UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to

OR

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from to

Commission File Number: 1-14852

GRUMA, S.A.B. de C.V.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

United Mexican States

(Jurisdiction of incorporation or organization)

Calzada del Valle, 407 Ote.

Colonia del Valle

San Pedro Garza García, Nuevo León

66220, México

(Address of principal executive offices)

Investor Relations

Calzada del Valle, 407 Ote.

Colonia del Valle

San Pedro Garza García, Nuevo León

66220, México

Tel: (52) 81 8399-3349

Facsimile: (52) 81 8399-3359

Email: ir@gruma.com

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class:		Name of exchange on which registered:
Series B Common Shares, without par value		New York Stock Exchange*
American Depositary Shares, each representing four Series B Common Shares, without par value		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Table of Contents

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

563,650,709 Series B Common Shares, without par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. o GAAP

x IFRS

Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 o Item 18 o

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

* Not for trading but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Table of Contents

INTRODUCTION

Gruma, S.A.B. de C.V. is a publicly held corporation (Sociedad Anónima Bursátil de Capital Variable) organized under the laws of the United Mexican States, or Mexico.

In this Annual Report on Form 20-F, references to “pesos” or “Ps.” are to Mexican pesos, references to “U.S. dollars,” “U.S.$,” “dollars” or “$” are to United States dollars and references to “bolivars” and “Bs.” are to the Venezuelan bolivar. “We,” “our,” “us,” “our company,” “GRUMA” and similar expressions refer to Gruma, S.A.B. de C.V. and its consolidated subsidiaries, except when the reference is specifically to Gruma, S.A.B. de C.V. (parent company only) or the context otherwise requires.

PRESENTATION OF FINANCIAL INFORMATION

This Annual Report contains our audited consolidated financial statements as of January 1, 2010 and December 31, 2010 and 2011 and for the years ended December 31, 2010 and 2011. The consolidated financial statements have been audited by PricewaterhouseCoopers, S.C., an independent registered public accounting firm and were approved by our shareholders at the annual general shareholders’ meeting held on April 26, 2012.

We publish our financial statements in pesos and prepare our consolidated financial statements included in this annual report in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The consolidated annual financial statements herein are our first financial statements prepared in accordance with IFRS. Through 2010 we prepared our consolidated financial statements in accordance with the Normas de Información Financiera (Mexican Financial Reporting Standards), commonly referred to as “Mexican FRS” or “MFRS”. Our date of transition to IFRS was January 1, 2010. IFRS 1—“First-time Adoption of International Financial Reporting Standards” has been applied in preparing these financial statements. See Note 28 to our audited consolidated financial statements for an analysis of the valuation, presentation and disclosure effects of adopting IFRS and a reconciliation between Mexican FRS and IFRS as of January 1 and December 31, 2010 and for the year ended December 31, 2010. Following the Company’s adoption of IFRS, the Company is no longer required to reconcile its financial statements prepared in accordance with IFRS to U.S. GAAP.

The financial statements of our entities are measured using the currency of the main economic environment where the entity operates (functional currency). The consolidated financial statements are presented in Mexican pesos, which corresponds to our presentation currency. Prior to the peso translation, the financial statements of foreign subsidiaries with functional currency from a hyperinflationary environment are adjusted for inflation in order to reflect changes in purchasing power of the local currency. Subsequently, assets, liabilities, equity, income, costs, and expenses are translated to the presentation currency at the closing rate at the date of the most recent balance sheet. To determine the existence of hyperinflation, we evaluate the qualitative characteristics of the economic environment, as well as the quantitative characteristics established by IFRS, including an accumulated inflation rate equal or higher than 100% in the past three years.

MARKET SHARE

The information contained in this Annual Report regarding our market positions is based primarily on our own estimates and internal analysis and data obtained from AC Nielsen. Market position information for the United States is also based on data from Technomic. For Mexico, information is also based on data from Información Sistematizada de Canales y Mercados or “ISCAM”, Asociación Nacional de Tiendas de Autoservicio y Departamentales (National Supermarkets and Department Stores Association) or “ANTAD”, Asociación Nacional de Abarroteros Mayoristas (National Groceries Wholesalers Association) or “ANAM”, and reports from industry chambers. For Venezuela, information is also based on data obtained from LatinPanel Venezuela. For Europe, information is also based on data from Symphony IRI Group. While we believe our internal research and estimates are reliable, they have not been verified by any independent source and we cannot ensure their accuracy.

Table of Contents

EXCHANGE RATE

This annual report contains translations of various peso amounts into U.S. dollars at specified rates solely for your convenience. You should not construe these translations as representations by us that the peso amounts actually represent the U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, we have translated U.S. dollar amounts from pesos (i) as of December 31, 2011 at the exchange rate of Ps. 13.95 to U.S.$1.00, which was the rate established by Banco de México on December 30, 2011 and (ii) as of March 31, 2012 at the exchange rate of Ps. 12.81 to U.S.$1.00, which was the rate established by Banco de México on March 30, 2012.

OTHER INFORMATION

Certain figures included in this Annual Report have been rounded for ease of presentation. Percentage figures included in this Annual Report are not all calculated on the basis of such rounded figures; some are calculated on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Annual Report may vary from those obtained by performing the same calculations using the figures in our audited consolidated financial statements. Certain numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them due to rounding.

All references to “tons” in this Annual Report refer to metric tons. One metric ton equals 2,204 pounds. Estimates of production capacity contained herein assume the operation of relevant facilities on the basis of 360 days a year, on three shifts, and assume only regular intervals for required maintenance.

FORWARD LOOKING STATEMENTS

This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, including the statements about our plans, strategies and prospects under “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects.” Some of these statements contain words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “strategy,” “plans” and other similar words. Although we believe that our plans, intentions and expectations as reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved. Actual results could differ materially from the forward-looking statements as a result of risks, uncertainties and other factors discussed in “Item 3. Key Information—Risk Factors,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.” These risks, uncertainties and factors include: general economic and business conditions, including changes in exchange rates, and conditions that affect the price and availability of corn, wheat and edible oils; potential changes in demand for our products; price and product competition; and other factors discussed herein.

Table of Contents

PART I

ITEM 1 Identity of Directors, Senior Management and Advisors.

Not applicable.

ITEM 2 Offer Statistics and Expected Timetable.

Not applicable.

ITEM 3 Key Information.

SELECTED FINANCIAL DATA

The following tables present our selected consolidated financial data as of and for each of the years indicated. The data as of December 31, 2010 and 2011 and for the years ended December 31, 2010 and 2011 are derived from and should be read together with our audited consolidated financial statements included herein and “Item 5. Operating and Financial Review and Prospects.”

Selected financial information for 2010 differs from the information we previously published for 2010, as a result of the implementation of IFRS. See Note 28 to our audited consolidated financial statements for an analysis of the valuation, presentation and disclosure effects of adopting IFRS and a reconciliation between Mexican FRS and IFRS as of January 1 and December 31, 2010 and for the year ended December 31, 2010.

Pursuant to the transitional relief granted by the SEC in respect of the first-time application of IFRS, historical financial data for the years ended December 31, 2007, 2008 and 2009 has been omitted, and no audited consolidated financial statements and financial information prepared under IFRS for the year ended December 31, 2009 have been included in this annual report.

	2010			2011
	(thousands of Mexican Pesos, except per share amounts)
Income Statement Data:
IFRS:
Net sales	Ps.	46,232,454		Ps.	57,644,749
Cost of sales		(31,563,342	)		(40,117,952	)
Gross profit		14,669,112			17,526,797
Selling and administrative expenses		(12,100,365	)		(13,984,486	)
Other expense, net		(518,732	)		(203,850	)
Operating income		2,050,015			3,338,461
Comprehensive financing cost, net		(1,163,203	)		(427,200	)
Equity in earnings of associated companies		592,235			3,329
Gain from divestment in associated companies		—			4,707,804
Income before income tax		1,479,047			7,622,394
Income tax expense		(839,561	)		(1,806,572	)
Consolidated net income		639,486			5,815,822
Attributable to:
Shareholders		431,779			5,270,762
Non-controlling interest		207,707			545,060
Per share data(1):
Basic and diluted earnings per share		0.77			9.35

Table of Contents

	2010			2011
	(thousands of Mexican pesos, except per share amounts and operating data)
Balance Sheet Data (at period end):
IFRS:
Property, plant and equipment, net	Ps.	17,930,173		Ps.	20,515,633
Total assets		38,927,394			44,542,618
Short-term debt(2)		2,192,871			1,633,207
Long-term debt(2)		15,852,538			11,472,110
Total liabilities		28,205,120			26,829,834
Common stock		6,972,425			6,972,425
Total equity(3)		10,722,274			17,712,784

Other Financial Information:
IFRS:
Capital expenditures		1,115,161			2,386,966
Depreciation and amortization		1,502,534			1,596,643
Net cash provided by (used in):
Operating activities		3,291,138			1,751,314
Investing activities		(802,208	)		6,779,129
Financing activities		(4,234,431	)		(7,429,059	)

(1) Based upon weighted average of outstanding shares of our common stock (in thousands), as follows: 563,651 shares for the year ended December 31, 2010 and 563,651 shares for the year ended December 31, 2011. Each of our American Depositary Shares represents four Series B Common Shares.

(2) Short-term debt consists of bank loans and the current portion of long-term debt. Long-term debt consists of bank loans, our senior unsecured perpetual bonds and debentures.

(3) Total equity includes non-controlling interests as follows: Ps.3,778 million as of December 31, 2010 and Ps.4,282 million as of December 31, 2011.

Table of Contents

	2007	2008	2009	2010	2011
	(thousands of tons)

Operating Data:

*Sales volume:*
Gruma Corporation (corn flour, tortillas and other)(1)	1,329	1,337	1,312	1,395	1,464
GIMSA (corn flour, and other)	1,753	1,821	1,874	1,890	1,959
Gruma Venezuela (corn flour, wheat flour and other)	480	465	459	523	528
Molinera de México (wheat flour)	488	494	508	530	564
Gruma Centroamérica (corn flour and other)	220	213	208	201	229

*Production capacity:*
Gruma Corporation (corn flour and tortillas)(2)	2,063	2,093	2,096	2,314	2,482

GIMSA (corn flour, and other)(3)	2,964	2,964	2,964	2,965	2,965
Gruma Venezuela (corn flour, wheat flour and other)(4)	808	823	909	823	823
Molinera de México (wheat flour)	894	894	894	811	837
Gruma Centroamérica (corn flour and other)	319	307	307	343	350
Number of employees	18,767	19,060	19,093	19,825	21,318

(1) Net of intercompany transactions.

(2) Includes 59 thousand tons of temporarily idled production capacity at December 31, 2011.

(3) Includes 477 thousand tons of temporarily idled production capacity at December 31, 2011.

(4) Includes 71 thousand tons of temporarily idled production capacity at December 31, 2011.

Dividends

Our ability to pay dividends may be limited by Mexican law, our estatutos sociales, or bylaws, and by financial covenants contained in some of our credit agreements. Because we are a holding company with no significant operations of our own, we have distributable profits to pay dividends to the extent that we receive dividends from our subsidiaries. Accordingly, there can be no assurance that we will pay dividends or of the amount of any such dividends. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

Pursuant to Mexican law and our bylaws, the declaration, amount and payment of dividends are determined by a majority vote of the holders of the outstanding shares represented at a duly convened shareholders’ meeting. The amount of any future dividend would depend on, among other things, operating results, financial condition, cash requirements, losses for prior fiscal years, future prospects, the extent to which debt obligations impose restrictions on dividends and other factors deemed relevant by the board of directors and the shareholders.

Table of Contents

In addition, under Mexican law, companies may only pay dividends:

· from earnings included in year-end financial statements that are approved by shareholders at a duly convened meeting;

· after any existing losses applicable to prior years have been made up or absorbed into shareholders’ equity;

· after at least 5% of net profits for the relevant fiscal year have been allocated to a legal reserve until the amount of the reserve equals 20% of a company’s paid-in capital stock; and

· after shareholders have approved the payment of the relevant dividends at a duly convened meeting.

Holders of our American Depositary Receipts, or ADRs, on the applicable record date are entitled to receive dividends declared on the shares represented by American Depositary Shares, or ADSs, evidenced by such ADRs. The depositary will fix a record date for the holders of ADRs in respect of each dividend distribution. We pay dividends in pesos and holders of ADSs will receive dividends in U.S. dollars (after conversion by the depositary from pesos, if not then restricted under applicable law) net of the fees, expenses, taxes and governmental charges payable by holders under the laws of Mexico and the terms of the deposit agreement.

The ability of our subsidiaries to make distributions to us is limited by the laws of each country in which they were incorporated and by their constitutive documents. For example, our ability to repatriate dividends from Gruma Venezuela may be adversely affected by exchange controls and other recent events. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks.” In the case of Gruma Corporation, our principal U.S. subsidiary, its ability to pay dividends in cash is prohibited upon the occurrence of any default or event of default under its principal credit agreements. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

During 2011, 2010, 2009 and 2008 we did not pay any dividends to shareholders. In 2007 we paid dividends to shareholders, in nominal terms, of Ps.410 million (per share Ps.0.85).

Exchange Rate Information

Mexico has had a free market for foreign exchange since 1994, when the government suspended intervention by the Banco de México, and allowed the peso to float freely against the U.S. dollar. From the beginning of 2004 until August 2008, the Mexican peso was relatively stable, ranging from Ps.9.92 to Ps.11.63. Between October 1, 2008 and March 2, 2009, the Mexican peso depreciated in value from Ps.10.97 to Ps.15.40. From March 2009 to the end of May 2011, the Mexican peso appreciated in value from Ps.15.40 to Ps.11.58. From June 2011 to the end of March 2012, the Mexican peso depreciated in value from 11.58 to 12.81. There can be no assurance that the government will maintain its current policies with regard to the peso or that the peso will not depreciate or appreciate in the future. See “Item 3. Key Information —Risk Factors—Risks Related to Mexico—Devaluations of the Mexican Peso May Affect our Financial Performance.”

The following table sets forth, for the periods indicated, the high, low, average and period-end noon buying rate in New York City for cable transfers in pesos published by the Federal Reserve Bank of New York, expressed in pesos per U.S. dollar.

