MIRA INFORM REPORT

 

 

Report Date :

10.12.2012

 

IDENTIFICATION DETAILS

 

Name :

NAGAHORI CORPORATION

 

 

Registered Office :

Tenjin Bldg, 1-15-3 Ueno Taitoku Tokyo 110-8546

 

 

Country :

Japan

 

 

Financials (as on) :

31.03.2012

 

 

Date of Incorporation :

June, 1962

 

 

Legal Form :

Limited Company

 

 

LINE OF BUSINESS :

MFG, WHOLESALE OF DIAMOND JEWELRY & FASHION JEWELS

 

 

No. of Employees :

657

 

RATING & COMMENTS

 

MIRA’s Rating :

Ba

 

RATING

STATUS

PROPOSED CREDIT LINE

41-55

Ba

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

Satisfactory

 

Status :

Satisfactory

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 – June 30th, 2012

 

Country Name

Previous Rating

(31.03.2011)

Current Rating

(30.06.2012)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

 

japan - ECONOMIC OVERVIEW

 

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self-sufficient in rice, Japan imports about 60% of its food on a caloric basis. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2011 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2011. A sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into recession. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake in March disrupted manufacturing. Electricity supplies remain tight because Japan has temporarily shut down almost all of its nuclear power plants after the Fukushima Daiichi nuclear reactors were crippled by the earthquake and resulting tsunami. Estimates of the direct costs of the damage - rebuilding homes, factories, and infrastructure - range from $235 billion to $310 billion, and GDP declined almost 0.5% in 2011. Prime Minister Yoshihiko NODA has proposed opening the agricultural and services sectors to greater foreign competition and boosting exports through membership in the US-led Trans-Pacific Partnership trade talks and by pursuing free-trade agreements with the EU and others, but debate continues on restructuring the economy and reining in Japan's huge government debt, which exceeds 200% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

 

Source : CIA

 

 

 

Company Name

 

NAGAHORI CORPORATION

 

 

REGD NAME 

 

KK Nagahori

 

 

MAIN OFFICE

 

Tenjin Bldg, 1-15-3 Ueno Taitoku Tokyo 110-8546 JAPAN

Tel: 03-3836-4711     Fax: 03-3837-1389

 

URL:                 http://www.nagahori.co.jp/

E-Mail address: info@nagahori.co.jp

 

 

ACTIVITIES  

 

Mfg, wholesale of diamond jewelry & fashion jewels

 

 

BRANCHES

 

Osaka, Fukuoka

 

 

STORE      

 

Ginza

 

 

OVERSEAS   

 

Milan, Antwerp, Mumbai

SANOCO Co Ltd (Hong Kong) (subsidiary)

 

 

 

FACTORIES  

 

Mobara (Chiba)

 

CHIEF EXEC:    KEITA NAGAHORI, PRES & CEO

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY    

 

FINANCES        FAIR                             A/SALES          Yen 14,874 M

PAYMENTS      NO COMPLAINTS          CAPITAL           Yen 5,323 M

TREND SLOW                          WORTH            Yen 14,015 M

STARTED         1962                             EMPLOYES      657

 

 

COMMENT    

 

MFR & WHOLESALER SPECIALIZING DIAMOND JEWELRY &  FASHION JEWELS. 

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS

 

 

                                 Unit: In Million Yen

Forecast (or estimated) figures for 31/03/2013 fiscal term

 

 

HIGHLIGHTS

           

The subject company was established by M Nagahori originally as Nagahori Pearls KK for wholesaling pearls and pearl jewelry.  In Oct 1982 renamed as captioned.  In 1973, approved as official member by Antwerp Diamond Exchange and started diamonds trading, which now are its main revenue sources.  Handles pearls and other precious stones, too.  Consolidated subsidiary, Soma KK, serves as production arm for gold ingot processing, etc, including OEM production.  Operates JV in Israel for diamond trading.  Provides a broad range of jewelry brands, offering a full range of items from fashion accessories to high-end labels.  Strong with sales of high margin brands through department stores nationwide (currently about 35).  In Jul 2005, acquired 10% stake in Rosy Blue Mfg (PTY) Ltd, S Africa, and started imports of diamonds.  Has Saitama Health Land in Saitama-Pref.  In Nov 2007 founded Royal Asscher Japan, JV with Royal Asscher Diamond (Antwerp) for importing and mfg diamond rings, pendant, etc.  In Nov 2007, acquired the brand name “Sweet Ten Diamond” from De Beers Group Marketing and will start selling the products from Mar 2008.  The company will expand sales of big diamond jewelry to department stores dealing with large institutional customers.  In the direct management WISP brand for people in their twenties and thirties, it opened the stand-alone store in Ginza to improve the brand image.  It has started exports and sales through the Hong Kong subsidiary.       

