REG - Mercantile Ports&Log - Full Year Results
30/06/2025 07:00
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RNS Number : 8591O Mercantile Ports & Logistics Ltd 30 June 2025
30 June 2025
Mercantile Ports & Logistics Limited
("MPL", the "Group" or the "Company")
Full Year Results
Mercantile Ports & Logistics (AIM: MPL), which is operating and continuing
to develop a port and logistics facility in Navi Mumbai, Maharashtra, is
pleased to announce its preliminary results for the year ended 31 December
2024.
Chairman's Statement
The year under review was one of operational progress, strategic positioning,
and foundations being laid for future growth. We report revenues of £4.35
million, which, as previously reported, reflects the fact that a number of
issues were encountered. In particular, the government elections in
Maharashtra reduced levels of activity on some of the infrastructure projects
in the region, whilst major contractors waited for the outcome of the
elections. In addition, there was some unexpected procedural friction in
obtaining regulatory clearances for container handling. Perhaps the biggest
impact, however, was the previously announced renegotiation of the Company's
loan facility with its consortium of lenders, which impeded the Company's
ability to secure longer term contracts with customers. These factors, though
temporary, affected throughput volumes during the period.
Despite these challenges, the fundamental strength of our business model
remains intact, and our long-term prospects continue to remain buoyant.
A central focus of the year has been the resolution of our outstanding debt
obligations. Whilst I am conscious that we have provided similar words of
optimism previously, I can report that we are now at an advanced stage of
negotiations with our lenders to resolve our debt and we remain grateful to
our major shareholder, Hunch Ventures, for their continued support and
guidance in this endeavour. We believe that a successful conclusion to these
discussions will provide the financial stability necessary to accelerate our
growth strategy and allow us to fully capitalize on our operational readiness,
and shift our focus firmly toward growth and value creation.
Looking ahead, I am confident that 2025 we will see us diversifying our
revenue streams and aligning the business with evolving market demand. This
expansion of our service offering is expected to materially improve the
utilisation of our port and enhance operating efficiency. The levels of
enquiry to use the Facility remain at record levels and the Company is
confident that, following completion of the banking solution, the Company will
return to growth.
On behalf of the Board, I thank our shareholders for their continued trust,
our employees for their commitment, and our partners and stakeholders for
their continued support. We look forward to delivering on our potential in the
year ahead.
Yours sincerely,
Jeremy Warner Allen
Chairman
Mercantile Ports & Logistics Limited
Operational Review
Indian Economy
India remained among the world's fastest-growing major economies in 2024, with
GDP expanding
8.2% in FY 2023-24. Although growth moderated slightly in FY 2024-25 due to
global uncertainty and implementation delays in domestic infrastructure,
full-year GDP is expected to rise by 6.5%, sustaining India's role as a global
growth leader.
This continued economic momentum, combined with a strong policy focus on
logistics, manufacturing, and trade, creates a supportive environment for port
operators and logistics infrastructure companies like Mercantile Ports &
Logistics Limited.
Macro Trends Driving Sector Growth
● Infrastructure Focus:
Flagship government initiatives such as PM Gati Shakti, Sagarmala, and the
National Logistics Policy are enabling integrated, multi-modal infrastructure
growth and accelerating cargo movement across India. (Source - PM Gati Shakti
- National Master Plan for Multi- modal Connectivity| National Portal of
India)
● Record Exports:
India's total exports (merchandise + services) reached a record $824.9 billion
in FY 2024-25, driving demand for high-capacity, efficient port
infrastructure. (Source - Press Release: Press Information Bureau)
● Manufacturing Expansion:
With 9.9% growth in the manufacturing sector (Source - The Print), demand for
bulk cargo, containerized freight, and liquid logistics is on the rise-key
growth areas for MPL.
● Port-Led Development:
India's emphasis on coastal connectivity and hinterland access is creating
long-term opportunities for modern private ports, particularly those aligned
with emerging trade routes and industrial clusters.
● Inflation Under Control:
The CPI dropped to 3.34% in March 2025 (Source - CNBC), improving cost
predictability for infrastructure projects and contributing to an overall
stable investment environment.
● Banking Sector Resilience:
A healthy financial system, with strong capitalization and low asset
impairments, supports ongoing infrastructure financing and private investment.
Visual Summary: India's Economic Indicators (2024-25)
Indicator Value/Trend Relevance to MPL
GDP Growth (FY 2023-24) 8.2% Strong macro backdrop for logistics
Estimated GDP (FY 2024-25) 6.4% Sustained trade and cargo demand
Total Exports $824.9 billion Expanding port throughput opportunities
Manufacturing Growth 9.9% Rise in industrial cargo volumes
CPI Inflation (Mar 2025) Tractor Sales 3.34% Stable cost environment
Policy Support operators Double-digit growth Rural consumption and agri-supply flows
Sagarmala, PM Gati Shakti Favourable for private port operators
Operational Update
2024 marked a significant milestone in the operational journey of Mercantile
Ports & Logistics Limited (MPL). It was a year defined by operational
maturity, strategic progress, and increasing confidence from our growing
customer base. Volume handled during the year was seen at 1.50 million MT in
2024 versus 1.33 million MT in 2023. Karanja Port continued to maintain its
status as a fully operational 24x7 facility, a standard it has consistently
upheld over the past three years. With seamless execution of vessel
navigation, yard operations, and transportation logistics across all shifts,
the port has steadily built a reputation for operational reliability and
efficiency. This sustained performance has contributed to positive customer
feedback, particularly highlighting the smooth handling of cargo and the
absence of any demurrage, underscoring the effectiveness of our
round-the-clock capabilities.
Another major development in 2024 was that Karanja Port received its
International Ship and Port Facility Security (ISPS) Certification. This
global standard affirms the port's compliance with international maritime
safety protocols and enables it to handle a wider variety of cargo and vessel
types, particularly from international operators. The certification further
enhances the port's profile as a secure and professionally managed maritime
gateway.
The port received proposals for handling liquid cargo, with multiple customers
expressing interest in developing tank farms and long-term infrastructure at
Karanja Port. These facilities would support both ambient and
temperature-controlled storage for a variety of liquid commodities. These
proposals are currently being evaluated, in line with our goal to expand into
diversified cargo verticals.
In anticipation of increased activity, MPL has taken steps to enhance its
business development and operations teams. We continue to receive interest
from a wide spectrum of industries, ranging from break-bulk cargo to liquid
commodities, as well as Engineering, Procurement & Construction (EPC)
contractors, many of whom are seeking short- to medium-term land leases at the
port for staging logistics related to their infrastructure projects.
These options are being carefully assessed by management to identify the
highest long-term value opportunities, while ensuring alignment with our
strategic goals and infrastructure roadmap.
Operationally, the Company is now preparing to commence container handling
operations in the second half of 2025. As mentioned in previous reports,
Karanja Port is increasingly recognised as a viable alternative for container
evacuation from Jawaharlal Nehru Port Authority (JNPA)-India's busiest
container terminal cluster.
JNPA currently handles approximately 6.0 to 7.0 million TEUs annually, and
with the addition of the fourth terminal, volumes are projected to grow to
9.0-10.0 million TEUs in the next 2-3 years. This rising throughput, combined
with urban congestion in the Navi Mumbai vicinity, creates a strong
opportunity for Karanja Port to serve as a supplementary logistics node for
container evacuation, staging, and onward movement.
A key enabler in this transition has been MPL's successful initiative to bring
Karanja Port under the same customs jurisdiction as JNPA (Zone II / JNCH).
This shift significantly streamlines customs processes and regulatory
alignment between both ports, creating a seamless operating environment for
containerized trade.
We are confident in the strength of our Operations team, which has
consistently demonstrated capability and resilience across multiple cargo
types. As we expand into new verticals and scale existing ones, the team
remains focused on making Karanja Port the preferred logistics partner for
customers across sectors.
Revenue
Major Revenue generated during the year:
Coal Handled during the period was 1.5 million MT, generating Revenue of
£3.58 million (₹38.38 crores);
The Offshore Supply Vessels (OSVs) handled during the year were 66 vessels for
Nationwide Shipping Services generating revenue £0.31 Million (₹3.34
crores);
Land Hire revenue generated were to the tune of £0.35 Million (₹3.81
crores) which were sublet to Esquire Shipping & Trading as well as Freight
Wings during the period.
Outlook
With projected GDP growth of 6.5% in FY 2025-26 and continued public-private
focus on logistics and infrastructure (Source - Press Release: Press
Information Bureau), the Board believes that India offers a compelling
environment for long-term port development. As new trade corridors and
industrial ecosystems take shape, MPL is well-positioned to serve as a
critical logistics enabler on the west coast of India, with strategic
customers, diverse cargo categories, and scalable capacity. Following
completion of the Company's refinancing, the Board believes that the Company
will return to more significant growth.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended Year ended
31 Dec 24 31 Dec 23 £000
Notes £000
CONTINUING OPERATIONS
Revenue 4 4,352 5,462
Cost of sales 5 (2,330) (2,417)
Gross margin 2,022 3,045
Administrative expenses 6 (2,841) (3,266)
Other income 921 590
Depreciation 11a (4,740) (5,581)
Impairment loss 11a (6,772) (9,853)
OPERATING LOSS (11,410) (15,065)
Finance income 7(a) 34 25
Finance cost 7(b) (7,291) (6,225)
NET FINANCING COST (7,257) (6,200)
LOSS BEFORE TAX (18,667) (21,265)
Tax income / (Expense) for 8 -- --
the year
LOSS FOR THE YEAR (18,667)) (21,265)
Non-controlling interest (37) (43)
Owners of the parent (18,630) (21,222)
LOSS FOR THE YEAR (18,667) (21,265)
Other Comprehensive (Loss)/Income:
Items that will not be reclassified subsequently to profit or (loss)
Re-measurement of net defined benefit liability 24 1 27
Items that will be reclassified subsequently to profit or (loss)
Exchange differences on translating foreign operations (460) (5,015)
Exchange difference on translating foreign operations attributable to:
Non-controlling interest (1)
Owners of parent (459)
Other comprehensive expense for the year (459) (4,988)
Total comprehensive expense for the year (19,126) (26,253)
Total comprehensive expense for the year attributable to:
Non-controlling interest (38) (43)
Owners of the parent (19,088) (26,210)
Total Comprehensive Expense for the year (19,126) (26,253)
Earnings per share (consolidated):
Basic & Diluted, for the year attributable to ordinary equity holders 10 (0.052p) (0.105p)
The accompanying notes on page 48 to 96 form part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2024
Year ended Year ended
31 Dec 24 31 Dec 23 £000
Notes £000
Assets
Property, plant and equipment 11(a) 93,543 105,355
Intangible asset 11(b) 33 63
Total non-current assets 93,576 105,418
Current tax assets 19(a) 2,879 2,114
Inventory of traded goods 323 72
Trade and other receivables 12 13,296 16,339
Investments 13 180 173
Cash and cash equivalents 14 911 2,881
Total current assets 17,589 21,579
Total assets 111,165 126,997
Liabilities
Non-current
Employee benefit obligations 17 42 35
Borrowings 18 28,461 36,399
Lease liabilities payable 20 1,206 1,457
Non-current liabilities 29,709 37,891
Current
Employee benefit obligations 17 259 276
Borrowings 18 22,037 10,672
Current tax liabilities 19(b) 17 61
Lease liabilities payable 20 590 335
Trade and other payable 20 4,048 4,131
Current liabilities 29,951 15,475
Total liabilities 56,660 53,366
Net assets 54,505 73,631
Equity
Stated capital 16 152,354 152,354
Retained earnings 16 (65,846) (47,217)
Translation reserve 16 (31,903) (31,444)
Equity attributable to owners of parent 54,605 73,693
Non-controlling interest (100) (62)
Total equity 54,505 (73,631)
1. The accompanying notes on page 48 to 96 form part of these consolidated
financial statements.
2. The consolidated financial statements have been approved and authorized
for issue by the Board on 27 June 2025.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2024
Year ended Year ended 31 Dec 23 £000
31 Dec 24
Notes £000
CASH FLOW FROM OPERATING ACTIVITIES
Loss before tax (18,667) (21,265)
Non cash flow adjustments 22 18,664 21,548
Operating profit/(loss) before working capital changes (3) 283
Net changes in working capital 22 1,116 (224)
Taxes paid (765) (6)
Net cash used in operating activities 348 53
CASH FLOW FROM INVESTING ACTIVITIES
Used in purchase of property, plant and equipment (PPE) 518 (1,651)
Sale proceeds of PPE 25 6
Finance income 7(a) 34 25
Net cash used in investing activities 577 (1,620)
CASH FLOW FROM FINANCING ACTIVITIES
From issue of additional shares -- 5,640
Fund raise cost -- (941)
Subscription money received (from the previous fund raise) 290 797
Repayment of bank borrowing principal -- (99)
Repayment of borrowings (3,094) --
Interest paid on borrowings -- (749)
Principal repayment on lease liabilities (54) (737)
Interest payment on leasing liabilities principal (31) (9)
Net cash from financing activities (2,890) 3,902
Net change in cash and cash equivalents (1,965) 2,335
Cash and cash equivalents, beginning of the year 2,881 558
Exchange difference on cash and cash equivalents (5) (12)
Cash and cash equivalents, end of the year 911 2,881
The accompanying notes on page 48 to 96 form part of these consolidated
financial statements.
