rally-in-logistics-stocks-is-here-to-stay:
some not so encouraging update:
Lately, there have been some concerns about the debt of KTIL, majority of which is for subsidiary KMLL and the fact that Q2FY14 reports discloses only standalone results only adds to this. Apart from this, I had few other concerns regarding status of the other expansion projects at Pipavav and Kakinada as there is no concrete info. available on these in public domain, so I wrote to IR/CS for clarifications on these issues after confirmation from him that he would be willing to address the same.
After evading the reply for many days and only after much follow up with him, he replied with the latest AR saying that the questions are self explanatory and all the info. is available in AR :). When I again followed up with him saying that the questions that are sent are prepared only after studying all the ARs of KTIL since its spin-off (which of course he knew already) and are very much general in nature and only if he would have cared to even go through each of the Qs, he would have already known, to which he came back saying that the mgmt wants to disclose only this much info. at the moment!
After this, I again sent an email asking for KMLL reports to which he replied that KTIL has chosen only to publish standalone results for first 3 quarters and only in 4th quarter consolidated reports will be available. He said that KMLL is a subsidiary and its reports are not prepared on quarterly basis.
Now considering the fact that the majority of the capex is going to be incurred on KMLL and mgmt is reluctant to disclose even materially very significant info. is a big negative, IMHO.
Views invited.
Hi aksh,
The publishing of consolidated results only at the year end is not uncommon. Many good managements also do that. Symphony is one example if I am not wrong. The first problem that you mentioned can however be a bad thing.
Hi Rohit,
I donât really think that just because itâs not uncommon and there are few or many companies following it, itâs good for us and I didnât ask for the consolidated reports, but the standalone reports of the subsidiary KMLL, to which he replied that, they donât prepare quarterly reports for subsidiary KMLL. Now when majority of capex is being done on KMLL, isnât this weird that you donât account for that or at least you donât want investors to know that?
As per the information I managed to glean from the company at the AGM, all projects at Pipavav and kakinada have been put on hold as the management is concentrating on the Pawarkheda project. They were doing only basic maintenance work like building a compound wall at Pipavav.
CMD said management is targeting maximum D/E ratio of 3 though some of the investors felt it could even go upto 4. It is a big risk because we still do no know how much total debt is being taken. However, management is building cold storages and agriculture-related ware houses because interest rates for this business is lower.
Phase 1 is complete and they seem to have speeded up work on Phase II as well. They have already begun to rent out warehouses and demand for the same is exceeding supply. The railway siding to handle container was almost completed by October but clearance from the rail ministry was holding up its inauguration. Management was enthusiastic about the response from the state government but felt that the rail ministry was quite laggard.
The KMML project at Pawarkheda is likely to be commissioned in the fourth quarter and the debt incurred and interest payable will reflect in the books from the fourth quarter.
The management indicated that they are keen on folding the entire logistics business in the Kesar Terminals company but had to partner with Kesar Enterprises to set up the project because the formerâs equity was quite low. But with the company growing fast, future projects will be set up under KTML.
I asked them specifically whether they would demerge KMML from the parent company. The answer was no because the multimodal biz was also in the logistics biz like the liquid terminals business. I also understood that the management was looking to lease land from other state governments to set up similar multimodal logistics businesses if the opportunity presented itself.
Right now, though, their entire focus is on Pawarkheda because it is several times the parent business.
Isnât it materially significant info.,to hold projects at Pipavav and Kakinada, and should have been disclosed to the exchanges? The latest publicly available info. as per the latest AR, speaks of these projects going well! Doesnât this casts a shadow of doubts on the mgmt regarding timely disclosures of materially significant info.?
The problem is that there isnât much of the info. available from the authentic source so I thought, itâs worthwhile, to hear it from the horseâs mouth rather than relying on hearsay which might have been propagated by vested interests. But the mgmt, plainly, refused to entertain any of the questions which were likeâŚ
Whatâs the status of projects at Pawarkheda, Pipavav and Kakinada? Whatâs the status of phase-1 at pawarkheda? how much of the total project is to be completed in phase-1? How the project is to be financed? etc.
