MIRA INFORM REPORT

 

 

Report No. :

353466

Report Date :

07.12.2015

 

IDENTIFICATION DETAILS

 

Name :

ITOCHU CORPORATION

 

 

Registered Office :

2-5-1 Kitaaoyama Minatoku Tokyo 107-8807

 

 

Country :

Japan

 

 

Year of Establishment :

1949

 

 

Com. Reg. No.:

1200-01-077358

 

 

Legal Form :

Limited Company

 

 

Line of Business :

A general trading house; Sales breakdown by divisions:

 

·         Textile Company

·         Machinery Company

·         Aerospace, Electronics & Multimedia Company

·         Energy, Metals & Minerals Company

·         Food Company

·         Finance, Realty, Insurance & Logistics Services Company

 

 

No. of Employees :

110,487

 

 

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

 

 

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 – March 31, 2015

 

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

Japan

A1

A1

 

Risk Category

ECGC Classification

Insignificant

 

A1

Low

 

A2

Moderate

 

B1

High

 

B2

Very High

 

C1

Restricted

 

C2

Off-credit

 

D

 

JAPAN - ECONOMIC OVERVIEW

 

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop an advanced economy. Two notable characteristics of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Scarce in many natural resources, Japan has long been dependent on imported raw materials. Since the complete shutdown of Japan’s nuclear reactors after the earthquake and tsunami disaster in 2011, Japan's industrial sector has become even more dependent than it was previously on imported fossil fuels. A small agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. While self-sufficient in rice production, Japan imports about 60% of its food on a caloric basis. For three decades, overall real economic growth had been impressive - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the aftereffects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008. Government stimulus spending helped the economy recover in late 2009 and 2010, but the economy contracted again in 2011 as the massive 9.0 magnitude earthquake and the ensuing tsunami in March of that year disrupted manufacturing. The economy has largely recovered in the four years since the disaster, although reconstruction in the affected Tohoku region has lagged, in part due to a shortage of labor in the construction sector. Japan enjoyed a sharp uptick in growth in 2013 on the basis of Prime Minister Shinzo Abe’s “Three Arrows” economic revitalization agenda - dubbed “Abenomics” - of monetary easing, “flexible” fiscal policy, and structural reform. Abe’s government has replaced the preceding administration’s plan to phase out nuclear power with a new policy of seeking to restart nuclear power plants that meet strict new safety standards, and emphasizing nuclear energy’s importance as a base-load electricity source. Japan joined the Trans-Pacific Partnership (TPP) negotiations in 2013, a pact that would open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2014 stood as the fourth-largest economy in the world after first-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. While seeking to stimulate and reform the economy, the government must also devise a strategy for reining in Japan's huge government debt, which amounts to more than 230% of GDP. To help raise government revenue, Japan adopted legislation in 2012 to gradually raise the consumption tax rate to 10% by 2015, beginning with a hike from 5% to 8% implemented in April 2014. That increase had a contractionary effect on GDP, however, so PM Abe in late 2014 decided to postpone the final phase of the increase until April 2017 to give the economy more time to recover. Led by the Bank of Japan’s aggressive monetary easing, Japan is making progress in ending deflation, but demographics - low birthrate and an aging, shrinking population - pose major long-term challenges for the economy.

 

Source : CIA

 

Company summery

 

ITOCHU CORPORATION

 

REGD NAME:               Itochu Shoji KK

 

MAIN OFFICE:              2-5-1 Kitaaoyama Minatoku Tokyo 107-8807 JAPAN

 

                                                Tel: 03-3497-2121     Fax: 03-3497-4141

                       

                                                *.. Registered at: 3-1-3 Umeda Kitaku Osaka, as given

 

URL:                             http://www.itochu.co.jp/

 

E-Mail address:             webmaster@itochu.co.jp

 

 

ACTIVITIES

 

General trading house

 

 

BRANCHES

 

Osaka, Nagoya, Fukuoka, Hiroshima, Sapporo, other (Tot 90)

 

Branch Office: Central Po Box No 117, Osaka 530 8691  ATTN: Osarm Section

 

 

