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Report Date : |
10.10.2014 |
IDENTIFICATION DETAILS
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Name : |
ISRAEL MILITARY INDUSTRIES LTD. |
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Registered Office : |
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Country : |
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Date of Incorporation : |
1933 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Developers, manufacturers, marketers and exporters
of arms, ammunition, defense equipment, weapons, home security, and combat
systems |
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No of Employees : |
Not Available |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
|
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
Slow but correct |
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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
|
Country Name |
Previous Rating (31.03.2014) |
Current Rating (01.06.2014) |
|
Israel |
A2 |
A2 |
|
Risk Category |
ECGC
Classification |
|
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 |
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 |
ISRAEL MILITARY INDUSTRIES LTD.
(Known as “I.M.I.” in short, or “TAAS” in Hebrew)
Telephone 972 3 548
57 01
Fax 972 3 548 57 29;
548 66 89
P.O. Box 1044 (4710001)
64 Bialik Blvd.
Ramat Hasharon
4720525 Israel
Originally established in 1933 as a department in the Ministry of Defense.
Converted into a government-owned private limited company and registered as
such as per file No. 52-003636-9 on the 03.07.1989.
Originally registered under the name ISRAEL MILITARY INDUSTRIES LTD., which
changed to TAAS - ISRAEL INDUSTRIES LTD. on the 12.6.1992, which changed back
to the present one on the 22.01.1996.
In December 2013, the CEO of the Ministry of Defense signed an agreement
for the privatization of subject, after earlier privatization programs
failed
(see more in CHARACTER).
Authorized share capital NIS 3,500,000,000.00, divided into -
350,000,000 ordinary shares of NIS
10.00 each, fully issued.
Company is fully owned by the State of Israel, through the Ministry of
Defense (Minister in charge Moshe Ya'alon).
1. Lt. General (Ret.) Ehud Adam,
Chairman,
2. Yehuda Felber,
3. Ms. Aliza Sharon,
4. Ms. Ariela Terner,
5. Ms. Rut Bar,
6. Ms. Karni Horan,
7. Ms. Galia Epstein,
8. Amit Zaid.
Avi Felder.
Developers, manufacturers, marketers and exporters of arms, ammunition, defense
equipment, weapons, home security, and combat systems (over 350 different
products).
Most of sales are for export. Main local customer: Ministry of Defense (40%
of total sales in 2012).
Operation is divided into the following: Heavy Ammunition Division, Land
System Division, Rocket Systems Division, Advanced Systems Division, Small
Caliber Ammunition Division and via subsidiary ASHOT ASHKELON LTD.
Note: As part of subjects' privatization procedures,
it is in the process of shifting its activities to 2 divisions (Maneuvering
Division and Fire Division), as well as part of activities which will be taken
to a new (non-privatized) company.
Among local suppliers: POLYURETHANE, DEAL ENGINEERS, NORDIA SPRINGS, AHARON
YOSEF & SONS, HANITA METAL WORKS, VERED EROSIA, ELBE LEADING TECH., EXTAL,
OTTO PERL, TEKTEAM, KIDMAH HANDLING EQUIPMENT, HOR-TAL ENGINEERING, DECTAL, TEFENPLAST, FINKELSTEIN METALS, B.T.I. QUALITY METAL CENTER, MEM BET, A. ADIRAN,
WIZLAN, I.C.P.C., MICHSHUR S.Z., PETRUS AVIATION, PALZIV
Operating from State leased (owned) premises (including headquarters and
several plants), on an area of 7,000 sq. meters, in Ramat Hasharon, and from
further 6 plants nationwide, including the "Itzhak",
"Givon", "Maltam", "Slavin" plants and subsidiary
ASHOT ASHKELON plant.
Having 3,482 employees as of end of 2013. Also employs several thousand
indirectly employees (sub-contractors). From a report of October 2014, as part
of the privatization plan (in which total of 1,170 employees to be laid-off),
some 700 employees are expected to retire by end of 2014 – see more
CHARACTER.
As of 30.09.2013, subject (consolidated) has a deficit in equity of NIS
1,732 million (74.7% of total assets), and a continuous deficit in working
capital of 1,965 million. The Government did not
publish later figures yet.
Subject has been suffering from a severe cash shortage for many years, and
is constantly being fueled by the State to pay its employees (the Government
used to fuel cash to subject "automatically" until mid 2000's, after
the matter deteriorated and publicly exposed, when it moved to approve fueling
money on a case to case basis). Subject also has been "enjoying" the
constant receipt of orders from its man client, the Ministry of Defense (which
pays in advance, which leaves an open debt).
In November 2013 the State fueled NIS 170 million, and additional NIS 140
million in January 2014. According to a report from January 2014, the State
will waiver subject loans in volume of over NIS 2.5 billion, as part of subject's
privatization process.
