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Report Date : |
17.06.2014 |
IDENTIFICATION DETAILS
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Name : |
KITAN TEXTILE INDUSTRIES LTD. |
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Registered Office : |
P.O. Box 24147, Tel Aviv (6124101), 57 Pinchas Rosen Street, Tel Aviv 6951279 |
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Country : |
Israel |
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Financials (as on) : |
31.12.2013 |
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Date of Incorporation : |
08.12.1997 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Importers, manufacturers, marketers and exporters of home textile
products, e.g. bed linen, towels, bath robes. |
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No. of Employees : |
114 |
RATING & COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Status : |
Moderate |
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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 31, 2014
|
Country Name |
Previous Rating (31.12.2013) |
Current Rating (31.03.2014) |
|
Israel |
A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low Risk |
A2 |
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Moderately Low Risk |
B1 |
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Moderate Risk |
B2 |
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Moderately High Risk |
C1 |
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High Risk |
C2 |
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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 |
KITAN TEXTILE INDUSTRIES LTD.
Telephone 972 3 645 15 55
Fax 972 3 645 15 21
Email: service2@kitan.co.il
P.O. Box 24147, Tel Aviv (6124101)
57 Pinchas Rosen Street
TEL AVIV 6951279 ISRAEL
Web-site: www.kitan.co.il
A private limited company, incorporated as per file No. 51-255936-0 on
the 08.12.1997.
Subject was established in order to continue the manufacturing
activities of its parent company, KITAN CONSOLIDATED LTD., established in 1958.
At the end of 2004, sister company TANGO LTD. was
merged into subject.
Authorized share capital NIS 6,285,000.00, divided into -
6,285,000
ordinary shares of NIS 1.00 each,
of which 6,244,000 shares amounting to NIS 6,244,000.00 were issued.
Subject is fully owned by KITAN CONSOLIDATED LTD., owned by CLAL INDUSTRIES LTD. (bonds are traded
on the Tel Aviv Stock Exchange), fully owned by AL
DIVERSIFIED PARENT S.A R.L (part of ACCESS INDUSTRIES Group), controlled by
Leonard (Len) Blavatnik.
In July 2012, I.D.B. HOLDING CORP. LTD., which held 60.5%
of CLAL INDUSTRIES (hereafter CI), completed the sale of 49.9% of CI to Leonard (Len) Blavatnik, for NIS 1.27 billion (see more in CHARACTER).
In March 2013 I.D.B. sold its remaining holdings (some 11%) in
Cl.
KITAN CONSOLIDATED LTD’s shares were de-listed from trading on the Tel
Aviv Stock Exchange on the 12.01.2000 following a series of tender offers made
by CLAL INDUSTRIES.
In November 2013, following a successful tender
offer for the shares held by the public, AL DIVERSIFIED PARENT reached full
ownership of CI, paying NIS 1.25 billion for the 50.1% of shares.
In May 2014 sister company GOLF & CO., signed an
agreement to acquire 100% of the shares of subject and KITAN
CONSOLIDATED for NIS 11 million (only with local operations), as well as for
the sale of its overseas activities to affiliate CLAL ELECTRONIC INDUSTRIES
(see more below). Deal is expected to be completed in the following months.
1. Gonen Bieber,
2. Yochanan Locker,
3. Yehuda Ben-Ezra.
Mrs. Esther Eldan.
Importers, manufacturers (in the Far East), marketers and exporters of home
textile products, e.g. bed linen, towels, bath robes. Also importers and
marketers of household products, operating retail
chain of 25 stores, under the name 'Kitan', for its manufactured and imported
goods.
50% of sales are export, to Europe, USA, China, Canada
Products are marketed under the brand names Royal Sateen, Kitan, Kitan
Studio, Esprit, Mexx, Walt Disney, Barbie, Supergol, Kitan Cool
In December 2012 subject closed its manufacturing plant in Dimona, its
last manufacturing plant in Israel, and ceased local manufacturing.
Local sales are also via HAMASHBIR 365, largest department store
(subject is operating 12 stores in the department stores).
Amongst clients: SHUFERSAL, Ministry of Defense, HARRODS (UK), COSTCO
(of the USA), HUDSON BAY (Canada).
Imports are mostly from India, China and Turkey.
Most of purchase is import, mainly from China
(48%) and Turkey (31%).
Among local suppliers: AVCO CHEMICALS, SALINA
INDUSTRIES, TAGIT M.A., CARGAL, AVRAHAM HARATI, SOLTAM-RADAD.
Operating from main offices (partly owned by CLAL Group), on an area of
21,000 sq. meters (serving also other companies in CLAL Group), in 57 Pinchas
Rosen Street, Tel Aviv, from a rented plant (owned by CLAL Group), on an area
of 60,000 sq. meters, in Dimona Industrial Zone (premises currently inactive).
Also operating from sewing plants overseas.
Having 114 employees (had 200 employees in the beginning of 2013).
In December 2012, following the closing of the plant in Dimona, its 40 employees
were laid-off. That ended a continuous decrease in workforce in the plant (see
more in CHARACTER).
