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MIRA
INFORM REPORT
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Report No. : |
498966 |
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Report Date : |
28.03.2018 |
IDENTIFICATION DETAILS
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Name : |
PHIBRO ANIMAL HEALTH LTD |
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Formerly Known As : |
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KOFFOLK (1949) LTD ·
FOLKMAN & DR. KOFFLER
LTD |
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Registered Office : |
P.O. Box 1098, Tel Aviv (6101001), 2 Hanagev Street, Motorola Building, Airport City, 7019900 |
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Country : |
Israel |
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Financials (as on) : |
31.12.2017 |
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Date of Incorporation : |
30.06.1949 |
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Legal Form : |
Private Limited Company |
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Line of Business : |
Manufacturers, marketers and exporters of fine chemicals and animal
health & nutrition products. In the fine chemicals field, subject
supplies intermediates for pharmaceuticals as well as for the agro-chemicals
and cosmetics markets. |
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No. of Employees : |
180 |
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+ |
Low Risk |
Business dealings permissible with low
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 (30.09.2017) |
Current Rating (31.12.2017) |
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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 and address
Correct Name: PHIBRO ANIMAL HEALTH
LTD.
Telephone 972
73 270 03 00
Fax 972 73 270 04 09
E-mail:
markovits@koffolk.co.il
P.O.
Box 1098, TEL AVIV (6101001)
2
Hanagev Street
Motorola
Building
Airport City, 7019900, Israel
HISTORY & LEGAL FORMATION
A private limited company, incorporated as per file No. 51-005760-7 on the
30.06.1949.
Originally registered under the name of FOLKMAN & DR. KOFFLER LTD.,
which changed to KOFFOLK (1949) LTD. on the 14.03.1979, which changed to the
present one on the 22.02.2018.
In June 1992 subject took over all activities of its subsidiary AGROZAN
LTD.
SHARE CAPITAL
Authorized share capital NIS 43,000.00, divided into -
429,940,000 ordinary shares (375,395,342 shares issued),
60,000 ordinary "A" shares (issued), all of NIS 0.0001 each,
of which shares amounting to NIS 37,545.5342 were issued.
Note: The currency in share capital was
originally in Old Israeli Shekel whose nominal value was 1 thousandth of
the current New Israeli Shekel (NIS), converted in 1986.
SHAREHOLDERS
Subject is fully
owned by PHIBRO ANIMAL HEALTH CORPORATION ("PAHC") of the U.S.A., a
public limited company, whose shares traded on the NASDAQ (NASDAQ:PAHC),
controlled by Jacob (Jack) Bendheim (of the USA).
Note: Jacob (Jack) Bendheim himself holds 56
ordinary shares.
DIRECTORS
1. Jacob (Jack) Bendheim, Chairman
and President of PAHC, of the USA,
2. Yehuda Markovitz,
3. Richard Johnson, of the USA,
4. Amir Shahar.
GENERAL MANAGER
Jonathan Bendheim.
BUSINESS
Manufacturers, marketers and exporters of fine chemicals and animal health
& nutrition products. In the fine chemicals field, subject supplies
intermediates for pharmaceuticals as well as for the agro-chemicals and
cosmetics markets.
In the animal health & nutrition field, subject supplies active
veterinary pharmaceuticals, vitamin concentrates, mineral medicated and
non-medicated premixes as well as other specialty ingredients.
Also marketing milk substitutes for farm animals manufactured by MAABAROT
(brand name “Halavit”).
In March 2011 as
part of a re-organization in PAHC Group, fully owned ABIC BIOLOGICAL
LABORATORIES LTD. (and its fully owned subsidiary ABIC VETERINARY PROD
70%-80% of subject's sales are for export. 60% of ABIC BIOLOGICAL and
subsidiary ABIC VETERINARY sales are export.
Local distribution is also carried out by
ABIC VETERINARY PROD
Subject operates as manufacturing
sub-contractors for NUTRITION & HUSBANDRY OF LIVESTOCK LTD., suppliers of animal nutrition, feed supplements
and preventive medicines.
Among clients: AMBAR
CENTRAL FEED MILLS, RAANAN FISH FEED, MILOUBAR, etc.
Among local
suppliers: NUMINOR - CHEMICAL INDUSTRIES, RINGEL BROS., DEAL ENGINEERS, APPLIED
CHEM, DORMEX
TRADE AND INVESTMENTS CO., E.S.T. PROJECTS
INDUSTRIAL SUPPLIES & SERVICE.
Operating from:
1. Office premises
(rented), on an area of 1,200 sq. meters, in 2 Hanegev Street, Business Park,
Airport City (serving subject and ABIC), Lod.
