Preserve the Gains of Fifty Years - Alkhorayef...

Abdul Rahman Alkhorayef about the IPO:

Preserve the Gainsof Fifty Years

Change Has Begun

Merging and Splitting Up Process Gives The Companies Strength and Flexibility

Restructuring:A Step forthe Best

Issue (32) Rajab 1428 - July 2007Quarterly Issue of Alkhorayef Group of Companies

1Issue (32) Rajab 1428 - July 2007

Many business groups or organizations have taken major steps to streamline operations for better results. These steps include management restructuring, review of rules and regulations, amending practices and adopting corporate goals. In all of these, the battle cry is “change.”

Change is resorted to when current wisdom for the organization goes contrary to existing realities and corporate plans, or if there are numerous opportunities but management is not cashing in. There could be other reasons that justify change, for sure. But for change to succeed, there are certain prerequisites, foremost of which are clarity of vision, a sincere willingness to adopt a new system, sound business practices, and effective leadership. In the process, change is neither a mere reaction nor change for the sake of change; rather, it is a pre-emptive move to achieve intended goals.

An honest-to-goodness effort is necessary in making change more acceptable in the organization and for the workforce to interact with it instead of rejecting it. The international environment is also very important as far as change is concerned. It is the key to success.

Change is constant; it is part and parcel of life. Without it, the organization won’t be able to improve its levels of performance or enhance the skills of its workforce by making them keep abreast of technology, which is continuously changing. Change is what increases productivity, upgrades quality, brings down costs, and minimizes errors.

By undergoing change, the employees acquire self-fulfillment because of improved skills, not to mention the financial benefits that change brings to them.

We at Alkhorayef have undergone a lot of changes which have resulted in growth for us in various fields.

This new issue of our magazine coincides with a new phase of positive change for the Group, which heralds new opportunities in the light of existing openness of the world economy, the general upward trend for growth worldwide, acceptance of the Kingdom as member of the World Trade Organization (WTO), and the huge investments in the Saudi market.

It goes without saying that stepped-up efforts are needed to achieve the goals of the Group in terms of growth, high-quality services and technology transfer.

And because the employee is the focus of change, this issue of the magazine has been dedicated to keeping him abreast of change, so that he can have a full understanding of it and its intended goals, and so that we can work as a team, as has always been the case at Alkhorayef.

Saud Abdulaziz Alswailem

Head of the Department of Human Resources& Editor-in-Chief

Changing for the Better

Opening

Issue (32) Rajab 1428 - July 20072

Abdullah Ibrahim Alkhorayef Sons Company

Riyadh 11411 P.O.Box 305Tel.: (+9661) 435 14 79Fax: (+9661) 435 88 52

Alkhorayef International Company


Reaching our customers throughout the world, providing comprehensive solu-tions programs, and working with colleagues as partners.

To achieve our dreams of growth by entering new markets, providing high quality products and services, and taking opportunities resulting from the hard work of our employees who were carefully chosen and sent for training to play an effective role in technology transfer and environmental preservation.

Alkhorayef Core Values

Publisher A company of

Articles Published in Alkhorayef bulletin express only the writers’ view-points and the bulletin holds no responsibility towards them.

• Growth • Technology transfer.• Protecting the environment. • Developing society.• Taking care of employees.

Alkhorayef Vision

Alkhorayef Mission

Chairman, Board of Directors

Abdulrahman Abdullah Alkhorayef

Editor-in-Chief

Saud Abdulaziz Alswailem

Editorial Supervisor

Mohammed M. Alshihri

Alkhorayef Group Company


Alkhorayef Petroleum Company

AlKhobar 31952 P.O.Box 30204Tel.: (+9663) 858 80 90Fax: (+9663) 857 85 69

Alkhorayef Lubricants Company

Jadah 21312 P.O.Box 11810Tel.: (+9662) 697 44 14Fax: (+9662) 697 38 27

Alkhorayef Industries Company


Alkhorayef Operation & Maintenance Company


Alkhorayef Agricultural Projects Company


Saudi Parts CenterCompany


Alnakhil Paper Industries Company


Trans Orient Modern Machinery Company


Saudi Installment House Company


Alkhorayef Management Services


All correspondences should be sent to the Editor-in-Chief, G.M., and Hu-man Resources DepartmentP.O.Box 305, Riyadh 11411 Tel: 01/4955452Fax: 01/4950261 - E-mail: [email protected].

P.O.Box 65701, Riyadh 11566 Kingdom of Saudi Arabia Tel: 00966-1-212-8001 Ext.: 1835 Fax: 1085 [email protected]

Issue 32 Rajab 1428 - July 2007Quarterly Bulletin of Alkhorayef Group of Companies


His Excellency Sheikh Abdurrahman bin Abdullah Alkhorayef, head of the Board of Executives of the Alkhorayef Group, receives at his office, in Allaisha area, his Excellency Sagr Yusuf Mohammad Itno, the ambassador of the Republic of Chad to the Kingdom. During the meeting cordial talks were held, especially on the good relations existing between Sheikh Abdurrahman Alkhorayef and officials of the Republic of Chad.

Ambassador of Chad Visits Alkhorayef Group

Agreement Signed to Supply Pumps to Nadec

News

By the grace of Allah, and the support of colleagues at Alkhorayef Industries, and after testing one of our pumps, an agreement was reached with the National Agricultural Development Company (Nadec) to supply the Company with 20 Alkhorayef Western Pumps fitted with Ultrabite pipes that are lined with thick polyethylene, as well as 22 Randolf Gear (drives) for expansion and replacement, at its project at Wadi Al-Dawasir. The agreement is part of a bigger project for providing machinery for axial irrigation and Volvo engines.The Ultrabite pipe system for turbine engines is regarded one of the developments and major achievements at Alkhorayef Group. The system, the best in terms of practical design and other advantages, guarantees operation for a long time and under difficult conditions. The unique characteristics of this system can be summarized as follows:- No leakage at the connecting areas because of the presence of

polyethylene at the edges of the flanges, forming a circular non-penetrable area.

