Antony Waste Handling Cell Ltd
NSE:AWHCL
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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 '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Jose Jacob, Chairman and Managing Director from Antony Waste Handling Cell Limited. Thank you, and over to you, sir.
Good afternoon, and thank you for joining us for our Q2 FY '25 earnings call -- earnings conference call. With me, I have Mr. Mahendra Ananthula, our Group Deputy; Richard Subramanian, our Group CFO; and [indiscernible], our Investor Relations Adviser. Our [indiscernible] presentation for Q2 FY '25 is now available on the website of the stock exchanges and also on our company's website.
For the quarter ended 30th September 2024, our office revenue remains stable, reaching INR 200 crores compared to the same period last year. This softer growth was primarily due to the absence of onetime lump sum escalation [indiscernible] of [ INR 13 crores ] in the prior period, a one-off of Collection and Transportation [indiscernible] contract.
If we there [indiscernible] of this one-off either [indiscernible] project roll off, our core operating revenue has seen a growth of [ closer ] on a year-on-year basis. Our total operating revenue inclusive of income from sale of recyclables and [ reduce that view ], but exclusive of contract revenue stood at INR 220 crores, reflecting stable year-over-year growth.
During the quarter, our Collection and Transportation business saw year-over-year volume growth of 9%. Revenue on year-on-year basis has seen a decline, and this is because of this onetime lump sum escalation receipt of INR 13 crores. However, if we talk about our processing revenue, it has grown by 22% driven by our sales from our PCMC waste-to-energy plant, and I'm happy to say that our first [indiscernible] plant is working very optimally.
EBITDA for the quarter at INR 49 crores with an EBITDA margin of close [ 31.4% ]. And [indiscernible] with a significant investment in our PCMC business, we believe our margin [indiscernible]. .
I'm pleased to announce that our wholly owned subsidiary, AG Enviro Infra Projects Private Limited achieved a significant milestone by building a INR 976 crores Collection and Transportation contract with Navi Mumbai Municipal Corporation. This marks the third consecutive term that we have been awarded this contract, which underscore our strong track record and exceptional repetition in [indiscernible] contract. Our [indiscernible] partnership with Navi Mumbai Municipal Corporation reflects the trust they have in our operational efficiency, commitment to quality and execute to deliver on large-scale [indiscernible].
In addition, we are excited to report that our construction and [indiscernible] waste management side have now commenced operation. Initial results are very promising, and we expect this facility to contribute meaningful, lead to both our operational goal, environmental sustainability objectives.
By addressing PCMC [indiscernible] we aim to support other infrastructure projects while promoting a [indiscernible] promoting the responsible recycling and the use of materials. Our [indiscernible] project is also progressing on schedule with steady advance well and successful early outcome. At this project -- at this [indiscernible] continues to ramp up, we anticipate it will play a vital role in our portfolio.
Looking [indiscernible] confident that our strategic investment in the C&T business, along with the recent operation of our PCMC [indiscernible] plant, the successful launch of our C&T construction [indiscernible] waste project and the scaling up of biomining at our [indiscernible] project will enable us to deliver strong and sustainable long-term [indiscernible]. Together, these initiatives not only drive growth, but also align with our commitment, building a greener, more sustainable future for the communities we serve.
Thank you, and I now turning over to the operational aspect. Let me get Mahendra, and Mahendra, over to you.
Thank you, Jose. I would like to provide it on the operational performance and [indiscernible]. We are pleased to announce the successful completion of our first anniversary of operating waste [indiscernible] facility, which has achieved an impressive plant load factor of approximately 71% in the first year since [indiscernible] on 7th October 2023. This is significantly higher than industry average of about 50% PLF for similar projects in their first year of operations. For the coming [indiscernible] year, we are targeting a PLF of about 75%.
During the quarter, our PCMC waste energy plant produced over [ 72 million ] green units in quarter 2, advancing our goal of reducing [indiscernible] fuel dependence and lowering carbon emissions. We have also avoided [ 3,435 tonnes ] of CO2 we produce.
During the period, we managed approximately 1.19 million [indiscernible], reflecting every 4-year -- 4% year-on-year growth. Excluding this contract, our organic volume growth was around 7% year-to-year, driven by the successful execution of new contracts, increased volumes at existing C&T sites.
