|
Report Date : |
14.11.2013 |
IDENTIFICATION DETAILS
|
Name : |
ARAD MEASURING
TECHNOLOGIES LTD. |
|
|
|
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Registered Office : |
P.O. Box 537, 4 Hamada Street, Yoqneam Industrial
Zone, Yoqneam Illit 2066718 |
|
|
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Country : |
Israel |
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|
|
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Date of Incorporation : |
07.12.1999 |
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|
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Legal Form : |
Private Limited Company |
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Line of Business : |
Developers, manufacturers, exporters and marketers of wireless
automatic meter reading systems (AMR) which are integrated into the water
meters manufactured by the ARAD Group and used also for gas and electricity
networks. |
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|
|
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No. of Employees : |
50 employees |
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 : |
Satisfactory |
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|
|
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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 |
|
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 |
ARAD MEASURING
TECHNOLOGIES LTD.
(Also known as ARAD TECHNOLOGIES)
Telephone 972
4 993 52 22
Fax 972
4 993 52 27
P.O. Box 537
4 Hamada Street
Yoqneam Industrial Zone
Yoqneam Illit 2066718 Israel
A Private Limited Company, incorporated as per file No. 51-286531-2 on
the 07.12.1999, as part of the ARAD Group, founded in 1941.
Authorized share capital NIS 38,000.00, divided into -
38,000
ordinary shares of NIS 1.00 each,
of which 13,100 shares amounting to 13,100.00 were issued.
Subject is a fully owned subsidiary of ARAD LTD, a public limited
company, whose shares are traded on the Tel Aviv Stock Exchange, controlled by:
1. Kibbutz Ramot Menashe,
29.4%, a cooperative society, operating communal agricultural settlement,
2. Kibbutz Dalia, 27.14%, a
cooperative society, operating communal agricultural settlement,
3. MILESTONES WATER
METERING AND MANAGEMENT SYSTEMS (SPC) LTD., 15.51%, of MILESTONES UPGRADING & INDUSTRIES
Group, controlled by the heirs of the Late Bill Davidson of the USA, and Oded
Tira and his son, Ron Tira.
MILESTONES Group purchased shares in ARAD in November 2007, investing
NIS 90 million (for 18% of the shares), according to a value of NIS 515
million.
Victor Blit, Chairman,
Ms. Tamira Katz,
Ms. Rachel Halevy,
Avi Scoltz,
Oded Vashitz,
Dr. Hugo Chaupan, Chairman of ARAD Group,
David Gail,
Miguel Zeevi.
Gavriel (Gabi) Yankowitz, also General Manager of ARAD.
Developers, manufacturers, exporters and marketers of wireless automatic
meter reading systems (AMR) which are integrated into the water meters manufactured
by the ARAD Group and used also for gas and electricity networks.
In 2012 the AMR segment comprises of 68.6% of ARAD Group's revenues
(similar to 2011).
ARAD Group, jointly with TELEMATICS WIRELESS, developed a digital
technology in water meters, which allows on-line remote monitoring and control
of the meters reading.
Some 80% of sales are exports, mostly to the U.S.A (53%), and Europe
(22%).
Among Group's clients are municipalities and water corporation
worldwide, MEKOROT WATER CO. (Israel's national water carrier), MADEY VERED, and many private companies.
Among foreign clientele: SOUTHERN WATER (UK), DELHI JAL BOARD (India).
Among suppliers: TELEMATICS WIRELESS, R.H ELECTRONICS, AVROT INDUSTRIES,
UNIQUE GROUP.
Among foreign suppliers: FABRICACIONES ESPECIALIZADAS.
Operating from rented offices, development and manufacturing facilities,
in 46 Hamada Street, Yoqneam Industrial Zone, Yoqneam Illit.
ARAD Group also operates from plants and offices in China, Canada, USA
and Spain.
Had 50 employees in subject in the beginning of 2009.
Having 548 employees in ARAD Group (of which 383 employees in Israel).
Subject's Stock was valued at NIS
ARAD LTD. current market value US$ 182.1
million.
There are no charges registered on the company’s assets.
