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MIRA INFORM REPORT
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Report No. : |
491046 |
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Report Date : |
16.02.2018 |
IDENTIFICATION DETAILS
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Name : |
NETAFIM LTD. |
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Registered Office : |
10 Hashalom Rd.,
Tel Aviv 6789212 |
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Country : |
Israel |
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Date of Incorporation : |
1998 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Manufacturers, marketers and exporters of irrigation systems and
solutions, intended for open-field crops, landscape irrigation, greenhouse technology
systems and turnkey greenhouse projects, wastewater management, and advanced
crop management and monitoring systems. |
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No. of Employees : |
Having some 4,500 employees serving the whole NETAFIM Group, of which
some 1,000 employees in Israel. |
RATING & COMMENTS
(Mira Inform has adopted New Rating mechanism w.e.f. 23rd
January 2017)
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MIRA’s Rating : |
A |
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Credit Rating |
Explanation |
Rating Comments |
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A |
Acceptable Risk |
Business dealings permissible with moderate
risk of default |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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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
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Country Name |
Previous Rating (30.06.2017) |
Current Rating (30.09.2017) |
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Israel |
B1 |
B1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low Risk |
A2 |
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Moderately Low Risk |
B1 |
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Moderate Risk |
B2 |
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Moderately High Risk |
C1 |
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High Risk |
C2 |
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Very High Risk |
D |
ISRAEL - ECONOMIC OVERVIEW
Israel has a technologically advanced free market economy. Cut diamonds,
high-technology equipment, and pharmaceuticals are among its leading exports.
Its major imports include crude oil, grains, raw materials, and military
equipment. Israel usually posts sizable trade deficits, which are offset 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 weathered the 2011 Arab Spring because strong trade ties outside the
Middle East insulated the economy from spillover effects.
Slowing domestic and international demand and decreased investment
resulting from Israel’s uncertain security situation reduced GDP growth to an
average of roughly 2.8% per year during the period 2014-17. 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 in the last decade. Political and regulatory
issues have delayed the development of the massive Leviathan field, but production
from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in
2014. One of the most carbon intense OECD countries, Israel generates about 57%
of its power from coal and only 2.6% from renewable sources.
Income inequality and high housing and commodity prices continue to be a
concern for many Israelis. 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. Government officials have called for reforms to
boost the housing supply and to increase competition in the banking sector to
address these public grievances. Despite calls for reforms, the restricted
housing supply continues to impact the well-being of younger Israelis seeking
to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed
prices and customs tariffs for farmers kept food prices high in 2016. Private
consumption is expected to drive growth through 2018 with consumers benefitting
from low inflation and a strong currency.
In the long term, Israel faces structural issues, including low labor
participation rates for its fastest growing social segments - the ultraorthodox
and Arab-Israeli communities. Also, Israel's progressive, globally competitive,
knowledge-based technology sector employs only about 8% of the workforce, with
the rest mostly employed in manufacturing and services - sectors which face
downward wage pressures from global competition. Expenditures on educational
institutions remain low compared to most other OECD countries with similar GDP
per capita.
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Source
: CIA |
Company
name & address
NETAFIM LTD.
Telephone 972 8 647 47 47; 647 47
00
Fax 972 8 647 39
83; 691 19 73
Email: pstmaster@netafim.com
10 Hashalom Rd.
Tel Aviv 6789212
Israel
HISTORY
& LEGAL FORMATION
Originally
established in 1998 as an agricultural cooperative society (ACS) and registered
as such as per file No. 57-003539-4, under the name NETAFIM COOPERATIVE SOCIETY
FOR DRIP IRRIGATION LTD. (NETAFIM ACS LTD.).
The ACS, which
began operation on the 01.01.1999, was incorporated in order to take over all
the activities of 3 “NETAFIM” plants:
1.
NETAFIM IRRIGATION EQUIPMENT AND DRIP SYSTEMS IN
KIBBUTZ HATZERIM (1973), a limited partnership, established in 1973.
2.
NETAFIM MAGAL, a limited partnership, established
in 1974.
3.
