Business Description and History
Although the sugar industry may not be publicly deemed the most lucrative area, the Saudi Arabian business environment suggests otherwise. MSI is a sugar company based in Saudi Arabia, which was established in 1994 as a joint venture between SAV Group and T&L Group. The company was created to own and operate a new refinery in Jeddah Port. The refinery was constructed to produce and distribute refined sugar and related by-products, such as molasses. After construction was completed, the refinery began full operations in May 1997.
The primary business of MSI is operating cane sugar refineries and selling and distributing refined sugar products. The company offers a wide range of products, including sugar cubes, powdered juices, fruit juices, fruit nectar, fruit jams, cakes, powders, caster sugar, jelly, pudding, cream caramel, chocolate, vanilla powder, and packing powder. The company’s products are distributed to various clients, including retailers, wholesalers, and food processing companies.
MSI has been in business for over 25 years and has established itself as a leading player in the sugar industry in Saudi Arabia. The company has achieved success through its high-quality products and a commitment to customer satisfaction. Over the years, the company has expanded its operations and product offerings, providing customers with a wider range of options.
Ownership
Based on the information provided, MSI is a privately held company with two shareholder groups: the SAV Group and the TNL Group. The SAV Group owns 75% of the shares, indicating a controlling interest in the company. As two majority shareholders, they have the power to make major business decisions, such as appointing the board of directors and determining the company’s strategic direction. Other corporates, including other companies or institutional investors own the remaining 25% of the shares.
These minority shareholders have a smaller stake in the company and less influence over its operations. However, they still have the right to vote on important matters and receive a share of the company’s profits. Overall, MSI’s ownership structure is typical of a privately held company, with ownership concentrated in the hands of a few individuals or entities. This contrasts with publicly traded companies, where ownership is dispersed among many shareholders, and the stock is traded on public exchanges.
Management
MSI has a strong leadership team, led by the CEO and CFO. The CEO holds a Bachelor’s degree in Economics and possesses extensive experience in leadership, planning, and management across various industries, including multinational companies. His experience as a board member in several companies demonstrates his ability to make strategic decisions and lead successful teams.
On the other hand, the CFO of MSI holds a Master’s degree in Commerce and Chartered Accountancy qualifications. Her extensive experience in financial management, corporate finance, strategy, and digital transformation spans over 20 years. This makes her an invaluable member of the leadership team, capable of managing the company’s finances and providing strategic financial advice to drive growth and profitability.
Business management at MSI is likely to be driven by a combination of strategic planning and financial management. The CEO’s experience in diverse sectors and leadership skills will help ensure that the company remains competitive and responsive to market changes. Meanwhile, the CFO’s expertise in finance and strategy will enable the company to make data-driven decisions and allocate resources efficiently, thereby improving its performance.
In addition to the CEO and CFO, MSI should have other key management personnel responsible for various aspects of the business, such as operations, marketing, and human resources. The management team’s effectiveness will depend on their ability to work together, communicate effectively, and align their goals with the company’s overall strategy. Effective business management at MSI will require focusing on innovation, efficiency, and sustainability. As a sugar company, MSI must navigate challenges such as fluctuating commodity prices, changing consumer preferences, and increasing regulatory requirements. The management team will need to proactively identify and address these challenges while also pursuing new opportunities for growth and diversification.
To remain competitive, MSI may need to invest in new technologies, processes, and products. For example, the company may explore automation to enhance efficiency in its production processes or develop new sugar substitutes to meet shifting consumer preferences. The management team must evaluate such investments based on their potential returns, risk, and alignment with the company’s overall strategy.
Sustainability will also be a key consideration for MSI’s business management. The company must manage its environmental impact and ensure its operations are socially responsible. This may involve investing in renewable energy, reducing waste and emissions, and adopting sustainable agricultural practices.
Subsidiaries
MSI has several business subsidiaries, one of which is Sugarify, the company’s home brand for the retail sugar market in Saudi Arabia. Sugarify was introduced to the market in 2002 and has become a popular brand among consumers. Apart from Sugarify, MSI also operates in Egypt under its MSI Egypt subsidiary. MSI Egypt has a daily production capacity of 2,300 tons, making it one of Egypt’s largest sugar production companies. This subsidiary has enabled MSI to expand its operations beyond Saudi Arabia and tap into the Egyptian sugar market.
