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Antony Waste Handling Cell Ltd
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Ladies and gentlemen, good day, and welcome to Anthony Waste Handling Cell Limited Q2 FY '24 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 Anthony Waste Handling Cell Limited. Thank you, and over to you.
Good afternoon, and thank you for joining us for our Q2 FY '24 earnings conference call. With me, I have Mr. Shiju Jacob, Executive Director and Chief Risk Officer; Mr. Mahendra Ananthula, Group President, Operations, Business Development and Diversification; Mr. Subramanian, our Group CFO; and SGA, our Investor Relations adviser.
Our investor presentation for second quarter of 2024 is now available on the website of the stock exchanges and also on our company website. First and foremost, I want to emphasize that our strong financial performance continued in our second quarter with another all-time high quarterly operating revenue of INR 200 crores, representing a 25% year-on-year increase with a steady growth strategy going forward.
Notably, we continue to work to improve our operational efficiency, which is reflected in our improved EBITDA margins, which has increased by 210 basis points to 24.5% on year-on-year basis. Despite facing inflationary pressure on our core segment, we have successfully maintained and improved our EBITDA margins partially due to increased volumes.
We are working hard to strengthen the revenue streams that underpin our business while also demonstrating our unwearying commitment to rigorously optimizing our cost structure. The core EBITDA margins achieved in the Q2 FY '24 were consistent with our previous guidance, reinforcing our confidence in long-term stability and growth.
The management has initiated a corporate restructuring with an aim at reducing managerial overlap. The Board has proposed combining Antony Infrastructure and Waste Management Services Private Limited and KL E into [Foreign Language]. All of those -- all of these are 100% wholly owned subsidiary of the listed entity.
The merger aims to achieve a more straightforward corporate structure, improve operational and managerial efficiency, leverage combined assets for a more robust and a sustainable business and realize cost savings, while utilizing valuable resources more efficiently.
With this, we plan to achieve a cleaner organizational structure. Our company is poised to embark on a promising growth trajectory the company is actively pursuing opportunities in C&T, which is collection and transportation and biomining projects.
And it expects to provide a positive update on some of them in the coming quarters. Furthermore, we are on track to diversify our revenue stream by offering complementary services. In a similar vein, we will launch a construction and demolition collection and transporting processing and disposal projects in Q4 FY '24.
Thank you, and now I hand over the call to Whole-Time Director, Mr. Shiju Jacob.
Thank you, Jose, and good afternoon to all who have joined us on this call. In our line of work, maintaining close collaboration with the various stakeholders and ensuring the delivery of top-notch services are of utmost significance. A crucial aspect of this involves ensuring full compliance of our vehicles, addressing strategic reviews and adhering to all contractual obligations mutually agreed upon with our clients. Equally importantly is our focus on managing receivables.
It's noteworthy that some municipal corporations still face challenges in constituting their standing committees due to the absence of elected members. This has been a historical issue and our management has diligently worked to address it. The positive outcomes of these efforts were evident in the last few quarters. An escalation amount from one corporation initially unapproved due to the lack of appropriate authority has now been resolved.
We have received a portion of the escalation in Q1 amounting to INR 7 crores and in the current quarter. We have received acknowledgment for an additional INR 12 crores for the previous year period. We are actively engaged with other municipal corporations to ensure similar acknowledgments directly contributing to the company's margin outlook as per our guidance.
Turning to our new business endeavors. Our management continues to implement a cluster approach. While our legacy business maintains its expected performance, we have successfully secured new contracts in the C&T and mechanical sweeping sectors. A recent highlight is our winning of a C&T contract valued at INR 386 crores from Panvel Municipal Corporation in the MMR region.
In this 5-year contract with the option of a 2-year extension, the corporation takes responsibility for all capital expenditures associated with the project, enabling us to adopt an asset-light model and redirect capital resources to other promising opportunities. This contract win builds on top of the recently 2 contracts bagged by the group. The 2 mechanical sweeping contracts, one from Pimpri-Chinchwad Municipal Corporation involved the mechanical sweeping -- street sweeping of major roads above 18 meters in PCMC area for a 7-year concession period at a cost of INR 80 crores; and another one from Nagpur Corporation.
These wins not really provide traction for future growth, but also contribute significantly to our goal of achieving a 20% to 25% compounded annual growth rate in our core revenues. In conclusion, these strategic initiatives underscore our commitment to operational excellence, financial prudence, and sustainable growth. We are confident that our focused first will continue to yield positive results and drive the company towards greater success.
Thank you, and I now hand over the call to Mahendra Ananthula, our Group President, Operations and Business Development. Mahendra, over to you.