In the C&T segment, we handled account breaking [indiscernible] of around 0.49 million tonnes in quarter 2, marking a strong 9% year-on-year growth. Please note that the [indiscernible] handle excludes projects based on [indiscernible] or household comps. Our waste purchasing business managed approximately [ 0.7 million tonnes ] in the second quarter.
Our [indiscernible] term remains robust as we continue to deliver impressive secular economy-driven metrics. During the quarter, the company successfully sold approximately [ 30,500 ] and around 4,000 tonnes of compost in the first [indiscernible] of FY '25. These totals reached about [ 60,750 tonnes ] of RBF and [ 10,200 tonnes ] of the compost, representing year-on-year growth rate of 14% and over 100%, respectively. This achievement highlights our commitment to sustainable facility by converting [indiscernible] actions from municipal product base into earlier, paving companies in making their ultimate fuel requirement goals.
On the ESG front, our Scope 1, Scope 2 emissions totaled approximately [ 10,800 and 1,700 tonnes ] of carbon [indiscernible] in H1 of FY '25, respectively, with awarded emissions amounting to approximately [ 6,800 tonnes ]. Our [indiscernible] currently stands at about [ 10,252 people ].
As we navigate the evolving landscape of municipal foreign waste management, we remain focused on [indiscernible] sustainable growth and enhancing operational efficiency. We are confident that our track record, innovative approach and commitment to excellence will continue to be our strength in achieving our [indiscernible].
Thank you, and I'll now hand over the call to N. G. for [indiscernible].
Thank you, Mahendra. Good afternoon, everyone. For the second quarter, FY '25, the company reported stable growth in its core operating revenue, reaching around INR 2,000 crores -- INR 200 crores, [indiscernible] was the same we had last year. Just to add currently what [ Jose ] mentioned earlier, the year-on-year growth appears softer, primarily due to the absence of the onetime income escalation receipt of INR 13 crores recorded in the prior period. Adjusted for this one-off and a project roll off, the core operating revenue showed a 6% increase on a year-on-year basis.
The quarterly component also appears soft due to the monsoon factors, which didn't allow us to optimally operate our contract and demolition waste project, which we plan to ramp up in the second half of the current financial year. Our total operating revenue, which includes income from sale of recyclable [indiscernible] and RF, excluding contract revenue [indiscernible] to INR 20 crores.
We have observed a notable shift in our revenue distributed from the second quarter FY '24 to second quarter FY '25. In the same period last year, revenue breakdown was 66% from C&T, 21% from processing and 13% from contracts and others. For the last quarter, that is Q2 FY '25, we shifted to 62% from C&T, 26% on [indiscernible] and processing and 12% on contracts and others.
[indiscernible] second quarter INR 25 crores to INR 27 crores, a slight decrease from INR 29 crores in the same period last year. The group achieved consolidated EBITDA of [ INR 49 crores ] with an EBITDA margin of 20.4%. Finance cost has increased from INR 7 crores last year to INR 12 crores in the previous -- in the last quarter, while depreciation has come by 54%. This is primarily due to the [indiscernible] launch of the waste energy plant and the construction and demolition waste project.
As of September 2024, the group's plus debt stood at approximately [ INR 397 crores ] with cash and bank balance of around INR 82 crores, which has been a net debt of around [ INR 315 crores ], indicating a net debt to [indiscernible] [ ForEx ]. Additionally, the company has during the quarter and subsequently received INR 45 crores of the capital grant from the PCMC [indiscernible] and the same has been applied towards debt reduction. The group's weighted average cost of debt is approximately around 9.6%.
That concludes our remarks. We would like to open the floor for the Q&A.
[Operator Instructions] The first question is from the line of [ Gagan ] from [ Zalando Castro ].
My first question is related to the exact time line, if you can -- what revenue are we going to book from each projects?
I'll ask project-wise, for the current year, after the next year, so that we can get a better understanding how the revenues will be [indiscernible]. So far, from the funded mutual [indiscernible], what sort of [indiscernible]...
I'm sorry, [indiscernible] you sound a bit low. Could you come a bit closer to your handset.
Yes, my audible now?
Yes, sir, you are.
Yes. So in the sense, we understand what is your [indiscernible] corporation that we expect for this year and next year? That is my first question. [indiscernible] I'll ask one by one.
Okay. For the first half of the current financial year, P&L added around [ INR 17.7 crores ] of revenue and the [indiscernible] power swing and the PCMC energy at around of INR 5 crores and around INR 23 crores, respectively. [indiscernible]
INR 5 crores? Mechanical fitting you said, INR 5 crores and?