MSI is also part of a larger group, the SAV Group, which is listed. The SAV Group operates within several business segments, including food, retail, and investment. In the food segment, the SAV Group deals in a range of food products, including edible oil, sugar, pasta, other food items, and confectionery. The retail segment owns and operates several hypermarkets, supermarkets, and convenience stores.
Finally, the investment segment engages in real estate activities, investments in associates, available-for-sale investments, and other investments. In summary, MSI has subsidiaries that enable it to operate in multiple countries and expand beyond the sugar industry. Additionally, its SAV Group membership provides access to various business segments, further strengthening its market position.
Suppliers
MSI relies heavily on its suppliers to provide the raw materials needed for its business operations. MSI imports approximately 90% of its requirements, with raw sugar being the primary commodity. The company sources its raw sugar from global commodity suppliers and brokers. MSI uses two common payment methods for raw sugar imports: Cash Against Documents (CAD) and a 60-Day Letter of Credit (LC). Under CAD, the supplier ships the goods and sends the shipping documents to MSI’s bank, which then releases payment upon presentation of the documents. In turn, the 60-Day LC payment method involves issuing a letter of credit from MSI’s bank to the supplier’s bank, guaranteeing payment to the supplier within 60 days of shipment.
MSI has three leading suppliers of raw sugar, which are located in the United Kingdom, Singapore, and Sudan. These suppliers are likely chosen due to their ability to provide high-quality raw sugar at competitive prices. Additionally, they may have established relationships with MSI that enable smooth, efficient supply chain operations.
As with any business, MSI’s suppliers are critical to its success. The company relies on its suppliers to provide the raw materials needed to produce its products. The quality and reliability of these materials can impact the quality and consistency of MSI’s products. Therefore, it is essential for MSI to carefully evaluate and maintain strong relationships with its suppliers to ensure a stable and sustainable supply chain.
MSI relies heavily on global commodity suppliers and brokers to source the raw materials needed to produce its products. The company imports 90% of its requirements, with the majority of these being raw sugar. MSI typically conducts transactions with suppliers using either CAD or a 60-Day LC payment method. This helps ensure that the supplier is paid promptly upon delivery of the goods, minimizing the risk of non-payment or other financial issues.
Each of the three suppliers has unique strengths and capabilities, which may make them better suited to supplying different types or quantities of raw sugar depending on MSI’s specific needs at any given time. Overall, MSI’s business suppliers play a critical role in ensuring the company has access to high-quality raw materials for producing its sugar products. Through careful selection and management of its supplier relationships, MSI can help to minimize supply chain disruptions and maintain a reliable source of raw materials to support its ongoing operations.
Customers (Buyers)
Business buyers are a crucial component of MSI’s customer base. These buyers are primarily large carbonated drink bottlers, juice bottlers, and confectionery factories that require raw sugar as a key ingredient in their production process. MSI’s business buyers tend to make payments via CAD/30-Days LC, indicating that they prefer to settle their accounts within 30 days of receiving the shipment. This payment method allows MSI to maintain a steady cash flow and avoid delays.
However, the company has also established a policy for new customers or those located in high-risk locations such as Iraq and Libya. MSI asks for LCs and partial payments in advance in such cases, indicating a higher risk associated with these customers. By doing so, the company aims to protect itself against the risk of non-payment or other financial risks associated with these customers.
MSI’s business buyers are an important source of revenue for the company. These buyers require a steady supply of raw sugar for their production processes and tend to settle their accounts within 30 days via CAD/LC. However, the company has established additional policies for high-risk customers to manage financial risks associated with such transactions.
Competitors
MSI competes with other companies specializing in sugar production. Durrah Sugar Refinery is one such company that MSI considers its main market competitor. Both companies have been operating in the market for several years and have established a strong reputation for their high-quality products. Durrah Sugar Refinery is known for producing a wide range of sugar products, including white, brown, and powdered sugar.
Additionally, both organizations are recognized for their commitment to sustainable and ethical practices, which resonate well with socially conscious consumers. Other competitors in the market include Al-Khaleej Sugar Refinery and Al-Jazeera Sugar Refinery, both of which operate in Saudi Arabia. Although these companies offer products and services similar to MSI and Durrah Sugar Refinery, they have distinct brands and effective marketing strategies that make them strong market contenders.