- The ease with which the pipes can be disassembled when needed, because of the use of flanges to connect them.

- The pipes resist corrosion, erosion and calcification due to the presence of polyethylene, which is not affected by elements that corrode iron.

- It resists salting effects and others caused by the chemical components of water.

- The smoothness of its inner surface which lessens friction.- The outer surface is coated with the resisting agent, Epoxy.- The average age of these pipes is four times that of regular

pipes.- It can withstand greater stress than regular pipes, which allows it

to reach depths greater than 3,300 feet.Compared to the price of regular pipes, Ultrabite pipes are more

expensive, but their service expenses are less, especially if we take into consideration average life expectancy and other characteristics such as:

- Savings on breakdown costs that normally accompany irrigation problems, and the prevention of crop loss due to maintenance or

frequent replacement.- Saving recurring costs of pipe disassembling and reassembling,- Saving energy costs due to the smoothness of the inner surface

of the pipe which leads to less friction to water, compared to regular pipes.

It is well- known that Nadec is one of the major local agricultural companies and has many projects in all parts of the Kingdom. Also worth mentioning is the fact that the Company is always looking for means to increase production and save costs, and that it encourages research and development for the benefit of the public.It is hoped that this agreement for pump replacement will be, God willing, the beginning of many similar agreements between us and Nadec.


His Excellency Abdullah bin Abdurrahman Alkhorayef has obtained a master’s degree in administration from the UK. He said that the degree would be an incentive for him in his work at the Group. The editorial team of the magazine extends its heartiest congratulations to Sheikh Abdurrahman Alkhorayef.

Alkhorayef International Company

News

Alkhorayef Petroleum Company

His Excellency Saad Abdullah Alkhorayef, President and CEO, has announced the establishment of the Alkhorayef Petroleum Company. He expressed gratitude to all employees of the Petroleum Oils Section. His

Excellency emphasized the necessity of hard work and growth until the Company becomes the best in providing services in the field of petroleum. He assured them that the Company is indeed able to achieve these goals through teamwork. His Excellency also announced his personal support, and that of the members of the Board of Executives at Alkhorayef, for Alkhorayef for Petroleum. He also announced the setting up of a Committee for Managing Directors and a Manager’s Board, which will meet regularly to follow up and review its activities.

His Excellency Sheikh Saad Abdullah Alkhorayef, President and CEO, has announced the establishment of the Alkhorayef Lubricants Company. His Excellency thanked all at the Lubricating Section who had participated, through their effort and team spirit. His Excellency emphasized the necessity of continuous efforts until the Company reaches its intended goal of becoming the best in providing services in the field of lubricating oils. His Excellency also announced his personal support, and that of the members of the Board of Executives at Alkhorayef, for Alkhorayef Lubricants company until it achieves its goals. He also announced the setting up of a Committee for Managing Directors and a Manager’s Board, which will meet regularly to follow up and review its activities.

Alkhorayef Lubricants Oils Company

His Excellency Engineer Mohammad Abdullah Alkhorayef, head and managing director for Manufacturing Affairs, has announced the establishment of the Alkhorayef International Company. He expressed gratitude to all employees of the International Sales Section, who have developed various activities. His Excellency emphasized the continuation of hard work and growth until the Company becomes the best in providing services in the field of equipment. He assured them that the Company is indeed qualified to achieve this through teamwork. His Excellency also announced his personal support, and that of the members of the Board of Executives at Alkhorayef, for Alkhorayef International Company until it achieves its goals. He also announced the setting up of a Committee for Managing Directors and a Manager’s Board, which will meet regularly to follow up and review its activities.

AbdullahAlkhorayef Obtains a Master’s Degree


Quality Lead AuditorCourse Held

Alkhorayef for Management Services held a training course at Al-Mutlaq Hotel between Feb. 5 and Feb. 21, 2007 entitled “ ISO 9001: 2000 Quality Lead Auditor”. The course was attended from the Alkhorayef Group by Mohammad Mousa, manager of the Operations and Planning Section at Nakhil Paper Industries Company, and Fahad Shinan from Alkhorayef Petroleum Company (sales section in Riyadh).

Preparing New Employees

The Human Resources Department at Alkhorayef held a course recently as a preliminary preparation of new employees at Alkhorayef Petroleum Company in Al-Khobar. During the course Saleh Al-Shamrani, head of training at the Group, gave a talk.

Sheikh Saad Alkhorayef, Gulf Parts management board president, visited Damascus, Syria, recently and signed a 6- million-dollar contract to supply SPI spare parts to Alforat Company which is dealing in petroleum. SPI spare parts are known for their high quality.

Sheikh Saad was accompanied by Khalaf Alkhalaf, Saudi Parts Center (SPC) gceneral manager. Gulf Parts is a subsidiary of SPC.

Sheikh Saad and Alkhalaf also met with the board of managers and the president of Alforat’s management board.During the meeting, the possibility of expanding commercial ties between the two companies were explored.A meeting was also held with Engineer Mahmoud Abdullah, general manager of the Albayader Group, which is based in

Syria. They discussed the possible ways to step up business collaboration.

Gulf Parts Signs Contract with Syrian Firm


News

The operations section at Alkhorayef Petroleum Company organized recently a training course on “ESP” submersible pumps. The course was attended by a group of employees from Saudi Aramco and the operations section at Alkhorayef Petroleum Company.

