Antony Waste Handling Cell Ltd (AWHCL) Q1 FY23 Earnings Concall Transcript

Antony Waste Handling Cell Ltd (NSE:AWHCL) Q1 FY23 Earnings Concall dated Aug. 11, 2022

Corporate Participants:

Jose Jacob Kallarakal — Chairman and Managing Director

N G Subramanian — Group Chief Financial Officer

Analysts:

Keshav Kumar — RakSan Investors — Analyst

Faisal Hawa — H.G. Hawa & Company — Analyst

Neerav Dalal — Maybank Securities India — Analyst

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Depesh Kashyap — Equirus Securities — Analyst

Anurag Patil — Roha Asset Managers — Analyst

Swechha Jain — ANS Wealth — Analyst

Tushar Raghatate — KamayaKya Wealth Management — Analyst

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Rishikesh Oza — RoboCapital — Analyst

Sandeep Salaria — UST Global — Analyst

Rajesh Jain — NB Investments — Analyst

Gaurav Gandhi — Glorytail Capital Management — Analyst

Kaushal Kedia — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Antony Waste Handling Cell Limited Q1 FY2023 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.

Jose Jacob Kallarakal — Chairman and Managing Director

Good afternoon, and a very warm welcome to everyone present on the call. Along with me, I have Mr. Subramanian, Group CFO; and SGA, our Investor Relations Advisor. I hope and pray for your continued safety, health and security, as well as that of your family. Our investor presentation is now available on the stock exchange and on the company website.

Before I begin, my comments on business performance, I would like to inform you that the Board of Directors of the company has appointed Mahendra Ananthula as Group President, effective August 16, 2022. Mahendra has over 30 years of experience mainly in the area of urban infrastructure, waste management and water management business.

Over the last few decades, Mahendra has gained extensive experience in corporate strategy, project development, sales and business development and urban infrastructure space. Earlier, he was associated with Feedback Infra, ICRA and PADCO International. And more recently, he was with Suez A.G., where he was responsible for sales and development of water and waste management business.

He has an extensive experience with both the public and private enterprises. His appointment is in line with the company’s aims to broaden and deepen our experience in the field of solid waste management and related and emerging areas of waste management as well.

Also, I would like to take this opportunity to thank Samir Kolte, who has decided to move on for personal reasons. During the period, Samir has been instrumental in improving the process and streamlining the functionalities across the breadth of the company.

Coming to the business performance, it gladdens me to inform you that company has reported its highest-ever operating revenue of INR156 crores from — during the quarter, reiterating our view of a strong year ahead. The core revenue grew approximately 19% year-on-year due to increased volumes, handle and waste process. As our new contract ramped up and economic activities improved in the area, we saw as well as price escalation benefit in our tipping fee compared to the previous year.

Onto business-wise performance; Municipal Solid Waste collection and transportation projects. We have 13 such ongoing projects after having added the new contracts for two zones in Nashik, namely Panchvati and Satpur. The project will handle 240 tonnes of municipal waste per year — per day. We anticipate that the project will begin operation on or before September 30, 2022. Our MSW C&T business volume increased by 16% year-on-year to 0.40 million tonnes in the first quarter of FY23.

Coming to Municipal Solid Waste processing project. For the three months ending June 2022, we processed approximately 0.65 million metric tonnes of Municipal Solid Waste in our processing projects, which included Kanjurmarg, Pimpri-Chinchwad and the Greater Noida bio-mining project. The total tonnage processed during the quarter increased by 18% year-on-year. Despite heavy rains in June, bio-mining at our first cell in Kanjurmarg is progressing very well.

We are pleased to report that the site has dispatched a record tonnage of compost and RDF in the month of July 2022. This comes on the heels of a record-breaking month for new compost order bag. The construction activity at the Pimpri-Chinchwad site are proceeding according to the plans, and we remain on track to begin operations by March 2023.

On the sustainability front, we are making good progress on our ESG journey. Electric and CNG vehicles now account for approximately 8% of our total fleet. Waste processing and converting the same into compost, power, and refuse-derived fuel helped to — in reducing greenhouse gas emission.

At our Kanjur site, approximately 85% of the total power consumed is generated from our bioreactor landfill gas engine. We will continue to implement sustainable business practices that will help us achieve our long-term goal of sustainability with growth. Our target would be a net zero company — emission company by FY’25, if not earlier.

We will continue to focus on contracting in newer municipal areas while adhering to the — our cluster-based strategy. Various municipalities are issuing tenders in the waste processing and MSW C&T segment, which will serve as a good growth opportunity for us.

This is it from my side. I now hand over the conference to Mr. Subramanian, our Group CFO.

N G Subramanian — Group Chief Financial Officer

Thank you, Jose. Good afternoon, everyone, and thank you for joining us for our first quarter earnings conference call. I will share the highlights of our financial performance.

The strength and resiliency of our business was clearly on display in the first quarter as we build on the growth reported last year, the momentum continued. Our teams remain focused on improving efficiency, which has reflected in record volumes being processed and handled.

The in-built escalation processes have also benefited the company. An inflationary environment and the annual salary revision for Grade One to Grade five employees have waved marginally on our core EBITDA margins, which we believe can improve as we progress during the balance period of the year.

During the quarter ending June 2022, the Company reported operating revenue of INR156 crores against INR131 crores in Q1 FY ’22, up 19% year-on-year. The total revenue, which stood at INR240 crores, included INR71 crores of project revenue arising from the Accounting Standard 115 of Ind-AS accounting norm and is mainly related to the ongoing capex activity at our PCMC waste-to-energy project. The increase in core revenue of 19% was driven by an increase in volumes in both C&T and in the processing, and partly from the in-built price escalations.

Consolidated EBITDA has registered a growth of 17% to INR49 crores in this June ’22 quarter compared to INR42 crores last year, with an EBITDA margin of 20%. The softness in EBITDA margin, as I referred, is primarily due to higher project revenue and related project cost due to the accounting standard, as mentioned. Core EBITDA margin is still lower on a year-on-year basis at approximately 23%, which is waged by higher O&M costs and also due to annual salary revision.

Profit before taxes was INR35 crores for Q1, which is up 23% year-on-year, and consolidated profit after taxes has risen to INR29 crores from INR22 crores last year, which is an increase of 30% year-on-year. Profit to shareholders after minority interest stands at INR23.6 crores versus INR16.8 crores for the same period last year, which is an increase of 41% year-on-year, and sequentially, it is up 18%.

The Municipal Solid Waste C&T revenue is up 21% for the quarter at INR115 crores as compared to INR95 crores for the same period last year. The growth was on account of increase in total MSW C&T volumes by 16%. MSW processing revenue has also improved to INR41 crores, partly due to the contribution from our Greater Noida bio-mining project, which was absent in the year ago period.

Talking on the balance sheet side, net debt to equity as of 30th June 2022 came in at around 0.4 times. Total debt as of 30th of June stood at INR229 crores and net debt is at INR160 crores. Our total net worth stood at around INR560 crores for the period. The overall credit profile of the company has improved, resulting in a 390 bps decrease in our average consolidated borrowing costs from 12.7% as of March 2021 to 8.79% as of June 30, 2022.

Our receivable days as of June 30, 2022 was 77. The total net block, including the capital work in progress as of June ’22, stood at INR542 crores as against INR435 crores in March ’22. And of the INR542 crores, the net block employed at the waste processing is approximately INR430 crores.

Currently, our key business indicators point to continued positive economic activity. Having said that, Antony Waste is well positioned in any economic environment. Our resilient business model is underpinned by our diverse customer base and essential nature.

The essential nature of our business and the annuity-like characteristics of our revenues are positive factors. We continue to advance our long-term strategic priorities of providing the best workplace for our employees, investing in technologies that differentiate Antony Waste and permanently reduces our cost to serve. We also will leverage on our sustainability platform for future growth.

That’s all from our end. We can open the floor for Q&A. Thank you.

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question -and -answer session. [Operator Instructions] We have the first question from the line of Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi, good afternoon sir. Sir, firstly, it’d be great if you could help understand the deboot contract revenues accounting a bit…

Operator

Mr. Keshav, your line has been unmuted. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hello? Am I audible? Hello?

Operator

Yes Mr. Keshav, please proceed.

Keshav Kumar — RakSan Investors — Analyst

Yes. So firstly, it would be great if you could help understand the deboot contract revenues accounting a bit. On the front of how it’s expensed, what sort of margins you make? And also, on the receivables that come with it, both current and non-current?