2. Plant, labs and warehouses (premises owned by the shareholders), on a built
area of 5,000 sq. meters (on a plot of 10,000 sq. meters), in 7 Magshimim
Street, Kiryat Matalon, Industrial Zone, Petach Tikva.
3. Plant (owned premises), on an area of 76,000 sq. meters, in Neot Hovav Eco
Industrial Park (south of Beer Sheva).
4. ABIC operates from plant, warehouse and distribution center, on an
area of 3,000 sq. meters, in 3 Hamelacha Street, Western Industrial Zone,
Beit Shemesh.
Web-site: www.koffolk.co.il
Having 180 employees
in subject (similar to the end of 2016).
Having 350 employees in
KOFFOLK Group - incl. ABIC Group (similar to end of 2016, 300 employees in
beginning of 2016, 270 employees in end of 2014).
Having 1,400 employees serving PAHC Group as
of 30.06.2017.
MEANS
Stock is valued at
US$ 13 million (was valued at US$ 14 million in the end of 2016, at US$ 12
million in the end of 2015, similar to mid-2014).
Subject's
consolidated B/S data shows (fiscal year ends 31st March, last obtainable:
US$
(thousands)
30.06.2011 30.06.2010
Current assets 62,038 70,847
Total assets 102,735 125,742
Current liabilities 35,196 33,101
Equity 59,231 48,358
Subject is an “Approved Enterprise” and as such is entitled to State
benefits and incentives.
Financial data is included in the consolidated B/S of parent company, PHIBRO ANIMAL HEALTH CORP. (fiscal year ends 30.06), which shows:
US$
(thousands)
31.12.2017 30.06.2017
ASSETS
Current assets
Cash and cash equivalents 40,185 56,083
Other financial assets 27,000 -
Accounts receivable 132,242 125,847
Other current assets 23,407 20,502
Inventory 173,613 161,233
396,447 363,665
PP&E (net) 127,940 127,351
Intangible assets 56,454 54,602
Goodwill 29,624 23,982
Other non-current
assets 52,665 53,797
663,130 623,397
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LIABILITIES
Current
liabilities 127,236 115,796
Non-current
liabilities 367,569 356,444
Equity 168,325 151,157
663,130 623,397
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PAHC current market value
US$ 1.55 billion.
There are 7 charges for unlimited amounts registered on subject's assets
(all assets), in favor of the State of Israel, Union Bank of Israel Ltd.,
Mizrahi Tefahot Bank Ltd. and companies (last charge placed November 2016 on
computer equipment, prior charge placed May 2012).
REVENUES
Subject's sales:
2014 sales were US$ 80 million, 70% of which were for export.
2015 sales were US$ 80 million, 70% of which were for export.
2016 sales were US$ 83 million, 70% of which were for export.
2017 sales were US$ 84 million, 75% of which were for export.
Consolidated sales of ABIC Group (subject's
subsidiaries ABIC BIOLOGICAL LABORATORIES LTD. and ABIC VETERINARY
PROD
2014 sales were circa US$ 48 million, 60% of which were for export.
2015 sales were circa US$ 48 million, 60% of which were for export.
2016 sales were circa US$ 40 million, 52% of which were for export.
2017 sales were circa US$ 47 million, 53% of which were for export.
PHIBRO
ANIMAL HEALTH CORP.
Consolidated
Statement of Income
US$
(thousands)
Year
ended 30.06
2017 2016 2015
Revenues 764,281 751,526 748,591
Of
which Animal Health 497,745 486,140 470,800
Of
which Vaccines 65,033 52,140 53,363
Gross profit 248,243 239,032 233,280
Operating income 97,934 85,744 87,668
Profits before taxes on income 80,543 76,761 78,763
Net income 64,615 82,728 60,280
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PAHC consolidated sales for the first 6 months of fiscal year 2018 ending
31.12.2017 were US$ 399,288,000 (of which US$ 261,686,000 Animal Health, of which US$ 36,665,000 vaccines),
making a gross profit of US$ 130,301,000, an
operating income of US$ 46,325,000 and a net income of US$ 22,924,000.
OTHER COMPANIES
Subsidiaries
(100%, included in subject's consolidated financial data):
ABIC BIOLOGICAL LABORATORIES LTD., developers, manufacturers, marketers and
exporters of vaccines and compounds for animals, mainly poultry vaccines, fully
owns ABIC
VETERINARY PROD
KOFIMEX LTD., manufacturers and marketers of veterinary medicines,
AGROZAN LTD., marketing of animals feed supplements,
PLANALQUIMICA INDUSTRIAL LTDA, Brazil.
PHIBRO ANIMAL HEALTH
HOLDINGS LTD., has been inactive since its incorporation in December 2008
(plans for this company did not materialized).