Thank you, Shiju, and good afternoon to all. I would like to share the remarkable achievements of our Kanjur facility and the recent commissioning of our state-of-the-art waste collection at Pimpri-Chinchwad Municipal Corporation.
In the last quarter, our Kanjur facility has witnessed significant progress. The volume of municipal solid waste processed experienced a noteworthy improvement reaching about 6,000 tonnes per day at an average, showcasing a remarkable increase of around 14%.
This enhancement can be attributed not only to the improvement in MSW processing volume but also through the strategic use of sanitary landfill facility. Moreover, we have achieved record-breaking dispatches of Refuse Derived Fuel, that is RDF, totaling an impressive 29,000 tonnes.
The surge in RDF dispatches can be attributed to the growing demand, which also resulted in a marginal increase in revenue recognition. It is worth noting that while the sale of RDF typically contributes lower margins compared to our processing norms, this pivotal role played by the management cannot be overstated.
However, we have to register our recent endeavors, is the successful commissioning of our cutting-edge waste energy plants at the Pimpri-Chinchwad Municipal Corporation effectively this quarter. This innovative facility has already embarked on a transformative journey by initiating commercial power sales, supplying up to 8 megawatts of power to vital PCMC infrastructure assets including the Ravet water pumping station and Chikali sewage treatment plant.
It is essential to highlight that these power sales commenced on 2nd October, and therefore, the reported numbers for the second quarter do not capture the significant development.
Our waste-to-energy facility power not only contributes to a cleaner environment, but also played a crucial role in ensuring the uninterested operation or refill as such. As we progress towards the end of fiscal year, our plan is to gradually increase the power supply, ultimately supplying almost 11.76 megawatts.
This expansion represents a monumental step towards creating a greener and more sustainable energy ecosystem. The positive impact of this initiative cannot be understated, as the green energy generated is estimated to save approximately 7 lakh tonnes of carbon dioxide emissions annually, equivalent to the emissions of around 1.5 lakh passenger cars.
In the initial testing phase, the plant has shown promising results, generating approximately 2.9 million units of power and achieving a plant load factor of about 70%. Our commitment to excellence is further demonstrated by our ongoing efforts to rigorously test all aspects of the plants, aiming to take a full load and seeking clarification for fitness from Hitachi Zosen, our esteemed technical partners.
In conclusion, these achievements underscore our dedication to environmental sustainability, innovation and a commitment to creating a better and greener future. I extend my gratitude to each one of you for this unwavering support on this transformative journey, and I believe that this will continue in future as well.
But let me also add that we are extremely delighted to provide an update on the operation and performance of entering waste landfill. In the second quarter of fiscal year '24, our company and its subsidiary, successfully managed impressive 1.15 million tonnes of waste, showcasing a remarkable 9% year-on-year. This growth can be attributed to the full-scale implementation of operations in newly acquired contracts, the exemption of our existing C&T site and an increase in tonnage processed at our waste processing operations.
Specifically in the Collection and Transportation business segment, we efficiently handled 0.45 million tonnes in quarter 2 of FY '24, reflecting a commendable 7% increase compared to the previous year.
Furthermore, our waste processing business managed 0.70 million tonnes, marking an 11% increase over the previous year. On the RDF front, this quarter, our RDF sales reached a new milestone, totaling approximately 29,000 tonnes, which is a significant increase compared to about 10,500 tonnes in the same period last year and about 27,800 tonnes in quarter 1 of -- in the previous quarter.
Additionally, we sold around 2,200 tonnes of compost during the quarter. Although these figures are on a year-on-year basis due to reduced fertilizer demand in Maharashtra and Gujarat, influenced by a weaker-than-expected monsoon, but our operational performance remains robust.
In terms of emissions, our Scope 1 emissions increased from 5,830 tonnes from carbon dioxide equivalent in quarter 1 to 6,374 tonnes in quarter 2 in line with the rise in tonnage handled.
Meanwhile, our Scope 2 emissions decreased from 891 tonnes in quarter 1 to 625 tonnes in quarter 2, reflecting fewer biomining and shedding activities.
Our commitment to emission reduction is evident with avoided emissions of 1,379 tonnes in quarter 1 and 1,260 tonnes in quarter 2. Our ground staff strength is at 9,814 and with the commencement of the Panvel project, we anticipate surpassing the 10,000 mark.
On the Panvel front, we have undertaken -- we have already taken over several vehicles from the corporation, and we shared operations from November 1 handling approximately 420 tonnes per day. These activities aligned seamlessly with our expectations, marking a positive stride in our commitment to environmental sustainability and extending efficient waste management practices to our clients.