NETAFIM YIFTACH - IRRIGATION AND DRIP PROD
Converted into a private limited company,
registered as such as per file No. 51-376909-1 on 28.12.2005 (assuming all
business activities of the ACS).
SHARE
CAPITAL
Authorized share capital 0.00 (no face value),
divided into:-
10 convertible type A
shares (issued),
10 redeemable B shares,
510,921 type C shares
(issued),
99,489,059 ordinary shares
(15,388,125 shares issued),
all of 0.00 each (no face value), of which
15,899,056 shares were issued.
SHAREHOLDERS
According to the Registrar of Companies:
1. BLUEDRIP
Sarl. (registered in Luxembourg), 61.3% of ordinary shares and
all convertible type A shares issued, part of the German international investment fund PERMIRA (headquartered in London, U.K.),
2. NETAFIM
HATZERIM HOLDINGS (A.C.S.) LTD., 32.7% of ordinary shares, fully owned by
Kibbutz Hatzerim, a cooperative society, operating an agricultural communal
settlement,
3. MAGALRON
COOPERATIVE SOCIETY FOR IRRIGATION & DRIPPING LTD., 6% ordinary shares, fully owned by Kibbutz Magal, a cooperative society, operating an
agricultural communal settlement (part of the shares are held in trust by BANK
LEUMI LISRAEL TRUSTEE COMPANY LTD.).
4. TAMIR
FISHMAN, 91% of type C shares, a trustee company.
Note: Subject itself is registered as holding 9% of type C shares.
In practice, since February 2018, shareholders are as follows:
1. MEXICHEM SAB de CV, 80%, publicly traded on
the Mexico Stock Exchange (BMV:MEXCHEM),
2. NETAFIM HATZERIM HOLDINGS (A.C.S.) LTD., 20%
of ordinary shares, fully owned by Kibbutz Hatzerim, a
cooperative society, operating an agricultural communal settlement
In September 2011, PERMIRA Fund acquired 55% of subject (some 20% from MARKSTONE, 10% from TENE, some 17% from Kibbutz Magal and 8% from Kibbutz Yiftach). In
November 2011 PERMIRA purchased further 6.5% from Kibbutz Hatzerim. In total, PERMIRA paid US$ 510 million for subject's shares (US$ 360
million in cash plus US$ 150 million in promissory notes, i.e. a loan from the
sellers). Additional US$ 75 million were to be paid based on 2012 results (has
been delayed since subject did not meet these results in 2012).
In August 2017, MEXICHEM SAB de CV, signed a definitive agreement to
acquire an 80% of subject (all of PERMIRA’s holdings (61.3%), all of Kibbutz Magal’s
shares (6%) and 12.7% of Kibbutz Hatzerim shares, based on value for subject of
NIS 1.9 billion. On the 07.02.2018, the deal was completed – see more MEANS
below.
DIRECTORS
1. Jose G R Barella, Chairman,
2. Dr. Jorg Rockenhauser,
3. Michail Zekkos,
4. Torsten Vogt,
5. Klaus Edelmann, latter 5 are foreign nationals, of PREMIRA,
6. Ms. Einat Rot,
7. Eli Ben Simon,
8. Gilad Winkler,
9. Yosef Lavi.
We assume Directors will
change following the a/m recent transaction. According to the deal, subject
will remain in Israel under Israeli management.
GENERAL
MANAGER
Ran Meidan.
BUSINESS
Manufacturers, marketers and exporters of irrigation systems and solutions,
intended for open-field crops, landscape irrigation, greenhouse technology
systems and turnkey greenhouse projects, wastewater management, and advanced
crop management and monitoring systems.
Products include: filters, hoses, drippers, dripper lines, micro-sprinklers,
valves, computer controlled irrigation systems, etc.
Subject supplies full turnkey solutions in its field, including matching
clients with financing bodies for the projects.
97% of sales are for export, to some 110 countries worldwide.
Amongst local clients: AMIR MARKETING & INVESTMENT IN AGRICULTURE,
HAMASHBIR FOR AGRICULTURE, shopping organizations, etc.
Main suppliers: Valves: DOROT VALVES, BERMAD; Filters: ARKAL, AMIAD, MPREST
SYSTEMS (monitoring systems).
