MIRA INFORM REPORT
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Report Date : |
26.07.2011 |
IDENTIFICATION DETAILS
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Name : |
HOD - ASSAF STEEL LTD. |
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Formerly Known As : |
HOD STEEL LTD. |
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Registered Office : |
P.O. Box 439, Industrial Zone, Acre 24104 |
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Country : |
Israel |
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Financials (as on) : |
31.03.2011 |
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Date of Incorporation : |
17.05.2001 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
manufacturing steel
bars from scrap metal |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
US$ 150,000 |
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Status : |
Satisfactory |
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Payment
Behaviour : |
No Complaints |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2011
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Country Name |
Previous Rating (31.12.2010) |
Current Rating (31.03.2011) |
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Israel |
a2 |
a2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
company name
& address
HOD - ASSAF STEEL LTD.
Telephone 972 4 901 50 00
Fax 972 4 955 22 30
P.O. Box 439
Industrial Zone
ACRE 24104-ISRAEL
HISTORY
& LEGAL FORMATION
A private limited company, incorporated as per No. 51-311188-0 on the
17.05.2001.
Originally
registered under the name HOD STEEL LTD., which changed to the present name on
the 11.10.2007.
Subject began its current u/m activities at the end of 2004.
SHARE
CAPITAL
Authorized share capital NIS 100,000.00, divided into -
100,000 ordinary
shares of NIS 1.00 each,
of which 104 shares amounting to NIS 104 were issued.
SHAREHOLDERS
Subject is fully owned by HOD – ASSAF INDUSTRIES LTD., a public limited company,
shares of which are traded on the Tel Aviv Stock Exchange, controlled (74.8%)
by Abraham Shani (formerly Sheinbaum).
DIRECTORS
1.
Avraham Shani, Chairman of HOD – ASSAF
INDUSTRIES,
2.
Binyamin Sarig, General
Manager of HOD – ASSAF INDUSTRIES.
GENERAL
MANAGER
Andre Vaida
BUSINESS
Subject operates the HOD ASSAF Group’s steel melting plant in Acre,
manufacturing steel bars from scrap metal.
Operating from premises, very long leased from state by shareholders, on an
area of 88,000 sq. meters, Industrial Zone, Acre (in Hebrew "Acco" or
"Akko").
Having 880
employees serving the HOD ASSAF Group, of which 608 in Israel (had 857
employees in the end of 2009).
MEANS
Financial data is included in the consolidated financial statements of parent company, HOD – ASSAF INDUSTRIES LTD., which shows:
NIS
(thousands)
31.12.2010 31.03.2011
ASSETS
Current assets:
Cash 7,846 14,362
Customers 237,668 257,734
Other debtors 35,374 42,970
Other assets - 151
Stock 199,662 300,854
480,550 616,071
Non-current
assets:
Pre-paid operation leasing expenses (net) 13,084 11,601
Fixed
assets (net) 233,139 241,753
Other non-current assets 3,768 4,745
249,991 258,099
730,541 874,170
======= =======
LIABILITIES
Current liabilities 236,241 372,087
Non-current liabilities 32,745 29,424
Equity 461,555 472,659
730,541 874,170
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Parent company HOD – ASSAF INDUSTRIES current market value US$
49.3 million.
Subject is an
“Approved Enterprise” and as such entitled for State support, grants and tax
relief.
In 2006 the
Israeli Investment Centre (IIC) approved a NIS 21.86 million investment plan
for the construction of subject’s plant.
There are 2 charges for unlimited amounts registered on the company's
assets, in favor of The State of Israel and Mercantile Discount Bank Ltd.
SALES
HOD
– ASSAF INDUSTRIES LTD.
Consolidated
Statement of Income
NIS
(thousands)
Year
ended 31.12
2008 2009 2010
Sales 1,241,545 841,593 975,249
Gross profit 176,028 66,783 68,549
Operating profit (loss) 112,011 (21,576) 12,571
Profits (loss) before taxes on income 88,680 (23,146) 6,721
Net profit (loss) 68,780 (16,803) 5,418
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Losses in 2009
were caused due to the global economic crisis.
HOD – ASSAF
INDUSTRIES consolidated sales for the first 3 months of 2011
were NIS 287,049,000 (17% increase compared to the parallel period in 2010),
making a gross profit of NIS 24,196,000, an operating income of NIS 7,803,000,
and a net profit of NIS 6,510,000.
·
Subject
ended 2007 with a net profit of 57,113,000.
·
Subject ended 2008 with a
net profit of 96,040,000.
·
Subject ended 2009 with a
net loss of 5,188,000.
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Subject ended 2010 with a
net loss of 6,114,000.
OTHER
COMPANIES
HOD – ASSAF
INDUSTRIES LTD., parent company, independently and via subsidiaries, traders,
manufacturers, processors, exporters and marketers of metal goods for the
construction, industrial and agricultural sectors.
Amongst its
holdings (all 100% subsidiaries unless otherwise mentioned):
HOD – ZAMIR
EQUIPMENT & BUILDING SUPPLIES LTD., 60%, traders, importers and marketers
of building supplies and materials, fully owns ISCOL TRADE LTD., importers and
marketers of wood and timber for the construction sector, and electricity
poles.
STEEL RECYCLING
LTD., 90%, established in 2006, purchasing steel scraps and processing them for
the melting subject's plant.