Stated Capital Translation Reserve Retained Earnings Other components of equity £000 Non-controlling interest £000 Total Equity
£000 £000 £000 £000
Balance at
1 January 2024 152,354 (31,444) (47,217) -- (62) 73,631
Transaction with owners 152,354 (31,444) (47,217) -- (62) 73,631
Loss for the year -- -- (18,630) -- (37) (18,667)
Foreign currency translation difference for foreign operations -- (459) -- -- (1) (460)
Re-measurement of net defined benefit liability -- -- -- 1 -- 1
Re-measurement of net defined benefit liability transfer to retained earnings -- -- 1 (1) -- --
Total comprehensive income for the year -- (459) (18,629) -- (38) (19,126)
31 December 2024 152,354 (31,903) (65,846) -- (100) 54,505
Balance at
1 January 2023 143,851 (26,429) (26,022) -- (19) 91,381
Issue of share capital 9,444 -- -- -- -- 9,444
Share issue cost (941) -- -- -- -- (941)
Transaction with owners 152,354 (26,429) (26,022) -- (19) 99,884
Loss for the year -- -- (21,222) -- (43) (21,265)
Foreign currency translation difference for foreign operations -- (5,015) -- -- -- (5,105)
Re-measurement of net defined benefit liability -- -- -- 27 -- 27
Re-measurement of net defined benefit liability transfer to retained earnings -- -- 27 (27) -- --
Total comprehensive income for the year -- (5,015) (21,195) -- (43) (26,253)
Balance at
31 December 2023 152,354 (31,444) (47,217) -- (62) 73,631
The accompanying notes on page 48 to 96 form part of these consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
Mercantile Ports & Logistics Limited (the "Company") was incorporated in
Guernsey under The Companies (Guernsey) Law, 2008 with registered number 52321
on 24 August 2010. Its registered office and principal place of business is
1st Floor, Tudor House, Le Bordage Rd, Guernsey GY1 1DB. It was listed on the
Alternative Investment Market ('AIM') of the London Stock Exchange on 7
October 2010.
The consolidated financial statements of the Company comprise of the financial
statements of the Company and its subsidiaries (together referred to as the
"Group"). The consolidated financial statements have been prepared for the
year ended 31 December 2024, and presented in UK Sterling (£).
The principal activities of the Group are to develop, own and operate a port
and logistics facilities. As of 31 December 2024, the Group had 46 (Forty-six)
(2023: 45 (Forty-five)) employees.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PREPARATION
The consolidated financial statements have been prepared on a historical cost
basis except where otherwise stated. The consolidated financial statements of
the Group have been prepared in accordance with International Financial
Reporting Standards ("IFRS") and interpretations as adopted by the European
Union and also to comply with The Companies (Guernsey) Law, 2008.
Climate Change and its impact on Karanja Port
Introduction
Climate change poses a significant threat to global sea ports, which are
critical nodes in international trade and transportation. The rising sea
levels, increased frequency and intensity of storms, and shifting weather
patterns associated with climate change present multifaceted challenges to
port operations and infrastructure.
The company has anticipated following key impacts of climate change for its
operational activity:
1. Sea Level Rise:
- Inundation of Port Facilities: Rising sea levels may inundate
low-lying port areas, causing structural damage to port infrastructure such as
berth, open and covered storage yard, storm water drains and road.
- Increased Flooding: Higher Sea levels exacerbate the risk of
flooding, particularly during high tides and storm surges, leading to
operational disruptions and increased maintenance costs. This may lead to a
significant downtime for revival and smooth operation.
2. Extreme Weather Events:
- Storm Surges: More frequent and severe storms can cause
significant damage to port infrastructure, delay shipping schedules, and
increase the risk of accidents and cargo loss. In 2020, Karanja Port was
impacted severely by cyclone named "Nisarga" which led to financial loss of
approximately 0.7 million (₹7 Crore). Similar natural catastrophic
situations can be anticipated in future with major financial implication.
- High Winds and Heavy Rainfall: These conditions can disrupt
loading and unloading operations, damage cargo, and pose safety risks to port
employees/workers. However, this is covered in the Port insurance.
3. Temperature Changes:
- Thermal Expansion: Higher temperatures cause thermal expansion of
sea water, contributing to sea level rise, leading to additional maintenance
cost.
4. Infrastructure Stress:
- Wear and Tear: Increased exposure to saltwater and extreme weather
conditions accelerates the wear and tear on port infrastructure leading to
increase in maintenance cost and significant stress to capital cost.
- Adaptation and Resilience Costs: Ports need to invest in resilient
infrastructure and adaptive measures, such as raising berth levels in future
and improving drainage systems.
Karanja Port has adapted following strategies to mitigate the above
anticipated challenges:
1. Infrastructure Upgrade:
- Elevating Structures: Raising the height of berth, ground level of
open and covered storage yard and other critical infrastructure can help
mitigate the risk of flooding. This will increase the expected lifespan on
the project and ROI.
- Storm Surge Drainage: Constructing storm surge drainage can
protect Karanja port from water logging or flood caused due to rising sea
levels and storm surges.
2. Operational Changes:
- Flexible Scheduling: Emergency management plan for such extreme
climate changes are already in place in Karanja Port for Implementing flexible
scheduling of the operational vessels to compensate the delays caused by
extreme weather and can help the port to maintain operational efficiency.
- Enhanced Monitoring: The operations team is already vigilant and
has adopted advanced weather forecasting and sea level monitoring systems to
provide early warnings and improve preparedness for extreme events.
3. Environmental and Regulatory Measures:
- Adopting and complying to Environmental Regulations: Karanja Port
is already complying with all the relevant environmental regulations and
international guidelines to ensure that ports contribute to global climate
mitigation efforts.
- Sustainable Practices: Karanja Port has adopted sustainable
practices, such as waste management, water stewardship, efficient use of
power, optimum vessel and equipment operations to reduce emissions from port
operations to help mitigate the port's environmental footprint.
4. Collaborative Efforts:
- Stakeholder Engagement: Karanja Port promotes involvement of
internal and external stakeholders for example improvement of local community
by preferring engagement of local contractors and candidates for employment.
Out of the total staff strength, the company has employed 34% locals at the
port currently and implementing the policies in the benefit of employees.
CONCLUSION
Since Karanja Port is on the frontline of climate change impacts, facing such
significant challenges requires immediate and sustained action. MPL board has
been in serious discussion internally to address this concern through
strategic planning, infrastructure investment, and collaborative efforts.
Karanja Port, can enhance its resilience to climate change and ensure the
continuity of trade and transportation. Addressing these challenges
proactively will be critical in safeguarding the economic and operational
stability of the port. However, the Management has secured the port with a
full coverage by ensuring the asset to mitigate from all risk of uncertainties
and eventualities.
Going Concern
In determining the appropriate basis of preparation of the financial
statements for the year ended 31
December 2024, the Directors are required to assess whether the Group has the
ability to continue in operational existence for a period of at least 12
months from the date of approval of these financial statements. Following a
detailed review of the Group's financial forecasts, cash flow models and
trading position, the Board has concluded that the going concern basis of
accounting remains appropriate in preparing these financial statements.
The year under review has been marked by sustained global geopolitical
instability, including the ongoing Russia-Ukraine conflict and heightened
tensions in the Middle East involving Israel, Palestine, and Lebanon. These
developments have disrupted international shipping routes and contributed to
elevated freight costs, which have had a direct impact on the Group's
financial results for the year ended 31 December 2024.
The Board has assessed the Group's ability to continue in operation for a
period of 18 months from the date of approval of the financial statements,
through to 30 June 2026. This period of assessment aligns with the Group's
internal budgetary process and reflects the seasonal nature of its port
operations. In addition, the Directors have also reviewed detailed cash flow
forecasts for the 24-month period from 1 January 2025 to 31 December 2026,
which further supports the longer-term visibility of liquidity and funding.
These forecasts reflect the operational ramp-up expected at Karanja Port which
will contribute meaningfully to revenue from 2025 onwards.
As at 31 December 2024, the Group held cash balances of £0.91 million.
Since March 2023, however, the Group has been unable to meet its scheduled
repayments of principal and interest on its term loan. Appropriate provisions
have been recognised in the financial statements in respect of the unpaid
amounts. An initial restructuring proposal, agreed in principle by the Group's
lenders, could not be concluded favourably. As a result, a revised One Time
Settlement (OTS) was formally submitted to the Group's lending consortium
which consists of 3 banks, by the Indian subsidiary on 24 March 2025. Sanction
has been received from the lead bank of the lending consortium, and approval
from the remaining lenders is expected by end June 2025. Until full consent is
received, however, there remains significant uncertainty around the timing and
success of the OTS implementation.
The Directors have modelled a base case scenario reflecting expected growth in
cargo volumes arising from the ramp-up in port activity under newly signed
customer contracts. In addition, the Directors have modelled a severe but
plausible downside scenario, which assumes a 20%-30% reduction in forecast
revenue during the going concern period, and reflects the potential for delays
in execution or underperformance of anticipated contracts. Both scenarios
incorporate expected cash outflows relating to the OTS settlement, trade
creditor payments, and other essential operating costs.
Under the severe downside scenario, a shortfall in available cash resources is
projected within the going concern period. To address this risk, the Group has
secured a £15.00 million unsecured line of credit from KJS Concrete Private
Limited (a Hunch Ventures group company), available until 31 December 2027.
This facility is intended to mitigate potential liquidity pressures and ensure
continuity of operations even under adverse conditions.
The Directors have also considered other principal risks and uncertainties
affecting the business and have performed sensitivity analysis on key
assumptions, including revenue growth and cost inflation. As part of this
assessment, management has identified mitigating actions under its control,
such as extending payment terms with vendors, deferring discretionary
expenditure, and maintaining a tight focus on core operational costs.
The Directors have determined that climate change is not expected to have a
significant financial impact during the going concern assessment period.
In reaching their conclusion, the Directors have considered the Group's cash
flow forecasts, capital requirements, availability of committed funding
facilities, and the continued support of key stakeholders including lenders
and shareholders. While a material uncertainty exists in relation to the
successful conclusion of the OTS proposal, the availability of the committed
line of credit and the Group's ability to implement mitigating actions provide
a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future.
Accordingly, the Directors consider it appropriate to continue to adopt the
going concern basis in preparing these financial statements.
b) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the results of the Company
and entities controlled by the Company (its subsidiaries) up to 31 December
2024. Subsidiaries are entities over which the Company has the power to
control the financial and operating policies. The Company obtains and
exercises control through holding more than half of the voting rights. The
financial statements of the subsidiaries are prepared for the same period as
the Company using consistent accounting policies. The fiscal year of Karanja
Terminal & Logistics Private Limited (KTPL) ends on March 31 and its
accounts are adjusted for the same period for consolidation.
Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies
adopted by the Group.
Non-controlling interest
Non-controlling interest, presented as part of equity, represent the portion
of a subsidiary's profit or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interest.
c) LIST OF SUBSIDIARIES
Details of the Group's subsidiaries which are consolidated into the Company's
financial statements
are as follows:
Subsidiary Immediate Parent Country of Incorporation % Voting Rights % Economic Interest
Karanja Terminal & Logistics (Cyprus) Ltd Mercantile Ports & Logistics Limited Cyprus 100.00 100.00
Karanja Terminal & Logistics Private Limited* Mercantile Ports & Logistics Limited India 8.49 8.49
Karanja Terminal & Logistics Private Limited* Karanja Terminal & Logistics (Cyprus) Ltd India 91.30 91.30
Karanja Terminal & Logistics (Cyprus) Ltd is wholly owned subsidiary of
Mercantile Ports and Logistics Limited. Karanja Terminal & Logistics
(Cyprus) Ltd holds 91.30% shares, Mercantile Ports & Logistics Limited
holds 8.11% shares in Karanja Terminal & Logistics Private Limited and the
balance 0.22% (50,000 shares out of 23,321,176) is held by various other
minority shareholders.
* Financial year end for Karanja Terminal & Logistics Private Limited
("KTLPL") is April to March, as same is governed by Companies Act 2013, but
for preparing group financials we have considered January to December period.
d) FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in UK Sterling (£), which
is the Company's functional currency. The functional currency for all of the
subsidiaries within the Group is as detailed below:
● Karanja Terminal & Logistics (Cyprus) Ltd ("KTLCL")
- Euro
● Karanja Terminal & Logistics Private Limited
("KTLPL") - Indian Rupees
Foreign currency transactions are translated into the functional currency of
the respective Group entity, using the exchange rates prevailing at the date
of the transactions (spot exchange rate). Foreign exchange gains and losses
resulting from the settlement of such transactions and from the retranslation
of monetary items denominated in foreign currency at the year-end exchange
rates are recognised in the Consolidated Statement of Comprehensive Income.
Non-monetary items are not retranslated at year-end and are measured at
historical cost (translated using the exchange rates at the transaction date).
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than GBP are translated
into GBP upon consolidation.