PCMC waste to energy added INR 23 crores.
PCMC [indiscernible] INR 23 crores. And similarly, when do we expect revenues coming in from [indiscernible] biomining and [indiscernible]?
The C&T revenue from [indiscernible] project will start in the -- from April 2025 onwards because the mobilization period is 6 months. So from next financial, we'll see revenue from the MMC contract coming in.
And for the [indiscernible] Biomining, I think the ramp-up will start in the second half and the revenue will start growing from December [indiscernible].
How revenue for this year, we expect from [indiscernible] Biomass?
So we are looking at about [ fourfold ].
Okay. Okay. And the last thing, on the construction definitely, have we started [indiscernible] revenue and [indiscernible]?
So can you repeat that question? We couldn't hear that clearly.
No. For the construction [indiscernible], have we [indiscernible] booking revenue? And what would be the revenue expectation for the current year?
For the construction revenue, we have started booking the revenue. We started C&T operations only in the month of August. So the ramp-up will happen in the current financial year.
Yes. So as N. G. mentioned, I mean, the CNC operations is started in August. The processing plant operation started 10 days ago. So approximately, going forward, we expect a revenue of about [ INR 3 crores ] per month.
[ INR 3 crores ] per month. Okay -- starting from?
[indiscernible], but at an average, I mean, for the next 4 months. So you can say that we will have about a revenue of [ INR 12 crores to INR 15 crores ].
Got it. And just one more thing. We formed [indiscernible] specifically to help corporate meet their EPS. If you can throw some light on this [indiscernible].
So construction and demolition was accounted to the white paper that was floated. For developers, approximately 10% of their [indiscernible] need to be from repurpose or recycled materials. So that is one of the mandates that we've been quoted by the government. So the EPR and is definitely revenue generation point for the company aspect. But the main core revenue for us would be a shipping fee from the client. Sales or revenue from EPR will be so over and above what we can get it to be [indiscernible]. .
Got it. And if you can just throw light on these projects, which are completed and was the revenue contribution last year? And how much here -- if you can just cite on the projects that were completed and their revenue [indiscernible].
So only the project that was completed last year was the Mangalore collection and aspiration business, and that contributed for the same period last year, therefore the H1 FY '24, it contributed around [ INR 17 crores ]. So if you would look at on an H1 to H1 basis, incremental revenue from new projects added around INR 45.8 crores. If you were to [indiscernible] revenue and the [indiscernible] onetime thing, the increase in revenue, core revenue for the H1 period would be around 12% for the company.
Can you just repeat the figure, last figure?
Total revenue -- would be around INR 46 crores. Revenue from [indiscernible] project INR 17 crores on [indiscernible] and [indiscernible] escalation was INR 13 crores, as we mentioned. If you net out these 2 numbers, then looking at a core revenue growth about 12.1% in the H1 [indiscernible].
[Operator Instructions] The next question is from the line of [ Patara ] from Spark BMS.
Can you give us the core EBITDA and core margin reported during the quarter?
The core EBITDA during the quarter was around INR 48.9 crores, and the [indiscernible] margin is around 20.1%.
20.1%. Okay. And as we stand today, what's the outlook for the half and anything new in pipeline in terms of newer geographies or derisking, any updates on that?
For the second half of the year, we are looking at a 15% to 16% top line growth, which includes ramp-up of operation as a bio mining of the C&T project, ramp up of operations at our waste energy entity, which will see an improved PLF post the maintenance shutdown, and the sale from my construction [ demolition ]. So that gives us comfort of achieving around [indiscernible] to 18% kind of a growth in the second half fiscal. .
On the project pipeline. On the project pipeline, I mean, we are looking at a couple of waste to energy and a couple of CMC projects, mainly in the Western region.
The next question is from the line of [ Kashy Tangata ] from DRG Starbroking.
Can you hear me?
We can hear you.
So for my question, could you throw some light and more perspective on what are the future prospects for the next year? And how are we looking forward to expand the margins?
So as I mentioned that we are looking at a couple of waste to energy and a couple of [indiscernible] projects, okay? Most importantly, another major initiative, which is still on the [indiscernible] stage, but we are doing setting up of a large waste-to-energy project at our existing [indiscernible]. I mean, as I mentioned, we are exploring that. We are in discussion with [ BMC ]. We had a couple of longer meetings. And we have submitted [indiscernible] brief concept, I would say, to them in terms of how we would like to take it as part of our existing mandates. So that's something that is going to be one of our initiatives for the next year as far as the commercial business grows.
