MIRA
INFORM REPORT
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Report Date : |
09.12.2008 |
IDENTIFICATION
DETAILS
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Name : |
NETAFIM LTD. |
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Registered Office : |
10 Hashalom Rd,
TEL AVIV 67892 |
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Country : |
Israel |
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Date of Incorporation : |
1998 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Manufacturers,
Marketers and Exporters of irrigation systems and solutions, intended for
open-field crops, landscape irrigation, greenhouse technology systems and
turnkey greenhouse projects, wastewater management, and advanced crop
management and monitoring systems. |
RATING &
COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
name & address
NETAFIM LTD.
(Also known as:
NETAFIM COOPERATIVE SOCIETY FOR DRIP IRRIGATION LTD.)
Telephone 972 8 647 47 47 (operator, in Hatzerim Plant)
Fax 972 8 647 39 83 (in Hatzerim Plant)
972 3 691 19 63 (office in
Tel Aviv)
10 Hashalom Rd.
TEL AVIV 67892 ISRAEL
HISTORY & LEGAL FORMATION
Originally established in 1998 as an
Agricultural Cooperative Society and registered as such as per file No.
57-003539-4, under the name NETAFIM COOPERATIVE SOCIETY FOR DRIP IRRIGATION
LTD.
Subject was incorporated in order to take
over all the activities of 3 “NETAFIM” plants:
1. NETAFIM IRRIGATION
EQUIPMENT AND DRIP SYSTEMS IN KIBBUTZ HATZERIM (1973), a limited partnership
(Reg. No. 55-000186-1) established in 1973
2. NETAFIM MAGAL, a
limited partnership (Reg. No. 55-000258-8) established in 1974
3. NETAFIM YIFTACH -
IRRIGATION AND DRIP PRODUCTS (1978), a limited partnership (Reg. No.
55-000258-8) established in 1978
Subject began
operating in its new format on the 1.1.1999.
Converted into a private limited company,
and registered as such as per file
No. 51-376909-1 on 28.12.2005.
SHARE CAPITAL
Authorized share
capital NIS 0.00, divided into -
100,000,000 ordinary shares of NIS 0.00
each,
of which 13,125,000 shares were issued.
SHAREHOLDERS
1. Kibbutz Hatzerim, 43.6%, a cooperative society, operating an
agricultural
communal settlement,
2. Kibbutz Magal, 26.8%, a cooperative society, operating an
agricultural
communal settlement,
3. MARKSTONE CAPITAL PARTNERS LP, 13.3%,
4. Kibbutz Yiftach, 8%, a cooperative society, operating an agricultural
communal settlement,
5. TENE FUND INVESTMENT IN IRRIGATION LP, 6.7%,
6. Reuven Bachar, 1.6%, an attorney, on behalf of Kibbutz Yiftach.
In January 2006, the MARKSTONE and TENE investment funds acquired 20% in
subject, for a sum of US$ 40 million. The deal was finalized in April 2006.
The Funds have an
option to increase their holdings in future by further 5%.
DIRECTORS
1. Attorney
Reuven (Rubi) Behar, Chairman,
2. Itzhak
Lidor,
3. Yosef
Lavi,
4. Erez
Rosenblit,
5. Gilad
Menachem,
6. Eli
Shochat,
7. Nadav
Kaplan,
8. Amir Kess,
of MARKSTONE,
9. Ariel
Halperin, of TENE,
10. Alon
Verber.
GENERAL MANAGER
Ofer Bloch
BUSINESS
Manufacturers,
marketers and exporters of irrigation systems and solutions, intended for
open-field crops, landscape irrigation, greenhouse technology systems and
turnkey greenhouse projects, wastewater management, and advanced crop
management and monitoring systems.
Products include:
filters, hoses, drippers, dripper lines, micro-sprinklers, valves, computer
controlled irrigation systems, etc.
Over 90% of sales
are for export, to some 110 countries worldwide.
Amongst local
clients: AMIR MARKETING & INVESTMENT IN AGRICULTURE, HAMASHBIR FOR
AGRICULTURE, shopping organizations, etc.
Among local
suppliers: ASHALIM AGENCIES, DGS LASER SAFETY, POLYRAM RAM ON
INDS., PLASSIM FITTINGS, KRAUSZ INDUSTRIES, I.P.E INTERNATIONAL, NAYER (2002),
BERMAD, SASSON METALS, BERMAD, J.D POLYMERS, RIMONI PLAST, SU-PAD, TOP SOLUTIONS, SORPOL,
etc.
