make the process faster so that the work can be done and completed in a timely fashion.
Okay. And sir, can you comment on second half of current year? How do you see the revenue trajectory and also the margin? How do you expect it to pan out?
Normally, our core operating margin hovers around 25% to 26%. I mean the recent fall in our decline in my optic EBITDA is partly because of significant contribution of contract revenue and contract costs. So maybe by second half of FY '24, we will be showing core revenue and core operations there from and that is the time we can have a realistic view on how the EBITDA shape out without significant contribution or the revenue getting skewed towards contract revenue and contract cost.
But sir, if you exclude the contract revenues also on call, the normalized core margins are still coming around 22% to 23%. So when we can expect to normalize to our earlier levels of 25% for core business?
So we expect that to happen anytime between the Q4 and the first quarter of the next year. Q4 of the current year and by Q1 of the next year because some of the escalation will also be passed through to us by January and February onwards. And the benefit of all the increase -- recent increase in costs get offset by the typical increases.
[Operator Instructions] The next question is from the line of Richard D'souza from SBI Mutual Funds.
So just a couple of questions. You mentioned in your remarks that now you're bidding for 4 or 5 new projects. So are these projects large enough to make an impact on the balance sheet? Or how are they?
So one of the projects is of the large size, but the CapEx is not -- will be spread over couple of ways. Similar to a processing contract. They would be of a long-term tenure similar to the project that we currently execute both at Kanjurmarg and at Pimpri Chinchwad. The balance 3 contracts that Jose was alluding to are of smaller tenure and they don't have significant balance sheet impacts. So we don't foresee our net debt to equity to go beyond 0.8 or 0.9x on a full drawn basis for the current and maybe for the mid of the next year.
Okay. Okay. Great. So the second question was that recently, there was some records being raised about the Ghazipur dump in, Delhi, where there were some methane missions and all that. And I think the MCD elections are getting over next month. So are we -- is that project open for bidding? Because I believe the current provider there for WT is not doing it properly. That project was closed for 6 months, I think so.
Yes, Richard, so the thing is post-election, they will come up with a tender for biomining license. So they are preparing a budget, the amount required is pretty huge to break in those days. So -- but everything will happen post-elections.
Okay. Okay. Cool. And there are a couple more dump yards in Delhi. So any -- I'm sorry for my voice, which is bits hoarse. Couple more dump yards in Delhi. So are they also open for bids? Or how is the situation there?
So most of this landfills are unscientific landfills. So that is the reason it's burning and creating a lot of pollution. So only option is to biomine it or close the landfill. So biomining is the best option because they can vacate the waste. And for this huge amount of money because of the size, although, landfills are pretty huge and hence the -- and they have been dumping from many years. So the fund is being allocated, everything is planned, but all the movements will start post elections.
Okay. I thought only in MCD, there is election. The other 2 dump yards are in other regions of Delhi, isn't it?
Yes, yes. The other region is also the fund allocation, everything has to be done. But they want to buy a pilot and all that. So basically, what we do, Richard, we see if the money is in place, rather we don't build those some places like that.
Yes.
The one we have got in Greater Noida, there the fund is a little bit. So we see the allocation. If it's there, then we go for it.
Okay. Okay. One last question from me. you had a bit of wage increase in the third quarter. Any particular reason for that?
We have seen some rationalization to be done because we had our full year annual review of all the teams. So our total staff size of around 8,000 employees, 90% of them are under my minimum wage. So I don't have to worry about them. But the balance around 8.5%, 9% of my employees still need to be competitively be compensated.
So there was an entire exercise that we conducted, which is an annual exercise. And that was the reason we have seen an increase in the wage coming. So we are trying to split the entire increase in 2 phases and half yearly review that just got completed now. And the initial impact that was done. The cost is getting reflected today.
Secondly, we are also seeing an increase in head count because of the rollout of our project in Varanasi and in Jhansi, which is also reflected in the increase in the total wage level.
[Operator Instructions] The next question is from the line of Anupam Gupta from IIFL.
So basically 2 questions. One is on the PCMC WD project, the 2 month delay which you're talking about, does that have any negative repercussions in terms of your balance decision period or in terms of whatever you can -- in terms of penalty or anything else.
No, we don't have any financial impact because of that. The COD they start after the plant is up and running. So we don't have any time financial impact because of this 2-month delay and the client has been informed about the same, they don't have any pecuniary benefit deficiency over this.
Okay. That's okay. The second question is on -- initially, you mentioned some INR 41 crore revenue decline in a few projects. Can you just highlight what you were talking about that? I was not very clear about that report.
So in Q1, the total contract revenue was INR 70.9 crores and in Q2, that contract revenues is around INR 30 crores. So that is a difference of INR 41 crores that I was talking about because during monsoon, the construction activity at the PCMC maturity slowed down. So that is the difference that you are seeing in my contract revenue, which shows into the sequential decline.
Okay. Okay. Understand. Understand. And just one last question. You mentioned the only contract which are left to be ramped up fully on the NDMC and the Jhansi and the recent sweeping contract. No other contract that has to be ramped up any further, right? Everything else is in the...
I was referring to NDMC and the one in Nashik, not Jhansi.