On consolidation, the assets and liabilities of foreign operations are
translated into GBP at the closing rate at the reporting date. The income and
expenses of foreign operations are translated into GBP at the average exchange
rates over the reporting period. Foreign currency differences are recognised
in other comprehensive income in the translation reserve. When a foreign
operation is disposed of, in part or in full, the relevant amount in the
translation reserves shall be transferred to the profit or loss in the
Consolidated Statement of Comprehensive Income.
e) REVENUE RECOGNITION
Revenue mainly consists of services relating to use of the port by customers
and includes services such as hiring of land, wharf-age, hiring of equipment,
loading/unloading, stevedoring, storage and from value added activities i.e.
trading activities which is incidental to providing port services.
Revenue is measured based on the consideration to which the group expects to
be entitled in a contract with a customer and excludes amounts collected on
behalf of third parties. The group recognises revenue when it transfers
control of a product or service to a customer.
Performance obligations are satisfied on handing over the land and / or
equipment to the customer / lessee, completion of loading/unloading,
stevedoring services, providing storage facilities and shipment of goods on
customers' vehicle.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognizing revenue as and when performance obligation(s) are satisfied.
The total transaction price for a contract is allocated amongst the various
performance obligations based on their relative standalone selling prices. The
transaction price for a contract excludes any amounts collected on behalf of
third parties.
Revenue is recognised either at a point in time or over time, when (or as) the
Group satisfies performance obligations by transferring the promised goods or
services to its customers.
Contract asset - The Group's recognises contract asset i.e. right to
consideration in exchange for goods or services that the Group has transferred
to a customer,
Contract liability - The Group's obligation to transfer goods and services to
a customer for which the Group has received consideration (or the amount is
due) from the customer.
The Group recognises contract liabilities for consideration received in
respect of unsatisfied performance obligations and reports these amounts as
other liabilities in the statement of financial position. Similarly, if the
Group satisfies a performance obligation before it receives the consideration,
the Group recognises either a contract asset or a receivable in its statement
of financial position, depending on whether something other than the passage
of time is required before the consideration is due. Invoicing for services is
set out in the contract.
The group does not believe there are elements of financing in the contracts.
There are no warranties or guarantees included in the contract.
The specific recognition criteria described below must also be met before
revenue is recognised.
Port operation and logistics services
Revenue from port operation services including cargo handling, storage, other
ancillary port and logistics services including the end-to-end value-added
services with respect to coal supply and delivery are measured based upon
cargo handled at rates specified under the contract and charged on per metric
ton basis.
The performance obligation is satisfied using the output method; this method
recognises revenue based on the value of services transferred to the customer,
for example, quantity of cargo loaded and unloaded and/or transported.
Revenue is recognized in the accounting period in which the services are
rendered and completed till reporting date. Amounts are invoiced based on the
estimated arrival date of the vessel provided by the customer, and revenue
recognised when the service is provided.
Management determines if there are separate performance obligations from which
customer are being able to benefit from, for example, barging, stevedoring or
transportation.
Performance obligations are considered on a contract-by-contract basis against
the requirements of IFRS 15. For each service the customer can benefit from
the good or service with "resources that are readily available to the
customer". The nature of the promise to the customer is considered within the
context of the individual customer contract and whether the promise to
transfer a combined item of overall port services, which can vary on a per
customer basis.
Revenue from sale of traded goods
Revenue from sale of traded goods i.e. coal is recognized on transfer of
control to the customers, which is generally on dispatch of goods to the
customer. The delivery is handled by the customer and therefore control is
deemed to have been transferred to the customer at this point and is invoiced
on delivery.
Sales are stated exclusive of Goods and Service Tax ("GST").
Income from long term leases
As a part of its business activity, the Group sub-leases land on a short-term
basis to its customers.
The head lease is not a short-term lease and thus the sublease must be
classified by reference to the right-of-use asset arising from the head lease,
rather than by reference to the economic useful life of the underlying asset.
As a part of its business activity, the Group sub-leases land on a short-term
basis to its customers. It is concluded that the subleases are an operating
lease because none of the indicators for a finance lease in IFRS 16 are
present.
The lease income is recognised from the sublease on a straight-line basis over
the period of lease / sub-lease agreement / date of memorandum of
understanding takes effect over lease period and annual lease rentals are
recognised on an accrual basis.
Amounts are invoiced as the service provided, on either a monthly or ad hoc
usage basis depending on the customer.
Interest income
Interest income is reported on an accrual basis using the effective interest
method.
f) BORROWING COST
Borrowing costs directly attributable to the construction of a qualifying
asset are capitalized during the period of time that is necessary to complete
and prepare the asset for its intended use. Other borrowing costs are expensed
in the period in which they are incurred and reported under finance costs.
g) SHARE BASED PAYMENTS
The Group has entered into an equity-settled share-based arrangement with its
service provider in 2023.
All services received in exchange for the grant of any share-based payment are
measured at the fair value of services received. The service provider is
rewarded with share-based payments, the number of shares issued in exchange
for the services received based on the fair values of services.
All share-based payments is recognised as an expense in the Statement of
Comprehensive Income with a corresponding credit to Share Capital up to the
nominal value of the shares issued with any excess being recorded as Share
Premium.
h) EMPLOYEE BENEFITS
ii) Defined contribution plan (Provident Fund)
In accordance with Indian Law, eligible employees receive benefit from
Provident Fund, which is a defined contribution plan. Both the employee and
employer make monthly contributions to the plan, which is administrated by the
government authorities, each equal to the specific percentage of employee's
basic salary. The Group has no further obligation under the plan beyond its
monthly contributions. Obligation for contributions to the plan is recognised
as an employee benefit expense in the Consolidated Statement of Comprehensive
Income when incurred.
iii) Defined benefit plan (Gratuity)
In accordance with applicable Indian Law, the Group provides for gratuity, a
defined benefit plan (the Gratuity Plan) covering eligible employees. The
Gratuity Plan provides a lump sum payment to vested employees, at retirement
or termination of employment, and amount based on respective last drawn salary
and the years of employment with the Group. The Group's net obligation in
respect of the Gratuity Plan is calculated by estimating the amount of future
benefits that the employees have earned in return for their service in the
current and prior periods; that benefit is discounted to determine its present
value. Any unrecognised past service cost and the fair value of plan assets
are deducted. The discount rate is a yield at reporting date on risk free
government bonds that have maturity dates approximating the term of
the Group's obligation. The calculation is performed annually by a
qualified actuary using the projected unit credit method. When the calculation
results in a benefit to the Group, the recognised asset is limited to the
total of any unrecognised past service cost and the present value of the
economic benefits available in the form of any future refunds from the plan or
reduction in future contribution to the plan.
The Group recognises all re-measurements of net defined benefit
liability/asset directly in other comprehensive income and presents them
within equity.
iv) Short term benefits
Short term employee benefit obligations are measured on an undiscounted basis
and are expensed as a related service provided. A liability is recognised for
the amount expected to be paid under short term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation
can be estimated reliably.
i) LEASES
As a lessee
The Company mainly has lease arrangements for converting the waterfront into
reclamation of land for construction of Port for terminal and logistics
operations. The land thus reclaimed consist of the open space and also
offices, warehouse spaces and equipment.
The Group assesses whether a contract contains a lease at inception of the
contract. The Group recognises a right-of-use asset and corresponding lease
liability in the statement of financial position for all lease arrangements
where it is the lessee, except for short-term leases with a term of twelve
months or less and leases of low value assets. For these leases, the Group
recognises the lease payments as an operating expense on a straight-line basis
over the term of the lease.
The lease liability is initially measured at the present value of the future
lease payments from the commencement date of the lease. The lease payments are
discounted using the interest rate implicit in the lease or, if not readily
determinable, the asset and company specific incremental borrowing rates.
Lease liabilities are recognised within borrowings on the statement of
financial position. The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability (using the
effective interest method) and by reducing the carrying amount to reflect the
lease payments made. The Group re-measures the lease liability, with a
corresponding adjustment to the related right-of-use assets, whenever:
· The lease term changes or there is a significant event or change
in circumstances resulting in a change in the assessment of exercise of a
purchase option, in which case the lease liability is re-measured by
discounting the revised lease payments using a revised discount rate;
· The lease payments change due to the changes in an index or rate
or a change in expected payment under a guaranteed residual value, in which
case the lease liability is re-measured by discounting the revised lease
payments using an unchanged discount rate;
· A lease contract is modified, and the lease modification is not
accounted for as a separate lease, in which case the lease liability is
re-measured based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of
modification.
The right-of-use assets are initially recognised on the SOFP at cost, which
comprises the amount of the initial measurement of the corresponding lease
liability, adjusted for any lease payments made at or prior to the
commencement date of the lease, any lease incentive received and any initial
direct costs incurred, and expected costs for obligations to dismantle and
remove right-of use assets when they are no longer used. Right-of-use assets
are recognised within property, plant and equipment on the statement of
financial position. Right-of-use assets are depreciated on a straight-line
basis from the commencement date of the lease over the shorter of the useful
life of the right-of-use asset or the end of the lease term.
As a lessor
The Group enters into lease arrangements as a lessor with respect to some of
its time charter vessels. Leases for which the Group is an intermediate lessor
are classified as finance or operating leases by reference to the right-of-use
asset arising from the head lease. Income from operating leases is recognised
on a straight-line basis over the term of the relevant lease. Amounts due from
lessee under finance leases are recognised as receivables at the amount of the
Group's net investment in the leases. Finance lease income is allocated to
accounting periods so as to reflect a constant periodic rate of return on the
Group's net investment outstanding in respect of these leases.
As a lessor the Group classifies its leases as either operating or finance
leases. The Group assessed whether it transfers substantially all the risks
and rewards of ownership. Those assets that do not transfer substantially all
the risks and rewards are classified as operating leases. The Group has
currently not entered into any lease that is classified as finance lease.
Lease income from operating leases where the Company is a lessor is recognized
in income on a straight-line basis over the lease term unless a systematic
basis more representative of the pattern in which benefit from the use of the
underlying asset is diminished is suitable.
j) INCOME TAX
Tax expense recognised in profit or loss comprises the sum of deferred tax and
current tax not recognised in other comprehensive income or directly in
equity. Current income tax assets and/or liabilities comprise those
obligations to, or claims from, fiscal authorities relating to the current or
prior reporting periods, that are unpaid at the reporting date. Current tax is
payable on taxable profit, which differs from profit or loss in the financial
statements. Calculation of current tax is based on tax rates and tax laws that
have been substantively enacted by the end of the reporting period.
Deferred tax
The income tax is being accounted under the asset and liability method, which
requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements. Under this method, we determine deferred tax assets and
liabilities on the basis of the differences between the financial statement
and tax bases of assets and liabilities by using enacted tax rates in effect
for the year in which the differences are expected to reverse. The effect of a
change in tax rates on deferred tax assets and liabilities is recognized in
income in the period that includes the enactment date.
Deferred tax assets are recognized to the extent that management believes that
these assets are more probable than not to be realized. In making such a
determination, it considers all available positive and negative evidence,
including future reversals of existing taxable temporary differences,
projected future taxable income, tax-planning strategies, and results of
recent operations. If it is determined that it would be able to realize the
deferred tax assets in the future in excess of the net recorded amount, the
necessary adjustment would be made to the deferred tax asset valuation
allowance, which would reduce the provision for income tax.
k) FINANCIAL ASSETS
The Financial assets and financial liabilities are recognised when the Group
becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial asset expire, or when the financial asset and
substantially all the risks and rewards are transferred. A financial liability
is derecognised when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories:
· amortized cost
· fair value through profit or loss ("FVTPL")
· fair value through other comprehensive income ("FVOCI").
In the periods presented, the corporation does not have any financial assets
categorised as FVTPL or FVOCI.
The classification is determined by both:
· the entity's business model for managing the financial asset
· the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within other expenses.
Subsequent measurement of financial assets
Financial assets at amortised cost:
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
· they are held within a business model whose objective is to hold
the financial assets and collect its contractual cash flows
· the contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the principal
amount outstanding
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where the effect of
discounting is immaterial. The Group's cash and cash equivalents, trade and
most other receivables fall into this category of financial instruments as
well as listed bonds that were previously classified as held-to-maturity under
IFRS 9.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking information to
recognise expected credit losses - the 'expected credit loss (ECL) model'.
This replaces IFRS 9's 'incurred loss model'. Instruments within the scope of
the new requirements included loans and other debt-type financial assets
measured at amortised cost and FVOCI, trade receivables, contract assets
recognised and measured under IFRS 15 and loan commitments and some financial
guarantee contracts (for the issuer) that are not measured at fair value
through profit or loss.
l) FINANCIAL LIABILITIES
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely the same under
IFRS 9, the Group's financial liabilities were not impacted by the adoption of
IFRS 9. However, for completeness, the accounting policy is disclosed below.
The Group's financial liabilities include borrowings, trade and other payables
and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where
applicable, adjusted for transaction costs unless the Group designated a
financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the
effective interest method except for derivatives and financial liabilities
designated at FVTPL, which are carried subsequently at fair value with gains
or losses recognised in profit or loss (other than derivative financial
instruments that are designated and effective as hedging instruments). In the
periods presented, the corporation does not have any financial liabilities
categorised as FVTPL or FVOCI.
