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Report Date : |
29.04.2014 |
IDENTIFICATION DETAILS
|
Name : |
PENFORD (ISRAEL)
LTD. |
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|
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Registered Office : |
P.O. Box 3008, Ramat
Gan (5213001), 21 Tuval Street, Diamond Exchange, Yahalom Bldg., Ramat Gan
5252236 |
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Country : |
Israel |
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Date of Incorporation : |
02.07.1980 |
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Com. Reg. No.: |
51-085590-1 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Traders, importers, exporters and marketers of Rough Diamonds. |
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No of Employees : |
·
15
employees in 2013 (same as in 2011 and 2010, had 20 employees in 2009),
current number unavailable. 1,500 employees (SDG worldwide) |
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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|
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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 31, 2014
|
Country Name |
Previous Rating (31.12.2013) |
Current Rating (31.03.2014) |
|
Israel |
a2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low Risk |
A2 |
|
Moderate Low Risk |
B1 |
|
Moderate Risk |
B2 |
|
Moderate High Risk |
C1 |
|
High Risk |
C2 |
|
Very High Risk |
D |
Israel ECONOMIC OVERVIEW
Israel has a technologically advanced market economy. Cut diamonds,
high-technology equipment, and pharmaceuticals are among the leading exports.
Its major imports include crude oil, grains, raw materials, and military
equipment. Israel usually posts sizable trade deficits, which are covered by
tourism and other service exports, as well as significant foreign investment
inflows. Between 2004 and 2011, growth averaged nearly 5% per year, led by
exports. 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. 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. The economy has recovered better than most
advanced, comparably sized economies, but slowing demand domestically and
internationally, and a strong shekel, have reduced forecasts for the next
decade to the 3% level. Natural gas fields discovered off Israel's coast since
2009 have brightened Israel's energy security outlook. The Tamar and Leviathan
fields were some of the world's largest offshore natural gas finds this past
decade. The massive Leviathan field is not due to come online until 2018, but
production from Tamar provided a one percentage point boost to Israel's GDP in
2013 and is expected to contribute 0.5% growth in 2014. In mid-2011, public
protests arose around income inequality and rising housing and commodity
prices. Israel's income inequality and poverty rates are among the highest of
OECD countries and there is a broad perception among the public that a small
number of "tycoons" have a cartel-like grip over the major parts of
the economy. 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. In May 2013 the Israeli government, in a politically
difficult process, passed an austerity budget to reign in the deficit and
restore confidence in the government's fiscal position. Over the long term, Israel
faces structural issues, including low labor participation rates for its
fastest growing social segments - the ultra-orthodox and Arab-Israeli
communities. Also, Israel's progressive, globally competitive, knowledge-based
technology sector employs only 9% of the workforce, with the rest employed in
manufacturing and services - sectors which face downward wage pressures from
global competition.
|
Source : CIA |
PENFORD (ISRAEL) LTD.
Telephone 972
3 575 01 74
Fax 972
3 575 29 56
P.O. Box 3008, Ramat Gan (5213001)
21 Tuval Street
Diamond Exchange, Yahalom Bldg.
RAMAT GAN 5252236 ISRAEL
A private limited company, incorporated as per file No. 51-085590-1 on the
02.07.1980, as part of the global Steinmetz Family diamond businesses founded
in 1949.
* Note: Registered Latin name is "PANFORD (ISRAEL) LTD.",
although subject's officials confirmed correct spelling is "PENFORD".
Authorized share capital NIS 200,000.00, divided into -
200,000 ordinary
shares of NIS 1.00 each,
of which 171,550 shares amounting to NIS 171,550.00 were issued.
1. PENFORD (LONDON)
LIMITED., 84%, registered in Isle of Man, said to be controlled
by Daniel Steinmetz,
2. Daniel Steinmetz, 16%.
In the past,
subject was known to be owned by part of STEINMETZ Diamond Group (hereinafter
SDG), owned by Steinmetz family, including brothers Benny Steinmetz and Daniel
Steinmetz. Based on media reports there have been changes in the group's
structure, including recently where Benny Steinmetz sold his part (37.5%) in
SDG to Daniel Steinmetz who now holds 75%, and Nir Livnat holds the remaining
25% in SDG. We could not understand if subject is part of SDG, therefore part
of the above said changes.
Daniel Steinmetz
David (Dudi) Shiama (also manages Group's diamond operations in Israel).
Traders, importers, exporters and marketers of rough diamonds.
Operating from
office premises, owned by the shareholders, on a large area of several hundred
sq. meters, in 21 Tuval Street (also referred to as 54 Bezalel Street), Yahalom
Building (28th Floor), Diamond Exchange, Ramat Gan (shares premises
with sister companies of the Group).
We were informed that some years ago the Group sold the 500 sq. meters on
the 17th Floor and purchased new offices, area of 1,000 sq. meters
on the 28th Floor.
SDG is operating from headquarters in Geneva, Switzerland, and subsidiaries
in several countries, including 6 diamond factories in Africa and South and
East Asia, as well as 10 offices around the world.
Having 15 employees in 2013 (same as in 2011 and 2010, had 20 employees in
2009), current number unavailable.
Having around 1,500 employees in SDG worldwide.
Financial data not forthcoming, known to be financially solid.