The maintenance department of the equipment systems sector, at Alkhorayef Industries Company, has been equipped with three mobile workshops for providing quick service for clients, on site. These mobile units were furnished with equipment and tools, as a form of post- sales service provided to customers.

Training Course at Alkhorayef Petroleum Company

Launching of 3 Mobile Workshops

Training Seminar in IrrigationAt the invitation of Engineer Khaled Al-Esa, manager of the Development

Center at the Ministry of Agriculture in Al-Ahsa region, the Alkhorayef Group organized recently a training seminar coordinated by Engineer Yusuf Al-Fihadi. Engineer Ahmad Abdulfatah, manager of sales in the Eastern Province, delivered a lecture about irrigation systems. Dr. Khaled Shalabi, head of Irrigation Research and Applications, gave a lecture on ways to manage irrigation water.

Saad Al-Simari ReaoppointedGM

His Excellency, Engineer Mohammad bin Abdullah Alkhorayef, head and managing director of Manufacturing Affairs, issued a directive re-appointing Sa’ad Al-Simari as the general manager of the Equipment Section starting June 1, 2007.


Article

Installment companies play a stellar role in stimulating economic activity in Saudi Arabia. They serve as an intermediary between the seller who wants to dispose of his commodity for cash and the buyer who wants to obtain the commodity but doesn’t have the money to pay for it. As such, installment companies help him in an organized and honorable manner, governed by legal regulation. In this connection, the Alkhorayef Group, through the Saudi Installment House Company (SIHC), has been rendering service by helping customers secure what they need through its Murabaha program which complies with Islamic law. The SIHC is one of the first installment companies in Saudi Arabia, and has gained a good reputation among similar companies. Needless to say, it has earned the trust of clients.

As the market grew, the Company diversified its services. Aside from financing transactions for permanent and car purchases, it also finances the purchase of furniture, electrical appliances, and real estate of all kinds. Since it started its operations, which go back over 15 years, the SIHC has witnessed high growth rates and has opened many branches in the main cities of the Kingdom so that it may be closer to the customer. To maximize its service to its valued customers the company has been keen to adopt a higher credit system, under which client applications are scrutinized carefully to minimize credit risk. The Company has been able to achieve high rates of debt repayment because of strict credit policies.

We at Alkhorayef feel that our chances for growth in the financing sector through installment programs are high due to the strength of the national economy, the increase in investment volume in the country, the expansion in government and privately-owned projects, the increasing need for housing units, and the high percentage of youth in the population of Saudi Arabia. All of these are factors that clearly increase the demand for financing.

And as the strategy of the Group takes into account continuous growth, and emphasizes efforts to create more employment opportunities for the citizens, we at Saudi Installment House have achieved a high Saudization rate that exceeds 60%. Our staff are regularly sent to attend training courses that keep them well informed of what is new in financing and management. These programs also impart new skills that enable them to provide the best of service to the customer, who is our main concern.

Hamad Abdullah AlkhorayefChairman of Saudi Installment House

Company, one of the companies of

Alkhorayef Group.

Installment Programs Are Financial Solutions


After fifty years, where does the secret of your success lie?The secret of Alkhorayef’s success, after Allah’s granting of this success,

is not really a secret. It has to do with well-known traditional values, such as the honesty and openness among the partners making up the Group, as well as their cooperation and sincerity in their work. Also contributing to our success is the absolute transparency on everything related to the Group. These have worked wonders in one our most important and difficult fields that does not normally experience success in the beginning. This is the field of agriculture and water. The Group, thanks to Allah, has achieved many things in this field, helping to maintain the structure of the Group and its position. We benefited from the boom period and the agricultural subsidies provided in the seventies of the last century, when we played an important role in importation and distribution. With the advent of the eighties though, we started to industrialize and set up two factories for equipment, and another two for making pumps and pipes; then we added a factory for axle irrigation devices. Thus, we had truly moved on from an importing phase to a phase for real industry. We were able to open a factory for transmission components in the nineties, in continuation of the diversity strategy of the Group. Then we entered a new phase where we concentrated on transporting liquids in general from one place to another, maintenance and operation, project management, desalination plants, purification plants, and sewage plants. Subsequently, we expanded even further and moved towards petroleum as we set up a section for it, and we were successful in obtaining projects from Aramco, the first being in Alhauta Governorate, which paved the way for us to build a factory for petrol pumps

Interview

The Abdullah Ebrahim Alkhorayef Sons Group is set for a new era in industrial and trading activities, which go back over half a century. This new step is indeed important and will and have an effect on its future and the future of those working for it. The head of the Board of Executives of the Group , Abdurrahman bin Abdullah Alkhorayef, sheds light on this.

Abdurrahman Alkhorayef:

Our share in the Saudi market is 60%, and our investments abroad cover different countries.

Interviewed by: Emad Darwish

No Employee Will Be Made Redundant


and another for re-engineering and producing spare parts, which were two high- tech factories. Our services extended to paper manufacturing as well, financing, and even management advice. At present we are thinking of setting up a factory for cables used in petroleum production.

Why did you decide to become a shareholders company?

The company started small. Then new companies were added as we specialized, companies which were subsidiaries of the main company, the Abdullah Ibrahim Alkhorayef Sons Company. Then the company entered ventures with foreign counterparts via an independent company, as we started specializing even more, and the number of companies finally reached between 12 and 15. Some of these companies survived while others folded up, and we are currently working with the second generation companies, and even some third generation ones. For this reason, we found it appropriate, in the interest of the family and in an effort to preserve the gains we have accumulated during more than half a century, to convert to a shareholders company. However, the transformation has yet to finalize.