Table of Contents

	Noon Buying Rate (Ps. Per U.S.$)
Year	High (1)	Low (1)	Average (2)	Period End
2007	11.2692	10.6670	10.9277	10.9169
2008	13.9350	9.9166	11.1415	13.8320
2009	15.4060	12.6318	13.4970	13.0576
2010	13.1940	12.1556	12.6222	12.3825
2011	14.2542	11.5050	12.4270	13.9510
October 2011	13.9310	13.1025	13.4379	13.1690
November 2011	14.2542	13.3826	13.6955	13.6201
December 2011	13.9927	13.4890	13.7746	13.9510
January 2012	13.7502	12.9251	13.4248	12.9251
February 2012	12.9514	12.6250	12.7833	12.7941
March 2012	12.9900	12.6280	12.7523	12.8115

(1) Rates shown are the actual low and high, on a day-by-day basis for each period.

(2) Average of month-end rates.

On April 20, 2012, the noon buying rate for pesos was Ps. 13.12 to U.S.$1.00.

RISK FACTORS

Risks Related to Our Company

Fluctuations in the Cost and Availability of Corn, Wheat and Wheat Flour May Affect Our Financial Performance

Our financial performance may be affected by the price and availability of corn, wheat and wheat flour as each of these raw materials represented 33%, 13% and 5%, respectively, of our cost of sales in 2011. Mexican and world markets have experienced periods of either over-supply or shortage of corn and wheat, some of which have caused adverse effects on our results of operations. In recent years, there has been substantial volatility and increases in the price of corn due primarily to increased demand for corn from emerging markets, and partly due to demand for corn-based ethanol in the U.S., which increased our cost of corn and negatively affected our financial condition and results of operation. Also, there have been increases in the price of wheat, driven by negative weather conditions in certain regions of the world and increased demand worldwide, especially from emerging markets. The price of corn has remained at high levels, reaching a peak in 2011 for recent years. The price of wheat declined significantly from its peak in 2008, and thereafter increased substantially but is still below the prior peak. We believe that the demand and price for corn will increase over the long term in connection with expected rising demand for corn-based ethanol, but mainly from increased demand by emerging markets.

To manage these price risks, we regularly monitor our risk tolerance and evaluate the possibility of using derivative instruments to hedge our exposure to commodity prices. We currently hedge against fluctuations in the costs of corn and wheat using futures and options contracts according to the Company’s risk management policy, but remain exposed to credit-related losses in the event of non-performance by counterparties to the financial instruments. In addition, if corn or wheat prices decrease below the levels specified in our various hedging agreements, we would lose the value of a decline in these prices.

Additionally, because of this volatility and price variations, we may not always be able to pass along our increased costs to our customers in the form of price increases. We cannot always predict whether or when shortages or over-supply of corn and wheat will occur. In addition, future Mexican or other countries’ governmental actions could affect the price and availability of corn and wheat. Any adverse developments in domestic and international corn and wheat markets could have a material adverse effect upon our business, financial condition, results of operations, and prospects.

Table of Contents

Our Current or Future Indebtedness could Adversely Affect Our Business and, Consequently, Our Ability to Pay Interest and Repay Our Indebtedness

Our level of indebtedness could increase our vulnerability to adverse general economic and industry conditions, including increases in interest rates, increases in prices of raw materials, foreign currency exchange rate fluctuations and market volatility. Our ability to make scheduled payments on and refinance our indebtedness when due depends on, and is subject to, several factors, including our financial and operating performance, which is subject to prevailing economic conditions and financial, business and other factors, the availability of financing in the Mexican and international banking and capital markets, and our ability to sell assets and implement operating improvements.

We May be Adversely Affected by Increases in Interest Rates

Interest rate risk exists primarily with respect to our floating-rate peso denominated debt, which generally bears interest based on the Mexican equilibrium interbank interest rate, which we refer to as the “TIIE.” In addition, we have additional interest rate risk with respect to floating-rate dollar-denominated debt, which generally bears interest based on the London interbank offered rate, which we refer to as “LIBOR.” We have significant exposure to exchange rate fluctuation due to our floating-rate peso and dollar-denominated debt. As a result, if the TIIE or LIBOR rates increase significantly, our ability to service our debt may be adversely affected.

Downgrades of Our Debt May Increase Our Financing Costs or Otherwise Adversely Affect Us or Our Stock Price

Our long-term corporate credit rating and our senior unsecured perpetual bond are rated “BB” by Standard & Poor’s Ratings Services (“Standard & Poor’s”). Our Foreign Currency Long-Term Issuer Default Rating and our Local Currency Long-Term Issuer Default Rating are rated “BB” by Fitch Ratings (“Fitch”). Our U.S.$300 million perpetual bond is rated “BB” by Fitch Ratings. These ratings reflect the debt repayment made on February 18, 2011, after applying the net proceeds from the sale of GRUMA’s 8.8% stake in Grupo Financiero Banorte, S.A.B. de C.V. (“GFNorte”). The ratings in effect during 2009 and 2010 were lower, prior to the debt repayment on February 18, 2011, reflecting additional leverage on GRUMA’s capital structure from the termination of GRUMA’s foreign exchange derivative positions and the subsequent conversion of the realized losses into debt.

If our financial condition deteriorates, we may experience future declines in our credit ratings, with attendant consequences. Our access to external sources of financing, as well as the cost of that financing, could be adversely affected by a deterioration of our long-term debt ratings. A downgrade in our credit ratings could increase the cost of and/or limit the availability of unsecured financing, which may make it more difficult for us to raise capital when necessary. If we cannot obtain adequate capital on favorable terms or at all, our business, operating results and financial condition would be adversely affected.

We Expect to Pay Interest and Principal on Our Debt with Cash Generated in Dollars or Pesos, as Needed, But Cannot Assure You That We Will Generate Sufficient Cash Flow in the Relevant Currency at the Required Times From Our Operations

We had approximately 83% of our outstanding debt denominated in dollars,14% in Mexican pesos and 3% in other currencies as of December 31, 2011. We may not generate sufficient cash in the relevant currency from our operations to service the entire amount of our debt in such currency. A devaluation of certain currencies or a change in our business could adversely affect our ability to service our debt.

Increases in the Cost of Energy Could Affect Our Profitability

We use a significant amount of electricity, natural gas and other energy sources to operate our corn and wheat flour mills and processing ovens for the manufacture of tortillas and related products at our domestic and international facilities. These energy costs represented approximately 4% of our cost of sales in 2011. In addition, considerable amounts of diesel fuel are used in connection with the distribution of our products. The cost of energy sources may fluctuate widely due to economic and political conditions, government policy and regulation, war, weather conditions or other unforeseen circumstances. An increase in the price of fuel and other energy sources would increase our operating costs and, therefore, could affect our profitability.

Table of Contents

The Presence of Genetically Modified Corn in Our Products, Which is Not Approved for Human Consumption, May Have a Negative Impact on Our Results of Operations

As we do not grow our own corn, we are required to buy it from various producers in the United States, Mexico and elsewhere. Although we only buy corn from farmers and grain elevators who agree to supply us with approved varieties of corn and we have developed a protocol in all our operations, with the exception of Venezuela, to test and monitor our corn for certain strains of bacteria and chemicals that have not been approved for human consumption, we may unwittingly buy genetically modified corn that is not approved for human consumption, and use such raw materials in the manufacture of our products. This may result in costly recalls, subject us to lawsuits, and may have a negative impact on our results of operations.

In the past, various allegations have been made, mostly in the United States and the European Union, that genetically modified foods are unsafe for human consumption, pose risks of damage to the environment and create legal, social and ethical dilemmas. Some countries, particularly in the European Union, as well as Australia and some countries in Asia, have instituted a partial limitation on the import of grain produced from genetically modified seeds. Some countries have imposed labeling requirements and traceability obligations on genetically modified agricultural and food products, which may affect the acceptance of these products. To the extent that we may unknowingly buy or may be perceived to be a seller of products manufactured with genetically modified corn not approved for human consumption, this may have a significant negative impact on our financial condition and results of operation.

Regulatory Developments May Adversely Affect Our Business

We are subject to regulation in each of the territories in which we operate. The principal areas in which we are subject to regulation are health, environmental, labor, taxation and antitrust. The adoption of new laws or regulations in the countries in which we operate may increase our operating costs or impose restrictions on our operations which, in turn, may adversely affect our financial condition, business and results of operations. Further changes in current regulations may result in an increase in compliance costs, which may have an adverse effect on our financial condition and results of operations. See “Item 4. Information on the Company—Regulation.”

Economic and Legal Risks Associated with a Global Business May Affect Our International Operations

We conduct our business in many countries and anticipate that revenues from our international operations will account for a significant portion of our future revenues. There are risks inherent in conducting our business internationally, including:

· general political and economic instability in international markets;

· limitations in the repatriation, nationalization or governmental seizure of our assets, including cash;

· direct or indirect expropriation of our international assets;

· varying prices and availability of corn, wheat and wheat flour and the cost and practicality of hedging such fluctuations under current market conditions;

· different liability standards and legal systems;

· recent developments in the international credit markets, which could affect capital availability or cost, and could restrict our ability to obtain financing or refinance our existing indebtedness at favorable terms, if at all; and

· intellectual property laws of countries that do not protect our international rights to the same extent as the laws of Mexico.

In addition, we have expanded our operations to China, Malaysia, Australia, England, the Netherlands, Italy, and more recently to Ukraine, Russia and Turkey. Our presence in these and other markets could present us

Table of Contents

with new and unanticipated operational challenges. For example, we may encounter labor restrictions or shortages and currency conversion obstacles, or be required to comply with stringent local governmental and environmental regulations. Any of these factors could increase our operating expenses and decrease our profitability.

Our Business May Be Adversely Impacted By Risks Related to Our Derivatives Trading Activities

From time to time, we enter into currency and other derivative transactions, pursuant to the Company’s risk management policy, that cover varying periods of time and have varying pricing provisions. We may incur unrealized losses in connection with potential changes in the value of our derivative instruments as a result of changes in economic conditions, investor sentiment, monetary and fiscal policies, the liquidity of global markets, international and regional political events, and acts of war or terrorism. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources,” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Rate Risk.”

We Cannot Predict the Impact that Changing Climate Conditions, Including Legal, Regulatory and Social Responses Thereto, May Have on Our Business

Various scientists, environmentalists, international organizations, regulators and other commentators believe that global climate change has added, and will continue to add, to the unpredictability, frequency and severity of natural disasters (including, but not limited to droughts, hurricanes, tornadoes, freezes, other storms and fires) in certain parts of the world. In response to this belief, a number of legal and regulatory measures as well as social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions which some believe may be chief contributors to global climate change. We cannot predict the impact that changing climate conditions, if any, will have on our results of operations or our financial condition. Moreover, we cannot predict how legal, regulatory and social responses to concerns about global climate change will impact our business in the future.

Our Business and Operations May Be Adversely Affected by Global Economic Conditions

The current global macroeconomic environment, characterized by a continuing crisis in the financial markets and the potential threat of a global economic downturn, primarily as a result of the ongoing sovereign debt crisis in the Eurozone, the high degree of unemployment in certain countries, the level of public debt in the U.S. and certain European countries, and the potential impact of budget consolidation measures in the Eurozone, has adversely affected the economy in the United States, Europe and many other parts of the world, including Mexico, and has had significant consequences worldwide, including unprecedented volatility, significant lack of liquidity, loss of confidence in the financial markets, disruptions in the credit sector, reduced business activity, rising unemployment, decline in interest rates and erosion of consumer confidence. It is uncertain how long the effects of this global macroeconomic instability will continue and how much of an impact it will have on the global economy in general, or the economies in which we operate in particular, and whether slowing economic growth in any such countries could result in our customers’ reducing their spending. As a result, we may need to lower the prices of certain of our products and services in order to maintain their attractiveness, which could lead to reduced turnover and profit or a decline in demand for our products. Any such development could adversely affect our business, results of operations and financial condition and lead to a drop in the trading price of our shares.

Our Financial Information Prepared under IFRS May Not Be Comparable to Our Financial Information Prepared Under Mexican FRS

We adopted IFRS as of January 1, 2011 and prepared our consolidated financial statements included in this annual report in accordance with IFRS as issued by the IASB. IFRS differs in certain significant respects from Mexican FRS and U.S. GAAP. An analysis of the valuation, presentation and disclosure effects of adopting IFRS and a reconciliation between Mexican FRS and IFRS as of January 1 and December 31, 2010 and for the year ended December 31, 2010 is set forth in Note 28 to our audited financial statements included in this annual report. As a result of the adoption of IFRS, our consolidated financial information presented under IFRS for fiscal years 2010 and 2011 may not be comparable to our financial information for previous periods prepared under Mexican FRS.

Table of Contents

Risks Related to Mexico

Our Results of Operations Could Be Affected by Economic and Social Conditions in Mexico

We are a Mexican company with 34% of our consolidated assets located in Mexico and 34% of our consolidated net sales derived from our Mexican operations as of and for the year ended December 31, 2011. As a result, Mexican economic conditions could impact our results of operations.

In the past, Mexico has experienced exchange rate instability and devaluation as well as high levels of inflation, domestic interest rates, unemployment, negative economic growth and reduced consumer purchasing power. These events resulted in limited liquidity for the Mexican government and local corporations. Crime rates and civil and political unrest in Mexico and around the world could also negatively impact the Mexican economy. See “Item 3. Key Information—Risk Factors—Developments in Other Countries Could Adversely Affect the Mexican Economy, the Market Value of our Securities and Our Results of Operations.”

Mexico has experienced periods of slow growth since 2001, primarily as a result of the downturn in the U.S. economy. The Mexican economy grew by 3.3% in 2007 and by 1.5% in 2008 but contracted by 6.1% in 2009. In 2010 and 2011, the Mexican economy grew by 5.5% and by 3.9%, respectively.

Developments and trends in the world economy affecting Mexico may have a material adverse effect on our business, financial condition and results of operations. The Mexican economy is tightly connected to the U.S. economy through international trade (approximately 79% of Mexican exports are directed to the United States), international remittances (billions of dollars from Mexican workers in the United States are the country’s second-largest source of foreign exchange), foreign direct investment (approximately 55% of Mexican foreign direct investment comes from U.S.-based investors), and financial markets (the U.S. and Mexican financial systems are highly integrated). As the U.S. economy contracts, U.S. citizens consume fewer Mexican imports, Mexican workers in the United States send less money to Mexico, U.S. firms with businesses in Mexico make fewer investments, U.S.-owned banks in Mexico make fewer loans, and the quality of U.S. financial assets held in Mexico deteriorates. Moreover, the collapse in confidence in the U.S. economy may spread to other economies closely connected to it, including Mexico’s. The result may be a potentially deep and protracted recession in Mexico. If the Mexican economy falls into a deep and protracted recession, or if inflation and interest rates increase, consumer purchasing power may decrease and, as a result, demand for our products may decrease. In addition, a recession could affect our operations to the extent we are unable to reduce our costs and expenses in response to falling demand.