 

 

FINANCIAL INFORMATION

 

The sales volume for Mar/2012 fiscal term amounted to Yen 14,874 million, a 0.2% down from Yen 14,911 million in the previous term.  Consumer spending was sluggish for jewelry and other big-ticket items, which are not for daily necessities.  The recurring profit was posted at Yen 545 million and the net profit at Yen 254 million, respectively, compared with Yen 224 million recurring loss and Yen 73 million net losses, respectively, a year ago.

           

(Apr/Sept/2012 results): Sales Yen 6,827 million (down 0.1%), operating loss Yen 122 million (down 11.8%), recurring loss Yen 117 million (down 7.1%), net profit Yen 11 million (down 70.6%).  (% compared with the same period a year ago). 

           

For the current term ending Mar 2013 the recurring profit is projected at Yen 590 million and the net profit at Yen 290 million, respectively, on a 1.5% rise in turnover, to Yen 15,100 million.  Sales volume will fall from projections, as active measures, such as exhibitions, somewhat failed at the term’s start.  But sales of high-priced diamond jewelry for department stores dealing with large institutional customers will continue to grow.

           

The financial situation is considered FAIR and good for ORDINARY business engagements.  Max credit limit is estimated at Yen 487.5 million, on 30 days normal terms. 

 

 

 

REGISTRATION

 

Date Registered:  Jun 1962

Legal Status:        Limited Company (Kabushiki Kaisha)

Authorized:           40 million shares

Issued:                 16,773,378 shares

Sum:                   Yen 5,323 million

           

Major shareholders (%): MF Nagahori Co (11.2), Company’s Treasury Stock (7.1), Resona Bank (4.6), Dai-ichi Life Ins (4.1), Morihiro Nagahori (4.0), Joyo Bank (3.1), Keita Nagahori (3.1), SIX SIS Ltd (3.0), Wahei Takeda (2.6), MUFG (2.4); foreign owners (7.3)

 

No. of shareholders: 1,543

 

Listed on the S/Exchange (s) of: Tokyo (Second Section)

 

Managements: Morihiro Nagahori, ch; Keita Nagahori, pres; Yasuaki Sakuma, s/mgn dir;  Kaoru Tabata, mgn dir; Ryoji Takada, dir; Koso Nakashiki, dir; Fumihiko Shirakawa, dir

 

Nothing detrimental is known as to the commercial morality of executives.

 

Related companies: Soma KK, KK Jewelry, Sanaco Co (Hong Kong), Brodia KK, Royal Asscher Japan (Total 3 domestic; 1 overseas)

           

 

OPERATION

 

Activities: Manufactures, processes, imports and partially retails diamonds, pearls, other gemstones, jewelry products (--98%), health care industry (2%).

           

Diamonds and other gemstones are imported.

           

            (Handling brands): Dal Lago, Sonia Rykiel, Yuki Torii, Hana-Kaido, arut, Pinky & Dianne, Private Label, Annie-j, anan, Lolita Lempicka, Disney, La Germa, Aqua-Style, Y’Sacos, WISP, other.

 

Clients: [Department stores, chain stores, jewelry stores] Takashimaya, Sogo, Vendome Yamada Corp, Marui Corp, Seibu Department Stores, other.

            No. of accounts: 500

            Domestic areas of activities: Nationwide

            Suppliers: [Mfrs, wholesalers] Rosy Blue Mfg, Eurostar Diamond Trading, Ishifuku Metal Ind, Dimexon, other.

 

Payment record: No Complaints

 

Location: Business area in Tokyo.  Office premises at the caption address are leased and maintained satisfactorily.

 

Bank References:

Resona Bank (Ueno-Chuo)

Mizuho Bank (Marunouchi-Chuo)

Relations: Satisfactory

 

 

FINANCES

 

(In Million Yen)

FINANCES: (Consolidated in million yen)

 

　

　

Terms Ending:

31/03/2012

31/03/2011

INCOME STATEMENT

 

 

 

  Annual Sales

　

14,874

14,911

 

  Cost of Sales

8,847

9,045

 

      GROSS PROFIT

6,027

5,865

 

  Selling & Adm Costs

5,404

5,630

 

      OPERATING PROFIT

622

235

 

  Non-Operating P/L

-77

-11

 

      RECURRING PROFIT

545

224

　

      NET PROFIT

254

73

BALANCE SHEET

 

