MIRA INFORM REPORT

 

 

Report Date :

22.12.2008

 

IDENTIFICATION DETAILS

 

Name :

GAFNI DIAMONDS LTD.

 

 

Formerly Known as :

R & B DIAMONDS LTD

 

 

Registered Office :

54 Bezalel Street, Diamond Exchange, Yahalom Tower, Ramat Gan 52521

 

 

Country :

Israel

 

 

Date of Incorporation :

11.01.1988

 

 

Legal Form :

Private Limited Company

 

 

Line of Business :

Traders, Importers, Exporters and Marketers of Diamonds of Various Sorts.

 

 

RATING & COMMENTS

 

MIRA’s Rating :

B

 

RATING

STATUS

PROPOSED CREDIT LINE

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.

Small

 

Status :

Moderate

 

 

Payment Behaviour :

No Complaints

 

 

Litigation :

Clear

 

name & address

 

GAFNI DIAMONDS LTD.

Telephone         972 3 575 97 02

Fax                   972 3 613 09 43

54 Bezalel Street

Diamond Exchange, Yahalom Tower

RAMAT GAN     52521   ISRAEL

 

 

HISTORY & LEGAL FORMATION

 

A private limited company, incorporated as per file No. 51-126382-4 on the 11.01.1988.

 

Originally registered under the name R & B DIAMONDS LTD., which changed to the present name on the 04.02.1988.

 

 

SHARE CAPITAL

 

Authorized share capital NIS 2,640.00, divided into –

2,640 ordinary shares of NIS 1.00 each,

of which shares amounting to NIS 100.00 were issued.

 

 

SHAREHOLDERS

 

1. Yuval Gafni, 85%,

2. Gideon Gafni, 15%.

 

 

SOLE DIRECTOR & GENERAL MANAGER

 

Yuval Gafni

 

 

BUSINESS

 

Traders, importers, exporters and marketers of diamonds of various sorts.

 

40% of sales are for export.

Among customers are the Tel Aviv Diamond Exchange members.

 

Diamond purchasing is both from import and from the local market.

 

Among local suppliers: YORAI BOROCHOV.

 

           

 

Operating from rented office premises, on an area of 30 sq. meters, in 54 Bezalel Street (also referred as 21 Tuval Street), Diamond Exchange, Yahalom Tower, 19th floor (room 89), Ramat Gan.

 

Having 3 employees (same as in 2007).

 

 

MEANS

 

Financial data not forthcoming.

 

There are 3 fixed charges for unlimited amounts registered on the company's assets (financial assets), in favor of Union Bank of Israel Ltd.

 

 

ANNUAL SALES

 

Sales figures not forthcoming.

 

 

OTHER COMPANIES

 

We are informed that subject’s shareholders also hold real estate companies.

 

 

BANKERS

 

Union Bank of Israel Ltd., Ramat Gan Branch (No. 062), Ramat Gan.

 

CHARACTER AND REPUTATION

 

Nothing unfavorable learnt on subject itself.

 

In February 2008, the Tel Aviv Magistrate Court sent Yuval Gafni (subject’s main shareholder and General Manager) and business colleagues Oded Dasao and Ricco Shirazi on a house arrest for couple of days, in suspicion of violating Securities Laws of inside trading, with regard to publicly traded company GOLAN FINE CRAFTS (1977) LTD. (dealing in real estate). Allegedly, Mr. Shirazi, whom the Police define as heading a criminal organization, received inside information from Oded Dasao (who control and manage GOLAN) and from Yuval Gafni. It was reported that the punishment for such felonies is 1 – 5 years imprisonment.

There were no further publications on Yuval Gafni in this connection since then.

Yuval Gafni is a relatively known figure, mainly to local football audience, from his involvement in the major football league (also used to own a team till several years ago).

 

Subject's officials refused to disclose any financial data.

 

Subject is long established.

           

 

 

 

Local diamond companies have been facing depression in business in general in recent period due to the recession in the U.S. markets, which worsened with the collapse in the financial markets in the U.S.A. and spread over the world during September-October-November 2008. The American market has been the No. 1 export market and the crisis in the U.S. market affects directly many Israeli diamond companies, as purchasing has gone down dramatically. There have been reports on delays in payments from clients, causing a cash flow problem to some local companies. Some diamond dealer report sales are stagnant.

 

The crisis in the world financial markets affected the diamond industry: Export of cut diamonds (net) during the first 10 months of 2008 summed up to US$ 5.8 billion, representing a 2.2% decrease comparing to parallel period in 2007. That after in October 2008, cut diamonds export fell by 46% comparing to October 2007. Export of rough diamonds (net) from Israel in October fell even sharper – by 58.5% comparing to October 2007.

 

Import of rough diamonds (net) rose 1.7% in the first 10 months of 2008 (from 2007) to US$ 4.07 billion, while in October alone import fell by 52.6%. Import of cut diamonds (net) also fell sharply in October 2008 by 44.4% reaching total of US$ 3.79 billion for the whole first 10 months of 2008.

 

Year 2007 marked a record in the export of cut diamonds from Israel, with net sales for export of US$ 7.076 billion, 7% rise from 2006 (US$ 6.611 billion). Exports (net) of rough diamonds were US$ 3.386 billion, a 25.5% increase from 2006 (US$ 2.701 billion, which was a 23.2% decrease from 2005).

Import of rough diamonds (net) rose 8% in 2007 by (from 2006) to
US$ 5.084 billion, while import of cut diamonds (net) also increased in 2007 by 13.3% reaching US$ 4.558 billion.

 

The USA is the main market for Israel’s export of cut diamonds, although its portion has been decreasing in view of the economic situation – the export rate is currently 43%, comparing to 60%-65% in past years. The secondary markets are Hong Kong (24%), Belgium (9%), U.K (3%), followed by China, Switzerland and India.

 

According to the President of the Israeli Diamonds Association, local banks are expected to contract credit given to local diamond firms, in view of the global financial crisis. However, he believes the local diamond sector is healthy, as trade in the sector rolls annual turnover of US$ 25 billion whereas total debt to the banks stands on US$ 2.5 billion.

           

 

SUMMARY

 

Dealings are recommended on a secured basis.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.47.39

UK Pound

1

Rs.70.65

Euro

1

Rs.66.33

 

 

RATING EXPLANATIONS

 

RATING

STATUS

 

 

PROPOSED CREDIT LINE

>86

Aaa

Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums

 

Unlimited

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

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

41-55

Ba

Overall operation is considered normal. Capable to meet normal commitments.

 

Satisfactory

26-40

B

Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.

 

Small

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

<10

C

Absolute credit risk exists. Caution needed to be exercised

 

 

Credit not recommended

NR

In view of the lack of information, we have no basis upon which to recommend credit dealings

No Rating

 

 

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%)

 

 

 

 

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions