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Report Date : |
01.10.2014 |
IDENTIFICATION DETAILS
|
Name : |
LLD DIAM |
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Registered Office : |
23 Tuval Street
Diamond Exchange, Noam Bldg. Ramat Gan 5252238 |
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Country : |
Israel |
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Date of Incorporation : |
12.10.1997 |
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Legal Form : |
Private Limited
Company |
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|
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Line of Business : |
Miners,
international manufacturers and traders in diamonds, dealing as cutters,
polishers, importers, exporters and marketers of all sorts of diamonds for
fine jewellery. |
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|
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No. of Employees |
90 |
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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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 – June 1, 2014
|
Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
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Moderate |
B1 |
|
High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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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 since 2011 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 Tamar field started meeting all of Israel's natural gas demand in 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. 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
|
Source
: CIA |
LLD DIAM
Telephone 972 3 755 11 11
Fax 972 3 612 27 15
23 Tuval Street
Diamond Exchange, Noam Bldg. Ramat Gan 5252238
Israel
A private limited company,
incorporated as per file No. 51-254128-5 on the 12.10.1997, continuing
activities which began in the mid 1970's by Lev Leviev.
Authorized share
capital NIS 34,300.00, divided into -
34,300 ordinary shares
of NIS 1.00 each,
of which 104 shares
amounting to NIS 104.00 were issued.
Subject is fully owned
by Lev Leviev.
(Note: According to
the Registrar of Companies, Moshe Leviev holds 1 single share).
Zevulun Leviev.
Miners, international
manufacturers and traders in diamonds, dealing as cutters, polishers,
importers, exporters and marketers of all sorts of diamonds for fine jewellery.
LEVIEV Group operates
in all stages of the diamonds chain – from mining and production to sales and
marketing. Dealing in cut and rough diamonds.
LEVIEV Group controls
its own diamond mines, some of which are located in Namibia and Angola. Most
manufacturing and processing is abroad, imported to Israel either as rough for sale
to other dealers or as cut diamonds for sale and export.
Diamonds and jewelry
are sold also via the Group’s chain of fancy stores around the world.
Operating from
premises owned by shareholders, on a total area of 1,200 sq. meters, in 23
Tuval Street (also referred to as 52 Bezalel Street), Noam Building (11th
& 9th floors – subject’s shareholders own and occupies the
entire floors), Diamond Exchange, Ramat Gan. Group also operating from mines,
plants and offices in South Africa, Namibia (see below) and Angola, polishing
plants in India and Far East and branches in Antwerp, New York, London, Moscow,
Rome, China/ Hong Kong, India and Dubai/ UAE.
Having around 90
employees in Israel (similar to 2013 and end of 2012, had 100 employees in
early 2012, same as in 2011 and 2010), as well as hundreds of employees serving
LLD Group worldwide (couple of hundreds in Israel).
Financial data not
forthcoming, however subject is known to be financially strong and solid.
Subject was hit by the
severe depression in the diamond industry which erupted in the last third of
2008 and lasted throughout 2009. Like the diamond industry, the situation
improved in 2010 (see also CHARACTER). According to media reports, following
the crisis subject’s bankers asked in the beginning of 2009 from subject to
lower its credit exposure and Mr. Leviev fueled NIS 400 million and subject was
left with US$ 800 million debt to its banks.
Sources in the branch
estimated in 2009 Lebiev’s diamond business at US$ 2 – 4 billion.
There are 4 charges
for unlimited amounts registered on the company's assets, in favor of Union
Bank of Israel Ltd. and Israel
Discount Bank Ltd. (last charge
placed September 2008, prior charges placed 1997).
According to the data published by the Israel Supervisor on Diamonds in the Ministry of Industry & Trade, export of polished diamonds by subject (actual overall sales presumed to be higher, as there are local sales of polished diamonds and may have sales of rough diamonds as well), were as follows:
2005 sales were US$
601 million.
2006 sales were US$
553 million.
2007 sales were US$
522 million.
2008 sales were US$
417 million.
2009 sales were US$
241 million.
2010 sales were US$
366 million.
Later data not
published.
LEVIEV Group whole
diamond and jewelry business estimated at US$ 3 billion per year.
AFRICA ISRAEL INVESTMENTS LTD., Leviev holds 47.4%, a large
holding company with many holdings in Israel and overseas in various fields (see
more CHARACTER). Current market value US$ 413.1 million (see more below).
MEMORAND HOLDINGS
& INVESTMENTS LTD., holding company via which Lev Leviev holds AFRICA
ISRAEL Group.
AURAMINE, owns and
develops gold mines in Russia (extracted 2 million tons of gold in 2008).