Secondly, as we had always mentioned about our commitment to get into vehicles, cutting facility and so on. And as we mentioned in the previous earnings call as well, we had decided to buy land instead of taking land on rent to [indiscernible] to derisk [indiscernible] projects. So we made progress. We have already identified the piece of land near Mumbai. And we will -- we have already submitted the application. Application has made progress within MIDC Circle. And post election, which all concerned later this month, their land acquisition coming is likely to give the land to us [indiscernible].
So that's [indiscernible] make us eligible to apply for license for this vehicle [indiscernible] facility. So these projects that I mentioned, I mean, are going to be to -- we have a focus on these 2 initiatives in the next couple of quarters and years.
[Operator Instructions] The next question is from the line of Amit Rajput from Ritz Capital.
Am I audible?
Yes.
Sir, could you please throw some light on your trade receivables and intangible assets because it was contributing around 18% to 20% in the -- of your balance sheet.
[indiscernible] the long-term receivables is part of the [indiscernible] money as for the tender condition, which gets released at the end of the contract. So the total DSO, including long-term receivables, stands around 112, post -- subsequent year after the quarter close, I mean we have received a significant amount of sums, and now our DSO is around 72. So that's on the receivables front.
Intangibles are basically money spent at capital expenditure in our [indiscernible] processing facility covers the material recovery and the composting plant and the waste-to-energy project. So these 2 are sitting as intangibles in the books of assets because these projects are on [indiscernible] nature. And as for accounting standard 115, this needs to be treated as either financial assets or at intangibles.
Sir, what is the future plan for [indiscernible] division because of now, most of the processing plants are in Mumbai and you are most concentrated to [indiscernible].
So apart from the geographic thing and it was apart from Mumbai, we also are present in the North [indiscernible] region and so on. What I think is that opportunities are here much more than some of the other regions. Although we earning a couple of business opportunities in the states of [indiscernible].
But these are still early days because not much progress has happened as far as those tenders are concerned. But geographically, we want to focus on that region, by and large. And in terms of projects, as I mentioned, that those waste to energy and vehicle staffing facility, that is going to provide us a lot of derisking.
So if we have any other contract other than waste energy and vehicle scrapping from multiple corporation for solid base management or processing side.
So in the military base, I mean part of this, there is a bio CNG project that we are looking at. And then there are a couple of composting and [indiscernible] facility. But those [ 5 ] is smaller. So that's why we are focused more on the waste to energy and [indiscernible] to some extent.
Sir, my final question is regarding your guidance towards revenue and margins because in recent quarter, your margin has been hit by more than 50%. But in quarter 2, FY '24, your [indiscernible] margins around 16% and now standing at [ 8.4% ].
Yes. So one of the main factors for the fall in our pretax margin is increasing interest and deposition cost. So that is also predominantly because of the base 2 analogy being put to and before that it was under capital working progress, right? So once the plant is commissioned to work, the interest and depreciation cost [indiscernible]. And this was what we have already guided in the past. So the plan of the company is to reduce the debt, which is what we are doing. So that the [indiscernible] from EBITDA to pretax is significant, some which can help us roll out more going forward.
So actually, your EBITDA margin has also seen some fall because in quarter 2 FY '24 [indiscernible] is margin standing at 24.6% and [indiscernible] now 21.4%. Is there any [indiscernible] guidance which you wanted to give on [indiscernible]?
We stand by our previous guidance of 22% to 23% EBITDA margin as of the financial year. So if you were to make those adjustments of escalations and revenue increase and everything, we would be looking at a 23% to 24% margin on a YTD basis. But the company's stance is guidance around 23% EBITDA margin for financial year 2025. .
The next question from the line of [ Yogesh ] from [ Aton ].
Am I audible?
Yes.
Yes, sir, my first question is on the CapEx. So what would be the CapEx like for FY '25, '26 to '27?
So for FY '25, you're looking at a CapEx of around INR 78 crores, which includes the newly bad contract for the Collection and Transportation business. In FY '26, it will be around INR 25 crores. And in FY '27, assuming we don't bag any contract, you will have a repeat CapEx of around INR 25-odd crores related to [ Kanuma ] and the waste-to-energy project. We don't see anything beyond that. Of course, this will change based on new project bids.