Our Business Operations Could Be Affected by Government Policies in Mexico

The Mexican government has exerted, and continues to exert, significant influence over the Mexican economy. Mexican governmental actions concerning the economy could have a significant effect on Mexican private sector entities, as well as on market conditions, prices and returns on securities of Mexican issuers, including our securities. Governmental policies have negatively affected our sales of corn flour in the past and may continue to do so in the future.

Following the 2006 Congressional and Presidential elections in which Felipe Calderón Hinojosa, of the political party Partido Acción Nacional or PAN, was elected president, and the 2009 elections for the Mexican House of Representatives, the Mexican Congress has continued to be politically divided, as no political party in Mexico holds an absolute majority in the Senate or House of Representatives.

Furthermore, Mexican Presidential and Congressional elections are scheduled for July 1, 2012. The lack of a majority party in the legislature, the lack of alignment between the legislature and the President and any changes that result from the Presidential and Congressional elections could result in political uncertainty or deadlock and prevent the timely implementation of political and economic reforms, which in turn could have a material adverse effect on Mexican economic policy and on our business, financial conditions and results of operations.

The Mexican government supports the commercialization of corn for Mexican corn growers through the Agricultural Incentives and Services Agency (Apoyos y Servicios a la Comercialización Agropecuaria, or

Table of Contents

ASERCA). To the extent that this or other similar programs are cancelled by the Mexican government, we may be required to incur additional costs in purchasing corn for our operations, and therefore we may need to increase the prices of our products to reflect such additional costs. See “Item 4. Information on the Company—Regulation.”

In 2008, the Mexican government created a program to support the corn flour industry (Programa de Apoyo a la Industria de la Harina de Maíz or PROHARINA). This program aimed to mitigate the impact of the rise in international corn prices through price supports designed to aid the consumer and provided through the corn flour industry. However, the Mexican government cancelled the PROHARINA program in December 2009. As a result of the cancellation of this program by the Mexican government in December of 2009, we were required to increase the prices of our products to reflect such additional costs. There can be no assurance that we will maintain our eligibility for other programs similar to PROHARINA that may be implemented, or that the Mexican government will not institute price controls or other actions on the products we sell, which could adversely affect our financial condition and results of operations. See “Item 4. Information on the Company—Regulation—Corn Flour Consumer Aid Program.”

The level of environmental regulations and enforcement in Mexico has increased in recent years. We expect the trend toward greater environmental regulation and enforcement to continue and to be accelerated as a result of international agreements between Mexico and the United States. The promulgation of new environmental regulations or higher levels of enforcement may adversely affect us. See “Item 8. Financial Information—Legal Proceedings” and “Item 4. Information on the Company—Regulation.”

Devaluations of the Mexican Peso May Affect our Financial Performance

Because we have significant international operations generating revenue in different currencies and debt denominated in various currencies, we remain exposed to foreign exchange risks that could affect our ability to meet our obligations and result in foreign exchange losses. In 2010 we posted a net foreign exchange gain of Ps. 144 million and a gain of Ps. 41 million in 2011. Major devaluation or depreciation of the Mexican peso may limit our ability to transfer or to convert such currency into U.S. dollars for the purpose of making timely payments of interest and principal on our indebtedness. The Mexican government does not currently restrict, and for many years has not restricted, the right or ability of Mexican or foreign persons or entities to convert pesos into U.S. dollars or to transfer other currencies out of Mexico. The government could, however, institute restrictive exchange rate policies in the future.

High Levels of Inflation and High Interest Rates in Mexico Could Adversely Affect the Business Climate in Mexico and our Financial Condition and Results of Operations

Mexico has experienced high levels of inflation in the past. The annual rate of inflation, as measured by changes in the National Consumer Price Index was 3.57% for 2009, 4.40% for 2010, and 3.82% for 2011. From January through March 2012, the inflation rate was 0.97%. On April 18, 2012, the 28-day CETES rate was 4.33%. While a substantial part of our debt is dollar-denominated at this time, high interest rates in Mexico may adversely affect the business climate in Mexico generally and our financing costs in the future and thus our financial condition and results of operations.

Developments in Other Countries Could Adversely Affect the Mexican Economy, the Market Value of Our Securities and Our Results of Operations

The Mexican economy may be, to varying degrees, affected by economic and market conditions in other countries. Although economic conditions in other countries may differ significantly from economic conditions in Mexico, investors’ reactions to adverse developments in other countries may have an adverse effect on the market value of securities of Mexican issuers. In recent years, economic conditions in Mexico have become increasingly correlated to economic conditions in the United States. Accordingly, the slow recovery of the economy in the United States, and the uncertainty of the impact it could have on the general economic conditions in Mexico and the United States could have a significant adverse effect on our businesses and results of operations. See “Item 3. Key Information—Risk Factors—Our Results of Operations Could Be Affected by Economic Conditions in Mexico,” and “Item 3. Key Information—Risk Factors—Risks Related to the United States—Unfavorable General Economic Conditions in the United States Could Negatively Impact Our Financial Performance.” In addition, economic crises

Table of Contents

in the United States as well as in Asia, Russia, Brazil, Argentina and other emerging market countries have adversely affected the Mexican economy in the past.

Our financial performance may also be significantly affected by general economic, political and social conditions in the emerging markets where we operate, particularly Mexico, Venezuela and Asia. Many countries in Latin America, including Mexico and Venezuela, have suffered significant economic, political and social crises in the past, and these events may occur again in the future. See also “Item 3. Key Information —Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks.” Instability in Latin America has been caused by many different factors, including:

· Significant governmental influence over local economies;

· Substantial fluctuations in economic growth;

· High levels of inflation;

· Changes in currency values;

· Exchange controls or restrictions on expatriation of earnings;

· High domestic interest rates;

· Wage and price controls;

· Changes in governmental, economic or tax policies;

· Imposition of trade barriers;

· Unexpected changes in regulation; and

· Overall political, social and economic instability.

Adverse economic, political and social conditions in Latin America may create uncertainty regarding our operating environment, which could have a material adverse effect on our company.

We cannot assure you that the events in other emerging market countries, in the United States, Europe, or elsewhere will not adversely affect our business, financial condition and results of operations.

You May Be Unable to Enforce Judgments Against Us in Mexican Courts

We are a Mexican publicly held corporation (Sociedad Anónima Bursátil de Capital Variable). Most of our directors and executive officers are residents of Mexico, and a significant portion of the assets of our directors and executive officers, and a significant portion of our assets, are located in Mexico. You may experience difficulty in effecting service of process upon our company or our directors and executive officers in the United States, or, more generally, outside of Mexico and in enforcing civil judgments of non-Mexican courts in Mexico, including judgments predicated on civil liability under U.S. federal securities laws, against us, or our directors and executive officers. We have been advised by our General Counsel that there is doubt as to the enforceability of original actions in Mexican courts of liabilities predicated solely on the U.S. federal securities laws.

Risks Related to Venezuela

Our Subsidiaries in Venezuela are Currently Involved in Expropriation Proceedings

On May 12, 2010, the Bolivarian Republic of Venezuela (the “Republic”) published in the Official Gazette of Venezuela decree number 7,394 (the “Expropriation Decree”), which announced the forced acquisition of all goods, movables and real estate of the Company’s subsidiary in Venezuela, Molinos Nacionales, C.A. (“MONACA”). The Republic has expressed to GRUMA’s representatives that the Expropriation Decree extends to the Company’s subsidiary Derivados de Maíz Seleccionado, C.A. (“DEMASECA”).

Table of Contents

As stated in the Expropriation Decree and in accordance with the Venezuelan Expropriation Law (the “Expropriation Law”), the taking of legal ownership can occur either through an “Amicable Administrative Arrangement” or a “Judicial Order”. Each process requires certain steps as indicated in the Expropriation Law, neither of which has occurred. Therefore, as of this date, no formal transfer of title of the assets covered by the Expropriation Decree has taken place.

GRUMA’s interests in MONACA and DEMASECA are held through two Spanish companies Valores Mundiales, S.L. (“Valores Mundiales”) and Consorcio Andino, S.L. (“Consorcio Andino”). In 2010, Valores Mundiales and Consorcio Andino (collectively, the “Investors”) commenced negotiations with the Republic with the intention of reaching an amicable settlement. GRUMA has participated in these negotiations with a view to continuing its presence in Venezuela by potentially entering into a joint venture with the Venezuelan government that could also include compensation, or, absent a joint venture arrangement, GRUMA may receive compensation for the assets subject to expropriation, which the law requires be fair and reasonable. Those negotiations are ongoing.

The Republic and the Kingdom of Spain are parties to a Treaty on Reciprocal Promotion and Protection of Investments dated November 2, 1995 (the “Investment Treaty”), under which the Investors may settle investment disputes by means of arbitration before the International Centre for Settlement of Investment Disputes (“ICSID”). On November 9, 2011, the Investors, MONACA and DEMASECA provided formal notice to the Republic that an investment dispute had arisen as a consequence of the Expropriation Decree and related measures adopted by the Republic. In that notification, the Investors, MONACA and DEMASECA consented to submit the dispute to ICSID arbitration if the parties are unable to reach an amicable agreement.

The negotiations with the government are ongoing, and the Company cannot assure that those negotiations will be successful or will result in the Investors receiving adequate compensation, if any, for their investments subject to the Expropriation Decree. Additionally, the Company cannot predict the results of any arbitral proceeding, or the ramifications that costly and prolonged legal disputes could have on its results of operations or financial position, or the likelihood of collecting a successful arbitration award. As a result, the net impact of this matter on the Company’s consolidated financial results cannot be reasonably estimated. The Company and its subsidiaries reserve and intend to continue to reserve the right to seek full compensation for any and all expropriated assets and investments under applicable law, including investment treaties and customary international law.

The Venezuelan government has not taken physical control of the assets of MONACA or DEMASECA and has not taken control of their operations. In consequence, GRUMA can validly and legally assert that, as of this date, Valores Mundiales and Consorcio Andino have full legal ownership of MONACA’s and DEMASECA’s rights, interest, shares and assets, respectively, and full control of all operational or managerial decisions of MONACA and DEMASECA, which will not cease until GRUMA, through Valores Mundiales and Consorcio Andino, finally agrees with the Venezuelan government on the terms and conditions to transfer such assets in accordance with the legal and business schemes that are currently being negotiated with the government of Venezuela.

Pending resolution of this matter, based on preliminary valuation reports, no impairment charge on GRUMA’s net investment in MONACA and DEMASECA has been identified. The Company is also unable to estimate the value of any future impairment charge, if one will be taken, or to determine whether MONACA and DEMASECA will need to be accounted for as a discontinued operation. The historical value as of December 31, 2011 of the net investment in MONACA and DEMASECA was Ps.2,271,178 and Ps.165,969, respectively. The Company does not maintain insurance for the risk of expropriation of its investments. For more information, please see “Item 8. Financial Information—Legal Proceedings.”

Venezuela Presents Significant Economic Uncertainty and Political Risks

Our operations in Venezuela through MONACA and DEMASECA accounted for 16% of our net sales and 14% of our total assets as of December 31, 2011. In recent years, political and social instability has prevailed in Venezuela. This unrest presents a risk to our operations in Venezuela which cannot be controlled or accurately measured or estimated.

Table of Contents

In recent years, Venezuelan authorities have imposed foreign exchange and price controls that apply to products such as corn flour and wheat flour, which have limited our ability to increase our prices in order to compensate for higher costs in raw materials and to convert bolivars into other currencies and transfer funds out of Venezuela. Pursuant to the foreign exchange controls, the purchase and sale of foreign currency is required to be made at an official rate of exchange, as determined by the Venezuelan government (the “Official Rate”). In addition, U.S. dollars may be acquired in order to settle certain U.S. dollar-denominated debt incurred pursuant to imports and royalty agreements, and for payment of dividends, capital gains, interest payments or private debt only after proper submission and approval by the Foreign Exchange Administration Board (CADIVI). We continue to make appropriate submissions to CADIVI. We expect to be in a position to meet our foreign currency-denominated obligations; however, as long as the system of exchange controls remains in effect, there is no assurance that we will be able to secure the required approvals from CADIVI to have sufficient foreign currency for this purpose.

In addition, as described in Note 5 to our consolidated financial statements, the Venezuelan government devalued its currency and established a two tier exchange structure on January 11, 2010. On December 30, 2010, the Venezuelan government issued Exchange Agreement No. 14, which established a single exchange rate of 4.30 bolivars per U.S. dollar effective January 1, 2011. We cannot guarantee that the Venezuelan government will not impose additional price controls, or further devalue its currency or make similar decisions in the future.

Additionally, our Venezuelan operations could be adversely affected since, among other reasons: (i) 100% of the sales of our operations in Venezuela are denominated in bolivars; (ii) Gruma Venezuela produces products that are subject to price controls; (iii) part of Gruma Venezuela’s sales depend on centralized government procurement policies for its social welfare programs; (iv) we may have difficulties repatriating dividends from Gruma Venezuela, as well as importing some of its requirements for raw materials as a result of the exchange controls; and (v) Gruma Venezuela may face increasing costs in some of our raw materials due to the implementation of import tariffs.

Risks Related to the United States

Unfavorable General Economic Conditions in the United States Could Negatively Impact Our Financial Performance

Net sales in the U.S. constituted 37% of our total sales in 2011. Unfavorable general economic conditions, such as the current economic slowdown in the United States could negatively affect the affordability of and consumer demand for some of our products. Under difficult economic conditions, consumers may seek to forego purchases of our products or, if available, shift to lower-priced products offered by other companies. Softer consumer demand for our products in the United States or in other major markets could reduce our profitability and could negatively affect our financial performance.

Additionally, as the retail grocery trade continues to consolidate and our retail customers grow larger, they could demand lower pricing and increased promotional programs. Also, our dependence on sales to certain retail customers could increase. There is a risk that we will not be able to maintain our U.S. profit margin in this environment.

Demand for our products in Mexico may also be disproportionately affected by the performance of the United States economy. See also “Item 3. Key Information—Risk Factors—Risks Related to Mexico—Our Results of Operations Could Be Affected by Economic Conditions in Mexico.”

Risks Related to Our Controlling Shareholders and Capital Structure

Holders of ADSs May Not Be Able to Vote at our Shareholders’ Meetings

Our shares are traded on the New York Stock Exchange in the form of ADSs. There can be no assurance that holders of our shares through ADSs will receive notices of shareholder meetings from our ADS depositary with sufficient time to enable such holders to return voting instructions to our ADS depositary in a timely manner. Under certain circumstances, a person designated by us may receive a proxy to vote the shares underlying the ADSs at our discretion at a shareholder meeting.