We continue to actively pursue opportunities in C&T and biomining projects, reflecting our firm commitment to sustainability and creating value for our stakeholders.
On to the financial aspect, let me get N.G. involved with it. N.G., over to you.
Thank you, Mahendra. In the second quarter of financial year 2024, the company achieved a significant milestone, as mentioned by Jose. We had an operating revenue of INR 200 crores, a robust 25% increase compared to INR 161 crores in the same period last year.
On a half yearly basis, the company reported an operating revenue of INR 379 crores, marking a substantial 20% growth from INR 317 crores in the same period last year. The impressive revenue growth is largely attributable to the substantial increase in volumes handled.
On the consolidated EBITDA front, the group exhibited a noteworthy growth of 23% to INR 57 crores in second quarter compared to INR 46 crores in second quarter of last year and the EBITDA margin of 25%, which reflects a significant increase of 210 bps from the last year period.
For the first half, the company registered a growth of 15% in EBITDA to INR 109 crores. The core EBITDA also displayed robust growth surging 28% to -- in second quarter of the current financial year to INR 55 crores as compared to INR 43 crores in the same period last year.
The core EBITDA margins stood at 25%. Excluding the escalation component of the previous period, the core EBITDA would align with the management's past guidance standing at around 21.6%. The profit after tax for second quarter reached INR 32 crores, up from INR 28 crores last year. And for the first half, it stands at around INR 54 crores.
As of September '23, the group's total debt is around INR 370 crores. Net debt is around INR 294 crores, indicating a net debt-to-equity ratio of 0.4x. The weighted cost of debt is around 9.1%.
During the first half, the total cash flow from operations stood at INR 92.5 crores, which is a substantial increase of INR 30 crores for the same period last year. Days sales outstanding remained at similar levels compared to the previous quarter.
The company's focus continues to center on enhancing operational efficiency, improving liquidity and fostering a positive financial environment in line with the goal of achieving a 20% to 25% CAGR rate in core operating revenues in a sustainable manner.
That's all from our side. Now we can open the floor for Q&A.
[Operator Instructions] The first question comes from Bhavya Gandhi from Dalal & Broacha Stock Broking.
Congratulations on good set of numbers. So my first question is related to vehicle scrapping because I see in your investor presentation that you put a slide on vehicle scrapping. If you could throw some light what kind of opportunity are we looking out in vehicle scrapping, land that we require? And what kind of revenue are we targeting or any early signs? Yes. That's it from my end. That is first question. And another is in respect to debt, I'll take it later. Yes.
Thank you for your question. I mean, also, we are very bullish about this vehicle scrapping facility as a business line because we don't -- we not only feel that this is a project which -- or this is a business line which probably will add value to our portfolio in the near future, but going forward, this entire recycling theme is something that we are very positive about.
Specifically on auto cycling -- auto recycling, I mean we have -- we are on the drawing board stage. We are trying to find the minimum viable products, identifying the vendors and equipment. In terms of -- and then we also have zeroed down on a couple of locations where we would set up our first plant. So if all goes well, I think we can -- we should be able to make some positive announcement on this front by the end of this year.
So would -- this business would be similar to our company-level ROCEs only? Or will it be lower or higher, if you can throw some light on this, sir?
So the jury is still out on these projects. I mean what we feel is that prima facie in the initial few years going forward, I mean, the main critical success factor of this kind of project is sourcing of vehicles, sourcing of the vehicles that need to be scrapped, okay?
So what we believe is that when we have a portfolio of about 4 or 5 projects and we have a considerable experience in sourcing of these vehicles and tying up with suitable entities for sale of scrap, okay, that's when we will have some decent numbers to talk about.
So at this stage, we do not want to say anything about specific viability of these projects on an individual basis. But I think going forward, in 5 years from now, this should be a very profitable business segment.
Sure. And basically, our cliental would not be corporation over here but would be some private players...
So this is one of the reasons that -- no, not really. So -- and this is one of the reasons that why we are looking forward to do more of these recycling projects because we want to add our nonmunicipal revenue.
Right. Right. And are we looking at any other opportunities besides vehicle scrapping having sort of nongovernment revenue because that significantly reduces our data dependency on corporations.
Yes. So vehicle recycling and tire recycling are 2 specific opportunities that we are starting with. Of course, there were many segments that we initially had long listed. I mean, also, we looked at plastics and batteries and so on. But out of that long list, we decided to first attempt auto and fire because that also has a lot of synergies with our existing business, where we handle so many.
Perfect. And with respect to your outstanding debt, if I'm not wrong, you mentioned about INR 294 crores of net debt, right? So how much is outstanding for more than a year? And if you can throw some light from which corporations is it outstanding? And how long do we expect it to recover it back?