Which were the considerations that led to the restructuring of the company? And how will restructuring affect activities?

Our first aim in restructuring is to provide better services, and then to be able to take advantage of new opportunities which will help us in achieving our goals. The Group consists of many companies, each one enjoying administrative independence with the only link between them being the financial and human resources departments. This has allowed for more flexibility, especially as each company has its own board run by one of the partners and which prepares the budget and sets out plans which in turn are reviewed by the board of the Group.

I would like to point out here that restructuring will not affect work and no employee will be laid off. True, the company is expanding in many aspects, but what is happening is redistribution of administrative centers. I would like to take the opportunity to tell everybody that there will be no change, and that any change that will take place will create new opportunities for promoting those who are currently working for us, and for attracting new talents to the Group. The Group has a bright future, and change will take place only in its legal structure. Some changes will probably take place at the board level. Each separate company has its own management board, and as we know, the running of a shareholders company is different from running a family company. The shareholding will initially be exclusive to the family, but when the right time comes, we will float 30% of the shares. It is expected that the company will be registered in two months’ time as a closed shareholders company, and in fact, at the moment some of the companies running according to limited liability rules, 37 companies to be precise, are currently being transformed.

Will adjustments be introduced to the way skilled personnel will be chosen to work for the Group?

There are criteria in choosing employees. These include education and practical experience. We like to add another factor, and this is honesty. I remember in this context that in the eighties when we were holding personal interviews to choose new employees, and one of them was refused a job. He came to my office and informed me of this so I contacted those in charge of

THE RESTRUCTURING OF THE GROUP GOES HAND IN HAND WITH ITS DEVELOPMENT.

THERE WILL BE A NEW SYSTEM FOR HUMAN RESOURCES THAT WILL LIVE UP TO THE EXPECTATIONS OF THE GROUP AND ITS EMPLOYEES.

I REQUEST FROM OUR WORKFORCE MORE EFFORT, WORK, AND ACHIEVEMENT.


recruitment and I requested them to approve his appointment. Worth noting is that he is now the deputy general manager of one of our companies and one of our best executives.What about training programs? To what extent are they important for the Group?

There is a comprehensive training program, but it is specifically for new graduates, a sector which we benefit from. We also have a booklet for employees. Training has had some success; however, it is still below our expectations. This is why a new strategy for training will be put in place, after approval by the Board. Worth noting is that we have achieved high levels of training, with the average period for each employee totaling 30 hours. We are aiming for more, because we value investing in human capital.

How will technology help in the restructuring and expansion of the company?

We were one of the first companies to adopt high-tech. The latest development has been the signing of an agreement with Oracle. All the work of the company is currently done with high-tech and we regard ourselves one of the front-line companies as far as high-tech is concerned. The only problem facing us here

is acquiring skilled personnel, which is a worldwide problem.What were the problems that you faced in restructuring?

The most foremost was differences in opinions, with each individual having his own opinion, but things are settled eventually by vote. Another difficulty is finding skilled personnel. Whenever you have skill, development follows. Any job is just looking for an appropriate employee, not a person as such but somebody with the necessary qualifications.

What is the share of your company in the Saudi market? And what is the situation outside the Kingdom?

Our share is about 50-60%. Outside the Kingdom, it is regarded relatively small, but there are markets where our share reaches 25%. Regarding competition, it is very tough; however, we have been able to prove ourselves as a leading company, both inside and outside the Kingdom.

How do you see inter-trade in Arab countries and the world at large? What are the steps you have taken in this direction?

Trade exchange in Arab countries is not as it should

Interview


employing them in industry and petroleum sectors.

How has your appointment as a member of the Council of Riyadh Region enriched your experience?

Never before had I worked in a government department; it is a new experience for me, and has indeed given me the opportunity to know the projects allocated for the Central Region. One of the things I have benefited from the experience is flexibility, something always shown by the Council headed by Prince Salman bin Abdulaziz, governor of Riyadh Region, who is always willing to listen to anything that serves the general interest.

What are your achievements in serving the community?We have a comprehensive program for charity work,

including the Alkhorayef Fund that is dedicated to every member of the family. We have also set up a special prize for scientific accomplishment, but we are only at the beginning of the road. Worth mentioning is that there is a special committee for charity work that sets aside money for charity, and we hope that its activity will always continue.

What do you expect from your workforce after changing to a stockholders company? And what do you promise them?

That they double their effort, because it is their company also and not mine alone. I promise to improve their situation and that each one will get what is due to him, even more. The goals of the Company are for all to achieve, and our interests are one.

What are your dreams for the next stage?To build a desalination plant at sea that is fully Saudi, and

fully run by the private sector. The efforts put in currently by the Government for privatizing water desalination are very important and will greatly ease the burden carried by the state. We are in fact about to establish a company for this purpose.

You are currently setting up an office in the family’s old home, why is this?

It is because it represents my childhood. I grew up in that place, our beginnings were there, and our whatever success we have started there.

Do you have a final message?I thank all those working for the Company, for all the effort

they have put in; I wish them to continue, and I promise to improve their situation. There will be a new human resources system which is still under study. It will guarantee that each employee stays in his position and his situation upgraded. Training will be given priority as a means to develop the skills of all those working for the Company.

be, whether in the private or the public sector. Obstacles are there and obvious, but policies need to be amended so that countries, through joint committees, can overcome these obstacles.

How does the Kingdom joining the WTO affect things?I think that joining the organization will not have much

(negative) effect at all because our experience in the trade sector is huge, as well as in industry and investment. We have overcome many obstacles before joining, and so I look at this step with great enthusiasm, as it would be an opportunity to expand into foreign markets and to excel in trying to please the customer, the main focus of our work.

What are the main obstacles that the Group faces? And what about Saudization?

