Mercantile Ports & Logis... Share Discussion Threads

[mount teide] 14/6/2017 18:25

As readers will be aware, there is an interesting Risk Factor detailed in the IPO document, concerning a condition of the Karanja Operating Dead of Lease, which has been broken by the management when they elected to proceed with the £37m cash raise. For which we were hoping to find a company statement in the Prelims confirming this matter has been satisfactorily dealt with, in order to protect shareholders interests. Sadly, this is not the case.


IPO - Risk Factors

Reliance on SKIL as the promoter of the Project:
'It is a condition of the Deed of Lease that SKIL, KIPL and their respective promoters and affiliates retain a minimum 26%, directly or indirectly, in the Project (the ‘‘Minimum Threshold’R17;). If that interest is not maintained the MMB may seek to terminate the Deed of Lease, which would have a material adverse effect on the Group’s business, financial condition and results of operations, as well as acting as a potential deterrent to potential acquirers of the Company.'


'The Board believes it is unlikely that the Minimum Threshold will be breached in the foreseeable future. In the event that a transaction was proposed in the future that would be likely to cause a breach of the Minimum Threshold, the Board would have to determine whether or not to proceed with such a transaction, taking into account all of the circumstances at that time. The Board believes that it may be possible to reach agreement with the MMB in the future with respect to reducing or eliminating the Minimum Threshold once the Project has been developed and is operational, although there can be no assurance that any such agreement will be reached.'

Have requested clarification of this matter from senior management at the Nomad along with Gandhi's 5 month long share subscription approval farce. This is in addition to ten other alleged breaches of AIM rules and regulations, previously reported to them.

[mount teide] 14/6/2017 18:01

Where is the announcement that Gandhi's Subscription Shares have been issued?

17 Jan 2017 RNS
'The Company will issue the Subscription Shares to Mr Gandhi as soon as the customary regulatory approval is received to enable the funds to be held with the rest of the placing proceeds in the Company's principal bank account in Guernsey.
A further announcement will be made when the Subscription Shares are issued.'

5 months later - still no announcement, and some vague comment in the prelims that 'Nikhil Gandhi had agreed to acquire additional shares of £3 million of MPL, and this was transferred to the bank accounts of Karanja Terminal & Logistics Pvt. Ltd., in January 2017.'

Who confirmed that it WAS transferred? Has this been independently verified? And, why has the regulatory approval not been confirmed enabling the transfer of funds to the Company's principal bank account in Guernsey?

Since this Executive has personal writs against him for allegedly siphoning tens of £millions out of another listed company, insider dealing charges, and is currently subject of a high court case, for issuing a signed blank cheque, shareholders should be rightly concerned that everything is above board, and AIM governance rules strictly observed.

After all, this is AIM not some third world bourse where white collar crooks are used to operating with near impunity.

AIM has standards for a reason, to keep the crooks and the riff raff out.

[saikat] 14/6/2017 17:43

Share price should rapidly go to 1-2p and hang around there until it goes to zero.
The management strategy is clear, which is, that there should not be any strategy except that we loot the last $. This one is one where the banks will lose money.
Don't believe the management's accounts - to see the actual money, you have to look at Pawan's accounts and Nikhil's personal wealth. Should theoretically not be difficult - a bottom quartile lawyer should be able to find out in less than a month - such is the evidence.

You can almost sense that they have bought out London - saying like, you non-execs and
Nomad, you clowns - you will polish our boots when we visit London. We will tip you well.

[mount teide] 14/6/2017 17:28

'Maybe the workforce had been ''mobilised''. The actual issue was that they were not working at Karanja? '

With another ITD contracted port development project under construction just 5 miles away, whose to know where the 400 to 500 strong Karanja workforce (according to Gandhi) is being deployed by ITD, and who is paying for it! What is certain, there has never been a fraction of that workforce figure on site, even for the stage managed photographs, and certainly not on any Google Earth images.

What we do know is the workforce work through the Monsoon season highly productively at JNPT recovering land, while no reclamation work has gone on at Karanja during the last two monsoon seasons and the same complete shutdown is also scheduled for this years 'annual 6 month all expenses paid holiday season for MPL management', even though circa £12m of debt capital and interest payments are now running, with no revenue and no land reclamation going on despite only 45% of the total land reclamation completed to date, some 3 years after commencing work.

[igoe104] 14/6/2017 16:41

How come the don`t get voted out at the Agm ?

[mount teide] 14/6/2017 16:37

Management have a lot to answer for - when that 208,550 transaction went through today at 4.8p, it would have cost £521K at IPO, but today raised just £10k!

They should resign and hang their heads in shame.

Don't hold you breath.

[mount teide] 14/6/2017 16:17

Pj1 - as Harry Markopolis once said, when dealing with financial sector fraud - "rule out nothing, no matter how implausible, because the implausible often turns out to be fact'

Who would have thought three of the big four 'auditors' would have aided and abetted Madoff's Ponzi Scheme for 20 years, with clean audit 'opinions', when he was stealing every dime from day one. What confidence does that give the public if the Audit industry and the Regulator allowed Madoff to get away with it, despite an expert in the field continually alerting them to the fraud for nearly a decade?