Okay. Jhansi is fully ramped up in terms of quarterly level.
Yes. Jhansi is fully ramped up NDMC and Nashik will be rolling out at the benefits of them.
So if I were to quantify that in terms of current revenue versus the potential revenue at full run rate, what should it be?
We normally don't comment on site-specific numbers, but the NDMC vital we say INR 100 crore annualized revenue, I mean I would say that I would be looking at, at least 5 months of revenue -- 4 months of revenue coming in the current financial year. And Jhansi is not very significant in that time. So that is anyway going on, and that won't have any debt. Nashik, as Shiju mentioned, it's a 264 -- 265-ton project.
240 tons..
240 tons project. So that, again, will not move the needle significantly, but it does add to the total.
[Operator Instructions] The next question is from the line of Hardik Jain from Whitestone Financial Advisors.
Sir, if I heard you correctly, you said the NDMC has the potential to generate INR 100 crore annual revenues, right?
Yes.
Okay. And sir, just one small thing. Actually, it's difficult for me to understand if you can help me to understand it, sir. So the contract revenue reported is around INR 44 crores. And I think the project expenses are also related to that, which is around INR 27 crores. So effectively, there is a profit of like INR 15 crores, INR 16 crores, which is being reported now. But once this project of PCMC gets over, this INR 15 crore, INR 17 crore of profit, which we are reporting today will not be reported and it will be compensated or it -- we'll get tipping fees in return? Is my understanding correct?
Yes, partly correct. What happens is the contract revenue component reflects the CapEx that I'm doing and that the contract cost, which is related to that, which you have a right to quantify that. So once the revenue is out, once contract revenue and the contract cost is out, that gets replaced with 2 streams of revenue. One is my tipping fee and other is the sale of power.
Sale of?
Power. So that gets added into my top line and the proportionate costs, operating cost is it in my operating cost line.
So what I assume is today what we are reporting around INR 15 crores, INR 17 crores of profit due to this project will be more than -- will hopefully be more than compensated by the profit of tipping fees and sale of power net of their expenses.
Yes. You are right on that.
[Operator Instructions] The next question is from the line of Depesh from Equirus Securities.
Sir, if I see the adjusted margin adjusted for the contract revenue and the cost, right, it comes to around 23%. Now given that the increase in the Compost and the RDF sales that we have seen, the normal expectation was that the processing margin should improve materially, right? So I just want to understand where is the disconnect because I think mostly, you have taken the price escalation also, right? So when can we see the margins going -- improve going forward?
So Depesh, so we are seeing a significant amount of cost that is sitting today as part of the transportation cost, which we had to incur because of setting up the entire linkages systems and segregation part of work. So we have OpEx'ed all of that during the quarter and maybe some of the cost will sit in the current quarter.
So benefit of better realization and the margin flow-through is likely to happen by Q4 and Q1 of the current -- Q4 of the current year and the Q1 of the next year. This being monsoon, we were not able to have a better margin play over here because the moisture levels are high and it's always difficult to work in monsoon conditions when we do biomining.
Got it. And also sir, the new ESOP plan that you have introduced, right? Can you give us a sense on how much cost will be booked in the P&L and when it will start coming in?
So we -- it's a process, we would be planning to come up with a grant sometime in November/December of this year. The total cost that is likely to sit in our books will be in the tune of around INR 1.5 crore to INR 2 crores. We will be able to give an exact once, the valuation of the ESOP and everything gets in because that gets expensed out through the system. .
Of the 3 lakh shares that is likely to come into the ESOP scheme. We have cut this into 2 components: the Series 1, which will be granted now, which is a 1 lakh shares. And the Series 2 is kept for future. So the cost is associated only with Series 1 and that's not going to be significant is what we understand. But this will be in the range of around 2% to 4% of my total wage, which is what we estimate today.
Understood. And sir lastly, I referred to the 0.4 in the notes of accounts. So just want to know the update on this INR 57 crores of receivables, which pertains to the escalation claim and the minimum wages. So the expectation was that this particular project was expected to close this year, right? So are we just continuing that? Or how is this money going to come, if you can just throw some light on that?
So Depesh, the minimum wages escalation portion of our payments has been -- they have started releasing those payments. Minimum wages, by January, they have said that they will start releasing big chunk of that money. So they have approached the state government because Mangaluru Municipality is looking for additional funds. And anyway, there the bosses have promised. But recently, they have released quite a few money on escalation also.
And Depesh just to add on what Jose mentioned. We have got a further extension, which will now continue until June 2023.
June 2023. Okay. And sir, the overall -- as I understand properly, if you can just help me recollect. So during the escalation, we do not basically buy new vehicles. And the repair and maintenance cost increases, right? So do you think any impact on the margins going forward because of this?
So we would be hiring more machines, and we will not be investing more CapEx. So there might be a slight margin variation, but that's taken care by the increase in volumes which was not seen in the last 2 years. So now we are seeing a slight bit of improvement in the volume strength. So we may invest in hiring few vehicles and not buying any new vehicles for the extended period of time.