The lack of skilled labor is probably the major obstacle , and solving it needs changes in regulations. Regarding Saudization, we have been able to achieve many things including winning second place in efforts to Saudize. At present, we have our own program to employ qualified Saudis and have taken big steps in this regard, including


Article

Since entering the field of petroleum in 1992, Alkhorayef has been aiming to occupy a preeminent position in this vital field by acquiring a 70% share of the Saudi market. This is a first step in its bid to become a regional player before entering other world markets. This has undoubtedly been achieved, judging from the testimony of many of our customers with whom we have locked up long- term contracts. The greater aim though is for Alkhorayef to be among the leading four companies for manufacturing and importing electric submersible pumps of the highest quality. These pumps that are subjected to a series of delicate and stringent tests. These tests are carried out by highly qualified and experienced individuals who have been chosen with care from all over the world. They are continuously being trained to keep us abreast of the latest developments in technology.The Group is not restricted to manufacturing in and importing from international companies only. It goes beyond these. It also seeks financing solutions by developing a proper mechanism for each customer. It may be said that the Group is different from others in related fields because it provides comprehensive services. Khorayef Petroleum Company, for instance, has a Department for Research and Development. This department provides information to the Engineering Department on the latest innovations in petroleum technology.The policy of the Company in entering new markets is built on flexibility that allows us to be near the customer and look after his needs. This is done either through local agents, the setting up of plants for assembling parts (such as what we are doing in Libya), entering into partnerships (such as what we’ve done in Kuwait), or manufacturing some parts in countries such as Russia, whose market we’re planning to enter. We think that there is still a lot to be done to preserve our market leadership, and to grow further. As such, we call on our staff to do their level best to preserve the gains and successes we have achieved so far, and to make our competitiveness one of their main objectives.

Saad AlkhorayefPresident and CEO

Alkhorayef Group of Companies

Alkhorayef Petroleum Company:

Achievements and Ambitions


The Alkhorayef Group is both a technology transfer and an industrial icon. This being so, it has gained the customers’ trust and confidence which are anchored on high-quality products which the Group has been known for in the local and international markets all these years.

The Group owns the second biggest plant in the world for manufacturing irrigation systems, producing more than 100,000 towers. It also owns the only technology in the world for lining pipes with polyethylene, also known commercially as “Permapipe TM”. The Group has also other plants, such as the one that manufactures pumps for agricultural and industrial use, the pipe factory, the carbon paper factory, the electrical submersible pumps factory, and the one that specializes in reversed engineering and spare parts. The products of the Group have not only been able to compete locally but also internationally. It is currently operating in more than 30 countries.

The Group has an extensive experience, 30 years to be exact, which has enabled it to develop many products through hardworking engineers and technicians who have continuously undertaken extensive researches to come up with what the markets needs. In this connection, the Group has spared no effort in providing its employees with the latest technology. It has also sent them to attend seminars and training courses to keep abreast of the latest developments in the industry. As expected, this has resulted in our being at the forefront and one of the industry leaders, if not the industry leader.

Our customers are satisfied. Such satisfaction has served as an inspiration for the Group to keep on developing high-quality products. This is an obsession since the market—the customers—is the raison d’etre of the Group’s existence.

The Group and its customers are partners. Such partnership is deep-rooted, and we are all enjoying the fruits of this partnership.

Mohammad bin Abdullah Alkhorayef

President and Managing Director of

Industrial Affairs

Alkhorayef Industries, a Name You Can Trust


The ambitions of the Abdullah Ibrahim Alkhorayef Group does not stop at the gains it has achieved through the set of companies it owns, but goes beyond that to meet its ever increasing , taking into account its principles, including growth, technology transfer, environmental protection, developing society, and looking after employees.

The Group’s decision to undergo change aims to give it more opportunities and strength by utilizing its resources better, and to concentrate on specialized activities to provide more services to the customer. This is why restructuring is the first practical step in the implementation of the “changing for the better” , through the separation of a number of sectors, and establishment of new independent companies. The petroleum sector was separated and became an independent company under the new name of “Alkhorayef Petroleum Company”, and the lubricating oils sector became “Alkhorayef Lubricating Oils Company”. The international sales department became “Alkhorayef International Company”.

Some sectors were also turned into independent companies. The merging of companies with huge entities could actually have obstructed movement, and as such, separation would give more flexibility and ability to move within a market that was witnessing continuous change.

The Alkhorayef Group is witnessing expansion in its activities by forming, adding to the chain of companies it already owns. This has made it necessary for the Group to undergo restructuring within a larger framework of change for the better, change that will adopt all that the future can provide in terms of development and advancement.

Going by the principle of changing for the better:

The separation of different sectors into independent companies... and the merging of others because of the similarity of activities.

Restructuring of Alkhorayef Group

Feature


TECHNOLOGY TRANSFER HELPS IN ACHIEVING THE VISION OF THE GROUP.

SEPARATION AND MERGING OF COMPANIES ENGENDER STRENGTH AND FLEXIBILITY.

THE GROWTH RATE OF EMPLOYEES HAS EXCEEDED 100%.

THE GROUP AIMS TO BECOME AN INTERNATIONAL GIANT.

While the separation of specialized activities into separate companies was a progressive move, the merging of some sectors with other companies of similar nature can also be regarded as a progressive move that allows the utilization of the strengths of these companies to bolster the sectors to which they belong. For example, the Marine Sector was merged with Alkhorayef Industries Company, and the equipment systems sector merged with the same company. There was also the merging of the construction sector with the Alkhorayef Maintenance and Operating Company.