OVERSEAS

 

North/South America, Europe, China, S/E Asia, other (Tot 115 over 80 countries)

 

 

CHIEF EXEC

 

MASAHIRO OKAFUJI, PRES & CEO

 

Yen Amount:     In million Yen, unless otherwise stated

 

 

SUMMARY

 

       FINANCES FAIR                             A/SALES          Yen 5,591,435 M

PAYMENTSNO COMPLAINTS    CAPITAL           Yen 253,448 M

TREND UP                                WORTH            Yen 2,748,251 M

STARTED         1949                             EMPLOYES      110,487

 

 

COMMENT    

 

NATION’S LEADING GENERAL TRADING HOUSE.

 

FINANCIAL SITUATION CONSIDERED FAIR AND GOOD FOR ORDINARY BUSINESS ENGAGEMENTS.

 

Unit: In Million Yen

Forecast (or estimated) figures for 31/03/2016 fiscal term

 

 

HIGHLIGHTS

           

This is major general trading house, currently top textile trader among domestic trading companies, with comprehensive strength in all areas of the textile industry from upstream to down-stream operations, while actively trying to expand into textile retailing.  Also strong in food industry, machinery plants, chemicals, energy and condominiums.  Further aggressive in satellite communications to lead other trading houses in telecom & China businesses.  Has stake in Perfect TV satellite broadcaster.  Implemented independently managed “division company system” in Apr 1997. (See OPERATION).  Acquired 3% stake in UNY, general supermarket operator based in Tokai area for collaboration in merchandise development and operation in China.  Constructing export terminals on West Coast jointly with major US grain firm as strategic base for export to China & other Asian countries.  Capital spending is at Yen 350 billion-plus in the March 2012 and March 2013 terms for metals & energy resources.  The company is eager to acquire additional new metals resources in light of opportunities presented by the deteriorating market, and will focus on iron ore and coal.  It will adopt IFRS from the March 2015 term.  The company plans to increase payout ratio from the present figure of around 23%.

 

 

FINANCIAL INFORMATION

 

The sales volume for Mar/2015 fiscal term amounted to Yen 5,591,435 million, an almost similar amount of Yen 5,589,525 million in the previous term.  The recurring profit was posted at Yen 418,515 million and the net profit at Yen 300,569 million, respectively, compared with Yen 360,762 million recurring profit and Yen 245,312 million net profit, respectively, a year ago.

 

For the current term ending Mar 2016 the recurring profit is projected at Yen 406,000 million and the net profit at Yen 330,000 million, respectively, on a 1.64% up in turnover, to Yen 5,500,000 million.  Profits generated from CITIC will start to be realized. The metal business will remain flat, but machinery sales and the general products and information and communication technology business will drive earnings growth.

 

The financial situation is considered FAIR and good for ORDINARY business engagements. 

 

 

REGISTRATION

           

Date Registered:             Dec 1949

Regd No.:                  1200-01-077358 (Osaka-Chuoku)

Legal Status:       Limited Company (Kabushiki Kaisha)

Authorized:         3,000 million shares

Issued:                1,662,889,504 shares

Sum:                   Yen 253,448 million

           

Major shareholders (%): Company’ Treasury Stock (4.8), Japan Trustee Services T (4.1), Master Trust Bank of Japan T (3.9), CP Worldwide Investment (3.8), Mizuho Bank (2.3), Nippon Life Ins (2.0), Mitsui Sumitomo Ins (1.8), Sompo Japan Nipponkoa Ins (1.5), Barclays Securities Japan (1.5), Asahi Life Ins (1.4); foreign owners (38.2)

           

No. of shareholders: 150,725

 

Listed on the S/Exchange (s) of: Tokyo

 

Managements: Eizo Kobayashi, ch; Masahiro Okafuji, pres; Koji Takayanagi, v pres; Tomofumi Yoshida, s/mgn dir; Hitoshi Okamoto, s/mgn dir; Takao Shiomi, s/mgn dir; Yuji Fukuda, mgn dir; Shuichi Koseki, mgn dir; Eiichi Yonekura, mgn dir; Fumihiko Kobayashi, mgn dir; Tsuyoshi Hachimura, mgn dir; Ichiro Fujisaki, dir; Chikara Kawakita, dir

 

Nothing detrimental is known as to the commercial morality of executives.