Table of Contents

Holders of ADSs Are Not Entitled to Attend Shareholder Meetings, and They May Only Vote Through the Depositary

Under Mexican law, a shareholder is required to deposit its shares with a Mexican custodian in order to attend a shareholders’ meeting. A holder of ADSs will not be able to meet this requirement, and accordingly is not entitled to attend shareholders’ meetings. A holder of ADSs is entitled to instruct the depositary as to how to vote the shares represented by ADSs, in accordance with procedures provided for in the deposit agreement, but a holder of ADSs will not be able to vote its shares directly at a shareholders’ meeting or to appoint a proxy to do so. In addition, such voting instructions may be limited to matters enumerated in the agenda contained in the notice to shareholders and with respect to which information is available prior to the shareholders’ meeting.

Holders of ADSs May Not Be Able to Participate in Any Future Preemptive Rights Offering and as a Result May Be Subject to a Dilution of Equity Interest

Under Mexican law, if we issue new shares for cash as a part of a capital increase, other than in connection with a public offering of newly issued shares or treasury stock, we must generally grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Rights to purchase shares in these circumstances are known as preemptive rights. We may not legally be permitted to allow holders of our shares through ADSs in the United States to exercise any preemptive rights in any future capital increases unless (i) we file a registration statement with the U.S. Securities and Exchange Commission, or SEC, with respect to that future issuance of shares or (ii) the offering qualifies for an exemption from the registration requirements of the Securities Act. At the time of any future capital increase, we will evaluate the costs and potential liabilities associated with filing a registration statement with the SEC, as well as the benefits of preemptive rights to holders of our shares through ADSs in the United States and any other factors that we consider important in determining whether to file a registration statement.

We are under no obligation to, and there can be no assurance that we will, file a registration statement with the SEC to allow holders of our shares through ADSs in the United States to participate in a preemptive rights offering. In addition, under current Mexican law, sales by the ADS depositary of preemptive rights and distribution of the proceeds from such sales to the holders of our shares through ADSs is not possible. As a result, the equity interest of holders of our shares through ADSs would be diluted proportionately and such holders may not receive any economic compensation. See “Item 10. Additional Information—Bylaws—Preemptive Rights.”

The Protections Afforded to Minority Shareholders in Mexico Are Different From Those in the United States

Under Mexican law, the protections afforded to minority shareholders are different from those in the United States. In particular, the law concerning fiduciary duties of directors, executive officers and controlling shareholders has been recently developed and there is no legal precedent to predict the outcome of any such action. Additionally, shareholders’ class actions are not available under Mexican law and there are different procedural requirements for bringing shareholder derivative lawsuits. As a result, in practice it may be more difficult for our minority shareholders to enforce their rights against us, our directors, our executive officers or our controlling shareholders than it would be for shareholders of a U.S. company.

We Have Significant Transactions With Affiliates That Could Create Potential Conflicts of Interest

We purchase some of our raw materials from our shareholder and associate Archer-Daniels-Midland Company (“Archer-Daniels-Midland,” or “ADM”) at market rates and terms. During 2009, 2010 and 2011, we purchased U.S.$159 million, U.S.$97 million and U.S.$ 147 million of raw materials, respectively, from Archer-Daniels-Midland. Transactions with affiliates may create the potential for conflicts of interest. See “Item 7. Major Shareholders and Related Party Transactions—Related Party Transactions.”

Exchange Rate Fluctuations May Affect the Value of Our Shares

Fluctuations in the exchange rate between the peso and the U.S. dollar will affect the U.S. dollar value of an investment in our shares and of dividend and other distribution payments on those shares. See “Item 3. Key Information—Selected Financial Data—Exchange Rate Information” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Rate Risk.”

Table of Contents

Mexican Law Restricts the Ability of Non-Mexican Shareholders to Invoke the Protection of Their Governments With Respect to Their Rights as Shareholders

As required by Mexican law, our bylaws provide that non-Mexican shareholders shall be treated as Mexican shareholders in respect to their ownership interests in us, and shall be deemed to have agreed not to invoke the protection of their governments under any circumstance, under penalty of forfeit, in favor of the Mexican government, any participation or interest held in us.

Under this provision, a non-Mexican shareholder is deemed to have agreed not to invoke the protection of its own government by requesting the initiation of a diplomatic claim against the Mexican government with respect to its shareholder’s rights. However, this provision shall not deem non-Mexican shareholders to have waived any other rights they may have, including any rights under the U.S. securities laws, with respect to their investment in us.

Our Controlling Shareholder Exerts Substantial Control Over Our Company

As of April 26, 2012, Roberto González Barrera and his family controlled approximately 54.41% of our outstanding shares. See “Item 10. Additional Information—Bylaws—Changes in Capital stock.” Consequently, Mr. González Barrera and his family have the power to elect the majority of our directors and to determine the outcome of most actions requiring approval of our stockholders, including the declaration of dividends. The interests of Mr. González Barrera and his family may differ from those of our other shareholders. Mr. González Barrera and his family’s holdings are described under “Item 7. Major Shareholders and Related Party Transactions—Major Shareholders.”

Mr. González Barrera has pledged and may be required to further pledge part of his shares in us to secure some of his borrowings. If there is a default and the lenders enforce their rights against any or all of these shares, Mr. González Barrera and his family could lose control over us and a change of control could result. In addition, a change of control could trigger a default in some of our credit agreements and have a material adverse effect upon our business, financial condition, results of operations and prospects. For more information about this pledge, see “Item 7. Major Shareholders and Related Party Transactions.”

Archer-Daniels-Midland, Our Strategic Partner, Has Influence Over Some Corporate Decisions; Our Relationship With Archer-Daniels-Midland Could Become Adverse and Hurt Our Performance

Archer-Daniels-Midland owns, directly or indirectly, approximately 23.22% of our outstanding shares. However, a portion of such interest is held through a Mexican corporation jointly owned with Mr. González Barrera, who has the sole authority to determine how those shares are voted. Thus, Archer-Daniels-Midland only has the right to vote 18.87% of our outstanding shares. In addition, Archer-Daniels-Midland has the right to nominate two of the 17 members of our board of directors and their corresponding alternates. As a result, Archer-Daniels-Midland may influence the outcome of actions requiring the approval of our shareholders or our board of directors. Mr. González Barrera and Archer-Daniels-Midland have also granted each other rights of first refusal in respect of their shares in our company, subject to specified conditions.

Additionally, subject to certain requirements under the Ley del Mercado de Valores, or Mexican Securities Law, Archer-Daniels-Midland may also: (i) request the Chairman of the board or the Chairman of the audit and corporate governance committees to convene a general shareholders’ meeting; (ii) initiate civil lawsuits against members of the board of directors, members of the audit and corporate governance committees, and the chief executive officer for breach of duty; (iii) judicially oppose resolutions adopted at shareholder meetings; and (iv) request the deferral of any vote regarding an issue about which it does not believe it has been sufficiently informed.

Archer-Daniels-Midland owns, directly or indirectly, a 40% interest in our subsidiary, Molinera de México, S.A. de C.V., or Molinera de México, and a 20% interest in our subsidiary, Azteca Milling, L.P., or Azteca Milling. Additionally, Archer-Daniels-Midland owns a 3% indirect interest in Molinos Nacionales, C.A., or MONACA and a 3% indirect interest in Derivados de Maíz Seleccionado, C.A. or DEMASECA. For more information, please see “Item 4. Information on the Company—Business Overview—Gruma Venezuela.” These subsidiaries account for 34% of our revenue. Although we own a majority ownership interest in each of Azteca Milling and Molinera de

Table of Contents

México, we are required to obtain the consent and cooperation of Archer-Daniels-Midland with respect to certain matters in order to increase our capital expenditures and to implement and expand upon our business strategies in respect of such subsidiaries.

We cannot assure you that our relationships with Archer-Daniels-Midland will be harmonious and successful. Disagreements with Archer-Daniels-Midland could affect the execution of our strategy and, as a result, we may be placed at a competitive disadvantage.

Our Antitakeover Protections May Deter Potential Acquirors

Certain provisions of our bylaws could make it substantially more difficult for a third party to acquire control of us. These provisions in our bylaws may discourage certain types of transactions involving the acquisition of our securities. These provisions could discourage transactions in which our shareholders might otherwise receive a premium for their shares over the then current market price. Holders of our securities who acquire shares in violation of these provisions will not be able to vote, or receive dividends, distributions or other rights in respect of, these securities and would be obligated to pay us a penalty. For a description of these provisions, see “Item 10. Additional Information—Bylaws—Other Provisions—Antitakeover Protections.”

We Are a Holding Company and Depend Upon Dividends and Other Funds From Subsidiaries to Service Our Debt

We are a holding company with no significant assets other than the shares of our subsidiaries. As a result, our ability to meet our debt service obligations depends primarily on the dividends received from our subsidiaries. Under Mexican law, companies may only pay dividends:

· from earnings included in year-end financial statements that are approved by shareholders at a duly convened meeting;

· after any existing losses applicable to prior years have been made up or absorbed into stockholders’ equity;

· after at least 5% of net profits for the relevant fiscal year have been allocated to a legal reserve until the amount of the reserve equals 20% of a company’s paid-in capital stock; and

· after shareholders have approved the payment of the relevant dividends at a duly convened meeting.

In addition, Gruma Corporation is subject to covenants in some of its debt agreements which require the maintenance of specified financial ratios and balances and, upon an event of default, prohibit the payment of cash dividends. For additional information concerning these restrictions on inter-company transfers, see “Item 3. Key Information—Selected Financial Data—Dividends” and “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources.”

We own approximately 83% of the outstanding shares of Grupo Industrial Maseca, S.A.B. de C.V., or GIMSA, 73% of MONACA, 57% of DEMASECA, 80% of Azteca Milling, L.P. (through Gruma Corporation) and 60% of Molinera de México, S.A. de C.V. Accordingly, we are entitled to receive only our pro rata share of any of these subsidiaries’ dividends.

Furthermore, our ability to repatriate dividends from Gruma Venezuela may be adversely affected by exchange controls and other recent events. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks.”

Table of Contents

ITEM 4 Information on the Company.

HISTORY AND DEVELOPMENT

Gruma, S.A.B. de C.V. is a publicly held corporation (Sociedad Anónima Bursátil de Capital Variable) registered in Monterrey, Mexico under the Ley General de Sociedades Mercantiles, or Mexican Corporations Law, on December 24, 1971, with a corporate life of 99 years. Our full legal name is Gruma, S.A.B. de C.V., but we are also known by our commercial names: GRUMA and MASECA. The address of our principal executive office is Calzada del Valle, 407 Ote., Colonia del Valle, San Pedro Garza García, Nuevo León, 66220 México and our telephone number is (52) 81 8399-3300. Our legal domicile is Monterrey, Nuevo León, México.

We were founded in 1949, when Roberto González Barrera, the Chairman of our board of directors, started producing and selling corn flour in Northeastern Mexico as an alternative raw material for producing tortillas. Prior to our founding, all corn tortillas were made using a rudimentary process. We believe that the preparation of tortillas using our dry corn flour method presents significant advantages, including greater efficiency and higher quality, which makes tortillas consistent and readily available. The corn flour process has been a significant impetus for growth, resulting in expanding corn flour and tortilla production and sales throughout Mexico, the United States, Central America, Venezuela, Europe, Asia and Oceania. In addition, we have diversified our product mix to include wheat flour in Mexico and Venezuela.

One of our most important competitive advantages is our proprietary state-of-the art technology for the manufacturing of corn flour and tortillas and other related products. We have been developing and advancing our own technology since the founding of our company. Throughout the years we have been able to achieve vertical integration which is an important part of our competitive advantage.

The following are some significant historical highlights:

· In 1949, Roberto González Barrera and a group of predecessor Mexican corporations founded GIMSA, which is engaged principally in the production, distribution and sale of corn flour in Mexico.

· In 1972, we entered the Central American market with our first operation in Costa Rica. Today, we have operations in Costa Rica, Guatemala, Honduras, El Salvador and Nicaragua, as well as Ecuador, which we include as part of our Central American operations.

· In 1977, we entered the U.S. market. Our operations have grown to include products such as tortillas, corn flour, and other tortilla related products.

· From 1989 to 1995, we significantly increased our installed manufacturing capacity in the United States and in Mexico.

· In 1993, we entered the Venezuelan corn flour market through an investment in DEMASECA, a Venezuelan corporation producing corn flour.

· In 1994, we began our packaged tortilla operations in Mexico as part of our strategy to broaden our product lines in Mexico, achieve vertical integration of our corn flour operations and capitalize upon our experience in producing and distributing packaged tortillas in the United States. We were focused only on the northern part of Mexico. In addition, in 1994 GRUMA became a publicly listed company in both Mexico and the U.S.

· In 1996, we strengthened our position in the U.S. corn flour market through an association with Archer-Daniels-Midland, which currently owns approximately 23.22% of our outstanding shares. Through this association we combined our existing U.S. corn flour operations and strengthened our position in the U.S. corn flour market. This association also allowed us to enter the Mexican wheat flour market by acquiring a 60% ownership interest in Archer-Daniels-Midland’s Mexican wheat flour operations.

Table of Contents

· From 1997 to 2000, we initiated a significant plant expansion program. During this period, we acquired or built wheat flour plants, corn flour plants, bread plants and/or tortilla plants in the United States, Mexico, Central America, Venezuela (acquisition of MONACA) and Europe.

· From 2001 to 2003, as a result of a comprehensive review of our business portfolio and our focus on our core businesses, we sold our bread business, under the Breddy brand.

· In 2004, we acquired Ovis Boske, a tortilla company based in the Netherlands, Nuova De Franceschi & Figli, S.P.A., or Nuova De Franceschi & Figli, a corn flour company based in Italy and a small tortilla plant in Las Vegas, Nevada. We continued to expand capacity and upgrade several of our U.S. operations, the most relevant of which was the expansion of a corn mill in Indiana. This expansion was completed during the second half of 2005.

· In 2005, we began the construction of a tortilla plant in Pennsylvania, which has been operational since July 2005. We continued to expand capacity at existing plants. In addition, Gruma Corporation acquired part of the manufacturing assets of the Mexican food division of Cenex Harvest States or CHS, which consisted of three tortilla plants located in New Brighton, Minnesota; Forth Worth, Texas; and Phoenix, Arizona. Gruma Corporation also acquired a small tortilla plant near San Francisco, California. In August, GIMSA acquired 100% of the capital stock of Agroindustrias Integradas del Norte and Agroinsa de México (together, and with their subsidiaries, Agroinsa), a group of companies based in Monterrey, Mexico engaged primarily in the production of corn flour and, to a lesser extent, wheat flour and other products.