The importance of this step can be appreciated even more in view of the Group’s decision to expand its industrial endeavors, a situation that requires more effort to keep up with the competition. The Group has acquired the WSP label for electrical submersible pumps, and has set up a complete factory for manufacturing the pumps, complete with a section for research and development. This is located in the Eastern Province. The Group also owns the second biggest plant in the world for irrigation equipment, as well as plastic lining technology.

The Group also acquired the SPI label and the right for marketing guaranteed spare parts as well the acquisition of a specialized factory for re-engineering spare parts and casting (as well as making) templates. Finally the Group has obtained the sole agency of the “Lyn” label for water pumps. As can be seen, change, for Alkhorayef Group, is not only a idealistic vision for things, but also a strategic choice that deals with flexibility, with the needs of the markets.


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50000 2003 2004 2005

Human Resources and Sales Growth

The Group aims to achieve growth for its human resources by opening opportunities for promotion which will reflect positively on the company. There will also be a positive effect on sales by concentrating on products and services via specialized business units, plus the utilization of opportunities opened by developing markets and the entry into new markets with the current products, or with new products.

Rates of growth for employees have exceeded 100% during the last five years, with a simultaneous growth in training hours and development in an effort to guarantee the quality of services provided for customers. This has translated into greater sales figures, and indeed higher quality of services for the customer, the main concern of the Group in all its operations.

Concentrating on Technology

The Alkhorayef Group stresses the fact that growth is not an easy task but a challenge that requires the combination of all factors that help to achieve goals, including technology. Efforts have been concentrated on changing to modern business practices by choosing the renowned “Oracle” system to connect the business network, and providing prompt data and information to the decision maker. Old manual procedures have been replaced by electronics, something which has allowed personnel to bolster performance, increase productivity, and cut expenses.

Positive Effect

The Group is also very keen to make the changing process very clear and understood by all employees and customers alike, while emphasizing that it is doing its level best to avoid negative effects this change might entail, including effects on the position of employees. In fact, the change will have a positive effect on them through the opportunities for promotion and personal development.

Change and Ambitions

The Alkhorayef Group is optimistic that there will be a positive feedback from employees regarding the changes, so that the Group may develop into an international giant from a regional one. There are no limits to its ambitions and there is a strong urge for growth and development built on the culture of the Group that emphasizes the importance of continuous learning to achieve growth through investment in human capital, which is the main factor for achieving these aims.

Feature


Article

After 13 years since the Alkhorayef Group entered the printing and paper sector, the Group started diversifying its activities by acquiring Trans Orient Modern Machinery Co. (TOMMCO). It also established Al Nakhil Paper Industries Company (APICO). With these two companies, the Group grew and was able to keep the cutting edge over competitors which had been in the same sector for a long time. The printing industry and paper trade are two of the mature sectors where competitors and traders have been engaged in for a long time. Both occupy the second position in their respective specializations. However, when we look at them as one company, they are undoubtedly the first firm in the printing and paper sector in the Kingdom. This was achieved by combining the experiences of the Group in the fields of equipment service, distribution, after-sales and storage services, in addition to the accumulated experiences of Trans Orient Modern Machinery Co., position in the market, relations with customers and importers, and investment of Al Nakhil Paper Industries Co. in the state-of-the-art technologies of the carbonated paper industry. Thus, the Group is able to achieve a high-quality production and compete with the well-entrenched international companies in this field. All these constituents were exploited, in addition to the Group culture based on making close relations with customers relying on trust, good interaction, goodwill, and maximum efforts in serving customers and participation in achieving their objectives. The natural result was the growth of this sector for the Group, resulting in increased material returns. We have been honored to provide King Fahad Holy Quran Printing Complex with many imported machineries. The company has also won a project for the provision of printers to Imam Mohammed bin Saud Islamic University. Moreover, it has established good relations with government sectors such as the General Security, Medical Services, Armed Forces, Civil Defense, among others. Regarding the private sector, Trans Orient Modern Machinery Co. is the first in the packaging equipment field. We are proud to deal with known and important companies and groups in this sector like Al-Obaikan Group, Al-Banawi Group, Naser Pack, Jeddah Printing Center, and Al-Kifah Al-Sharif Group. The company has also penetrated the press establishments, where all printing machineries were sold to Al-Watan newspaper, Commercial Section of the Al-Yamamah Press Establishment, Okaz, and Dar Al-Yaum. The company is expanding in commercial printing. It won Hala Printers Development Project, which is important for the development of printers in the private sector in the Kingdom. It was bought later by the Saudi Research and Marketing Group (SRMG). We wish a promising future for this sector that enjoys positive indices in Saudi Arabia, represented in high growth rate in the population, growth at the cultural and educational levels and the big development in the fields of publicity, advertising, and industry in general and packaging industry in particular. Therefore, the Group is striving to develop its cadres to go along with this growth, develop its market share based on its good record with customers, distinguished relations with importers, and competence of its workers.

Bandar AlkhorayefGeneral Manager of Al-Nakhil Paper

Industries Company

A Promising Future for the Printing Sector


The Marine Section, just as the rest of Alkhorayef Group, has an ambitious and flexible vision that changes according to the needs of the market. It strives to please the customer, and its tools for doing this are its sincere willingness for change towards what is better, and an ability to carry this out and to represent the best of agencies. It has the confidence to go forward, develop, and keep up with an ever-progressing technology. All this has allowed the Marine Section to succeed in various ways.

Today, 27 years after the Section was launched, and after more than ten years of that very important step of becoming the representatives of Yamaha in the western coast of Saudi Arabia, I would like to mention here some of the developmental steps to be taken.

Because we believe in the importance of technology and that it is the pivotal point of development, and because recreation is an indispensable part of life that gives us the chance to ease daily stress, we have made electronics and tourism the centerpoints for development in the Marine Section.

