Mercantile Ports & Logis... Share Discussion Threads

[lefrene] 31/3/2017 15:15

One wonders if our Mr Gandhi is also in the oil service industry, and if the missing money is going to turn up in the shape of service ships?

[waterloo01] 31/3/2017 14:45

We are now passed the revised (revised/revised) deadline of being 2 months behind where they said they would definitely be by end Jan in the last RNS. Still no photographic evidence since the staged drone footage in January. No confirmation if Gandhi's money arriving either. The only thing for sure is that they continue to pilfer funds.

How long till the Nomad resigns or is forced to by evidence outlined by MT, the shares suspended, the cash disappeared, the banks call in the loan and 'interested' parties take the rump of what's left at a fraction of the costs to date.

A sorry tale.

[mount teide] 29/3/2017 16:01

Progress Update - 13 March 2017

'as at today's date, piling for approximately 40 per cent of the final quay length has now been completed.'

Since the photographic update of the 17 Jan 2017 shows approximately 100m of key piling complete, the same as announced as achieved in the September 2016 Interims update: lets be generous and assume with 24 hr working, a further 25m to 30 m at best of additional piling will have been completed by the 13 March 2017. ( I await clarification from the Nomad as to what 40% means, in terms of either the existing piling achieved to date or final quay length, since the Progress Update is meaningless without that information - and could be considered to be further obfuscation as to what progress has actually been made).

It is breathtaking arrogance and downright fraud for the company to state that piling for approximately 40% of the final quay length has been completed.

Since this suggests the final quay length will be:

125m divided by 40 multiplied by 100 = 310m

The 8.0million tonne throughput of the port was predicated on having 900-1000m of quay length. The Port's cargo throughput estimates will be reduced by at least 50% and possibly as high as 65%, if the final quay length is reduced to just 300m to 350m, barely enough to accommodate two 4,000t deadweight vessels, not the six berths that the company claimed in the recent Shareholders Circular.

The commercial ramifications of operating with such a restricted quay length would be totally CATASTROPHIC FOR THE PORT as a BUSINESS. IMO it would reduce the maximum cargo throughput to at best around 2-3 million tonnes. This would NEVER even remotely generate sufficient revenue/profit to cover the interest payments on the bank debt let alone pay off any of the principle as it falls due.

And things only get worse with the inane RNS dated 27 March 2017 -

'Mercantile Ports and Logistics and its wholly owned subsidiary M/s. Karanja Terminal and Logistics Pvt. Ltd, is pleased to announce it has entered in to a Memorandum of Understanding (MoU) with a leading Engineering and Logistics Project Execution company.

The agreement will allow for the use of 200 metres of the quay length as an area for handling cargo related to the decommissioning of wellhead platforms for the gas industry. It also includes plans to develop a yard area at the port which is expected to be ready in time for commencement of port operations.'

The implication of the two most recent Market announcements are, that Management cluelessly, are allowing for more than half of the final quay length to be made exclusively available(effectively offering unrestricted access) for just one client's use. Basically, the prospective client appears to want to have free and unrestricted berth access for up to two supply boat vessels of around 75m to 100m in length 24/7.

Going by the commercial contracts the North Sea Oil industry has at the Port of Aberdeen to handle such vessels and cargo for wellhead platform decommissioning - the amount of vessel and cargo handling revenue generated is extremely modest in tonnage terms compared to using the facilities for handling liner cargo or break bulk vessels.

Once again, both operationally and commercially it is simply not possible to make any sense whatsoever of the last two RNS Market Updates. They both raise incredibly serious questions that have potentially dire financial consequences for shareholders, that management need to urgently answer.

Shareholders will also note on MPL's new website, the homepage shows an animation of the completed Port layout, taken from the video made by SPL/MPL in 2014/15, to market the Port under construction and clearly detailing the 1000m of quay length and 200 acres of hardstanding/warehousing.

[mount teide] 27/3/2017 18:18

Shareholders Circular - Placing & Open Offer - 31 October 2016

RISK FACTORS

Risks relating to the Group

'No assurances can be given that the Facility will be completed on time, if at all, and the failure of the Facility would likely result in a loss of an investment in the Company.'