Operating from main
rented offices, on an area of 1,200 sq. meters in 10 Hashalom Rd.
(Derech Hashalom in Hebrew), Tel Aviv (to where they
moved from 161 Arlozorov Street, Tel Aviv), and from further 3 plants in Israel
(in Kibbutz Hatzerim, Kibbutz Magal and in Kibbutz Yiftach) and 11 plants worldwide. Also operating from subsidiaries offices abroad
and numerous distribution offices worldwide.
Having some 2,500
employees, serving the whole NETAFIM Group, of which some 1,200 in Israel.
In the beginning of
November 2008, it was reported that subject will dismiss 100 to 150 employees,
most of them in Israel, due to the crisis in the world financial markets, which
in turn lead to orders cancellations by clients. In the beginning of 2008
subject recruited 220 new employees to the Group, and now in view of the
situation has to adapt to the new circumstances.
MEANS
Subject is known to be financially sound in recent years. Estimated
market value by sources in the branch in 2007 was US$ 400 - 500 million.
According to reports, the MARKSTONE and TENE
funds which acquired 20% in subject in the beginning of 2006, fueled US$ 70
million into subject.
Equity as of 2006 known to be over US$ 90
million.
There are indications in last couple of years of a public offering of
subject's shares through the Nasdaq Stock Exchange. The latest report from the
end of 2007 refers to a public issuance within the next 2 years according to a
market value of over US$ 700 million.
Subject is an “Approved Enterprise” and as such enjoys tax benefits and
State incentives.
In 1996/7 the Israeli Investment Center
(IIC) approved an investment palns of over US$ 10 million for the expansion of
subject’s plants and in 2001, another US$ 27 million investment plan the
expansion of subject’s plant in Hatzerim.
There are 253 charges for unlimited amounts and 4 charges for a total
sum of
US$ 222,189,022.00 registered on the company assets, in favor of the State of
Israel, Bank Leumi Le'Israel Ltd., Bank Hapoalim Ltd. and IBM ISRAEL LTD.
ANNUAL SALES
2004 sales reported to be US$ 300,000,000.
2005 sales reported to be circa US$
360,000,000, making a net profit of
US$ 22,000,000.
2006 sales reported to be US$ 396,600,000.
2007 sales reported to be US$ 497,000,000.
2008 sales expected to be some 25% higher due to latest acquisitions
(see below).
Subject
is known to be profitable.
(Note:
the recent years' sales figures are published in the press based on data
provided by subject).
OTHER COMPANIES
Subject owns 32 subsidiaries around the
world, among them:
NETAFIM IRRIGATION INC., USA
NETAFIM AUSTRALIA PTY LTD., Australia
NETAFIM THAILAND CO. LTD., Thailand
NETAFIM CENTRAL
EUROPE (1994) LTD.
NETAFIM IRRIGATION
INDIA Pvt. LTD., India
NETAFIM CHILE LTDA,
Chile
NETAFIM PERU S.A.C.,
Peru
NETAFIM DEUTSCHLAND
GmbH, Germany
NETAFIM KOREA LTD.,
Korea
NETAFIM IRYGACJA SP.
ZO.O., Poland
NETAFIM CZECH
s.r.o., Czech Republic,
NETAFIM SLOVAKIA,
S.R.O., Slovakia
Other affiliates:
NETAFIM IRRIGATION EQUIPMENT AND DRIP
SYSTEMS IN KIBBUTZ HATZERIM (1973)
NETAFIM MAGAL
NETAFIM YIFTACH – IRRIGATION AND DRIP
PRODUCTS (1978),
NETAFIM MAGAL
INDUSTRIES CO. (1990) LTD.
NETAFIM 55 LTD.
BANKERS
Bank Leumi Le'Israel Ltd., Central Branch (No. 800), Tel Aviv - main
account.
Bank Hapoalim Ltd., Central Branch (No. 600), Tel Aviv.
Mizrahi Tefahot Bank Ltd., Main Branch (No. 461), Tel Aviv.
The First International Bank of Israel Ltd., Main Branch (No. 046), Tel
Aviv.
CHARACTER AND REPUTATION
Nothing unfavorable learned.
Subject's officials, as a matter of policy,
refuse categorically to disclose financial and other details.
Subject is the global pioneer in the drip irrigation field and
considered the largest company in the world in this area. It is one of the
largest exporters in Israel, the largest one of the Kibbutz movement.
