|
Report Date : |
29.06.2012 |
IDENTIFICATION DETAILS
|
Name : |
H & O FASHION CHAINS (2003) LTD. |
|
|
|
|
Formerly Known As : |
TAG WOMAN LTD |
|
|
|
|
Registered Office : |
Hutzot Shefayim Shefayim 6099000 |
|
|
|
|
Country : |
|
|
|
|
|
Date of Incorporation : |
22.12.2003 |
|
|
|
|
Legal Form : |
Private Limited Company |
|
|
|
|
Line of Business : |
Importers,
designers, marketers and retailers of apparel and fashion products, including
handbags, jewelry, watches and other fashion accessories, as well as
footwear, toiletries and cosmetics, household products and home textile. |
|
|
|
|
No. of Employees : |
1,300 |
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 : |
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 – March 31st, 2012
|
Country Name |
Previous Rating (31.12.2011) |
Current Rating (31.03.2012) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
H & O FASHION
CHAINS (2003) LTD.
Telephone 972 9 971 30 03; 971 30 05
Fax 972 9 971 30 06
Hutzot Shefayim
SHEFAYIM 6099000 ISRAEL
A private limited company,
incorporated as per file No. 51-348094-7 on the 22.12.2003.
Originally registered under the name TAG
WOMAN LTD., which changed to the present name on 24.06.2009.
During 2011 subject assumed all the
commercial activities of parent company
H & O FASHION LTD., which became a holding company. H & O
FASHION was established in 1992 (continuing activities founded many years
earlier).
Authorized share
capital NIS 10,039,100.00, divided into -
10,039,100 ordinary shares of
NIS 1.00 each,
of which
10,000,000 shares amounting to NIS 10,000,000.00 were issued.
Subject is fully
owned by H & O FASHION LTD., fully owned by AVRAHAM LIVNAT LTD., owned by
Avraham (Bondi) Livnat & family.
AVRAHAM LIVNAT
gained full control over H & O since September 2009, after acquiring the
shares (50%) of its former partners B. GAON RETAIL & TRADING LTD. (based on
a company value for of NIS 40-NIS 60 million).
In January 2007 H
& O FASHION completed the acquisition of control in subject (63.25%) from
subject's former other shareholders (Ilan Levy, Liran Drey, Sagiv Halevi and
Eli Guetta, also the founders of subject), in consideration of NIS 14.5 million in cash. In June 2008, H &
O realized an option (PUT option) given and acquired the rest of subject’s
shares (36.75%) from subject’s founders, in consideration of NIS 8.31 million.
1. Amiaz Sagis, Chairman of H & O FASHION,
2. Yehezkel Dovrat,
3. Yair Assahel,
4. Shaul Ben Zeev,
5. Eliaz Poleg.
Nitzan Hadas.
Importers,
designers, marketers and retailers of apparel and fashion products, including
handbags, jewelry, watches and other fashion accessories, as well as footwear,
toiletries and cosmetics, household products and home textile.
Subject operates 2
retail chain stores: of 40 branches countrywide (all owned), under the
“H&O” name (for all audiences), as well as 3 stores of “TagWoman” brand department,
targeted at young women audience.
Subject provides
uniforms to the Israeli Police, Prison Authority and other Armed Forces.
Subject has
members’ club counting some 260,000 members.
Manufacturing is
carried out via subcontractors.
Subject purchases
raw materials for production from local suppliers and finished goods are
purchased from both foreign and local suppliers.
Among local
suppliers: YANIT LINGERIE, M. G. S. SPORT TRADING, BOTTEX, AL SRAD, ZIP FASHION
MARKETING, ADA LISS GROUP, TALDOR MANAGED SERVICES, GROUPE CORWIK, ZIP FASHION
MARKETING, LILIT COSMETICS, etc.
Advertising
agency: PUBLICIS GELLER - NESSIS.
Sole local
representatives of: CARTER'S, LUMBERJACK, MAVI JEANS, ALESSANDRO GOTTI, EXPO,
DOCKERS.
Operating from
rented offices, on an area of 1,400 sq. meters, in Hutzot Shefayim, Kibbutz
Shefayim, and from 40 branches nationwide (each store is 1,000 sq. meters and
up).
Having
1,300 employees.
According to
reports regarding the transaction in 2009 GAON Group sold its 50% in H & O
to the LIVNAT Group based on a company value for subject of between NIS 40-NIS
60 million.
Current stock is valued at NIS 100,000,000.
Subject enjoys the backing of the
financially solid AVRAHAM LIVNAT Group.
According to a
report from March 2011 subject's advertizing budget is NIS 9 million.