PHIBRO ANIMAL HEALTH CORPORATION (PAHC), manufacturers and marketers of a
broad range of animal health and nutrition products to the poultry, swine and
cattle markets. Also a manufacturer and marketer of performance products for
the ethanol, wood preservation and personal care industries.
Subject is part of PAHC Animal Health & Nutrition Division, including
also:
PRINCE AGRI PROD
Other companies of "PAHC":
PHIBRO-TECH, INC., a metal-based manufacturer, recycler and marketer of
performance chemicals, serving the metal finishing, printed circuit board,
catalyst, and related industries (part of the Performance Products Division).
PHIBROCHEM, International Sourcing Specialist.
FERRO METAL & CHEMICAL CORPORATION LTD., manufactures and distributes
on a worldwide basis a range of specialty chemicals,
PHIBROWOOD, supplier of technologically advanced, environmentally friendly,
wood preservation treatment products.
BANKERS
Union Bank of Israel Ltd., Main Branch (No. 63), Tel Aviv, account No.
827400/90.
Bank Leumi Le’Israel Ltd., Kiryat Arie
Business Branch (No. 670), Petach Tikva, account No.
84100/95.
Mizrahi Tefahot Bank Ltd., Ramat Siv Petach
Tikva Branch (No. 431), Petach Tikva, account No. 151299.
A check with the Central Banks' database did
not reveal anything detrimental on subject’s a/m accounts.
CHARACTER AND
REPUTATION
Nothing unfavorable learned (besides environmental related issues specified
below, which do not appear to be of significance).
Subject is a large and long established company, leading in their field.
Subject is Iso 9001
certified.
Subject is a member of the PHIBRO ANIMAL HEALTH CORPORATION (formerly known
as PHILLIP BROS. CHEMICALS INC.), a global player in the veterinary field,
which operates around the world
with 900 employees, selling products to 2,500 customers in over 50 countries.
In June 2010 parent company PAHC, following a private share issuing (some 30%) to a private investor,
completed a successful purchase offer for its shares which were traded on the
AIM London Stock Exchange and shares were de-listed from trade and PAHC became
a private limited company.
On the 11.04.2014 PAHC issued shares on the NASDAQ
and reconverted into a public limited company.
In 2000, subject’s parent company acquired the medical food additives
division for animals of the
In the beginning of the 2000s subject acquired British company WYCHEM,
manufacturers of industrial chemical and pharmaceutical products.
In February 2009, parent company PAHC completed the acquisition of ABIC VETERINARY
PROD
In January 2011, The
Ministry for Environment Protection notified subject (and another 4 companies)
that they must stop transferring waste to the evaporation pools in Neot Hovav Eco
Industrial Park, or be exposed to legal procedures.
On the 01.05.2013 it
was reported that the Neot Hovav Industrial Council ordered an immediate
closing of subject's plant in Neot Hovav due to severe odor harassments, as
well as violation of subject's treatment of hazardous products and pollutants.
That follows hearing procedures in the past months regarding smell harassments.
Subject's accountant informed us that a/m report was just 'noise' by the
head of Neot Hovav Industrial Council, and that the plant has been operating as
usual.
In July 2017 it
was reported that subject (as "PAHC"’s local
branch) signed an agreement with ZYDUS CADILA of India, where ZYDUS will erect a
plant for the manufacturing of PAHC’s products and market
them in India. Deal is valued at US$ 150 million along 5 years.
In an interview
with Jonathan Bendheim in July 2017, he stated that subject
is a world leader in the vaccinations for poultry and birds (Israel being a
main route for bird migration). He further said that in the beginning of 2017
subject acquired activity in fish vaccination.
According to Central Bureau of Statistics (CBS) data, investments in
imported machinery & equipment for the Manufacture of Chemicals &
Chemical Products (excl. for
pharmaceuticals and refinery manufacturing) in 2016 summed up to NIS
741.5 million, 36.2 increase from 2015 (after 15% decrease from 2014).
Sales for export
by the Chemicals & Chemical products Industry in 2016 marked 14% decrease
from 2015 and summed up at US$ 6,864 million (US$ 7,969 million in 2015),
significantly lower compared also to 2014 (export US$ 10,976 million) and 2013
(US$ 11,248 million). A positive trend noticed in the first half of 2017, with
export rising 16% higher than in the 1stH 2016 to US$ 3,989 million.
SUMMARY
Good for trade
engagements.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
INR 64.80 |
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1 |
INR 92.26 |
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Euro |
1 |
INR 80.76 |
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ILS |
1 |
INR 18.61 |
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 : |
SYL |
RATING EXPLANATIONS
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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
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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.