Skil Ports & Lg Share Discussion Threads

[waterloo01] 10/11/2016 16:37

Some large buys today. As usual someone knows something before the rest of us.

[waterloo01] 10/11/2016 09:29

Do we take the lack of any updates that management won't do a call with major holders and if so why?

[deepvalueinvestor] 09/11/2016 04:42

Maybe put Trump on the Board?

[davidosh] 09/11/2016 04:38

MT....The CC does not have to include the NEDs at this stage and can include only large shareholders with an interest in putting your concerns to the company.

Clearly if you are not a shareholder you personally have no interest in challenging the Board but our group will want to do that. We can always summon a meeting with Lord Flight once confident where we stand on this.

[pj 1] 08/11/2016 18:46

How ironic that a key manager responsible for operations pre-placing debacle, alleged lies and mis-information to shareholders, and clearly someone who does not make things happen, is appointed to the Board of Directors. Surely he should have been dismissed?

''Jay Mehta, aged 41, is appointed to the Board having been with the Company from inception. Jay is Chief Operating Officer of Karanja Terminals & Logistics Private Limited and SPL. He has 13 years' experience in port operations and management, port marketing, logistics planning and financial services. Jay is an electronic engineering graduate, and holds a Diploma in Port, Shipping and Transport Management from the International Maritime Transport Academy, Rotterdam and a Masters in Business Administration (MBA) from Fordham University, New York.''

Apparently Lord Flight is impressed with the works completed to date. Whilst clearly the only other investors current and past who are pleased with works completed are members of the Board of Directors.

''I have been impressed with the work that has been achieved to date''

How many posters here are impressed with works completed to date? (moving dirt!)

Safety in numbers I suspect

There is no way in a million years a manager of a failing project should be appointed to Board level unless the failing Board have departed.

[waterloo01] 08/11/2016 17:51

Divi, as probably the largest holder, have you been in touch with L&G or Flight direct to find out if they are up to speed? MT, understand your position, but I'd like to hear what the NEDS have to say at this point and with what we know (or think we know).

[mount teide] 08/11/2016 17:45

davidosh - I am no longer a shareholder and while very willing to assist PI's have no wish to speak to SPL's NED's again, since i believe they have let investors down, with their lack of oversight, particularly after receiving around a quarter of a million pounds each to date in fees plus expenses since IPO - an outrageous sum considering where the project is to date and their likely input.

When i last spoke to one of the NED's(last year) he had anything but his finger on the pulse of what was going on with the management of the project. I was telling him things he was totally unaware of - if he was on top of his brief this should not have been the case.

With the benefit if hindsight, i believe the NED's were appointed to the company by Nikhil Ghandi to give credibility to the project with the institutional investor base, rather than leadership and oversight, which he knew very well would be difficult for them to provide when based some 4,000 miles away.


AIMHO/DYOR

[mount teide] 08/11/2016 17:01

ITD - i have little doubt they will have provided SPL with 'goods and services' equivalent to the funds received from SPL to date for work at Karanja.

That is not the question.

There is another way of approaching this - hire a firm of independent Marine Engineering Consultants such as Beckett Rankine who are based in Mumbai and ask them to undertake an examination of the work completed to date at Karanja - and provide a cost estimate for it.

For probably £3-5k, the cost of allocating a principal engineer to the project for a site visit and 30hrs project work - it would be possible to get a very good understanding as to what it should have cost to carry out the work completed to date at Karanja, and also provide an estimate as to what further funds would be needed to complete the project.

Frankly, after the management performance to date, to protect their own investment interests its about time the shareholders fox was let loose in the SPL henhouse.


AIMHO/DYOR

[davidosh] 08/11/2016 16:27

MT/DVI When are you both available for a conference call ?

[lefrene] 08/11/2016 15:47

I doubt that Lord Flight has arrived on the scene serendipitously, I would guess he's been ushered in at the request (insistence?) of major holders. As MT says it's pointless reclaiming more land without having some commerce in place. Sadly this port seems to have turned into a typical Indian scam of some sort, I suspect significant amounts of money have been directed elsewhere than port construction. I would like to see an independent firm of accountants go through the books.

[waterloo01] 08/11/2016 15:16

MT, Well it's somewhere between Skil (in one of it's guises) and ITD that the money has been 'spent', so an audit is essential, but need to get a change of management before that can happen IMO.

Re ITD, I did check and the project is listed with a value in there annual report/presentations. Says little more than 'marine facilities' but it is there, which at the time gave me some comfort.

[mount teide] 08/11/2016 14:55

Waterloo - ITD contract audit - this should be a priority for shareholders imo.

Late last year as an ITD shareholder, i wrote to their senior management on three occasions requesting information on the scope of work and project specifications for the SPL Karanja contract - failed to receive a reply on each occasion - not even an acknowledgement.

