3decades

MIRA INFORM REPORT

Report No. :	504863
Report Date :	25.04.2018

IDENTIFICATION DETAILS

Name :	ALSAGGAF TRADING CO LTD

Registered Office :	Al Khamseen Street, Sana’a

Country :	Yemen

Year of Establishment :	2005

Legal Form :	Limited Liability Company

Line of Business :	Export of Non-Ferrous Scrap Metals.

No. of Employees :	22

RATING & COMMENTS

(Mira Inform has adopted New Rating mechanism w.e.f. 23^rd January 2017)

MIRA’s Rating :

Credit Rating

Explanation

Rating Comments

Acceptable Risk

Business dealings permissible with moderate risk of default

Status :	Satisfactory

Payment Behaviour :	Slow but Correct

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

Country Name

Previous Rating

(30.09.2017)

Current Rating

(31.12.2017)

Yemen

Risk Category	ECGC Classification
Insignificant	A1
Low Risk	A2
Moderately Low Risk	B1
Moderate Risk	B2
Moderately High Risk	C1
High Risk	C2
Very High Risk	D

YEMEN - ECONOMIC OVERVIEW

Yemen is a low-income country that faces difficult long-term challenges to stabilizing and growing its economy, and the current conflict has only exacerbated those issues. The ongoing war has halted Yemen’s exports, pressured the currency’s exchange rate, accelerated inflation, severely limited food and fuel imports, and caused widespread damage to infrastructure. The conflict has also created a severe humanitarian crisis - the world’s largest cholera outbreak currently at nearly 1 million cases, more than 7 million people at risk of famine, and more than 80% of the population in need of humanitarian assistance.

Prior to the start of the conflict in 2014, Yemen was highly dependent on declining oil and gas resources for revenue. Oil and gas earnings accounted for roughly 25% of GDP and 65% of government revenue. The Yemeni Government regularly faced annual budget shortfalls and tried to diversify the Yemeni economy through a reform program designed to bolster non-oil sectors of the economy and foreign investment. In July 2014, the government continued reform efforts by eliminating some fuel subsidies and in August 2014, the IMF approved a three-year, $570 million Extended Credit Facility for Yemen.

However, the conflict that began in 2014 stalled these reform efforts and ongoing fighting continues to accelerate the country’s economic decline. In September 2016, President HADI announced the move of the main branch of Central Bank of Yemen from Sanaa to Aden where his government could exert greater control over the central bank’s dwindling resources. Regardless of which group controls the main branch, the central bank system is struggling to function. Yemen’s Central Bank’s foreign reserves, which stood at roughly $5.2 billion prior to the conflict, have declined to negligible amounts. The Central Bank can no longer fully support imports of critical goods or the country’s exchange rate. The country also is facing a growing liquidity crisis and rising inflation. The private sector is hemorrhaging, with almost all businesses making substantial layoffs. Access to food and other critical commodities such as medical equipment is limited across the country due to security issues on the ground. The Social Welfare Fund, a cash transfer program for Yemen’s neediest, is no longer operational and has not made any disbursements since late 2014.

Yemen will require significant international assistance during and after the protracted conflict to stabilize its economy. Long-term challenges include a high population growth rate, high unemployment, declining water resources, and severe food scarcity.

Source : CIA

SUMMARY

Company Name : ALSAGGAF TRADING CO LTD

Country of Origin : Yemen

Legal Form : Limited Liability Company

Registration Date : 2005

Issued Capital : YR 2,000,000

Paid up Capital : YR 2,000,000

Total Workforce : 22

Activities : Exporters of non-ferrous scrap metals

Financial Condition : Undetermined

Payments : Slow but correct

COMPANY NAME

ALSAGGAF TRADING CO LTD

ADDRESS

Registered & Physical Address

Location : Al Khamseen Street

Town : Sana’a

Country : Yemen

Telephone : (967-1) 677645 / 677542

Mobile : (967-77) 7779712 / (966-53) 5806592

Email : info@alsaggaftrading.com

Premises

Subject operates from a small suite of offices and a warehouse that are rented and located in the Central Business Area of Sana’a.

KEY PRINCIPALS

Name Position

· Dr Mustafa Al Junaid Managing Director

· Hassan Alsaggaf Director

LEGAL FORM & OWNERS

Date of Establishment : 2005

Legal Form : Limited Liability Company

Issued Capital : YR 2,000,000

Paid up Capital : YR 2,000,000

Name of Shareholder (s)

· Dr Mustafa Al Junaid

· Hassan Alsaggaf

OPERATIONS

Activities: Engaged in the export of non-ferrous scrap metals.

Subject has a workforce of 22 employees.

FINANCIAL DATA

Companies registered in Yemen are not legally required to make their accounts public and no financial information was released by the company or submitted by outside sources.

BANKERS

· National Bank of Yemen

Zubairy Street

PO Box: 198309

Sana’a

Tel: (967-1) 284123

Fax: (967-1) 284128

PAYMENT HISTORY

Subject’s payments have been reported to be slow but correct

GENERAL COMMENTS

During the course of this investigation the following sources were consulted:

- Internal database

- Journals, directories, media & web searches

- Local Registry office

During the course of this investigation nothing detrimental was uncovered regarding subject’s operating history or the manner in which payments are fulfilled. As such the company is considered to be a fair trade risk.

