Mercantile Ports & Logis... Share Discussion Threads

[mount teide] 13/6/2017 10:48

What you see in that photograph that sumuwin kindly posted has a carrying value of £94.93m!

The photograph shows circa 90acres (we estimate 85 acres) of land reclamation under development for port activity, 160 shallow water piles for a lightweight heavily scaled back open jetty, and some dredging off the berth carried out not by a high tech computer controlled suction dredger but a pontoon mounted small crane and bucket grab!

The Impairment review supporting the ridiculous asset valuation of the port when fully complete and operational and which is greater than the estimated final build cost, is a complete work of fiction, that does not stand up to any critical examination.

For instance, the valuation assumes the port will be operational by the end of 2017, and has a fully complete construction end date of MARCH 2018!!!!!!, and fully operational by April 2018. Complete nonsense!

Perhaps management can explain how this is going to be achieved, because after reclaiming 15 acres of land between June 2016 and Dec 2017, they are assuming the remaining 110 acres will be completed in 3 months! Clueless, totally clueless. (Tip to management - for what little is left of your own credibly, if you're trying to pull the wool over people's eyes at least put a case forward that could be even remotely plausible!)

They assume another £60m of cost to completion - while reporting just £61m of cash and headroom in the debt facility! Suggesting a further cash raise - since the share price is likely to be around 1p by the middle of next year, i suspect that would be a waste of time, since there would be no support and the game would be up.

They are basing the protected revenue figures on handling large quantities of stream transhipment containers - this is a huge assumption that is not supported by any objective examination, not least since there is currently NO stream transhipment containers handled in Mumbai Harbour by any of the 40 terminals at the Old Indira Harbour Docks, and some 4.5m teu of new terminal capacity is coming on stream at JNPT early next year.


The Revenue forecast for which predictably there are no volume throughput figures is based simply on "current comparable market rates."

Well, as suggested previously, for the purposes of clarity and since the cost of the port has ballooned by nearly 40% since IPO, James Sutcliffe and the CEO should provide shareholders with a three year revenue and profit projection in order to give them a little 'comfort' that their investment is still on track. As, the shareprice falling from 250p to 5p since IPO, for what is basically the gross mismanagement of a real estate development by a completely incompetent board, tells the real story behind this investment disaster.


Sadly, for shareholders, while the board may be totally incompetent, they are not idiots - so do not expect to see any time soon a detailed 3 year Revenue and Profit projection, because Management know very well the current market rates are wholly insufficient, as demonstrated previously, to generate a profit capable of even covering the interest on the debt, never mind repayment of any capital, now the construction 'cost' has ballooned to £148m for a much reduced design specification.

AIOHO/DYOR

Now looking at the cash burn situation - tip to management from a first glance - the least you could have done was to have made it plausible and consistent!


As the shareholder who arranged and paid for the light aircraft to fly over the 'PORT UNDER CONSTRUCTION ' at Karanja, back in 2014 to take photos' , said after the pilot could find no evidence of any activity on site, never mind a port under development:

"DO NOT believe a word this BoD's tell you. Do not believe the web site. Do not believe their projected figures. Get it proven. Do not forget they have been caught red handed how many times now?

Where has the cash gone? It certainly isn't in the earth imo."

[phowdo] 13/6/2017 09:19

I notice they've incorporated a subsidiary in the Netherlands as part of a "restructuring". Should help obfuscate what they are actually doing for another 6-12 months.

[mount teide] 13/6/2017 09:13

Lets start with the clueless, ultra high spending Management's Land reclamation performance against forecast - JUNE 2016 to DEC 2017 :

Jun 2016 - 75 acres ACTUAL
Jan 2017 - 75 acres ACTUAL - 140 acres FORECAST
Mar 2017 - 79 acres ACTUAL - 180 acres FORECAST
JUN 2017 - 90 acres ACTUAL - 200 acres FORECAST
DEC 2017 - 90 acres ACTUAL - DUE TO ALL RECLAMATION WORK CEASING FOR MONSOON SEASON!


So, during the last 12 months Management delivered a total of 14 acres(11%) of land reclamation against the target of 125 acres, deceitfully put to the market to raise another £37m. At the current rate of progress they will only need another 8 years to complete the land reclamation work.