Got it. And sir, lastly, sir, on the PCMC contract, you mentioned a delay because of some semiconductor issues and all. So the other companies are basically saying that the semiconductor issue is getting solved now rather than being a major issue now. So how sure are we that this 2-month delay, the vendor is saying that, that should -- the project will commence in that time and it will not get further delayed because I think the problem has been solving. And till last quarter, we were very like confident that by March it should start. But what happened in the last 2 months, I just want to understand.
So what has happened is 3 of the parts, they come from Japan, and that kind of got delayed because they were pushed down the supply lines from the vendor side. So we have again renegotiated with them to move it up the supply line. So something which was supposed to be delivered on site. It's -- that got pushed on by 2 weeks.
And secondly, there was some logistic issue at the shippers end. There was a shortage of containers that they need to move it out from the container depot. So that is something of a global phenomenon in certain big shipping lines. So that is something that has been touted as a reason for the delay. But we have been talking consistently because this is something which is a very critical nature because everything else falls in the place once the main component gets installed. So the electrical wiring and other ancillary work, all is linked up to these 3 equipment's coming on board and getting shipped into the site.
Got it. So the INR 67 crore CapEx that is pending in the PCMC, that will be major with the machine installation, right? That will happen just in the last piece of the month, right?
Yes. So that into includes electrical wiring and the main machine parts. The central...
So in Q3, Q4, the contract cost and the contract revenue will be much lower and it will hit basically Q1 of FY '24?
It's likely to be 70% in Q3, Q4 and 21% in Q1 because bulk of the work and boilers and everything will already be in place by the end of January and the installations of electrical wiring and everything will start going -- progressing post that. So this is likely to happen in Q4 and in Q1.
The next question is from the line of Bhavya Gandhi from Dalal & Broacha.
Sir, with respect to guidance, I just wanted, what is our forward lifting guidance for revenue and EBITDA? Do we stick to that 25% sort of revenue guidance?
So we normally look at the longer part of growth lines. And as Jose had mentioned, a 25% CAGR growth and the ability to maintain our margins are something that form the bedrock for our company. So we will stick to the guidelines here.
Okay. And with respect to time line of incremental revenue for next 2 quarters, except NDMC, we don't have any further revenue uptick? And maybe in Q1 FY '24, we'll have Pimpri Chinchwad waste-to-energy reflecting in our books. And post that, do we have any sort of plans where we can increase our revenue potential? Because on tonnage front, you mentioned the 7% to 8% is something that we are looking at on [ guidance ] basis. And -- but the industry itself is growing at 9-odd percent. So we expect our tonnage growth to be lesser than the industry level?
So what is happening now is few of the contracts are not on tonnage. So when I'm saying 8.2% increase in tonnage. I am not including the benefit from contracts like Varanasi and Jhansi, which is on units of households that are collected. So the 8.2% doesn't reflect the total collection and transportation business growth that we are talking about because I'm not able to quantify the tonnage and I'm picking up at both these sites. So my volume growth is more than 8.2% in that sense.
And just to add the incremental revenue growth over and our NDMC and the PCMC waste-to-energy, we would be looking at revenue contribution coming from Nashik from the end of this calendar year, for example. That is going to come in. And also from the power sweeping contract that we have got in Nagpur. So those are the 2 additional revenue points that's going to start coming in from Q4 of this year.
Okay. And one more question with respect to our credit rating. So any reasons why we were at BBB minus. Because back then also our cash flow situation was quite good only. And is it because that the interest rates still are credit rating are interest borrowing costs also fell? Or has it got something else only to do with that?
No. So we awarded BBB- stable overview from CARE for last 2 years. And this was during the time of COVID. So there was a lot of uncertainty given the fact that our revenue streams, everything is aligned with the commercial activity of the nation and the fact that the government finances has always been doubted during this period. So that is why rating agency has been very cautious. For any upgrade during these 2 periods, for infrastructure companies per se. But now from -- based on the numbers that we have shared with them, we will be going for a revisit. And then that is when the entire cash flow strength and the project wins will be translated into maybe a better rating watch or an upgrade or a notch up at that angle. So the last 2 years has been on a cautious view for infrastructure companies across.
Okay. So can we expect further upgrade in the rating and lowering our borrowing cost?
We are definitely been working on that because, if you look at my net debt to equity and the cash flow from operations and my interest coverage ratios are significantly comfortable today than what it was 3 years back. So that is definitely going to help. And over a period of time, we have seen the cost of borrowing, also come down significantly. And even if we don't get an upgrade, material, for example, I've seen the cost of borrowings come down sharply, both at my significant [indiscernible] on subsidiaries let it be Antony Lara or Lara Renewables or even the collection transportation business where in its vehicle funded loans. .
So that is reflective of the current creditworthiness internally. And the credit rating of BBB minus is more from a working capital facility which we enjoy at Bank Baroda. And we don't have any term loans on that entity. So the term loans that we have is that the waste-processing sites where we have a better rating from CRISIL and that has reflected in better borrowing costs.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
I take this opportunity to thank everyone for joining the call. I hope you have been able to address all your queries. For any further information, kindly get in touch with me or Strategic Growth Advisors, our Investor Relations Advisor. Thank you once again.
Thank you.
Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.