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Report No. : |
355853 |
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Report Date : |
17.12.2015 |
IDENTIFICATION DETAILS
|
Name : |
LEO SCHACHTER
DIAM |
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Formerly Known As : |
Schachter & Namdar Polishing Works Ltd |
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Registered Office : |
21 Tuval Street
Diamond Exchange, Yahalom Bldg. Ramat Gan 5252138
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Country : |
Israel |
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Date of Incorporation : |
13.07.1981 |
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Legal Form : |
Private limited company |
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Line of Business : |
Diamond cutters,
polishers, traders, importers, marketers and exporters. |
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No. of Employee : |
1,500 (Group) 100 (Approximately) |
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 – March 31, 2015
|
Country Name |
Previous Rating (31.12.2014) |
Current Rating (31.03.2015) |
|
Israel |
B1 |
B1 |
|
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 2013, 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. Israel's economy also has weathered the Arab Spring because strong trade ties outside the Middle East have insulated the economy from spillover effects. Slowing demand domestically and internationally and reduced investment due to uncertainties caused by the Gaza conflict in summer 2014 have reduced GDP growth to about 2% during 2014. 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 expected to come online no sooner than 2017, but production from Tamar provided a one percentage point boost to Israel's GDP in 2013 and a 0.5% boost 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 and has started splitting up the oligopolies to address some of the grievances but has maintained that it will not engage in deficit spending to satisfy populist demands. 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 |
LEO SCHACHTER DIAM
Telephone 972 3 576 62 22
Fax 972 3 613 24 89
Email: ramatgan@lsdco.com
21 Tuval Street
Diamond
Exchange, Yahalom Bldg.
RAMAT
GAN 5252138 ISRAEL
A private limited company,
incorporated as per file No. 51-089213-6 on the 13.07.1981, as an amalgamation
of the diamond business activities of Late Leo Schachter founded in the USA in
1952 and those of David Namdar in Italy.
It was originally
registered under the name SCHACHTER & NAMDAR POLISHING WORKS LTD., which
changed to LEO SCHACHTER LTD. on the 30.08.2005 and finally changed to the
present name on the 24.07.2006.
During 2004 subject's shareholders decided to split their activities, and
part of the activities were transferred to a newly established subsidiary MOSHE
NAMDAR & CO. LTD., which later in 2007 separated from subject's Group
altogether.
Authorized share
capital NIS 1,000.00, divided into – 1,000,000 ordinary shares of NIS 0.001
each, fully issued.
1. LEO SCHACHTER & CO. INC.,
of the USA, 49.5%, owned by the heirs of Leo Schachter, Tannenbaum and
Greenberg families,
2. FANCY DIAM
3. Lenard Kramer, 5.5%,
4. Moshe Namdar, 3.83%.
1. Elliot Tannenbaum, President & Co-General
Manager,
2. David Greenberg, Co-General Manager,
3. Dov Tannenbaum.
Diamond cutters,
polishers, traders, importers, marketers and exporters.
Almost all sales
are for export.
Among local
clients: B. BRIZA COLORS, MULTI-NATIONAL DIAMONDS, R.E.S. DIAMONDS, AVNER
EIZENSTEIN DIAMONDS.
Among local
diamond suppliers: OFER MIZRAHI DIAMONDS
Operating from
owned premises, in Yahalom Building, Diamond Exchange, 22nd Floor,
in 21 Tuval Street (also referred to as 54 Bezalel Street), Ramat Gan.
Also operating from factories in China, Botswana, India, Thailand and New
York, as well as offices in New York, Mumbai, Shanghai, Hong Kong, Toronto and
Dubai.
Exact number of employees unavailable. Known to have over 1,500 employees
serving LEO SHACHTER Group worldwide, of which over 100 employees
estimated to be in Israel.
Financial data not
forthcoming, but known to be financially solid.
Subject (also in its previous forms) is a Diamond Trading Company (DCT)
Sightholder from DE BEERS since 1966. According to reports
from February 2004, they are the largest receiver from a DE BEERS Sight in
volume of US$ 150-200 million per year.
There are 2 charges for unlimited amounts
registered on the company's assets, in favor of Israel Discount Bank Ltd.
(charges placed in 1986 and 2000)
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:
2007 sales for
export (net) were US$ 446,000,000.
2008 sales for
export (net) were US$ 352,000,000.
2009 sales for
export (net) were US$ 215,000,000.
2010 sales for
export (net) were US$ 359,000,000.
2011 sales for
export (net) were US$ 403,000,000.
2012 sales for
export (net) were US$ 317,000,000.
2013 sales for export (net) were US$ 327,692,000.
2014 sales for
export (net) were US$ 287,702,000
LEO SCHACHTER DIAM
LEO SCHACHTER
DIAMONDS EAST LTD., Hong Kong.
LEO SCHACHTER
DIAMONDS (INDIA) PVT. LTD., India.
SHACHTER AND
NAMDAR HOLDINGS LTD., a holding company.
I. LESHEM DIAMONDS
LTD., 100%, traders, importers, exporters and marketers of diamonds.
KAMA-SCHACHTER
JEWELLERY, Mumbai, India.
S.N.W LTD.
And other foreign
companies/ subsidiaries.
Subject’s shareholders
also hold and involved in many other companies.