 

Related companies: Itochu Techno Solutions, Itochu Shokuhin, Itochu Enex, other

           

 

OPERATION

           

Activities: Activities: A general trading house; Sales breakdown by divisions:

Textile Company (10%): Raw cotton, Cotton yarns, Wool, yarns, Rayon staple, Spun rayon yarns, Rayon yarns, Synthetic staple, Synthetic filament, Cotton fabrics, Wool fabrics, Silk fabrics, Rayon fabrics, Spun rayon fabrics, Synthetic filament fabrics, Knit fabrics, Knit outer garments, Knit under garments, Woven outer garments, Woven under garments, Other garments, Secondary textile products, Imported sundries, Bedding fabrics, Interior fabrics, Industrial fibers, Inorganic fibers and related products.

Machinery Company (7%): Civil engineering, Construction, Mining and related materials handling machinery, Agricultural machinery, Metalworking and processing machinery and plant, Forging machinery, Textile machinery, Semiconductor manufacturing equipment, Automobile parts manufacturing plant, Plant related to the iron and steel industry, Cement plant, Food machinery, Grain silos, Hospital equipment, Oil, gas, and chemical plants, Passenger vehicles, Commercial vehicles, Automobile parts and equipment, Special-purpose vehicles, Rolling stock, Ships, Power generating equipment.

Aerospace, Electronics & Multimedia Company (5%): Satellite communications, International telecommunications, Terminals and peripheral equipment for broadcasting and communications systems, Entertainment and content business, Systems and related machinery for mobile telephones, Systems and related equipment for computer and information processing, Semiconductor equipment, Aircraft, In-flight equipment, Space-related equipment, Security equipment.

Energy, Metals & Minerals Company (34%): Iron ore, Direct reduced iron, Coking coal, Coke, Thermal coal, Ferro alloy and its materials, Ferrous scrap, Pig iron, Metal powder, Electrodes, Activated carbon, Steel plates, Hot & cold rolled sheets and coils, Galvanized steel, Steel for machinery, Stainless steel, High tensile steel, Construction materials, Welded steel pipes, Seamless steel pipes, Steel wires, Marine steel structures, Bridges, Prefabricated steel for buildings, Rails, Non-ferrous metals, Precious metals, Rare metals, Aluminium, Crude oil, Natural gas liquid (NGL), Gasoline, Naphtha, Kerosene, Jet fuel, Gas oil, Fuel oil, Bunker oil, Lubricant, Asphalt, Liquefied petroleum gas (LPG), Liquefied natural gas (LNG), Nuclear fuel (uranium concentrates, uranium hexafluoride), Nuclear power related equipment

Food Company (34%): Wheat, Barley, Wheat flour, Rice, Starches, Soybeans, Sunflower oil, Olive oil, Palm oil, Coconut oil, Corn, Soybean meal, Rapeseed meal, Fish meal, Alfalfa pellets, Raw sugar, Sweeteners, High-fructose corn syrup, Dairy products, Nuts, Coffee, Cocoa, Fruit juice, Liquor, Soft drinks, Beef, Pork, Chicken, Fruits and vegetables, Processed foods, Frozen foods, Canned foods, Pet foods, Consulting services for food business.

Finance, Realty, Insurance & Logistics Services Company (10%): Finance: Foreign exchange and securities trading, securities and fund investment, asset management (including structuring and sales of financial products), lending, online securities broking, other financial services; Realty: Planning, developing, constructing, contracting, managing, operating, selling related facilities and materials for residential housing, office buildings, resort facilities, golf courses, industrial parks, hotels; Insurance: Insurance and reinsurance agency, broking of insurance and reinsurance, consulting of insurance and reinsurance; Logistics services: Warehousing, trucking, operation of logistics centers, chartering, international intermodal transport, air cargo, travel services, distribution processing, freight forwarding, customs clearance.

