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Report Date : |
27.11.2014 |
IDENTIFICATION DETAILS
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Name : |
ARABOV GROUP SALES (2012) LTD. |
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Registered Office : |
54 Bezalel Street Diamond Exchange, Yahalom Bldg. Ramat Gan 52521 |
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Country : |
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Date of Incorporation : |
01.08.2012 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Subject is engaged in the entire diamond branch – rough
trading, polishing, polished dealing, jewelry manufacturing and retailing. |
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No. of Employees : |
Not Available |
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 : |
Unknown |
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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 – June 1, 2014
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Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
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A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
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Source
: CIA |
ARABOV GROUP SALES (2012) LTD. (CORRECT NAME)
Telephone 972 3 613 40 10
Fax 972 3 613 40 14
Email: info@arabovgroup.com
Diamond Exchange, Yahalom Bldg.
A Private Limited Company, incorporated as per file No. 51-480633-0 on the 01.08.2012.
Authorized share capital
100 ordinary shares of
fully issued.
1. Alon Arabov, 80%,
2. Gilad Goshen, 20%.
1. Alon Arabov, General Manager,
2. Gilad Goshen.
Subject is part of ARABOV GROUP, an international diamond company, engaged in the entire diamond branch – rough trading, polishing, polished dealing, jewelry manufacturing and retailing.
ARABOV GROUP has joint-venture manufacturing agreements with mines in Russia and South Africa.
Operating from premises in 54 Bezalel Street (also referred to a 23 Tuval Street), Diamond Exchange (23rd floor), Yahalom Bldg. Ramat Gan. ARABOV GROUP operates from manufacturing facilities and offices in the USA, Belgium, China/ Hong Kong, India, as well as in Russia and South Africa.
Number of employees not forthcoming, having several hundred employees serving the whole group in Israel and overseas.
Financial data not forthcoming, however ARABOV GROUP has been known to be financially solid. The Group, via D.D.M ARABOV GROUP (a partnership with another diamond group DALIOT), has been a DTC sightholder (we do not know the current status).
There is 1 charge for an unlimited amount registered on the company's assets (all assets), in favor of The First International Bank of Israel Ltd. (charge placed March 2013).
ARABOV GROUP reposts its annual sales to exceed US$ 500 million.
ARABOV Group includes, among others:
ARABOV GROUP LTD.,
D.D.M ARABOV GROUP LTD.,
DAVID ARABOV & SONS (2013) LTD., traders, importers, exporters and marketers of polished diamonds.,
DAVID ARABOV & SONS (1998) LTD., non- active,
ARABOV INVESTMENTS LTD., real estate,
ARABOV GROUP (SHANGHAI) LTD., China,
ARABOV GROUP (HONG KONG), LTD., Hong Kong,
ARABOV GROUP USA DIAMOND DISTRIBUTION CENTER INC., USA.
According to our files:
The First International Bank of Israel Ltd., Diamond Exchange Branch (No. 026), Ramat Gan.
Union Bank of Israel Ltd., Ramat Gan Branch (No. 062), Ramat Gan.
Since we could not speak to subject's officials, we could not verify a/m bank data.
Nothing unfavorable learned on subject itself.
Alon Arabov, subject's main shareholder, also the General Manager of ARABOV GROUP is among the diamond dealers involved in the recent illegal affair ('underground bank' affair) detailed below, who, together with his brother Doron Arabov (also a diamond dealer involved on the Group's business) were detained in January 2012 and released by Court home under restrictions.
According to one media article from that date David Arabov, Alon's and Doron's father, was also mentions as one of the persons taken for interrogation, yet in the Tax Authorities' press release he is not mentioned.
In January 2014 it was reported that Alon Aravbov filed a lawsuit against former business partners for NIS 4.5 million, claiming they used threats and extortion against him in view of taking over his companies and family's assets. The partnership concerns a cooperation agreement between Alon Arabov and local wealthy businessman Avshalom Nuriel (and another businessman, Ofer Hirshzon) from 2011, for the purchase of rough diamonds from ALROSA.
Yet another harsh conflict was revealed in the press in April 2014, this time in the framework of a partnership between Alon Arabov and diamond dealer Erez Daliot. At the request of Arabov, the Tel Aviv District Court issued a temporary injunction in sum of NIS 50 million against Daliot rights in the partnership (we assume it concerns D.D.M ARABOV GROUP LTD.). Arabov claims that Daliot deceived him, violating their agreement of paying Arabov his part in the huge profits he is deserved. The injunction is designed to guarantee the verdict sum, in case Arabov wins the case, in a lawsuit he filed against Daliot for NIS 95 million, which is under mediation. Daliot responded that Arabov is trying to blackmail him.
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.
Aravbov family members are veteran and known international diamond dealers, with the family's diamond business founded in late 1950s by David Arabov. The family is also known to have holdings in real estate properties.
ARABOV GROUP was ranked 7th in the 2011 list of Israel's largest polished diamonds exporters with sales for export of polished diamonds of US$ 102 million. It does not appear in the 2012 List, though the reason is not known (it is possible that the company chose not to be published in the list for its own motives, which is their choice).
Based on the Companies' Registrar, David Arabov was a 55% shareholder in local diamonds firm D.N. DIAMONDS (2007) LTD., and in October 2012 a change in shareholders took place, where his shares transferred to Itzhak (Tzahi) Arabov. Reportedly, there have been conflicts within Arabov family, not just with Tzahi, but also between brothers Alon and Doron Arabov.
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 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 said 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.
In July 2014 3 indictments were filed to the Tel Aviv District Court against central defendants in the affair, who provided foreign currency services to the "underground bank" (not against diamond dealers at this stage), for felonies of money laundering and tax evasion in volumes of US$ millions.
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% in value terms 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 fell again in 2012 (net export fell 23% in 2012 from 2011).
Net export of polished diamonds continued to grow in the 1st half of 2014 with 6% rise in value terms compared to 2013 (fell 6.7% in karat terms), reaching US$3.55 billion.
Net rough diamond exports totaled US$2.9 billion in 2013, a mere rise from 2012, and totaled US$1.75 billion in the 1stH 2014 (up 6% and 11.6% in value and in karat terms, respectively).
Net imports of polished diamonds remained in 2013 similar level as 2012 (after drop by 25% in value in 2012 from 2011), totaling US$4.3 billion, and in the 1stH 2014 reached US$2.05 billion (up 0.9% in value and 5.7% in karat). Net rough diamonds imports rose 4% in 2013 summing up at US$4 billion, and summed at US$ 2.2 billion in the 1stH of 2014 (3% rise in value, 10% fall in karat terms).
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.
On one hand, ARABOV GROUP has been known as financially strong. As noted above, Alon Arabov and his companies are involved in 3 different affairs. From the information we gathered, it is difficult to determine which companies are involved with which affait. Therefore, we do not know subject's particular position, also as its officials refused to cooperate. Follow-up advised, mainly in case charges pressed in the 'underground bank' affair, which if and when an indictment would be filed against Alon Arabov, he may face prison and large fines.
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).
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
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.61.87 |
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1 |
Rs.97.23 |
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Euro |
1 |
Rs.77.21 |
INFORMATION DETAILS
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Analysis Done by
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RAS |
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Report Prepared
by : |
NIS |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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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 |
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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 |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to
overcome financial difficulties seems comparatively below average. |
Small |
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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 |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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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.