Yes. So we are talking about the total debt at that point of time, not debtors. So if you are talking about debtor's amount, I mean, the total outstanding is around INR 110 crores, which is less than 6 months period.
Less than 6 months. And more than 6 months?
More than 6 months is around INR 88 crores, which includes retention money and minimum is reimbursement.
Okay. And any -- which are facing any issues or litigations or any disputed amount?
Yes, that is around INR 6.8 crores for which -- which is a qualified line item, which is mentioned in the note. So these are old dues which are gone into arbitration, which have been settled in favor of the company. Now we have not realized the money because it's either in the Bombay High Court or is in the Supreme Court jurisdiction. So once the ruling come across, we will be able to realize the money from these 2 entities.
Perfect. And sir, one last question from my end with respect to construction debris, that project is supposed to start in December, if I'm not wrong?
No. As per the contract, we are supposed to start it by middle of February.
Middle of February. Okay. And that's the only 1 contract which has been awarded as of now? And do we expect further contracts in this space as well?
There are many cities who are in the -- I mean, planning for their construction debris recycling projects. So -- but yes, we -- as of now, we have only 1 project. But going forward, we will be looking forward to getting more.
And similar set of margins and ROCE levels?
They are similar, yes.
And more of a CapEx mode or an OpEx mode, if you can just broadly guide on that?
Most of the time, the processing contracts are on a CapEx mode because the corporation will give you only land. I mean that is like the biggest cost of any transaction, right? So they will give you land and then they will ask you to set up the plant and do the random part of it. But in large waste processing contracts, we have seen that there is an element of capital grant that is involved it could be anywhere between 10% to 50% of the total capital outlay. But it's, again, very corporation-specific and tender specific.
The next question comes from Ansh Manek from Equirus Securities Private Limited.
Congratulations for good set of numbers. Sir, I would like to hear the update with respect to the collection part for few of the municipal corporation where we have made a provision of around INR 20 crores in FY '23?
Yes. So we have already realized around INR 15 crores from the old receivables from one of the corporations in the last 7 months. And there is a written confirmation from the client that the balance will be repaid within the end of the current financial year and maybe by the first half of the next financial year. So 25% of the old receivables have already been received by the company in that aspect.
So if I recollect, during the last quarter, we received around INR 6 crores, so INR 15 crores for the first half would result into the INR 9 crores received during the second quarter, right, sir?
Yes. So during the second quarter, we have realized a tune of around INR 12 crores. Actually, this is for a period of December '21 till March 2023 so that the previous year item which we have recognized. That amount is around INR 12 crores. So if you were to strip out that, our core operating margin is still at a healthy 21.6%.
Okay. Got it, sir. Second question is with respect to the Mangalore project. So there were reports that the municipal corporation would be issuing the place tender for the project. So any update on that part?
So the Mangalore cooperation actually came up with a tender. They divided the city into 4 parts and came up with 4 projects, but then there were not too many -- they didn't get a good response and hence, they have terminated that contract -- terminated that tender.
So as we speak, I mean our contract is till January of 2024, okay? And the client is now looking forward to bidding it out again at the citywide level. But as of now, they have not given us any deadline in terms of by when they would do that.
And what would be the outstanding amount for this specific project as of date?
For Mangalore, the total outstanding amount is around INR 48 crores.
INR 48 crores? Okay, sir. And sir, my last question would be with respect to the construction and debris contract. So if you can highlight the process of the contract, what would be the byproducts like this we have in Kanjurmarg RDF and compost sales, so do we have any other byproducts which would be also forming part of this type of contract?
So in the case of the C&T project that we have with MCGM, our revenue model essentially is hinging on the processing fee or the tipping fee which the client is going to give us. So that is going to be the primary revenue.
Now coming to byproducts, in all C&T projects, the byproducts are sand and aggregates, okay, which are sold to the construction companies and/or use it to make value-added products like paver blocks, tiles and things like that. So that's the second line of revenue stream. So that you can say is similar to the RDF and compost business in the Kanjur facility. So we'll have 2 revenue streams, but bulk of the revenue and the project -- bulk of the revenue will come from the tipping fees. And the project is viable on its own based on tipping fees. Whatever comes by selling of the sand aggregates or value-added products comes as an upside. That would be an upside.
[Operator Instructions] Your next question comes from Harshal from [indiscernible].
Am I audible?
Yes, loud and clear.
Yes. So I have seen the results. So I have one question that we wrote back excess liabilities of INR 9 crores during half year ended September '23, which you had tied it in cash flow statement, right? So the EBITDA percentage that we are considering right now is it that EBITDA percentage including this INR 9 crores or excluding this INR 9 crores?
