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Report No. : |
318436 |
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Report Date : |
21.04.2015 |
IDENTIFICATION DETAILS
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Name : |
ARAD TEXTILE INDUSTRIES LTD. |
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Registered Office : |
P.O. Box 1092
(7019802) 1 Kinneret Street Air Port City Park Airport City 7019900 |
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Country : |
Israel |
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Date of Incorporation : |
1976 |
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Legal Form : |
Public Limited Liability Company |
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Line of Business : |
Manufacturers, exporters and marketers of
towels. |
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No. of Employees : |
400 |
RATING & COMMENTS
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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 : |
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 – December 31, 2014
|
Country Name |
Previous Rating (30.09.2014) |
Current Rating (31.12.2014) |
|
Israel |
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 |
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 |
ARAD TEXTILE
INDUSTRIES LTD.
Telephone 972
3 519 37 77
Fax 972
3 519 37 85
P.O. Box 1092
(7019802)
1 Kinneret Street Air Port City Park
Airport City 7019900 Israel
Originally established in 1976, and
incorporated as a private limited company as per file No. 51-088494 on the
27.04.1981.
Converted into a public limited liability
company as per file No. 52-003955-3 on the 27.06.1993.
In July 1993 published a prospectus offering
shares to the public on the Tel Aviv Stock Exchange.
In October 2001, following a successful
tender offer, subject’s shares were de-listed from trade in the Tel Aviv Stock
Exchange.
Originally registered under the name ARAD TOWELS
LTD., which changed to the present name on the 01.01.2003.
Authorized share
capital NIS 41,250,000.00 divided into -
41,250,000
ordinary shares of NIS 1.00 each,
of which
40,267,551 shares amounting to NIS 40,267,551.00 were issued.
Subject is fully
owned by STANDARD TEXTILE (EUROPE) LTD., controlled by STANDARD TEXTILE CO.
INC, USA, controlled by Gary Heyman & family, of the USA.
STANDARD TEXTILE
acquired the public shares in subject in October 2001.
1. Gary Heyman, Chairman, President & CEO
of STANDARD TEXTILE,
2. David Mizrahi,
3. Chris Bop.
Ronen Yehezkel.
Manufacturers, exporters and marketers of
towels.
Also manufacturers, exporters and marketers of
fabrics (mainly apparel and accessories for the operation rooms).
Manufacturing is also via affiliated
Jordanian plant (C.I.G.) and subcontractors in Israel (Mitzpe Ramon) and in
Jordan.
Note: Since October 2014, subject is in the
process of closing down it manufacturing facilities in Israel and transferring
all remaining production activities to plant in Jordan.
Local customers are mainly institutional:
hotels, hospitals, Israel Defense Force, Israel Prisons Service, Health
Ministry, etc.
Some 90% of sales are for export, some 60%
are to parent company in the USA.
Subject produces approximately 70 million
towels annually, mainly to Europe and the USA. Amongst subject's customers are
major U.S. hotel chains such as MARRIOTT, STARWOOD, GAYLORD, HARRAHS, DIAMOND
RESORTS, MGM, high-end Las Vegas casino hotels, the French hotel chain ACCOR
and most of Europe's large industrial laundries, which provide towels for
hotels and health care facilities.
Among local suppliers: P.A.T. COMPRESSED AIR
TECHNOLOGY, CARGAL, FRIDENSON LOGISTIC SERVICES TRANSPORT, HAMENIA PUMPS,
TCHELET DYEING & FINISHING, etc.
Operating from
headquarters offices, on an area of over 400 sq. meters, in 1 Kinneret Street, AirPort City Park, situated near the Ben Gurion International Airport,
and from 2 plants in Migdal Haemek (owned, on an area of 4,000 sq. meters) and
in Arad (one third owned, on an area of 50,000 sq. meters).
In August 2014 subject closed manufacturing
activities in its Migdal Haemek plant, and as noted above subject is in the
process of closing manufacturing activities in the Arad plant.
Subject's accountant informed us that
subject is in the process of massive layoffs due to the transfer of activities to
Jordan. She advised to re-contact her in several months after process is
complete (had 400 employees in mid 2014 and some 500 employees in 2013).
Stock was valued at NIS 25 million in mid
2014 (stock was in volume 36 million in 2013 and in volume of NIS 35 million in
2012, however it was decided to lower stocks). Current stock level not
forthcoming.
Subject is an “Approved Enterprise” and as
such enjoys State incentives and tax benefits. In 1997, the Israeli Investment
Center (IIC) approved a US$ 2 million investment plan for the expansion of
subject’s plant. In 2001 and in 2005 the IIC approved further investment plans
of US$ 9.6 million and US$ 5.4 million, respectively, for the expansion of
subject’s plant.
There are 5 charges for unlimited amounts
registered on the company’s assets (financial assets, fixed assets and other
assets), in favor of the State of Israel, Mizrahi Tefahot Bank Ltd., Bank Leumi
Le’Israel Ltd., and Bank Hapoalim Ltd. (last charge placed in 2007).
Consolidated 2007 sales claimed to be US$
100,000,000, 90% for export.
Estimated pre-tax
profit according to reports from October 2007, stand on
US$ 11-12,000,000. Net profit estimated at 9% of turnover annually.
Consolidated 2008 sales claimed to be US$
110,000,000, 90% for export.
Consolidated 2009 sales claimed to be US$ 80,000,000, 90% for export.
Consolidated 2010 sales claimed to be US$ 98,000,000, 85% for export.
Consolidated 2011 sales claimed to be US$ 111,000,000, 87% for export.
Consolidated 2012 sales claimed to be US$ 110,000,000, 87% for export.
Consolidated 2013 sales claimed to be US$ 110,000,000, 88% for export.