N G Subramanian — Group Chief Financial Officer

So, as per the Accounting Standard 115, since it is a deboot contract, the assets gets passed through our income statement since there’s a charge mechanism, the right to charge issue. So as and when the company incorporates any capex related to deboot project, we need to recognize the potential revenue which is based on the project IRR, which is very conservative number based on GSEC plus a spread of around 300 bps at the beginning of the project, which in our case, we have taken it around 10.2% totally.

So we kind of recognize that as a part of a revenue component and the actual cost, which is the contract cost, is expensed out as a contract cost norm. So — and then the reflective asset category gets reflected either as financial assets or as intangibles. The reason they have to split between them is as per the tender clause, if the tender clearly mentions that there’s a minimum assured tonnage or a minimum guaranteed tonnage that kind of an element gets recognized either as — that gets recognized as financial assets.

If the tender is slightly moot on that point and it’s slightly ambiguous, then the entire capex of that activity gets recognized as intangibles. Both these items get amortized over the period of the project as per the tangibleness of the entity and as per the tipping fee that gets billed over a period of time.

We can ask our Investor Relations team to send you a note, a detailed note on how we pass these entries, how the same is been recognized in financial assets, either as current assets or as non-current assets. These would be as per the service concession agreement accounting norms.

Keshav Kumar — RakSan Investors — Analyst

Sure sir. That will be great. Sir, secondly, the tonnage processed in the PCMC project will be a fraction of the Kanjurmarg one, right? So like from a contribution angle, it will have a fairly lower number compared to Kanjurmarg?

N G Subramanian — Group Chief Financial Officer

The Pimpri-Chinchwad waste-to-energy project has a capacity of around 1,000 tonnes per day, and that will not increase, unlike the projects that we have in Kanjurmarg. The technology which we use in Pimpri is of waste-to-energy, so there is a capping. You cannot increase the boiler capacity on an incremental basis.

We need to set up a different plant completely for any enhanced waste that needs to be processed. So, we process around 5,800 tonnes in Kanjurmarg on a monthly basis, on a tonne — TPD basis. So — and that can go up to 7,500 tonnes per day. Yes, so PCMC will be capped at 1,000 tonnes per day.

Keshav Kumar — RakSan Investors — Analyst

Sure, sir. And sir, on the PET bottle recycling front. Now, is it fair to assume that post EPR in the areas of a presence for C&T, we should technically get the largest pie on the sourcing end, because this kind of waste would largely be non-industrial waste or am I reading this differently?

N G Subramanian — Group Chief Financial Officer

Yes. So we have — so Keshav, what happens in India is, there is a fantastic cycle of recyclers from all chains. So certain amount of plastic which gets thrown out in residential gets recycled through the housekeeping agencies thereabouts. What we get either at housekeeping end or at a processing end, is something that we have a very strong control on, and the company is already tied up with few companies in this aspect.

Keshav Kumar — RakSan Investors — Analyst

Sure, sir. And sir, just one last bit. So with the EPR coming in, would the bottle manufacturers be responsible to use the recycled PET as the feedstock for making more bottles or the supply chain would differ? And there’s not much market yet in India for food-grade plastic recovery. So why I ask this is to understand how value will accrue to us in, say, another four to five years? So for example, if there are firm commitments from the bottle manufacturers for food-grade recycling, the supply chains and processing chains will get incentivized in a more sustainable way, and more value might accrue to us as well as sources?

N G Subramanian — Group Chief Financial Officer

Right. So, this is, as you rightly said, it’s a long-term process. Even today, companies and the operators are still finding their way around the most efficient way of recycling, collecting and recycling, distributing and segregating them to the rightful category shape. So till that time, segregation at source improved significantly. There will always be a gray area about whether a producer will be having — will be in a position to have access to the right quality of recycled product for him to tap into.

So, till the time the segregation is made mandatory at the generation point, this will take some more time for the policy to kick in. But in three to four years’ time, a large number of plastics or the other recycling things will be adhered to and will be looked into.

Keshav Kumar — RakSan Investors — Analyst

Thank you for answering my question sir. I will come back in the queue.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Faisal Hawa from H.G. Hawa and Company. Please go ahead.

Faisal Hawa — H.G. Hawa & Company — Analyst

Appointment of Mr. Mahendra Ananthula as the President of our Development of Operations and New Business. So what exactly do we want to develop, which vertical, because most of our other businesses don’t really need — the existing businesses doesn’t need industry heavyweight like Mr. Mahendra Ananthula. So that is one. So what are the kind of KRAs that we have given to him? And are there any business targets or revenue targets given to him? That’s one. And can you just elaborate on reasons on why Mr. Samir Kolte has resigned from the company?

Jose Jacob Kallarakal — Chairman and Managing Director

Sure.

Faisal Hawa — H.G. Hawa & Company — Analyst

I mean, this compost bit, looks to be like a very good sector for the company’s business, which is up to you. If you can process the waste already lying in our Kanjurmarg land, it would result in the revenues straight away and in freeing up of the land at the site. So how are we — have we taken any steps to improve the production of the compost further? I know that we’ve already done the highest-ever sales in this quarter on compost. So is there any more improvement that we can make?

And thirdly, sir, our project expenses have really almost doubled this quarter. I guess it is because of the PCMC project. So can we not put this into, like, fixed assets instead of getting in directly to P&L and what are your thoughts about it?

Jose Jacob Kallarakal — Chairman and Managing Director

So regarding Mahendra Ananthula, the — one of the reason is like, you know we are focusing the growth on waste processing, municipal solid waste processing, and like waste-to-energy and having PATs and growing this particular sector, like how we are finding Kanjur as well as waste processing in Pimpri-Chinchwad.

So Mahendra has big experience and the company he’s worked in Suez, which is predominantly into waste management, and one of the largest French company, and they are into waste processing from waste-to-energy and all that. So how to structure the bid process and how we can win where it is less capital intensive, and achieve those type of contracts — long-term contracts, which is 20, 25 years and that is one another important thing for waste processing, our municipal solid waste.

As far as collection transportation, we are already good, but he has the strength in that particular segment. And we have given him certain amount of targets where we have to achieve in the next three years for — to take the company to a bigger level. And that’s one of the reasons we feel he’s very important for the growth of the company in a big way.

As far as Samir Kolte, when we hired Samir Kolte, I know him for many years. He was a consultant, and he has very good experience in waste [Phonetic] for creating right processes, improving the processes in all the area like when we have lot of spare parts, procurement systems and HR systems and all that. So his involvement really helped the company to create robust processes, because without having robust processes, if I’m winning a lot of contracts, it doesn’t help. So if you have processes in place, then winning contracts really helps.

And the other thing is Mahendra — Samir felt that he has done whatever he can, and he has taken the company to the level as export process glide. And he wanted to carry on with his interest, where he is really good at. So that’s the reason he left. He wanted to go with his interest.

N G Subramanian — Group Chief Financial Officer

Yes. And on your point with respect to compost sales, we have already started augmenting our systems to increase the production of compost without compromising the quality of compost. So we are in the process of doubling our processing points, wherein we can segregate or generate compost from fresh waste over and above the current limits, so yes — and we have now understood that there is a market for it, because in the past, over the four, five years, compost sales was something which was very skeptical and looked at. We couldn’t understand whether such a market existed.

Over the last three years, we have been able to monitor this industry closely, and now, it warrants that we can definitely put in incremental capex because the returns would be positive. So yes. So the biomining activity has also started, which will also help us in generating higher volumes of compost.

On your third question, sir, it’s something we would definitely love to. I mean, but unfortunately, the accounting standard doesn’t allow us to shift or recycle accounting standards that has been mandated by the regulators that all the companies which are listed needs to follow the Ind-AS Accounting norms. So if I were to be a private limited company, I would be showing whatever capex that I do as land and building, plant and machinery, and you can actually have it the old way of accounting. But since I am a listed company, I need to adhere to the listed norms.

Faisal Hawa — H.G. Hawa & Company — Analyst

So the extra is actually almost like a capex we have made, but which is going to P&L?

N G Subramanian — Group Chief Financial Officer

Yes. So the items that you look at as intangibles in the books, they are not copyright or goodwill or trademark. They’re actually in my material recovery facility. You can touch them, you can feel them and you can hug them. I mean, it’s as simple as that.

Faisal Hawa — H.G. Hawa & Company — Analyst

The compost sale could be like, say, 20%, 22% of our total revenue ever [Technical Issues] wishing for too much?

