MIRA INFORM REPORT

Report Date :

17.11.2011

IDENTIFICATION DETAILS

Name :	POLYON BARKAI INDUSTRIES (1993) LTD.

Registered Office :	Mobile Post Menashe, Barkai 37860

Country :	Israel

Financials (as on) :	30.06.2011

Date of Incorporation :	01.12.1971

Legal Form :	Private Limited Company

Line of Business :	Developers, manufacturers and marketers of engineered polyethylene and polypropylene films and lids for the food and packaging industries, as well as special construction insulation applications

RATING & COMMENTS

MIRA’s Rating :

RATING		STATUS	PROPOSED CREDIT LINE
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

Maximum Credit Limit :	US$ 450,000

Status :	Good

Payment Behaviour :	No Complaints

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 – September 30^th, 2011

Country Name

Previous Rating

(30.06.2011)

Current Rating

(30.09.2011)

Israel

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name & address

POLYON BARKAI INDUSTRIES (1993) LTD.

Telephone 972 6 638 73 87

Fax 972 6 637 20 47

Mobile Post Menashe

BARKAI 37860 ISRAEL

HISTORY AND LEGAL FORMATION

Originally established as a limited partnership and registered as per file No. 55-000158-0 on the 01.12.1971.

Converted into a private limited company and registered as such as per file No. 51-190123-3 on the 24.12.1993.

SHARE CAPITAL

Authorized share capital NIS 123,900.00, divided into -

122,900 ordinary shares (23,000 shares issued),

1,000 preferred shares, all of NIS 1.00 each,

of which shares amounting to NIS 23,000.00 were issued.

SHAREHOLDERS

1. KATZIR INVESTMENT FUND (1989) LTD. (known as the KATZIR Fund, 50%, [see ownership structure of this company in "OTHER COMPANIES"], bonds are traded on the Tel Aviv Stock Exchange (TASE),

2. Kibbutz Barkai, 50% (also via POLYON BARKAI Limited Partnership), a cooperative society, operating a communal agricultural settlement.

KATZIR Fund invested in subject in January 2006, acquiring from Kibbutz Barkai 50% in subject for NIS 12 million.

DIRECTORS

1. Yonatan Melamed, Chairman,

2. Eitan Perlman,

3. Shaul Ashkenazi,

4. Or Aizenberg,

5. Ms. Sara Stein,

6. Itamar Shwike,

7. Ram (Forman) Giora.

GENERAL MANAGER

Boaz Ruvel.

BUSINESS

Developers, manufacturers and marketers of engineered polyethylene and polypropylene films and lids for the food and packaging industries, as well as special construction insulation applications.

Amongst products: plastic sheets, tubular film, embossed film, high density polyethylene film, bags, sacks, etc. (using brand name "Polylid" for heat-sealing lamination films for food trays and containers).

Also manufacturers of thermal reflective insulation tiles and sheets using the brand name "Polynum".

Products are sold as inputs for the building sector, agriculture, gardening and DIY sectors.

50% of subject's sales are to the local market and 50% are exports to Japan, Hungary, Qatar, Dubai, India, Australia, Korea, Singapore, Sweden and more.

Amongst local suppliers: CARMEL OLEFINS, KAFRIT INDUSTRIES, PIGARO RONAN TRANSPORTATION, TOSAF COMPOUNDS and more.

Also using the import & export services of TOAM IMPORT AND EXPORT, a cooperative operating on behalf of the “Kibbutz” movement.

Operating from rented premises (offices, warehouses and plants), on an area of 16,000 sq. meters, owned by Kibbutz Barkai, in Kibbutz Barkai.

Having some 70 employees (had some 80 employees in 2009, same as in 2008).