Operational targets and delays

'The Facility is being developed pursuant to the terms of the Deed of Lease with respect to the Project Land upon which the Facility is being built. The operational targets in relation to the Facility, as set out in the Deed of Lease, are subject to the completion of planned operational goals on time and according to budget, and are dependent on the effective support of the Group’s personnel, systems, procedures and controls.

If the Facility is not constructed and commissioned within the timeframes set out in the Deed of Lease, except due to a force majeure or a change in law, the Maharashtra Maritime Board may require the Group to rectify this non-compliance within six months and, if not so rectified, the Maharashtra Maritime Board may give notice of its intention to terminate the Deed of Lease one calendar month later if the breach is not rectified in that time.

Whilst the Maharashtra Maritime Board have waived their right to terminate the Deed of Lease in relation to the delays to the construction of Facility to date, IF THERE ARE ANY FURTHER DELAYS WHICH RESULT IN THE MAHARASHTRA MARITIME BOARD EXERCISING THEIR RIGHT TO TERMINATE THE DEED OF LEASE, THIS WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE GROUOP'S BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS'


On the date(31 October 2016) of publication of the Shareholders Circular to the Market to raise £37m of additional funds, the Management while correctly stressing in the circular the serious risk any further delays to the build out of the Karanja port development could well have on the Group's business, financial condition and results of operations, KNEW FULL WELL that NO Land Reclamation had been carried out since mid June 2016, and No Quay Piling since mid September 2016. They also would have known that NO further reclamation or quay piling work was planned before Jan 2017 at the earliest: materially important information which was kept from the Market until mid January 2017, when Company website photographs revealed all, for those that know how to interpret them.

Not only was the market clearly mislead but, the actions of Management may have put the Company at serious risk(following previous material delays) of having its Operating Deed of Lease(with a TWO Year build timetable) for Karanja terminated by the Port Authority - a risk Management deemed serious enough to have warranted prominent inclusion in the shareholders circular for prospective investors to be aware of.


This action by management, only brought to light by the Jan 2017 site photographs(without them the market would still have been ignorant of it all), raises the entirely reasonable concern that the Company may not have been fully funded to continue without interruption through to the end of Q1/2017, where, with the benefit of hindsight they disingenuously suggested in the circular that:

'By the end of the first quarter of 2017 the Company expects to have:
• reclaimed 90 per cent. of the land; (180 acres)
• constructed four berths, three of which will be capable of receiving vessels; and
• entered into commercial agreements with end users.'

And that the £37m Fund Raising was required before the high capital intensive land reclamation and quay piling operations could recommence.

Management behaviour that raises sufficient concern, that at the very least shareholders should demand an urgent financial audit/ confirmation of bank cash deposits.

AIMHO/DYOR

[tyranosaurus] 27/3/2017 13:36

These so called crooks will get away with it and the shareholders will get nothing, and no chance in hell of getting anything back.

Even UK Government screwed shareholders in Bradford And Bingley, employing some stooge to state the company had no value, less than a month after a right issue.
Rights issue was based on false information but no chance of any money coming back.

US passed a bill on internet gaming attached to a welfare bill, so voted through because of welfare bill. Cost UK shareholders in Sportingbet, Partygaming etc 90% of company value.

China Education Group was making money but directors wound it up (Jersey Registrar), and there`s nothing anyone in UK could do. 100% loss.

[diku] 26/3/2017 23:26

full capacity...meaning?...machinery or people?...how many?...

[pj 1] 26/3/2017 22:11

''The Company's main contractor is operating at full capacity ......''

Will that be another excuse for the future?

What a strange unqualified statement to make?

Where are thet operating at full capacity, Bizarre imo

[diku] 25/3/2017 21:44

Anybody fancy going?..


The Company's main contractor is operating at full capacity and the Company's engineers remain engaged with the contractor to ensure that the configuration of the final facility is optimised to achieve maximum utilisation of the land mass created. The Company is confident of completing its facility by the end of this year, although the matters referred to above, taken together, have contributed to adding approximately eight weeks to the previously reported timetable.

It is not appropriate for construction projects such as this to be commented upon on a daily basis but management will endeavour to provide regular updates to investors both by way of announcements and through drone footage on the Company's website. The Company would also welcome any shareholders who plan to visit Mumbai and wish to visit the site to see the progress that has been made.