The global drip irrigation market was valued
at US$ 1.9 billion in mid 2005, with 5%-10% growth rate. Israeli companies are
considered pioneers and leading industries in the world, including subject,
NAAN DAN and PLASTRO.
Subject is ISO 9001:2000 certified.
Besides subject, the
Kibbutz Hatzerim (established 1946, 440 members), Kibbutz Magal (established
1953, 240 members) and Kibbutz Yiftach (established 1948, 220 members) each
also cultivates large area of agricultural lands, including fruit plantations,
operating dairy farming, poultry, etc.
In January 2006 the local investment funds MARKSTONE and the TENE
invested in subject. The MARKSTONE Fund in Israel is managed by Ron Lubash and
Amir Kess, and is part of the MARKSTONE Capital Group, a private investment
fund which specializes in investments in mature and leading industrial
companies and in the capital market. The fund, which raised around US$ 800
million for its portfolio investment in the last couple of years, mostly from
American institutions, have already invested over half of the sum raised in
several local firms, including NILIT, STEIMATZKY and ELRAN REAL ESTATE.
the TENE Fund is a local investment fund, headed by Ariel Halperin,
which invests chiefly in Kibbutz industries. It has already invested in several
plants, subject being one of them, with investments between US$ 6 to US$ 30
million in each. The institutional investors in TENE are BANK LEUMI, PHOENIX
INSURANCE, EMILIA INVESTMENTS, etc.
During the last couple of years there have been several reports
regarding mergers and acquisitions of subject, in particular and in the
irrigation sector in general, in face of the amounting competition in world's
markets.
In October 2006, it was reported that
subject is negotiating with a major local competitor NAAN DAN IRRIGATION their
acquisition by subject for
NIS 150 million. The deal never finalized, and in mid 2007 the Indian Concern
JAIN acquired 50% of NAAN DAN.
In April 2007, it was reported that subject is participating in
agricultural research projects in Poland, funded by the European Commission in
volume of €3 million.
In October 2007, it was reported that RIMONI PLAST will supply subject
plastic injected products in value of US$ 7 million in 2 years.
In mid April 2007 subject submitted an offer
to PLASTRO IRRIGATION SYSTEMS LTD. (another Israeli competitor) to acquire
control in PLASTRO. The offer has not reached negotiation stages. PLASTRO's
shareholders finally closed a transaction in which JOHN DEERE of the USA, which
became their main shareholder (75%) according to PLASTRO company value of NIS
265 million. The deal poses a major challenge for subject's hegemony position
in global markets.
In parallel, probably prior to the closing
with PLASTRO, there were reports regarding negotiations between JOHN DEERE and
subject, and in September 2007 it was reported that JOHN DEERE offered close to
US$ 600 million for acquiring subject, however subject's Kibbutz shareholders
declines the offer. According to the reports, the acquisition proposal included
subject's debts of
US$ 100 million (up from US$ 80 million in 2005).
In the beginning of 2008 subject completed the acquisition of control
(75%) in Dutch REVAHO, which is considered among the largest in the world in
manufacturing and marketing greenhouses, and also importers and distributors of
irrigation equipment (with 2007 turnover US$ 100 million) and 120 employees
including in their plants in Holland and Romania. REVAHO has thus far been
subject's sole representative in Holland and the U.K. The deal was estimated at
US$ 70 million for the 75% stake.
In recent years subject has been focusing efforts towards the Indian
market, where it estimates it has a 20% market share in its field, being the 2nd
largest.
In February 2008, subject reported it launched a global planning center
in India. In addition, it is completing the construction of its 2nd
plant in the country, expected to employ 150 workers (in addition to 500
employees already employed in the plant in North India).
Since 2006 subject has opened demonstration and training centers in Israel, as well as in Greece, Brazil, Thailand, The Philippines and other
countries.
In July 2008, subject announced the acquisition of EDEN IRRIGATION of
France, established in 1989 and supplies DIY irrigation products. The company's
2007 sales reported to be € 7 million.
As noted above (see BUSINESS), subject announced it is revising its 2009
plans, following the sever crisis that has been hit world financial markets,
causing credit shortage among companies, among them subject’s clients in
American and Asian markets.
SUMMARY
Good for trade engagements.
Maximum unsecured credit recommended several US$ millions.
FOREIGN EXCHANGE
RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.49.22 |
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UK Pound |
1 |
Rs.73.03 |
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Euro |
1 |
Rs.63.14 |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)