MIRA INFORM REPORT

 

 

Report Date :

28.12.2012

 

IDENTIFICATION DETAILS

 

Name :

I – DIAMONDS (ISR) LTD.

 

 

 

 

Registered Office :

23 Tuval Street Diamond Exchange, Noam Bldg. Ramat Gan 5252238     

 

 

Country :

Israel

 

 

Date of Incorporation :

04.01.2012.

 

 

Legal Form :

Private Limited Company

 

 

Line of Business :

Subject operates in the diamonds field (exact line of business not forthcoming).

 

 

No. of Employees :

4

 

 

RATING & COMMENTS

 

MIRA’s Rating :

NB

 

RATING

STATUS

PROPOSED CREDIT LINE

--

NB

New Business

 

--

 

Status :

New Business

Payment Behaviour :

Unknown

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)

Israel

A2

A2

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

 

ISRAEL - ECONOMIC OVERVIEW

 

Israel has a technologically advanced market economy. It depends on imports of crude oil, grains, raw materials, and military equipment. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable trade deficits, which are covered by tourism and other service exports, as well as significant foreign investment inflows. The global financial crisis of 2008-09 spurred a brief recession in Israel, but the country entered the crisis with solid fundamentals - following years of prudent fiscal policy and a resilient banking sector. The economy has recovered better than most advanced, comparably sized economies. In 2010, Israel formally acceded to the OECD. Natural gasfields discovered off Israel's coast during the past two years have brightened Israel's energy security outlook. The Leviathan field was one of the world's largest offshore natural gas finds this past decade. In mid-2011, public protests arose around income inequality and rising housing and commodity prices. The government formed committees to address some of the grievances but has maintained that it will not engage in deficit spending to satisfy populist demands.

Source : CIA

Company name and address

 

I – DIAMONDS (ISR) LTD.

Telephone972 3 613 33 14

Fax           972 3 613 32 96

23 Tuval Street

Diamond Exchange, Noam Bldg.

RAMAT GAN  5252238            ISRAEL

 

 

HISTORY & LEGAL FORMATION

 

A private limited company, incorporated as per file No. 51-471330-4 on the 04.01.2012.

 

 

SHARE CAPITAL

 

Authorized share capital NIS 10,000.00, divided into -

              10,000 ordinary shares of NIS 1.00 each,

of which 1,000 shares amounting to NIS 1,000.00 were issued.

 

 

SHAREHOLDERS

 

Subject is fully owned by Marcus Schwalb.

 

 

SOLE DIRECTOR & GENERAL MANAGER

 

Marcus Schwalb.

 

 

BUSINESS

 

Subject operates in the diamonds field (exact line of business not forthcoming).

 

Operating from the rented offices premises of BENDIACO LTD. (controlled by Beni Schwalb, the son of Marcus Schwalb), on an area of 68 sq. meters, in 23 Tuval Street (also referred to as 52 Bezalel Street), Diamond Exchange, Noam Building (2nd floor, room No. 212), Ramat Gan.

 

Number of employees not forthcoming, believed to be few.

Having 4 employees in BENDIACO as of beginning of 2011.

 

MEANS

 

Financial data not forthcoming.

 

There are no charges registered on the company's assets.

 

 

REVENUES

 

Sales figures not forthcoming.

 

 

OTHER COMPANIES

 

BENDIACO LTD., fully owned by Beni Schwalb (50.85%), Marc Schwalb, (33.90%), both of Belgium and Hitash Shah (15.25%), of India. Established 1996. Traders, importers, exporters and marketers in diamonds.

 

 

BANKERS

 

Bank data not forthcoming.

 

 

CHARACTER AND REPUTATION

 

Nothing unfavorable learned.

 

Mr. Beni Schwalb informed us that his father Marcus Schwalb is currently abroad and dew back in a week's time. We shall contact him upon his return and update you accordingly.