· In 2006, during the first quarter, we concluded the acquisitions of two small tortilla plants in Australia (Rositas Investments and Oz-Mex Foods), which strengthened our presence in the Asian and Oceania markets. In September 2006, we opened our first tortilla plant in Asia, located in Shanghai, China. We believe the plant has allowed us to strengthen our presence in the Asian markets by improving our service to customers and consumers, allowing us to introduce new products to the Asian market and offer fresher products. In October 2006, we concluded the acquisition of Pride Valley Foods, a company based in Newcastle, England, that produces tortillas, pita bread, naan, and chapatti. We believe the acquisition will strengthen our presence in the European market and will provide an opportunity to expand our product portfolio to products similar to tortillas.

· In 2007, we entered into a contract to sell a 40% stake in MONACA to our former partner in DEMASECA. In conjunction with this transaction, we also agreed to purchase an additional 10% ownership interest in DEMASECA from our former partner. We also purchased the remaining 49% ownership interest in Nuova De Franceschi & Figli, a corn flour company based in Italy, in which we previously held a 51% ownership interest. In addition, we made major investments in capacity expansions and upgrades in Gruma Corporation, started the construction of a new tortilla plant in Epping, Australia for Gruma Asia and Oceania, and expanded two of GIMSA’s plants.

· From 2008 to 2010, we made significant capital expenditures for the construction of a tortilla plant in southern California, capacity expansions, general manufacturing and technology upgrades to several of our existing facilities, the construction of a tortilla plant in Epping, Australia, the construction of a wheat mill in Venezuela, and the acquisition of Altera I and Altera II, the leading producer of corn grits in Ukraine.

· In 2011, we acquired Semolina, the Turkish market leading producer of corn grits, two tortilla plants in the U.S. located in Omaha, Nebraska and Albuquerque, New Mexico, and Solntse Mexico, the leading tortilla manufacturer in Russia.

Table of Contents

ORGANIZATIONAL STRUCTURE

We are a holding company and conduct our operations through subsidiaries. The table below sets forth our principal subsidiaries as of December 31, 2011.

Name of Company	Principal Markets	Jurisdiction of Incorporation	Percentage Owned(1)	Products/ Services

Mexican Operations

Grupo Industrial Maseca, S.A.B. de C.V. (“GIMSA”)	Mexico	Mexico	83%	Corn flour, Wheat flour, Other

Molinera de México, S.A. de C.V. (“Molinera de México”) (2)	Mexico	Mexico	60%	Wheat flour, Other

U.S. and Europe Operations

Gruma Corporation	United States and Europe	Nevada	100%	Packaged tortillas, Other tortilla related products, Corn flour, Flatbreads, Grits, Other

Azteca Milling, LP.(3)	United States	Texas	80%	Corn flour

Central American Operations(4)

Gruma de Guatemala, S.A., Derivados de Maíz Alimenticio, S.A., Industrializadora y Comercializadora de Palmito, S.A., Derivados de Maíz de Guatemala, S.A., Tortimasa, S.A., Derivados de Maíz de El Salvador, S.A., and Derivados de Maíz de Honduras, S.A. (“Gruma Centroamérica”)	Costa Rica, Honduras, Guatemala, El Salvador, Nicaragua, Ecuador	Costa Rica, Honduras, Guatemala, El Salvador, Nicaragua, Ecuador	100%	Corn flour, Packaged tortillas, Snacks, Hearts of palm, Rice

Venezuelan Operations(5)

Molinos Nacionales, C.A. (“MONACA”) (6)	Venezuela	Venezuela	73%	Corn flour, Wheat flour, Other products

Derivados de Maíz Seleccionado, C.A. (“DEMASECA”) (6)	Venezuela	Venezuela	57%	Corn flour

Other Subsidiaries

Mission Foods (Shanghai) Co. Ltd., Gruma Oceania Pty. Ltd., and Mission Foods (Malaysia) Sdn. Bhd. (“Gruma Asia and Oceania”)	Asia and Oceania	China, Malaysia and Australia	100%	Packaged tortillas, Chips, Other products

Productos y Distribuidora Azteca, S.A. de C.V. (“PRODISA”)	Mexico	Mexico	100%	Packaged tortillas, Other related products

Investigación de Tecnología Avanzada, S.A. de C.V. (“INTASA”)	Mexico	Mexico	100%	Construction, Technology and Equipment operations

(1) Percentage of equity capital owned by us directly or indirectly through subsidiaries.

(2) Archer-Daniels-Midland indirectly holds the remaining 40% interest.

(3) Archer-Daniels-Midland indirectly holds the remaining 20% interest.

(4) As part of a corporate restructuring of our Central American operations, on January 1, 2009, all subsidiaries of Gruma Centroamérica, LLC were transferred to Gruma International Foods, S.L.

Table of Contents

(5) Together these subsidiaries are referred to as “Gruma Venezuela.”(6) Archer-Daniels-Midland holds a 3% indirect interest in both companies and RFB Holdings de Mexico, S.A. de C.V. holds a 24.14% indirect interest in MONACA and 40% in DEMASECA. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—— Our Subsidiaries in Venezuela are Currently Involved in Expropriation Proceedings “—Risks Related to Our Controlling Shareholders and Capital Structure—Archer-Daniels-Midland, Our Strategic Partner, Has Influence Over Some Corporate Decisions; Our Relationship With Archer-Daniels-Midland Could Become Adverse and Hurt Our Performance,” and “Item 10. Additional Information—Material Contracts—Archer-Daniels-Midland.”

Our subsidiaries accounted for the following percentages and amount of our net sales in millions of pesos for the years ended December 31, 2010 and 2011.

	Year ended December 31,
	2010				2011
	In Millions of Pesos		Percentage of Net Sales		In Millions of Pesos		Percentage of Net Sales
Gruma Corporation	Ps.	21,451	46	%	Ps.	23,923	42	%
GIMSA		11,853	26			15,386	27
Gruma Venezuela		5,382	12			9,157	16
Molinera de México		3,757	8			4,633	8
Gruma Centroamérica		2,765	6			3,180	6
Others and eliminations		1,024	2			1,366	1
Total	Ps.	46,232	100		Ps.	57,645	100

Association with Archer-Daniels-Midland

We entered into an association with Archer-Daniels-Midland in September 1996. Archer-Daniels-Midland is one of the world’s largest agricultural processors and traders. Through our partnership we have improved our position in the U.S. corn flour market and gained an immediate presence in the Mexican wheat flour market.

As a result of this association, we and Archer-Daniels-Midland combined our U.S. corn flour operations to form Azteca Milling, L.P., a limited partnership in which we hold indirectly, 80% and Archer-Daniels-Midland holds indirectly, 20%. We and Archer-Daniels-Midland agreed to produce and distribute corn flour in the United States through Azteca Milling. In addition, we acquired 60% of the capital stock of Archer-Daniels-Midland’s wholly-owned Mexican wheat milling operations, Molinera de México, S.A. de C.V. Archer-Daniels-Midland retained the remaining 40%. We and Archer-Daniels-Midland agreed to produce and distribute wheat flour in Mexico through Molinera de México. As part of this agreement, we also received U.S.$258.0 million in cash and gained exclusivity rights from Archer-Daniels-Midland in specified corn flour and wheat flour markets. In return, Archer-Daniels-Midland received 74,696,314 of our then newly issued shares, which represented at that time approximately 22% of our total outstanding shares and the right to designate two of the 17 members of our board of directors and their corresponding alternates. Currently, Archer-Daniels-Midland owns, directly and indirectly, approximately 23.22% of our outstanding shares and, indirectly, a combined 3% stake in MONACA and DEMASECA. See “Item 3. Key Information—Risk Factors—Risks Related to Our Controlling Shareholders and Capital Structure—Archer-Daniels-Midland, Our Strategic Partner, Has Influence Over Some Corporate Decisions; Our Relationship With Archer-Daniels-Midland Could Become Adverse and Hurt Our Performance” and “Item 10. Additional Information—Material Contracts—Archer-Daniels-Midland.”

Capital Expenditures

Our capital expenditure program continues to be primarily focused on our core businesses and markets. Capital expenditures for 2010 and 2011 were U.S.$89 million and U.S.$191 million, respectively. During 2010, capital expenditures were mostly applied to general manufacturing and technology upgrades in Gruma Corporation and GIMSA, and the acquisition of the leading producer of corn grits in Ukraine. During 2011, capital expenditures were primarily applied to production capacity expansions, manufacturing and technology upgrades, particularly in the U.S., Mexico and Europe. We also made certain acquisitions throughout the year, including the purchase of the

Table of Contents

leading producer of corn grits in Turkey, two tortilla plants in the U.S. and the leading tortilla manufacturer in Russia.

We have budgeted approximately U.S.$200 million for capital expenditures in 2012, which we intend to use mainly for production capacity expansions, general manufacturing and technology upgrades, especially in Gruma Corporation, GIMSA and Molinera de México. We anticipate financing these expenditures throughout the year through internally generated funds and debt. This capital expenditures budget does not include any potential acquisition.

The following table sets forth the aggregate amount of our capital expenditures during the periods indicated.

	Year ended December 31
	2010		2011
	(in millions of U.S. dollars)(1)
Gruma Corporation	$	50.0	$	126.9
GIMSA	13.8		19.2
Gruma Venezuela	6.9		3.5
Molinera de México	4.5		5.7
Gruma Centroamérica	3.4		7.1
Others and eliminations	10.0		28.8
Total consolidated	$	88.6	$	191.2

(1) Amounts in respect of some of the capital expenditures were paid for in currencies other than the U.S. dollar. As a result, U.S. dollar amounts presented in the table above may not be comparable to data contained elsewhere in this Annual Report, which is expressed on the basis of the peso/dollar exchange rate as of December 31, 2011, unless otherwise specified.

For more information on capital expenditures for each subsidiary, please see the sections entitled “Operation and Capital Expenditures” under the relevant sections below.

BUSINESS OVERVIEW

We believe we are one of the largest corn flour and tortilla producers and distributors in the world. We also believe we are one of the leading producers and distributors of corn flour and tortillas in the United States, one of the leading producers of corn flour and wheat flour in Mexico, and one of the leading producers of corn flour and wheat flour in Venezuela. We believe that we are also one of the largest producers of corn flour and tortillas in Central America, and one of the largest producers of tortilla and other flatbreads, including pita, naan, chapatti, pizza bases and piadina in Europe, Asia and Oceania. Our focus has been and continues to be the efficient and profitable expansion of our core business—corn flour, tortilla, wheat flour and flatbreads. We pioneered the dry corn flour method of tortilla production, which offers several advantages over the centuries-old traditional wet corn dough method. These advantages include higher production yields, reduced production costs, more uniform quality and longer shelf life. The dry corn flour method of production offers significant opportunities for growth. Using our technology and know-how, we expect to encourage tortilla and tortilla chip producers in the United States, Mexico, Central America, and elsewhere to convert to the dry corn flour method of tortilla and tortilla chip production. Additionally, we expect to increase the presence of our other core businesses, including packaged tortillas in the United States, Mexico, Central America, Europe, Asia and Oceania, and wheat flour in Mexico and Venezuela.

Table of Contents

The following table sets forth our revenues by geographic market for the years ended December 31, 2010 and 2011.

	Year ended December 31,
	2010		2011
	(in millions of pesos)
United States and Europe	Ps.	21,445	Ps.	23,901
Mexico	15,539		19,870
Venezuela	5,382		9,157
Central America	2,765		3,180
Asia and Oceania	1,101		1,537
Total	Ps.	46,232	Ps.	57,645

Strategy

Our strategy for growth is to focus on our core business—corn flour, tortilla, and wheat flour production, as well as to expand our product portfolio towards the flatbreads category in general —and to capitalize upon our leading positions in the corn flour and tortilla industries. We have taken advantage of the increasing popularity of Mexican food and, more importantly, tortillas, in the U.S., European and Asia and Oceania markets. We have also taken advantage of the adoption of tortillas by the consumers of several regions of the world for the preparation of different recipes other than Mexican food, and from the flexibility of our wraps and flatbreads category and new product concepts we have launched such as low-fat, carb-balance and multigrain. Our strategy includes the following key elements:

Expand in the Growing Retail and Food Service Tortilla Markets Where We Currently Have a Presence and to New Regions in the United States: We believe that the size and growth of the U.S. retail and food service tortilla markets offer significant opportunities for expansion.

Enter and Expand in the Tortilla and Flatbread Markets in Other Regions of the World: We believe that markets in other continents such as Europe, Asia and Oceania offer us significant opportunities. We believe our current operations in Europe will enable us to better serve markets in Europe and in the Middle East through stronger vertical integration, improvements in logistical efficiencies, and enhanced knowledge of our local markets. Our presence in Asia and Oceania will enable us to offer our customers fresh products and respond more quickly to their needs. We will continue to evaluate ways to profitably expand into these rapidly growing markets.

Maintain Gruma Corporation’s MISSION® and GUERRERO® Tortilla Brands as the First and Second National Brands in the United States: We intend to achieve this by increasing our efforts at building brand name recognition, and by further expanding and utilizing Gruma Corporation’s distribution network, first in Gruma Corporation’s existing markets, where we believe there is potential for further growth, and second, in regions where Gruma Corporation currently does not have a significant presence but where we believe strong demand for tortillas already exists.

Encourage Transition in Certain Markets from the Traditional Cooked-Corn Method to the Dry Corn Flour Method as Well as New Uses for Corn Flour, and Continue to Establish MASECA as a Leading Brand: We pioneered the dry corn flour method of tortilla production, which offers several advantages over the centuries-old traditional wet corn dough method. We continue to view the transition from the traditional method to the dry corn flour method of making tortillas and tortilla chips as the primary opportunity for increased corn flour sales. We will continue to encourage this transition through improving customer service, advertising and promoting principally our MASECA® brand corn flour, as well as leveraging off of our manufacturing capacity and distribution networks. We see an opportunity for further potential growth in the fact that the dry corn flour method is more environmentally friendly than the traditional method. We are also working to expand the use of corn flour in the manufacture of different types of products besides tortillas and tortilla chips.

Expand the corn milling business in Europe through the production and supply of corn grits and other by-products of corn in Europe and the Middle East: The company’s European milling division’s priority is to consolidate itself as a market leader in corn milling and related products for the snack, brewing and breakfast cereals

Table of Contents

industries, where we believe there is significant potential in these regions. We aim to expand our production capacity through a series of strategic acquisitions located near the major consumption centers, and to invest in technology in order to consolidate our competitive position in the market place.