N G Subramanian — Group Chief Financial Officer

I would say — see, technically, that will be high because good quality compost and if I process 100 tonnes of waste, I would be generating around 7 tonnes of sellable good quality compost. So if you are talking about 22% of revenues, then that will be — the processing amount has to be significantly higher than what I intake it, and it’s not in the vicinity. At the most, at the peak, you can look at around 8% to 9% of the revenue to be from sale of RDF and compost, because that’s what the volume metric is. And maybe there’s a price range and everything that comes in.

Today there’s a demand for compost because the need of the hour is to enrich the soil condition across the country, because of excessive usage of urea and NPK, the soil condition has taken a hit. Now, once soil condition improves and the moisture and there is established market for such compost, we will definitely hold on to the market share that we have got till now, and maybe we will also definitely improve on that.

Faisal Hawa — H.G. Hawa & Company — Analyst

We can supply that fuel we were supplying for boilers to [Indecipherable] also — those sales also increasing in time to come?

N G Subramanian — Group Chief Financial Officer

Yes. We have been able to source and supply a higher amount of refuse-derived fuel over the years. And that percentage amount, though the base is small, we have been able to show at around 80% to 120% increase on a month-on-month basis. So that is another confident thing that will help us boost our other income and reduce our reliance purely on tipping fee.

This industry is also new. The acceptance of the product is good. The calorific value is as high as that of coal. I mean, it’s around 3,600 kilocals today. There are negatives, the negatives being ability of this fuel to absorb atmospheric moisture, the transportation cost is high. So those are the risks and problems that any company in the waste management faces.

So unless and until you have a waste-to-energy plant set up at the processing unit, then this will definitely reduce the kind of waste that gets recycled into the system today.

Faisal Hawa — H.G. Hawa & Company — Analyst

The various other measures that you are going to take, like e-waste collection or dry waste collection from each and every home in Mumbai. You know those kind of — have you made any kind of…

N G Subramanian — Group Chief Financial Officer

We have made some solid headways in the cities of Delhi for now, and we will be rolling out similar activity in Varanasi and Jhansi. So, establishing a system, getting the people to get used to this way of segregating waste and handing it out to suppliers and operators like Antony, it’s a slightly long-term activity. So we have definitely started work on that. Maybe by the end of the current calendar year, we will be able to showcase the kind of tonnage that the company has been able to recycle without the same ending in the landfill of that particular city.

Operator

Mr. Hawa, does that answer all your questions?

Faisal Hawa — H.G. Hawa & Company — Analyst

Very well answered. Thank you so much.

Operator

Thank you. We have the next question from the line of Neerav Dalal from MIB, Maybank Securities India. Please go ahead.

Neerav Dalal — Maybank Securities India — Analyst

Thanks for the opportunity. I had three questions. First, was…

Operator

Mr. Dalal, I’m sorry to interrupt, but your audio…

Neerav Dalal — Maybank Securities India — Analyst

Yes, now?

Operator

Yes, please go ahead. Thank you.

Neerav Dalal — Maybank Securities India — Analyst

Yeah. So I had three questions. First was in terms of our revenue growth, what would be the contribution of the new projects or projects that have not completed 12 months of operations or stabilized? That is number one.

Number two, in terms of the escalation clauses that were there, so have we been able to get 100% benefit of that in this quarter because this would be the quarter wherein the fuel costs would have been very high for us.

And number three would be, any new initiatives in terms of adjacent businesses that you had talked about in the last conference call? Any headway in terms of any adjacent businesses that we are looking at entering, or any plans on that?

N G Subramanian — Group Chief Financial Officer

Right. So the new contracts, Mr. Dalal, that we have bagged, the revenue would be marginal. I mean, the Jhansi was one thing that we started and the revenue contribution from Jhansi is not more than 3% of my consol revenue today. So it’s not significant. But we are definitely seeing a ramp-up happening because some of the assets which were to be procured by the corporation was procured in late June and the same has been deployed from July onwards. So we are seeing a significant ramp-up in the current quarter, so we expect that same to be reflected going forward.

On your other question, escalations. Approximately 40% of my escalations are of fixed nature and 60% is variable. And all the variable clauses are not — I mean, around 26% of the variable — of the revenue is coming under the monthly clause. So that is getting passed on. But bulk of it, I would say, around 38% to 40% of my revenues still have a variable, but they are either annual or half yearly. So the benefit of the increase in fuel costs, we may be able to pass it or achieve in the later period.

Neerav Dalal — Maybank Securities India — Analyst

Just a follow-up on the first two things. So also we’ve seen that your number of vehicles has seen a large jump. So would that be a lead indicator in terms of even higher growth in the next — in the first few months?

N G Subramanian — Group Chief Financial Officer

Definitely, definitely. The more the vehicles, the more the garbage is collected, but that may not actually translate into tonnage revenue that gets reported by the company because certain projects like the ones in Jhansi, the ones in Varanasi, is based on the units of households or industrial units or commercial units that we cater to. So when we report the tonnage, they may not show a linear increase to the number of vehicles, but the revenue will definitely reflect the core unit growth also.

But it’s a fair assumption to say that the more the number of vehicles, the higher is the revenue potential, because normally the tonnage carrying capacity, we kind of try to maximize as much as possible so that we have efficient use of our fixed assets here.

Neerav Dalal — Maybank Securities India — Analyst

Right. So in the coming nine months, you will have the benefit of the balance of the variable escalations that would come in, plus any bump up in the volumes in the existing…

N G Subramanian — Group Chief Financial Officer

Yes.

Neerav Dalal — Maybank Securities India — Analyst

Right. And in terms of the last question, any new initiatives?

N G Subramanian — Group Chief Financial Officer

That’s an ongoing process for us. So we have definitely — in the last earnings call, we’ve mentioned that we had bid for six contracts. Three of them in the collection and transportation and three in processing. We — or sorry, slightly tangentially, lot of corporation bodies, they are under election norms. So they don’t have a ruling body today or the standing committees. The corporations like Navi Mumbai, MCGM, Nagpur, there are no elective members today.

So even large — other corporations are in the same state. So once the elective bodies get formulated, there will be better traction in awarding the contracts. So we have bid for such contracts. It’s awaited final decisions from the elected members if and when they get elected. So till that time, the existing operator continues the work.

Neerav Dalal — Maybank Securities India — Analyst

Right, right. Yes. So my question was more towards any new adjacent businesses other than municipal waste management that we are looking at, that was…?

N G Subramanian — Group Chief Financial Officer

We’re looking at construction debris processing. That’s a large business in established cities. So that is one area that we’re definitely looking for, and we are already in talks with the technology providers and the machines and in that aspect. So that is one extension that we are looking at.

Second extension is, of course, we have been internally looking at vehicle scrapping and related activity. So that is something that we will definitely be entering into, given an opportunity and the size of the market and the economic viability of the same.

Neerav Dalal — Maybank Securities India — Analyst

Right, right. Just one clarification. In terms of the project revenues, if I were to reverse calculate the project expenses, add the 10.2%, I would get the project revenues. Would that be the right assumption?

N G Subramanian — Group Chief Financial Officer

That will be a right assumption.

Neerav Dalal — Maybank Securities India — Analyst

Got that. Got that. I’ll get back into the queue. Thank you.

Operator

Thank you. We have the next question from the line of Bhavya Gandhi from Dalal & Broacha. Please go ahead.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Yeah, thank you for the opportunity. Sir, I see almost 500 vehicles added to our fleet. So just wanted to know, this is for Jhansi project, Nashik project because we were at almost 1,200, and now we’re at 750-odd level? Yeah, that is my first question?

N G Subramanian — Group Chief Financial Officer

So, the number of vehicles is not just at Jhansi or Nashik because Nashik is still ongoing, the procurement. This is also part of the smaller vehicles which has to be procured at the NDMC contract which we bagged, and the corporation is supposed to provide it to us. So that is part of it. So the incremental increase in fleet is from NDMC, which is the North Delhi Municipal Corporation, the one in Jhansi, and there are very few vehicles of Nashik, which is in that number.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Okay. Fair enough, sir. And is it possible to share the cash flow from operations for this quarter?

N G Subramanian — Group Chief Financial Officer

We would share this — can I get back to you on this?

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Sure. Sure. And sir, with respect to escalation clause, if the inflation eases, will there be a reversal, say for example, your inflation eases out and then will there be a de-escalation also to the contract?