There are 20 charges for unlimited amounts
registered on the company's assets (financial assets), in favor of Israel
Discount Bank Ltd., Bank Leumi Le'Israel Ltd., Bank Hapoalim Ltd. and Mizrahi
Tefahot Bank Ltd. (last charge placed April 2011).
H & O FASHION
2010 consolidated sales claimed to be NIS 500,000,000.
H & O FASHION
2011 consolidated sales claimed to be NIS 500,000,000.
H & O FASHION
2012 first 6 months sales claimed to exceed NIS 200,000,000.
Subject's CFO
informed us that sales are at the same pace as of 2011, and are seasonal, 2nd
half of year is stronger than the 1st.
H & O FASHION
LTD., parent company, a holding company.
The Livnat Family
also, via holding company AVRAHAM LIVNAT LTD. (established in 1972) has
holdings in many other companies, via (among others):
TAAVURA Group: Mainly TAAVURA HOLDINGS LTD., which
operates in the following lines of activities:
1.
Road haulage services, dealing in all sorts of
cargo (bulk, cars, heavy duty equipment, raw materials, etc.).
2.
Infrastructure, mining, earth and marine works.
3.
A holding company for the TAAVURA Group, which
deals in automobiles, infrastructure, heavy-duty equipment and machinery, tires, public transportation, environment, etc.
TAAVURA
consolidated 2011 sales were NIS 2,431 million.
Amon
its many holdings:
TASHTIT CONSTRUCTION MACHINERY LTD., the
sole representatives of DAF and KENWORTH trucks, VDL buses, LIEBHERR heavy duty
equipment,
UNIVERSAL TRACKS ISRAEL LTD. (U.T.I.),
importers and marketers of ISUZU trucks in Israel, 50%,
TAMIG LTD., tires importers and
distributors, agents of PIRELLI,
YOZMA GALIL
HOLDINGS (1982) LTD., via subsidiaries engaged in haulage transportation.
MAMAN- CARGO TERMINALS & HANDLING LTD.,
65.3%, established in 1974 and publicly traded (TASE) since 1989. Current
market value of US$ 56.3 million. Deals in management and operation cargo
terminal authorized for all import and export cargo at the Ben Gurion
International Aiprort (Israel’s main gateway). Also holds and leases real
estate provides logistics and aviation ground services.
EGGED TAAVURA LTD., 50%, public
transportation operator,
SHMERLING -
SYNCHRO ENERGY ENGINEERING LTD., engaged in generators, electric switch-boards
and control panels,
(See more on the
Group in CHARACTER).
Mizrahi Tefahot Bank Ltd., Hachashmonaim
Branch (No. 494), Tel Aviv, account No 186634.
Bank Leumi Le’Israel Ltd., Allenby Business
Branch (No. 802), Tel Aviv, account No 132900/23.
Israel Discount Bank Ltd., Hamasger Branch
(No. 4611), Tel Aviv, account
No 4611.
Bank Hapoalim Ltd., Central Business Branch (No. 600), Tel Aviv,
account
No 634330.
A check with the Central Banks' database did not reveal any negative
information regarding subject's a/m accounts.
Nothing unfavorable
learned on subject (reportedly, there is a lawsuit from mid 2011 against
H&O by a local fashion marketing company ZIP, a former supplier, who claims
H&O and its manager Nitzan Hadas deceived them and threatened to destroy
them economically. ZIP's claim is for NIS 9.5 million. H&O denies. This
case we assume refers to subject's parent, not subject).
Subject is one of
the leading local fashion retail chains.
When
acquired by H & O FASHION, subject –while being
TAGWOMAN alone-carried hefty financial troubles. Parent H & O
FASHION LTD. excersized a streamlining process
in subject and recovery plan upon its acquisition. In February 2010 it was
reported that during the last year H&O Group closed down 10 of TagWoman 32
branches. Due to fierce competition in the local market and the slow down in
the fashion sector in 2009 and 2010, subject continued to inflict losses, and
in May 2011 it was reported that in recent months 8 more losing branches were
closed down, plus another one in Modi'in to be closed, leaving subject with
some 10 shops. In mid 2009 it was decided to merge TagWoman brand within H
& O branches (as a department).
In
mid 2010 it was reported on NIS 1 milion investment in promotion of TagWoman
brand for summer 2010.
In
May 2011, H & O reported that they expect that the stremlining measures and
shops closing will lead TagWoman to balance till the year's end.