According to the report, the privatization total expenses (to tax payers)
have reached some NIS 6 billion (NIS 2.3 billion direct expenses).
Data from
subject's consolidated draft B/S of based on the latest publications by the
Government Companies Authority (GCA):
(NIS)
31.12.2012 30.09.2013
Fixed assets, real estate & investments 925 984
Total assets 2,298 2,318
Total liabilities 3,537 4,050
Equity (deficit) (1,239) (1,732)
Subject's current value
for the privatization varies between NIS 1.5 billion – NIS 3 billion (based on
subject IP).
According to a report
from October 2014, subject's accrued orders in volume of NIS 5 billion for the
next 3 years.
There are 72 charges for unlimited amounts, as well as 9 charges for the
amounts of NIS 10,000,000, US$ 945,244, € 376,487 and
Austrian Schillings 90,060 registered on the company's financial and fixed
assets, in favor of local banks and companies.
2009 sales were NIS 1,858 million, making a gross profit of NIS 160.8
million, an operating loss of NIS 142 million, ending with a net loss
of NIS 254 million.
2010 sales were NIS 1, 925 million,
making a gross profit of NIS 403 million, an operating loss of
NIS 51.1 million, ending with a net
loss of NIS 164.5 million.
2011 sales were NIS 1,738 million, an
operating loss of NIS 146 million, ending with a net loss of NIS 293 million.
2012 sales were NIS 1,859 million, an
operating loss of NIS 137 million, ending with a net loss of NIS 247 million.
Sales for the first 9 months of 2013 were NIS
1,190 million (36.4% decrease compared to parallel period in 2012), making an
operating loss of NIS 268 million, ending with a net loss of NIS
593 million.
Later sales figures
unavailable.
According to a report from January 2014,
following the privatization, subject is expected to end 2014 with a loss of
some NIS 250 million, reach balance in 2015 and move into a profitability of
NIS 50 million – NIS 100 million.
ASHOT ASHKELON INDUSTRIES LTD., 85%, shares are traded on the Tel Aviv
Stock Exchange, maket value US$ 43.7 million,
manufacturers of general mechanical precision
products, automotive transmission, front and rear axles, propeller shafts,
hypoid-helical-berel and spur gears, machine tools, shells
EUROTAAS (EUTA) LTD., 100%, non-active,
IMI SERVICES, 100%, USA, marketing in the U.S.A,
IMI TRADING, 100%, USA, purchasing in the U.S.A,
INTERNATIONAL TECHNOLOGIES AND SYSTEMS, 100%, marketing
and trade activities,
PLAINDENT, 100%, non-active,
TAAS COLLAGE FOR SECURITY AND CTU, limited partnership,
dealing in training and instruction, 75%,
SIMI PTE LTD., 100%, non-active,
SCENT DETECTION TECHNOLOGIES LTD., 11.68%, a joint venture between subject
and M.S. TECH LTD., providers of innovative trace detection technology
solutions for Homeland Security and Law Enforcement applications.
Bank Hapoalim Ltd., Business Central Branch (No. 600), Tel Aviv, account
No. 662195.
A check with the Central Banks' database did not reveal anything
detrimental on subject’s a/m account.
Bank Otsar Hahayal Ltd., Taas Branch (No. 383), Ramat Hasharon.
Also working with:
Bank Leumi Le’Israel Ltd.
The First International
Bank of Israel Ltd.
During all years since 1990s, subject has been suffering financial
difficulties and losses. As noted, subject has deficits in equity and in
working capital, and relies on State fueling to meet is liabilities, mainly
salary payments. The continuance of government support, despite the
problems, is due to subject being a vital strategic industry for the State's
defense interests.
A main chronic problem has been the financing of retirement pensions of
over NIS 200 million per year. All the time, the Israeli government has been
taking steps in order to stabilize subject and to promote its privatization,
however subject is still remains state-owned and financially troubled.
Significant streamlining measures have been taken in saving costs on one
hand, and increasing sales on the other, which somewhat improves subject’s
status.
Subject went through several recovery attempts, including couple of years
ago a failure to merge subject with RAFAEL ADVANCED DEFENSE SYSTEMS LTD., also State owned. Following the results of a Parliamentary Committee, in
December 2011 the Government, the Labor Union, employees and the Financial
Committee of the Parliament agreed on a privatization of subject (excluding
governmental companies), at the end of 2012.
Several layouts for subject's privatization were given, and on the
18.12.2013 the Director General of the Ministry of Defense signed the final
privatization plan, according to which subject is to be split into 3 companies:
1) Subject (which will carry all of subject's debts, practically a
holding company), 2) ISRAEL MILITARY INDUSTRIES SYSTEMS (hereafter NEW IMI),
which will have a positive equity and will be the company to be privatized, and
3) TOMER, which will remain a State company (which will assume subject's rocket
propulsion and tank and armored vehicles activity, and some 400 employees will
be transferred to it).