Financial data is
included in the consolidated B/S of parent company, ARAD LTD., which shows:
US$
(thousands)
31.12.2012 30.06.2013
ASSETS
Current assets
Cash and cash equivalents 6,843 8,685
Other financial assets 8,398 8,365
Customers 36,260 41,292
Other debtors 1,727 2,439
Other assets 64 -
Stock 41,890 42,600
95,182 103,381
Non-current assets
Fixed assets, net 17,713 17,664
Intangible assets & goodwill 12,824 12,063
Other assets 6,517 6,466
37,054 36,193
132,236 139,574
======= ======
LIABILITIES
Current liabilities 44,293 43,821
Non-current liabilities 15,164 19,528
Equity 72,779 76,225
132,236 139,574
======= =======
Subject ended 2010 with a net profit of US$ 10,109,000.
Subject ended 2011 with a net profit of US$ 6,625,000.
Subject ended 2012 with a net profit of US$ 10,773,000.
====== ====== =======
ARAD LIMITED
Consolidated
Statement of Income
US$
(thousands)
Year
ended 31.12
2010 2011 2012
Sales 117,078 129,257 135,251
Gross profit 42,629 48,516 50,612
Operating income 11,121 14,079 15,193
Profit before
taxes on income 11,291 12,069 15,314
Net income 10,256 11,106 12,882
====== ====== =======
ARAD LTD. consolidated sales for the first 6 months of 2013 were
US$ 74,813,000 (13% increase comparing to the parallel period in 2012), making
a gross profit of US$ 27,921,000, an operating profit of US$ 8,680,000, making
a net profit of US$ 7,070,000.
CONTADORES DE AGUA DE ZARAGOZA S.A, 100%, Spain, manufactures of an
electronic measuring device integrated in subject's information systems.
ARAD LTD., parent company, developers, manufacturers, exporters and
marketers of precision water meters for applications such as domestic,
waterworks, irrigation and water management.
MASTER METER INC, 100%, a plant in the U.S.A, fully owns MASTER METER
SYSTEMS INC, USA, and MASTER METER PRODUCTS OF
CANADA INC. operating US and Canada activities.
ARAD METERING TECHNOLOGIES WUHAN CO. LTD., 100%, China, distributing
subject's products in China.
ARAM WATER METERS SERVICES LTD., 100%, water meters renovations of water
systems in rural localities.
Bank Leumi Le'Israel Ltd., Haifa Main Branch (No. 876), Haifa.
Bank Hapoalim Ltd., Kikar Paris Branch (No. 736), Haifa.
Nothing unfavorable learned on subject itself (please refer to NOTE
below).
In 2008 the Anti-trust Authority started to investigate allegations that
ARAD LTD., (including a subsidiary – not
subject, and senior officials), its competitor MADEY VERED LTD. and other 4 firms have a binding arrangement between them in the
local market for water meters (in October 2009 the investigation went public).
In December 2011 an indictment was filed to the Jerusalem
District Court in suspicion of forming a cartel, led by subject, as the largest
player (see below) during the years 2004-2009 in tenders for municipal and local
authorities.
In September 2013 the Jerusalem District court convicted Gabi Yankowitz,
sentencing his to 70 days in prison (to be served in community service),
conditional imprisonment of 12 months and a NIS 175,000 fine. Matter against
ARAD is still pending.
A class action lawsuit of NIS 133 million which
was filed against the parties in matter was erased in July 2012.
It should be noted that in January 2005 the
Court for Trade Restrictions had already objected a merger between subject and MADEY VERED. The Court ruled that the compromise creates a binding arrangement,
practically a monopoly between the two largest companies in the local water
meters field.
In September 2013 motion was submitted to the court for the approval as
a class action lawsuit for NIS 10 million against ARAD, its subsidiary ARAM and
other water measuring companies, on the ground of binding agreement between
them. It should be noted that the procedure for such claims to be approved are
usually long and mostly eventually turned down.
Apart from the above, nothing unfavorable learned.
Since 2003 subject is a declared monopoly in the local market in the
water meters field. In 2012 subject had 85% of local market share.
Estimated world market share is 6%, USA market share is 9% and Spanish
market share (via AGUA DE ZARAGOZA) is estimated at 10%-20%.
According to economist estimations from 2006, ARAD Group was considered
the 6th largest in the world in the water meters field.
Despite our efforts, we were unable to speak with subject's officials,
as they were always unavailable. We left messages which so far remain
unanswered.
All ARAD products meet worldwide standards of quality and performance
including ISO, AWWA, MOC, and FCC standards. Our quality system is certified
ISO 9001:2000 and our products hold the CE mark.
Kibbutz Ramot Menashe was founded in 1948 and has some 270 members.
