Neto Melinda: Tal Hal, growth engine or dependence with a governance cost
The main article focused on the balance sheet that funded growth. This follow-up isolates the sharper point: Tal Hal sits at the center of the local-market engine with 47.7% of poultry purchases, an updated marketing fee of NIS 1.17 per kg, and a derivative claim that is still unresolved.
What This Follow-Up Is Isolating
The main article argued that 2025 growth came with a balance-sheet price. This follow-up isolates one of the reasons that debate does not end with inventory or receivables: the Tal Hal relationship. This is not just another large supplier. It is the junction where local-market growth, purchasing concentration, an updated fee structure, and an unresolved derivative claim all meet.
The numbers explain why this deserves its own piece. Local-market revenue rose to NIS 2.43 billion in 2025 and reached 46.5% of sales. Inside that activity, Tal Hal accounted for 47.7% of poultry purchases and 19.9% of the company's total purchases. At the cost-of-revenue level, the company also shows purchases from Tal Hal of NIS 880.7 million, alongside NIS 673.7 million from major supplier B. So this is clearly a real economic engine, but also a concentration issue that cannot be treated like a footnote.
The important read is this: Tal Hal is both an engine and a test. It helped expand local-market distribution, but as the agreement became larger the company also had to invest more governance capital around it: a shareholder vote, a semiannual review mechanism, concentration caps, and legal defense that is still not behind it. So the question is not whether the agreement works commercially. The question is whether the dependence remains managed, or whether it is already starting to create a governance cost of its own.
The chart above makes clear that this is not only about one name but about the whole procurement structure. In 2025 the two leading suppliers already accounted for 84.2% of poultry purchases. Tal Hal is the visible anchor, but the actual economic dependence sits on a fairly narrow supply spine.
Tal Hal Now Sits At The Core Of The Growth Engine
At the end of 2019 the company entered into a strategic agreement with Tal Hal for the supply of regular-kosher poultry, without mutual minimum-volume commitments, with an expected scope of about NIS 800 million. The meaningful jump in marketed volume came at the end of 2021, when Tal Hal's own distribution system was cancelled. That detail matters because it shows the relationship did not remain a simple sourcing contract. It became a channel that gave the company access to volume, additional customers, and deeper activity with existing ones.
That dependence remained very much alive in 2025. Tal Hal declined slightly as a share of the company's total purchases versus 2023 and 2024, but inside poultry it moved back up to 47.7% from 43.7% in 2024. At the same time, supplier B rose to 36.5%. That means the company did not truly spread the poultry engine across a broad base. It mainly anchored it on two large suppliers, one of them disclosed by name and tied to an open legal dispute.
The absolute number matters too. Cost of revenues shows purchases from Tal Hal of NIS 880.7 million in 2025, up from NIS 806.2 million in 2024. So even if Tal Hal's percentage share of total company purchases did not spike, the economic weight of the agreement inside the business remained very large.
What is especially important is that the company itself describes the Tal Hal arrangement as something that enabled it to increase regular-kosher fresh-poultry marketing while preserving profitability and operating at large, stable scale. That is a reasonable claim, but it is also why the relationship cannot be judged only through the revenue line. Once one supplier sits deep inside the growth engine, every change in terms, every operational delay, and every legal argument around the arrangement carries a larger than normal weight.
The 2025 Update Was Not Technical
On March 6, 2025 the general meeting approved an update to the poultry-marketing agreement. The marketing and distribution fee increased from NIS 1.00 per kg of regular chicken to NIS 1.17 per kg, indexed to CPI based on the CPI published on December 15, 2024 and updated twice a year, on January 1 and July 1. For antibiotic-free chicken, which the company defines as negligible at about 0.5% of the volume under the agreement, the fee was set at NIS 1.8 per kg.
This was not a cosmetic change. The updated agreement also defines annual scope of up to NIS 1.2 billion, a term of three years from approval, and a right for each side to terminate with six months' prior notice. Put differently, the company agreed to pay more per unit, gave the fee ongoing indexation, and formally expanded the operating room of the agreement.
The approval, however, came with a control layer that says a lot about the sensitivity. The audit committee committed to examine every six months the average monthly selling price of a kilogram of regular-kosher chicken against two major poultry integrations, to verify that there is no material deviation, defined as up to 5%. In addition, the company committed to concentration limits so that up to NIS 800 million a year the share would not exceed 80%, and above NIS 800 million a year it would not exceed 50%. The company says it met those commitments in 2025.