Overseas trading ratio: (42%)

Clients: [Wholesalers, mfrs] Nippon Access Inc, Itochu Shokuhin, Idemitsu Kosan Kaisha, Japan Gas Energy, JX Nippon Oil & Energy Corp, Prime Meat Packers, Itokin Co, Nisshin Ringyo, other.

No. of accounts: 3,000

Domestic areas of activities: Nationwide

 

Suppliers: [Mfrs, wholesalers, carmakers] Mazda Motor, Nippon Steel, Isuzu Motors, Nissin Food Products, JGC Corp, Dole, Nissin Foods, Dole Japan Inc, JX Nippon Oil & Energy Corp, Japan Petroleum Exploration Co, Sakhalin Oil & Gas, other.

 

Payment record: Regular

 

Location: Business area in Tokyo.  Office premises at the caption address are owned and maintained satisfactorily.

 

 

Bank References

 

            Mizuho Bank (Uchisaiwaicho)

            SMBC (Osaka)

            Relations: Satisfactory

 

 

FINANCES

 

(In Million Yen)

FINANCES: (Consolidated in million yen)

　

　

Terms Ending:

31/03/2015

31/03/2014

INCOME STATEMENT

  Annual Sales

　

5,591,435

5,587,526

  Cost of Sales

4,502,371

4,542,504

      GROSS PROFIT

1,089,064

1,045,022

  Selling & Adm Costs

704,104

762,011

      OPERATING PROFIT

384,960

283,011

  Non-Operating P/L

33,555

77,751

      RECURRING PROFIT

418,515

360,762

　

      NET PROFIT

300,569

245,312

BALANCE SHEET

  Cash

　

700,292

653,739

  Receivables

2,101,300

2,127,968

  Inventory

780,550

744,441

  Securities, Marketable

　

　

  Other Current Assets

555,810

313,388

      TOTAL CURRENT ASSETS

4,137,952

3,839,536

  Property & Equipment

786,862

747,664

  Intangibles

488,941

440,246

  Investments, Other Fixed Assets

3,146,946

2,757,405

      TOTAL ASSETS

8,560,701

7,784,851

  Payables

1,669,814

1,661,973

  Short-Term Bank Loans

543,660

472,667

　

　

　

  Other Current Liabs

633,037

479,728

      TOTAL CURRENT LIABS

2,846,511

2,614,368

  Debentures

　

　

  Long-Term Bank Loans

2,548,504

2,420,713

  Reserve for Retirement Allw

56,404

57,022

  Other Debts

　

361,031

295,157

      TOTAL LIABILITIES

5,812,450

5,387,260

      MINORITY INTERESTS

  Capital, Paid-Up

253,448

202,241

  Surplus

2,494,803

2,195,350

      SHAREHOLDERS' EQUITY

2,748,251

2,397,591

　

      TOTAL EQUITIES

8,560,701

7,784,851

CONSOLIDATED CASH FLOWS

Terms ending:

31/03/2015

31/03/2014

Cash Flows from Operating Activities

　

403,629

428,101

Cash Flows from Investment Activities

-276,103

-270,377

Cash Flows from Financing Activities

-97,896

-77,855

　

Cash, Bank Deposits at the Term End

　

700,292

653,739

ANALYTICAL RATIOS            Terms ending:

31/03/2015

31/03/2014

Net Worth (S/Holders' Equity)

2,748,251

2,397,591

Current Ratio (%)

145.37

146.86

Net Worth Ratio (%)

32.10

30.80

Recurring Profit Ratio (%)

7.48

6.46

Net Profit Ratio (%)

5.38

4.39

Return On Equity (%)

10.94

10.23

 

 

 

 

FOREIGN EXCHANGE RATES

 

Currency
Unit

Indian Rupees

US Dollar

1

Rs.66.84

UK Pound

1

Rs.101.04

Euro

1

Rs.73.05

Yen

1

Rs.0.54

Note : Above are approximate rates obtained from sources believed to be correct

 

 

INFORMATION DETAILS

 

Analysis Done by :

AMR

 

 

Report Prepared by :

NIT

 

               


 

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%)

 

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.