SAMICOR, diamond
extracting from the Angola’s Sea.
DIOMONTE FINANCING,
18%, Angola, worlds 4th largest diamond mine (“Katoka”).
NAMCO, diamond mines
in Namibia and South Africa.
MIUZ, Russia, design,
manufacture and sale of jewelries, operating via 160 chain stores, mainly in
Russia, CIS and Eastern Europe countries, estimated annual sales US$ 150
million.
OPEN JOINT STOCK
COMPANY MOSCOW JEWELRY FACTORY, Russia.
S.H.G., LEVIEV Group
is a partner in gold and metals mining in Kyrgyzstan.
Main branch:
Union Bank of Israel
Ltd., Ramat Gan Branch (062), Ramat Gan.
Nothing unfavorable
learned on subject.
In June 2012 it was reported that Namibian Diamond Trading Company (NDCT), owned by Namibian Governmental and DE-BEERS, announced it will cease the supply of rough diamonds to LLD Group. LLD had a 5-years agreement with the Government, who announced the license (Sight) is not being renewed due to "not meeting the requirements". The Namibian polishing and cutting plant, opened in 2004, has been known as the largest of its kind in African continent. Consequently, LLD Group fired all its 150 employees in Namibia and suspended the work in its plant.
Subject's CFO refused
to disclose financial data.
Lev Leviev is a well-known veteran diamond dealer and is
considered the world’s largest private diamond dealer with worldwide
reputation. According to 'Forbes' World's richest persons, he is ranked 974th
with personal wealth estimated at US$ 1.5 billion, making him the 12th
in Israel.
In Israel, Leviev has been one of the leading business figures, via his AFRICA ISRAEL Group, though his influence fell in the last couple of years – the hit in the real estate and diamond businesses due to the severe crisis (see below). Yet, thanks to its reputation and the fact it deals in all the diamond sector chain, LEVIEV Group managed to cross over the crisis (according to sources in the diamond branch subject met all liabilities promptly, enjoying the fact that both customers and suppliers want to work with subject), and the Group’s financial standing improved also.
In the past Leviev was a DE BEERS sightholder in South
Africa, however following continuous conflicts he departed and became the
largest independent cutter and processor of diamonds in the world, and the main
source of rough diamonds, challenging the long standing hegemony of DE BEERS
and revolutionized the sector. Mr. Leviev controls many other international
companies in the diamond sector, among them are ASCORP, RUIS DIAM
During 2004 and 2005 Leviev opened, jointly with the local authorities, 2 major plants for diamonds polishing and cutting in Namibia and in Angola.
Born in Tashkent, Uzbekistan, Leviev is also strongly involved in the Russian diamond industry and trade.
Subject has been the leading largest diamond company in Israel, most of the years by far largest than others. In the lists of Israel's largest polished diamonds exporters (published by the Israel Supervisor on Diamonds in the Ministry of Industry and Trade) until 2010 subject was ranked 1st as Israel's largest polished diamonds exporter. Since 2011 LLD Group chose to refrain from being reported in the list (which is the company's own choice).
In 1996 Lev Leviev took over control in AFRICA ISRAEL INVESTMENTS LTD., publicly traded on the Tel Aviv Stock Exchange, land developers, building contractors, and also managing and dealing, through subsidiaries, yielding properties, hotels and resorts, industries, commerce and agencies. AFRICA ISRAEL Group (AFI) has been one of the largest concerns in Israel. Other public companies in the AFI Group are also traded on stock exchanges in Israel and abroad.
AFI was adversely hit
by the crisis in world financial and real estate markets, mainly due to its
real estate holdings in Russia and the USA, accumulating huge losses –with debt
in total of NIS 8 billion to the bonds holders and banks.
AFI announced in
August 2009 on uncertainty in their ability to meet all its future obligations,
seeking an arrangement with its bonds holders (and Institutional Investors who
hold most of the bonds), which was completed in May 2010 in volume of NIS 7.45
billion (part of the debt erased, a re-schedule for payments set, and Leviev
fueled his own capital (NIS 750 million) though remained in control). AFI's
financial standing improved significantly thanks to the debt arrangement, as
well as recovery in global markets, including the real estate market in Russia.
In March 2014 it was
reported that Leviev purchased the Dutch SIEBEL Jewelry chain in a sum
estimated at several tens NIS 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% 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).
Good for trade engagements.
Good for all
credits.
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
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.61.61 |
|
|
1 |
Rs.100.27 |
|
Euro |
1 |
Rs.78.21 |
INFORMATION DETAILS
|
Report Prepared
by : |
TPT |
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.