|
Report Date : |
08.08.2013 |
IDENTIFICATION DETAILS
|
Name : |
LLD DIAMONDS LTD. |
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Registered Office : |
23 Tuval Street, Diamond Exchange, Noam Bldg.,
Ramat Gan 5252238 |
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Country : |
Israel |
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Date of Incorporation : |
1970 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
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
|
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 : |
Satisfactory |
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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 – March, 31st, 2013
|
Country Name |
Previous Rating (31.12.2012) |
Current Rating (31.03.2013) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
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High |
B2 |
|
Very High |
C1 |
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Restricted |
C2 |
|
Off-credit |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. Its major
imports include crude oil, grains, raw materials, and military equipment. Cut
diamonds, high-technology equipment, and pharmaceuticals are among 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. Israel's economy also has weathered the
Arab Spring because strong trade ties outside the Middle East have insulated
the economy from spillover effects. 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, and production from the Tama field is expected to
meet all of Israel''s natural gas demand beginning mid-2013. 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.
RAMAT GAN 5252238 ISRAEL
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 (11th & 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 47.4%, a large holding company
with many holdings in Israel and overseas in various fields (see more
CHARACTER). Current market value US$ 314.2 million (see more below).
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.
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. According to
'Forbes' World's richest persons, he is ranked 974th with personal
wealth estimated at US$ 1.5 billion, making him the 12th in Israel.
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.
Export of polished diamonds from Israel fell by 23% in 2012 from 2011,
after the sector recovered in 2010 and mainly in 2011 from one of the worst
depressions in the global diamond sector due to the economic crisis in global
markets that erupted in 2008. The sector experienced almost an entire freeze
and collapse in sales of about 70% in the peak of the crisis. While the global
diamond industry experienced major declines during 2012, Israel saw a steady improvement
in its diamond trade in the third and fourth quarters of the year, according to
the Diamond Administration at the Ministry of Industry & Trade.
Israel’s net polished diamond exports stood at US$5.6 billion in 2012,
compared a decline of 23% from 2011. Net rough diamond exports totaled US$2.8
billion in
Net imports of polished diamonds dropped 25% from 2011, totaling US$4.27
billion, while net rough imports stood at US$3.8 billion, 13 % less than in
2011.
The diamond sector has been keeping a steady trend in the first half of
2013.
Net polished diamond exports in 2013 1st half witnessed a
slight decrease (2%) comparing to 2012 1stH, reaching US$ 3.233 billion, while
export of rough diamonds saw a 8.1% rise. Net imports of rough diamonds in the
1st half of 2013 reached US$ 2.037 billion, 2.8% increase compared
with the parallel period in 2012, whereas import of polished diamonds fell by
5.3% to US$ 2.084 billion.
Expectations in the local diamond sector for 2013 2nd half is
for further recovery.
The United States continued to be Israel’s major market for polished
diamonds, accounting for 44% of the market in 2013 1st half (36% in
2012). Hong Kong is the next largest market with 29.7% of exports (28% in
2012), with Switzerland accounting for 7.8%, Belgium 6.7%, and Thailand with
1.1%.
According to the President of the Israeli Diamonds Association, in 2010
the trade in the local diamond sector rolled 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.
An affair of an underground bank shocked 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,
and for a while to paralysis (especially in purchase of raw diamonds) due to
uncertainty among local and foreign dealers.
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.
In June 2013 it was reported that the Police resumed its raids on the
diamonds branch, and although names of suspects were not released, sources say
that it is also related to the above underground bank affair. In parallel, it
is also reported that the Tax Authorities and diamonds dealers' representatives
are trying to reach an arrangement for past debts.
Good for trade engagements.
Good for all credits.
Note: Since the beginning of February 2013 Israel Post has started using a
new area code method of 7 digits (the old method of 5 digits is no longer
valid).
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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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 –
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Gem & Jewellery Export Promotion Council in its statistical data has
shown the export of polished diamonds to have increase by 28 % in February
2013. Compared to $ 1.4 bn worth of polished diamond export in February, 2012,
India exported $ 1.84 billion worth of polished diamonds in February 2013. A
senior executive of GJEPC said, “Export of cut and polished diamonds started
falling month-wise after the imposition of 2 % of import duty on the polished
diamonds. But February, 2013 has given a new ray of hope to the industry as the
export of polished diamonds has actually increased by 28 %. It means the
industry is on the track of recovery and round tripping of diamonds has
stopped completely.” Demand has started coming from the US, the UK, Japan and
China. India’s polished diamond export is expected to cross $ 21 bn in 2013-14.
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The banking sector has started exercising restraint while following
prudent risk management norms when lending money to gems and jewellery sector.
This follows the implementation of Basel III accord – a global voluntary
regulatory standard on bank capital adequacy, stress testing and market
liquidity.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.39 |
|
|
1 |
Rs.94.17 |
|
Euro |
1 |
Rs.81.70 |
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 |
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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.