Mangalam Cement Limited (MCL) has taken decisive action following the non-delivery of a significant petroleum coke shipment, filing an insurance claim for approximately $5.4 million. The company disclosed this material event in a recent filing with the stock exchanges, shedding light on a complex international trade situation.

The Deal and Its Complications

MCL entered into an agreement with AUM Commodities FZCO, a Dubai-based company, to procure 55,000 metric tons (MT) of Green Delayed Petroleum Coke from Venezuela. The deal, valued at $99.90 per MT CIF (Cost, Insurance, and Freight), was set to be a significant procurement for the cement manufacturer.

MCL opened irrevocable letters of credit totaling $5,398,255.00, representing 90% of the cargo's value, as per the terms of the sale contract. The cargo was reportedly loaded at Jose Terminal, Venezuela, destined for Kandla Port in India.

The Non-Delivery and Legal Actions

Despite the completion of loading, the shipment has not reached its intended destination at Kandla Port. This non-delivery prompted MCL to take several actions to protect its interests:

1. Insurance Claim: MCL filed a formal claim with Liva Insurance B.S.C.(c) for $5,371,263.92, plus interest and costs. This amount represents the cargo payment sum less a 0.5% excess.

2. Legal Demands: The company, through its English solicitors in Hong Kong, has issued letters of demand to various parties involved in the transaction. These include:

   • Huanshan HK Limited of Hong Kong (the contractual carrier)
   • Mr. Cao Yuli of Hubei Province, China (the Ultimate Beneficial Owner)
   • Safe Ships Ltd of Qingdao, China (the Ship Managers)
   • Viraaje Shipping FZCO of Dubai (the Charterers)
   • Mr. Stavros Moussoyannis of East Mediterranean Marine Ship Management and Operation LLC of UAE (the Ship Brokers)

Financial Performance Amid Challenges

Despite these logistical challenges, Mangalam Cement has reported strong financial results for the quarter ended June 30:

The company has shown significant year-over-year growth, with net profit nearly doubling compared to the same quarter in the previous fiscal year.

Looking Ahead

As Mangalam Cement navigates through this complex situation, the company continues to take necessary steps to protect its interests and those of its insurers. The outcome of the insurance claim and legal actions will be closely watched by stakeholders and could have implications for the company's financial position in the coming quarters.

The incident underscores the risks involved in international trade and the importance of robust risk management strategies in the cement industry's supply chain. As the situation unfolds, Mangalam Cement's handling of this challenge will be a testament to its operational resilience and financial management capabilities.

Mangalam Cement , a prominent player in the Indian cement industry, has reported strong financial results for the quarter, showcasing significant growth across key metrics.

Revenue Surge

The company's revenue from operations increased to ₹45,174.26 lakhs from ₹38,057.30 lakhs in the same period last year, marking an impressive 18.70% year-over-year growth. This robust performance indicates a healthy demand for Mangalam Cement's products in the market.

Profitability Boost

Mangalam Cement's profitability saw a remarkable improvement:

Net profit showed strong growth, rising to ₹3,225.93 lakhs from ₹1,706.30 lakhs year-over-year, translating to an 89.00% increase. This substantial growth in bottom-line performance underscores the company's ability to convert revenue gains into profit.

Earnings Per Share

The company's basic and diluted earnings per share stood at ₹11.73 compared to ₹6.21 in the previous year quarter, reflecting the improved profitability.

Material Event Disclosure

Mangalam Cement disclosed a significant material event involving the non-delivery of petroleum coke cargo worth $5.4 million. The company had entered into an arrangement with AUM Commodities FZCO in July 2024 to procure 55,000 MT of Green Delayed Petroleum Coke at $99.90 per MT. Despite payment through letters of credit totaling $5,398,255.00, the cargo loaded in May 2024 has not been delivered to Kandla Port.

Legal and Insurance Actions

In response to this issue, the company has taken the following actions:

1. Filed an insurance claim with Liva Insurance for $5,371,263.92
2. Issued legal demands through solicitors against various parties including the contractual carrier

Conclusion

While Mangalam Cement has reported strong financial results for the quarter, the ongoing issue with the non-delivery of petroleum coke cargo presents a challenge. The company's proactive approach in addressing this matter through legal and insurance channels demonstrates its commitment to protecting its interests. As the construction and infrastructure sectors continue to play a crucial role in India's economic growth, Mangalam Cement's financial performance suggests it is well-positioned to capitalize on opportunities in the cement industry, despite facing operational hurdles.