Both Kibbutz Dalia and Kibbutz Ramot Menashe are agricultural
cooperative societies, engaged in various agricultural branches, including
cultivating large areas of field crops, cotton, fruit plantation, as well as
operate dairy farming, etc.
Kibbutz Dalia, a financially solid entity, was founded in 1939 and has
some 430 members. Besides subject, it is also a 50% partner (and founder) in
ZOHAR DALIA ACS LTD., manufacturers, marketers and exporters of detergents
intermediates, soaps and cleaning products.
MILESTONES Group, which purchased shares in parent company in November
2007, is controlled by the heirs of the Late Jewish-American Glass
tycoon, Bill Davidson (passed away in March 2009). Mr. Davidson owned GUARDIAN,
the American glass manufacturer, the 2nd largest in the world, and
was the owner of American basketball team Detroit Pistons. He was also involved
in other local ventures and donations. He was ranked among the U.S. 70
wealthiest persons.
Oded Tira is a known figure, a former President of the Israel
Manufacturers’ Association.
In December 2007, it was reported that HAREL IT will perform an IT data
storage and backup project for subject, in volume of NIS 1 million.
In September 2008, sister U.S. company MASTER METER received an order
for AMR systems from the Water Authority of Kingsport city (TN), in value of
US$ 4.7 million (and option to expand the order by 50%).
In June 2009 ARAD announced that ARAM WATER METERS SERVICES completed
the sale of its water management activities for NIS 2.5 million.
In July 2009 ARAD reported it will supply AMR systems to MEYMEY HANEGEV
Association for NIS 20 million through the next 5 years.
In December 2009 ARAD acquired 51% of CONTADORES DE AQUA DE ZARAGOZA
S.A. (CONTAZARA), of Spain for € 8.1 million. In May 2013 ARAD realized it
option and acquired the remaining 49% for € 4.3 million.
According to reports in December 2009 ARAD entered the markets of China,
India, Russia and Brazil with AMR pilots.
In January 2010 ARAD Group received 2 orders to supply AMR system to 2
companies in India (part of the Mumbai water project) for a total sum of US$
7.3 million.
In February 2010 ARAD signed an agreement to supply AMR systems to
SOUTHERN WATER of England for £ 36 million (5 years contract, £ 7.1 million a
year), subject’s largest contract ever.
In November 2011 subject's Spanish subsidiary won a tender of € 7
million in Madrid.
In April 2012 ARAD established a Chinese subsidiary ARAD METERING
TECHNOLOGIES WUHAN CO.
In April 2013 subject won 2 tenders (together with local Indian partner)
to supply AMR systems to DELHI JAL BOARD. First tender in volume of US$ 16.3
million and the 2nd in volume of US$ 1.6 million.
In July 2013 AVROT INDUSTRIES's painting plant completed the test-run,
and will serve as ARAD Group's painting plant, in volume of NIS 2.5 million per
year.
The AMR applications global market is estimated at US$ 600 million,
concentrating mainly in the USA, based on reports from 2010.
Export by the local water-related industries is valued at US$ 900
million per annum and increasing, with new companies and startups in this field
join the trend of the growing demand for drinking water. Israel has tiny part
in the global market, which is valued at US$ 450 billion (in 2011, furcated to
grow by 10% by 2014). However, Israel is considered as pioneer in the field and
in its reputation for water management capabilities.
Good for trade engagements.
1. According to the
Registrar of Companies subject has a "Law Violating Company" Status.
As part of the Registrar efforts in the last period to collect fees and
supervision on meeting all duties by Companies’ law, such status notes have
been added to the registry. Registration as a "Law Violating Company"
is done due certain violation by the subject company for not meeting the
Registrar of Companies regulations promptly, mainly for not paying Registrar
fees, and/or not submitting annual reports on time. The sanctions and penalties
against the company in such case include fines up to NIS 250,000, not allowing
the company to register new charges on its favor, not allow registration a
charge on its assets (which may deprive the company from taking new loans at
their banks), cannot make changes in the Registrar, and more.
It should be noted that this may not necessarily be connected to the
company's business activities and financial standing (although in many cases
there is a connection, it is most likely not so in subject's case;
It is also possible that there is a technical or administrative problem, as
such things also happen).
2. Since 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).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.63.45 |
|
|
1 |
Rs.101.17 |
|
Euro |
1 |
Rs.85.55 |
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 |
---- |
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.