With Madoff, far too many people did not want to see what was staring them in face - the major wall street investment banks knew what was going on alright - not one ever had a dime of their investors money placed with Madoff. Why did they not do something? As Harry said, "Those who live in glass houses don't throw stones".



We have re-run our revenue and profit projections with the latest Prelim data - the results have deteriorated from awful to hopeless. How certain is it the banks will take over the assets? - as likely as night following day!

Management has trapped MPL shareholders in a Karanja designed Egyptian pyramid. The increase in cost to £148m, start up date falling back materially yet again, for a reduced specification, was the final block falling into place cutting off any escape. The arrogant, totally incompetent management have a lot to answer for.


I wrote 8 months ago after seeing the Shareholders Circular:

'It would not suprise me that for around £150m of cat and debt, all shareholders will see before the money again runs out, will be around 300-400m of jetty with 4.5m of water availability, and around 75-100 acres of reclaimed land - something that could probably be built today to a very high spec for £40-50m.'

Well, when the money runs out again and it will, probably during H1/2018, i would suggest the prediction is likely to prove extremely accurate, compared to the management fantasy world nonsense.

MPL only had £61m left at 31 Dec 2016. No further land reclamation is scheduled to take place before Jan 2018.

Intentionally imo, there was no cash and debt drawdown forecast in this years Prelims. Shareholders will be completely in the dark as to the cash burn situation in 2017 until the Interims in mid September.

So at 2017 year end there will only be around 90-100 acres, a part complete jetty, and not much money left. Where are the funds to reclaim a further 100 acres going to come from? Considering that the present 90 acres and 160 piles have got the totally ludicrous carrying cost of £94m and a circa £12m a year Debt capital and interest repayment now running.

Answers on a postcard to the AIM regulator and Mumbai Fraud Squad.


AIOHO/DYOR

[pj 1] 14/6/2017 13:22

again, it begs the question going back a couple of years and the repeat RNS's of the ''workforce being mobilised''.

Maybe the workforce had been ''mobilised''. The actual issue was that they were not working at Karanja? :-//

[pj 1] 14/6/2017 13:20

hmm- that's assuming those 'services' were supplied. Or could they have been ''consultation fees''? A stab in the dark that paying in shares is actually a smoke screen. All IMO

[mount teide] 14/6/2017 12:45

2017 Prelims - in terms of information compared to the previous year, it is very thin gruel.

Just a brief Chairmans Report - No detailed Strategic Report, business review and anticipated bank debt drawdown forecast or end of H1/2017 cash and debt forecast.

Well buried, is the £5.92m of loan interest payments due before the end of 2017. This suggests most of the £49m loan has already been drawn down. Yet, at the end of 2016, we are told there is still £25m of headroom in the debt facility. The two only reconcile if most of the £25m debt headroom is drawn down in the first few months of 2017.

Likewise, in the 2016 Prelims, bank loan interest payments of £4.59m were due for payment before the end of 2016. To reconcile it would suggest at least £30.0m+ had already been drawn down by end of 2015. Yet, in the 2017 Prelims there is still £25m of headroom in the debt facility at the end of 2016, and the comment that during the year the 'company has capitalised borrowing cost of £3.93 million.'

Makes little sense, compared to the reported loan drawdown.

It does however tie in almost perfectly with the following statement in the 2016 Prelims:
'The Group expects that by end June 2016 it will have headroom in its banking facilities of approximately £15 million.' Subsequently amended materially upwards by £9.8m in the following Interims.

What is certain, is the £11.4m of debt capital and interest payments that fall due by the end of Jan 2018, with similar £10m+ payments falling due in each of the following 3 years.


29 May 2014 - PRELIMS
'By the end of 2014 we expect to have placed approximately 275 piles. We continue to expect to have a revenue generating facility in operation by the end of 2015 with revenue from partial commencement of the logistics facilities expected to be produced by the end of 2014.

Not often you will come across a company where the annual travelling expenses £307k, were GREATER than either the employee costs £176k or Directors Fees £304k!


13 June 2017 - PRELIMS
2.5 YEARS AFTER the date they expected to have placed 275 piles, it is cheerfully announced that operations are progressing well and MPL has now laid 160 piles.


Interesting to note ITD did not pay a penny of cash for their £3.0m shareholding - 'ITD was provided £3.0 million in shares in lieu of services.'

[escapetohome] 13/6/2017 20:05

Im not even touching this one with a bargepole.

This wins my 'POOP' award of 21st century.

[mount teide] 13/6/2017 14:14

Financial Liabilities as of 31 Dec 2016 -

Bank Loan principal payments of £57.5m and Interest Payments of £40.2m = £97.7M!
Yes you read that right!

Of which £6m fall due this year, and a further £47m during the following four years!
Bear in mind Dover, Europe's largest short sea port made a post tax profit of £3.0m last year.


Cash Burn:

After last years debacle, it is extremely disappointing to note in this year's Prelims, there is no cash position forecast for the end of June 2017. Shareholders have only been provided with figures that are already 6 months out of date.

Also, Management appear to have taken the executive decision not to share their £300k a year travelling expenses data with us anymore.