In my experience, although it is not altogether unusual for companies to refuse to give any detailed contract information to shareholders, it is unusual to not at least receive an acknowledgement and some very basic contract information.

AIMHO/DYOR

[diku] 08/11/2016 13:59

Going below 10p?...looks like no fishy port for fisherman!....

[mount teide] 08/11/2016 01:58

One important question that needs to be answered by management is why they are going to complete the construction of close to the entire terminal BEFORE handling any commercial traffic - it just does not make economic sense - the size of the execution risk suggests it would be far more sensible to develop the port in phases, in line with commercial demand.

Seventy five acres is a large storage hardstanding area for an initial phase of operations - the port of Dover is around 300 acres and has Britain's largest ro ro ferry operation(30 ships a day), as well as cruise, general cargo, bulk cargo and fridge cargo handling terminals, and a marina.

Now Karanja's total construction cost has apparently risen by a further 40%, why management would want to continue to build a port two thirds the size of Dover BEFORE starting to handle any cargo, does i'm afraid, like much of this management's thinking, just does not make common, never mind commercial sense.

An initial build phase of a maximum of 100acres(50 football pitches) of hardstanding/warehousing and 600m of quay would imo be more than sufficient for the first three years of operation.

I would target high value break bulk, out of gauge and ro-ro cargo over the quay, and container transhipment cargo ex JNPT through the road gate.

Post the Open Offer and Placing, by deduction, using management's own figures in the circular, this should reduce the initial construction cost by around £35m and possibly as much as £45m; close to the current bank debt raised for the project, and change the entire economics and execution risk of the project to one shareholders would likely be considerably more comfortable with.

If it were my money this is what i would do!

[waterloo01] 07/11/2016 23:50

MT, is the draft enough for ro-ro and if so, one assumes a very different lay out and cost base?

I pick up from what you are saying, that a change of direction/focus and management, it might still present some value.

If Flight, the neds and the nomad have any sense of responsibility, they need to try and make it happen and before they spend any money raised.

I'd also like an audit of the ITD contract, but that can wait.

[saucepan] 07/11/2016 21:08

davidosh: if I may ask - have you got any further setting up a meeting/conference call with management? It would be great if you could kindly update the board with what transpires and what is concluded.

[mount teide] 07/11/2016 20:27

Waterloo - The most profitable by far would be handling fast moving high value finished goods currently shipped on ro-ro and break bulk vessels.

Deep sea and coastal ro-ro traffic is expected to increase dramatically over the next 10 years in India, while containers shipped on general cargo vessels is forecast to decline.

SPL should be targeting cargo and vessel types that are forecast to grow into Mumbai's Indira terminals not decline.

Additionally, with the huge planned expansion in throughput at the JNPT over the next decade, it would be a smart move to plan to allocate at least 50% of the terminal to provide storage, transhipment and distribution services to import and export shippers using JNPT. This business is high value, easy to handle and requires only modest infrastructure and handling equipment investment and, delivers high land utilisation, storage and handling fees.

London Gateway has an annual throughput design capacity of 3.5m teu, and management forecast this will generate sufficient storage, transhipment and distribution service demand to fully utilise the near 1500 acre logistics park they are currently building adjacent to it.

There is a reason why Karanja has just a rather old and poorly maintained small jetty to service the local fishing fleet: it is because the fishing industry does not generate sufficient revenue to justify much more.

frankly, £150m is a serious amount of money for any new port terminal development regardless of draft availability, other than a specialist deep sea container or LNG terminal.

At Karanja it will require a significant portion of the annual cargo throughput to be of high value and reasonably fast moving to generate the return necessary for the operation to be a commercial success - whether that cargo arrives via the quay or road is unimportant. This extra £36m of development cost will considerably reduce the level of return potentially achievable for investors over what they could have reasonably expected previously.

SPL need to get a executive management team with the operating experience and industry knowledge to target the optimum cargo mix over the quay and via road to maximise the commercial performance of the operation - using large areas of what is a relatively expensive terminal to handle and store low value, slow moving bulk cargoes just will not work.

The shipping industry is a highly specialised sector, and although it has grown at an average of 2% globally for the last 20 years is currently littered with investment banks, hedge and pension funds sitting on massive losses(estimated in excess of $200bn), much of which were run up by management with little industry knowledge financing boom time projects that were highly speculative, and often with no guaranteed contractural revenue streams.

The publicly traded shipping companies provide a window of information on the crisis, but represent less than 25% of the industry and total fleet capacity, and is the area where most of the new equity has been invested and lost.

The publicly traded shipping companies are today mostly insolvent, generating revenues that barely cover vessel operating expenses, do not cover debt service or generate cash reserves for essential maintenance, and are in many cases managed by the investor funds that do not understand how shipping works.