Avraham (Bondi)
Livnat is a well-known and among the leading and most powerful local
businessmen. TAAVURA Group, which
he founded, is the largest local transporters of heavy road haulage. The Group
has many other holdings, including 80% in CARMEN MANAGEMENT AND ASSETS (1997)
LTD., which has some 20% stake in the publicly traded company EQUITAL LTD.,
dealing in real estate and oil and natural gas exploration (includes part in
the rights in one of the largest natural gas discoveries in the world, when in 2009
and 2010 huge resources were discovered in the “Tamar” and “Dalit” prospects,
offshore Haifa, of over 200 billion CM, valued many US$ billions).
In addition, Bondi is also a shareholder (some
13%) in one of Israel's largest and most influential concerns, I.D.B Concern (controlled by Nochi Dankner), which via its holding subsidiaries,
are operating and investing in all kind of sectors in Israel and abroad,
including trade and commerce, finance and insurance, real estate,
telecommunications and media, hi-tech and other industries.
In February 2012 AVRAHAM LIVNAT LTD. and CLAL
INDUSTRIES AND INVESTMENTS (IDB subsidiary) signed an agreement in which
AVRAHAM LIVNAT will acquire 55% of MASHAV INITIATION AND DEVELOPMENT shares
from CLAL (including a put/call option on remaining shares) for NIS 1,320
million.
In Parallel, MASHAV (owns 70% of NESHER,
local largest cement supplier) will acquire AVRAHAM LIVNAT's holding in TAAVURA
HOLDINGS for no less that US$ 200 million. Deals are awaiting boards' and
authorities' approvals.
In
November 2010 it was reported that H&O won (for the 3rd
consecutive time) tender to supply uniform for Israeli Police and Prison Authority for NIS 40 million.
In February 2010 it was reported that H&O
enters the home decoration field, in
a format of a store within store, under the brand PRIMAVERA, offering home
textile, household artcrafts and giftware. Investment in the move said to be
NIS 5 million. The local Home Textile field is valued at NIS 1 billion and is
highly competitive and considered saturated. H&O hopes to capture 5% market share.
In
July 2010 it was reported that H&O is opening a sport section in its
stores, with a private brand named EXT, investing NIS 2 million.
During
2010 H&O received the representation of 'Champion' sports brand and of 'Carter's' baby clothing brand. According to
reports H&O will invest 5 million in the Carter's brand's promotion. It
also intends to open 4-5 independent Carter's stores. Local babies clothing field is estimated at NIS 600
million per annum.
In
September 2011 it was reported that H&O is openning 6 new stores on total
space of 4,750 sq. meters each, with an investment of NIS 15 million.
In
March 2012 it was reported that subject received the representation of
"Bacellona Football Club" football uniforms.
According to reports from the beginning of
2012, total revenues of the local fashion market are NIS 10 billion per annum.
Based on surveys, around 50% and more is women's fashion.
Moreover, 40% of fashion stores in Israel belong to fashion chains, the rest
being private shops.
According to the Central Bureau of Statistics (CBS), import of
Clothing and Footwear in 2011 kept the rising trend from 2010: import rose by
close to 19%, after rising 13.4% in 2010 from 2009, summing up to US$ 1,707.3
million (in 2009 the local market experienced a slow-down). Most import comes
from China. Main other countries of origin for textile goods are France, Italy,
Hong Kong and Turkey, Spain and the U.S.A.
Despite the fears
due to the slow-down trend in the local economy, mainly since mid 2011, sales
by the local fashion –clothing and footwear- branch in 2011 witnessed a growth.
The income of fashion chains (which covers 1,350 shops, the major chunk of
fashion sales in Israel) summed up to NIS 4.52 billion, representing a 5.7%
rise from 2010 in money terms. Sales during the year characterized in ups and
downs, though eventually they came higher than 2010, a year which was better
than 2009, when the branch suffered from slow-down (coupled with the general
local economic environment) and overall sales indicators were negative. 2010 sales were only marginally positive. Sales have
been also influenced by the entrnce of new international fashion players
to the already highly competitive local market in 2009-11 (GAP, H&M,
Forever21).
According to sources in the local fashion branch, in recent months the
branch entered
again a freezing mode. It may be explained by several factors, including the
present slow-down in local economy, the fierce competition and more.
According
to the Central Bureau of Statistics (CBS), private consumption expenditure by
Israeli households in 2011 in clothing, footwear and personal effects rose by
mere 1.3% from 2010, after a 9.5% increase from 2009.
Good for trade
engagements.
Note: Since the beginning of 2012 Israel Post
started using a new area code method of 7 digits (the old method of 5 digits
will still be valid till end of 2012).
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.56.92 |
|
|
1 |
Rs.88.91 |
|
Euro |
1 |
Rs.71.25 |
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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.