Any shareholder interested in visiting the site should contact the Company's Investor Relations adviser, Redleaf Communications, by calling 0207 382 4769 or by emailing [e-mail].

[mount teide] 24/3/2017 13:46

Statement of Directors’ Responsibilities

'In accordance with The Companies (Guernsey) Law, 2008, the Directors are responsible for preparing financial statements for each financial year, which give a true and fair view, in accordance with applicable law and regulations. The Directors are required to:

• Make judgments and estimates that are reasonable and prudent;

Shareholders Circular of Oct 2017 - Placing and Open Offer

'The construction of the Facility was delayed due to a number of factors but work on site has continued without material interruption since October 2015'

Outlook:

'As at 30 September 2016, on the basis of an exchange rate of Rs. 86.6 : £1.00, the Company’s cash position was £22.8 million and it had £24.0 million headroom in its Debt Facility. As such, the Directors believe that the Company has sufficient resources to finance the continued construction of the Facility, without delay, through to the end of the first quarter of 2017 and, following receipt of the Transaction proceeds, to complete the Facility by the end of the third quarter of 2017.'


Market was advised the project was fully funded until end of Q1/2017 and progressing WITHOUT DELAY, with a timetable of near term progress targets they expected to achieve:

'By the end of January 2017 the Company expects to have:
• completed the dredging requirement;
• reclaimed 70 per cent. of the land; (140 acres)
• constructed two berths, one of which will be capable of receiving vessels.

By the end of the first quarter of 2017 the Company expects to have:
• reclaimed 90 per cent. of the land; (180 acres)
• constructed four berths, three of which will be capable of receiving vessels; and
• entered into commercial agreements with end users.'

Indeed, such was the Directors confidence that the build out was on track they stated in the Circular (just two months from year end)that:

'The Directors expect that the Facility will be capable of receiving vessels by the end of this year(2016)'


Now compare this to the actual situation since unwittingly provided by a spectacularly naive management to the market:

The EVIDENCE subsequently provided by the company(photographic and written) into the public domain indicates a totally different situation to that claimed in Shareholders Circular dated 31 October 2016 and, used by the Directors to raise £37.6m from a market, that had every right to believe(The Directors stated it to be the case in the Circular), that the LAND RECLAMATION WORK and QUAY WALL PILING was ongoing without material interruption, and that the near term progress targets they had prepared to support the cash raise were reasonable and prudent estimates.

The photographs put up on the company website on 17 Jan 2017 confirmed that the quay wall piling stopped in early September 2016 and did not restart until Jan 2017 - the photographs showed just 100m of piling: the same figure the company reported to the market as achieved in Sept 2016 when the Company updated the market with a progress report via the Interims on 22 Sept 2016.

Additionally, NO land reclamation work occurred between June 2016 and Jan 2017, again confirmed by comparing the June 2016 photographs with the January 2017 photographs, which showed the perimeter temporary rock wall still in place and unaltered, and identical reclaimed land footprints.

Why were there 8 photographic updates in H1/2017(prior to notifying the market of the need for further funds) and, no photographic updates between mid June 2016 and mid Jan 2017? Because, other than a small amount of land improvement work, NO Land Reclamation work was being carried out at Karanja, DESPITE management claiming in the Shareholders Circular of Oct 2016 it was progressing WITHOUT MATERIAL DELAY and providing the market with a detailed timetable of near term progress targets they expected to achieve.

The reality of the situation to any independent examination, would show that the Directors clearly knew full well when they published the Shareholders Circular on 31 October 2016, there had been NO Land Reclamation Work taking place after June 2016 or, Piling after September 2016, and so the near term progress target estimates contained within the Fund Raising Circular were a work of fiction designed to give comfort by suggesting the construction work was not only still progressing without material interruption but, according to managements progress targets now actually accelerating at a rate many multiples of that achieved at any point in time previously.

Indeed, back in November 2016, i posted after sighting the Shareholders Circular, that i doubt shareholders would see even 20% of the progress targets indicated in the Shareholders Circular, as even this would require a rate of progress considerably above that previously achieved, which was highly implausible.

However, even i was totally shocked when i saw the Jan 2017 photographs confirm that the progress made with Land Reclamation between June 2016 and Jan 2017 was ZERO, and that there had been NO Quay Wall Piling carried out between September 2016 and Jan 2017.