N G Subramanian — Group Chief Financial Officer

No. So if your tipping fee, it is at the beginning of the contract, and that is the base price on which you get the increase on the escalation. So there is no — if the diesel prices comes from INR108 to say, INR100, what you are asking is, will my tipping fee go down?

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Yes.

N G Subramanian — Group Chief Financial Officer

So most of the contracts, it’s a one way type. If there is a fall in diesel prices, the tipping fee remains same as compared to the previous rate.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Okay. So maybe we will see some sort of margin expansion if the diesel prices ease off?

N G Subramanian — Group Chief Financial Officer

Yes. So if the diesel prices goes down, we can definitely have some benefit. I hope that true.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Right. And sir, is it possible to give revenue and EBITDA guidance for FY’23 and ’24, broadly your internal guidance?

N G Subramanian — Group Chief Financial Officer

So we’re tracking at least a 25% CAGR growth both on the top line and margins, on core margins basis, I mean because we should be tracking anywhere between 23% to 25% on the core margins. So, we should be comfortable achieving that.

But the Ind-AS factor kind of throws the spanner in the guidance. So my core revenue has grown a 19% year-on-year for the first quarter. That is something that we can easily hold on to and actually grow, and we are actually looking at 25% CAGR growth over the next couple of years at the core revenue front.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Right. And sir, on the contract revenue, if you could just share an example within PPT or externally also, that would be really helpful because that’s a bit complicated for anyone to understand.

N G Subramanian — Group Chief Financial Officer

When we have more profile [Phonetic] on that, we’ll try to put it on the website.

Bhavya Gandhi — Dalal & Broacha Stock Broking Pvt Ltd. — Analyst

Yes, please, please. Thank you so much. That’s it from my end.

Operator

Thank you. We have the next question from the line of Depesh from Equirus Securities. Please go ahead.

Depesh Kashyap — Equirus Securities — Analyst

Yeah. Hi Joes sir and NG sir. Thank you for taking my questions. Sir firstly, on the processing revenue, I think the incremental in the quarter-on-quarter number if I see, it’s just INR3 crores. So just wanted to understand how much is the Greater Noida contribution in this quarter?

N G Subramanian — Group Chief Financial Officer

The greater Noida contribution in tonnage has not been — has been significant. I would say around 30,000 tonnes have been mined in that area, so that is the number which we can give from a project-specific point of view. So the total tonnage to be mined would be around 65,000 — 60,000 tonnes, and we have achieved around one-third of that.

Depesh Kashyap — Equirus Securities — Analyst

Okay. So in terms of revenue, it will be like what — less than like, INR2 crore? I think that is the number?

N G Subramanian — Group Chief Financial Officer

For the quarter, it’s around INR3.6 crores, I would say.

Depesh Kashyap — Equirus Securities — Analyst

Got it. And full revenue potential of this project is around INR24 crores. That’s what the press release says, right?

N G Subramanian — Group Chief Financial Officer

So yes. So when I say 60,000 that per the planned for the first half or for the calendar year, the total capacity is around 200,000 tonnes. So we are planning to start knowing [Phonetic] on the amount at a faster clip from now onwards.

Depesh Kashyap — Equirus Securities — Analyst

Got it. Secondly, sir, on the — if I calculate the underlying margins of the business, excluding these contract expenses. There seem to be around 23%, which is slightly lower than what our average we do around 25%, 26%. So if any one -offs, like apart from fuel costs, any one-offs that was like causing this margin pressure and what is the guidance for the full year and the margins excluding the contract expenses and all?

N G Subramanian — Group Chief Financial Officer

So fuel, yes, that was one — there is pass on that we will definitely kind of recover that impact. The two items that has eaten into our margins a bit has been — we had an increasingly higher repairs and maintenance cost, and it’s also inflationary because the cost of our repairs and spare parts has increased on a year-on-year basis. That is one of the reasons why we are seeing some slight increase in our O&M cost. And also the three other sites that we have, like the one in Nagpur, Pimpri-Chinchwad and Noida, they’re entering the third and fourth year of operations.

So the repairs and maintenance do kick in, in this period, so we have seen that start. And we also have incurred certain pre-monsoon R&M, so that is also sitting in my Q1 numbers. Additionally, during the first quarter, we have an annual salary revision for our Grade one to Grade five employees. That has also been accounted for in this first quarter.

Depesh Kashyap — Equirus Securities — Analyst

Got it. And sir, thirdly, like how much capex has already happened at Pimpri-PCMC project and how much is remaining? And I think in the beginning, you said, right now, the net debt number is around INR160 crores, right? So what do you think the net debt number can go up to by the end of FY’23 when we complete the capex?

N G Subramanian — Group Chief Financial Officer

So the total capex planned at Pimpri-Chinchwad is around INR177 crores incrementally, of which we have done INR61 crores till now, till Q1. So the balance around say, INR110 crores will have to be spent over the next three quarters, so that is the item. And it is safe to assume that the entire incremental capex will be debt funded because the equity components already will pump in. so we will see an incremental debt jump from — net debt to jump from INR170 crores to around INR240 crores.

Depesh Kashyap — Equirus Securities — Analyst

Got it. And lastly, sir, any of the existing contracts which are expected to end in the next six to nine months? Any of the contracts that you — that are already ongoing but especially ends this year?

N G Subramanian — Group Chief Financial Officer

One in Mangalore has got an extension till January 2023, so that is one. And the other two contracts, one in Thane, and the one in Navi Mumbai, they are due for renewals, but the tenders are not yet floated out. So I mean, it will be — till the time the tender gets floated and LOA and everything has come out, I think safe to assume that these contracts will continue for at least another year. And these contracts contribute to around 9% of my revenue today.

Depesh Kashyap — Equirus Securities — Analyst

Right. And are these contracts maybe the drag on the margins, right, because if they are under the extension period and that’s where basically repair and maintenance cost increase?

N G Subramanian — Group Chief Financial Officer

Actually, yes, the drag — but it’s a well-oiled machinery. So it’s not that I’m EBITDA neutral. I’m making definitely EBITDA positive numbers on that. But yes, I cannot invest more on the upkeep of the machine and these vehicles are around eight to nine years old, so they definitely have a higher repairs and maintenance demand.

Depesh Kashyap — Equirus Securities — Analyst

Got it Sir thank you and all the best.

Operator

Thank you. We have the next question from the line of Anurag Patil from Roha Asset Managers. Please go ahead.

Anurag Patil — Roha Asset Managers — Analyst

Thank you for the opportunity. Sir, for Nashik project, how much will be the initial capex we have to do on the vehicles?

N G Subramanian — Group Chief Financial Officer

We have estimated around INR25 crores to be the capex based on the latest price and announcements by the Tata Motors and Ashok Leyland so — and that will be the only capex, we have to have all the vehicles on the ground. We don’t have any maintenance capex, we kind of operates the entire thing out later.

Anurag Patil — Roha Asset Managers — Analyst

Okay. And sir, in terms of vehicles, all the vehicles we prefer to own, or there are some parts that are leased fully?

N G Subramanian — Group Chief Financial Officer

So the tender conditions are all the primary and the secondary waste collection units need to be owned by the operator. So when we are talking about Tata Ace kind of a mini compactors or a large compactors, those are owned by the company, and that’s how it is.

We also hire specialized equipments like the JCBs or poclains and trucks and everything, which is higher maintenance and it also has a dead run miles. So in a collection and transportation, we also hire certain dumpers and JCBs on a need-to-do basis. But the tender clearly says the primary and the secondary vehicles should be owned by the operator.

Anurag Patil — Roha Asset Managers — Analyst

Okay. And sir, in terms of project revenues, how much project revenues we can expect in the remaining three quarters? Any ballpark number if you could give?

N G Subramanian — Group Chief Financial Officer

So, we’d showing at least an incremental INR110 crores from the Pimpri-Chinchwad project and an increment of around INR28 crores to INR30 crores coming from our Kanjur project. So all put together INR140 crores of project revenue — plus 10%, so INR140 crores, it’s 89.8%. So we just flip it up. So that is my project revenue component sitting in my books of accounts, potential entity.

Anurag Patil — Roha Asset Managers — Analyst

So that will be for entire FY ’23 or remaining nine months?

N G Subramanian — Group Chief Financial Officer

No, no. This is for ’23 only. Because by the end of ’23, we would have completed the entire capex for Pimpri-Chinchwad. So after that, there won’t be any incremental capex to be spent at the site. So the capex will be spent and capitalized till March ’23. So that is what will be sitting as the project revenue from the Pimpri-Chinchwad site.