In May 2014, following the agreement of
acquisition by GOLF & CO., CI published subject's financial data. CPAs
noted that subject has suffered losses in the past years, and the continuation
of activities is based on subject's ability to raise capital from parent
company and banks. Subject's management estimates it will be able to obtain
sufficient capital and meet its liabilities.
Consolidated B/S shows:
NIS (thousands)
31.12.2012 31.12.2013
ASSETS
Current assets
Cash and cash
equivalents 2,031 1,548
Customers 26,292 20,764
Other debtors and
current assets 1,549 1,612
Stock 25,929 20,778
55,801 44,702
Assets for sale 5,000 5,000
60,801 49,702
Non-current assets
Fixed assets (net) 5,335 5,569
66,136 55,271
====== ======
LIABILITIES
Current liabilities 48,357 39,463
Non-current liabilities 856 673
Equity 16,923 15,135
66,136 55,271
====== ======
Main indicators from CLAL INDUSTRIES B/S to the 31.03.2014 (in brackets
31.12.2013):
Total B/S: NIS 10,648 million (NIS 10,202 million)
Equity: NIS 4,053 million (NIS 3,734 million).
One of subject's ways to cover expenses is leasing part of its plant's
plot for a sister company.
Subject is an “Approved Enterprise” and as such enjoys tax benefits and
State incentives (this status was while being a manufacturing company, but
since subject closed its Israeli plant, it may have lost its favorable status).
There are 4 charges for unlimited amounts
registered on the company’s assets, in favor of the state of Israel, Bank Leumi
Le'Israel Ltd. and The First International Bank of Israel Ltd. (last charge
placed February 2011).
Consolidated
Statement of Income
NIS
(thousands)
Year
ended 31.12
2011 2012 2013
Revenues 167,214 140,517 106,962
Gross profit 40,245 39,802 47,802
Operating profit
(loss) (14,787) (19,947) (259)
Net profit (loss) (16,164) (21,652) (1,866)
KITAN EUROPE GmbH, 100%, marketing subject's
products abroad.
KITAN CONSOLIDATED LTD., parent company, a holding company.
ACCESS INDUSTRIES, an international industrial group, with long-term
strategic holdings in Europe, North and South America, in industries such as
oil, coal, aluminum, petrochemicals and plastics, telecommunications, media,
and real estate.
CLAL INDUSTRIES LTD., a holdings and
investment company, with many holdings in various fields in the local industry
and trade: textile, cement, hi-tech and electronics, bio-technology,
communications, real estate and other industries. Other CI’s holding in the textile field:
GOLF & CO. GROUP LTD., 62%, a public limited
company, shares traded on the TASE, importers, marketers and retailers of
fashion (men’s, women’s and children wearing apparel and footwear) and Home
Fashion (home textile products, home toiletries and spa, household products,
etc.). Current market value US$ 147.3 million. Operating 288 retail branches
(190 apparel and 98 home textile).
Bank Leumi Le’Israel Ltd., Tel Aviv Central Branch (No. 800), Tel Aviv,
account No. 115100/68.
The First International Bank of Israel Ltd., Main Branch (No. 046), Tel
Aviv,
account No. 433950.
A check with the Central Banks' database did not
reveal any negative information regarding subject's a/m accounts.
Over the last years subject has been suffering from the competition with foreign textile manufacturers. Its flag plant in
Dimona (the last manufacturing facility subject held in Israel, this is after in 2008 subject closed its local
Nazareth sewing plant) dismissed most of its employees over the recent
years, until finally closing it down in December 2012, shifting production to
lower-wage workforce plants abroad. Manufacturing in Israel has been inflicting
losses on subject, despite the cost saving measures taken and other initiatives.
Subject has been going through a re-organization in the recent years,
shifting its main focus to retail. Subject is currently forming a retirement
plan for dismissed employees. Subject also
shifted its sewing plants from Arab countries – Egypt and Jordan, to other
countries, due to the bad sentiments of the local population against Israel.
Parallel to shifting all of manufacturing abroad, subject has been
increasing import, and opening its own retail chain stores (currently 25
stores). As part of the shift to focus on retail, subject ceased operating as
manufacturer of private label for other clients. Subject also closed its
"store in store" in HARRODS in England.
In May 2014 CI reported that sister company GOLF & CO. GROUP LTD. will
acquire all of subject's shares for NIS 11 million, and in parallel, subject's
subsidiary KITAN EUROPE will be sold to CLAL ELECTRONIC INDUSTRIES
(filly owned by CI), thus, subject will remain only with operations in Israel
(in practice GOLF is acquiring the retail activities).
GOLF AND CO. is among the leading fashion chain stores in
Israel.
CLAL INDUSTRIES is a
veteran concern, with holdings in other local industries, leading in their
fields, including cement (NESHER), bio-technology and healthcare (CLAL
BIOTECHNOLOGIES), transportation & logistics (TAAVURA, MAMAN), beverages,
shipbuilding, textile & fashion, energy and hi-tech.