Sure. And the other one is on the -- your debt reduction. We have reduced some debt this year. So what would be the trajectory of debt in the next 2 years?
So put into perspective, if the company doesn't bag any new contracts, and we are able to generate the kind of cash flows from our existing projects to be about INR 120 crores to INR 130 crores, we would be debt free in 5 years period of time.
Okay. So by FY '29, basically?
Yes, if we don't bag any new contracts.
Sure. And just one question on the quarter. So if I look at the revenue from the election in transportation, about [ INR 132 crores ] we did -- sorry, INR 141 crores we did. Last time, it was about INR 152 crores, and this includes INR 13 crores of escalation. So if I exclude that, there has been a decline -- or there is an increase, but volume has increased by about 1%. So what is the [indiscernible] coming from?
You also need to remove close to INR 9 crores of Mangalore revenues. So 2 things. One is the INR 13 crores of revenue from escalation and the INR 9 crores are Managlore, which is absent in the current quarter. So you need to compare that. So on a apples to apples, the core operating revenue is up by around 12 -- [ 19% ] adjusted for the Mangalore and escalation items.
Okay. Sure. is helpful. And just last one question. As you discussed that you're looking to set up maybe a waste-to-energy plant at [indiscernible]. so I know still it is on the doing book. But just to understand, will it be like -- the size would be bigger than that [indiscernible] like something about that?
It's going to be definitely much bigger than that. I mean because also Mumbai is a large city. And then so we are looking at -- as of now, as we speak, we are looking at [ 3,000 tonnes ] per day each, so about 3,000 tonnes per day of [indiscernible] is what we're looking at. It is about 4x that of the PCMC plant. .
Sure. So like the [indiscernible] is about 14 megawatts. So would it be -- it would be like about 3x [indiscernible] debt capacity?
That's right. Yes. [indiscernible], typically, in this, I mean, I should look at the intake at of the base. So PCMC is, yes, 40 megawatts with 700 tonnes per day. This is about 4x -- 3.5 to 4x is also [indiscernible].
Next question is from the line of [ Pushkar Jain ] from CECO Investments.
Can you please speak loud?
Yes. My question was in terms of the growth guidance for the next 2, 3 years, and the question, EBITDA margin. So what do you think would be our guidance for the FY...
[indiscernible] We can't hear you.
Can you hear me now?
Yes. It's better.
Yes. So my question is regarding the sustainable revenue growth for next 2, 3 years and the EBITDA margin you think is possible in the next 2, 3 years?
So we are confident of growing the core revenue growth by around 25% CAGR over the next 3 to 4 years based on the existing contracts and the project ramp-up that we have at the PCMC and the construction and demolition base. Our margin profile should be steady of around 23% over the next 3 to 4 years if everything goes as per our scheduled plan.
And on the data deals, did I hear it correctly that it reduced from [indiscernible] to 72?
Yes, that is collections made subsequent to the quarter end.
So how is it steep for sir, if you can explain in the data [indiscernible]?
So the data is normally what happens is corporation squeeze the payment [indiscernible] divisions and records. So the bids are raised at the end of the quarter. The payment gets really anywhere between 20 to 25 days after the period ends. Since the reporting -- and are for accounting [indiscernible] end of the quarter, that is why you see a lumpiness there, and the realization happens during the quarter period.
Okay. So like -- actually the details should have been the range of [ 75 to 85 ], like normally?
So normally, yes, it's always on the same line. So around 70 to 74 is what our rolling DSOs are.
The next question is from the line of [ Suji Chotrifrom ] Solis Capital.
Am I audible?
Yes.
Actually, I have 2 questions. What's your plan about new technology in waste to management or in electrical e-waste product?
So as we had mentioned in the previous earnings calls, I mean, we have prioritized in terms of what are the segments with circular economy feels that we want to identify into. So to start with, we have focused more on the waste scrapping and tire scrapping facility.
So you are not in the focus of e-waste, like factory or [indiscernible]?
Yes. So we are [indiscernible]. The market is not a size but we are exploring where we have been doing research on it. I mean, in future, we come up with e-waste too.
And are you planning for the private company CapEx also? Like last time you have said about both [indiscernible] waste management, something?
[indiscernible].
I'm actually -- are you looking for the [indiscernible] government, but also in the private sector as well?