Continually Improve Service and Quality of Our Products to Customers and Consumers: We continue to develop customer relationships by ensuring that our customer-service and sales representatives develop an intimate knowledge of their clients’ businesses and by working with clients to help them improve their products, services, and sales to their consumers. We continuously work to improve service and the quality of our products to consumers, raise consumer awareness of our products, and stay informed of our consumers’ preferences.

Leverage Our Existing Available Production Capacity and Focus on Optimizing Operational Matters: Our investment program during recent years in plants and operations has resulted in sufficient existing capacity to meet current and foreseeable demand. We believe that we have the capacity to operate at optimal levels and that our economies of scale and existing operating synergies permit us to remain competitive without additional material capital expenditures.

U.S. and European Operations

Overview

We conduct our United States and European operations principally through our subsidiary, Gruma Corporation, which manufactures and distributes corn flour, packaged tortillas, corn chips and related products. Gruma Corporation commenced operations in the United States in 1977, initially developing a presence in certain major tortilla consumption markets by acquiring small tortilla manufacturers and converting their production processes from the traditional “wet corn dough” method to our dry corn flour method. Eventually, we began to build our own state-of-the-art tortilla plants in certain major tortilla consumption markets. We have vertically integrated our operations by (i) building corn flour and tortilla manufacturing facilities; (ii) establishing corn purchasing operations; (iii) launching marketing and advertising campaigns to develop brand name recognition; (iv) expanding distribution networks for corn flour and tortilla products; and (v) using our technology to design and build proprietary corn flour, tortilla and tortilla chip manufacturing machinery.

In September 1996, we combined our U.S. corn flour milling operations with Archer-Daniels-Midland’s corn flour milling operations into a newly formed limited partnership, known as Azteca Milling, L.P., in which Gruma Corporation holds an 80% interest. See “Item 10. Additional Information—Material Contracts.”

During 2000, Gruma Corporation opened its first European tortilla and corn chips plant in Coventry, England, initiating our entry into the European market. During 2004, Gruma Corporation concluded two further acquisitions in Europe; a tortilla plant in Holland and a 51% ownership of a corn flour plant in Italy in an effort to strengthen our presence in the region.

In 2006, Gruma Corporation acquired a flatbread plant in the north of England, which enabled us to expand our product portfolio with new types of flatbreads; primarily naan and pita. In addition, Gruma Corporation acquired the remaining 49% ownership interest in Nuova De Franceschi & Figli, a corn flour company based in Italy, in which we previously held a 51% ownership interest. In March 2010, we acquired 100% of the share capital of Altera I and Altera II, the leading producer of corn grits in Ukraine, for U.S.$9 million. We believe this acquisition in Eastern Europe will enable GRUMA to continue its growth strategy in emerging markets in that region.

During 2011, we acquired two tortilla plants in the United States, Albuquerque Tortilla Company and Casa de Oro Foods, for U.S.$9 million and U.S.$23 million, respectively. In July 2011, we acquired Solntse Mexico, the leading tortilla and corn chips manufacturer in Russia, for U.S.$9 million. We believe this acquisition consolidates the presence of GRUMA in Russia and improves our ability to serve countries in Eastern Europe by providing access to lower costs and a closer location to major customers. In November 2011, we acquired Semolina, the Turkish market leading producer of corn grits for U.S.$17 million. The acquisition of Semolina represents a significant milestone for GRUMA’s growth strategy in Eastern Europe and the Middle East. Our European milling division’s priority is to consolidate itself as a market leader in corn milling and related products for the snack, brewing and breakfast cereals industries.

Table of Contents

Gruma Corporation

Gruma Corporation operates primarily through its Mission Foods division, which produces tortillas and related products, and Azteca Milling, L.P., a limited partnership between Gruma Corporation (80%) and Archer-Daniels-Midland (20%) which produces corn flour. We believe Gruma Corporation is one of the leading manufacturers and distributors of packaged tortillas and related products throughout the United States and Europe through its Mission Foods division. We believe Gruma Corporation is also one of the leading producers of corn flour in the United States through its Azteca Milling division.

Principal Products. Mission Foods manufactures and distributes packaged corn and wheat tortillas and related products (which include tortilla chips) under the MISSION® and GUERRERO® brand names in the United States, as well as other minor regional brands. By continuing to build MISSION® into a strong national brand for the general consumer market and GUERRERO® into a strong Hispanic consumer focused brand, Mission Foods expects to increase market penetration, brand awareness and profitability. Azteca Milling manufactures and distributes corn flour in the United States under the MASECA® brand.

Sales and Marketing. Mission Foods serves both retail and food service customers. In the U.S., retail customers represent approximately 77% of our business, including supermarkets, mass merchandisers and smaller independent stores. Our food service customers include major chain restaurants, food service distributors, schools, hospitals and the military. In our European business, approximately half of our tortilla production is allocated to retail sales, and the other half to the food service segment, including quick-service restaurants and food processors.

For the U.S. tortilla market, Mission Foods’ current marketing strategy is to increase market penetration by increasing consumer awareness of tortilla products in general, to expand into new regions and to focus on product innovation and customer needs. Mission Foods promotes its products primarily through cooperative advertising programs with supermarkets as well as radio and television advertising, targeting both Hispanic and non-Hispanic populations. We believe these efforts have contributed to greater consumer awareness. Mission Foods also targets food service companies and works with restaurants, institutions and distributors to address their individual needs and provide them with a full line of products. Mission Foods continuously attempts to identify new customers and markets for its tortillas and related products in the United States and, more recently, in Europe.

Azteca Milling distributes approximately 40% of the corn flour it produces to Mission Foods’ plants throughout the United States and Europe. Azteca Milling’s third-party customers consist largely of other tortilla manufacturers, corn chip producers, retail customers and wholesalers. Azteca Milling sells corn flour in various quantities, ranging from four-pound retail packages to bulk railcar loads.

We anticipate continued growth in the U.S. market for corn flour, tortillas, and related products. We believe that the growing consumption of Mexican-style foods by non-Hispanics will continue to increase demand for tortillas and tortilla related products, particularly wheat flour tortillas. Also influential is the fact that tortillas are no longer solely used as ingredients in Mexican food; for example, tortillas are also used for wraps, which will continue to increase demand for tortillas. Growth in the U.S. corn flour market is attributable to the conversion of tortilla and tortilla chip producers from the wet corn dough process to our dry corn flour method, the increase of the Hispanic population, the consumption of tortillas and tortilla chips by the general consumer market, and stronger and increased distribution.

Competition and Market Position. We believe Mission Foods is one of the leading manufacturers and distributors of packaged tortillas and related products throughout the United States and Europe. We believe the tortilla market is highly fragmented, regional in nature and extremely competitive. Mission Foods’ main competitors are hundreds of tortilla producers who manufacture locally or regionally and tend to be sole proprietorships. However, a few competitors have a presence in several U.S. regions such as Olé Mexican Foods and Reser’s Fine Foods, among others. In addition, a few large companies have tortilla manufacturing divisions that compete with Mission Foods, for example, Tyson, Bimbo, Hormel Foods, and General Mills. Mission Food’s largest competitors for branded tortilla are Olé Mexican Foods, Bimbo, and Hormel Foods.

Table of Contents

Competitors within the corn flour milling industry include Minsa and the corn flour milling divisions of Cargill. Azteca Milling competes with these corn flour manufacturers in the United States primarily on the basis of superior quality, technical support, customer service and brand recognition. However, we believe there is great potential for growth by converting tortilla and tortilla chip manufacturers that still use the traditional method to our corn flour method. We believe Azteca Milling is one of the leading producers of corn flour in the United States.

We strongly believe there is significant growth potential for tortillas, wraps and other flatbreads in all geographic areas of Europe and also through multiple channels, for example, in the retail and foodservice channels. Mexican-based cuisine is gaining popularity in key markets. Likewise, consumer trends indicate a growing need for versatile, healthy, nutritious and tasty food on-the-go, as well as for more interesting food accompaniments. Our products address all of these needs, and their profile allows them to be easily customized to local cultures. Mission Foods is well-placed to both drive and benefit from this situation in the coming years.

We believe Mission Foods is one of the leading tortilla producers in Europe with the main competitors being Santa Maria and General Mills. There are a number of more recent players occupying niche positions in tortilla production, operating in continental Europe and the United Kingdom.

Operation and Capital Expenditures. Annual total production capacity for Gruma Corporation is estimated at 2.5 million metric tons as of December 31, 2011, with an average utilization of 71% in 2011. The average size of our plants as of December 31, 2011 was approximately 9,302 square meters (about 100,000 square feet).

Capital expenditures for the past two years were U.S.$177 million, mostly for expansion and upgrades of existing facilities and the construction of a new tortilla plant in southern California, that began production during 2010. In March of 2010, we acquired 100% of Altera I and Altera II, the leading producer of corn grits in Ukraine for U.S.$9 million. We believe this acquisition in Eastern Europe will enable GRUMA to continue its growth strategy in emerging markets of the region. During 2011, we acquired two tortilla plants in the United States, Albuquerque Tortilla Company and Casa de Oro Foods for U.S.$9 million and U.S.$23 million, respectively. In July 2011, we acquired Solntse Mexico, the leading tortilla and corn chips manufacturer in Russia, for U.S.$9 million. We believe this acquisition consolidates the presence of GRUMA in Russia and improves our ability to serve countries in Eastern Europe by providing access to lower costs and a closer location to major customers. On November 2011, we acquired Semolina, the Turkish market leading producer of corn grits, for U.S.$17 million. The acquisition of Semolina represents a significant milestone for GRUMA’s growth strategy in Eastern Europe and the Middle East. Our European milling division’s priority is to consolidate itself as a market leader in corn milling and related products for the snack, brewing and breakfast cereals industries.

Gruma Corporation’s projected capital expenditures for 2012 will be approximately U.S.$75 million, mainly for production capacity increases and manufacturing and technology upgrades, as well as the construction of a new plant in Florida. These budgeted capital expenditures do not include any potential acquisitions.

Mission Foods produces its packaged tortillas and other related products at 26 manufacturing facilities worldwide. Twenty two of these facilities are located in large population centers throughout the United States. During 2009, Mission Foods closed three manufacturing facilities located in Las Vegas, Fort Worth and El Paso. Mission Foods has shifted production to other plants to achieve savings in overhead costs. Mission Foods will consider reopening the Fort Worth plant should market demands require additional capacity. During 2010, Mission Foods closed an additional manufacturing facility located in Phoenix, Arizona. Outside the United States, Mission Foods has two plants in England, one plant in The Netherlands, and one plant in Russia.

Mission Foods is committed to offering the best quality products to its customers through the implementation of the American Institute of Baking (“AIB”) food safety standards, and Global Food Safety Initiative (“GFSI”) recognized certification schemes such as British Retail Consortium (“BRC”) and Safe Quality Food (“SQF”). Additionally, our plants are regularly evaluated by other third party organizations and customers.

All of the Mission Foods manufacturing facilities worldwide have earned either a superior or excellent category rating from the AIB-GMP audits. Most of Mission Foods’ U.S. plants have earned the AIB’s highest award, the combined AIB-GMP and AIB-HAACP certification. One of our recently acquired plants is in the process of implementing AIB-GMP audits this year and four other plants have not yet gone through the AIB-HACCP certification process.

Table of Contents

In 2008 Mission Foods started the BRC certification process at four plants in the U.S. By 2011, thirteen plants had completed the certification process. Additionally, one of our plants is SQF certified. Our plants in England and The Netherlands are also evaluated by third party organizations such as the AIB, International Food Standards and BRC. Our facility in Russia, which was acquired in July of 2011, operates in compliance with Russian food production laws and is audited by multiple clients. The facility is currently working towards HACCP certification.

Azteca Milling produces corn flour at six plants located in Amarillo, Edinburg and Plainview, Texas; Evansville, Indiana; Henderson, Kentucky; and Madera, California. Gruma Corporation also produces corn flour at our plants in Ceggia, Italy, Cherkassy, Ukraine, and Samsun, Turkey. The majority of our plants are located within important corn growing areas. Due to Azteca Milling’s manufacturing practices and processes, all six facilities located in the U.S. have achieved ISO 9002 certification as well as the AIB certification. Our corn flour plants in Italy and Ukraine have obtained the BRC certification. Additionally, our corn flour mill in Italy obtained the OHSAS 18001 international workplace safety standards certification, and our corn flour plant in Turkey has obtained the International Featured Standards certification, among others.

Seasonality. We believe there is no significant seasonality in our products, however part of our products tend to experience a slight volume increase during the summer months. Tortillas and tortilla chips sell year round, with special peaks during the summer, when we increase our promotion and advertising by taking advantage of several holidays and major sporting events. Tortilla and tortilla chip sales decrease slightly towards the end of the year when many Mexicans go back to Mexico for the holidays. Sales of corn flour fluctuate seasonally as demand is higher in the fourth quarter during the holidays because of the preparation of Mexican food recipes that are very popular during this time of the year.

Raw Materials. Corn is the principal raw material used in the production of corn flour, which is purchased from local producers. Azteca Milling buys corn only from farmers and grain elevators that agree to supply varieties of corn approved for human consumption. Azteca Milling tests and monitors its raw material purchases for corn not approved for human consumption, for certain strains of bacteria, fungi metabolites and chemicals. In addition, Azteca Milling applies certain testing protocols to incoming raw materials to identify genetically modified products not approved for human consumption.

Because corn prices tend to be somewhat volatile, Azteca Milling engages in a variety of hedging activities in connection with the purchase of its corn supplies, including the purchase of corn futures contracts. In so doing, Azteca Milling attempts to assure corn availability approximately 12 months in advance of harvest time and guard against price volatility approximately six months in advance. The Texas Panhandle currently is the single largest source of food-grade corn. Azteca Milling is also involved in short-term contracts for corn procurement with many corn suppliers. Where suppliers fail to deliver, Azteca Milling can easily access the spot markets. Azteca Milling does not anticipate any difficulties in securing adequate corn supplies in the future.

Corn flour for Mission Foods U.S. operations is supplied by Azteca Milling, and to a much lesser extent, by GIMSA. Corn flour for Mission Foods European operations is supplied by our corn mill in Italy.

Wheat flour for the production of wheat tortillas and other types of wheat flat breads is purchased from third party producers at prices prevailing in the commodities markets. Mission Foods believes the market for wheat flour is sufficiently large and competitive to ensure that wheat flour will be available at competitive prices to supply our needs. Contracts for wheat flour supply are made on a short-term basis.

