|
Report Date : |
31.12.2013 |
IDENTIFICATION DETAILS
|
Name : |
TARO PHARMACEUTICAL INDUSTRIES LTD. |
|
|
|
|
Registered Office : |
|
|
|
|
|
Country : |
|
|
|
|
|
Financials (as on) : |
31.03.2013 |
|
|
|
|
Date of Incorporation : |
03.06.1959 |
|
|
|
|
Legal Form : |
Public Limited Company |
|
|
|
|
Line of Business : |
Developers, manufacturers,
exporters and markets of pharmaceuticals, generic and branded
pharmaceuticals, both prescription and OTC. |
|
|
|
|
No. of Employees : |
1,294 |
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 – September 30, 2013
|
Country Name |
Previous Rating (30.06.2013) |
Current Rating (30.09.2013) |
|
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. 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 |
TARO PHARMACEUTICAL
INDUSTRIES LTD.
Telephone 972 9 971 18 00
Fax 972 9 955 74
43
P.O. Box 10347, (2611202)
14 Hakitor Street
Haifa Bay Industrial Zone
Haifa 2624761 Israel
A public limited company,
incorporated as per file No. 52-002290-6 on the 03.06.1959 under the name of
TARO VIT CHEMICAL INDUSTRIES LTD., which changed its name to TARO VIT
INDUSTRIES LTD. on the 27.06.1984.
In December 1993
merged with TARO PHARMACEUTICAL INDUSTRIES LTD. (established 1950, acquired
1961), which became non-active.
On 27.02.1994 name
was changed to that of the non active company, i.e. the present name.
In 1961 completed
its initial public offering.
As of 1982, shares
are publicly traded (see more below).
On the 18.09.2002,
TARO PHARMACEUTICAL PROPERTIES LTD. was merged into subject.
Authorized share
capital NIS 20,000.00, divided into -
200,000,000 ordinary
shares of NIS 0.0001 each,
of which 44,800,007
shares amounting to NIS 4,480.0007 were issued.
1. SUN PHARMACEUTICAL INDUSTRIES LTD., 66.3% (in capital, 77.5% in voting), via ALKALOIDA CHEMICAL CO., of India, a publicly traded company on the Bombay Stock Exchange, controlled by Dilip Shanghvi,
2.
2. Shares are also traded on the New York
Stock Exchange (NYSE:TARO).
As from March 22,
2012, subject's shares are traded on the NYSE. Prior to the move to the NYSE,
shares were quoted on the Pink Sheets Electronic Quotation Service (“Pink
Sheets”) under the symbol TAROF.
In September 2010
came to an end a 3-years battle over the control in subject, after the Court
ruled in favor of SUN. The affair started in May 2007, when Indian
international pharmaceuticals corporation, SUN PHARMACEUTICAL INDUSTRIES, acquired (via Hungarian subsidiary ALKALOIDA
CHEMICAL COMPANY EXCLUSIVE GROUP LTD.) the control in subject in consideration
of US$ 454 million (partly cash, partly for covering TARO's debts), from the
Levitt and Moros families (controlled by Dr. Barrie Levitt and Dr. Daniel
Moros).
SUN attempted to
gain full ownership in subject through a purchasing offer for the shares held
by the public, however in February 2013 these the attempt was terminated – see
more CHARACTER.
Note: SUN PHARMACEUTICAL is currently in the process of a tender offer for the
purchase of the maximum amount of shares for US$ 200 million (a Dutch offer –
about 4.6% of shares).
1. Subramanian Kalyanasundaram, Chairman,
2. Jim Kedrowski,
3. Sudhir Valia,
4. Aalok Shanghvi,
5. Mrs. Ilana Avidov-Mor,
6. Dan Biran,
7. Prof. Dov Pekelman.
Kal Sundaram,
General Manager,
Rami Zajicek, Esq.,
Group Vice President Haifa Site Manager.
Developers, manufacturers,
exporters and markets of pharmaceuticals, generic and branded pharmaceuticals,
both prescription and OTC.
Subject produces
some 190 pharmaceutical products, including topical preparations (creams,
ointments, gels, and solutions), oral medications (tablets, capsules, powders,
liquids) and sterile products (ophthalmic drops, powders).
Some 95% of sales
are for export, mostly to the USA.
Main wholesaler customers (in USA): McKesson, AmeriSource Bergen.
Among local
suppliers: MICHAEL CHEMICALS, YES PHARMA, DEAL ENGINEERS, HELION, BERLIN
TECHNOLOGIES, KINETIC SYSTEMS ISRAEL, A. SHITZER, GADOT CHEMICALS, HUBERMAN & SONS, N.S.L.T. 2002 HAIFA, BIOPHARMAX, ZIFRONI CHEMICAL SUPPLIERS, BIO-LAB, etc.