 

An affair of an underground bank has been shocking the local diamond branch, after in late January 2012 Police raided the Diamond Exchange (after a long undercover operation), arrested several individuals for investigation, caught diamonds and various assets worth NIS millions, and blocked several bank accounts. It is suspected that a group of people, including diamond dealers, run an illegal bank in the Diamond Exchange compound for loans, money transfer abroad based on fictitious transactions and exchange in volume of NIS 1 billion for several years. The affair has already led to several of reported bankruptcies of local diamond firms, a decrease of up to 70% in transactions in 2012, frozen bank accounts, a paralysis (especially in purchase of raw diamonds) even with fear of the a collapse of the sector, while dealers –local and foreign- face uncertainty.

In March 2012 the Police decided to lower the profile of the investigation for a while a result of the big pressure from the diamond branch (to stop the continuing damage inflicted) and the Government (who is losing US$ hundred millions from decrease in tax collection). In November 2012 the Police and Tax Authorities recommended on indictments against the 25 suspects in the affair, among them diamond dealers, for the said suspicions and obstruction of the investigation.

 

The Supervisor of Diamonds at the Ministry of Industry, Trade & Labor published the diamond's sector import-export data for the 1st half of 2012, which reveals a 19% fall in net sale of cut diamonds, and a fear of another deep crisis in the branch. The sector recovered in 2010 and mainly in 2011 from one of the worst depressions in the global diamond sector due to the severe economic crisis in global markets that erupted in September 2008. The sector experienced almost an entire freeze and collapse in sales of about 70% in the peak of the crisis and 2009 export diamonds shrank by some 40%.

In 2011 the local diamond sector recorded US$ 7,202 million in net sales of cut diamonds, 23.5% higher than in 2010. This was thanks to the strong first 2 thirds of 2011, which were stalled in the last third, reflecting the fragile global economy and fear of another recession wave in USA and Europe. It should be noted that in karat terms, net export of cut diamonds rose only by 4% from 2010.

Net export of rough diamonds in 2011 also climbed almost 15%, reaching US$ 3,515 million (fell almost 29% in karat terms).

Net import of cut diamonds in 2011 summed up to US$ 5,682 million, representing 34.7% increase comparing to 2010 (18% rise in karat terms), while net import of rough diamonds rose by 17.5% from 2010, totaling US$ 4,413 million (11% fall in karat terms).

 

The positive trend reversed in 2012 and in the first 9 months, export (net) of cut diamonds was US$ 4,262 million, down 27% from the parallel period in 2011, and rough diamonds export (net) reached US$ 2,068 million, a 30.5% decrease. Import of rough diamonds (net) in the first 9 months of 2012 were down 25% to US$ 2,646 million compared with the parallel period in 2011 (53% down in karat terms), while import of polished diamonds (net) witnessed a 26% fall reaching US$ 3,083 million.

 

In terms of target export (polished diamonds) countries, in 2012 the USA was the main destination, with 35% of total export, while Hong Kong being the 2nd largest target country, with 31%. Traditionally, the USA has been by far the largest export market for the local export (60%-65% of total export), though the continuing economic crisis in the USA brought a change in the trend, where the Far Eastern markets have been growing on America and Europe's account (in early 2010, for the first time Far East markets even became Israel’s diamond industry’s main target).

Other main target countries included Belgium (9%) and Switzerland (5%).

 

According to the President of the Israeli Diamonds Association, in 2010 the trade in the local diamond sector rolls annual turnover of US$ 25 billion while total debt to the banks stands on US$ 1.5 billion, down from US$ 2.4 billion in the eve of the crisis. The Ministry for Industry & Trade also assisted the local diamond exporters by providing bank guarantees in total scope of NIS 1 billion.

Local diamond sector employs some 20,000 persons.

In February 2009, Israel was ranked as the world’s largest exporter of cut diamonds, followed by India, Belgium and South Africa.

 

 

SUMMARY

 

For the time being, dealings are recommended on secured basis.

 

 

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.54.84

UK Pound

1

Rs.88.55

Euro

1

Rs.72.63

 

 

INFORMATION DETAILS

 

Report Prepared by :

PRL

 

 

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.