Distribution. An important element of Mission Foods’ sales growth has been the expansion and improvement of its tortilla distribution network, including a direct-store-delivery system to distribute most of its products. Tortillas and other freshly made products are generally delivered daily to customers, especially in retail sales and in regions where we have plants. In regions where we do not have plants, there is no daily distribution and tortillas are sometimes sold refrigerated. In keeping with industry practice, Mission Foods generally does not have written sales agreements with its customers. Nevertheless, from time to time, Mission Foods enters into consumer marketing agreements with retailers, in which certain terms on how to market our products are agreed. Mission Foods has also developed a food service distribution network on the west and east coasts of the United States, and in certain areas of the Midwest.

Table of Contents

The vast majority of corn flour produced by Azteca Milling in the U.S. is sold to tortilla and tortilla chip manufacturers and is delivered directly from the plants to the customer. Azteca Milling’s retail customers are primarily serviced by a network of distributors, although a few large retail customers have their corn flour delivered directly to them from the plants.

Almost all of the corn flour and corn grits produced in Europe are sold to beer, snacks, tortilla chip and taco shell manufacturers, and are delivered directly from the plants to the customer. We also supply customers in several industries like breakfast cereals and polenta, among others. Retail customers are primarily serviced by a network of distributors, although a few large retail customers have their corn flour delivered directly to them from the plants.

Mexican Operations

Overview

Our largest business in Mexico is the manufacture and sale of corn flour, which we conduct through our subsidiary GIMSA. Through our association with Archer-Daniels-Midland, we have also entered the wheat milling business in Mexico through Molinera de México. Our other subsidiaries engage in the manufacturing and distribution of packaged tortillas and other related products in northern Mexico, conduct research and development regarding corn flour and tortilla manufacturing equipment, produce machinery for corn flour and tortilla production and construct our corn flour manufacturing facilities.

GIMSA—Corn Flour Operation

Principal Products. GIMSA produces, distributes and sells corn flour in Mexico, which is then used in the preparation of tortillas and other related products. GIMSA also produces wheat flour and other related products to a much lesser extent.

In 2011, GIMSA had net sales of Ps.15,386 million. We believe GIMSA is one of the largest corn flour producers in Mexico. GIMSA estimates that its corn flour is used in one third of the corn tortillas consumed in Mexico. It sells corn flour in Mexico mainly under the brand name MASECA®. MASECA®, a standard fine-textured, white corn flour is a ready-mixed corn flour that becomes a dough when water is added. This corn dough can then be pressed to an appropriate thickness, cut to shape and cooked to produce tortillas and similar food products.

GIMSA produces over 50 varieties of corn flour for the manufacture of different food products which are developed to meet the requirements of our different types of customers according to the kind of tortillas they produce and markets they serve. It sells corn flour to tortilla and tortilla chip manufacturers as well as in the retail market.

Sales and Marketing. GIMSA sells packaged corn flour in bulk principally to thousands of small tortilla manufacturers, or tortillerías, which purchase in 20-kilogram sacks and produce tortillas on their premises for sale to local markets. To a lesser extent, GIMSA also sells corn flour in bulk to supermarkets’ in-store tortillerías and snack manufacturers. Additionally, GIMSA sells packaged corn flour in the retail market in one-kilogram packages.

The following table sets forth GIMSA’s bulk and retail sales volume of corn flour, and other products for the periods indicated.

	Year Ended December 31, (tons in thousands)
	2009		2010		2011
	Tons	%	Tons	%	Tons	%
Corn Flour
Bulk	1,451	77	1,468	78	1,528	78
Retail	290	16	291	15	292	15
Other	133	7	131	7	139	7
Total	1,874	100	1,890	100	1,959	100

Table of Contents

Retail sales of corn flour are channeled to two distinct markets: urban centers and rural areas. Sales to urban consumers are made mostly through supermarket chains that use their own distribution networks to distribute MASECA® corn flour or through wholesalers who sell the product to smaller grocery stores throughout Mexico. Sales to rural consumers are made principally through the Mexican government’s social welfare retail chain, a social and distribution program named Distribuidora Conasupo, S.A., or DICONSA, which consists of a network of small government-owned stores and which supplies rural areas with basic food products.

Mexico’s tortilla industry is highly fragmented, consisting mostly of tortillerías, many of which continue to utilize, what is in our opinion, the relatively inefficient wet corn dough method of tortilla production (the traditional method). We estimate that the traditional wet corn dough method accounts for approximately half of all tortillas produced in Mexico. Tortilla producers that do not utilize corn flour buy the wet dough from dough producers or buy and mill their own corn and produce wet corn dough themselves.

We believe the preparation of tortillas using the dry corn flour method possesses several advantages over the traditional method. This traditional method is a rudimentary practice requiring more energy, time and labor because it involves cooking the corn in water and with lime, milling the cooked corn, creating and shaping the dough, and then making tortillas from that dough. We pioneered the dry corn flour method in which we mill the raw corn in our facilities into corn flour. Tortilla producers and consumers, once they acquire the corn flour, may then simply add water to transform the flour into wet dough to produce tortillas. Our internal studies show that the dry corn flour method consumes less water, electricity, fuel and labor. We estimate that one kilogram of corn processed through the dry corn flour method yields more tortillas on average than a similar amount of corn processed using the traditional method. Corn flour is also transported more easily and under better sanitary conditions than wet corn dough and has a shelf life of approximately three months, compared with one or two days for wet corn dough. The market for wet corn dough is limited due to the perishable nature of the product, restricting sales of most wet corn dough producers to their immediate geographic areas. Additionally, the corn flour’s longer shelf life makes it easier for consumers in rural areas, where tortillerías are relatively scarce, to produce their own tortillas.

We believe in the benefits of our dry corn flour method and also believe that we have substantial opportunities for growth by encouraging a transition to our method. Corn flour is primarily used to produce corn tortillas, a principal staple of the Mexican diet. The tortilla industry is one of the largest industries in Mexico as tortillas constitute the single largest component of Mexico’s food industry. However, there is still reluctance to abandon the traditional practice, particularly in central and southern Mexico, because corn dough producers and/or tortilla producers using the traditional method incur lower expenses by working in an informal economy. Additionally, such producers are generally not required to comply with environmental regulations, which also represents savings for them. To the extent regulations in Mexico are enforced and we and our competitors are on the same footing, we expect to benefit from these developments.

GIMSA has embarked on several programs to promote corn flour sales to tortilla producers and consumers. GIMSA offers incentives to potential customers, such as small independent tortillerías, to convert to the dry corn flour method from the traditional wet corn dough method. The incentives GIMSA offers include new, easy to use equipment designed specifically for small-volume users, financing, and individualized training. For example, in order to assist traditional tortilla producers in making the transition to corn flour, GIMSA also sells specially designed mixers made by Tecnomaíz, S.A. de C.V., or Tecnomaíz, one of our research and development subsidiaries. For more information about our research and development department, see “Item 4—Information on the Company—Miscellaneous—INTASA—Technology and Equipment Operations.” GIMSA also helps its tortillería customers to improve sales by directing consumer promotions to heighten the desirability of their products and increase consumption, which, in turn, should increase corn flour sales and our brand equity. These efforts to improve sales and strengthen our brand equity by better positioning us among consumers include prime time advertising on television as well as radio, magazine and billboard advertising.

During 2011, GIMSA continued emphasizing the nutritional values of its products in advertising campaigns on radio and television nationwide. GIMSA also continued reinforcing MASECA’s image and brand recognition, associating our brand with sports, exercise and wellness, and emphasizing the benefits of a good nutrition for general health. Following this strategy, we sponsor several professional sports teams including the Mexican Soccer Football Federation (FEMEXFUT), as the official sponsors of Mexico’s national soccer team in all of its categories through the year 2014.

Table of Contents

GIMSA is aware of the dynamism of the Mexican market. In order to adapt quickly and to anticipate new customers’ needs, GIMSA continued diversifying its sales force in specialized teams to be able to satisfy different types of customers, focusing primarily in increasing product availability and achieving higher market coverage. GIMSA also continues working on the conversion of customers from the traditional process preparing tortillas to our corn flour method, mainly in the central and south regions of Mexico where the traditional method is still widely used.

GIMSA has also created specific business models for its customers to improve the viability of their businesses, primarily in the distribution and delivery process of tortillas to consumers, and the identification and recognition of the use of MASECA as a main ingredient in their products. Our strategy of developing specific sales formats has permitted us to serve customers requiring high frequency delivery and low volume orders as well as customers with high volume consumption with working capital investments needs.

Additionally, the Company undertakes the following ongoing initiatives in an effort to improve operational efficiency, increase consumption of corn flour, and improve on its successful business model to attract new customers:

· initiatives designed to strengthen commercial relations with our existing customers, primarily by offering personalized customer service and sales programs to our customers, including the development of comprehensive business models;

· initiatives designed to increase coverage in regions with low corn flour consumption with special promotions tailored specifically to these markets;

· design of individualized support regarding the type of machinery required for their business, financial advisory and training;

· assistance to customers in the development of new profitable distribution methods to increase their market penetration and sales;

· development of tailored marketing promotions to increase consumption in certain customer segments; and

· assistance to customers in the development of new higher margin products such as tortilla chips, taco shells and enchilada tortillas, reflecting current consumption trends.

Competition and Market Position. GIMSA faces competition on three levels—from other corn flour producers, from sellers of wet corn dough and from the many tortillerías that produce their own wet corn dough on their premises. Our estimates indicate that about half of tortilla producers continue to use the traditional wet corn dough method.

GIMSA’s biggest challenge in increasing its market share is the prevalence of the traditional method. In the corn flour industry, GIMSA’s principal competitors are Grupo Minsa, S.A. de C.V. and a few regional corn flour producers. OPTIMASA, a subsidiary of Cargill de México, built a corn flour plant and began to offer corn flour in the central region of Mexico, therefore becoming a new competitor for GIMSA since 2005. We compete against other corn flour manufacturers on the basis of quality, brand recognition, technology, customer service and nationwide coverage. We believe that GIMSA has certain competitive advantages resulting from its proprietary technology, greater economies of scale and broad geographic coverage, which may provide it with opportunities to more effectively source raw materials and reduce transportation costs.

Operations and Capital Expenditures. GIMSA currently owns 19 corn flour mills, all of which are located throughout Mexico, typically within corn growing regions and those of large tortilla consumption. GIMSA also owns two more plants, one of which produces wheat flour and the other, corn grits and several types of corn based products. Three of GIMSA’s plants are idle. The Chalco plant has been inactive since October 1999 GIMSA will consider reopening this plant should market demands require additional capacity. The other two plants (Monterrey y Celaya) have been idle since February 2006. These assets are currently being depreciated.

Table of Contents

Annual total production capacity for GIMSA is estimated at 2.97 million metric tons as of December 31, 2011, with an average utilization of 66% in 2011. The average size of our plants as of December 31, 2011 was approximately 19,956 square meters (approximately 214,806 square feet).

In recent years, GIMSA’s capital expenditures were primarily used to upgrade technology and corn flour production processes. GIMSA spent U.S.$33 million for these purposes from 2010 to 2011. GIMSA currently projects total capital expenditures during 2012 of approximately U.S.$29 million, which will be used primarily for updating technology and production capacity expansion projects.

Pursuant to an agreement between GIMSA and Investigación de Tecnología Avanzada, or INTASA, our wholly-owned subsidiary, INTASA provides technical assistance to each of GIMSA’s operating subsidiaries for which each pays to INTASA a fee equal to 0.5% of its consolidated net sales. Each of GIMSA’s corn flour facilities uses proprietary technology developed by our technology and equipment operations. For more information about our in-house technology and design initiatives, see “Item 4—Information on the Company—Miscellaneous—INTASA—Technology and Equipment Operations.”

Seasonality. The demand for corn flour varies slightly with the seasons, with some minor increases during the December holidays.

Raw Materials. Corn is the principal raw material required for the production of corn flour, and constituted 57% of GIMSA’s cost of sales for 2011. We purchase corn primarily from Mexican growers and grain elevators, and from world markets at international prices. Most of our domestic corn purchases are made through ASERCA, a governmental program established and supported by the Mexican Ministry of Agriculture, where contracts are entered into once the corn is planted to guarantee price and delivery upon harvest. Compañía Nacional Almacenadora, S.A. de C.V., a subsidiary of GIMSA, enters into contracts for and purchases the corn, and also monitors, selects, handles and ships the corn.

We believe that the diverse geographic locations of GIMSA’s production facilities in Mexico enables GIMSA to achieve savings in raw material transportation and handling. In addition, by sourcing corn locally for its plants, GIMSA is better able to communicate with local growers concerning the size and quality of the corn crop and is better able to maintain quality control. In Mexico, GIMSA purchases corn on delivery in order to strengthen its ability to obtain the highest quality corn on the best terms.

Traditionally, domestic corn prices in Mexico typically follow trends in the international market. During most periods, the price at which GIMSA purchases corn depends on the price of corn in the international market. As a result, corn prices are sometimes unstable and volatile. Additionally, in the past, the Mexican government has supported the price of corn. For more information regarding the government’s effect on corn prices, see “Item 3. Key Information—Risk Factors—Our Business Operations Could Be Affected by Government Policies in Mexico” and “Item 4. Information on the Company—Regulation.”

In addition to corn, the other principal materials and resources used in the production of corn flour are packaging materials, water, lime, additives and energy. GIMSA believes that its sources of supply for these materials and resources are adequate, although energy, additives and packaging costs tend to be volatile.

Distribution. GIMSA’s products are distributed through independent transport firms contracted by GIMSA. Most of GIMSA’s sales are made free-on-board at GIMSA’s plants, in particular those to tortilla manufacturers. With respect to other sales, in particular sales to the Mexican government, large supermarket chains, and snack producers, GIMSA pays the freight cost.

Molinera de México—Wheat Flour Operation

Principal Products. In 1996, in connection with our association with Archer-Daniels-Midland, we entered the wheat milling market in Mexico by acquiring a 60% ownership interest in Archer-Daniels-Midland’s wheat flour operation, Molinera de México. See “Item 10. Additional Information—Material Contracts.” Molinera’s main product is wheat flour, although it also sells wheat bran and other byproducts. Our wheat flour brands are REPOSADA®, PODEROSA® and SELECTA®, among others.

Table of Contents

Sales and Marketing. In 2011, approximately 86% of Molinera’s wheat flour production was sold in bulk and 14% was sold for the retail segment. Most of the bulk sales are made to thousands of traditional bakeries and tortillerías, supermarkets’ in-store bakeries and, to a lesser extent, to cookie and pasta manufacturers. Most of the retail sales are made to large supermarkets and wholesalers throughout Mexico. Through wholesalers, our products are distributed to small grocery stores.