According to the plan, 1,170 employees will be laid-off, and NEW IMI will operate
2 main business segments (instead of current 5).
In April 2014 the Government Financial committee approved the privatization
scheme (following an agreement reached between subject, the Union and the State).
According to the plan, in the beginning of 2015 an address will be made to
private investors (who must be Israeli citizens), and reaching privatization by
2016.
Also part of the plan, subject will leave its current property in Ramat
Hasharon (which is a very lucrative real estate property thanks to its central
location) by 2020 (as part of a deal between the Ministries of Finance and
Ministry of Defense to evacuate military bases located in the center of
Israel).
Subject is long established and well known for its pioneering technological
developments and quality military systems.
Subject, jointly with 3 other Israeli companies, was ranked in 2007 among
the world's top 100 defense and military companies by the American weekly
"Defense News".
In March 2012 subject was put in the Indian Black List, due to allegations
of bribery. As part of the sanctions of being on the list, subject is
prohibited to supply India for 10 years. The loss of the Indian market (one of
the leading customers of Israeli military products) is a major blow for
subject. The Indian investigation, which took place in the past 3
years, excluded subject from participating in indian tenders.
In
April 2012 the Indian Government made a seizure on subject'sUS$ 44 million bank
colatral on behalf of Indian company OFB, which was intended for the erection
of a plant in India.
Subject
said it would appeal. In May 2013 the Indian Supreme Court rejected subject's
appeal.
In February 2005, subject sold its loosing “Magen plant” of the Small Arms
Division activities (light ammunition), for a sum of US$ 15 million to ISRAEL
WEAPON INDUSTRIES LTD. of businessman Sami Katsav.
In 2007 subject received supply contracts in value of NIS hundreds of
millions to the Israeli Ministry of Defense (massive purchase move was after
the 2nd Lebanon War in 2006 for ammunition of all sorts in volume of
NIS 450 million, as well as US$ 70 million from American Assistance money).
Among other projects was development of defense systems for buildings and
facilities in face of the rockets attacks near the Gaza Strip; and developments
of defense systems for the Israel Defense Force future Armored Vehicle, the
"Tiger".
In December 2007, the Israeli Government decided to terminate the
unsuccessful attempt to privatize and sell subject's subsidiary ASHOT ASHKELON.
The procedure, which started with a tender published by GCA in 2003/4, got
complicated and halted due to Court orders. There were allegations of
misconduct by the GCA selling procedures, regarding the winning Group.
ASHOT is veteran and well-known, financially solid and profitable.
Among major transactions in the last years is with the Turkish Government,
in which subject ameliorated 170 old M60 tanks for the Turkish Army in volume
of US$ 687 million.
In April 2008, US Navy ordered subject’s deception systems for aircrafts
(firing rockets from the aircraft which creates imaginary decoys for radars),
in value of NIS 30 million.
In
April 2009 it was reported that subject is involved jointly with SOLTAM (and other
Israeli sub-contractors) in a major multi-year contract for artilery weapon and
ammunition signed with the Ministry of Defense of Kazakhtan in a project of
upgrading the Khazakhi Army at estimated value of US$ 250 million. Due to
claims on supply of damaged equipment and allegations (by the Khazakhi Secret
Service) on briberies, the Khzakhi Government halted the equipping deal (which
was partly supplies). Subject’s officials denied all allegations.
In October 2009 it was reported that subject together with EBA&D of USA
will establish a joint company to provide protection and shielding solutions.
In July 2010 it was reported that subject received orders in volume of US$
In December 2012
subsidiary ASHOT and the Ministry of Defense signed a deal in which ASHIOT will
supply heavy armored vehicles components in volume of NIS 1.72 billion.
According to a report from February 2013, subject and ELBIT SYSTEMS will
supply a satellite in volume of US$ 100 million, following a sale in of a
satellite to the Italian Ministry of Defense 2012
Israel is
considered one of the largest exporters of military and defense equipment in
the world. Asia is the largest geographical market for Israeli export, while
the U.S.A. is the largest country market for the military and defense
industries' export.
Export level fell
significantly in 2011 due to the unfavorable global economic circumstances,
however climbed back by 20% in 2012 to US$ 7.4 billion.
Sales by the 4
largest local defense industries (ELBIT, IAI, RAFAEL and IMI) comprise some 85%
of overall sales.
Notwithstanding subject's losses, being a state owned company,
considered good for trade engagements. We figure that now, the fact that
subject's privatization process appears to be a done deal after its approval by
the government and labor union, has a positive impact, therefore subject is
suitable also for credits (at least of several hundred thousand US$).
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.61.04 |
|
|
1 |
Rs.98.64 |
|
Euro |
1 |
Rs.77.74 |
INFORMATION DETAILS
|
Analysis Done by
: |
SUB |
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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.