That is where the sharpest detail sits. Tal Hal stood at 47.7% of poultry purchases in 2025. In other words, the company stayed within the 50% cap, but only by 2.3 percentage points. So this restraint mechanism is no longer a theoretical clause buried in the shareholder minutes. It is a live control around a transaction that is already operating close to the line.
| Junction | What Was Set In 2025 | Why It Matters |
|---|---|---|
| Regular-chicken marketing fee | NIS 1.17 per kg, CPI-linked and updated twice a year | The fee increased and formally became inflation-linked |
| Annual agreement scope | Up to NIS 1.2 billion | The agreement received a wider frame, not only a price update |
| Oversight mechanism | Semiannual price review versus two major poultry integrations, with up to 5% allowed deviation | The company is acknowledging that the agreement needs ongoing monitoring, not one-off approval |
| Concentration cap | Above NIS 800 million a year, no more than 50% of poultry purchases | Tal Hal was already at 47.7% in 2025, so it is close to the cap |
| Exit route | Each side can terminate with six months' notice | There is an exit path, but not one that allows immediate maneuvering |
The bottom line of this section is simple: the company did not merely renew an old agreement. It gave it a higher fee, a wider scope, and a heavier control layer. Once a supply agreement needs both a shareholder vote and a semiannual benchmarking mechanism to remain publicly comfortable, it is no longer routine procurement.
The Shareholder Vote Gave The Company An Argument, Not Closure
The motion for approval of a derivative claim was filed back in June 2023. According to the company, it targeted the serving directors, Neto Holdings, Tal Hal, and Nur Yiska, initially for no less than NIS 16.1 million over losses allegedly caused by the expansion of activity with Tal Hal and by advance payments. Later, after the motion was amended in September 2024, the applicants argued for a "minimum amount" of NIS 177.8 million, which they say reflects excess consideration received by the trust in the sale of its shares to Nur Yiska, alongside possible additional damage to the company in connection with the Tal Hal arrangement.
The company's position is quite direct. It argues that the Tal Hal arrangement predated the share sale, so there was no personal interest when the original marketing agreement was signed, and that beyond that the arrangement benefited the company and improved its business performance. In April 2025 the company also stressed in a supplemental response that the March 6, 2025 shareholder meeting approved the updated agreement by a 75.4% majority, which in its view weakens the claims that the economics were unfavorable.
The problem is that the case is still open, and the company itself says that at this stage it cannot estimate the claim's prospects. After another round of responses and a dismissal motion that was not accepted, the first pretrial hearing that had been set for March 15, 2026 was postponed to April 26, 2026. So even after shareholder approval and even after the updated terms, the issue remains alive.
That matters because the shareholder vote clearly strengthened the company's line of defense, but it did not erase the governance cost. If anything, the fact that the updated agreement itself became part of the legal battlefield means the company will still have to explain to shareholders, the court, and the market why a central growth engine did not also become a governance weak spot.
The Governance Cost Does Not Sit Only In Tal Hal
To understand why this debate is not isolated to the poultry-marketing agreement alone, it helps to look at the wider governance perimeter. On July 15, 2025 the general meeting also approved the extension and update of the management agreement with Neto for another three years, from July 4, 2025 through July 3, 2028. The fee is NIS 316 thousand per month, indexed to CPI relative to the April 2025 CPI. The agreement covers management services provided through David Ezra at 80% of a position, Shmuel Paz at 85%, and Danny Schlesinger at 85%.
Financially this is of course far smaller than Tal Hal. The company paid Neto NIS 3.661 million under the agreement in 2025, versus NIS 3.432 million in 2024 and NIS 3.331 million in 2023. But size is not the point. Pattern is the point. In the same year in which the company had to re-legitimize the economics of the Tal Hal arrangement, it also renewed an inflation-linked management arrangement with its controlling shareholder. Anyone trying to separate economics from governance too neatly is missing the full picture.
This chart is not here to argue that the management agreement is large. It is here to show that the company operates inside a perimeter where sensitive arrangements repeatedly require committee approval, board approval, and shareholder approval, sometimes with CPI linkage and sometimes with core executives inside the structure. So the question around Tal Hal is not only whether the agreement stands up on commercial terms. The question is how the market reads a company whose meaningful growth engine sits inside a governance framework that needs constant maintenance.
Bottom Line
Tal Hal is probably both a real growth engine and a dependence the company cannot blur away. In 2025 the company showed that the agreement still delivers volume, customer access, and stable activity. But it also showed something else: the bigger this engine remains, the more governance is needed to keep it publicly supportable. A higher fee, automatic indexation, a concentration cap that is being tested close to the line, and a derivative claim that is still open, these are not background details.
So the thesis of this continuation is not that Tal Hal is a bad agreement. The thesis is that the company can no longer benefit from this relationship without also paying for it in governance terms. As long as the agreement keeps working and the company stays inside its control mechanisms, the market can live with that. If concentration rises further, if the legal process drags on, or if another economic adjustment is required, that cost will become much more tangible.
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