Operational Review
Operational Review
The import chain process kicks off as soon as the Company receives GFSA’s subsidized wheat supply at the wheat collection point on the dates agreed between the Company and GFSA. The process of procuring wheat from international and local farms with predetermined specifications, characteristics and features is undertaken by GFSA, while the Company procures the rest of the raw materials for the feed manufacture, including yellow corn, which is used in animal feed production. The Company also purchases other materials such as soybeans, palm oil and vitamins from local suppliers within the Kingdom.
The Company’s relationships with its suppliers are regulated in most cases under standardized purchase and supply contracts. These contracts include commercial terms such as product purchase prices; delivery and payment provisions; duration of the contract and provisions for termination and renewal available to the parties; incentives; discounts, as well as other items.
It is noteworthy that the Company has a long-term wheat supply agreement of up to 25 years with GFSA, which commenced as of December 2020G and expectedly to be renewed automatically, unless there are material violations.
The said agreement is subject to amendment in line with governmental and regulatory reforms or even, in some cases, may be cancelled upon violation or non-compliance. The wheat purchase price from GFSA is also pegged to the flour product price sold to customers. This results in a specific profit margin for the Company on those products, and effectively provides a subsidy on the wheat purchase price, compared to the wheat price in the open market.
GFSA oversees the transportation of imported wheat from ports and local suppliers to strategic storage silos within the Kingdom. Subsequently, GFSA transfers the wheat from these storage silos to the Company’s operational silos, which are situated near or in close proximity to GFSA’s silos.
The Company then manages the transportation and storage of wheat feedstock at its various geographically dispersed sites.
The Company keeps a safe stock of raw materials at its facilities to meet production needs for a specific duration. The amount of this safe stock varies based on storage needs and the perishability of different commodities
Unlike other raw materials, the Company does not store significant reserves of wheat at its facilities. This is because GFSA oversees and controls the wheat stocks, allowing the Company to depend on them for the timely supply of the required quantities of wheat.
The production of flour includes the use of wheat grains that are transferred to large silos, where scaling, sieving, metals removal and moisture control occur. Following this process, the different varieties of wheat are blended until the resulting blend meets the targeted mixture by the Quality and Safety specifications for the milling process.
The milling process of wheat begins with purification and cleaning using refineries and air through which any impurities are removed. Following this step, the wheat is moistened and dried in preparation for the start of the milling process.
The wheat milling process is carried out by the crushing cylinders passing through it, where the ground wheat is then sent to the sifting device. In the sifting device, different types of grains are produced, as they are separated and classified into coarse, medium, and fine grains.
At this stage, flour is produced, after which the re-milling and purification processes continue until reaching the finished products for flour of all kinds, bran, semolina, in addition to wheat germ. The quality laboratory is monitoring and supervising the quality of these products around the clock.
Following the completion of the production processes, the Company packs in packages of various weights of the category (1kg, 2kg, 5kg, 10kg, 20kg, 40kg, 45kg and 50kg).
As for bulk flour, it is loaded directly into dedicated client trucks. Finished products of flour of all kinds, bran and animal feed are stored in the Company’s warehouses where customers load and transport them to their factories for production or to distributors’ warehouses for distribution.
The Company employs a dedicated sales team that is responsible for providing services to customers, implementing the pricing strategy and promoting the Company’s products. The sales team communicates with customers directly to make sure all their requests are met.
It is reported that about 90% of purchases were picked up directly by the customers from the Company’s production facilities (i.e., sales handed over on the production facilities premises).
The Company also has a fleet of vehicles that provides delivery services for some special products of small size (retail sales in modern and traditional trade sales channels) for a number of customers, no more than 5% of total sales as of the end of 2023G. Delivery costs are typically borne by the Company.
in the most strategic locations across the Kingdom
plus Daily 300 tons of Durum
storage capacity