So basically, this multiple solid waste management is collected from all household and household to buy the municipal corporation. So it is controlled by the municipal corporation about 80% to 90%. And in the smaller town, it is a franchise. So it is not like we can just go and collect everywhere [indiscernible] that size of [indiscernible] talking [indiscernible]. So we are focusing on the larger size market.
So are you planning to expand in the other country also only focus in India right now in terms of waste management?
[indiscernible] market is pretty good and big and we are not -- there's a huge opportunity in [indiscernible].
There as required from the Middle East, okay? But we are very clear that we would like to work there only if it comes to any investment and our contribution will essentially be more of knowledge and mandate.
And what sort -- right now, are you planning for something like raising money from market or something?
Currently, the kind of debt profile that we have and the financial flexibility [indiscernible] is more than adequate to meet our existing requirements and even the proposed capital requirements, that existing line of business. We will definitely reach out to the market if unfortunately increases and there is something which can be banked on.
Okay. And you're planning in the -- like the South India, like Tamilnadu and [indiscernible]. So are you bidding for the contracts right now or the contract is still going to be [indiscernible]?
So risk management committee at [indiscernible] reduced all the proposals that's being given now we have definitely reviewed the projects in the certain part of the country. The management is definitely looking at those opportunities. And if it meets our equity and cash equity IRR threshold, we will be bidding for the same.
[Operator Instructions] The next question is from the line of [ Tenda Mishra ] from Fin Investors.
Am I audible?
Yes.
Sir, my first question is related to the projects in the U.S. currently can to 4 new projects. What is the completion period there?
So the existing projects have a time line of around -- the waste processing projects have a time line around 2042. And the Collection and Transportation average exit period will be 2029.
My next question is regarding guidance. Actually, I've joined late, so I missed some part. Would you take through our new guidance for next year and this year end?
So we are confident of growing our company at a -- which is a core revenue growth of around 25% over the next 3 to 5 years. And the EBITDA margins will be sustained around [ 23%, 24% ] from the existing projects this year.
The next question is from the line of [ Javier Gandhi ] from Delalin Broadcast Broking.
First wanted to know, in terms of ROC ranking, if you can provide this project via the best-in-class ROC, if you can be [indiscernible]?
So [indiscernible] we will reach up from now onwards, given the fact that most of the capital space has been over, so the [indiscernible] almost going to stagnate going forward. But for the waste Collection and Transportation CapEx that we have incurred. So we see our ROC expand from Q2 of '25 onwards. And that should average, at least 75 to 120 [indiscernible] from the levels that we have achieved now.
I meant if you can give a project-wise taking order of ROC whether it's waste to energy...
[indiscernible] would like to discuss the written metrics project-wise because it's [indiscernible] business-centric proposition here.
Only if you can just most be picking order not will be absolute number that size.
So I mean, the Collection and Transportation definitely gives a better ROCE because the capital employed is not as high as it waste to energy or a waste processing project. So the priority or ROCE per se would be Collection and Transportation, where the CapEx provided by the corporation followed by Collection and Transportation where the CapEx is funded by the company. And third, in that order would be waste processing contracts. But the nature of the business are very different. The [indiscernible] which are stickiness and annuity modes are also may consider when we are looking at the contracts that we book.
Right. And in terms of cash IRR, [indiscernible] taking orders the same?
No, that will be different because the ratio will be different. Clientele receivables are also different. So cash -- in a utopian environment, I think, yes, the [indiscernible] would remain the same because 0 CapEx, better IRS. Few CapEx, slightly lower than better IRR than [indiscernible]. We [indiscernible] long-term visibility to revenue [indiscernible] work environment and core party risk, which can be addressed and banked on.
Right. So I just -- because in the C&T, we evaluate in every project. So what is the desired cash IRR target that we look internally for any project, a bare minimum of the number?
I mean these are very dynamic in nature given the needs and our proximity and the project aspects. But normally, the base pressure will be at least a delta over the cost of borrowing that we have. And since we are in an infrastructure business, gross of ordering is anywhere between 9.5% to 11.5% depending upon the risk of the project and the execution of this thing.
Next question is from the line of [ Prakash Kapadia ] from Spark PMS.
Would you have the volume tonnage of the C&T and the processing business handy?
Sorry, can you -- you are asking about C&T or...
C&T and the MSW processing, the volume for the quarter or the first half, whatever can be [indiscernible]?
So it was around point -- I'll think for this year or this quarter.