We are informed of no significant change in
sales during the first 8 months of 2014 comparing to the previous years.
Regarding reported accumulated losses of subject - see more in
CHARACTER.
ARAD TOWELS ASSETS (1986) LTD.,
STANDARD TEXTILE
(EUROPE) LTD., a holding company,
C.I.G., 50% controlled by STANDARD TEXTILE USA
and 50% by a Jordanian company, a sewing plant located in Irbid, Jordan, acting
as subject's subcontractor.
Bank Leumi
Le’Israel Ltd., Central Branch (No. 800), Tel Aviv,
account No. 265700/07.
Bank Hapoalim Ltd., Yahalom Branch (No.
537), Tel Aviv, account No. 76026.
A check with the Central Banks' database did
not reveal anything detrimental on subject’s a/m main accounts.
Working also with:
Mizrahi Tefahot Bank Ltd., Tel Aviv Main
Business Center Branch (No. 461), Tel Aviv.
The First International Bank of Israel Ltd.,
Tel Aviv Main Branch (No. 061), Tel Aviv.
Israel Discount Bank Ltd., Main Branch (No.
010), Tel Aviv.
In a media report from October 2014,
discussing the closing of the plant in Arad and its consequences to the
employees, close associates to subject's General Manager said that subject had
accumulated losses of NIS 50 million in the past 4 years. Subject's General
Manager himself refused to comment.
We could not find any validation to these
numbers.
Subject is in the process of a fundamental
re-organization, in which all local manufacturing activities are transferred
abroad (mainly Jordan).
Apart from that, nothing unfavorable
learned.
Parent company, STANDARD TEXTILE CO. INC, founded
in 1940, is a global manufacturers of healthcare, hospitality and institutional
textiles, apparel, surgical, incontinence care, decorative products &
linen. With 3,600 employees worldwide in 23 plants over 13 countries, customers
in some 60 countries and global annual sales of US$ 650 million.
In 1999 subject’s parent, STANDARD TEXTILE
(EUROPE) LTD. acquired some 41% of subject's shares from D.G.M.A., of the DELTA
GALIL INDUSTRIES Group, in consideration of US$ 17.5 million, and then
purchases further 5% of subject's shares from Yossef Geva, in consideration of
US$ 2.4 million.
Later, in 2001, STANDARD reached full ownership in subject, after
acquiring the rest of D.G.M.A. shares, in consideration of allocating them 15%
in STANDARD.
In
February 2008 STANDARD singed an agreement for the
supply of towels to the French hotel chain ACCOR, one of the largest resort & hotel
companies in the world (a continuating
agreement), amounting to some € 45 million, thus becoming the sole supplier for
the Chain. Subject's share in this deal is some € 27 million. As a result, it
was reported that subject will expand its plant by further 3,000 sq. meters.
In
April 2008 STANDARD singed a continuation agreement
for the supply of towels and beddings to the American hotel chain MARRIOTT, one of the largest resort & hotel companies in the world,
amounting to NIS 252 million, thus becoming
the sole supplier for the North America and Canadian hotels. Subject's share in
this deal is production of some 18 million towels.
In
August 2008 Gary Heiman, President & CEO of STANDARD TEXTILE CO. and
subject’s Chairman was one of the among the 12 honorees who received special
awards for their contribution to the Negev Region (south of Israel) industry
promotion.
During the end of 2008 and the beginning of
2009 it was reported that subject laid-off some 160 employees due to a sharp
decline in orders from MARRIOTT and ACCOR hotel chains, which were affected
from the global economic crisis. Since then, during 2009 subject received
several large orders, main one from billionaire Sheldon Adelson for his Casinos
and hotels in Las Vegas and Macao, for some NIS 10 million, which enabled to
re-recruit back employees.
In October 2011 it was reported in the local
media, that subject threatens in the dismissals of 550 employees from its
manufacturing facilities, if the Finance Ministry will move on with its program
to higher exposure of competing cheaper import of textile from the Far East, by
lifting existing tariffs.
Sales by local Textile, Clothing and Fashion Industries
have been experiencing decrease in sales over the last years. Some 60% of the
textile industry production is sold in the local market and the rest for
export.
Most exports are the North American market, and the industries suffered from
the global economic crisis, mainly in the USA, as well as the slow-down in
local market.
Sales for export
by the Textiles, Wearing Apparel & Leather industries has been in a
decreasing trend over the last years: export fell by 6.6%, 6.7% and 5.3% in the
years 2011, 2012 and 2013, respectively (from the previous year), reaching US$
762 million in 2013. Export in the first 7 months of 2014 shows some recovery,
with sales for export rising by 12% from the parallel period in 2013.
Besides the weakness
of global markets, the local industry has been in
state of crisis in face of amounting import from foreign competitors with
cheaper production costs, forcing streamlining process, plants closure, and
mostly resulting in the shift of textile manufacturing to low labor cost
countries. There are around 14,000 employed in the textile sector in some 130
plants. In order to deal with the situation, the local textile industry
diverted mainly to advanced technologies production, niches and design aspects.
According to Central Bureau of Statistics (CBS) data,
investments in machinery & equipment from import for the manufacturing of
Textiles in 2013 fell 43.8% (in quantity terms) from 2012 and summed up to NIS
36.9 million (after 2.7% increase in 2012).
Despite the transformation subject has been going through, we belived
subject has a strong backing from its shareholders, and considered good for trade engagements.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
|
US Dollar |
1 |
Rs.62.56 |
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|
1 |
Rs.93.56 |
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Euro |
1 |
Rs.67.49 |
INFORMATION DETAILS
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Analysis Done by
: |
RAS |
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Report Prepared
by : |
DPT |
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.