Len Blavatnik is a Russian-American tycoon, who via ACCESS INDUSTRIES
has many holdings in various industries (as well as via other companies).
According to Forbes' The World's Billionaire's List of 2011, Blavatnik was
listed in 80th place with an estimated fortune of US$10.1 billion.
In November 2007, subject and SHUFERSAL, Israel's
largest supermarket chain, reported a cooperation, where SHUFERSAL will promote
and sell subject's products exclusively in their chain. The deal volume
estimated at NIS 4 million.
In the years 2010, 2011 and 2012 sales to SHUFERSAL
were NIS 143 million, NIS 136 million and NIS 69 million respectively.
In May 2008 subject acquired FIBROTEX veteran
activities (manufacturing, marketing and export) in the household textile,
which is complementary to subject (hiring 40 of FIBROTEX employees).
In April 2009 it was reported that subject is launching
a new home textile brand under the style "Kitan Home" as part of this
strategy, in cooperation with HOMETEX. In September 2009 it was reported that
subject invests NIS 5 million in 14 new "Kitan Home" stores in a
concept of "store within store" within the HAMASHBIR 365, a leading
local department stores chain.
In March 2011 it was reported that subject is opening 3
retail stores, investing NIS 1 million.
In September 2011 subject signed an agreement with SOLTAM-RADAD to sell its household products, as well as opening 2 new retail stores.
In early 2012 subject signed a deal to enter its brand
"Esprit" to the Canadian retail chain store HUDSON BAY (some 100
stores), in volume of NIS 5 million annually.
Also in the beginning of 2012, subject franchised its "Royal
Sateen" brand in the USA, receiving royalties.
In February 2012 it was reported that subject is opening 3 new shops
with total investment of NIS 2 million, including a 100 sq. meters shop in
Weizmann Center in Tel Aviv, a 200 sq. meters shop in Sirkin Mall, Petach
Tikva, and a 120 sq. meters shop in MIXX Center, Hadera. To-date, further 3 new
shops were opened in Karmiel, Ashkelon and another shop in Tel Aviv, reaching
21 stores.
In May 2012 subject reached a compromise regarding a class motion filed in
May 2008 on environmental issues, in which subject will perform several actions
to reduce its pollutants, as well as donate NIS 70,000 to the Ben Gurion
University for environmental studies.
In October 2012 it was reported that a store was opened in Raanana with
an investment of NIS 300,000, and 3 more stores are intended to be opened with
a total investment of NIS 1.5 million.
According to a report from December 2012, OFFIS TEXTILE is contemplating
to move its activities to subject's (now shut-down) plant in Dimona.
In February 2013 it was reported that CI sold half of
the property in 57 Pinchas Rosen Street, Tel Aviv, where
subject operates from, for NIS 80 million.
In May 2013 it was reported that subject will start marketing
ARCOSTEEL home and kitchen products.
In January 2014 it was reported that subject received
the local representation of ESPRIT (home textile) as well as in Europe Canada
and Mexico.
From the CBS National Accounts for 2013, it turns that expenditure by
local households on private consumption grew by 3.7% from 2012, after rising by
3.2% in 2012 and by 3.8% in 2011. Per-capita expenditure increased in 2013 by
1.8%.
Consumption expenditure by households on durable goods rose by 3.7% from
2012 (after remaining level in 2012 and rising 7.9% rise in 2011), although a
breakdown shows that expenditure on furniture
and jewelry rose by 3.5%, in contrast to a 0.9% decrease in electric
appliances and other equipment.
Per capita expenditure for private consumption
on durable goods rose in 2013 by 1.8% (after 1.7% decrease in 2012 and 5.9%
rise in 2011). Breakdown reveals that expenditure
on electrical domestic appliances fell by 2.7% per capita, while purchase of
furniture and jewelry rose by 1.5% per capita.
According to CBS, import of consumer goods in 2013 marked a
2.2% increase continuing the rise of 1.9% in 2012 and 9.8% in 2011. Most of the
rise was in durable goods (4.1%), which comprising some 40% of the import
volume, while import in durable goods rose by mere 0.9% from 2012. Main rise
derived from import of Household Utensils in 2013 which rose by 2.5% from 2012,
summing up to NIS 2,546 million (in NIS terms, 9.5% in $ terms), after 1.7% in
2012.
The local household products market is considered highly competitive
after reaching market saturation. It includes household textile, tableware and
kitchenware and utensils, bath accessories and ornaments &decorative items,
ceramic and glass ware, etc. According to estimations, the local household
products market volume reaches NIS 2.5 – 3 billons annually (of which circa NIS
1 billion for “home textile”), and includes retail, wholesale, institutional
markets (Retail chains capture 30% of the market share, specialization stores
20%, while the institutional and workers unions sector has 50% share).
Following the acquisition by GOLF, considered good for trade
engagements.
Note: 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.60.01 |
|
|
1 |
Rs.102.00 |
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Euro |
1 |
Rs.81.25 |
INFORMATION DETAILS
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Analysis Done by
: |
SUB |
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Report Prepared
by : |
NNA |
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.