Among other local suppliers: INTERDAN, ASHALIM AGENCIES, DGS LASER SAFETY, POLYRAM PLASTIC INDUSTRIES, PLASSIM FITTINGS, KRAUSZ INDUSTRIES, I.P.E
INTL., NAYER (2002), BERMAD, SASSON METALS, J.D POLYMERS, RIMONI PLAST,
SU-PAD, TOP SOLUTIONS, SORPOL, MAPAL, MEISAV LACOL, SYSTEMATITECH, SHOSHANI
& WEINSTEIN, CARASSO.
Operating from main rented offices, on a large area, in 10 Hashalom Rd. ('Derech
Hashalom' in Hebrew), Tel Aviv, from further 3
plants in Israel in Kibbutz Hatzerim, Kibbutz Magal (D.N. Hefer,
the address you provided), and in Kibbutz Yiftach, and further 14 plants overseas (including USA, Australia, Brazil, Chile,
India, South Africa, Holland, Peru, Spain, Turkey, China, and more).
Also operating from subsidiaries offices abroad and worldwide
representatives' offices in over 110 countries.
Since we could not speak to subject’s officials, we were unable to verify
the a/m overseas locations.
Having some 4,500 employees serving the whole NETAFIM Group, of which some
1,000 employees in Israel.
MEANS
In August 2017, MEXICHEM signed an agreement to acquire 80% of subject for US$
1,516 million, giving subject a company value of US$ 1,895 million. As noted
above, deal was completed on the 07.02.2018.
MEXICHEM financial
indicators show:
US$
millions
30.09.2018 31.12.2016
Total assets 8,788.00 8,354.01
Equity 2,896.19 2,677.79
MEXICHEM current market value MXN 106.82 billion.
In March 2015 subject signed a financing
agreement with several banks and financial institutes, led by BANK HAPOALIM, in
volume of US$ 500 million (of which long time loan of US$ 150 million and a
credit line of US$ 350 million) for the next 5 years.
In 2012, reportedly, subject invested US$ 40
million in fixed assets, US$ 25 million in acquisition and establishment of new
companies, and US$ 3 million in a new company in India for customers' finance.
Subject is an “Approved Enterprise” and as
such enjoys tax benefits and State incentives. In
1996/7 the Israeli Investment Center (IIC) approved an investment palns of over
US$10 million for the plants expansion and in 2001 another US$ 27 million
investment plan (expansion of the Hatzerim plant) approved.
According to a
report from June 2013, subject invested US$ 10 million in 2013 in new plants in
Valencia –Spain, in Brazil and in Peru.
In October 2014 it
was reported that subject is contemplating to recycle of its debts in volume of
US$ 230 million, issuing bonds in volume of up to US$ 250 million and a credit
line of US$ 150 million. Subject received (A-) rating for the bond issuing and
a general rating of (BB-). According to the report subject will have liquid
assets in volume of US$ 510 million by the end of 2015.
In December 2014
it was reported that the recycling will be done with the local BANK HAPOALIM,
MIZRAHI TEFAHOT BANK and HSBC BANK (and not with J P MORGAN), which will be in
volume of NIS 1.2 billion + additional credit line of NIS 1 billion.
In December 2016
it was reported that subject invested NIS 20 in the erection of a plant in
China.
There are 20
charges for unlimited amounts registered on the company assets, in favor of
Bank Hapoalim Ltd. and IBM ISRAEL LTD. (last 7 charges placed December
2015-January 2016 and prior 3 charges placed March 2015, all in favor of Bank
Hapoalim, prior charges placed 2004-2005 on equipment in favor of IBM).
REVENUES
2010 sales claimed to be over US$ 600 million, of
which over 90% were for export, with EBITDA of US$ 85 million and estimated net
profit US$ 15 million.
2011 sales were US$ 809 million, with EBITDA of US$
115 million.
2012 sales were US$ 750 million (95% for export),
with gross profit reported to be 32% of sales.
2013 sales were US$ 750 million, 95% were for export.
2014 sales were US$ 750 million. According to
reports from December 2016, with an EBITDA of US$ 80 million.