And if, as may be rightly mentioned that, the entire focus of the mgmt is on pawarkheda project, because it is several times the parent business, isnât it so much weird that, as per them, they donât account for that on quarterly basis? And that they canât make it available to the public on standalone basis, may be even without audit?
IMHO, the biggest risk is not the debt but the speed of execution of pawarkheda project as govt. institutions are major stakeholders in the project and we all know how lethargically the govt. machinery works in India. It is also very important to know the kind of final agreement reached between KMLL and Mandi Board, which is not available, as some adverse clause in the agreement might impact investment merits big time.
The last time I spoke with Mandi official, I was informed that there are some delays and phase-1 hopefully will be completed by end of current FY.
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Awesome results by KTIL. KMLL story yet to begin. Q4 should start reflecting the same.
Is there any update from the management about mandi project status update
As it is debated FM is going to impose customs duty (3%) on crude, does it have any impact on the Business Model of KTIL. (Leaving aside KMLL)
Thanks
Management decided to postpone declaration of interim dividend this year amidst indications of delay in clearance from the railways. As of now it is not clear if the clearance has come through. But the management is already earning revenues by renting out warehouses to companies.
Shiv looks like you are among the few who has been following the company for long. I have been trying to find the background of the promoters and the nameKilachand is also associated with the infamous group which are promoters of companyâs like Polychem,Synthetics and Chemicals andGujarat Poly AVX Electronics. The office of this Kilachand is just one floor below the office given by Kesar EnterprisesOriental House, 5th Floor, 7 Jamshedji Tata Road,Churchgate Reclamation,Mumbai, Maharashtra - 400020 is for polychem Kilachand while the Kesar groups address is Oriental House, 6th Floor, 7 Jamshedji Tata Road,Churchgate Reclamation,Mumbai, Maharashtra â 400020.
I am not able to connect the dots how are these two related?
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i think these are the same kilachands. will find out and update.
KTIL has announced not so good Q4 nos and 3.5 Rs. dividendâŚ
And some interesting developmentsâŚPhase-1 of Composite Logistics Hub project at pawarkheda to be inaugurated by Arun Jaitley in the presence of CM tomoro 30th May 2015.
I think the rationale behind investment in KTIL was growth of KMLL (pawarkheda project). Since it is being inaugurated today, September quarter onwards shall show good growth in both top and bottom line.
And that is why, I believe, this quarterâs numbers are somewhat insignificant.
The interest payment will also go up from June or September 15 quarter⌠One should take cognisance of that⌠But, over a period of 1-2 years this should do wellâŚ
Note: Have vested interest from lower levelsâŚ
So finallyâŚthe GAME is on!!
KMLL has officially kicked off today. I am going to keep tracking the activities and traffic at KMLL every month. These are exciting times for us all.
Our baby is finally growing up. Lets hope phase 1 of kmll progresses very well and phase 2 starts off in time as well.
I am told the government is very keen on this KMLL project as its supposed to create thousands of jobs. Its a project close to Mr.Chauhans heart and politically very important. I cannot believe our company is heading such a prestigious and landmark project in MP.
Please keep updating with any and every detail. Fingers crossed. If all goes well, I think the stock will go bananas in a years time.
Cheers everyone.
Neil Bahal.
may i ask how will u track on monthly basis. do u live in proximity
No buddy. But as an investor, we need to either send someone to do the checking regularly or find someone locally to give inputs.
Any negative news⌠or just going down because of market correction⌠Seems like market didnt take kmml story in a good way
At Rs 326 the its available at a PE of nearly 12. Valuations certainly look interesting.
However, not very clear as to why the share is sliding, is there something that we are not aware of ???