You will recall at JNPT, ITD achieved 225 acres in 19 months in tidal waters up to 20m deep, including 75 acres and 400+ berth piles in the 6 month MONSOON SEASON, or as MPL shareholders more commonly refer to it: our 'management's' annual 6 month fully shareholder expensed Holiday, where we throw in £25k/month of luxury jetset travel and 5 star hotels, to ensure they are kept in the lifestyle they have become accustomed to at our expense during the last 7 years.

[pj 1] 13/6/2017 08:13

The fact photos/ drone shows the Lorries all queing up again (as previously) looks very suspect to me given the overall works completed to date.
Surely any Manager worth an ounce of salt would have flowed the lorries to avoid down time and associated costs.

I assume the qeue is a double whammy as the same problem occurs during loading?

Another staged shoot?

[mount teide] 13/6/2017 08:00

Complete and utter disaster for shareholders.

Chairman's statement was clearly written by a clueless buffoon like the CEO and fact checked by Donald Trump.

The first photograph dated May 17 2017 tells an altogether different story from the carefully crafted nonsense in the Prelims.

So where is the 200 acres and 6 berths, 4 capable of receiving vessels?

Once again, even less work carried out than we predicted, which was 20% of that shareholders were told to expect by end of H1/2017 in the Shareholders Circular dated October 2016.

Will revert with a full update, once we have forensically examined all the photographs and Donald Trump 'facts' in the results announcement.

[phowdo] 13/6/2017 07:39

However, depending on the length of the monsoon and other factors beyond its control, management is confident that two berths will be operational and the facility will be generating revenue by the end of the year.

Yeah right, we believe you this time :)

[someuwin] 13/6/2017 07:09

Chairman's Statement

The year ended 31 December was important for the Company. In September 2016, we were pleased to announce the appointment of two additional directors; Lord Flight and Jay Mehta. Lord Flight's extensive PLC experience as well as his commercial understanding and relationships in India are a valuable addition to the Board. This, combined with Jay's significant operational experience, has strengthened the breadth of experience on our Board. We will aim to strengthen the board further during the course of the year as we move to the operational phase of the project.

In November 2016, we were successful in raising GBP36 million of equity funding, supported by both existing and new investors. During the year, the Company made progress on site across all work streams and, as at 31 December 2016, the Group had cash resources of GBP35.69 million with a subscription commitment of GBP3 million which was received in January. There was approximately GBP25 million still available for drawdown at the year-end under the Company's banking facilities. In addition, as part of the audit process, the Company was pleased that an impairment review has been performed and that the Value in Use of the port, once completed, has been calculated as being higher than the final expected cost of the completed port.

The Company has been pleased with progress although, as announced in the update of 13 March this year, the combination of temporarily reduced access to the site, due to deterioration of the road, together with undetected rock in the harbour basin during piling, meant that some delays have been experienced.

Project update

The Company's discussions with the contractor regarding the optimum configuration of the facility have continued to progress well. The completed port and logistics facility will consist of approximately 200 acres of reclaimed land, and six berths capable of handling 4000 DWT vessels with a draft of up to 5 meters. An optimised berth configuration will now include approximately 800 meters of quay length (200 meters more than envisaged at the time of Admission) by utilising both sides of a 400 meter jetty. Such a configuration will allow for 600 meters of waterfront (out of a total of 1000 meters) to be available for future expansion.

The Company is pleased to report that channel dredging is now complete and the turning circle and berth pockets are currently being dredged. Dredging work is being synchronised with the schedule of other streams and is progressing in line with management's expectations. Reclamation continues apace and circa 90 acres of land have now been reclaimed. This is sufficient reclaimed land to enable the facility to commence operations once the vital services and infrastructure have been installed. In addition, sufficient reclamation material for at least a further 10 acres of land is on site, with this material currently being used for the surcharging process.

MPL has laid 160 piles, which is sufficient for 250 meters of jetty. The Company intends to lay 240 piles in total. At the same time, the jetty deck slabs continue to be fabricated on site. A sufficient number to cover 150 meters of jetty have now been fabricated and these are expected to be laid on the jetty in the near term. Certain other work streams will continue throughout the monsoon season, which is due to commence in approximately three weeks. Reclamation will cease for the duration of the monsoon.