All interest-related charges and, if applicable, changes in an instrument's
fair value that are reported in profit or loss are included within finance
costs or finance income.
m) PROPERTY, PLANT AND EQUIPMENT
MPL's balance sheet contains significant property, plant and equipment, and
right-of-use assets primarily comprising of assets relating to port, office,
plant and machinery, vehicles and other movable assets. Items of property,
plant and equipment are measured at cost less accumulated depreciation and
impairment losses.
All the expenditures directly attributable in respect of the port and
logistics facility under development are carried at historical cost under
Capital Work in Progress as the Board believes that these expenses will
generate probable future economic benefits. These costs include borrowing
cost, professional fees, construction costs and other direct expenditure.
After capitalisation, management monitors whether the recognition requirements
continue to be met and whether there are any indicators that capitalised costs
may be impaired.
Cost includes expenditures that are directly attributable to the acquisition
of the asset and income directly related to testing the facility is offset
against the corresponding expenditure. The cost of constructed asset includes
the cost of materials, sub-contractors and any other costs directly
attributable to bringing the asset to a working condition for its intended
use. Purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
Parts of the property, plant and equipment are accounted for as separate items
(major components) on the basis of nature of the assets.
The Indian subsidiary has constructed and developed the port which is now
fully operational. The basic infrastructure is ready, however, depending on
the specification of the customer and cargo dimension, the ground improvement
etc. will be carried out and made worthy for operation and once complete will
be accordingly transferred from Capital Work-in-Progress to Property, Plant
and Equipment when the assets deemed ready to use. Hence, the Group has been
prudently transferring the assets to Property, Plant and Equipment on the
basis of utilisation of space for operations.
Gains or losses arising on the disposal of property, plant and equipment are
determined as the difference between the disposal proceeds and the carrying
amount of the assets are recognised in profit or loss within other income or
other expenses.
Right-of-use assets:
Right-of-use assets, the cost is equivalent to the present value of the future
lease payments relating the leased assets. This note also details nay
additions and disposals during the year, and shows depreciation, which is an
expense in the income statement to reflect the usage of these assets.
Right of use assets are initially measured at cost, which is an amount equal
to the corresponding lease liabilities (present value of future lease
payments) adjusted for any lease payments made at or before the commencement
date, less any lease incentives received. (See note on lease liabilities
accounting policy).
Depreciation is calculated by estimating how many years the asset is expected
to be in use, which is also known as the useful economic life (UEL) of the
asset. The depreciation charge reduces the initial value of the assets over
the time and spread evenly over their UELs. The value after deducting
accumulated depreciation is known as the net book value.
No depreciation is charged during the course of construction on the Port
Assets. Depreciation is calculated for all other assets to write off the cost
or valuation, less residual value, on a straight-line basis over the following
expected UELs:
Useful economic lives
Assets Estimates Life of assets
Lease hold Land Development Over the period of Concession Agreement by
Maharashtra Maritime board (MMB).
Marine Structure, Dredged Channel Over the period of Concession Agreement by
Maharashtra Maritime board (MMB).
Non-Carpeted Road other than RCC 3 years
Office equipment 3-5 years
Computers 2-3 years
Computer software 5 years
Plant & machinery 15 years
Furniture 5-10 years
Vehicles 5-8 years
Depreciation methods, useful lives and residual value are reassessed at each
reporting date. Right-of-use assets depreciated over the shorter of the lease
period and estimated useful life.
Impairment of Property, Plant and Equipment
Internal and external sources of information are reviewed at the end of the
reporting period to identify indications that the property, plant and
equipment may be impaired. When impairment indicators exist, Management
compares the carrying value of the property, plant and equipment with the fair
value determined as the higher of fair value less cost of disposal or value in
use, "refer to the Critical Accounting Estimates section before Note 3 to the
financial statements"..
For impairment assessment purposes, assets are grouped at the lowest levels
for which there are largely independent cash inflows (cash-generating units).
As a result, some assets are tested individually for impairment and some are
tested at cash-generating unit level.
MPL has a sole Cash Generating Unit (CGU) namely, Karanja Port in India since
inception. The Port Assets are reviewed for evidence of a trigger for
potential impairment at least annually or whenever events or circumstances
indicate that the value on the balance sheet may not be recoverable.
Impairment testing is performed on cash generating units (CGUs) which is the
Port itself, this being the lowest level of separately identifiable cash
flows.
An impairment loss is recognised as follows:
Description Amount in
£ million
Enterprise Value 95.03
Carrying Value of the CGU (111.19)
Net Enterprise Value (Impairment) (16.16)
From the above, it is evident that an impairment loss is recognised on the
amount by which the asset's net book value exceeds its recoverable amount, the
latter being the higher of the asset's fair value less cost to dispose and
value in use. Value in use calculation is performed using cash flow
projections, discounted at a post-tax rate, which reflects the asset specific
risks and the time value of money.
Property, plant and equipment is stated at cost, net of accumulated
depreciation and/or impairment losses, if any. Based on the impairment review
performed the property, plant and equipment are impaired to the extent of £
16.16 million, out of which the net impact of £6.77 million which is for the
current year as provided in the accounts and as the balance £9.39 million was
already been provided in the previous year.
When an impairment loss subsequently reverses, the carrying amount of the CGU
is increased to the revised estimate of the recoverable amount, but ensuring
the increased carrying amount does not exceed the carrying amount that would
have been determined if no impairment loss had been recognised for the CGU in
prior years. A reversal of an impairment loss is recognised as a credit to the
income statement when recovery of performance is considered reasonably
certain.
n) TRADE RECIEVABLES AND PAYABLES
Trade receivables are financial assets at amortised costs, initially measured
at the transaction price, which reflects fair value, and subsequently at
amortised cost less impairment. In measuring the impairment, the Group has
applied the simplified approach to expected credit losses as permitted by
IFRS9. Expected credit losses are assessed by considering the Group's
historical credit loss experience, factors specific for each receivable, the
current economic climate and expected changes in forecasts of future events.
Changes if any in expected credit losses are recognised in the Statement of
Comprehensive Income.
Trade payables are financial liabilities at amortised cost, measured initially
at fair value and subsequently at amortised cost using an effective interest
rate method.
o) ADVANCES
Advances paid to the EPC contractor and suppliers for construction of the
facility are categorised as advances and will be offset against future work
performed by the contractor.
p) CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and bank deposits that can
easily be liquidated into known amounts of cash and which are subject to an
insignificant risk of changes in value.
q) SHARE CAPITAL AND RESERVES
Shares have 'no par value'. Stated capital includes any premiums received on
issue of share capital.
Any transaction costs associated with the issuing of shares are deducted from
stated capital, net of any related income tax benefits.
Foreign currency translation differences are included in the translation
reserve. Retained earnings include all current and prior year retained
profits.
r) NEW STANDARD AND INTERPRETATION
There are no accounting pronouncements, which have become effective from 1
January 2024 that have a significant impact on the Group's consolidated
financial statements.
Standards, amendments and interpretations to existing standards that are not
yet effective and have not been adopted early by the group.
Following new standards or amendments that are not yet effective and have been
issued by the IASB which are not applicable or have material impact on the
Group.
· IFRS S1 - General Requirements for Disclosure of
Sustainability-related Financial Information
· IFRS S2 - Climate-related Disclosures
CRITICAL ACCOUNTING ESTIMATE
a) Impairment
In line with the accounting policy, management assessed the value in use of
the CGU when testing for impairment. This requires estimation of the present
value of future cash flows expected to arise from the continuing operation of
the CGU. These estimates require assumptions over various factors, in
particular future sales, future margin performance and considering the
consolidated costs. Each of these areas are critical in estimating the present
value of future cash flows. Were there to be significant changes in these
estimations, the amount recognised in respect of impairment during the year
could be materially impacted, or impairment charges recognised in previous
years may be reversed.
In contrast to past performance, the Indian subsidiary is now confident of
ramping up its operations from 2025 onwards, as it managed to sign:
a) Shiny Shipping & Logistics Pvt. Ltd. for Edible Oil discharging and
distribution;
b) Trial run conducted for Afcons Infrastructure Limited and advanced
negotiations are under way to sign a tentative contract which will be for
a 24-30-month contract for hiring of land for fabrication and erection of
Girders for Revas Port construction, at our Port;
The Directors are optimistic about the business potential at the port for the
period 2025 onwards. The capacity utilisation of the port in essence drives
the revenue and the EBIDTA generated by MPL through its CGU. The optimum
utilisation of the Port capacity is the essence and a driving force which
ramps up the revenue as well as the EBIDTA margin of the group. The CGU will
be cash positive the moment capacity utilisation crosses more than 50% range.
Impairment testing is performed on cash generating units (CGUs) which is the
Port itself, this being the lowest level of separately identifiable cash
flows.
An impairment loss is recognised as follows:
Description Amount in
£ million
Enterprise Value 95.03
Carrying value of CGU (111.19)
Net Enterprise Value (Impairment) (16.16)
Out of £16.16 million, the net impact of £6.77 million which is for the
current year as provided in the accounts and as the balance £9.39 million was
already been provided in the previous year.
Value in use calculation is performed using cash flow projections, discounted
at a pre-tax post IFRS-16 rate, which reflects the asset specific risks and
the time value of money.
The impairment review considers the VIU of the CGU compared to the carrying
value in the first instance, and subsequently for fair value less cost to
dispose if the VIU is lower than the carrying value. The VIU calculation is
based on the remaining life of the Port assets i.e. the balance valid lease
period using the latest forecast data to adjust the specific cash flows. The
recoverable amounts of the impaired CGU are based on the VIU.
The growth rate and operating margins used in the estimate cash flows are
based on the current contracts on hand as well as advanced negotiations with
the current clients on their expansion of activities at Karanja port as
follows:
1) Esquire Contract (Existing Customer):
a. Increase in the estimated imports of coal for 2024 from 1.5 million MT
to 2-2.5 million MT;
b. Import of Silica Sand /Gypsum c. Import of Steel
2) Two contracts signed with one of India's largest Oil & Gas company,
summing up to £9.61million (₹105.9 crores) for an initial period of 36
months:
a. Increasing the number of OSV vessels per month per berth.
b. Increase the number of dedicated berths from 1 to 2 by 2026;
c. Discussions underway for use of Karanja Port facilities for Rig repair
and maintenance;
d. Use of Karanja Port facilities by 3rd party vendors/
partners/contractors'/ associates for Oil & Gas sector operations;
e. Storage and supply of consumables to OSVs;
f. Supply of bunkers and Water supply to OSVs;
g. Other allied services.
3) Contract with Shiny Shipping & Logistics Pvt. Ltd. for an initial
period of 36 months for discharging and distribution of Edible Oil to local
markets with an estimated revenue generation of £1.40 million (₹14.94
crores).
4) Project Cargo (New customer)
The Indian subsidiary is also in advanced negotiations with Afcons
Infrastructure Ltd for a space which was earlier occupied by Tata Daewoo Joint
Venture, for constructing the new bridge from Uran to Revas Bridge for a
period of 24-30 months.
5) Container Handling:
The container handling operations is expected to commence from Mid of 3rd
quarter of 2025 which will also significantly contribute to the top line as
well as the bottom Line.
The key assumptions used in the VIU calculation are;
- A post-tax discount rate of 14.6% (2023: 13.5%) was calculated
using the weighted average cost of capital (WACC). An assessment was made of
the risks associated with the cash flows based on the forecast assumptions and
a risk adjustment included in the WACC.
- Port utilization estimated to peak at 79% by 2030 (driven by bulk
and container cargo). It is important to note that this is a conservative
assumption. In the current case, we have remained conservative and assumed
peak capacity utilization around 75%.
- The forecast assumes that port utilization will be 17% in 2024,
27% in 2025, 39% in 2026 and 50% in 2027. The expected sales growth as a
result of increase in port utilization with a CAGR ranging between from 60% to
70% to 2028 with steady growth of 0-1% per annum thereafter.
Based on the impairment review carried out, the group recognised a net
impairment of £ 6.77 million for the year.
In the VIU calculations, no specific impact has been included in respect of
climate change as it is not expected to be materially different to the
forecast assumptions during the forecast period.
Certain movable assets are expected to be replaced at the end of their UEL by
those that have a lower impact on the environment. Cash outflows that are
directly associated with CGUs have been included in the discounted cash flow
modelling.
Sensitivities in the impairment modelling
The impairment model is prepared on very conservative assumptions. Generally,
Ports operate at 100-110% of the installed capacity as peak capacity
utilisation. In addition, ramp up in capacity utilisation is steep preponing
cash flows at higher or peak capacity utilisation.
In case of MPL, not only the ramp up in capacity utilisation is assumed to be
steady, but also the peak capacity utilisation is taken at 96% instead of 110%
in the impairment model. To add to the conservative assumptions, the tariff
revenue on handling per MT of cargo is also assumed to be in proportion with
the G&A expenses on a year on year basis.
However, the below sensitivity analysis reflects a reasonably plausible
alternative scenario for impairment evaluation.
