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Report Date : |
06.04.2013 |
IDENTIFICATION DETAILS
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Name : |
LLD DIAM |
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Registered Office : |
23 Tuval Street Diamond Exchange, Noam Bldg. Ramat Gan 52522 |
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Country : |
Israel |
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Date of Incorporation : |
12.10.1997 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Miners,
international manufacturers and traders in diamonds, dealing as cutters,
polishers, importers, exporters and marketers of all sorts of diamonds for
fine jewellery. |
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No. of Employees : |
90 |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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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 – 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 |
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Very High |
C1 |
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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
LLD DIAM
Telephone 972
3 755 11 11
Fax 972
3 612 27 15
23 Tuval Street
Diamond Exchange, Noam Bldg.
A private limited company, incorporated as per file No. 51-254128-5 on the
12.10.1997, continuing activities which began in the mid 1970's by Lev Leviev.
Authorized share capital NIS 34,300.00, divided into -
34,300 ordinary shares
of NIS 1.00 each,
of which 104 shares amounting to NIS 104.00 were issued.
Subject is fully owned by Lev Leviev.
(Note: According to the Registrar of Companies, Moshe Leviev holds 1 single
share).
Zevulun Leviev.
Miners, international manufacturers and traders in diamonds, dealing as
cutters, polishers, importers, exporters and marketers of all sorts of diamonds
for fine jewellery.
LEVIEV Group operates in all stages of the diamonds chain – from mining and
production to sales and marketing. Dealing in cut and rough diamonds.
LEVIEV Group controls its own diamond mines, some of which are located in
Namibia and Angola. Most manufacturing and processing is abroad, imported to
Israel either as rough for sale to other dealers or as cut diamonds for sale
and export.
Diamonds and jewelry are sold also via the Group’s chain of fancy stores
around the world.
Operating from premises owned by shareholders, on a total area of 1,200 sq.
meters, in 23 Tuval Street (also referred to as 52 Bezalel Street), Noam
Building (12th & 9th floors – subject’s shareholders
own and occupies the entire floors), Diamond Exchange, Ramat Gan. Group also
operating from mines, plants and offices in South Africa, Namibia (see below)
and Angola, polishing plants in India and Far East and branches in Antwerp, New
York, London, Moscow, Rome, China/ Hong Kong, India and Dubai/ UAE.
Having 90 employees in Israel (had 100 employees in early 2012, same as in
2011 and 2010), as well as hundreds of employees serving LLD Group worldwide
(couple of hundreds in Israel).
Financial data not forthcoming, however subject is known to be financially
strong and solid.
Subject was hit by the severe depression in the diamond industry which
erupted in the last third of 2008 and lasted throughout 2009. Like the diamond
industry, the situation improved in 2010 (see also CHARACTER). According to
media reports, following the crisis subject’s bankers asked in the beginning of
2009 from subject to lower its credit exposure and Mr. Leviev fueled NIS 400
million and subject was left with US$ 800 million debt to its banks.
Sources in the branch estimated in 2009 Lebiev’s diamond business at US$ 2
– 4 billion.
There are 7 charges for unlimited amounts registered on the company's
assets, in favor of Union Bank of Israel Ltd., Israel Discount Bank Ltd. and Bank
Leumi Le’Israel Ltd. (last charge placed September 2008).
According to the data published by the
Israel Supervisor on Diamonds in the Ministry of Industry & Trade, export
of polished diamonds by subject (actual overall sales presumed to be
higher, as there are local sales of polished diamonds and may have sales of
rough diamonds as well), were as follows:
2005 sales were US$ 601,000,000.
2006 sales were US$ 553,000,000.
2007 sales were US$ 522,000,000.
2008 sales were US$ 417,000,000.
2009 sales were US$ 241,000,000.
2010 sales were US$ 366,000,000.
Later data not published.
LEVIEV Group whole diamond and jewelry business estimated at US$ 3 billion
per year.
AFRICA ISRAEL
INVESTMENTS LTD., Leviev holds 47.3%, a large holding company with many
holdings in Israel and overseas in various fields (see more CHARACTER). Current
market value US$ 299 million.
MEMORAND HOLDINGS & INVESTMENTS LTD., holding company via which Lev
Leviev holds AFRICA ISRAEL Group.
AURAMINE, owns and develops gold mines in Russia (extracted 2 million tons
of gold in 2008)
SAMICOR, diamond extracting from the Angola’s Sea.