Affiliate DIACOR INTERNATIONAL LTD., which is part of STEINMETZ Diamond Group, has been a DCT Sightholder for many years.
There are 2 charges for unlimited amounts registered on the company's
assets, in favor of The First International Bank of Israel Ltd. (charges were placed in 2003 and in 2005).
Sales figures not forthcoming, known to be in scales of over hundred US$
million and much more.
STEINMETZ Diamond Group includes:
·
STEINMETZ-ASCOT
LTD., processors and polishers, traders, importers, exporters and marketers of
cut diamonds. Operate on relatively very low level.
DIACOR
INTERNATIONAL LTD., Switzerland
STEINMETZ-ASCOT
DIAMONDS N.V., Belgium
STEINMETZ
GROUP OF COMPANIES LIMITED
ASCOT
DIAMONDS (PTY) LTD.
ABT
DIAMONDS CUTTING WORKS (PTY) LTD.
R.
STEINMETZ & SONS (INDIA) PRIVATE LIMITED
NAMCOT
DIAMONDS (PROPRIETARY) LTD
R.
STEINMETZ & SONS N.V.
ST
DIAMONDS
STEINMETZ-ASCOT
USA LIMITED
SDG
MARKETING INC.
STEINMETZ
DIAMONDS (BOTSWANA) (PTY) LIMITED
Steinmetz family has numerous other holdings in other fields.
·
The First International Bank of Israel Ltd., Diamond
Exchange Branch (No. 026), Ramat Gan.
Bank
Leumi Le’Israel Ltd., Diamond Exchange Branch (No. 629), Ramat Gan.
Nothing unfavorable learned.
So far we have been unable to speak with any of subject's officials. We
left messages which so far left unanswered. In case they will return and we
manage to come up with further data, we shall update you accordingly.
In our past interview, CFO said subject is operating on very high volumes,
but refused to disclose financial information.
STEINMETZ Diamond Group is a multinational group, one of the world’s largest
diamond miners, with wide operations in South Africa, Sierra Leone, and other
African countries. The Group has also large manufacturing and retail
operations, specializing in large, fancy colored and rare stones. Steinmetz
family is affluent.
It was known that
the Group suffered from the global economic crisis that adversely hurt the
global diamond industry, and as such, subject’s Group was also harmed, though financial
data is unavailable.
There are many reports related to Mr. Benny
Steinmetz, an international wealthy businessman and entrepreneur, however as in this stage we do not know if he has any direct connection to
subject and subject's Group, we shell refrain from going into more details. We
do not know if Benny Steinmetz has been connected to subject itself, but know
from reports he exited from SDG recently. Reports mention the legal
investigations presently held against Benny Steinmetz in person and against his companies (in the mining industry, in which he
has many large holdings) as the reason for leaving SDG, in order to leave SDG
as a sightholder and not harm SDG's reputation. Benny Steinmetz denies that these are
reasons for exiting SDG, saying it is part of a routine business strategy.
DIACOR is reported to be purchasing diamonds from De Beers in volumes of US$
30-US$ 50 million per annum, making them one of De Beers most important and
largest clients.
Israel's diamond
industry remarked on impressive growth in almost all trade parameters in 2013,
from the data by Israel's Diamond Administration at the Ministry of Economics:
Net export of polished diamonds rose by 11.6% from 2012, reaching US$ 6.2
billion. The market has been volatile in recent years: the branch –in Israel as
well as globally- experienced its worst depression in the 2nd half
of 2008 and 2009 due to the global economic crisis (almost an entire freeze and
collapse in sales of about 70% in the peak of the crisis), then recovered in
2010 and mainly in and fell again in 2012 (net export fell by 23% in 2012 from
2011).
Net rough diamond
exports totaled US$2.9 billion in 2013, a mere rise from 2012.
Net imports of
polished diamonds remained in similar level as 2012 (after drop by 25% in 2012
from 2011), totaling US$4.3 billion, while net rough diamonds imports summed at
US$ 4 billion, 4% up from 2012 (when it fell 13% from 2011).
The United States
continued to be Israel’s major market for polished diamonds, accounting for 37%
of the market in 2013 (35% in 2013). Hong Kong is the next largest market with
27% of exports, with Switzerland accounting for 9.3%, Belgium 7.3%, and India
accounting for 2.3% of Israel's polished diamond export.
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
global crisis. The Ministry of Economics also assisted the local diamond
exporters by providing bank guarantees in total scope of NIS 1 billion.
In February 2009,
Israel was ranked as the world’s largest exporter of cut diamonds, followed by
India, Belgium and South Africa.
Local diamond
sector employs some 20,000 persons.
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. The Attorney General is in process of
preparing indictments.
In the end of December
2013 it was reported that 5 diamond dealers were summoned to a hearing (not
mandatory) regarding the a/m affair, prior to filing an indictment, before the
Tel Aviv District Attorney (Tax and Finance sector).
Notwithstanding
the lack of updated data from subject's officials, considered good for trade
engagements.
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.
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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.
-
Excerpts from Times of India dated 30th October 2010 is as
under –
-
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.
-
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.60.50 |
|
UK Pound |
1 |
Rs.101.69 |
|
Euro |
1 |
Rs.83.62 |
INFORMATION DETAILS
|
Analysis Done by
: |
DIV |
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Report Prepared
by : |
MNL |
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.