Sensitivity Adjustment Net Impairment Impact £ in million
Decrease in port utilisation by 2% Additional Charge -£3.67
Increase in port utilisation by 2% Additional Release £3.67
EBITDA decreased by 2% Additional Charge -£0.00
EBITDA increased by 2% Additional Release £0.00
G&A increased by 5% Additional Charge -£0.00
G&A decreased by 5% Additional Release £0.00
WACC increased by 50 bps Additional Charge -£3.89
WACC decreased by 50 bps Additional Release £3.89
The management exercised a sensitivity analysis on the financial model for the
immediate future to ascertain the impact of increase/ decrease under various
heads in the model:
i. Port Capacity utilization:
Increase: Catalyst drivers for Revenues are majorly the Bulk Cargo and
Container Cargo. Any increase in traffic at the Port will enhance the Port
utilization, which will contribute to the improvement of business performance
and thus release the charge on the impaired asset.
Decrease: Decrease in the Port Utilization capacity due to climate conditions,
deferment of operations may adversely impact and thus increase the charge of
impairment on the asset.
ii. General & Administration Expense:
Increase: Major Cost contributing to G&A are the Cost of Personnel,
Insurance, Professional Fees and Travel. The increase is cost depends on the
economic situation and changes considering the inflation, beyond the assumed
rate. This would further impair the asset proportionately.
Decrease: Any reduction due to better negotiations on the Insurance,
Professional fees, Travel rates, would reduce the impact of impairment on the
asset.
iii. EBIDTA:
Increase: Revenue generated from land rentals, which is 100% margin business,
will directly reduce & release the charge on the impairment of the asset
and improve the EBIDTA margin.
Decrease: Increase in cost of operations such as equipment hire, stevedoring
etc cost, if hiked, then would adversely impact the EBIDTA margin and would
contribute and increase the impairment of asset.
iv. Weighted Average Cost of Capital (WACC):
Increase: Increase in the WACC by 50 basis point will also contribute to
additional charge on the impaired asset. This may occur if the Reserve Bank
increases the REPO rate which will have direct impact on the rate of interest
on the term debt.
Decrease: a decrease in the WACC by 50 basis point will release and reduce the
charge on the impaired asset. This again depends solely on the market
condition and Reserve bank policy.
b) Recognition of income tax assets in respect of tax
MPL group's Indian subsidiary had filed a writ petition in Hon'ble High court
for seeking relief against the order passed by the Income Tax Appellate
Tribunal (ITAT) for the two assessment years 2011- 12 and 2012-13, which was
decided in favour of the group's Indian subsidiary. Therefore, the major
portion of the tax pertains to the amounts paid under protest for the
Assessment Year (AY) 2011- 2012 (£0.45 million) and AY 2012-13 (£1.47
million). These amounts were deposited as a precondition for filing appeals
with the Income-tax authorities for these years.
The Principal Commissioner of Income Tax (Appeals) vide its order dated 20th
March, 2023, issued an order in favour of the Group's subsidiary for the
assessment years 2011-12 and 2012-13. In January, 2025, the Indian subsidiary
received partial refund of Cir.£1million (₹10.19 crores) out of the Total
refund due of £2.70 million (₹28.84 crores). The balance is expected to be
released by first half of 2025. In addition, during the year 2024, the
subsidiary also received refund of £0.02 million (₹1.45 crores).
Since the Income tax department has preferred an appeal in Supreme Court and
in light of the uncertainty of the final outcome, there remains a risk over
the amount recognised. However, the chances of appeal are considered remote
and as such, on the basis of highly probable an asset was recognised in
respect of the amount receivable.
As per these orders, the matter was sent back to the files of Principal
Commissioner of Income Tax (Appeals) for re-adjudication following the ITAT
orders for assessment years 2013-14 to 2015-16. The status of open litigations
for AY 2013-14 to AY 2015-16 remain unchanged during FY 2024 i.e., the matter
is yet to be adjudicated and the outcome of appeal before Hon'ble Bombay High
Court is pending.
3. SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The Board of
Directors are the Chief operating decision maker. The Group has only one
operating and geographic segment, being the project on hand in India and hence
no separate segmental report presented.
4. REVENUE FROM OPERATION
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Sale of goods 1,410 1,456
Cargo handling income 2,178 1,683
Lease income 408 1,188
Other operating income 357 1,135
4,352 5,462
Revenue from Sale of goods is "Point in time" and other revenue heads are
"Over the time". Other operating income relates to income from dredging, coal
handling and distribution income and wharf age.
Certain portions of the port have been designated for leasing portions. The
lease has been classified as operating lease because it does not transfer
substantially all the risks and rewards incident to ownership and it does not
fulfil other conditions mentioned in IFRS 16 applicable to be classified as
finance lease.
The major customer for sale of goods is Radha Krishna Trading Company,
followed by Shree Shakti Coal Corporation.
Significant contributors to the Cargo Handling Income is Esquire Shipping
& Trading Pvt. Ltd.
Nationwide Shipping Services, a registered vendor of Largest Oil & Gas
company has contributed to the Offshore Supply Vessels (OSVs) operations at
Karanja Port. As at the end of December2024, the total number of OSV vessels
handled at Karanja Port is 88 Vessels since January 2024. Currently the Major
Contributor to Lease Income is Esquire Shipping & Trading Pvt. Ltd.
The total future minimum lease rentals receivable at the SOFP date is as
under:
Payments falling due As on As on
31 Dec 24 31 Dec 24
INR in million £ million
2025 19.83 0.19
2026 19.83 0.19
2027 19.83 0.19
2028 19.83 0.19
Fifth year and above 39.66 0.37
Total 118.99 1.11
5. COST OF SALES
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Wharf age expense 412 479
Other operating expense 2,171 1,919
Changes in inventory (253) 19
Total 2,330 2,417
6. ADMINISTRATIVE EXPENSES
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Employee costs 518 556
Directors' remuneration and fees 302 281
Foreign exchange loss 7 (3)
Provision for doubtful debts 26 --
Other administrative costs 1,988 2,432
Total 2,841 3,266
7.(a) FINANCE INCOME
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Interest on bank deposits 34 25
Management has tested the OTR for debt modification under IFRS 9. The revised
cash out flow discounted at original EIR 13.45% resulted in net gain of £5.41
million and was affected accordingly in 2021. The recognized gain is spread
over the remaining term of the modified debt using the effective interest
method, and therefore has been considered in the 2024 financials.
7.(b) FINANCE EXPENSES
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Interest on term loan 5,432 4,398
Interest others 1,859 1,827
Total 7,291 6,225
With regard to interest on term loan of £ 5.43 million, the actual interest
paid during the period is Nil (£1.54 million - 2023).
The Indian subsidiary has submitted a proposal for One Time Settlement closer
to the book value of total debt for consideration which is under process.
Currently the Principal Term Loan repayment and interest accrued thereon are
unpaid since March 2023 till date.
8. INCOME TAX
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Loss Before Tax (18,667) (21,265)
Applicable tax rate in India* 26.00% 26.00%
Expected Tax Credit (4,853) (5,529)
Reconciling Items
Non-deductible losses of MPL and Cyprus entities 308 378
Un-recognised deferred tax asset on tax losses 4,545 5,151
-- --
* Considering that the Group's operations are presently based in India, the
effective tax rate of the Group of 26% (prior year 26%) has been computed
based on the current tax rates prevailing in India. In India, income earned
from all sources (including interest income) are taxable at the prevailing tax
rate unless exempted. However, administrative expenses are treated as
non-deductible expenses until commencement of operations.
MPL group's Indian subsidiary had filed a writ petition in Hon'ble High court
for seeking relief against the order passed by the Income Tax Appellate
Tribunal (ITAT) for the two assessment years 2011-12 and 2012-13, which was
decided in favour of the group's Indian subsidiary. Therefore, the major
portion of the tax pertains to the amounts paid under protest for the
Assessment Year (AY) 2011-2012 (£0.45 million) and AY 2012-13 (£1.47
million). These amounts were deposited as a precondition for filing appeals
with the Income-tax authorities for these years.
The Principal Commissioner of Income Tax (Appeals) vide its order dated 20th
March, 2023, issued an order in favour of the Group's subsidiary for the
assessment years 2011-12 and 2012-13. As such, as a result of a tax previous
paid in respect of 2011-12 and 2012-13 is expected to be returned to the
Indian subsidiary and as such an asset has been recognised of £2.1m. Since
the Income tax department has preferred an appeal in Supreme Court and in
light of the uncertainty of the final outcome, there remains a risk over the
amount recognised and as such there was judgement taken that the amount was
expected to be recovered.
As per these orders, the matter was sent back to the files of Principal
Commissioner of Income Tax (Appeals) for re-adjudication following the ITAT
orders for assessment years 2013-14 to 2015-16. The status of open litigations
for AY 2013-14 to AY 2015-16 remain unchanged during FY 2024-25 i.e., the
matter is yet to be adjudicated and the outcome of appeal before Hon'ble
Bombay High Court is pending. As such a contingent liability continues to be
recognised in respect of amounts potentially due.
The Indian Subsidiary has received the refund order u/s. 264 read with section
260 of the Income Tax Act for the assessment year 2011-12 as well as 2024-25
vide the order dated 20 June 2023 totaling to £2.97 million (₹.31.52
crores).
Since the Income tax department has preferred an appeal in Supreme Court and
in light of the uncertainty of the final outcome, the Group has disclosed the
same under the head of contingent liability in note no 25.
The Company is incorporated in Guernsey under The Companies (Guernsey) Law
2008, as amended. The Guernsey tax rate for companies is 0%. The rate of
withholding tax on dividend payments to non-residents by companies within the
0% corporate income tax regime is also 0%. Accordingly, the Company will have
no liability to Guernsey income tax on its income and there will be no
requirement to deduct withholding tax from payments of dividends to
non-resident shareholders.
In Cyprus, the tax rate for companies is 12.5% with effect from 1 January
2014. There is no tax expense in Cyprus.
As at 31st December 2024 due to uncertainty that Indian entity will generate
sufficient future taxable income to offset business losses incurred to realise
deferred tax assets, the management has not recognised the Deferred Tax Asset
amounting to (£ 11.15 million) (Gross tax losses: £ 24.02 million) (2023-
(£ 5.43 million). (Gross tax losses: £ 20.9 million).
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Deferred tax liabilities (307) (1,886)
Offset against deferred tax assets 307 1,886
Deferred tax liabilities -- --
As a result of amendments to IAS 12 'Deferred Tax related to Assets and
Liabilities arising from a Single Transaction' deferred tax has been
recognised in respect of IFRS 16 leases. In applying the standard at the
beginning of the earliest comparative period presented, a deferred tax asset
has been recognised to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised
resulting in an amendment to the amounts recognised at 31st December 2024.
9. AUDITOR'S REMUNERATION
The following are the details of fees paid to the auditors, McMillan Woods
Audits Limited and Indian auditors, in various capacities for the year:
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Audit Fees
Audit fees payable to McMillan Woods Audits Limited for the Group accounts 85 184
audit *
Audit fees payable to auditors of subsidiary companies** 8 7
Non-audit service
Interim Financial Statement Review 5 5
Total 98 196
* Audit Fees for MPL includes the additional fees charged during 2023 by Grant
Thornton UK LLP in respect of the prior year audit aggregating to £ 15,000
(2022: £ 30,000).
** Audit fees for the Subsidiary companies for the year 2024: -
Indian entity is £6,542
Cyprus entity is £1,893
Total £8,435
9. EARNINGS PER SHARE
Both basic and diluted earnings per share for the year ended 31 December 2024
have been calculated using the loss attributable to equity holders of the
Group of £18.63 million (prior year loss of £21.22 million).
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Loss attributable to equity holders of the parent (£18,629,522) (£21,221,801)
Weighted average number of shares used in basic and diluted earnings per share 356,312,692 201,581,972
EARNINGS PER SHARE
Basic and Diluted earnings per share (0.052p) (0.105p)
The Group has successfully completed fund raise by private placement of
301,479,660 and 13,333,333 new Ordinary Shares on 28 June 2023 and 31 July
2023 respectively at a price of 0.03 pence per share.
11 (a). PROPERTY, PLANT AND EQUIPMENT
Details of the Group's property, plant and equipment and their carrying
amounts are as follows:
Computers Office Furniture Vehicles Plant & Machinery Port Asset Right of use Asset Capital Work in Progress Total
Equipment
£000 £000 £000 £000 £000 £000 £000 £000 £000
Gross carrying amount
47 (1) 434 (87) 569 (7) 59 (1) 104,171 (1,63838) 1,659 (21) 131,575 (1,487)
Balance 1 Jan 2024 2 579 -- -- 23 8,333 -- 24,057 9,007 (8,335) (55)
Net Exchange Difference -- 7 -- -- (35) -- -- -- (20) 261
Additions 9 639 (8,335)
-- -- -- -- --
Transfers from CWIP ^ Disposals --
--
Balance 31 Dec 2024 48 595 347 527 81 110,867 1,618 16,622 130,705
Depreciation
Balance 1 Jan 2024 (41) (320) (9) (106) (122) (420) (12) (24,902) (403) -- (26,220)
1
Net Exchange Difference Charge for the year Disposals 1 (3) 4 (29) 5 (28) -- (4) 449 (4,475) 11 (66) -- 461 (4,711)
Impairment -- -- -- 32 -- -- (6,742) 18 50 (6,742)
--
-- -- -- -- --
--
--
Balance 31 Dec 2024 (44) (435) (146) (412) (16) (35,670) (440) -- (37,162)
4 160 201 115 65 75,197 1,178 16,622 93,543
Carrying amount 31 Dec 2024
Group has leased various assets including land and buildings. As at 31
December 2024, the net book value of recognised right-of use assets relating
to land and buildings was £1.18 million (2023: £ 1.26 million). The
depreciation charge for the period relating to those assets was £ 0.03
million (2023: £ 0.18 million).