Yes, yes. For this quarter.
Quarter has been said about 1.19 million tonnes. Yes, sorry. In the PSC segment, the transportation segment, we did about 0.49 million tonnes in this...
0.49 million tonnes. And the MSW processing?
Processing is 0.70 million tonnes.
0.70 million tonnes. And would you have some first half now?
First half number. So basically, quarter 2 in C&T, with debts about 9 -- for the year-on-year. I think we'll get back to you.
And you mentioned you seem pretty confident of 22% to 23% EBITDA and the core revenue growth being almost 25%. So what gives you that visibility for second half?
So when we mentioned 25%, that's a CAGR growth over the next 3 to 5 years. It's not for the second half, one. Second is our second quarter normally see a [indiscernible] and maintenance costs. Bulk of our Collection and Transportation projects are entering in the fourth tier of their operation. It normally sees a significant retiree maintenance cost coming in.
So we have incurred a large amount of investment during the second quarter for the upkeep of those Collection and Transportation assets, which kind of gives us a longer payback over the next 3 to 4 years of the project life. So that's kind of -- that is a philosophy of Antony Waste that we kind of do our entire report and maintenance, we don't capitalize them. We kind of OpEx regard to the maintenance cost. And we do it during the mid of project life so that the benefit is available for the balance life of the project.
The confidence that we get -- how we are providing for the guidance is basically because the Collection and Transportation and the waste processing are long-term contracts with growth, which is there for us. We exited the June quarter with an order book of around [ INR 8,300 crores ] to be spread over the next 12 to 14 years. So that kind of has a finite revenue met for us without the escalation kicking in. So that kind of gives us a comfort on new guidance.
The positive for us is the ramp-up of [indiscernible] biomining is expected in setup and [indiscernible] construction and demotion was, which is getting delivered those numbers. So the base effect will help us deliver those measurements.
[Operator Instructions] The next question is from the line of [ Pushkar Jain ] from Sequent Investment.
So actually, I missed on the ROCE question. So one is our steady state ROCE like we expect seduced ROC from here on which of the CapEx is done?
So we should be in mid to -- low to mid-teens going forward because our denominator is going to be much higher than what it was historically. So anywhere between 11% to 14% over the next project rollout should be are compared, I would say.
[Operator Instructions] The next question is from the line of [ Harish Swanton ], who is an individual investor.
My first question is on the Mangalore project. Have you seen the full money from them now that we have discontinued operations?
We have [indiscernible] 70% of the total outstanding. The balance will be received over the next 15 months.
Okay. And secondly, can you mention the potential of the [indiscernible] to clean initiative? How much do you get from that initiative now? And how big is that?
So we have really got this traction. We have been able to work with a few large developers. We have got a large order from the [indiscernible] group to start on the click-to-clean business. So it is quite a good traction. We will be able to give you a better number by March and then the long-term contracts are signed up and we have a revenue visibility at that end.
Okay. On the [indiscernible] project, can you mention the likelihood of us getting it?
The channel contract has a significant risk, the counterparty risk because the buyer of the power and the recipient and the payment would be from the [indiscernible], which a lot of bankers are not making bank of it. So that is a contract that we will not be able to go ahead given the continue and contrary risk. And so currently, for the waste to energy in Chennai, we'll give it in where we are exploring other projects with a multiple operation over that. .
Okay. And my last question is, is there a likelihood, I mean, it is just an open [indiscernible] in my mind, that we look at something like a QIP, not at current price levels, but at whatever comfortable price levels soon, strategic people, not bankers or not investment firms, but global firms like Waste Management, Inc. or Global Investment Company so that we also benefit out of the local alliance or partnership and our perception also got -- and we can solve our debt issue without waiting for 5 years with no orders, as you said, because how is a running business. So it is just a forward answer you're better equipped and to handle these things. But this is just an open to in my mind, if you'd like to comment now or you can close to receive my suggestion.
So we have not specifically thought about any QIP, any strategic players in the [indiscernible]. However, we are open to the idea of tying up for the new segment that we are trying to get into, which is our car recycling or going forward if you get into was for [indiscernible]. So for that strategic tie-up with some of the global majors or technology suppliers or operators is something that we'll be looking forward to.
The next question is from the line of [ Ravi Gandhi ] from Delalin Brodcast Broking.
Yes, [indiscernible].
[indiscernible] Could do come a bit close to your handset?