The amount is not fully written back because that period is of multiple corporations and for multiple timelines. So the only amount that we have written back is of INR 6.78 crores in the first quarter.
In the second quarter, our entire amount of INR 12 crores was not provided for in the past at all. So there was no provision to be made because we didn't recognize this escalation since there was no standing committee in any of the corporations where this matter was pending. So once the corporation has given us signal in principle about, we have recognized the same in the first and in the second quarter.
And that's also my point here is that EBITDA percentage that we are considering right now the EBITDA number that we are considering whether this is including this INR 9 crores provision, which we wrote back or excluding this INR 9 crores?
So the reported EBITDA, the core EBITDA margin of 25.6% includes the escalation amount that we have received. If you were to strip out the escalation of the prior period, that is still March 2023, if we were to remove that, our core EBITDA margin is 21.6%.
Okay. Okay. I understand, I apologize, again, because if you see -- that you see on -- if you open your cash flow statement, right, we can find one line item of excess provision wrote back of approximately INR 9 crores credit, that INR 9 crores credit is there in your cash flow...
No, that has not been utilized. That has not been utilized because that is our ECL provisioning that we have kept.
Okay. So that is the ECL provision, right? That is the additional provisioning, right?
Yes. That's an additional provision, which has been kept.
Yes. So we wrote it back in this year?
No, no, we have not included that. And as a policy, the company -- the Board has suggested that we create an ECL provisioning because of the variability in the revenue recognition pattern, given the past experiences, as a prudent accounting policy, we have started creating an ECL provisioning, which is equal to around 1% to 1.5% of the revenue. So that's how this kind of works out. It's also case specific, but that's the nature of the processing.
Another question that I would have -- that we had -- I have seen the annual report to March 2023 and March 2022, I have seen that we are significantly irregular or delayed in payments of statutory dues because if you see your accounts for March '23, right, we have approximately paid around INR 70 lakhs or INR 80 lakhs towards delay in payment of statutory dues.
Yes. So let me please explain to you the reason why there is a delay in the payment of the statutory dues. These are predominantly related to a mismatch in the name of the UAN number of the provident fund employees.
So what happens is in January 2022 and in 2023 onwards, it was mandatory that the PF portal we seed that with the Aadhaar number of the employees and the PAN number. In bulk of our employees who are actually in the marginalized class of society, they don't have these details in place.
The names do have a mismatch. For example, the Aadhaar cards, the surnames are normally alphabets, in our case. So that has been a mismatch. That is why the PF which has been deducted could not be paid to the PF portal.
Now this was the case for around 787 employees across our organization. The same has been addressed now. We have come down to around 82 employees and the same will be addressed and updated by the end of the current financial year. So this is something which is a problem from the PF portal where the company has not been able to correctly upload the chalans in the name of the employee because of the name mismatch.
Okay. I understand. But I have seen that in 2 consecutive years, in March '23 as well in March '22.
Yes. So we have a decent amount of churn in our business. Our attrition rates are very high. It's around 22%, 24%. So a person who has worked in our site like a driver or a laborer, if he discontinues his work, then that amount still has to be sorted out. It is very difficult for our company to kind of chase a person and get his documents and get it uploaded.
So that is something that we are addressing. We have spoken to the PF commissioners and the authorities to allow us to have an off-line portal where we can provide these documents, get it signed by the civil surgeon of the particular state to allow the change in name because most of these people don't even have school leaving certificates. They are either fifth standard dropouts and stuff like that.
And the PF portal needs a school leaving certificate of tenth standard, which is proving to be a difficulty for us. So this -- these are actual problems that we are facing at the ground. We are also approaching the NIC to find an option where this can be done off the system so that we can make it -- regularize the issue.
Okay. Okay. And then one last question, one last question that we are paying significantly high remuneration to nonexecutives directors, because I have seen the remuneration that will be paid to nonexecutive directors towards commission and attending Board meeting and all that thing is INR 1 crore. So 3 Directors, Non-Executive Directors we are paying approximately INR 30 lakhs -- INR 30 lakhs each to each of the Directors.
So do you think that this payment of such amount is justifiable considering the size and scale of the business, nature of the business, this quantum of remuneration is justified because I have seen other companies payment to Non-Executive Directors and it is not that as much as what we are -- what I can see in your company.
Sir, the nature of our business, the nature of work, the time and effort that goes into kind of working with the clients and managing the workload is significantly different. I'm not sure about the peer comparison that you're making here. So I will not be in a position to compare whether it's in line or excess or below that.