2015 sales reported to be US$ 850-US$ 900 million, with an EBITDA of US$ 97
million.
According to MEXICHEM’s Q3-2017 financial report, 2016 sales were US$ 856
million. According to media reports with an EBITDA of US$ 115 million.
MEXICHEM’s 2016 sales were US$ 5,349.81 million, making a net profit of
US$ 238.4 million.
First 9 months of 2017 sales were US$ 4,363.35 million, making a net profit
of US$ 179.92 million.
OTHER
COMPANIES
According to our
records, subject also owns 29 subsidiaries around the world, among them:
REVAHO B.V., 75%, of the Netherlands.
NETAFIM IRRIGATION
INC., USA
NETAFIM COOPERATIE
U.A, the Netherlands
NETASHA GROUP
B.V., the Netherlands
NETAFIM BRASIL SISTEMAS E EQUIP DE IRRIGAÇÃO LTDA, Brazil
NETAFIM SULAMA SISTEMLERI SANAYI VE TICATET LTD, Turkey
NETAFIM SOUTH AFRICA PROPRIETARY LIMITED, South Africa
NETAFIM AUSTRALIA
PTY LTD., Australia
NETAFIM THAILAND
CO. LTD., Thailand
NETAFIM IRRIGATION INDIA Pvt. LTD., India
NETAFIM CHILE LTDA, Chile
NETAFIM PERU S.A.C., Peru
NETAFIM DEUTSCHLAND GmbH, Germany
NETAFIM KOREA LTD., Korea
NETAFIM IRYGACJA SP. ZO.O., Poland
NETAFIM CZECH s.r.o., Czech Republic
NETAFIM MEXICO S.A. de C.V., Mexico
NETAFIM SLOVAKIA, S.R.O., Slovakia
NETAFIM CENTRAL EUROPE (1994) LTD.
RYM, 60%, Costa Rica
NETAFIM ITALIA SRL, Italy.
MEXICHEM is a
global leader in plastic piping, PVC producers and one of the world’s largest
chemical and petrochemical companies. Operating in 30 countries, with some
18,400 employees.
BANKERS
Bank Hapoalim Ltd., Business Center Branch
(No. 600), Tel Aviv – main account.
Mizrahi Tefahot Bank Ltd., Main Branch (No.
461), Tel Aviv.
The First International Bank of Israel Ltd.,
Main Branch (No. 46), Tel Aviv.
Union Bank of Israel Ltd., Tel Aviv Main
Branch (No. 63), Tel Aviv.
Israel Discount Bank of Ltd., Main Branch
(No. 10), Tel Aviv.
CHARACTER
AND REPUTATION
Nothing unfavorable
learned.
Despite our efforts, we were unable to speak with subject's Chief Accountant, as he was always unavailable. We left messages which so far remain
unanswered.
According to a report from August 2017, the
drip irrigation global market is valued at US$ 3 billion (although drip
irrigation captures mere 5% of the whole global irrigation market).
Subject is the global pioneer in the drip
irrigation field and considered the largest company in the world in this area,
with estimated 30% global market share (35%-50% market share is South Africa
and Australia). It is one of the largest exporters in Israel, the largest one
of the Kibbutz movement.
Subject is the only Israeli company to be
part of the UN Water Mandate Organization.
Israeli companies
are considered pioneers and world leaders, including subject, NAANDAN JAIN and
RIVULIS IRRIGATION.
Subject is ISO 9001:2008, ISO 14001 and ISO
18001:2007 certified.
Kibbutz Hatzerim was established 1946, has some 480 members, also
cultivates large area of agricultural lands, including fruit plantations,
operating also dairy farming (300 cows). The Kibbutz also owns JOJOBA ISRAEL
ACS LTD. (2,000,000 sq. meters of jojoba growing, producing oil which sold
mainly for export), and has other smaller ventures.
In April 2007, it was reported that subject
is participating in agricultural research projects in Poland, funded by the European
Commission in volume of €3 million.
In 2007, it was reported that RIMONI PLAST
will supply subject plastic injected products in value of US$ 7 million in 2
years.
