Bethel Finance: Makhteshim Agan unit recalls defective product

www.bethelfinance.com Makhteshim Agan Industries Ltd. (TASE: MAIN) is asking customers in a European country to recall an insecticide, after defects were found in production. A subsidiary of Makhteshim Agan produced the insecticide in Israel, and sold it in the European country. The subsidiary sells its products all over Europe. The company intends to replace the defective stock. In a notification to the Israel Securities Authority and the Tel Aviv Stock Exchange today, Makhteshim Agan legal counsel Michal Arlozorov stressed that the fault that led to the decision to recall the product from the shelves was a quality problem discovered during the production process of one product. As soon as the problem was discovered, the company instructed its customers in the country concerned to return the batches of the product to be replaced with new ones. Makhteshim Agan said that the defective material did not represent an environmental danger of any kind. The defect was found a few weeks ago in a routine laboratory test in Israel. Similar tests were carried out at the same time in the European country, and these showed that the product had a chemical profile that was not suitable for its original purpose. The company stressed that the cause of the defect had been found in the course of comprehensive checks carried out after the discovery, and that steps had been taken to prevent the problem from recurring and to ensure faultless production. However, Makhteshim Agan's announcement said that the company had been required to provide explanations to the authorities in the country where the defective product was sold about the nature of the problem and its full extent. Makhteshim Agan expressed concern today that, because of the breakdown, the authorities might consider suspending the permits for the sale of the product in that market. In its notification, the company said in this context that initial checks indicated that even if the permits were suspended, the direct effect on its total sales would not be material. Europe is one of Makhteshim Agan's main markets, with 40% of its output being sold there. Eighteen months ago, ChemChina bought control of the company from IDB Holding Corp. Ltd. (TASE:IDBH), headed by Nochi Dankner.