The one in Kanju is an ongoing project. So as and when I start exploring my Cell 6 and Cell 7, there will be an incremental capex, but these are not large capex. They would be to the tune of around INR15 crores to INR20 crores each.

Anurag Patil — Roha Asset Managers — Analyst

Okay. And sir, just last question. What would be our blended finance cost currently?

N G Subramanian — Group Chief Financial Officer

You’re asking about the cost of borrowing for us?

Anurag Patil — Roha Asset Managers — Analyst

Yeah, yeah, cost of borrowing.

N G Subramanian — Group Chief Financial Officer

Cost of borrowing is around 9% for us today.

Anurag Patil — Roha Asset Managers — Analyst

Okay. That is it from my side sir. Thank you very much.

Operator

Thank you. We have the next question from the line of Swechha Jain from ANS Wealth. Please go ahead.

Swechha Jain — ANS Wealth — Analyst

Hi sir. Thank you for giving this opportunity. Sir my first question is, if you could give us the approximately daily tonnage for Nashik and NDMC separately, along with the tipping fee per tonne on both of these sites sir?

N G Subramanian — Group Chief Financial Officer

Yeah. So the total tonnage at Nashik, we estimate it to be around 240 to 260 tonnes per day. And the rate per ton is something that we have — average blended rate will be around INR1,600 — around INR2,000 is what I’m told.

Swechha Jain — ANS Wealth — Analyst

Okay. So the blended is overall, right, not specifications?

N G Subramanian — Group Chief Financial Officer

For that we have two zones. One is Satpur and other is Panchvati. So the rates per zone is different because the activity and zone, the complexities are different. So the blended rate will be around INR2,000.

Swechha Jain — ANS Wealth — Analyst

And for NDMC, if you could give the same tonnage and the tipping fee per tonne?

N G Subramanian — Group Chief Financial Officer

The tonnage in NDMC at peak. But today, it’s just on the rollout zone, but at peak, it should be averaging not less than 900 to 1,000 tonnes per day, and the rate would be similar to the ones that we have bid in Nashik.

Swechha Jain — ANS Wealth — Analyst

Okay. Okay. My second question is in PCMC, we are also going to generate some power, right. So, if you could help me understand the total megawatt that we would be generating and a number of units of power that can be generated per megawatt is what I wanted to understand, actually?

N G Subramanian — Group Chief Financial Officer

So the total installed capacity is of around 14.5 megawatt and the net metering after auxiliary consumption and others, we believe should be around 11.5 megawatts. That’s a sellable unit. This would be sold at around INR5 — at INR5 fixed for the tenure of the project, which is 21 years. And so on an average, we expect around INR35 crores to INR40 crores of revenue, depending upon the — how less of the auxiliary power can be consumed, so that’s the number we have.

These are fairly conservative numbers. So as and when the ramp-up happens and the PLF improves, this is assuming a PLF of just 85 and this has been assured by Hitachi and ISGEC. So based on their confirmation and numbers, this is what the numbers stack up today. As and when the project initializes, the bottlenecks get evolved and everything, our plan is to improve the PLF because the RDF quality over there is very high.

The supply of waste is also high. The tender allows us to procure RDF from third parties also. So my PLF can be maintained at a higher rate. But we’d be in a significantly stronger position to tell on this exact number that you’re asking maybe by January of 2023 when the fireworks and the flares happen.

Swechha Jain — ANS Wealth — Analyst

Okay. Okay. So number of units of power that can be generated per megawatt is something that you cannot give me right now? I mean…

N G Subramanian — Group Chief Financial Officer

So the net metering is around 11.5 megawatt. So I mean, that — based on that, that INR5 — that’s saleable unit.

Jose Jacob Kallarakal — Chairman and Managing Director

Saleable 11.5 megawatt. Generation 14, in-house consumption will be around 2.5 megawatt something, and saleable will be around 11.5 megawatt.

Swechha Jain — ANS Wealth — Analyst

Okay. Understood, understood. And sir, in the PCMC, we are also going to sell the compost, right? So, if you could help me understand the potential that — the revenue that can be generated through the sales of compost and other things separately, if you could give?

N G Subramanian — Group Chief Financial Officer

Compost normally should not be a significant amount because it’s 1,000 tonnes per day capacity and we are currently generating around 1,050 tonnes per day. So we don’t foresee a significant contribution coming from sale of compost. But having said that, it should be in the range of around 2% to 3%, what we have witnessed historically in Kanjur site it. It may improve, but there is a limitation there.

Jose Jacob Kallarakal — Chairman and Managing Director

It is around 20 to 25 tonnes per day.

Swechha Jain — ANS Wealth — Analyst

Okay, okay. So my last question is, sir, in FY ’22, our total project expense was close to INR49 crores. And I believe the total project revenue for FY ’22 was close to INR99 crores. So what I understand is our profit from the project was basically INR50 crores. Is my understanding correct?

N G Subramanian — Group Chief Financial Officer

No, I don’t think so. That is slightly out of whack because we had a project revenue of — for last year, that is FY ’22, we had INR49 crores of revenue. You need to add 10% of that to arrive at the contract revenue from that item. So if you’re seeing that it’s a slightly bigger bump. Then it also includes revenue from power sweeping and other items in the other components. My contract revenue is not so high.

Swechha Jain — ANS Wealth — Analyst

Okay. So what I wanted to understand is, is there any other component of project expense built in, in other expense item or whatever we give like INR49 crores is the project expense?

N G Subramanian — Group Chief Financial Officer

Any and everything that we spend on the capital items sits in the project cost. It doesn’t flow into our other expense side.

Swechha Jain — ANS Wealth — Analyst

Right. And so what I’m calculating is, roughly, we made a project — profit of close to INR50 crores, approximately INR40 crores, INR45 crores or INR50 crores. Is that correct?

N G Subramanian — Group Chief Financial Officer

INR47 crores is our number.

Swechha Jain — ANS Wealth — Analyst

Okay. So what I wanted to understand now is, actually, so this project is obviously going to get over in FY ’23, right?

N G Subramanian — Group Chief Financial Officer

Construction phase is going to get over, yes.

Swechha Jain — ANS Wealth — Analyst

So the INR47 crores of profit that we are seeing is not going to happen from FY ’24?

N G Subramanian — Group Chief Financial Officer

So let me rephrase it. So what today you’re seeing — assuming I’m spending INR100 crores on capex, so I’m showing INR110 crore as contract revenue and INR100 crores as contract expenses. You are seeing a INR10 crore of EBITDA contribution coming from that.

Now after the capex is done, you will not have this INR110 crores of revenue, INR100 crores of your contract cost. But this will be replaced with the actual core revenue of around INR65 crores in Pimpri-Chinchwad.

Swechha Jain — ANS Wealth — Analyst

That’s what I wanted to understand. So that’s…

N G Subramanian — Group Chief Financial Officer

Yes. So this will be replaced by the core revenue that will start generating and the capex, which sits in my books as financial assets or intangibles gets amortized and comes in the form of depreciation.

Swechha Jain — ANS Wealth — Analyst

Right. [Foreign Speech] The INR50 crores — INR47 crores [Foreign Speech] project expense what we are seeing…

N G Subramanian — Group Chief Financial Officer

Actually INR4.7 crores, if I’m not wrong. I think INR47 million.

Swechha Jain — ANS Wealth — Analyst

So that will be replaced by the 65…

N G Subramanian — Group Chief Financial Officer

Core revenue, yes.

Swechha Jain — ANS Wealth — Analyst

From PCMC, right? Is my understanding correct, is what I wanted to understand.

N G Subramanian — Group Chief Financial Officer

That is correct. So yes, the project revenue goes off, core revenue comes in.

Swechha Jain — ANS Wealth — Analyst

Right, right. And how much margin can we get on this core top line, say, of INR575 crores from PCMC sir? Any guidance?

N G Subramanian — Group Chief Financial Officer

Normally, waste processing contracts are significantly profitable in collection and transportation. So my weighted average EBITDA should move towards 27%, 28% gradually, once the ramp up and my PLF improves.

Swechha Jain — ANS Wealth — Analyst

This 27%, 28% is just from PCMC, right? I want to understand that?

N G Subramanian — Group Chief Financial Officer

At consol level. We normally don’t give project-specific EBITDA guidance. But at consol level, what you are seeing today at around 20% will move to higher once my capex is done.