MEANS

Condensed B/S shows:

NIS (thousands)

31.12.2009 31.12.2010 30.06.2011

ASSETS

Current assets 34,794 45,533 43,506

Non-current assets 38,140 37,482 39,300

72,934 83,015 82,806

====== ====== ======

LIABILITIES

Current liabilities 46,055 57,655 58,504

Non-current liabilities 8,396 6,037 5,810

Equity 18,483 19,323 18,492

72,934 83,015 82,806

====== ====== ======

Current stock was valued at NIS 13,000,000 in late 2009 (same as in 2008).

In mid 2007 it was reported that subject will invest NIS 17 million in expanding manufacturing platforms.

There are 47 charges for unlimited amounts, as 1 charge for NIS 220,000.00 registered on the company's assets, in favor of Bank Hapoalim Ltd., Union Bank of Israel Ltd., Mizrahi Tefahot Bank Ltd., Bank Leumi Le’Israel Ltd. and further financial and leasing companies (last 5 charges placed March – September 2011).

SALES

Statement of Income

NIS (thousands)

Year ended 31.12

2008 2009 2010

Sales 86,071 80,075 106,265

Gross profit 14,812 15,684 18,525

Net profit (loss) (1,826) (64) 840

======= ======= =======

Sales for the first 6 months of 2011 were NIS 55,576,000 (13.3% increase comparing to the parallel period in 2010), making a gross profit of NIS 8,707,000, and ending with a net loss of NIS 831,000.

OTHER COMPANIES

POLYON INDIA PVT LTD., 100%, a marketing subsidiary in India.

KATZIR INVESTMENT FUND (1989) LTD., an investment fund, focusing on investments in the Kibbutz Movement industries, controlled (72%) by KATZIR FUND DEBENTURE FOR INVESTMENT LTD. (25% held by the public), owned by KATZIR FUND DEBENTURE FOR INVESTMENT MANAGEMENT (2006) LTD., owned by:

1. KATZIR FUND LTD., 60%, owned by Rami Mandola,

2. POALIM CAPITAL MARKETS LTD., 20%, controlled by BANK HAPOALIM LTD., Israel's largest bank,

3. THE FIRST INTERNATIONAL & CO.- UNDERWRITING & INVESTMENTS LTD., 10%, owned by FIBI HOLDINGS LTD. and THE FIRST INTERNATIONAL BANK OF ISRAEL LTD. (Israel's 5^th largest bank),

4. HAREL INSURANCE CO. LTD. (and other members of the HAREL Insurance Group), 10%, one of local largest insurance firms.

KATZIR INVESTMENT FUND also holds (holds also 4 inactive companies):

IDEA INFORMATION SYSTEMS ASC LTD. 50%, software provider for the preservation, management and exposure of heritage assets.

YIZRAEL TAMUZ ACS LTD. 50%, manufacturers, marketers and exporters, providing manufacturing services to the hi-tech industry

PASKAL TECHNOLOGIES ACS LTD. 50%, manufacturers, exporters and marketers of plastic fasteners for the agricultural field

EXTRA PLASTIC LTD., 42.5%, publicly traded (TASE), manufacturers, marketers and exporters of plastic packaging products.

ASIF DEBENTURES FOR INVESMENTS LTD. 100%

ORGANITECH USA INC., 27.3%.

A.A. TECHNOLOGIES Y.P. LTD., 100%.

KATZIR FUND DEBENTURE FOR INVESTMENT LTD. also holds 100% in KATZIR FINANCE LTD., KATZIR BERINA LTD. and ASIF DEBENTURE FOR INVESTMENT LTD.

Kibbutz Barkai also holds:

POLYON BARKAI LIMITED PARTNERSHIP, which owns 13.1% of GINEGAR PLASTIC PRODUCTS LTD., developers, manufacturers, marketers and exporters of LDPE film - cover films, polyethylene sheets for agricultural applications (greenhouses, field cultivation, etc.) and industrial use. It is a publicly traded on TASE, with current market value US$ 30.2 million. 2010 consolidated sales were NIS 550.5 million, making a net profit of NIS 17.9 million.

POLYGER LTD., owned by subject and GINEGAR, a joint marketing company for its 2 owners.