In view of the strength of current products and our (after sales) services, and their complementary nature to marine and land recreation, and because of the interest shown in domestic tourism, we at the Marine Section have decided to be competitive and contribute to the Kingdom’s development. We have signed an agreement to build and operate a marine jetty north of Jeddah. Construction on the project will start soon, God willing. The jetty will have a yacht club and rent facility, a restaurant, jet skis, as well as a maintenance center. The space allocated to me in this issue is not enough to mention other details; however, in future issues we will talk more about this project.

Regarding electronics, we are about to sign an agreement with a specialized company in the field of marine electronics, navigation and communications. The name of the company can only be announced after the signing of the agreement.

Our ambitions have no limit, and in order to improve our services, hopefully with a positive effect on sales, we have set up a complete section for military marine equipment (including importing, assembling, and training). The section has found a lot of interest among our customers, and has developed to the extent that our brand has become trusted and a reason for national pride.

Finally, we should not forget the role played by the Marine Section in developing the skills of its employees, and its great concern for them, particularly their personal lives. The employee is a partner for progress. In view of this I would like to extend my deepest gratitude and respect to each employee of the Marine Section, as well as those working in all branches.

Abdullah bin IbrahimAlkhorayef

Deputy GM, Marine Section

Ambitious Goals of the Marine Section

Article


The AIA Group realized early on the importance of IT and its contribution to business. As a result a decision was made in the early 1980s to build the IS department to support business with legacy application based on IBM mainframe. The IT at that time was simple and provided application services only for local users. The more business grew with more companies being formed, the Group realized the need for a more structured and formalized IT, capable of coming up with a comprehensive service delivery model covering all the necessary tools needed to assist business and compete in the market, which was difficult at that time to manage through a conventional system with limited resources as the previous legacy system.In 2003 the Group IT went through a drastic change in strategies, performing with due diligence, adjusting its direction toward improving IT to be aligned with business objectives, taking an appropriate role models for IS in relation to the company’s main business processes, becoming closer to business, educating business with new emerging technologies and providing the best tools to manage business while improving quality and cost effectiveness of service delivery. Today, IT plays a major role in business with a comprehensive and highly developed service portfolio. It has assumed the role of being a business partner to the Alkhorayef Group. In that respect, IT started strategizing and focusing its direction in value- added services , having deep insight into the business and understanding of the requirements, forecasting projects and development in the coming five years.IT began the implementation of its plans, using strategy as a guideline and define goals toward serving the business. Therefore, it started a massive organizational change by improving the team structure and formed a group with high skills and expertise in data communication, system management, application development and support mechanism.IT extended services to cover more than ten companies connected directly to Riyadh Data Center, with more than 38 branches in the Kingdom and more than ten branches in the Middle East and in the Gulf. As part of it’s strategy to introduce state-of-the art application, the team arrived at a decision of adopting Oracle application. An implementation strategy was developed and the decision to implement for the Group consists of diversified business covering Trading, Services, Contracting, O&M, and Manufacturing.. Continuously, the IT will work hand in hand with business to improve the processes to get rid of the exhaustive and redundant processes and streamline business. IT foresees the forthcoming challenges. Therefore, we will prepare the business with the necessary tools to stand against market fluctuations and fulfill customers’ demand to sustain a competitive advantage over the competitors. Such direction and vision will make IT to take a further step toward introducing CRM & SRM application to help business analyze “opportunities and leads”, study the market to improve supplier and customer relations, and bridge the gap and improve product quality and service delivery.. We believe that IT is important and can contribute highly to the growth and sustainability of business, minimizing the dependence on guess work and run the business with clear sight with extreme focus on the customer’s needs and the market ups and down. This will require both the IT and business to work together.

Fahed Al-MotairyAIA Group Information

Technology Division

IT and It’s Vital Roles


The Alkhorayef Commercial Company Petroleum Division has been growing from strength to strength over the years. It was established in January 1994 to execute the Central Arabia Electrical Submersible Pump Supply, Installation, Commissioning and Maintenance Contract for Saudi Aramco and to offer services to oil companies in neighboring countries. At present, it provides electrical submersible pump services to oil companies in the Middle East, Asia and North Africa. US$1000 oil field service contracts have been awarded to Petroleum Division after a bidding. New factories have been built, equipped and put into production and a workforce of over 500 trained engineers and technicians proudly wear the Alkhorayef badge.

Over the next 10 years, the global oil field services market, particularly the artificial lift sector, is expected to grow at a level unprecedented in the history of our industry. The Petroleum Division has been restructured and Alkhorayef Petroleum Company, a fully capitalized subsidiary of the Alkhorayef Group, has been formed to participate in this period of remarkable growth and in future opportunities.

Alkhorayef Petroleum Company, with its well- known brand names of Western Submersible Pumps and Western Engineered Pumps and Components, will continue to grow in new markets and the Company will evolve from a widely recognized and respected regional industry power to a global player in the oil field services market.

David HandersonGeneral Manager of

Alkhorayef Petroleum

Growing from Strength to Strength

Article


Community

Al-Dihaimi Made SupervisorOur colleague, Faisal Sa’ad Al-Dihaimi, has been promoted to supervisor of Employee Affairs at Alkhorayef Industries Company. Congratulations.

Dr. Shalabi, DeputyEngineer Faiz Khalifat, General Manager of Alkhorayef Industries Company, has issued an order appointing Dr. Khaled Ali Shalabi deputy general manager of operations at Alkhorayef Industries Company starting July 5. He reports directly to the operations general manager.