Operating from owned
premises (headquarters, plant, labs and warehouses), on an area of 34,000 sq.
meters in 14 Hakitor Street, Haifa Bay Industrial Zone, Haifa. Also operating
from manufacturing facilities in Canada (owned, 33,000 sq. meters) and R&D
and marketing premises in the USA and Canada.
Having 1,294
employees serving TARO Group, of which over 700 in Israel.
Consolidated B/S
shows (fiscal year ends March 31st):
US$ (thousands)
31.03.2013 30.09.2013
ASSETS
Current assets
Cash and cash equivalents 237,284 350,611
Short term bank deposits & marketable securities323,216 360,284
Accounts receivable- Trade 119,810 127,318
Other receivables, prepaid expenses & others 119,835 146,111
Inventories 109,626 112,042
909,771 1,096,366
Long-term receivables
and other assets 23,227 23,418
Property, plant and equipment, net 145,265 145,527
Other assets 28,373 26,600
1,106,636 1,291,911
======== ========
LIABILITIES
Current liabilities 192,531 227,390
Long-term debt, net of current maturities 23,144 22,511
Equity 890,961 1,042,010
1,106,636 1,291,911
======== ========
Current market value
US$ 4.37 billion.
Subject is an Approved Enterprise and as such entitled to tax benefits
and State incentives. In December 2001, Israeli Investment Centre (IIC)
approved a
US$ 20.3 million investment plan for the expansion of subject’s plant in Haifa.
In December 2002,
IIC approved a further US$ 13.5 million plan for the expansion of subject’s
plant. In May 2004, IIC approved a further US$ 22 million plan for the
expansion of subject’s plant.
During 2003, subject
completed a US$ 110 million capital raise by issuing bonds to the institutional
market and local banks.
In June 2011 SUN
announced it is going to invest some US$ 100 million in expanding and upgrading
its facilities worldwide, including in subject.
There are several
charges for a total amount of NIS 48,400,000, registered on the company's
assets.
Subject announced it
changed its fiscal year end from December 31st to March 31st
to align TARO's fiscal reporting and annual budgeting periods with that of its
major shareholder, SUN.
Consolidated Statement of Income:
US$ (thousands)
Fiscal year ended
31.03
2013 2012
Sales, net 670,954 543,082
Gross profit 494,826 365,585
Operating income 328,580 237,570
Income before income taxes 335,863 241,718
Income from continuing operations 268,064 205,744
Net income 266,206 204,274
======= =======
2014 first 6 months
sales were US$ 358,511,000 (2.6% increase compared to parallel period of 2013),
making a gross profit of US$ 266,186,000, an operating income of US$
193,815,000 and a net income of US$ 155,132,000.
Subject's main subsidiaries
(all 100% owned):
TARO RESEARCH
INSTITUTE LTD., operates as the Research and Development company of the TARO
PHARMACEUTICAL Group.
TARO PHARMACEUTICALS
USA INC., U.S.A.
TARO PHARMACEUTICALS
INC., Canada
TARO PHARMACEUTICAL
UK LTD., U.K.
TARO PHARMACEUTICAL
NORTH AMERICA INC (TNA), Cayman Islands
TARO PHARMACEUTICAL
EUROPE B.V., the Netherlands
TARO
TARO PHARMACEUTICALS
INDIA PVT LTD., India.
Bank Hapoalim Ltd.,
Hayetzira Branch (No.459), Netanya, account No. 90909.
Bank Leumi Le’Israel Ltd., Central Branch (No. 800), Tel Aviv,
account 406200/44.
Israel Discount Bank
Ltd., Main Branch (No. 010), Tel Aviv, account No. 196991.
A check with the Central Banks' data base did not reveal
negative information on subject’s bank accounts.
Also working with:
CitiBank N.A., Main Branch (No. 001), Tel Aviv.
In the legal aspect, after resolving the power struggle issue in September 2010 (as described below), there is nothing unfavorable learnt. TARO also settled class action motions that were filed due to the said affairs.
Subject is the 3rd
largest pharmaceutical company in Israel (after TEVA and PERRIGO ISRAEL).
TARO is a veteran company, enjoying good reputation.
After years of continuous growth, subject suffered a major
set back in Spring 2004, after severe irregularities in its financial reports
were revealed concerning inventories evaluation, leading to a long turmoil,
which also harmed subject in several aspects, including financial.
During 2006 subject
encountered financial difficulties and liquidity distress (subject
operated under the warning of a "going concern" for a certain period), mainly connected to the accounting turmoil (regarding
inventory calculations), which also led
to senior management shocks and resignations.
As a result, TARO Group went through streamlining measures and re-organization process, including dismissals and real estate properties realization.
In December 2006 TARO's shares were removed from the Nasdaq Global Select Market to the traded on the "Pink Sheets" list (the Over-The-Counter Bulletin Board), after failing to meet the SEC regulations (subject published its audited financial statements for the three years ended December 31, 2006, which include restated financial statements for 2004-5-6, only in April 2010).