COUNTRY OUTLOOK

The country’s economic and social fabric is crippling after one year of conflict. The economy has contracted sharply. Official reporting suggests that the GDP contracted in 2015 by approximately 28 %. The escalating conflict since March 2015 has led to widespread disruptions of economic activities and infrastructure destruction. Since the second quarter of 2015, oil and gas exports have come to a halt. Imports have also contracted, except for critical food and energy products. Annual inflation reached around 30 % in 2015, and is expected to increase further as the fiscal performance is continuously weakening.

Public finances are under severe stress. The fiscal deficit widened to 11.4 % of GDP in 2015 from about 5 % of GDP in 2014. Foreign financing of the budget has largely come to a halt, as many development partners suspended their engagement. Where possible, partners moved to emergency and relief operations. Non-hydrocarbon tax collection declined by about 25 % compared to 2014. The government had to delay or suspend many public expenditure obligations while servicing wage and interest payment obligations. All premiums on wages were cut. Public investment has come to a complete stop.

The escalated conflict has complicated the management of monetary and exchange rate policy. The 2015 loss in foreign financing and especially in oil and gas exports led to increased pressures on Central Bank of Yemen (CBY) foreign exchange reserves, limiting gradually its space to finance imports while maintaining a stable exchange rate. International reserves declined to less than $2 billion in late 2015 (2 months of imports). Consequently, the CBY stopped in February 2016 supporting imports at the official exchange rate except for wheat and rice. Meanwhile, the government’s reliance on central bank financing of the fiscal deficit has increased domestic debt stock by about 18 % of GDP, to an estimated 53 % of GDP.

Social indicators were already poor before the 2015 crisis. Yemen has the highest poverty incidence in the Middle East, with about 37.3 % of the population living below the poverty line of $2 (2005 PPP) a day per person, and poverty is more widespread and persistent in rural areas. Yemen also has one of the highest malnutrition rates in the world, with almost 60 % of children under the age of five having chronic malnutrition, 35 % underweight, and 13 % having acute malnutrition in 2012.

An alarming humanitarian crisis is unfolding in the face of conflict and war. The civilian death toll is estimated to have exceeded 6000, with about 28,500 wounded. As of end 2015, 2.5 million people were estimated to be internally displaced in Yemen. As in any conflict, the poor are suffering the most: 21.2 million Yemenis or roughly 82 % of the population are in need of emergency humanitarian assistance; 14.4 million Yemenis are facing chronic food insecurity, which has increased by 35 % since the conflict began; and 19.3 million Yemenis are without safe drinking water or sanitation. According to UN-OCHA, this has led to a sharp increase in malnutrition and disease burden as forced reliance on water from unprotected sources make people, particularly the young, vulnerable to diarrhea and cholera.

Economic and social prospects in 2016 and beyond will depend critically on rapid improvements on the political and security fronts to be able to rebuild the economy. Providing relief and basic humanitarian assistance is needed to the many suffering from the conflict in the short-term. Even in a post-conflict period, the country will depend more than ever on foreign assistance and donor support to recover from this conflict and rebuild confidence, including in its institutions. Restoring peace and political stability is critical for beginning reconstruction and addressing the country’s deep-rooted governance, institutional, economic, social, and environmental challenges.

The conflict in Yemen has caused a dramatic deterioration of the economic and social conditions in the country. Output contracted sharply, driving household incomes downward. Important institutions like the Central Bank became dysfunctional in late 2016. Yemenis are facing a catastrophic humanitarian situation, massive displacement, and destruction of vital infrastructure. The UN recently launched a humanitarian appeal (US$2.1 billion) for helping the 8 million Yemenis suffering from rising food insecurity.

Official statistical reporting on Yemen is no longer available. However, the data gathered suggests that Yemen’s GDP contracted since 2015 by about 40%, cumulatively. Economic and social prospects in 2017 and beyond will depend critically on rapid improvements on the political and security fronts, and ultimately whether an end to the on-going conflict will allow for re-building the economy, the productive sphere, and Yemen’s social fabric. If peace is restored by mid-2017, the fiscal deficit is estimated to be halved, to 6% of GDP. Foreign financing can resume in the second half of the year (with emergency assistance estimated to reach 4% of GDP). At the same time, tax collection can pick up with the resumption of hydrocarbon production, with hydrocarbon tax revenues recovering to about 6% of GDP, of which two-thirds would be due to increased domestic energy consumption. Non-hydrocarbon tax revenues are estimated to reach about 8% of GDP in such a scenario.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	INR 66.36
UK Pound	1	INR 92.51
Euro	1	INR 81.05
YER	1	INR 0.27

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

INFORMATION DETAILS

Analysis Done by :	VIV

Report Prepared by :	NIT

RATING EXPLANATIONS

Credit Rating	Explanation	Rating Comments
A++	Minimum Risk	Business dealings permissible with minimum risk of default
A+	Low Risk	Business dealings permissible with low risk of default
A	Acceptable Risk	Business dealings permissible with moderate risk of default
B	Medium Risk	Business dealings permissible on a regular monitoring basis
C	Medium High Risk	Business dealings permissible preferably on secured basis
D	High Risk	Business dealing not recommended or on secured terms only
NB	New Business	No recommendation can be done due to business in infancy stage
NT	No Trace	No recommendation can be done as the business is not traceable

NB is stated where there is insufficient information to facilitate rating. However, it is not to be considered as unfavourable.

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 are as follows:

· Financial condition covering various ratios

· Company background and operations size

· Promoters / Management background

· Payment record

· Litigation against the subject

· Industry scenario / competitor analysis

· Supplier / Customer / Banker review (wherever available)

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