Fahad Al-Saif, ManagerEngineer Mohammad bin Abdullah Alkhorayef, head and managing director of Manufacturing Affairs, has issued an order to promote Fahad Naser Al-Saif to spare parts manager at the Equipment Section of Alkhorayef Industries Company. He started reporting to the Equipment Systems manager on July 1, 2007.

Iyad Becomes ManagerThe general manager of Alkhorayef Industries Company, Engineer Faiz Khalifat, has issued an order appointing Engineer Iyad Hisham the new manager of spare parts and after-sales services at Alkhorayef Industries Company starting May 7, 2007. He reports directly to the general manager of operations.

Al-Ma’youf, PromotedEngineer Mohammad Abdullah Alkhorayef, head and managing director for Manufacturing Affairs, has issued an order promoting Sulaiman Al-Ma’youf to manager of Maintenance Services at the Equipment Section of Alkhorayef Industries Company. He reports directly to the general manager of the Equipment Systems Section starting August 1, 2008.

Al-Harazi PromotedEngineer Mohammad Abdullah Alkhorayef, head and managing director for industrial affairs, has issued an order for the promotion of Ali Mohammad Al-Harazi to Financial Manager of Alkhorayef Industries Company. His responsibilities cover all the company sectors -- equipment, factories, and marine activity. He started reporting directly to the head of the company and the Financial Department of the Group July 1.

Mohammad Shahin PromotedIan Yarwood, General Manager of Alkhorayef Lubricating Oils Company—Castrol, has issued an order for the appointment of Amjad Mohammad Bilal Shahin as financial manager. In such a capacity he’s responsible for all the financial and auditory operations of the company. The whole of the Auditory Section will also fall under his authority. This bulletin wishes him the best in his new responsibility.

Mousa PromotedMohammad Mousa received best wishes and congratulations on the occasion of his promotion to the position of assistant manager of the operations at the planning section of Nakhil for Paper Industries. Congratulations and best wishes.


Community

Eid Salama Receives Two CertificatesEid Salamah Musallem, technical supervisor at the Marine Section in Makkah, has received a certificate of thanks and appreciation, from each of the following:Sa’ad Abullah Al-Twaijri, general manager of Civil Security, for his efforts, and his effective participation, in the “rubber boats trainers” training course; Commodore Abdulhameed bin Hamdan Al-Mor’ee, commander of the Boarder Guards in Makkah Region, for his effective participation and cooperation.This bulliten congratulates him on the occasion and wishes him all success in the future.

Gorpally Has a Newborn Gorpally Ranveer Goud of Nakheel for Paper Industries has just been blessed with a baby girl. May she be the joy of her farther and mother.

Khojali Gets DiplomaKhaled Abdullah Khojali, working for The Sons of Abdullah Ibrahim Alkhorayef Company, has received a diploma for Executive Secretary from the training center of Chamber of Commerce and Industry in Riyadh. The course was held between August 8, 2006 and June 5, 2007. He received an “Excellent” rating. Congratulations to Khaled.

Osama Gets BestPerformance AwardWith the grace of Allah, our colleague Osama Adel of Alkhorayef Lubricants Company (Khobar branch) has received the “Best Performance” award for the year 2006; our heartiest congratulations to him.

Omar Othman CelebratesOn July 5, 2007, Omar Othman, manager for Internal Scrutinizing at Alkhorayef Group, celebrated the marriage of his daughter in Sudan. Best wishes to him and the newly-married couple.

Zirban Gets MarriedMansour Zirban of Alkhorayef Petroleum Company (Riyadh Sales), got married on July 9, 2007. Best of luck to him.

Mabkhout is MarriedMohammad Mabkhout of the Marine Section of Alkhorayef Industries Company, held a banquet in Al-Karawan Palace in Jeddah on 13-3-1428H, on the occasion of his marriage. Congratulations and best wishes.

Sattaam Security Posting ForSattaam Hamad Al-Fihaid has been appointed an administrator of Security and Safety at the Alkhorayef Industries Company. We wish him best of luck.

Al-Hammaad AppointedAbdullah Saleh Al-Hammaad has been appointed supervisor of the Security and Safety Department at Alkhorayef Industries Company. We wish him the best of luck as well.


Al-Mousa Has a BabyFaiz Al-Mousa, financial manager at Gulf Parts in Dubai (one of the companies under the Group) has been blessed with a baby boy named “Abdullah”. May Allah bless him.

Condolences to OscarThe human resources department at Alkhorayef Group extends its condolences

to our colleague Oscar Paul Gallo, general manager of Gulf Parts in Dubai, for the

passing away of his father in the United States last June 9.

Twin Celebration For Al-HumaidanAbdurrahman Al-Humaidan of the Information Systems Section at the Group, has received a diploma for project management after completing one hundred hours at Al-Yamama College. Congratulations and best of luck. He has also been blessed with a baby boy. May Allah bestow happiness on him.

Letter of ThanksFor Ahmad KhairallahMr. Ahmad Khairallah has received a letter of thanks from the first deputy of the Chairman, Sheikh Mohammad Alkhorayef.

Al-Fouzan Has a NewbornMohammad Al-Fouzan, manager of Employees Affairs at Alkhorayef Industries Company, has been blessed with a newborn baby girl; may Allah bless her.

Condolences to Al-DihamiThe department for Human Resources at the Alkhorayef Group extends its

condolences to Mohammad Al-Dihami, supervisor of equipment systems at

Buraidah branch, for the death of his father on April 18, 2007. May Allah bestow

mercy upon him and admit him to Jannah.

Condolences to Sayed IftikharThe Human Resources Department of Alkhorayef Group of Companies extends

its condolences to Sayed Iftikhar Husain Shah, an employee at the Group, on the

passing away of his mother on April 19, 2007. May Allah bestow his mercy upon

her and grant her Jannah.

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