POLYON (INVESTMENTS) 1988 LTD.,

POLYON LAMINATION LTD.

BANKERS

· Bank Hapoalim Ltd., Hadera Branch (No. 620), Hadera.

· Mizrahi Tefahot Bank Ltd., Hadera Branch (No. 420), Hadera.

CHARACTER AND REPUTATION

Nothing unfavorable learned.

Subject is ISO 9001: 2200, 9002 certified.

Subject, like other local export-oriented plants from the plastic and rubber industry, notably those exporting to the USA and Europe, were adversely hit by the severe global economic crisis. Sectors to which subject sells, such as the Building, Agriculture/Gardening and DIY, suffered in particular, resulting in the decrease in orders by such customers.

The situation has been improving as global market begun recovery since 2009 2^nd half.

In June 2007 KATZIR Fund acquired 42.5% of EXTRA PLASTIC LTD. in consideration of NIS 30 million. There was a mention of a possible merger of subject and EXTRA PLASTIC, whose activities are synergetic, however the idea did not mature.

Kibbutz Barkai, established in 1949, has some 200 members. Cultivates large areas of agricultural land, field crops, and operate dairy farming, poultry etc.

The KATZIR FUND has several other investments in the local industry, all mature Kibbutz industries, in which the fund invested 50% and the rest owned by each of the respective Kibbutz partner. Rami Mandola, who heads the KATZIR Fund, is former partner in KOST FORER GABBAY AND KASIERER (Ernst & Young Israel), a leading local accounting firm.

In early 2010 KATZIR Group went through a re-structure, in which its shareholders, via KATZIR FUND DEBENTURE FOR INVESTMENT LTD., acquired the public shell company TRI TOP INVESTMENTS LTD. (whose name was consequently changed to KATZIR INVESTMENT FUND (1989) LTD.) for NIS 3 million, and diverted all the investment activities (including rights and liabilities) in the industrial companies, including in subject and others (as in OTHER COMPANIES) to KATZIR INVESTMENT FUND (1989) LTD.

In October 2007 it was reported that subject will supply the US Army in Iraq thermal isolation sheets for NIS 2 million.

The Ministry of Industry & Trade data published summary of Israel's Plastic and Rubber Industry in 2009: The Sector’s sales (local and for export) reached US$ 4,090 million (of which some half for export), representing 4% decrease from 2008 (sales in 2008 also fell from 2007 by 7.3%, after several years of continuing growth – reaching record sales of US$ 4,596 million in 2007). The fall is explained by the global crisis that erupted in 2008 2^nd half, into 2009.

Sales for export by the Plastic and Rubber Industry badly suffered and plunged in 2009 by 15% from 2008, but recovered in 2010 with 6.2% growth in export, reaching US$ 1,622.4 million, as part of the recovery in global markets, and by 19.5% in 2011 first half (comparing to 2010 1^st half).

In general, 30% of the Plastic and Rubber sector's sales are household products, 23% - agriculture, 16% - packaging, 9% - building sector, 9% to the industry (rest is to other fields).

According to the Central Bureau of Statistics, import of Plastic and Rubber raw material for the local industry in 2010 summed up to NIS 2,047.2 million, 30.4% increase from 2009 (then it decreased by 31% from 2008, which reflected the the global recession). The upwards trend continued into the first 8 months of 2011 –close to 26% rise (compared with 2010), totaling US$ 1,715.8 million.

Investment in imported machinery and equipment to the plastic and rubber industry totaled NIS 512 million in 2010, some 8% down from 2009, continuing the decreasing trend although in a much lesser magnitude, after a sharp fall of 29% in 2009 from 2008 (then it witnessed a mere 1% increase from 2007).

SUMMARY

Good for trade engagements.

Maximum unsecured credit recommended US$ 450,000.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.50.90
UK Pound	1	Rs.80.30
Euro	1	Rs.68.48

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	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
----	NB	New Business	----

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

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.