In May 2007 subject entered into a merger agreement for its
acquisition by SUN PHARMACEUTICAL
INDUSTRIES for US$230 million in cash and in addition US$224 million
from SUN to cover debts of subject to their banks, institutional investors and
bonds holders. The total enterprise value of the transaction was US$454
million. In addition, SUN fueled an immediate sum of US$41 million of interim
equity financing to subject, which solved immediate debt problem (payments to
their bond's holders). In July 2007 SUN fueled
further US$ 18 million into subject, realizing part of the option given to them
in th emerger agreement (option for 3 years).
SUN in an international company based in India, one of the
largest pharmaceutical companies in India. It is a public company whose shares
are traded on the Bombay Stock Exchange, with current market value of
around INR 1.19 trillion.
Following a/m deal, a major dispute erupted between the parties, accompanied by lawsuits and counter-lawsuits, and fierce power struggle, which also effected subject operations. In May 2008 subject’s Board voted to terminate Merger Agreement, claiming mainly that the deal reflected a well much lower subject’s real value. SUN persisted its efforts to complete the deal as planned (realize its option to acquire Levitt and Moros shares). In Summer 2008 the District Court ruled that the merger is valid. An appeal filed to the Supreme Court, ruling in favor of SUN, and SUN gained control in subject (paid further US$ 37 million to Levitt and Moros for their 12% in capital share and 33% of voting shares. In November 2010 SUN paid TEMPLETON US$ 82 million for further 12%.
Since October 2011 SUN has been trying to purchase the remaining of TARO's shares held by the public, including investment funds as minority shareholders, in view of merging it into SUN (thus deleting subject's shares from trade). Its purchase offer from late 2011 was rejected, which forced SUN to improve its offer. In August 2012 SUN made another higher offer (for some 33% of the shares), now needed to be approved. Yet, 2 investments funds, minority shareholders, resist, claiming (including a lawsuit filed) that subject's recent 2nd quarter financial results were manipulated, therefore SUN's offer is unfair.
On the 08.02.2013
subject and SUN announced that they have mutually agreed to terminate their
merger agreement, announced in August 2012. The termination is due to objection
of the minority shareholders, and the fact that following subject's recent
financial results its value increased, turning SUN's offer irrelevant (24%
under market share value).
As above mentioned, currently SUN is in the process of acquiring some 4.6% of subject's share in a reverse tender (a Dutch tender), offering a total of US$ 200 million.
In 2002 subject acquired all assets of American pharmaceutical company, THAMES PHARMACAL INC., for a sum of US$ 6.4 million.
In 2003 TARO signed an agreement with MEDICIS PHARMACEUTICAL CORP., to purchase from MEDICIS 4 branded prescription product lines for sale in the USA for an aggregate price of US$ 23.8 million.
In February 2007 subject received positive results from the clinical trials assessing the effectiveness of T2000 in treating essential tremor. It will be subject's first proprietary ethical drug, a significant breakthrough.
In February 2009 it was
reported that subject received a warning from the U.S. FDA concerning a test
conducted in its manufacturing facility in Canada in July 2008, relating to the
company’s quality control procedures. In April 2011 FDA, after re-conducting a
test in the plant, announced TARO meets the requirements.
During 2010 subject closed down its manufacturing facility in Ireland, which has been inflicting losses, and decided to sell the facility.
In May 2010 subject signed an agreement with GLENMARK GENERICS INC of the USA to distribute GLENMARK's branded product.
Annual sales volume in the local pharmaceuticals market is estimated at NIS 4 billion, divided into NIS 1.8 billion to the institutional sector (HMO's, hospitals, etc.) and NIS 1.2 billion to the private sector (including pharma retail chains).
In 2009 sales of drugs for human consumption (including from import) reached US$ 1,409 million (US$ 1,416 million in 2008), of which estimated over US$ 1,100 million were from import.
The non-prescription drugs market in Israel is valued at some 15% of the local whole drugs market, with annual growth rate of circa 15%.
In 2011 import of medicines reached US$ 497 million (were US$ 555 million in 2010).
Sales by the local Pharmaceutical Industry in 2010 reached US$ 6,984 million, of which US$ 6,612 million were for export.
Sales for exports of pharmaceuticals in 2012 reached US$ 6,847 million, representing close to 6% decrease from 2011 (after 10% and 41.5% increase in 2011 and 2010 from the previous years, respectively).
Sales for export are to over 120 countries. Products included drugs, raw materials for medicine production, veterinary medication.
There are some 13 generic pharmaceutics production companies in Israel and the industry employs 9,000 employees.
Good for trade engagements.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.62.00 |
|
|
1 |
Rs.102.17 |
|
Euro |
1 |
Rs.85.19 |
INFORMATION DETAILS
|
Report Prepared
by : |
NIS |
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.