Swechha Jain — ANS Wealth — Analyst

Okay. Okay, thank you Sir. Thank you. That helps a lot.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Tushar Raghatate from KamayaKya Wealth Management. Please go ahead.

Tushar Raghatate — KamayaKya Wealth Management — Analyst

Yeah. Good afternoon sir and congratulations for good set of numbers. Sir, my question is on the project for which you have bid. So you said we have bid for the five projects. So sir, if I see the tonnage it’s near to 1000 or so. So it seems like the municipals are big municipals. So just want to understand, is it near the NMR region or what would be the timeframe like to get update on the same like, can we consider one year or 1.5 year for that?

N G Subramanian — Group Chief Financial Officer

A few of the contracts that we’ve bid at are in LOA stage. So some of the contracts we’ll be able to announce some clarity maybe by September or October. That’s when we expect to hear from the corporations on the tendering process. Otherwise, the new contracts are anyway now coming up at a faster pace, so we will definitely be keeping the stock exchange and the investors informed on that part.

Tushar Raghatate — KamayaKya Wealth Management — Analyst

And sir, the tipping fee would be higher on this compared to our normal average tipping fee?

N G Subramanian — Group Chief Financial Officer

Tipping fee is reflective of the activity and the scope of the work. So if the scope of the work is significantly smaller than what I’m currently doing in my existing project, then it can be even lower than what I’m doing. So it all depends upon the scope of the work.

So it will not be — I mean, I will not be able to guide you on the rate per tonne. But normally, you always have a wage escalation coming in every six months. So 62% of the operating cost is fuel and labor. And that has a northward trajectory, then the tipping fee will have a northward trajectory at the time of bidding.

Tushar Raghatate — KamayaKya Wealth Management — Analyst

Fair enough. Sir, on the competition front. So the market leader’s EBIT margin — EBITDA margin is near to 30% range or so. Can we expect our margin going to that range in the next coming two to three years?

N G Subramanian — Group Chief Financial Officer

The company is definitely working and working towards that, so that is one thing. And the industry leaders also have a product mix, which is skewed towards more of a hazardous waste. And that is an area that Antony Waste today doesn’t have presence since we are predominantly a municipal solid waste entity and that is one of the reasons why we are looking at beefing up our senior management team with people like Mahendra joining us who has got significant experience in the waste processing of varied materials, not just municipal solid waste which are high capex and high-margin business with a lot of technological benefit being approved. So we are definitely exploring this area. And we’ll definitely keep you posted as and when things shape up.

Tushar Raghatate — KamayaKya Wealth Management — Analyst

Fair enough sir. Sir, just one question. Sir, the Jhansi, Varanasi, NDMC biomining and Nashik project, so what would be the potential revenue on annual terms?

N G Subramanian — Group Chief Financial Officer

We would not be in a situation to give you an approximate number today because they are all at various level of scale up. But it will be a fair assumption to say that going forward, these projects will be contributing to around 25% of my total revenue. And the growth that we are assuming would be around 25% CAGR on a consol basis. So that is something that we can state today. We normally don’t give city-wise/corporation-wise revenue breakup.

Tushar Raghatate — KamayaKya Wealth Management — Analyst

Okay sir, fine. Thank you sir.

Operator

Thank you. We have the next question from the line of Vikram R. from Maybank. Please go ahead.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Yeah, hi. Thanks. Most of my questions have been answered, but I would like to know. There is an inherent seasonality in this business, right? So Q2 will be better because of rains and certain other factors. Am I correct in saying that?

N G Subramanian — Group Chief Financial Officer

So it’s unlike your financial quarter ending. I mean, we have this — so from July 15th onwards, the monsoon starts, and that period goes all the way till the festive period, which will be November. So it is — I mean, it’s like Kharif crop and Rabi crop, it doesn’t fall in your quarter one, quarter two. So there will be a spread between the quarters. But it’s a very fair assumption to say it has a seasonality impact, 55% of my revenue will come in this 180 days and 45% of revenue will come in the balance 180 days.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Okay. My next question is, you already said that electric vehicles are some 8% of your fleet? Do you have an internal target as to where you want to reach with respect to that number?

N G Subramanian — Group Chief Financial Officer

So we don’t have an internal compulsory target to achieve, but we are definitely exploring the economic viability of the same and whether the same can be tweaked to enhance our count. One is, they should be efficient enough to take the load and go into the dumping grounds where they are supposed to go. I mean, if there are significant operational issues, then I will be pulled up by my client.

So the vehicles that we have deployed currently are the primary collectors, which is like a small vehicles like your Tata Ace kind of an example. We have yet to use electrical vehicles or electrical modified compactors because we have not seen commercial vehicles come out, which are economically viable for us to deploy today. Maybe tomorrow when the technology is better and cheaper, it’s like the solar panels.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Actually that was going to be my next question, actually, maybe you can answer it along with what you’re already saying. So any — typically any electric vehicle that you order, so you are saying those are not tailor-made for you or do you buy it and then you make the changes? I just wanted to understand.

N G Subramanian — Group Chief Financial Officer

So, yes, they are customized to carry garbage. I mean, there are certain companies which actually do this. but the tippers, basically if you look at the body, I mean — the chassis remains the same, your power remains similar, but the [Foreign Speech] body which you want, that has to be customized because it cannot be too tall, it cannot be too flat, it cannot have a flipping body. It has to have a certain non-corrosive material which adds to the weight of the machine, which it has to be able to manage and run.

So for example, talking about auto rickshaw, I mean — at the most, you’re going to have three people sitting around 160 -odd kgs. But a Tata Ace, you’d have — in a position to carry around 800 kgs of garbage, which has leachates, which is of corrosive nature and it will seep into the machine which should not breakdown every two months. So those are the working problems that we face.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

And I remember you saying these are not Indian OEMs, right? These are usually foreign OEMs you have to deal with for such procuring such vehicles?

N G Subramanian — Group Chief Financial Officer

EV options are now locally procured because there are large number of local players. But when we talk about compactors, the large compactors, we procure it from Hale which is a DevOps of US Fortune 500 company. So we procure it, and we kind of have it fabricated on a Tata Motors or an Ashok Leyland or Mahindra chassis.

Jose Jacob Kallarakal — Chairman and Managing Director

So the EV vehicle, only the small version is presently successful. And a good part is, it is — we don’t need fuel, so there’s a huge cost EBIT. But it’s on an experimental basis we are doing, and we are finding some good traction in the northern region where there’s less rain and it’s dry. So we are looking at the smaller or the primary collection vehicle, the small vehicle.

But the larger trucks, we have not yet planned to turn it into an electric vehicle because in India or worldwide, we don’t have the heavy-duty trucks with the EV model.

N G Subramanian — Group Chief Financial Officer

In waste management.

Jose Jacob Kallarakal — Chairman and Managing Director

In waste, because there it has to go to the landfill, you need a huge amount of torque.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Yes. Just a last question which is more of a broad-based one. Is there any one or two trend that is happening in some of the developed countries now which you foresee — with respect to, obviously, waste handling, that you foresee that will start coming in into India which is not there and which will obviously be a great opportunity for you? Is there any particular benefit there?

Jose Jacob Kallarakal — Chairman and Managing Director

In India, it has started almost like in developed countries, instead of people collecting fees from the municipalities, a major chunk of money come from, directly from the cities — from the citizens and shops and malls and all.

In India, the trend has come in and like the one in Noida, which we have won the contract. There, they have said okay, you collect money individually from the citizens and malls and everybody, as well as you offset a tipping fee. So you plan how much you will earn from the city while collecting payments from the people and thereafter, you feel you need extra money to run the operation, so you can quote your tipping fee. So the money which I have to charge from the citizen is already fixed, like per household it will be INR50 or INR30.

So — but in the developed countries, they fix it to a certain level where the municipalities need not bear any money. So it will be charged directly from the citizens. So this type of trend definitely will help for us because there are some municipalities where the city is very rich, people are very well to do, but the administration of that municipality is not efficient due to which their tax collection is poor and they’re not able to execute such projects.

So that way, we are — our type of industry, we’d evolve from being totally dependent on municipality, we have another stream of collection from the — directly from the citizens.

Vikram Ramalingam — Maybank Investment Banking Group — Analyst

Alright. Okay. Thanks. That’s it from my side.

Operator

Thank you. We have the next question from the line of Rishikesh from RoboCapital. Please go ahead.

Rishikesh Oza — RoboCapital — Analyst

Hi sir. Thanks for the opportunity. Sir, my first question is I missed the revenue and EBITDA margin guidance. Can you please repeat it?