Amounts recognised in the statement of income are detailed below:
Particular £000 £000
31 Dec 2024 31 Dec 2023
Depreciation on right-of-use assets 66 177
Interest expense on lease liabilities 161 173
Expense relating to short-term leases -- --
227 350
Computers Office Furniture Vehicles Plant & Machinery Port Right of use Asset Capital Total
Equipment Asset Work in
£000 £000 £000 £000 £000 Progress £000
£000 £000
£000
Gross carrying amount
Balance 1 Jan 2023
49 (3) 570 (34) 472 (91) 626 (38) 63 (4) 110,533 (6,463) 2,035 (123) 24,894 (1,497) 139,242 (8,253)
Net Exchange Difference 1 46 53 5 -- 101 -- 724 (64) 930 (64) (280)
--
Additions -- -- (3) -- -- (24) -- -- -- (253)
Transfers from CWIP ^ Disposals -- -- -- --
Balance 31 Dec 2023 47 579 434 569 59 104,171 1,659 24,057 131,575
Depreciation
Balance 1 Jan 2023
(41) (227) (114) (412) (8) (10,468) (589) -- (11,859)
Net Exchange Difference Charge for the year Disposals
Impairment 3 (3) 17 (111) 19 (27) 26 (47) -- (4) 616 (5,197) 110 (177) -- 791 (5,566)
-- 1 -- 13 -- -- (9,853) 253 267 (9,853)
--
-- -- -- -- -- --
--
--
Balance 31 Dec 2023 (41) (320) (122) (420) (12) (24,902) (403) -- (26,220)
6 259 312 149 47 79,269 1,256 24,057 105,355
Carrying amount 31 Dec 2023
The Group has leased various assets including land and buildings. As at 31
December 2023, the net book value of recognised right-of use assets relating
to land and buildings was £ 1.26 million (2022: £ 1.45 million). The
depreciation charge for the period relating to those assets was £ 0.18
million (2022: £ 0.26 million).
Movable Assets taken against loan provided as security
· The following asset are provided as security for lease liability
payable as described in Note 20:
£000 £000
31 Dec 2024 31 Dec 2023
Vehicles 115 150
227 350
The vehicles, which are free from encumbrances, will also form as a
subservient charge of hypothecation towards securitisation of debt.
All other immovable and movable property with a carrying value of £
93,895,239 (2023: £105,268,233) is under hypothecation in favour of the "Term
lenders".
The Port facility being developed in India has been hypothecated by the Indian
subsidiary as security for the bank borrowings (revised outstanding as at 31st
December 2024 as against the borrowing limit sanctioned in 2021 as per OTR is
INR 460 crore [£ 42.80 million] (2023: INR 460 crore (£43.36 million)) for
part financing the build out of the facility.
The Indian subsidiary has estimated the total project cost of INR 1,404 crore
(£138.10 million) towards construction of the port facility. Out of the
aforesaid project cost, the contract signed with the major contractor is INR
1,049 crores (£105.21 million). As of 31 December 2024, the contractual
amount (net of advances) of INR 48.03 crores (£4.82 million) work is
unexecuted. There were no other material contractual commitments.
11.(b) INTANGIBLE ASSETS
I Intangible Asset Software
£000
£
Gross carrying amount
Balance 1 Jan 2024 96 (1)
--
Exchange Difference
--
Additions
--
Transfers from CWIP ^ Disposals
Balance 31 Dec 2024 95
Depreciation
Balance 1 Jan 2024 (33)
Exchange Difference Charge for the year Disposals -- (29)
--
Balance 31 Dec 2024 (62)
Carrying amount 31 Dec 2024 33
Intangible Asset Software
£000
Gross carrying amount
Balance 1 Jan 2023 33 (1)
--
Exchange Difference
64
Additions
--
Transfers from CWIP ^ Disposals
Balance 31 Dec 2023 96
Depreciation
Balance 1 Jan 2023 (19)
Exchange Difference Charge for the year Disposals 1 (15)
--
Balance 31 Dec 2023 (33)
Carrying amount 31 Dec 2023 63
12. TRADE AND OTHER RECEIVABLES
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Deposits 805 1,043
Advances
- Related Party 3,823 4,113
- Others 6,142 9,297
Accrued Interest of fixed deposits 6 3
Debtors
- Related Party -- --
- Prepayment 45 95
- Trade debtors 2,502 1,788
Less: Provision for doubtful debts (26) --
Total 13,296 16,339
Advances include payment to EPC contractor of £ Nil (2023: £ 6.16 million)
towards mobilisation advances and quarry development. These advances will
either be recovered as a deduction from the invoices being raised by the
contractor over the contract period or refunded.
'Advances to Related Party' include receivables towards share application
money of £ 3.82 million (Dec 2023: £ 4.11 million).
Break down of Trade Debtors:
£ 1.84 million (2023: £ 1.32 million) receivable from the single major
customer, which includes £0.03 million (2023: £ 0.02 million) which is past
due for 180 days' (2023: 30 days') management estimate that amount is fully
realisable however, provision of £ 0.03 million (2023: Nil) for expected
credit loss is made for the same amount.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivable.
To measure expected credit losses on a collective basis, trade and other
receivables are grouped based on similar credit risk and aging. The assets
have similar risk characteristics to the trade receivables for similar types
of contracts.
The expected loss rates are based on the Group's historical credit losses
experienced. The historical loss rates are then adjusted to reflect current
and forward-looking information, any known legal and specific economic
factors, including the credit worthiness and ability of the customer to settle
the receivables.
The Group renegotiations or modifications of contractual cash flows of a
financial asset, which results in de- recognition, the revised instruments are
treated as a new or else the group recalculates the gross carrying amount of
the financial asset.
13. INVESTMENTS
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Deposits 180 173
Total 180 173
*Deposits are placed under lien against Bank Guarantees issued by bank on
behalf of the group to various Government Authorities and the Debt Service
Reserve (DSR) as per the loan agreement with lenders. The fair value of
short-term deposits is £ 0.18 million (2023: £ 0.17 million).
14. CASH AND CASH EQUIVALENTS
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Cash at bank and in hand 911 2,881
Total 911 2,881
Cash at bank earns interest at floating rates based on bank deposit rates. The
fair value of cash at bank and in hand is £ 0.91 million (2023: £ 2.88
million).
Included in cash and cash equivalents is £ 0.28 million (2023: £ 0.71
million) that is within a bank account in the name of Hunch Ventures
(Karanja), as a result of the 2018 and 2021 share sale. The Company is the
beneficiary of the account. During the year, we have been able to draw money
out of this account to cover working capital throughout the year.
15. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and interest rate risk), credit risk and liquidity
risk. The Board of Directors carries out risk management.
(a) Market Risk
(i) Translation risk
Foreign currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate because of changes in market foreign
exchange rates. The Company's functional and presentation currency is the UK
Sterling (£). The functional currency of its subsidiary Karanja Terminal
& Logistics Private Limited (KTLPL) is INR and functional currency of
Karanja Terminal & Logistics (Cyprus) Ltd. is Euro.
The exchange difference arising due to variances on translating a foreign
operation into the presentation currency results in a translation risk. These
exchange differences are recognised in other comprehensive income. As a
result, the profit, assets and liabilities of this entity must be converted to
GBP in order to bring the results into the consolidated financial statements.
The exchange differences resulting from converting the profit and loss account
at average rate and the assets and liabilities at closing rate are transferred
to the translation reserve.
While consolidating the Indian subsidiary accounts the group has taken closing
rate of GBP 1: INR 107.4645 for
SOFP items and for profit and loss item GBP 1: INR 106.9890.
This balance is cumulatively a £ 31.93 million losses to equity (2023: £
31.44 million loss). This is primarily due to a movement from approximately
1:70 to 1:100 between 2010 to 2013 and the translation reserve reaching a loss
of £ 21.6 million at 31 December 2013 and further increase in translation
reserve from £ 21.6million to £
31.93 million due to appreciation of GBP against INR during the period 2018 to
2024. The closing rate at 31
December 2024 was GBP1: INR 107.4645, hence as compared to the translation
loss reported between 2018-
19, the same is insignificant in 2024. With the majority of funding now in
India this risk is further mitigated. During
2024, the average and year-end spot rate used for INR to GBP were 106.9890 and
107.4645 respectively (2023:
102.7267 and 106.1053).
Translation risk sensitivity
The foreign currency risk management are referring to is the translation of
the Indian subsidiary from INR to GBP, which impacts on the translation
reserve through OCI. As such this is not considered relevant to the disclosure
requirements of IFRS 7.
The amounts included in KTPL are all denominated in INR (including the loan)
which is disclosed as the functional currency and the amounts in MPL parent in
GBP which is disclosed. As such there isn't considered to be any material
foreign currency risk.
(ii) Interest rate risk
Interest rate risk is the risk that the future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The
Group's exposure to the risk of changes in market interest rates relates
primarily to the Group's long-term debt obligations with floating interest
rates.
The base rate set by the bank may be changed periodically as per the
discretion of the bank in line with Reserve Bank of India (RBI) guidelines.
Based on the current economic outlook and RBI Guidance, management expects the
Indian economy to enter a lower interest rate regime as moderating inflation
will enable RBI and the banks to lower the base rate in the near future.
Interest rate sensitivity
At 31 December 2024, the Group is exposed to changes in market interest rates
through bank borrowings at variable interest rates. The exposure to interest
rates for the Group's money market funds is considered immaterial.
The following table illustrates the sensitivity of profit to a reasonably
possible change in interest rates of +/ - 1% (2022: +/- 1%). These changes are
considered to be reasonably possible based on observation of current market
conditions. The calculations are based on a change in the average market
interest rate for each period, and the financial instruments held at each
reporting date that are sensitive to changes in interest rates. All other
variables are held constant.
Year Profit for the Year Equity, net of tax
£000 £000
+1% -1% +1% -1%
31 December 2024 (622) 622 (460) 460
(b) Credit Risk
Credit risk is the risk that a counterparty fails to discharge an obligation
to the Group. The Group's maximum exposure (£ 7.58 million (2023: £ 9.16
million)) to credit risk is limited to the carrying amount of financial assets
recognised at the reporting date.
The Group determines credit risk by checking a company's creditworthiness and
financial strength both before commencing trade and during the business
relationship at initial recognition and subsequently. Customer credit risk is
managed by the Company's established policy, procedures and control relating
to customer credit risk management. Credit quality of a customer is assessed
based on an extensive evaluation and individual credit limits are defined in
accordance with this assessment.
The Group's policy is to deal only with creditworthy counterparties. The Group
has no significant concentrations
of credit risk.
The Group considers default to be when there is a breach of any of the terms
of agreement.
The Group writes off a financial asset when there is no realistic prospect of
recovery and all attempts to recover the balance have been exhausted. An
indication that all credit control activities have been exhausted and where
the asset due is greater than 365 days old or where there are insolvency
issues relating to the trade and other receivables.
The Group does not concentrate any of its deposits in one bank. This is seen
as being prudent and credit risk is managed by the management having conducted
its own due diligence. The balances held with banks are on a short-term basis.
Management reviews quarterly bank counter-party risk on an on-going basis.
(c) Liquidity Risk
Liquidity risk is the risk that the Group might be unable to meet its
financial obligations. Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities.
The current term loan availed by the Indian subsidiary, a proposal for
restructuring submitted in February 2023, could not be concluded favourably
and hence the Indian subsidiary made revised proposal for One Time Settlement
in March, 2025 and is under consideration at the Head office of the lead
lender.
The Group is in an advanced stage of negotiation with the current consortium
of lenders and is confident of obtaining a favourable response from the
lenders shortly.
The Group's objective is to maintain cash and demand deposits to meet its
liquidity requirements for 30 -day periods at a minimum. This objective was
met for the reporting periods. Funding for build out of the port facility is
secured by sufficient equity, sanctioned credit facilities from lenders and
the ability to raise additional funds due to headroom in the capital
structure.
The Group manages its liquidity needs by monitoring scheduled contractual
payments for build out of the port facility as well as forecast cash inflows
and outflows due in day-to-day business. Liquidity needs are monitored and
reviewed by the management on a regular basis. Net cash requirements are
compared to available borrowing facilities in order to determine headroom or
any shortfalls. This analysis shows that available borrowing facilities are
expected to be sufficient over the lookout period.