Yes. Yes. You mentioned about the steady-state ROCE in the low to mid-teens, 11% to 14%. If you can just throw some light on the ROE front because ROC, I mean, if the cost of borrowing is closer to 9.5%, which even goes up to 11-odd percent. So 14% isn't it [indiscernible] ROC with the level of risk data rate that we have in the prices. you could throw some light on the ROE as well, steady-state ROE.
On the ROE part, given the fact that [indiscernible] network will go on increasing, as we currently are not looking at issuing dividends, which is one of the ways of reducing our equity base. So we will be [indiscernible] ROE single digits for some time.
ROCE is mainly a back a kind of capital that we are raising and the long-term duration of the construction fee if you want to look at was purchasing contracts, they normally take anywhere between 24 to 36 months for the construction phase. And they really are high in capital and the balance sheet really gets added up by 25% to 30% at each time a new waste to energy or a waste purposing contract comes in while the revenue and EBITDA contribution which over the next 20 years, which kind of really give double long growth rate.
So the ROCE, though you are saying -- but from a waste processing and long-term annuity model, it's like any other infrastructure road to kind of a company. But I would see large upfront and then kind of [indiscernible] on the capital.
Right. Even if we take the average ROE, would that number be somewhere [indiscernible] I understand the upfront...
We would be looking at an 8% as has been a historical average. It was as high as 14%, but that was on a lower equity base. As and when we move into corporate restructuring and changes that are [indiscernible] initiated over the next couple of years, we will see an internal hurdle rate of around at least [ 5 ] teams to start. I mean that is something that have as a [indiscernible] but it's going to be at least a 7- to 8-year kind of a work in progress for us.
The number is really low when it comes to ROE as well and [indiscernible] risk that we have in the business. I mean, is it the reason that a lot of people don't bid for such kind of processing large long-term contract? Or is it to do with the difficulty of this business or out in some light on this item?
It's a combination of both. Most of the projects in the waste management requires a significant debt-to-equity ratio. It's like 70-30 kind of a debt equity ratio that you need to bid for this project. So that is why you are seeing a large equity component being invested in these kind of entities. Collection and Transportation, normally can get away with around [ INR 9,000 -- INR 90,000 ] kind of a number. But the CMC business is a low base kind of a thing, so we can execute multiple of them. But we are talking about [indiscernible] processing. The equity [indiscernible] number is kind of -- doesn't allow a large number of players in the business. And also, there is a significant quantum part, which is something which doesn't allow a lot of players to get into PX.
So ideally speaking, coming up everything, isn't CMC project the best format to work with?
That is true because if you look at our revenue profile, in the past, it was close to 70-30. Let's call it 70% with C&T and 30% being a base profit. That has moved 60-40 towards for us. And that is also primarily because the margin profile was different in CMC versus processing. The C&T margin profile keeps [indiscernible] down over the project has because of higher repair maintenance and you're working with a multiple [indiscernible] clients, which have a very risk [indiscernible] while in case of waste processing we work with a few clients and the much more evenly spread out based on your collection criteria.
[indiscernible] I also look at the entry bales and where we can have a position. So when it comes to Collection and Transportation, today, I mean depending on the size, I mean even a regional players can compete against you, right? Because then it just boils down to the price whereas in the case of processing, I mean it's actually much more technologically advanced. So chances of smaller players getting in are extremely low. And people have tried in the past, but they figured out that it's a default in.
So that's why in the balance of things, I mean I think it's [indiscernible] we're supposed to have a balance portfolio, a combination of CMT and processing project sustainably on expeditor [indiscernible].
The next question is from the line of [ Rishi ] from Greencore Securities.
As there is no response from the participant. Ladies and gentlemen, due to time constraints, we have reached the end of our Q&A session. I now hand the conference over to Mr. Jose Jacob for closing comments.
I use to convey my heartfelt gratitude to our committed team who [indiscernible] has played a remote role in accomplishing our goals. We are continuously building our capabilities to enhance our operational efficiency and service delivery. Our unbearing focus remains on delivering, consistent operational and financial performance while creating long term value for our shareholders. By investing in innovation and leveraging our expertise, we aim to strengthen our position in the market and drive sustainable growth for the future. I am optimistic that our part towards the cleaner and cleaner future will be marked by a continue success. Thank you, and happy and prosperous new year.
Thank you. On behalf of Antony Waste Handling Cell Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.