Prelims 2015
Dec 2015 - ACTUAL Figures:
Cash £38.5m - Debt headroom £32m (total £70.5m)

Mid Jun 2016
Forecast position for end June 2016
Cash £18.0m - debt headroom £15m (total £33.0m)

Interims 2016
June 2016 - ACTUAL figures
Cash £24.8m - debt headroom £24.8m (total £49.6m)

Shareholders Circular 31 October
As of 31 Sept 2016 - ACTUAL
Cash £22.8m - Debt headroom £24.0m (total £46.8m)

Prelims 2016
Dec 2016 - ACTUAL figures
Cash £35.69m - Debt headroom £25m (total £60.69m)


Some initial Observations:

Cash position between October 2016 and end Dec 2016

Cash at start £22.8m + £36m funds raised = £58.8m
Cash at end Dec £35.7m
Cash Burn £23.1m

Now the accounts say the Company has made advances to ITD of the astonishing sum of £16.70m (prior year £13.4m), towards mobilisation and quarry development to be recovered as a deduction from the invoices being raised by the contractor over the contract period:

Yet, MPL still had a cash burn of £23.1m during a three month period when there was NO land reclamation work or berth piling going on. In fact there had been NO land reclamation work carried out in the monsoon season between mid June 2016 and end of Jan 2017 and next to no berth piling, and NO dredging. Makes no sense - where did that £23.1m get spent and who received it?

Debt headroom - how can the debt headroom go up by 1m since end Sept, and £10m since the mid June 2016 forecast if the company said debt drawdown was proceeding in line with their forecast, as published in the Prelims.


How can the Port have the astonishing current carrying value of £94.4m, when the port currently consists of 90 acres of part developed reclaimed land and 160 berth piles? And when ITD won the contract to build the entire infrastructure(reclaimed land/quay wall berth/dredging/services/drainage)of the Port for £57m?


Answers on a postcard to the AIM regulator and Mumbai Fraud Squad!

[diku] 13/6/2017 14:01

lefrene....in other words a fishy port for fisherman!!!...


They talk the talk and totally underestimated the works....1p soon...

[phowdo] 13/6/2017 13:02

MCap still £20M.
Which looks about £20M too high.
The bank will seize the port when they fail to make interest payments once all the cash has gone due to delays and "slippage". Then it will be sold back to insiders (who will no doubt be flush with cash) with common shareholders getting sweet Fanny Adams.

[lefrene] 13/6/2017 12:58

So which of Mr Gandhi's friends will end up buying the port for a song?

It seems to me that this is barely a port at all, but will likely be a trading estate with docking facilities to enable barges to move things locally.

[guernseymoney] 13/6/2017 12:29

The shareprophets article nicely sums up my experience, viz;

"In the 7 years since IPO, overwhelmingly, those foolishly tempted into catching the 'falling Mercantile knife' quickly learned to their horror, that the razor sharp knife is in fact welded to a 2 tonne anvil and taking 'no prisoners' as it hurtles mercilessly downwards under gravity"....

[kev0856153] 13/6/2017 12:08

This is the funniest part. Hilarious!


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.


Nikhil Gandhi

[kev0856153] 13/6/2017 12:07

hxxp://www.shareprophets.com/views/29683/mercantile-ports-before-we-turn-to-dire-results-today-more-on-this-zero-in-waiting

[mount teide] 13/6/2017 12:02

Prelims -

The man with writs for the alleged siphoning of tens of £millions of shareholders funds out of another company he had executive responsibility for and who recently settled serious insider dealing charges out of court with the regulator states:

'We will aim to strengthen the board further during the course of the year as we move to the operational phase of the project.'

With the THREE NEDS based 4,000 miles away in the UK, and two of the three executives far too busy running their other extensive Indian business interests, shareholders are now being told that in order to 'protect' what little remains of their 'investment', currently overseen on a daily basis by a well meaning young man who is an electronics engineer by training with NO senior management experience in the Ports Industry, that the Board needs to be strengthened!


The man with the writs goes on to say:

'The Company has experienced the sort of minor interruptions to activity that often impact projects such as this in India.'

Yes, in the best dry season in living memory which saw unbroken sunshine and no rain for 7 months turn the Uran Peninsula into a dustbowl, MPL achieved just 11% of the land reclamation work they told the market they expected to achieve!

Although, what would you expect from someone who said he would put his reputation of 25 years on the line in December 2015, by shamelessly forecasting that shareholders would have an on budget operational port at Karanja by the end of 2016!

Reputation? After seeing 96% of their 'investment' disappear like morning mist, its entirely what shareholders would have expected from someone of such impeccable previous 'standing' and 'probity'. If that was not bad enough, sadly, shortly after that nonsensical 'forecast', shareholders woke up to the shocking news that Nikhil Gandhi in addition to his insider dealing charges, had been served writs by the highly distinguished and respected Sunny Varkey, the billionaire education entrepreneur and philanthropist, and Unesco Goodwill Ambassador, alleging fraudulent transactions and siphoning off as much as £12 million of funds from his company Everonn, by the former executive Director Nikhil Gandhi, which saw the company subsequently fall into administration.

[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.