N G Subramanian — Group Chief Financial Officer

So we are looking at 25% CAGR growth over the next two years on my core revenue, and the margin should be in the tracking. Our core margin should be tracking around 23%, 25% [Foreign Speech]

Operator

Sorry to interrupt, but participant there is disturbance from your line. Please go ahead. Sir, please go ahead.

N G Subramanian — Group Chief Financial Officer

Yes. Sorry. So we are looking at a 25% CAGR growth for our core operating revenue to sustain over the next couple of years comfortably. And the margin should track once my capex and everything related to the deboot project is over, should track upwards of 25% comfortably, if not better.

Rishikesh Oza — RoboCapital — Analyst

Okay. And sir, if you could also provide a debt outlook?

N G Subramanian — Group Chief Financial Officer

So my incremental peak debt based on the current projects that I have should be around INR280 crores is what we presume as the max range based on the current outlook and the projects that I have and everything. And my net worth today is around INR520-odd crores or thereabout, so pretty much in shape. So we internally are looking currently at around net debt to equity is around 0.4 times. So, we might go all the way up to 0.7 times is what we estimate over the next — by the end of — during the 2023, maybe with the first quarter of 2024.

Rishikesh Oza — RoboCapital — Analyst

Okay. Okay. And sir, once the capex is over, if you could please share what is the revenue potential that the company will have?

N G Subramanian — Group Chief Financial Officer

So the lion’s share of the capex is going into the Pimpri-Chinchwad waste-to-energy project. So the incremental capex from that project would be around INR65crores, at a very conservative PLF assumptions of around 75% to 80% to-date. So, I mean, there is a potential that this might improve, but currently, this is what we are forcing the incremental core revenue, incremental jump to come in after this capex is done.

Rishikesh Oza — RoboCapital — Analyst

Okay, that’s it from my side. Thank you.

Operator

Thank you. We have the next question from the line of Sandeep Salaria from UST Global. Please go ahead. Sandeep, your line has been unmuted, please proceed with your question. If you have muted the line from your end, please unmute and speak.

Sandeep Salaria — UST Global — Analyst

Yeah hi. Am I audible?

Operator

Yes, please go ahead.

Sandeep Salaria — UST Global — Analyst

Yeah. Good afternoon and thanks for the opportunity. Great set of numbers. I’m an individual investor and firstly I’m delighted to partner with such a great team and intend to continue this association for a long time to come. I have joined late, so pardon me, if this question has already been asked.

So now my question is, there is a significant jump in the project expenses year-on-year and quarter-on-quarter. So could you please be kind to explain how the contract revenue and project expenses move? So since there are massive variations between quarters like, there’s a big impact on EBITDA and margin gets affected. So it seems like that project margins are very less and this has an effect on EBITDA margins and causing overall margins to fall.

So, as a share of project revenue increases in this quarter, it’s like around 35%, as seen — of total revenue, so our margins will keep on going lower. So do we see this trend to continue going forward? So please help me to understand the move between contract revenue and project expenses? Explain it like you would to a five year old. Thank you very much and good luck.

N G Subramanian — Group Chief Financial Officer

I will try. So the project revenue and project cost, I mean, is related to the capex, which is ongoing at our Pimpri-Chinchwad and at Kanjur site, which are deboot projects. So as and when we incur the capex, the same gets reflected into my revenue and contract cost heads. So as and when we incur the capex, you will see an increase in the revenue or some numbers getting comment [Phonetic].

So we are foreseeing around INR110 crores incremental capex to come in over the next three quarters to make the Pimpri-Chinchwad project complete. So that is the kind of revenue that will come in my project revenue lines. And a similar cost will be sitting in my project cost head. So once the capex item is done, you will not see the project revenue or the project cost line items. The same will be replaced with core operating revenue and the operational expenses of that related activity.

So, we had discussed during the beginning of the call that if the company will be sharing a note on the accounting standard, which gets reflected into this kind of numbers coming in, we’ll share the same through our Investor Relations people, with all the attendees so far, and we also have the same note prepared and shared on our website.

Sandeep Salaria — UST Global — Analyst

That is really helpful. Thank you very much and good luck.

Operator

Thank you. We have the next question from the line of Rajesh Jain from NB Investments. Please go ahead.

Rajesh Jain — NB Investments — Analyst

Good evening. I have three questions. What is the status of the Pimpri-Chinchwad municipal project? Is it expected to be commissioned by 31st March ’23?

N G Subramanian — Group Chief Financial Officer

Yes. The production — the construction activity is going on as per schedule, and we are tracking the same. The commissioning date should be 31st March, if not before.

Rajesh Jain — NB Investments — Analyst

Okay. Sir, the second thing is, in the last call, you had mentioned that we had bid for six total projects, and you had mentioned that due to the elections not being happening, so it may take for a while to get these projects decided. So does it mean that any chance of getting any new projects during the current financial year is very low?

N G Subramanian — Group Chief Financial Officer

The current financial year, sir, we are just one quarter down we seriously hope that the elections get over by — before Diwali. So we hope to get some news before the calendar year ends. So fingers crossed, as I would say.

Rajesh Jain — NB Investments — Analyst

So, it all depends on the election that has to happen in the Maharashtra state, right? Maharashtra municipal election?

N G Subramanian — Group Chief Financial Officer

In many places, not just Maharashtra, in many places, because the tenure of the municipal corporation are normally around five years, and so a lot of corporations are over and has been changed over there. So till the time they get elected. Like Varanasi, for example, that is up for election. The elections are due in another four months. So Bombay is still due, Nagpur, Navi Mumbai, I mean, you name it. Actually, we can talk about the cities that we operate in, so that’s the ongoing process. And in cities that we have bid for, we are keeping an acute watch.

Rajesh Jain — NB Investments — Analyst

Okay. And lastly, sir, regarding the price increase to get for the diesel price increase, you said only those contracts which are having a monthly pass over, you’d be able to get maximum of that. And whereas the annual and the half yearly ones, you’re yet to receive that. On a consolidated basis, is it possible to know how much percentage of this diesel price increase the company has already received?

N G Subramanian — Group Chief Financial Officer

Okay. And lastly, sir, regarding the price increase to get for the diesel price increase, you said only those contracts which are having a monthly pass over, you’d be able to get maximum of that. And whereas the annual and the half yearly ones, you’re yet to receive that. On a consolidated basis, is it possible to know how much percentage of this diesel price increase the company has already received?

Rajesh Jain — NB Investments — Analyst

I know. So how much percentage of the overall price increase we have got? You say 27%. That is for the monthly increase you are saying, right?

N G Subramanian — Group Chief Financial Officer

Right. So if there’s any increase in fuel price of, say INR100 becomes INR110, so there’s a 10% increase in the fuel cost. Now, the tipping fee is broken into three items. There is a component for — there is a rate assigned for labor, there’s a rate assigned for fuel and there’s a rate assigned for miscellaneous items. So, if there is a 40% rate assigned for fuel and my tipping fee is, say at INR100. So I will get — 10% of the 40% will increase. That is INR100 will become INR104. So 27% of my revenue has already achieved this INR104 as the tipping fee.

Rajesh Jain — NB Investments — Analyst

So that means, you mean to say the remaining 73% or so is yet to get the price rise?

N G Subramanian — Group Chief Financial Officer

It’s yet to get the price impact benefit passed on to the company, yes.

Rajesh Jain — NB Investments — Analyst

Company, correct. Okay sir. Thank you very much and wish you all the best.

N G Subramanian — Group Chief Financial Officer

Thank you Mr. Jain.

Operator

Thank you. We have the next question from the line of Gaurav Gandhi from Glorytail Capital Management. Please go ahead.

Gaurav Gandhi — Glorytail Capital Management — Analyst

Yes. Hi sir. Congratulations on the good set of numbers. Sir, if the current government changes in 2024, central government I’m talking about, and if the Swatch Bharat Mission budget get reduced or the focus of the government get reduced, do you see any kind of business impact or reduction in number of tenders by municipalities?

Jose Jacob Kallarakal — Chairman and Managing Director

See this cleanliness has been a problem Pan India and I’ve seen every government, it’s a big important issue because if the city is not clean, then there’ll be more diseases and no government can survive. So — and the cities collects their own taxes and they float their own tenders. So basically, they have to keep their city clean. So we don’t foresee any problem, but that is it. We have been always a neutral operator.