SPL's Karanja's terminal, has the potential to make equity investors a decent return but, it also carries a considerable risk of investors seeing all their equity lost should the inexperienced executive management take the wrong decision as to its optimum use and target traffic.


AIMHO/DYOR

[waterloo01] 07/11/2016 18:04

So what would be the most profitable use of the port given the restrictions? Ferry traffic? Fishy port (as gets suggested!). If you are correct, then port layout and equipment will be rather different from spec as it stands.

[unwize] 07/11/2016 14:41

Mount Teide

You posted: "Frankly, to be a commercial success, Karanja port needs to have a strategy where they look to attract and handle the shipping services that currently operate to the Indira docks, complimented by Transhipment work to/from vessels anchored awaiting berths - not the other way round."

In the 2010 AIM admission document it states: " The Directors expect that the Facility will link the wider economic hinterland of the region with the Major Ports on the west coast of India and other Non-Major Ports elsewhere in India. The Directors expect this to be done using 4,000 DWT barge transport to service ships, thereby avoiding using road transport and the long waiting times at the congested JNPT, as well as by docking smaller coastal freighters that will be able to consolidate and tranship loads to the outbound Major Ports or for inbound redistribution to other parts of India."

The emphasis is placed on barges servicing other ships, this has been public knowledge for several years. If you think this isn't a good idea commercially why were you so bullish previously?

[mount teide] 07/11/2016 13:32

Unwise - there are many barges over 4000DWT operating in SE Asia similar to the example you detailed - these mostly require tug assistance to move them around for transhipment work, since they are generally not powered barges, unlike the ones currently operating in Mumbai Harbour and its approaches.

The cost of using harbour tugs to move large barges around for transhipment work is extremely expensive by comparison to a self powered barge.

The link below is an overview of the study carried out by London and Mumbai based Marine Engineering Consultants Beckett Rankine on the marine conditions and operational parameters for lighterage in Mumbai Harbour. It contains photographs of the type of powered barges currently used for lighterage work.

Aside from highlighting that the anchorage can be used for around 9 months of the year, with restricted use during the monsoon season, they comment and have subsequently told me that container transhipment by barge in the anchorage is much more problematic than with bulk cargoes. While not possible during the monsoon season due to adverse sea and wind conditions, container transhipment can also be problematic outside of the SW monsoon season from a handling safety/productivity perspective in anything but light wind/sea conditions.

hxxp://www.greenpiggy.co.uk/wp-content/legacy/PS/10162/0835___1035_Mumbai_Lighterage.pdf


Frankly, to be a commercial success, Karanja port needs to have a strategy where they look to attract and handle the shipping services that currently operate to the Indira docks, complimented by Transhipment work to/from vessels anchored awaiting berths - not the other way round.

If i were the MD of a shipping company currently operating services to the Indira Docks in Mumbai, and was approached by SPL to consider moving our services to Karanja Port, the first question my operations/technical Director(usually like myself, an ex sea going Master Mariner) and I would ask is "what will be the minimum depth available to our shipping in the approach channel to the port?" All the huge positives about Karanja's location, road access, closeness to the open sea etc are irrelevant, if i cannot have 24/7 free and unrestricted access to and from the port at any state of the tide. IMO to be a commercial success, it is critical that SPL operates karanja principally as a ship handling port, with barge transhipment activity as a much smaller secondary feature.

See little chance of commercial success for Karanja if barge transhipment cargo is to form the overwhelming majority of operations.

I would bet serious money, that if the 'port' were operated as a warehousing and logistics centre handling roadside transhipment and storage traffic only on behalf of shippers using the JNPT terminals, it would have far more chance of commercial success than operated as primarily a barge transhipment 'port' operation.

[unwize] 07/11/2016 12:01

Mount Teide, I agree that the work carried to date doesn't seem to justify anywhere near the £60m spent by the interim date and the timetable for ongoing work looks wildly optimistic.

However one of the other points you make regarding a channel only supporting vessels of 4.5m draft doesn't appear to be as big a problem as you suggest. You linked to a company that has a fleet of small bulk carriers with drafts over 4.5m but they look like sea going ships rather than barges that would travel between anchored ships and a port( how far out in the bay would ships be anchored?). A quick google brings up stuff like this:

hxxp://www.pacificbasin.com/upload/fleet/towage/pdf/PB%201%20-%20Spec.GA,%2016.9.09.pdf

That's a 12000DWT barge with over 2000m2 of deck that has a loaded draft of only 4.5m. If this exists there must be hundreds or thousands of barges that can carry 4000DWT with a draft of 4.5m or less.

Unwize

[diku] 06/11/2016 21:15

They would have finished building an upmarket hotel by now...I say forget the Port & build a Hotel...

[hatey] 05/11/2016 12:04

I'm guessing those 10.75p trades are actually buys.

This is going to be the flipping of the century going to take a hell of a long
time to move this stock.