In summary, the Company's own photographic progress reports and written statements between June 2016 and Jan 2017, tells us that when the October Shareholders Circular was published, contrary to what was claimed, there was no Land Reclamation or Quay Wall piling taking place and no intention to recommence work before Jan 2017, which thereby renders all the progress target estimates contained therein as a work of fiction, since they had NO realistic chance whatsoever of being achieved.

IMO At the very least this is misrepresentation.


AIMHO/DYOR

[azalea] 24/3/2017 09:49

PJI
You missed out South Korea, Brazil and the USA where presidents have bee impeached for criminal activities' and CEO and directors have either been imprisoned or shot themselves to avoid going in one. I cannot remember if Asil Nadir of Polly Peck infamy has finished his prison sentence in the UK; he came back from his retreat in Northern Cyprus and gave himself up.Then we had the Brit who committed suicide by jumping overboard from his yacht. Not forgetting the individual who will serve the rest of his life in prison for being caught running the biggest Ponzi scheme in U.S. history. Any fraudulent business activities in India are peanuts in size and numbers compared to elsewhere.

[phowdo] 24/3/2017 09:21

I doubt Lord Flight will be losing money here.
I cant say the same of the Common shareholders.

[pj 1] 24/3/2017 08:34

Lord Flight should have heeded the 'No Fly Zone'..... :-0

[mount teide] 24/3/2017 01:41

lefrene - 'Just what is Howard Flight doing, lending his name to this scam? Too old to care about his reputation?'

Sadly, its likely to be another example of the old adage: There's no fool like an old fool!

Flight threw £100k of his own cash into the placing pot too. That is likely to mean his £40k a year non exec fees, will see him still out of pocket, by the time the banks make their move!

I suspect, David Lean's brilliant adaptation of E.M.Forster's 'A passage to India', is likely to make uncomfortable viewing for our noble Lord Flight, whenever it is repeated on TV over the years ahead!

[mount teide] 23/3/2017 23:15

It is simply extraordinary, considering the company has now raised in excess of £150m in equity finance and debt, that the new Head of Finance's role is not even considered worthy of a Board position, and is being carried out by someone based outside the country. While a relatively callow youth, with no senior management Port Industry experience and, who has had operational responsibility for the appalling debacle that is the three and a half year to date, Karanja Port build out, has been promoted to the Board.


Arden Partners in the 13 December 2013 Note rated MPL as a BUY with a target price of 175p, stating the building of Karanja 'was in' the then current price of 73p 'for free'!

So it was interesting to note, that in October 2016 Shareholders Circular, Arden Partners had agreed to, amongst other things, introduce the Company to potential Placees at 10p per share, in return for a commission fee of £177,916.60 on completion of the Transaction.

It was also interesting to note that in the October 2016 Capital Raise - the only MPL Director with hands on port development consultancy and construction experience, elected to take no part in the Placing, refusing to add a single share to his existing long term holding of ZERO shares! After trousering more than £250k in Fees since 2010, while the company he has overseen on behalf of shareholders, experienced an eye-watering 97% fall in the share-price since IPO, it would appear his investment judgement on port development projects is impeccable, particularly those where he is actively involved - equity investors and shareholders clearly could learn from the man!

Consequently, it was a little surprising that the highly acclaimed fund managers at L&G and M&G did not take that particular Non exec's lead and refuse to throw anymore of their clients cash at this 'port development venture'(and i use that phrase in its loosest possible sense).

L&G increased to 69.9m shares (18.2%)
M&G increased to 60.6m shares (15.8%)

With the 1000m of quay and 200 acres of land, Arden Partners in their Note dated 13 December 2013, stated that the terminal was capable, according to management, of handling an 8.0 million tonne cargo throughput per year. In practice, this would only be possible if a very high percentage of the cargo throughout were roll on roll off. Without ro-ro cargo there is no chance whatsoever of that throughput forecast being achieved. In fact, for a mix of mainly break bulk and containers( the target market), Karanja would do very well to achieve 4.0 million tonnes throughout per year.