Gaurav Gandhi — Glorytail Capital Management — Analyst

There are certain incentives which are given by central governments or some special [Speech Overlap]

Jose Jacob Kallarakal — Chairman and Managing Director

So there is a capital grant, which we get like Swatch Bharat there is — there’s a capital grant given for procurement of trucks or anything to the municipalities. So it’s around…

Gaurav Gandhi — Glorytail Capital Management — Analyst

I mean, in all, it won’t have any kind of business impact even if the government changes?

Jose Jacob Kallarakal — Chairman and Managing Director

No, no, it will not because, see this is an essential item like hospitals. So…

Gaurav Gandhi — Glorytail Capital Management — Analyst

No. But actually, my point is we haven’t seen this kind of focus on Swatch Bharat Mission before 2014. That’s what I’m — that’s why I’m asking?

N G Subramanian — Group Chief Financial Officer

Mr. Gaurav, if you look at the budgetary allocation of municipal corporations, if you can check on the budgetary allocation, there’s always an allocation for the Municipal Solid Waste department. That is actually — I mean, that’s always been stable as a percentage of total opex that has never come down.

What has added over the last couple of years has been a greater need to modernize and increase the processing part and the collection and transportation. So, the money that is being spent by the government agencies or the urban local bodies, as you call, has remained there. So it’s — we don’t foresee a change in priorities having an impact on this industry per se.

Gaurav Gandhi — Glorytail Capital Management — Analyst

Okay. Alright, thank you. Congrats.

Operator

Thank you. We have the next question from the line of Kaushal Kedia [Phonetic], an investor. Please go ahead.

Kaushal Kedia — Individual Investor — Analyst

Yes, hello?

Operator

Please go ahead sir.

Kaushal Kedia — Individual Investor — Analyst

Yeah. What I wanted to understand is, which is your largest contributor in the revenue, which city? I assume it’s Mumbai, right, Greater Mumbai?

N G Subramanian — Group Chief Financial Officer

BMC is our largest client today.

Kaushal Kedia — Individual Investor — Analyst

So what I want to understand is when is the contract expiring for it?

N G Subramanian — Group Chief Financial Officer

2036. That’s — we have collection and transportation work, and we also do waste processing at Kanjur. The waste processing at Kanjur, is a 25 years project, which gets over in 2036.

Kaushal Kedia — Individual Investor — Analyst

Okay. So you’re saying that, that waste processing whatever the waste out there will get forwarded to the Pimpri-Chinchwad plant?

N G Subramanian — Group Chief Financial Officer

No, no, no. Those are different projects. So each municipal corporation has to provide a waste processing solution for the residents of that particular city. So the waste from one municipal corporation cannot cross the municipal limits. So I cannot take the waste of Mumbai and move it to Thane, Kalyan or Ulhasnagar Municipal Corporation for processing. It has to be processed within that municipal limits today. That’s the law.

Kaushal Kedia — Individual Investor — Analyst

In Pimpri-Chinchwad, there is no one else who is processing waste except you, right?

N G Subramanian — Group Chief Financial Officer

So, today, we are the exclusive guys who are setting our plant. There is an open dumping ground in Moshi where the waste is currently being transported. There are — so that’s the way it is today.

Kaushal Kedia — Individual Investor — Analyst

Okay. So how dependent is the plant on you getting the contract for the Pimpri-Chinchwad area, then?

N G Subramanian — Group Chief Financial Officer

Sorry, can you please repeat that question?

Kaushal Kedia — Individual Investor — Analyst

I’m saying how dependent is the plant for import waste on you getting the contract?

N G Subramanian — Group Chief Financial Officer

So contracts are exclusive in nature. So the collection and transportation contract has nothing to do with the waste processing contract. Both are exclusive contracts with exclusive tendering process and the tenure of the project is also different.

Kaushal Kedia — Individual Investor — Analyst

No. But that is what I’m saying, to say, suppose if you don’t get the contract for the waste processing, then the plant will be idle, right?

N G Subramanian — Group Chief Financial Officer

No. The contract allows that you can process — the waste has to be processed. There are no additional waste processing sites in Pimpri-Chinchwad.

Jose Jacob Kallarakal — Chairman and Managing Director

So every municipality has their own waste processing facility. So for which presently, all the municipalities are modernizing their waste process and facility. Till date, 75% of Indian waste is openly dumped. Now, they are floating tenders to process the waste scientifically, so that is a separate business.

And then already, there is collection and transport where you collect waste from households, which is also a separate business. Typically, collection and transportation business of a city is having a tenure of seven to 10 years. And waste processes where the capex is high, the — typically the tender is 21 to 25 years.

So once we sign a waste contract — processing contract, whoever may be the C&T operator, he has to bring the waste to our processing centers because that is the only place where he can dump. There’s no other facility available in that limit.

Kaushal Kedia — Individual Investor — Analyst

Okay. And how much does Mumbai contribute to the revenues? Mumbai collection and transportation and waste processing?

N G Subramanian — Group Chief Financial Officer

So, I would say around 35%, 38% of my revenue comes from…

Jose Jacob Kallarakal — Chairman and Managing Director

Initially it was higher, now it is reducing.

Kaushal Kedia — Individual Investor — Analyst

Okay. And the Mumbai collection and transportation is due for renewal in ’26? 2026?

N G Subramanian — Group Chief Financial Officer

MCGM, yes. The RCRM contract is due for renewal. It’s a seven year contract. It’s due for renewal in 2026.

Kaushal Kedia — Individual Investor — Analyst

And the waste processing for MCGM is still 2031 around?

N G Subramanian — Group Chief Financial Officer

2036.

Kaushal Kedia — Individual Investor — Analyst

2036. Okay, okay, that is it. Thank you.

Operator

Thank you. We have the next question from the line of Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi. Sir, can you dissect the receivables? What are the receivable days currently? What fraction would be due for more than six months? And what were the bad debtors for FY ’22?

N G Subramanian — Group Chief Financial Officer

So the normal DSOs, as of the numbers that have been presented in the presentation is around 72. But — 77, so that is a weighted average. So some of our clients pay us within 30 days, some of the clients pay us on a quarterly mode, so that’s the number which gets generated on that speed.

And during the quarter, we didn’t have any bad debts. So we didn’t have to — because the payment have all been processed and accepted by the client. So we didn’t have any bad debts. What we normally do is normally we kind of have a general provision for debts which are under contingencies or under arbitration historically. I mean, we haven’t created any specific line items for bad debts in the last FY ’22 number, but we have created a general credit provisioning in the past. That is amount which is due and under arbitration in various high courts of the country.

Keshav Kumar — RakSan Investors — Analyst

So that will have an escalation component as well as the bad debtors, right?

N G Subramanian — Group Chief Financial Officer

So these amounts are for old contracts which are already expired. So all the receivables from current contracts are pretty much live and there are no bad debts to them.

Keshav Kumar — RakSan Investors — Analyst

Sure, sir. And sir, is there a scope to take a stake in Antony Lara further up from here or this would be it?

N G Subramanian — Group Chief Financial Officer

Honestly, the company has never ventured into that area of buying out the technical provider because today, Lara Central and Antony, there is a lot of technological advantage that both the companies earns and learns from this entity. But it’s a possibility that can happen in future. But for now, we have not looked at it.

Keshav Kumar — RakSan Investors — Analyst

Okay. And sir, lastly, the total capital allocation from PCMC is INR240 crores, right?

N G Subramanian — Group Chief Financial Officer

INR240 crores, yes.

Keshav Kumar — RakSan Investors — Analyst

And what will be the ROIC on that level for INR240 crores?

N G Subramanian — Group Chief Financial Officer

Normally, it should be in line with what we are doing across all our sites. I mean when we bid for a contract, we look like what will this earn over and above my existing site, or actually it’s equal to what my other sites earns. So my ROIC should be in line with what we have been generating.

Keshav Kumar — RakSan Investors — Analyst

So that will be 30% plus if you can give me a ballpark number?

N G Subramanian — Group Chief Financial Officer

It should be — It won’t be so high. It will be — we have been maintaining around 20%, 24%, and that is something that we should be comfortable with, if not work on it for making it better.

Keshav Kumar — RakSan Investors — Analyst

Alright sir. Thank you sir. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question, and we will now close the question queue. I hand the conference over to Mr. Jose Jacob for closing comments. Please go ahead, sir.

Jose Jacob Kallarakal — Chairman and Managing Director

I’d take this opportunity to thank everyone for joining the call. I hope we 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 Advisors. Thank you.

Operator

[Operator Closing Remarks]