Along with the project's contractor, MPL's engineering team is managing the work to enable the facility to commence operation by end of 31(st) December 2017. MPL benefits from having an experienced in-house engineering team led by Mr K.V.Natrajan, one of India's most experienced marine civil engineers, with over 45 years' experience in port and harbour engineering and construction. Mr. Natrajan was the Chief Engineer of the JNPT, a World Bank aided project, while it was being constructed between 1984 to 1989. He was also the Chief Technical Expert for Adani Ports & SEZ following which he led the coal terminal construction for Jindal Steel as Managing Director. He has also been associated with other large port projects including for Birlas, Tata and the Reliance Group.

The Company was pleased to announce earlier this year two Memorandums of Understandings for customers wishing to use the facility and the Company's business development team, led by Mr Umesh Grover, who has over 43 years' experience in the industry, continues to gain traction with new customers. The Company expects to make further announcements in the coming weeks.

Mr. Grover spent 39 years with the Shipping Corporation of India (SCI) in various capacities including Chief Engineer on board SCI vessels, head of the container business and finally as a Director on the Board of SCI. He has also served as the head of various trade bodies including the Indian National Ship Owners Association (INSA) as CEO and the Container Freight Station Association of India (CFSAI) as its Secretary General. The Company has also appointed Captain Ashok Shrivastava as co-head of Marketing & Sales to assist with these efforts. Captain Shrivastava is a master mariner and joins the team with over 35 years of experience in the shipping industry and has been CEO of the shipping division of Allcargo Logistics, a major listed logistics company in India.

Conclusion

The Company has experienced the sort of minor interruptions to activity that often impact projects such as this in India. The cumulative effect of these minor and unforeseen interruptions is that management no longer expect the facility to be completed by the end of the year. However, depending on the length of the monsoon and other factors beyond its control, management is confident that two berths will be operational and the facility will be generating revenue by the end of the year.

The Directors believe that, once completed, the Facility will be well aligned with the Government of India's recently announced 'Sagarmala' policy initiative which seeks to promote coastal and in-land waterways movement of cargo. The initiative is aimed at reducing the carbon foot-print and bringing down logistical costs in India so as to be more in line with those of developed nations.

The macro opportunities in India remain as compelling as ever and the Directors believe that the Facility is perfectly positioned to benefit from these factors.

Nikhil Gandhi

Executive Chairman

Mercantile Ports & Logistics Limited

[diku] 12/6/2017 22:41

Was the coke & sprite budgeted for as well?...if it was budgeted for then does it mean it has to be used up regardless of necessary or not?...

[saikat] 12/6/2017 19:46

For Pavan and his money laundering instincts - everything is budgeted for.

A loot and a heist of £100m plus, plus one and half days a month of jaunt in India in the name of work plus time around it - all 5 star level - plus a £175k a year job - no work at all for years- Pavan is the kid born with the silver spoon. And you can't put such an obvious fraud to prison for life - courtesy London.

[pj 1] 12/6/2017 18:41

Travelling expenses.

FWIW, and I believe I have posted this before but cannot recall, I questioned Pavan about travelling expenses 2 or 3 years ago.

The response I got was; "it is what was budgeted for'' or very similar words. So the cash was spent irrespective of what (none)works had been undertaken.

I wonder what the budget for travelling expenses in 2017, 2018 and 2019 are?

[guernseymoney] 12/6/2017 16:46

Best thanks MT.

The closest thing that I owned to a port was a logistics co. - I had a few quid in Kuehne and Nagel a few years ago, but sold at a modest profit - wish I'd held on..

Liking the some airport operators at present - have Zurich airport (Flughafen Zuerich AG) and Fraport on my watchlists, but both have run away recently.

[mount teide] 12/6/2017 16:26

No, with the current buoyant Cruise sector, the valuation looked a little too high, perhaps confirmed by the share-price weakness since IPO.

But, the strategy of buying public sector port assets in Mediterranean Nations and modernising them is very sound.

Port of Tilbury was bought from the UK Government in 1989 for £32m, and with modest investment and huge productivity gains over the years is probably worth around £1bn today.