But we feel that the remuneration for the Non-Executive Directors to be in line with the time and effort. If you look at the business potential, the kind of growth, the kind of traction, it's a difficult job. It's -- the milk run starts at 5 in the morning, there are issues on the ground, the escalation is very rapid. So those things need to be tackled. Unlike industry like in cement or a steel industry where lateral recruits are possible, in waste management, it's very difficult to get replacement of these people who have got more than 2.5 decades of experience in this business.
Okay. Is this margin of 24%, is this including escalation or excluding escalation?
Sorry, can you repeat that question?
Is the 24% to 25% margin that we are seeking, right? Is this including escalation cost or excluding escalation deposits?
So this -- the reported margin of 25% is including the escalation. So if I were to strip out the escalation of the prior period, which is till March '22, which has been accounted now, the core operating margin would be around 22.6%.
Okay. And how much is the escalation claim that we are expected to submit in the next couple of months or next quarters which are to be accounted.
INR 14 crores from one corporation, the other corporation will be around similar lines. But the timing of the same is something that the management will not be in a position to give today because it's -- there are no standing committees, there are no elected members in those corporations. So it's likely to get delayed.
[Operator Instructions] Your next question comes from Ansh Manek from Equirus Securities Private Limited.
Sir, I have a question with respect to the sustainable core EBITDA margin in the mid to long term.
So a sustainable margin for us if escalations and everything come on time, the core sustainable operating margin would be in the range of 22% to 23%. I mean 21% to 23% would be a very safe range for us to work with because 60% of our costs have escalations built into the system. So that kind of gets a pass-through benefit. So on a sustainable manner, 21% to 22% is something which we can work.
It's the EBITDA margin, right sir, or EBIT margin?
EBITDA margin.
Your next question comes from Bhavya Gandhi from Dalal & Broacha Stock Broking.
Just wanted to know that any thoughts on repaying the debt in the long term? I mean, do we want to be like a debt-free company or will debt keep sitting on our books? Because for a further growth, because as I understand, our ROCEs are lower than the rate of revenue growth. I mean, every year either will have to do dilution for further growth or rely on debt. So -- I mean, if you can throw some light on this? Because it will be growing faster than our ROCE or ROE rates, right?
Yes. The problem is a multiplying one. So as an infrastructure services company and the fact that we are working with only one kind of clients, the ability to raise debt is also a matter of the kind of financial viability and the flexibility that the management has. The BBB+ credit rating that has been given to us is backed by the fact that there is a decent amount of cash in the system, and the debt is also very easily serviceable.
To be a debt-free company, it is easy for us because basically, that would mean that if you stop bagging any contracts, for the next couple -- within the next 3.5 years, we can throw enough cash to be a debt-free company.
For the first half, the cash flow from operations was around -- after working capital was around INR 90-odd crores. And the total debt is around INR 380-odd crores. So within 4 years, we will be a debt-free entity in that sense. We would always like to have some debt because that helps us in kind of building for multiple projects at the same time, not just bidding on 1 kind of a stream of revenue.
Right. right. Okay. Fair enough. And if you can throw some light, I know it's very early right now. But if you can throw some light, what would be the entire process of collecting construction debris, say, the corporation will tell you collect the debris from a particular building or how is it like? I mean, if you can just explain the entire road map, how the process will be done on ground level.
Yes. So I mean, as per the tender, I mean, we are supposed to collect waste from Western suburbs of Mumbai. So that's the area of jurisdiction that we have in our scope, okay? And then there are 2 types of segment, 2 type of customers, I would say. One are the builders. Builders who are doing the -- who are taking up development projects and are likely to generate a lot of debris.
So they are the people who are mandated to supply the waste to us which we will carry and process at our site. The second would be the smaller more at a ward level or at the sector level, wherein people generating lesser quantity of construction debris, but they would like to keep it outside their building or a small building or something like that. So you can say maybe some large builders and individual household owners will generate these 2. So that's how the tender has specified these 2 type of customers.
Right. And the payment will still be received from the corporation, although we might be picking maybe from a Lodha builder, but the payment still...
Yes. As per the MCGM bylaws, whoever generates construction debris as part of their construction activities is supposed to inform BMC, take their approval and deposit then a specified amount of fees which based on the volume of waste that they generate, so that will accrue to the municipality. And our revenue will come from BMC based on the leverage data at our processing site.
Okay. There is no minimum offtake guarantee that they provide you? I mean that these many tonnes would be guaranteed from the cooperation?
There is no offtake guarantee, but 600 tonnes per day is what the client has given a lot of data during the -- in the tenders -- in the tender document. So 600 tonnes per day is what we are working with.
Okay. And do we require any complex machinery for this sort of conversion of this debris or how is it like, a bit difficult for us to understand. So this...