Comparative working of the Group's non-derivative financial liabilities have
contractual maturities (and interest payments) as summarized below:
As at 31 December 2024:
Principal Payments Interest Payments
Payment falling due INR in Crore £000 INR in Crore £000
Within 1 year 127 11,851 187 17,380
1 to 5 years 306 28,461 67 6210
After 5 years -- -- -- --
Total 433 40,312 254 23,590
The above table represents the current loan which is active and does not
include the impact of the re-structuring proposal under consideration.
The present composite rate of interest ranges from 8.00% to 11.50% and closing
exchange rate has been considered for the above analysis.
In addition, the Group's liquidity management policy involves considering the
level of liquid assets necessary to meet the funding requirement; monitoring
SOFP liquidity ratio against internal requirements and maintaining debt
financing plans. The current debt equity ratio with the lenders is 0.92:1.
As a part of monitoring SOFP liquidity ratio, management monitors the
debt-to-equity ratio and has specified optimal level for debt-to-equity ratio
of 1:1.
As at 31 December 2023:
Principal Payments Interest Payments
Payment falling due INR in Crore £000 INR in Crore £000
Within 1 year 70 6,584 76 7,186
1 to 5 years 316 29,794 99 9,370
After 5 years 37 3,512 4 338
Total 423 39,890 179 16,894
The present composite rate of interest ranges from 8.00% to 11.50% and closing
exchange rate has been considered for the above analysis.
In addition, the Group's major stake holder - Hunch Ventures has taken the
initiative of arranging the funds to cater to the One Time Settlement proposal
underway with the Lenders to the Indian subsidiary. Furthermore, there is a
credit line facility of £15.00 million also made available by Hunch Ventures
to the Indian subsidiary to mitigate any liquidity shortfall.
The current debt equity ratio with the lenders is 0.92: 1.
As a part of monitoring SOFP liquidity ratio, management monitors the
debt-to-equity ratio and has specified optimal level for debt-to-equity ratio
of 1:1.
Financial Instruments
Fair Values
The different levels per the IFRS 13: Fair Value Measurement fair value
hierarchy have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or
liabilities;
Level 2: Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices);
Level 3: Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs)
Set out below is a comparison by category of carrying amounts and fair values
of the entire Group's financial instruments that are carried in the financial
statements.
Payment falling due Notes Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Financial Assets at Amortised Cost
Trade and other receivables 12 6,492 6,102
Investments 13 180 173
Cash and cash equivalents 14 911 2,881
Total 7,583 9,156
Financial Liability at Amortised Cost
Borrowings 19 50,498 47,071
Trade and other payables 20 4,048 4,131
Lease liabilities 20 1,796 1,792
Total 56,342 52,994
All the financial assets and financial liabilities are considered to be level
1, except for borrowings which are level 2.
The fair value of the Group's financial assets and financial liabilities
significantly approximate their carrying amount as at the reporting date.
The carrying amount of financial assets and financial liabilities are measured
at amortised cost in the financial statements are a reasonable approximation
of their fair values since the Group does not anticipate that the carrying
amounts would be significantly different from the values that would eventually
be received or settled.
Maturity profile of financial liabilities
Within 1 year 1-2 years 2-5 years More than 5 years Total
£000 £000 £000 £000 £000
As at 31 December 2024
Borrowings 22,037 7,223 21,238 -- 50,498
Interest on borrowings 17,380 2,723 3,486 -- 23,589
Trade and other payables 4,048 -- -- -- 4,048
Lease liabilities (including vehicle loan) 590 188 492 526 1,796
As at 31 December 2023
Borrowings 10,672 5,419 27,886 3,094 47,071
Interest on borrowings 7,186 3,419 5,951 338 16,894
Trade and other payables -- -- -- -- 4,131
Lease liabilities (including vehicle loan) 507 232 527 5,060 6,326
16. EQUITY
16.1 Issued Capital
The share capital of MPL consists only of fully paid ordinary shares of no-par
value. The total number of issued and fully paid-up shares of the Company as
on each reporting date is summarised as follows:
Year ended Year ended
Particulars 31 December 24 31 December 23
No of shares £000 No of shares £000
Shares issues and fully paid: Beginning of the year Addition in the year#
Share issue cost
356,312,692 152,354 41,499,699 143,851
Closing number of shares
-- -- 314,812,993 9,444 (941)
-- -- --
356,312,692 152,354 356,312,692 152,354
The issued capital amounts to £152.35 million (2023: £152.35 million) after
reduction of share issue costs. Holders of the ordinary shares are entitled to
receive dividends and other distributions and to attend and vote at any
general meeting. During the year the Company has allotted Nil (2023: 314.81
million) equity shares to various institutional and private investors, by way
of a rights issue.
The Company has recognized the services received in a share-based payment
transaction when the services are received in accordance with IFRS 2 -
Share-based payment in year 2023.
Shares issued during the previous year includes 13,359,166 for value shares £
400,775 issued to Cavendish Financial PLC (erstwhile known as Cenkos
Securities PLC) as the consideration for the fair value of services rendered
pertaining to private placement of shares.
The transaction costs are incremental costs directly attributable to the
equity transaction that otherwise would have been avoided and have therefore
been accounted for as a deduction from equity.
16.2 Other Components of Equity
Retained Earnings
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Opening Balance (47,217) (26,022)
Addition during the year (18,630) (21,222)
Re-measurement of net defined benefit liability 1 27
Closing balance (65,846) (47,217)
Accumulated losses of £ 65.85 million (2023: £ 47.22 million) include all
current year retained profits.
Translation Reserve
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Opening Balance (31,444) (26,429)
Addition during the year (460) (5,015)
Closing balance (31,904) (31,444)
The translation reserve of £ 31.90 million (2023: £ 31.44 million) is on
account of exchange differences relating to the translation of the net assets
of the Group's foreign operations which relate to subsidiaries, from their
functional currency into the Group's presentational currency being Sterling.
17. EMPLOYEE BENEFIT OBLIGATIONS
Non-Current Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Pensions - defined benefit plans 42 35
Total 42 35
Current
Wages, salaries 250 267
Pensions - defined benefit plans 9 9
Total 259 276
18. BORROWINGS
Borrowings consist of the following:
Non-Current Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Bank loan (refer to note 27) 28,461 33,305
Loan from others* -- 3,094
Total 28,461 36,399
Current
Bank loan (refer to note 27) 11,851 6,564
Interest payable 10,186 4,088
Total 22,037 10,672
The term loan facility currently is as per existing sanction which was issued
on 10 June 2021 against which the quarterly principal repayments for the
entire 2023 is overdue, and the interest on these facilities is overdue from
March 2023 till December 2024. The interest rate on term loan is 10.55%, on
FITL is 11.55% and GECL is 8%.
The restructuring proposal submitted to the consortium of lenders in February
2023 was not concluded in favour
of the Indian Subsidiary, as communicated in August 2024. In accordance with
the lenders' credit assessment, the loan account was subject to a downgrade in
classification, retrospectively applied from 11th June 2021.
MPL board along with the Indian subsidiary have submitted a proposal for One
Time Settlement closer to the book value of the total debt.
* Loan from others: This amount pertains to unsecured loan from Grevek
Investments & Finance Pvt. Ltd.
19.(a) CURRENT TAX ASSETS
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Income tax* 2,879 2,114
Current tax assets 2,879 2,114
The income tax pertains to self-assessment tax as well as withholding taxes
paid for the assessment years 2011-12 to 2024-25.
The Indian subsidiary has received the refund order for the Assessment years
2011-12 as well as 2012-13 and is expected to be transferred to the bank
account shortly.
(Refer Note 25 for disclosure of Contingent liabilities in respect of these
matters).
19.(b) CURRENT TAX LIABILITIES
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Duties and taxes 17 61
Current tax liabilities 17 61
The Group recognises liabilities for anticipated tax issues based on
assessment of whether additional taxes will be due, and whether it is probable
that the relevant authority will accept each tax treatment, or group of tax
treatments, that it used or plans to use in its income tax filing.
Where the outcome of assessment by the Income Tax department on these matters
is different from the amounts that were initially recorded, such differences
will impact the income tax provisions in the period in which such
determination is made. The Group discharges the tax liability based on income
tax assessment.
Based on the judgements passed by Income Tax Tribunal in favour of the Indian
Subsidiary for the assessment years 2013-14 to 2015-16, the Commissioner of
Income Tax - CIT-(A) has relied upon the ITAT judgement and issued order in
favour of the Indian subsidiary for the assessment years 2011-12 and 2012-13
as well.
20. TRADE AND OTHER PAYABLES
Trade and other payables consist of the following:
Non-Current Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Lease liability (refer to note 27) 1,206 1,457
Current
Lease liability (refer to note 27) 590 335
Trade Creditors 4,048 4,131
Future minimum lease payments at 31 December 2024 were as follows -
Minimum lease payments due in £000
Within 1 - 2 2 - 3 3 - 4 4 - 5 After 5 Total
1 year Year Year Year Year Year
Lease payments 753 188 174 159 159 4,551 5,984
Finance charges (163) (159) (155) (155) (154) (3,402) (4,188)
Net present values 590 29 19 4 5 1,149 1,796
Future minimum lease payments at 31 December 2023 were as follows -
Minimum lease payments due in £000
Within 1 - 2 2 - 3 3 - 4 4 - 5 After 5 Total
1 year Year Year Year Year Year
Lease payments 507 232 190 176 161 5,060 6,326
Finance charges (172) (165) (161) (158) (157) (3,721) (4,534)
Net present values 335 67 29 18 4 1,339 1,792
21. RELATED PARTY TRANSACTIONS
The consolidated financial statements include the financial statements of the
Company and the subsidiaries listed in the following table:
Name Country of incorporation Field activity Ownership interest Type of share held
HELD BY the Company (MPL):
Karanja Terminal & Logistics (Cyprus) Ltd. Cyprus Holding company 100% Ordinary
Karanja Terminal & Logistics Private Ltd. India Operating company - Terminal Project 8.49% Ordinary
HELD BY Karanja Terminal & Logistics (Cyprus) Ltd:
Karanja Terminal & Logistics Private Ltd. India Operating company-Terminal Project 91.30% Ordinary
The Group has the following related parties with whom it has entered into
transactions with during the year.
a) Shareholders having significant influence
The following shareholders of the Group have had a significant influence
during the year under review:
· Lord Howard Flight holds 0.18% of issued share capital as on 31
December 2024 (as on 31 December 2023 - 0.18%) of Mercantile Ports &
Logistics Limited at the year end.
· Jay Mehta holds 0.97% of issued share capital as on 31 December
2024 (as on 31 December 2023 - 0.99%) of Mercantile Ports & Logistics
Limited at the year end.
· John Fitzgerald holds 0.35% of issued share capital as on 31
December 2024 (as on 31 December 2023 - 0.18%) of Mercantile Ports &
Logistics Limited at the year end.
· Jeremy Warner Allen holds 1.08% of issued share capital as on
31 December 2024 (as on 31 December 2023 - 1.08%) of Mercantile Ports &
Logistics Limited at the year end.
· Dimitry Tsvetkov holds 0.26% of issued share capital as on 31
December 2024 (as on 31 December 2023 - 0.26%) of Mercantile Ports &
Logistics Limited at the year end.
· Karanpal Singh via Hunch Ventures and Investments Private Limited
holds 38.40% of issued share capital as on 31 December 2024 (as on 31 December
2023 - 38.40%) of Mercantile Ports & Logistics Limited at the year end.
b) Key Managerial Personnel of the parent
Non-executive Directors
- Mr. John Fitzgerald
- Jeremy Warner Allen
- Karanpal Singh
- Amit Dutta
- Dmitri Tsvetkov
Executive Directors
- Mr. Jay Mehta (Managing Director)
c) Key Managerial Personnel of the subsidiaries
Directors of KTLPL (India)
- Mr. Jay Mehta
- Mr. Rakesh Bajaj
Directors of Karanja Terminal & Logistics (Cyprus) Ltd - KTLCL (Cyprus)
- Ms. Andria Andreou
- Ms. Chrystalla Stavrou
d) Other related party disclosure
Entities that are controlled, jointly controlled or significantly influenced
by, or for which significant voting power in such entity resides with,
directly or indirectly, any individual or close family member of such
individual referred above.
- Athos Hq Group Bus. Ser. Cy Ltd
- John Fitzgerald Limited
- KJS Concrete Private Limited
- Himangini Singh
- Fiona Gupta
e) Transaction with related parties
The following transactions took place between the Group and related parties
during the year ended 31 December 2024
Nature of transaction Year ended Year ended
31 Dec 24
£000
31 Dec 23
£000
Athos Hq Group Bus. Ser. Cy Ltd Administrative fees 23 10
23 10
The following table provides the total amount outstanding with related parties
as at year ended 31 December 2023:
Transactions with Key Managerial Personnel of the subsidiaries
See Key Managerial Personnel Compensation details as provided below - Advisory
services fee
None.
Compensation to Key Managerial Personnel of the parent
Fees paid to persons or entities considered Key Managerial Personnel of the
Group include:
Non-Executive Fees Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Lord Flight -- 36
John Fitzgerald 45 45
Jeremy Warner Allen 40 40
Amit Dutta 35 35
Dmitri Tsvetkov 45* 45*
Total 165 201
Executive Director Fees
Jay Mehta 144 88
Total compensations paid to Key Managerial Personnel 309 289
* Includes £ 10,000 (2023: £ 10,000) paid as sitting fees to Dmitri
Tsvekov for attending Audit Committee meetings.