In early 2008 subject completed the
acquisition of control (75%) in Dutch REVAHO, considered among the largest in
the world in manufacturing and marketing greenhouses, and also distributors of
irrigation equipment (with 2007 turnover US$ 100 million) and 120 employees in
their plants in Holland and Romania. REVAHO was thus far subject's sole
representative in Holland and the U.K. The deal was estimated at US$ 70 million
for the 75% stake. In 2011 REVAHO won a large project in Russia in volume of
tens US$ million.
In 2008, as part of its focus in the Indian
market, where it estimates it has a 20% market share in its field (being 2nd
largest), subject reported it launched a global planning center in India, and
completing the construction of a 2nd plant in India (having 500
employees employed in the plant in North India).
In 2008, subject announced the acquisition
of EDEN IRRIGATION of France, established in 1989 and supplies DIY irrigation
products. The company's 2007 sales reported to be € 7 million.
In 2009 subject reported on a huge contract
in Brazil for supply of its irrigation systems in value of US$ 150 million;
Subject also won a tender in Peru to supply irrigation systems in value of US$
22 million.
In June 2012 it was reported that subject,
as part of a global agreement by 45 multinationals' commitment for non-profit
activities, will assist 50,000 farmers in India to shift to advanced irrigation
techniques, and will assist the Brazilian Government to implement irrigation
systems in remote rural areas.
In July 2013 it was reported that subject opened a plant in Valencia, Spain, following the expansion of activities in Spain, Portugal and
Africa. 2 other plants in Brazil and Peru were opened in 2013.
In August 2014 it was reported that subject
in advanced stages for a deal to supply Ethiopian governmental company with irrigation
equipment in volume of some US$ 200 million. According to the report, financing
(for the Ethiopian company) will be via an Israeli financial consortium headed
by Bank Hapoalim.
In January 2015 it was reported that subject
will participate in India's largest irrigation project to supply water to some
6,700 small farmers. Project is in volume of US$ 120 million, of which
subject's part is US$ 60 million.
In May 2015 it was reported that subject
signed a NIS 50 million deal with CSS (a sugar cane company) of Senegal.
In July 2015 subject reported it signed a
deal with VINGROUP of Vietnam in volume of NIS 65 million, to supply irrigation
equipment, as well as construct and manage a greenhouse project in Vietnam.
In March 2016 subject connected local BANK
HAPOALIM as a financer to its some US$ 200 million irrigation project for sugar
cane, on an area of 7,000 hectares in Ethiopia.
In September 2016 it was reported that
subject acquired 60% of the Costa Rican Irrigation
company, RYM, according to a reported sum of several US$ millions.
In an interview with
subject’s General Manager in September 2016, he stated that subject is erecting
a new production line in its plant in Hatzerim, and that sales growth is 5%-10%
annually, and the EBITDA growth is even higher.
In December 2017 subject won ‘Excellent
Exporter’ Award.
SUMMARY
Good for trade
engagements.
FOREIGN EXCHANGE RATES
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Currency |
Unit
|
Indian Rupees |
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US Dollar |
1 |
INR 63.92 |
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|
1 |
INR 89.55 |
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Euro |
1 |
INR 79.68 |
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ILS |
1 |
INR 18.11 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
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Analysis Done by
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NIY |
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Report Prepared
by : |
TPT |
RATING EXPLANATIONS
|
Credit Rating |
Explanation |
Rating Comments |
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A++ |
Minimum Risk |
Business dealings permissible with minimum
risk of default |
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A+ |
Low Risk |
Business dealings permissible with low
risk of default |
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A |
Acceptable Risk |
Business dealings permissible with
moderate risk of default |
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B |
Medium Risk |
Business dealings permissible on a regular
monitoring basis |
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C |
Medium High Risk |
Business dealings permissible preferably
on secured basis |
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D |
High Risk |
Business dealing not recommended or on
secured terms only |
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NB |
New Business |
No recommendation can be done due to
business in infancy stage |
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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)
This report is issued at
your request without any risk and responsibility on the part of MIRA INFORM
PRIVATE LIMITED (MIPL) or its officials.