HOD-ASSAF GLOBAL
CONDUCTOR LTD. (formally HOD HAMEGADER LTD.),
100%,
manufacturers of steel wires.
HOD ASSAF METALS
LTD., 100%, traders in iron for construction, owns:
HOD SELA LTD.,
51%, dealers in flat iron, professional iron and piping,
TAMA LTD.,
Guernsey Island, 100%, owns:
GAMMA INDUSTRIES
SRL, Romania, 100%,
S.C SARME SI
CABLURI S.A. ("SIRME"), Romania, 99.9%, plant in Romania,
ORON
BANKERS
Mercantile
Discount Bank Ltd., Haifa Main Branch (No. 650), Haifa.
CHARACTER
AND REPUTATION
In
May 2010 a fire broke out in subject's compaound. Although there was no severe
damages, a class action was filed agains Group (for NIS 138 million). The case
ended in July 2011 in a comprimise in which Group will invest some NIS 1
million the environment protection.
In May 2009 subject and parent company HOD – ASSAF INDUSTRIES (as well as YEHUDA STEEL Group, the 2 Israeli
manufactures of reinforced steel), requested from Ministry of Industry, Trade and
Labor to impose custom levies on imported steel (anti-dumping) in order to
protect local steel industry, which may collapse. At the first stage the
Ministry checked and after finding that import of iron increased significantly
(market share of imported iron rose to 25%), decided to lay a temporary levy.
Local steel and iron importers, as well as the Contractors’ Association,
submitted their objection to the Ministry and also appealed through the Courts
to avoid such import tax. They claimed that there has been no rise in demand
for iron in 2008. In August 2009 the Ministry formed a compromise, according to
which import of iron to Israel up to 270,000 tons (average import in 2007-2008)
will not be levied and over that limit a US$84 per ton will be imposed.
As the price metal started to rise, both Groups requested a levy on scrap
iron export due to extensive export (to Turkey) claiming it causes a shortage
in the local market, which elevates prices, hence the lack of economic
viability for local production. On the 24.07.2011 the Minister of Trade agreed
on a levy of US$ 35 per exported ton (for one year).
In August 2006 the Ministry of Environment issued a warning letter to HOD –
ASSAF for causing air pollution from its plant above the allowed standard, and
warned subject the plant may be shut down if the problem would not be treated.
As a result, HOD – ASSAF purchased and installed a system for decreasing
the emissions causing air pollutions, according to plan approved by the
Ministry of Environment, in value of US$ 2 million.
In that regard, in December 2006, 4 citizens filed a class action motion
against HOD – ASSAF and subject's General Manager Andre Vaida.
In February 2009 HOD – ASSAF has reached a compromise in claim against them
regarding environmental damages, in which HOD – ASSAF will invest some NIS 15
million in new procedures, donate NIS 330,000 to an environment fund and also
pay legal expenses NIS 370,000.
Therefore, subject assumes the above motion will be denied.
Apart from that, nothing unfavorable learned.
Subject is one of the leading melting plants in Israel. HOD ASSAF Group is
one of the leading and largest suppliers of steel to the local industry, with
daily production of 1,200 tons of steel.
In December 2002, the Haifa District Court approved HOD – ASSAF INDUSTRIES
proposition to acquire the acre steel welding plant of UNITED STEEL MILLS, a
local metal company which went into liquidation, for a sum of NIS 4.176
million. That came after YEHUDA STEEL LTD. already won the deal, but the Trade
Restriction Commissioner annulled its proposal, due to YEHUDA STEEL monopoly
status.
Later, in 2005, the monopoly status was removed and consequently YEHUDA
STEEL filed an appeal. In April 2007, the Trade Restriction Court rejected YEHUDA
STEEL appeal.
In September 2005, HOD – ASSAF acquired from a liquidator 88,000 sq. meters
in the Kiryat Plada Industrial Zone, Acre. During 2006, HOD – ASSAF acquired
further 22,000 sq. meters in the same compound.
In 2008, 276 tons of iron was imported, based on Customs Authorities
data. In money terms, volume of imported iron was valued NIS 234.5 million in
2008.
According
to the Chairman of the Metal and Electricity sectors at the Manufacturers’
Association, sales of the various metal and electricity related industrial
sectors fell by 20% in 2009 (from 2008, when sales reached NIS 70 billion) due
to the significant slow-down in the local economy, affected by the global financial
and economic crisis.
The above
industries contracting trend was evident in 2008 after the long and significant
growth trend since 2004 (in 2007 the sectors’
overall sales reached a climex of NIS 75.7 billion). The sectors have been
witnessing a gradual recovery that started in mid 2009, into 2010, paralell to
the improvement in the global markets.
According
to the Central Bureau of Statistics (CBS), import of metals raw
materials to the local industries in 2010 and 2011 1st quarter
showed an increasing trend, after a contraction in
CBS
data on investment in imported machinery and other equipment for the
manufacturing industry in 2010 (comparing to 2009): investments in the
manufacture of metal products was NIS 1,131 million (37% up, after 31% decrease
in 2009 from 2008); investments in the manufacture of basic metal products was
NIS 128.3 million, 2.5% rise, after 48% fall from 2008).
SUMMARY
Good for trade
engagements.
Maximum unsecured credit recommended US$ 150,000.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.44.42 |
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UK Pound |
1 |
Rs.72.49 |
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Euro |
1 |
Rs.63.87 |
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 |
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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NB |
New Business |
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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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.