 

 

 

  Cash

　

2,022

1,576

 

  Receivables

 

1,798

1,528

 

  Inventory

 

10,676

11,266

 

  Securities, Marketable

　

　

 

  Other Current Assets

222

383

 

      TOTAL CURRENT ASSETS

14,718

14,753

 

  Property & Equipment

4,444

4,569

 

  Intangibles

 

126

153

 

  Investments, Other Fixed Assets

2,082

2,127

 

      TOTAL ASSETS

21,370

21,602

 

  Payables

 

963

875

 

  Short-Term Bank Loans

4,795

5,333

 

　

 

　

　

 

  Other Current Liabs

799

709

 

      TOTAL CURRENT LIABS

6,557

6,917

 

  Debentures

 

40

80

 

  Long-Term Bank Loans

109

120

 

  Reserve for Retirement Allw

380

355

 

  Other Debts

　

269

355

 

      TOTAL LIABILITIES

7,355

7,827

 

      MINORITY INTERESTS

 

 

 

  Capital, Paid-Up

5,323

5,323

 

  Surplus

 

8,692

8,451

 

      SHAREHOLDERS' EQUITY

14,015

13,774

　

      TOTAL EQUITIES

21,370

21,602

CONSOLIDATED CASH FLOWS

 

 

 

 

Terms ending:

31/03/2012

31/03/2011

 

Cash Flows from Operating Activities

　

1,354

1,047

 

Cash Flows from Investment Activities

-290

5

 

Cash Flows from Financing Activities

-698

-1,080

　

Cash, Bank Deposits at the Term End

　

1,945

1,576

ANALYTICAL RATIOS            Terms ending:

31/03/2012

31/03/2011

 

 

Net Worth (S/Holders' Equity)

14,015

13,774

 

 

Current Ratio (%)

224.46

213.29

 

 

Net Worth Ratio (%)

65.58

63.76

 

 

Recurring Profit Ratio (%)

3.66

1.50

 

 

Net Profit Ratio (%)

1.71

0.49

 

 

Return On Equity (%)

1.81

0.53

 

           


DIAMOND INDUSTRY – INDIA

 

-          From time immemorial, India is well known in the world as the birthplace for diamonds.  It is difficult to trace the origin of diamonds but history says that in the remote past, diamonds were mined only in India. Diamond production in India can be traced back to almost 8th Century B.C.  India, in fact, remained undisputed leader till 18th Century when Brazilian fields were discovered in 1725 followed by emergence of S. Africa, Russia and Australia.

-          The achievement of the Indian diamond industry was possible only due to combination of the manufacturing skills of the Indian workforce and the untiring and unflagging efforts of the Indian diamantaires, supported by progressive Government policies.

-          The area of study of family owned diamond businesses derives its importance from the huge conglomerate of family run organizations which operate in the diamond industry since many generations.

-          Some of the basic traits of family run business enterprises include spirit of entrepreneurship, mutual trust lowers transaction costs, small, nimble and quick to react, information as a source of advantage and philanthropy.

-          Family owned diamond businesses need to improve on many fronts including higher standard of corporate governance, long-term performance – focused strategies, modern management and technology.

-          The diamond jewellery industry in India today may be more than Rs 60000 mil and is rated amongst the fastest growing  in the world. Indi ranks third in the world in domestic diamond consumption.

-          Utmost caution is to be exercised while dealing with some medium and large diamond traders which are usually engaged in fictitious import – export, inter-company transactions, financially assisted by banks. In the process, several public sector banks lost several hundred million rupees. They mostly diverted borrowed money for diamond business into real estate and capital markets.

-          Excerpts from Times of India dated 30th October 2010 is as under –

DIAMOND SAGA – DIRTY DOZEN STUCK WITH 2K CR DEBT

This could be the biggest credibility crisis the Indian diamond industry has ever faced. Fifteen banks run the risk of losing Rs 2000 crore lent to a dozen diamond firms in Surat. Until about two months ago, they had not repaid  these dues. Bankers believe many diamantaires borrowed money during the economic downturn two years ago and diverted funds to businesses like real estate and capital markets. Many of themselves made money from these businesses but their diamond companies have gone sick and declared insolvency.

-          Most of the money borrowed from the banks in the name of their diamond business has been diverted in real estate and the share market. The banks are not in a position to seize their properties because in many cases, these were purchased in the name of their relatives and friends.

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.54.20

UK Pound

1

Rs.86.99

Euro

1

Rs.70.22

 

 

INFORMATION DETAILS

 

Report Prepared by :

SDA

 

 

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.