I will explain it in simple thing. So there are 2 main equipments. One is called the jaw crusher and so on, which is that when you get the waste, you will have very, very large size of the waste, right? So it has to be crushed.
So there is called jaw crusher, so there is one equipment. And the second equipment is the main processing, is the core part, which is what actually processes based on wet washing process. And that is something that we have procured from a company called CDE Asia, which has supplied similar machinery for similar plants to at least 10 other projects in the country. So we have gone for vendors with experience. So these are the 2 set of equipment, which forms the crux of the planning machinery.
Perfect. And where would this land be located where we'll be carrying out this entire processing?
This is at Dahisar.
Your next question comes from Harshal from [indiscernible]
So just wanted to understand that how much percentage of revenue that you are expected to get from nongovernment business over next 2 to 3 years over a period of time? Because we are -- right now, what I understand is significant revenue chunk is coming from government source, municipal corporations, so how much percentage we wanted to diversify over the period of next 2 to 3 years?
So I mean, it's difficult to put a number and we don't want to put a number, but let's say, going forward, let's say, in 5 years from now, we want to have about 15% to 20% of nonmunicipal revenue in 5 years from now.
And do we plan to get into any other waste management, say for example, any corporate waste management or you wanted to focus on e-waste management or do we wanted to have any such strategy or do we have any plan to focus on those businesses?
As I explained at the beginning of this call that in this entire recycling or the circular economy theme, we explored several segments. There is recycling of different types of waste. So we looked at e-waste, we looked at plastics, we looked at tires, batteries, auto recycling and so on. And we found -- we thought that -- given our experience, our synergies with existing core business, it is worthwhile to start with, to start with auto and tire recycling.
And that's why we are working more on that -- those 2 segments. As and when things evolve in e-waste and plastics and other batteries, I mean, we will be exploring that as well.
Okay. Okay. I apologize because I could not attend at the beginning of the call, so I was not aware about it. And how much revenue that you are expected to generate from vehicle and tire scrapping over a period of next 5 to 7 years or when we start the work on ground, so how much portfolio of the percentage in terms of percentage that we look to generate revenue from those streams?
Too early. Just to -- I mean it's very early to give any number or a commitment on that. I mean because as I said that these segments are contingent on first of all, it was convenient on the government coming up with a clear policy, which they have done, which is a very -- which is a huge positive. And then comes the point of view of the implementation of this right? So we see more traction in auto recycling and so on. That's why we thought we'll get into that. But in terms of the size, in terms of viability, in terms of how the consolidation will happen, in this business, that is something which probably -- these are very early days for this segment.
Okay. Okay. And one last question that how much -- currently, I can see the receivable of around INR 250 crores [indiscernible] right? And we have a balance sheet size of INR 1,250 crores, so approximately 1/5 of receivables -- 1/5 of our assets is locked in receivable. So how much sustainable receivables that we expected to see on an over period of time? Because INR 250 crores on a revenue of INR 800 crores or INR 900 crores, do you think that is it on higher side or we would remain sustainable for a longer period of time?
So the receivables, you need to look at it in 2 points. One is there is also an unbilled revenue component which is like 1 month of revenue because the billing for waste management, let it be collection transportation or processing is on a monthly basis. So end of the month, the bill gets raised. So that component sits at receivables as an unbilled revenue, which is not sent out, one.
Second is also the tender has a retention policy wherein percentage of the revenue is kept on hold and released to the operator at the end of the contract, right? So these are 2 components which kind of adds to the number of around 200-plus that we are referring to. The retention amount by itself is around INR 48 crores and your unbilled revenue would be in the range of around INR 70 crores to INR 80 crores.
So both of them together is around INR 120 crores by themselves. So the net effective receivables that we should be worried about or looked at would be in the range of INR 120 crores to INR 130-odd crores. And the management is very astutely aware of the money that gets stuck here because this money would actually help us fuel our growth through. If you look at our day sales receivables, we have been trying to work it around -- it's still at 78, if I'm not wrong. And that is something that the management is definitely working on. And any benefit from that will definitely help us for the equity contribution on new projects for us.
Okay. And do we have any plan to give any dividend in this year?
The Board is considering this option, but there's a technicality so which we need to look at. At the stand-alone level, the company's projects are not significant. The company has a lot of revenues in the downstream entity, which is your AG Enviro and Antony Enviro. So as part of that, we have started with the first step of merging 2 of our wholly-owned subsidiary into 1 large wholly-owned subsidiary. Maybe it's a long-term process for us to kind of make it streamline and push the funds into the listed entity to make it the most tax-efficient way of declaring dividends or taking the funds out. So that is one way that we are looking at. But to answer your question, the Board has discussed about dividends at various forums and we definitely would be looking at that sometime in the next year.