By way of comparison the Port of Tilbury with 1,120 acres of storage and 60 deep draft berths, last year handled around 12 million tonnes, and Tilbury has 4 daily short sea ro-ro/container services, and routinely sees 20 to 30 large ship movements per weekday.

Should, the completed quay length at Karanja fall well short of the 1000m length in the GA plan(i bet my reputation it will, and by a very considerable amount ), the annual cargo throughput will be proportionately reduced.

Considering the now £49m bank debt has a current 13.5% annual interest payment, this means an annual interest bill of £6.2m. It is worth noting that the Port of Dover(Britain's largest short sea port) made a profit of circa £3m last year. It is my view that Karanja will never see a 200 acre/1000m port development and is probably 18 months to two years away at best, from seeing something even HALF of that specification.

As a consequence, it should prove a highly sobering experience for shareholders to note the following programme of bank debt principle and interest payments that have now stated to fall due:

As at 31 December 2015, the Group's non-derivative financial liabilities have contractual maturities (and interest payments) as summarised below:

Payment falling due:
Within 1 year: Interest payment of £4.6m
Within 1 to 5 years: Principle and Interest payments of £35.8m
Following 5 years: Principle and Interest payments of £49.4m

Since the borrowings are secured by the hypothecation of the port facility and pledge of its shares, in the view of this poster with 30 years senior level industry experience, it is a 100% probability, like Night following day, that the banks will take over the Port at some time in the next 18 months to three years.

I strongly suspect a certain gentleman among the senior management is fully aware of this, and that all shareholders will see during the intervening period is the same slow rate of progress/ultra high cash burn of the past, until the Banks finally call time and step in. At which point, i would also bet serious money, that the market value of the 'port asset' at Karanja at that point in time would still be well below the outstanding debt principle.


AIMHO/DYOR

[lefrene] 23/3/2017 16:42

One notes that the FCA is not on that list phowdo!

[phowdo] 23/3/2017 16:20

Until people in the City start serving jailtime then AIM frauds will continue as its seen as easy money and a victimless crime. See GBO and countless Chinese companies et al.

Everyone knows when its a scam.
The analysts.
The brokers.
The nomads.
The NEDs.
The PR.

They all earn money from it right up to the end. That money comes from peoples pensions and savings. They can afford it, right?

[lefrene] 23/3/2017 16:04

Just what is Howard Flight doing, lending his name to this scam? Too old to care about his reputation?

[pj 1] 23/3/2017 15:59

Yes azalea. Investing in India is just as safe as investing in the UK, and Yemen and Iraq, .............

[azalea] 23/3/2017 15:53

There are lots of countries all over the world where investors do not get their money back from companies that go pear shaped. The USA and UK are no exception.

[pj 1] 23/3/2017 15:43

It's always been a concern from day 1 how investors would get any cash back from India if things went pear shaped.

[saikat] 23/3/2017 12:54

MT, technical aspects of port construction apart,there has to be some way in which swindling of this magnitude can be stopped. The current system of governance
in small firms with Non-executives and accountants and nomads hardly does its job when anybody could steal remorselessly even when the stealing is blatantly obvious.

[mount teide] 23/3/2017 11:13

With regard to the design and specification of the Port Terminal at Karanja - i would refer shareholders to the tender document prepared by the principal consultant engineers Royal Haskoning for 'The development of Marine Facilities at Karanja', subsequently won by ITD Cementation with a bid of circa £57m.

In late 2013, Arden Partners in preparation to initiate coverage, met with SKIL management and were kindly provided with a copy of the General Arrangement Plan for the Layout of the Port prepared by Royal Haskoning. This is the key plan of the construction Tender Documentation, which Arden subsequently included in their Note dated 13th December 2013.

The highly detailed GA Plan was prepared specifically for the tender process and, along with various marine geophysical site survey reports, were provided to the Marine Civil Engineering groups invited to tender for the development of the Port, with which to formulate a build cost analysis for their subsequent offer.

Shareholders who have the Arden Note, will note on page 11, the GA layout plan and associated text, detailing the storage land configuration and quay length of the proposed port development given to the Marine Civil Engineering tender groups and Arden Partners, by SKIL management - and from which i quote:

'SKIL has designed its Karanja terminal to be built on 100 acres of reclaimed estuary land and to consist of 1,000m of quay.