Compensation to Key Managerial Personnel of the subsidiaries
Directors' fees Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
KTLCL - Cyprus 3 3
Transactions with shareholders / entity having significant influence
Nature of Transaction Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Provision created for doubtful advances for advance given to SKIL Provision for doubtful advances -- 107
Infrastructure Ltd.
Shares issued to Hunch Ventures and Investment Limited Share subscription -- 3,750
Shares issued to Jay Mehta Share subscription -- 100
Other payables
As at 31 December 2024, the Group had Nil (2023: £3.09 million) as payable to
related parties
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Grevek Investment & Finance Private Ltd. -- 3,094
Receivable from the shareholders having significant influence
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Debtors Advances 107 107
Less: provision for doubtful advances Hunch Ventures and Investment Limited* (107) (107)
Advances recoverable in cash or in kind Advances 3,823 4,113
3,823 4,113
*At the time of the placing and subscription in August 2021, the Company
intended for the proceeds of the fundraising to be held in the Company's bank
account in Guernsey. The subscription monies from Hunch Ventures required
Reserve Bank of India ("RBI") approval in order to be remitted to Guernsey.
However, at the time of the Company's General Meeting on 9th September 2021,
the Company confirmed that it had directed Hunch Ventures to transfer the
subscription monies to one of the Company's Indian bank accounts and that was
done.
Subsequently, the Board resolved that it did wish the funds to be transferred
to Guernsey and, as a result, requested that Hunch Ventures pursue the "RBI
approval" route once more. In pursuing this, Hunch Venture's bank required the
subscription monies to be transferred to Hunch Venture's account so that
application could be made for the funds to be moved to Guernsey.
The Company is able to rely on the support documentation to the RBI process,
put in place at the time of Hunch Ventures' original investment in 2018. It
should be noted that the Company continues to have access to the Subscription
monies and, since the period end, has accessed these funds.
Given the time being taken to receive RBI approval, the Company and Hunch
Ventures have received advice on an alternative structure to achieve the
Company's desired treasury requirements, without the requirement to receive
RBI approval.
Ultimate controlling party
The Directors do not consider there to be an ultimate controlling party.
22. CASH FLOW ADJUSTMENTS AND CHANGES IN WORKING CAPITAL
The following non-cash flow adjustments and adjustments for changes in working
capital have been made to profit before tax to arrive at operating cash flow:
Non-Cash flow Adjustments Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Depreciation 4,750 5,581
Impairment Loss 6,772 9,853
Finance Income (34) (25)
Finance cost 7,291 6,225
Re-measurement of net defined benefit liability (1) (27)
Provision for Gratuity 9 17
Loss on disposal of PPE 1 7
Balances written back (87) (190)
Provision for doubtful advances (26) --
Provision for doubtful advances -- 107
Increase/(decrease) in trade and other payables 422 49
Decrease/(increase) in trade and other receivables *952 *(124)
Current investments (deposits with bank) (7) (173)
Increase in inventory (251) 24
Total 1,116 (224)
* Excludes £ 0.3 million (2023: £ 3.5 million) receivable towards share
application money.
23. CAPITAL MANAGEMENT POLICIES AND PROCEDURE
The Group's capital management objectives are:
· To ensure the Group's ability to continue as a going concern
· To provide an adequate return to shareholders
Capital
The Company's capital includes share premium (reduced by share issue costs),
retained earnings and translation reserve which are reflected on the face of
the Statement of Financial Position and in Note 16.
24. EMPLOYEE BENEFIT OBLIGATIONS
a. Defined Contribution Plan:
The following amount recognized as an expense in statement of profit and loss
on account of provident fund and other funds. There are no other obligations
other than the contribution payable to the respective authorities.
Year ended Year ended
31 Dec 24 31 Dec 23
£000 £000
Contribution to Provident Fund 9 22
Contribution to ESIC 1 2
Total 10 24
b. Defined Benefit Plan:
The Company has an unfunded defined benefit gratuity plan. The gratuity plan
is governed by the Payment
of Gratuity Act, 1972. Under the Act, employee who has completed five years of
service is entitled to specific benefit. The level of benefits provided
depends on the member's tenure of service and salary at retirement age.
Every employee who has completed five years or more of service gets a gratuity
on departure at 15 days' salary (last drawn salary) for each completed year of
service as per the provision of the Payment of Gratuity Act, 1972 with total
ceiling on gratuity of INR 2 million with effect from 29 March 2018.
The significant actuarial assumptions for the determination of the defined
benefit obligation are the discount rate, the salary growth rate and the
average life expectancy. These assumptions were developed by management with
the assistance of independent actuaries. Discount factors are determined close
to each period-end by reference to market yields of high-quality corporate
bonds that are denominated in the currency in which the benefits will be paid
and that have terms to maturity approximating to the terms of the related
pension obligation. Other assumptions are based on current actuarial
benchmarks and management's historical experience. The assumptions used for
the valuation of the defined benefit obligation are as follows:
Key Assumptions
Particulars 31 Dec 24 31 Dec 23
Discount rate Salary growth rate Withdrawal rate 6.90% p.a. 7.40% p.a.
6.00% p.a. 6.00% p.a.
2.00% p.a. at younger ages reducing to 2.00% p.a. at younger ages reducing to
7.00% p.a. at older ages 7.00% p.a. at older ages
The following tables summaries the components of net benefit expense
recognised in the Consolidated Statement of Comprehensive Income and the
funded status and amounts recognised in the Consolidated Statement of
Financial Position for the gratuity plan:
As at As at
Particulars 31 Dec 24 31 Dec 23
£000 £000
Statement of Comprehensive Income
Net employee benefit expense recognised in the employee cost
Current service cost
Interest cost on defined benefit obligation 6 12
Total expense charged to loss for the period 3 4
Amount recorded in Other Comprehensive Income (OCI)
9 16
Opening amount recognised in OCI
Re-measurement during the period due to:
Actuarial (gain) arising from change in financial assumptions Actuarial (gain)
/ loss arising on account of experience changes Amount recognised in OCI
-- (1) -- (27)
Closing amount recognised in OCI
(1) (27)
(1) (27)
Reconciliation of net liability / asset
Opening defined benefit liability 46 59
Expense charged to profit or loss account 9 (1) 15 (27)
Amount recognised in Other Comprehensive (Income)
Closing net defined benefit liability
54 44
Movement in benefit obligation and Consolidated Statement of Financial
Position
A reconciliation of the benefit obligation during the inter-valuation period:
Particulars As at As at
31 Dec 24 31 Dec 23
£000 £000
Opening defined benefit obligation 43 59
Current service cost 6 13
Interest on defined benefit obligation 3 4
Re-measurement during the period due to:
Actuarial (gain) arising on account of experience changes
Actuarial loss / (gain) arising from change in financial assumptions -- (1) -- (27) (2)
Benefits paid --
Closing defined benefit obligation liability recognised in Consolidated
Statement of Financial Position
51 44
Particulars As at As at
31 Dec 23 31 Dec 22
£000 £000
Net liability is bifurcated as follows:
Current 9 9
Non-current 42 35
Net liability 51 44
The present value of the DBO was measured using the Projected Unit Credit
(PUC) method.
The weighted average duration of the defined benefit obligation at 31 December
2023 is 10.67 years (2022:
7.7 years).
25. CONTINGENT LIABILITIES
Particulars As at As at
31 Dec 24 31 Dec 23
£000 £000
Bank guarantee issued to Maharashtra Pollution Control Board towards issuing 30 30
the consent to operate the Port
The Commissioner of Customs - Jawaharlal Nehru Custom House towards the 100 100
collateral for acting as a custodian of the Cargo handled at the Port
There is an ongoing arbitration proceeding initiated by the Indian subsidiary
with the dredging sub-contractor for claiming damages for non-performance
under dredging contract to the tune of ₹214 crores (£19.91 million) and a
counter claim made by the sub- contractor for
₹74.11 crores (£6.90 million) plus additional interest @18% p.a. considered
as contingent.
The matter is under arbitration act in the jurisdiction of Mumbai. Based on
the legal opinion obtained, management is confident that the outcome will be
in favour of the Company.
The counter claim made by the sub-contractor on the Company is considered as a 10,458 7,695
contingent liability.
As of the Balance sheet date the cross examination of the witnesses of the
Claimant is completed and the cross examination of the witnesses of the
respondent is underway.
The Income tax liability to the tune of ₹30.94 crores (£2.88 million)
(exclusive of any interest
or penalties) for the Assessment years from 2013-14 to 2024-25.
MPL group's Indian subsidiary had filed a writ petition in Hon'ble High court
for seeking relief against the order passed by the Income Tax Appellate
Tribunal (ITAT) for the two assessment years 2011-12 and 2012-13, which was
decided in favour of the group's Indian subsidiary.
The Indian subsidiary has received the refund order u/s. 264 read with section
260 of the Income Tax Act for the assessment year 2011-12 as well as 2012-2013
and as such the amount in respect of these two years is no longer considered a
contingent liability.
As per these orders, the matter was sent back to the files of Principal
Commissioner of Income 2,879 4,535
Tax (Appeals) for re-adjudication following the ITAT orders for assessment
years 2013-14 to
2015-16. The status of open litigations for AY 2013-14 to AY 2015-16 remain
unchanged during FY 2023-24 i.e., the matter is yet to be adjudicated and the
outcome of appeal before Hon'ble Bombay High Court is pending.
Cash outflows, if any, is determinable on receipt of judgments pending at
respective authorities.
26. CAPITAL COMMITMENTS
Particulars As at As at
31 Dec 24 31 Dec 23
£000 £000
Estimated value of contracts in capital account in relation to property, plant
and equipment remaining to be executed and not provided for (net of advances)
4,754 4,815
27. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Group's liabilities arising from financing activities can
be classified as follows:
Particulars Long-term borrowing Current Leased liabilities Total
£000 Maturity of long-term borrowing £000
£000 £000
1 January 2024 36,399 10,672 1,792 48,863
Cash-flows:
- Repayment -- (3,094) * -- (161) (161) (3,094)
- Repayment/adjustment of principal -- --
Non-cash:
- Exchange difference (401) (187) (23) (611)
- Accrued during the period -- 6,178 188 6,366
- Interest on term loan
EIR adjustment
932 -- -- 932
- Reclassification
(5,374) 5,374 -- --
31 December 2024 28,461 22,037 1,796 52,295
Particulars Long-term borrowing Current maturity of long-term Leased liabilities Total
£000
£000 borrowing £000
£000
1 January 2023 39,165 2,295 2,428 43,888
Cash-flows:
- Repayment -- (99) (749) (737) (9) (836) (758)
- Accrued during period --
Non-cash:
- Exchange difference (2,382) (267) (129) (2,778)
- Accrued during the period -- 4,981 239 5,220
- Interest on term loan
EIR adjustment
- Reclassification* 1,033 (1,417) *
-- -- 1,033
4,511 -- 3,094
31 December 2023 36,399 10,672 1,792 48,863
* The amount is net of re-classification of Loan from Others £ 3.09 million
from Trade Payables in the previous year to non-current borrowings in the
current year. The £3.1m was advanced as financial assistance during the port
construction due to the delay in disbursement from lenders. As a result of the
cash constraint on account of Covid-19 an agreement was signed 31st May 2023
that the advances will not be called until the company becomes adequately cash
flow surplus or 3 years, whichever is earlier.
28. EVENTS OCCURRING AFTER REPORTING PERIOD
a. New projects / contracts:
· The Indian subsidiary has been successful in performing a trial
run for Afcons Infrastructure Limited and advanced negotiations are underway.
· Contract with Shiny Shipping and Logistics Pvt. Ltd. which is
handling the Edible Oil cargo for Indian Oil Corporation Ltd for discharging
and distribution locally. The initial contract is for 36 months and the
contract value is £1.40 million (₹14.94 crores).
· Ambuja Cement Limited which had temporarily stopped its
operations in 2024 has recommenced its discharging operations at Karanja Port
effective April 2025.
b. Status of the Term Loan proposal:
b) The Indian subsidiary has submitted a letter dated 24th March 2025 to the
consortium of lenders for a
One Time Settlement (OTS) closer to book value of the total debt and the
lenders are perusing the same.
c. Income Tax Refund for AY 2011-12 & AY 201-13
Out of the Total refund due of £2.70 million (₹28.84 crores), the Indian
Subsidiary has received £1.0 million (₹10.19 crores) refund in the first
quarter of 2025.
29. AUTHORISATION OF FINANCIAL STATEMENTS
The consolidated financial statements for the year ended 31 December 2024 were
approved and authorised for issue by the Board of Directors as on 27 June
2025.
For further information, please visit www.mercpl.com
(https://www.mercpl.com/) or contact:
MPL c/o SEC Newgate
+44 (0) 20 3757 6880
Cavendish Capital Markets Limited Stephen Keys
(Nomad and Broker) +44 (0) 207 220 0500
SEC Newgate Elisabeth Cowell/ Bob Huxford
(Financial Communications) +44 (0) 20 3757 6880
mpl@newgatecomms.com
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