[guernseymoney] 12/6/2017 16:10

Do you own GPH, MT?

[mount teide] 12/6/2017 15:57

In May, Global Port Holdings was one of the biggest listings in London in years.

The world’s largest independent operator of ports used by cargo and cruise ships has 14 Cruise ports and 2 Container/General Cargo/Bulk Cargo Ports - including in Venice, Barcelona and Dubrovnik, handling 7.8m cruise passengers a year.

Proceeds from the flotation, which raised £155m, values the company at £467m, and will be used to fund further expansion, with the top regions for acquisitions the Mediterranean - where GPH has almost a 25% market share - and the Caribbean and Asia.

GPH is currently in talks with nine ports in Europe, seven ports in the Caribbean and four ports in Asia about potential deals.

In the year to December 2016, the company reported £88m in revenue with pre-tax profits of £4.0m.

[mount teide] 10/6/2017 19:00

If in the IPO documentation, the market were told investors would get a 360m lightweight open jetty accessed via an approach road at the eastern end and, serviced via a 3.5m deep approach channel capable of handling vessels of a maximum of 4,000 dwt, together with a maximum of 170 acres of hardstanding, for an estimated total build cost of £108m, since risen to £148m, they would have been laughed at by the Ports Industry. And told shareholders were certain to lose everything, if it was to be part funded by £49m of debt at 14% interest where the banks had hypothecation over the assets in the event of failure to meet the repayment terms of the loan.

Since then the Company has raised the staggering total of £159m in debt and equity (£73m IPO, £49m Debt and £37m Placing & Open Offer) to fund the project which even in its now hugely scaled back form (the Directors preferred option to support raising another £37m!) is still less than half constructed after some 7 years.

If the Directors or Nomad is reading this(we know they do read Advfn), perhaps they can explain to shareholders how the revised port development plan(Directors preferred finish) necessitated the raising of another £37m of funds compared with the original, much higher specification which still to this day is cheerfully marketed on the Company Website, leaving MPL at extreme risk of false advertising lawsuits from investors. When by any objective evaluation it should have resulted in a material reduction in build cost of circa £15m to £25m.

ITD were selected as principal contractor apparently by competitive tender - we are yet to find any evidence this Port Development Project went out to competitive Tender. The £57m contract was described as for Marine Facilities at Karanja, when news of it appeared in the Port Industry Press and on ITD's website under 'new contract' news - since then, nothing.

ITD's 'marine division' contracts on their website describe in considerable detail the scope of the various contracts they have under construction e.g. The Adani Port Container Terminal - 700m quay with 80 acres of hardstanding. The high value Karanja Port is conspicuous by its absence.

If someone were to ask a ports industry professional what 'Marine Facilities' meant, they would say there is insufficient information to even hazard a guess. The range of potential possibilities could vary from say £25m to £1bn in build cost, dependent on dredged depth of the approach channel, berth length, type, load capabilities and water depth, hardstanding area and load requirement etc.

Since 'Marine Facilities' is totally meaningless, it is worth referring back to the Principal Engineer, Royal Haskoning's original design specification for the Port, which would have been forwarded together with various other site survey reports to ITD and any others invited to tender for the contract.

What we can say, is the facility being built at Karanja bears no resemblance to it. So it begs the question, who prepared the engineering design plans ITD are now using for the revised port specification and open jetty? Surely not the principal contractor ITD! Whoever it is, produced the plans well before 2016, because piling for the jetty commenced on site in January 2016, some 9 months before the Placing and Open Offer, which contained no mention that the 1000m quay would in fact now be a lightweight 360m open piled jetty, that along with other changes would require £37m of additional funds, rather than the reporting back to shareholders of a circa £25m cost saving, that management had prudently used to reduce the bank debt from £49m to £24m.

AIOHO/DYOR

[family values] 10/6/2017 16:19

Mount Teide

Thanks for posting that last piece.

I've shared it on a board were I have growing concerns that all is not what it seems,

but die-hard fan boys are most refractory to having their eyes opened.

Good Luck

[kev0856153] 10/6/2017 16:14

can someone post a link to the google earth page that shows the karanji jetty. I need a good laugh