As part of its Karanja project SKIL is also planning to build an integrated logistics park and warehousing facility on a further 100 acres of reclaimed land giving capacity of 0.6m TEUs in line with the port facility.'



In the September 2016 Interims, management stated 'Dredging is 60% complete... and to resume in the coming weeks, after the monsoon period'

In the October 2017 Shareholder Circular for the Placing and Open Offer the following comment was made:

By the end of January 2017 the Company expects to have:
• completed the dredging requirement;

Yet, worryingly, in the March 2017 Project Update, there is no mention whatsoever of any dredging work having taken place during the intervening period - with Management stating that piling and further land reclamation and preparation had been the key area of focus during Q1 2017, after they resumed these activities in early Jan 2017(after stopping the land reclamation in June 2016, and the piling in September 2016 without informing the market, and despite claiming the contrary in the October Shareholders Circular to raise an additional £36m of funds). Are we to assume the dredging was completed ahead of schedule in late 2016? If this was the case, it seems rather odd that such a significant milestone was not worthy of mention in Management's next project update!


In this connection, Shareholders may be aware that the Maharashtra Maritime Board(MMB) is the Government organisation with responsibility for the administration and operation of ports and terminals within Mumbai Harbour and the connecting waterways. This responsibility includes all matters relating to the authority over and control of dredging within Mumbai Harbour and its connecting waterways.

I have this week written to MMB, requesting information relating to the dredging of the approach channel from the main channel in Mumbai Harbour to the new Port Terminal under development at Karanja Creek. The request was for information covering but not restricted to:

* The scope of the dredging plan
* Date the dredging work commenced
* Progress made to date
* Anticipated completion date
* Company carrying out the dredging work

Looking forward with interest to receiving their reply - will keep readers advised as to what is received back.

[mount teide] 22/3/2017 21:21

Shareholders may be aware that early last year ITD Cementation won the dredging, land reclamation and build tender for the first phase expansion of the nearby Jawaharlal Nehru Port (JNPT) deepwater Container port.

The huge deepwater port expansion project will develop three new container berths, covering a linear quay length of 1,000 metres with a 15.5 metre vessel draught capacity. The new facilities will be capable of accepting the latest generation of Ultra Large Container Vessels (ULCV), which currently are unable to trade to Mumbai due to the 14m draft restriction in the long harbour access channel and alongside the existing container berths.

The new terminal will also feature 225 acres of high density, high point load, 6 high container stacking, with capacity for 2.4 million TEU, serviced by 12 post panamax quay cranes, each with a height of a 20 storey office block.

Work on the port expansion project commenced in April 2016 and is currently on schedule to open in early 2018. That much of the 'land' to be reclaimed was originally under 15m/50 feet of fast flowing seawater, gives some insight and perspective as to the scale of the project, physical work and volume of material involved.

Now compare this to Karanja, where the quay wall will be in just 4.5m of water and built to accommodate vessels of 4,000 deadweight tonnes(cargo carrying capacity), while the new JNPT terminal is being built to a specification to handle huge deep sea vessels in excess of 300m in length, with a deadweight exceeding 100,000 tonnes, 15.5m loaded draft, an air draft greater than a 12 storey block of flats, and which have to approach the port quay wall at a closing speed less than 1 metre a minute to avoid sustaining contact damage to the ship and berth infrastructure.

The new JNPT deepwater container terminal expansion project has a budgeted cost of 2,160 crore/£260m inclusive of extensive harbour channel dredging and, is scheduled to open barely two years from the commencement of construction.

By contrast, at Karanja, Skil/MPL commenced construction in September 2013, and after 3.5 years they have reclaimed and part prepared 79 acres of mostly foreshore and intertidal zone, and laid around 120m of light specification quay piling, for which management have apparently paid out somewhere currently between £75m and possibly as much as £100m of shareholders cash and debt.(An astonishing state of affairs, considering the contract to build the entire Karanja port facility was awarded to ITD for £57m!)

The next update of the cash position will make extremely interesting reading, considering we now know that no reclamation work was carried out between June 2016 and early Jan 2017, and no quay piling between Sept 2016 through to early Jan 2017, as confirmed by company photographic and written updates - totally contrary to what was claimed in the October 2016 Placing and Open Offer to raise an additional £36m.