Your next question comes from Uma from [indiscernible].
Am I audible?
Yes.
Okay. Just wanted to understand, you've mentioned some 3 new projects. Could you throw some light on the numbers of those projects?
So we were talking about Panvel collection and transportation.
We are talking of Panvel this thing which is about INR 376 crore of revenue over 5 years where the client has option of extending it by another 2 years. So that is one collection and transportation project.
The second one is the mechanical sweeping contract at Pimpri-Chinchwad Municipal Corporation, so that is about, let's say, 7-year contract, with about INR 80 crores of revenue. And the third one probably [indiscernible] contract, actually has already started. So that is about INR 12 crores, if I am not wrong [indiscernible] that also is a 7-year contract.
Okay. And the margins would be similar to the...
Yes, similar kind of margins, yes.
Your next question comes from Bhavya Gandhi from Dalal & Broacha Stock Broking.
Sir, I just wanted to know, is there any thought process behind this group restructuring? Are we planning to sort of delist relist or create some value addition out of this different entities within the main entity itself? Yes. That's the first question.
So the idea behind the corporate restructuring is just to clean up the corporate structure because our multiple subsidiaries that all of them are wholly-owned subsidiaries. So that adds to a line of compliances, additional managerial oversight. So just it was purely mean to clean up the org structure, have 2, 3 lines of activity, processing, collection and transportation thereabouts. So that was the reason. The main reason why these companies were formed was because of the Section 80I of tax benefit under the Minimum Alternate Tax. So since that is no more required we wanted to do that. And we just got delayed on that aspect and now we're just trying to get it done.
Right. And with respect to vehicle scrapping, will there be a tendering process or we have to sort of go to the customers directly and ask for the scrappage? If you can just throw light on that front as well?
So the vehicle scrapping policy is that you need to apply with the state transportation department for the license to set up this plant, okay? And then they have already issued guidelines in terms of what all needs to be there. For example, they need to be 2 acres of land. And then there are a few more conditions that one has to meet. Based on which license will be given. So these are merchant plants. So there's not tendering required as far as getting these projects are concerned.
For the vehicles, but if your question is also about how will we source the vehicle? Is that the question?
Yes, source as well as license, if you can throw some light on the license as well? So I didn't understand what do you mean by license? And if there's a different between the tender and license, getting a license, I mean...
So it's like this. So when we are -- okay, let's say if we want to do a project in state of -- in the city of Bangalore, okay? So then we have to go to the Bangalore City Transportation Department -- Transportation Commissioner and then apply for a license. So there are certain conditions which they have given, if we meet that, including having land of minimum 2 acres and so on, so then the commissioner will give us approval or you can say, license or approval for setting up this facility, okay?
Then setting of this facility is like setting up any other factory, which is infinitely going to be a merchant plant. So that's why to answer your question, there is no tendering process required to get such projects. It is based on our own market study and survey and the attractiveness of the location that we can define with city or which state we want to go to.
Okay. And similarly on the sourcing part. So then once you get the license, how do you source this scrappage?
So the sourcing of vehicles, I mean, the -- as per the policy, any vehicle -- any diesel vehicle, which is more than 10 years or any petrol vehicle, which is more than 15 years need to be scrapped. So which basically means that vehicle owner has to come to such a facility, apply -- I mean, give the vehicle for scrapping. And then we, as a facility will have to scrap it and cancel the registration of that vehicle at the VAHAN website, which is the MORTH website for registered vehicles and then give him a certificate within a specified number of days. So that would mean that the vehicle is officially scrapped, okay?
And in terms of sourcing of these vehicles, either customers can come to us because, I mean, they would be not too many such facilities in a given city. So depending on what is convenience of vehicle can -- the owner can approach us directly or -- but then apart from that, we also will have a website, we also have an app under which people can actually sign up for that. Then there are also these insurance companies or these -- the police department or dealers who have this inventory of old vehicles.
So that would be sourced from that. The tendering for such vehicles would only be in the case because I think some of these public sector undertaking PSUs or government departments, they auction their vehicles. So for that, we will have to bid.
There are no further questions from the participants. I now hand the conference over to Mr. Jacob for closing comments.
I'm pleased to convey my heartfelt gratitude to our committed team whose tireless efforts have played of pivotal role in accomplishing our goals. My sincere appreciation goes out to our valued clients and stakeholders for their unwavering support. Together, we have a robust and successful company, and I'm optimistic that our path towards a cleaner and greener future will be marked by continued success. Wish you all a joyous Diwali and a prosperous New Year. Thank you.
On behalf of Anthony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.