DIOMONTE FINANCING, 18%, Angola, worlds 4th largest diamond mine
(“Katoka”),
NAMCO, diamond mines in Namibia and South Africa.
MIUZ, Russia, design, manufacture and sale of jewelries, operating via 160
chain stores, mainly in Russia, CIS and Eastern Europe countries, estimated
annual sales US$ 150 million.
OPEN JOINT STOCK COMPANY MOSCOW JEWELRY FACTORY, Russia.
S.H.G., LEVIEV Group is a partner in gold and metals mining in Kyrgyzstan.
Main branches:
Union Bank of Israel Ltd., Ramat Gan Branch (062), Ramat Gan.
Bank Hapoalim Ltd., Yahalom Branch (No. 537), Ramat Gan.
Also working with:
Israel Discount Bank Ltd., Diamond Exchange Branch (No. 080), Ramat Gan.
Nothing unfavorable learned on subject.
In June 2012 it
was reported that Namibian Diamond Trading Company (NDCT), owned by Namibian
Governmental and DE-BEERS, announced it will cease the supply of rough diamonds
to LLD Group. LLD had a 5-years agreement with the Government, who announced
the license (Sight) is not being renewed due to "not meeting the
requirements". The Namibian polishing and cutting plant, opened in 2004,
has been known as the largest of its kind in African continent. Consequently,
LLD Group fired all its 150 employees in Namibia and suspended the work in its
plant.
Subject's CFO refused to disclose financial data.
Lev Leviev is a
well-known veteran diamond dealer and is considered the world’s largest private
diamond dealer with worldwide reputation. His own personal wealth was estimated
in 2009 at NIS 6.5 billion, making him among the richest in the country.
In Israel, Leviev
has been one of the leading business figures, via his AFRICA ISRAEL Group,
though his influence fell in the last couple of years –the hit in the real
estate and diamond businesses due to the severe crisis (see below). Yet, thanks
to its reputation and the fact it deals in all the diamond sector chain, LEVIEV
Group managed to cross over the crisis (according to sources in the diamond
branch subject met all liabilities promptly, enjoying the fact that both
customers and suppliers want to work with subject), and the Group’s financial
standing improved also.
In the past Leviev
was a DE BEERS sightholder in South Africa, however following continuous
conflicts he departed and became the largest independent cutter and processor
of diamonds in the world, and the main source of rough diamonds, challenging
the long standing hegemony of DE BEERS and revolutionized the sector. Mr.
Leviev controls many other international companies in the diamond sector, among
them are ASCORP, RUIS DIAM
During 2004 and
2005 Leviev opened, jointly with the local authorities, 2 major plants for
diamonds polishing and cutting in Namibia and in Angola.
Born in Tashkent,
Uzbekistan, Leviev is also strongly involved in the Russian diamond industry
and trade.
For many years,
subject has been the leading largest diamond company in Israel, most of the years
by far largest than others. To-date it is still the largest (No.
In 2011 the LLD
Group refrained from being reported in the Israel Supervisor on Diamonds top
exporters list.
In 1996 Lev Leviev
took over control in AFRICA ISRAEL INVESTMENTS LTD., publicly traded on the Tel
Aviv Stock Exchange, land developers, building contractors, and also managing
and dealing, through subsidiaries, yielding properties, hotels and resorts,
industries, commerce and agencies. AFRICA ISRAEL Group (AFI) has been one of
the largest concerns in Israel. Other public companies in the AFI Group are
also traded on stock exchanges in Israel and abroad.
AFI was adversely hit by the crisis in world financial and real estate
markets, mainly due to its real estate holdings in Russia and the USA,
accumulating huge losses –with debt in total of NIS 8 billion to the bonds
holders and banks.
AFI announced in August 2009 on uncertainty in their ability to meet all
its future obligations, seeking an arrangement with its bonds holders (and
Institutional Investors who hold most of the bonds), which was completed in May
2010 in volume of NIS 7.45 billion (part of the debt erased, a re-schedule for
payments set, and Leviev fueled his own capital (NIS 750 million) though
remained in control). AFI's financial standing improved significantly thanks to
the debt arrangement, as well as recovery in global markets, including the real
estate market in Russia.
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.
According to the
Central Bureau of Statistics export of diamonds from Israel fell by 22.1% in
2012 from 2011. This is after 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.
Good for trade
engagements.
DIAMOND INDUSTRY –
INDIA
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.54.88 |
|
|
1 |
Rs.83.54 |
|
Euro |
1 |
Rs.70.90 |
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.