Israel Discount Bank Ltd., Diamond Exchange Branch (No. 080), Ramat Gan.
Nothing
unfavorable learned.
Similar to the
previous years, subject's officials gave only general data, and refused to
disclose financial and other business details, as a matter of policy.
Subject is a world
leading diamond company, enjoying excellent reputation in Israel and worldwide.
According to the
report published by the Israel Supervisor on Diamonds in the Ministry of
Industry and Trade, subject was ranked 1st in the 2014 (as in
2011-2013) list of Israel's largest polished diamonds exporters for the first
time. In previous years (2005 till 2010) subject was ranked 2nd to
LLD DIAM
In 1995 it was
reported that subject’s shareholders acquired 2 floors (21st and 22nd
floors- total of 2,300 sq. meters) in the Yahalom Building, in consideration of
US$ 10 million. Part of the area was rented, the rest used by subject.
In May 2005, it
was reported that the SCHACHTER & NAMDAR Group acquired a 3,000
sq. meters plot in central Tel Aviv, for a sum of US$ 15 million. The plot is
designed for 18 story building, for residential and commercial purposes.
In February 2004 subject announced a structural change in the SCHACHTER
& NAMDAR Group, initially the establishment of a subsidiary MOSHE NAMDAR
& CO. LTD., that, in order to maximize potential where each party will
focus on different markets. In the beginning of 2007 the split was completed
between the activities of Namdar family and LEO ASCHACHTAR Group.
In 2005 subject
created a joint venture with New York’s WILLIAM GOLDBERG DIAMONDS, one of the
most respected names in the industry, specializing in high-end customers,
including leading jewelry houses Cartier and Harry Winston.
In 2007, subject
joined with KAMA Jewelry of Mumbai, India to form KAMA SCHACHTER JEWELRY, one
of Asia’s largest manufacturers and exporters of diamond jewelry.
In 2006 Leo Schachter
formed an alliance with LEE HENG DIAMOND Group in Hong Kong to distribute the
Leo Diamond brand in the Far East.
In June 2014
subject was awarded the Asia Dignitaries Award by the Israel Asia Chamber of
Commerce for its being a leading firm which considerably increased its diamonds
export to Asia – total of close to US$ 150 million in 2013 to Hong Kong, India
and China.
Israel's diamond
industry continued the growth trend in all trade parameters in 2014, after the
impressive growth in 2013 in most parameters, based on the data by Israel's
Diamond Administration (IDA) at the Ministry of Economics: Net export of
polished diamonds rose by 0.6% from 2013, reaching US$6.269 billion (after
rising 11.6% in 2013), and net rough diamond exports totaled US$3.061 billion
in 2014, up 4.2% from 2013 (after a mere rise in 2013). The market has been
volatile over the last years after experiencing its worst depression due to the
global economic crisis, then recovered in 2010 but fell again in 2012. The
recovery in 2013 and 2014 is positive news for the local branch (still away
from its peak on the eve of the crisis with export of polished diamonds of US$
7 billion), however it is reported that profit margins have been decreasing due
to smaller gaps between rough and polished diamond prices (leading the diamond
dealers to search for new rough sources in hope to decrease costs). Overall,
IDA reports that 2014 was tough year for the diamond industry in Israel and
globally.
In addition, the
local diamond sector has been negatively affected by 2 other significant
factors: the production of counterfeit diamonds, whose quality keeps improving
(harming the raw diamonds market) and the "underground bank" affair –
see below. As a result, local diamond dealers report on difficulties in
executing transactions and bad atmosphere in the branch.
The data published
for the 1st half of 2015 (compared to 1stH 2014) points on a
negative reverse trend in all parameters: Net export of polished diamonds
represents 17% decrease, reaching US$2,975 million, and net rough diamond
exports decreased by 22%, totaled US$ 1,361 million. Net imports of polished
diamonds fell by 17%, reaching US$ 1,793 million, while net import of rough
diamonds fell 21% totaling US$ 1,623 million.
The United States
continued to be Israel’s major market for polished diamonds, accounting for 44%
of the market in the 1stH 2015 (some recovery from 39% in latest years). Hong
Kong is 2nd largest market with 31% of exports (30% in 2014), then
Switzerland 10%, Belgium 6.5%, and U.K. accounting for 2.4% 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 stood on US$ 1.5 billion, down from US$ 2.4 billion in the eve of the
global crisis.
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 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.
Since mid-2014 the
State Attorney started to file indictments against central defendants in the
affair, initially against dealers who
provided foreign currency services to the "underground bank", for
felonies of money laundering and tax evasion in volumes of US$ millions (in
June 2015 the court made the first conviction in the affair, sending a foreign
currency dealer who pretended also to be a diamond dealer, for 4 years prison
and a fine, part of a plea bargain), and in October 2015 indictments for severe
charges pressed against 5 diamond firms and persons for felonies committed in
volumes of millions US$.
Notwithstanding
refusal to disclose financial and other data, considered good for trade
engagements.
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.66.99 |
|
|
1 |
Rs.101.78 |
|
Euro |
1 |
Rs.73.47 |
|
ILS |
1 |
Rs. 17.12 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
|
Analysis Done by
: |
HNA |
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Report Prepared
by : |
ANK |
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.