Our marketing strategy depends on the type of customer and region. Overall, our aim is to offer products according to customers’ specifications as well as technical support. We are trying to increase our market share in bakeries by offering products with consistent quality. In the retail segment we target small grocery stores through wholesalers, and supermarkets through centralized and national level negotiations. We are focusing on improving customer service, continuing to increase our distribution of products to supermarkets’ in-store bakeries, and developing new types of pre-mixed flours for the supermarket in-store bakery segment. We provide direct delivery to supermarkets, supermarkets’ in-store bakeries, wholesalers, industrial customers and some large bakeries. Most small bakeries and small grocery stores are served by wholesalers.

Competition and Market Position. We believe that we are one of Mexico’s largest wheat flour producers based on revenues and sales volume. Molinera de México competes with many small wheat flour producers. We believe the wheat flour industry is highly fragmented and estimate that there are about 90 participants. Our main competitors are Altex, Trimex, Tablex, La Espiga, Elizondo, and Anáhuac.

Operations and Capital Expenditures. We own and operate nine wheat flour plants, including one of which we hold only a 40% ownership interest. Annual total production capacity for Molinera is estimated at 837 thousand metric tons as of December 31, 2011, with an average utilization of 83% in 2011, including production volume for third parties for which Molinera receives a fee. On average, the size of our plants as of December 31, 2011 was approximately 12,044 square meters (approximately 129,590 square feet). Capital expenditures in 2010 and 2011 amounted to U.S.$10 million mainly for general upgrades and maintenance. Molinera de México’s capital expenditures in 2012 are projected to be U.S.$28 million, which will be used primarily for production capacity expansion on several wheat mills and general manufacturing and technology upgrades.

Seasonality. Molinera’s sales are subject to seasonality. Higher sales volumes are achieved in the fourth and first quarters during the winter, when we believe per capita consumption of wheat-based products, especially bread and cookies, increases due in part to cold weather and the celebration of holidays occurring during these quarters.

Raw Materials. Wheat is the principal raw material required for the production of wheat flour and constituted 71% of Molinera’s cost of sales for 2011. Molinera de México purchases approximately 63% of its wheat from Mexican growers, and 37% from international markets. Molinera de México purchases domestic wheat from local farmers and farmers’ associations through ASERCA, a governmental program established and supported by the Mexican Ministry of Agriculture, where contracts are entered into once the wheat is planted to guarantee price and delivery upon harvest. Wheat is also sourced from foreign producers in the United States and Canada through different trading companies. Purchases are made based on short-term requirements with the aim of maintaining adequate levels of inventories.

In recent years the price of wheat domestically and abroad has been volatile. Volatility is due to the supply of wheat, which depends on various factors including the size of the harvest (which depends in large part on the weather).

Central American Operations

Overview

In 1972, we entered the Costa Rican market. Our operations since then have expanded into Guatemala, Honduras, El Salvador and Nicaragua, as well as Ecuador, which we include as part of our Central American operations.

Table of Contents

Gruma Centroamérica

Principal Products. Gruma Centroamérica produces corn flour, and to a lesser extent tortillas and snacks. We also cultivate and sell hearts of palm and process and sell rice. We believe we are one of the largest corn flour producers in the region. We sell corn flour under the MASECA®, TORTIMASA®, MASARICA® and MINSA® brands. In Costa Rica, we sell packaged tortillas under the TORTI RICA® and MISIÓN® brands. We operate a Costa Rican snack operation which manufactures tortilla chips, potato chips and similar products under the TOSTY®, RUMBA®, and LA TICA® brand. Hearts of palm are exported to numerous European countries as well as the United States, Canada, Chile and Mexico.

Sales and Marketing. 79% of Gruma Centroamérica’s sales volume in 2011 derived from the sale of corn flour.

Gruma Centroamérica corn flour bulk sales are oriented predominantly to small tortilla manufacturers through direct delivery and wholesalers. Supermarkets make up the customer base for retail corn flour. Bulk sales volume represented approximately 57% and retail sales represented approximately 43% of Gruma Centroamérica’s corn flour sales volume during 2011.

Competition and Market Position. We believe that we are one the largest corn flour producers in Central America based on revenues and sales volume. We believe that there is significant potential for growth in Central America as corn flour is used in only approximately 15% of all tortilla production; the majority of tortilla manufacturers use the wet corn dough method. Additionally, we believe we are one of the largest producers of tortillas and snacks in Costa Rica.

Within the corn flour industry, the brands of our main competitors are: Del Comal, Doña Blanca, Selecta, Bachoza and Instamasa. However, one of our main growth potentials is to convert tortilla manufacturers that still use the traditional method to our corn flour method.

Operations and Capital Expenditures. We had an annual installed production capacity of 350 thousand tons for corn flour and other products as of December 31, 2011, with an average utilization of approximately 68% during 2011. We operate one corn flour plant in each of Costa Rica, Honduras, El Salvador, and Guatemala, for a total of four plants throughout the region. In Costa Rica, we also have one plant producing tortillas, one plant producing snacks, one plant processing hearts of palm and one plant processing rice. In Nicaragua and Honduras we have small tortilla plants, while in Guatemala we have a small plant that produces snacks and in Ecuador we have a small facility which processes hearts of palm. On average, the size of our plants as of December 31, 2011 was approximately 75,574 square meters (approximately 813,472 square feet).

During 2010 and 2011 most of our capital expenditures were oriented towards general manufacturing upgrades and production capacity expansions at existing tortilla plants. Total capital expenditures for the past two years were approximately U.S.$3.4 and U.S.$7.1 million, respectively. Capital expenditures for 2012 are projected to be U.S.$9 million, which will be used primarily for general manufacturing and technology upgrades.

Seasonality. Typically, corn flour sales volume is lower during the first and fourth quarters of the year due to higher corn availability and lower corn prices.

Raw Materials. Corn is the most important raw material needed in our operations, representing 41% of the cost of sales during 2011, and is obtained primarily from imports from the United States and from local growers. None of the countries in which we have corn flour plants restrict corn import permits granted by the United States. Price fluctuation and volatility are subject to domestic conditions, such as annual crop results and international conditions.

Gruma Venezuela

Overview

In 1993, we entered the Venezuelan corn flour industry through a participation in DEMASECA, a corn flour company in Venezuela. In August 1999, we acquired 95% of DAMCA International Corporation, a Delaware

Table of Contents

corporation which owned 100% of MONACA, Venezuela’s second largest corn and wheat flour producer at that time, for approximately U.S.$94 million. Additionally, Archer-Daniels-Midland acquired the remaining 5% interest in MONACA.

In April of 2006, we entered into a series of transactions to: (i) purchase an additional 10% ownership interest in DEMASECA at a price of U.S.$2.6 million; (ii) purchase a 2% stake in MONACA from Archer-Daniels-Midland at a price of U.S.$3.28 million; and (iii) sell a 3% interest in DEMASECA to Archer-Daniels-Midland at a price of U.S.$780,000.

Additionally, in April of 2006, we entered into a contract for the sale of a stake in MONACA to Rotch Energy Holdings, N.V. (“Rotch”), a controlled entity of our former indirect partner in DEMASECA, Ricardo Fernández Barrueco. As a result Rotch acquired a 24.14% interest in MONACA, and subsequently pledged its equity interests for the benefit of a Mexican financial institution (the “Rotch Lender”) as security for a loan to a controlled entity of Rotch. In June of 2010, Rotch defaulted under the loan and the stake in MONACA was sold and assigned to a third investor, whose interest is held by a Mexican company, RFB Holdings de Mexico, S.A. de C.V. RFB Holdings de Mexico, S.A. de C.V. is not affiliated with our former indirect partner in DEMASECA, Ricardo Fernández Barrueco.

As a result of the aforementioned transactions, we currently own 72.86% in MONACA, RFB Holdings de Mexico, S.A. de C.V. owns 24.14% and Archer-Daniels-Midland owns the remaining 3% in MONACA. In addition, we own 57% in DEMASECA, RFB Holdings de Mexico, S.A. de C.V. indirectly owns 40% and Archer-Daniels-Midland owns the remaining 3% in DEMASECA. MONACA and DEMASECA are collectively referred to as “Gruma Venezuela.”

On May 12, 2010, the Bolivarian Republic of Venezuela published in the Official Gazette of Venezuela decree number 7,394, which announced the forced acquisition of all goods, movables and real estate of our subsidiary company in Venezuela, MONACA. The Republic has expressed to GRUMA’s representatives that the Expropriation Decree extends to our subsidiary DEMASECA . As of this date, no formal transfer of title of the assets covered by the Expropriation Decree has taken place. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela— Our Subsidiaries in Venezuela are Currently Involved in Expropriation Proceedings,” and “Item 8. Financial Information—Legal Proceedings.”

DEMASECA and MONACA

Principal Products. Gruma Venezuela produces and distributes corn flour as well as wheat flour, rice, oats and other products. We sell corn flour under the brand names JUANA® and DEMASA®. We sell wheat flour under the ROBIN HOOD®, FLOR DE TRIGO® and POLAR® brand, rice under the MONICA® brand and oats under the LASSIE® brand.

Sales and Marketing. Venezuelans use corn flour to produce and consume arepas, which are made at home or in restaurants for household consumption rather than manufactured by specialty shops or other large manufacturers. We sell corn flour in the retail market in one kilogram bags to independent distributors, supermarkets, wholesalers, and governmental social welfare and distribution programs. We also sell wheat flour, distributing it in 45 kilogram bags and in one kilogram bags. Bulk sales to customers made up approximately 42% of our total sales volume in 2011. The remaining 58% of sales in 2011 were in the retail market, which includes independent distributors, supermarkets and wholesalers.

Competition and Market Position. With the MONACA acquisition in 1999, we significantly increased our share of the corn flour market and entered the wheat flour market. We believe we are one of the largest corn flour and wheat flour producers in Venezuela.

In corn flour, our main competitor is Alimentos Polar, and, to a lesser extent, Industria Venezolana Maizera PROAREPA, Asoportuguesa and La Lucha. In wheat flour, our principal competitor is Cargill.

Operation and Capital Expenditures. We operate five corn flour plants, five wheat flour plants, two rice plants, one pasta plant, and two plants that produce oats and spices in Venezuela with a total annual production

Table of Contents

capacity of 823 thousand tons as of December 31, 2011 and an average utilization of approximately 68% during 2011. Two rice plants, representing 71 thousand tons, are temporarily idle. On average, the size of our plants measured in square meters is approximately 8,961 (approximately 96,454 square feet) as of December 31, 2011.

Capital expenditures for the past two years were U.S.$10.3 million. Most of this was applied to general upgrades . Capital expenditures for 2012 are budgeted to be U.S.$15 million and expected to be focused on general manufacturing and technology upgrades mostly related to production efficiencies and compliance with applicable regulations.

Seasonality. Sales fluctuate seasonally as demand for flour-based products is lower during those months when most schools are closed for vacation. In addition, sales are higher in November as customers build inventory to satisfy increased demand during the holiday season in December.

Raw Materials. Corn and wheat are our most important raw materials. Corn is purchased in Venezuela and is subject to the corn market’s volatility and governmental regulations related to prices, quantities and storage facilities. Corn prices are fixed by a government agency. 100% of our wheat is purchased from the U.S. and Canada, with its availability and price volatility dependent upon those markets. We do not engage in any type of hedging activity for our supplies since exchange rate policies and country risk for Venezuela constrain our capacity to transfer funds abroad in order to fund any hedging strategy.

Miscellaneous—INTASA—Technology and Equipment Operations

We have developed our own technology operations since our founding. Since 1976 our technology and equipment operations have been conducted principally through INTASA, which has two subsidiaries: Tecnomaíz, S.A. de C.V., or Tecnomaíz, and Constructora Industrial Agropecuaria, S.A. de C.V., or CIASA. The principal activity of these subsidiaries is to provide research and development, equipment, and construction services to us and small equipment to third parties. Through Tecnomaíz, we also engage in the design, manufacture and sale of machines for the production of tortillas and tortilla chips. The machinery for the tortilla industry includes a range of capacities, from machines that make 15 to 300 corn tortillas per minute to dough mixers. The equipment is sold under the TORTEC® and BATITEC® trademarks in Mexico. Tecnomaíz also manufactures high volume energy efficient corn tortilla, wheat tortilla and tortilla chip systems that can produce up to 1,200 corn tortillas per minute, 600 wheat tortillas per minute and 3,000 pounds of chips per hour.

We carry out proprietary technological research and development for corn milling and tortilla production as well as all engineering, plant design and construction through INTASA and CIASA. These companies administer and supervise the design and construction of our new plants and also provide advisory services and training to employees of our corn flour and tortilla manufacturing facilities. We manufacture corn tortilla-making machines for sale to tortilla manufacturers and for use in “in-store tortillerías,” as well as high-capacity corn and flour tortilla-makers that are supplied only to us.

GFNorte Investment

As of December 31, 2010, we held approximately 8.8% of the outstanding shares of GFNorte, a Mexican financial services holding company and parent of Banco Mercantil del Norte, S.A., or Banorte, a Mexican bank. As of the same date, our investment in GFNorte represented Ps.4,296 million. GFNorte’s results of operations were accounted for in our consolidated results of operations using the equity method of accounting. For the period ended December 31, 2010, we received Ps.91 million in dividends in respect of our investment in GFNorte.

On February 15, 2011, we concluded the sale of 177,546,496 shares of the capital stock of GFNorte at a price of Ps.52 per common share (the “GFNorte Sale”), resulting in cash proceeds of Ps.9,232,417,792 before fees and expenses. As a result of the sale of the GFNorte’s shares, we no longer hold shares of GFNorte’s capital stock.

Table of Contents

REGULATION

Mexican Regulation

Corn Commercialization Program

To support the commercialization of corn for Mexican corn growers, Mexico’s Secretary of Agriculture, Livestock, Rural Development, Fisheries and Food Ministry (Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación, or SAGARPA), through the Agricultural Incentives and Services Agency (Apoyos y Servicios a la Comercialización Agropecuaria, or ASERCA), a government agency founded in 1991, implemented a program designed to promote corn sales in Mexico. The program includes the following objectives:

· Ensure that the corn harvest is brought to market, providing certainty to farmers concerning the sale of their crops and supply security for the buyer.

· Establish a minimum price for the farmer, and a maximum price for the buyer, which are determined based on international market prices, plus a basic formula specific for each region.

· Implement a corn hedging program to allow both farmers and buyers to minimize their exposure to price fluctuations in the international markets.

To the extent that this or other similar programs are canceled by the Mexican government, we may be required to incur additional costs in purchasing corn for our operations, and therefore we may need to increase the prices of our products to reflect such additional costs.

Corn Flour Consumer Aid Program

Since the end of 2006, the price of corn set by the Chicago Board of Trade and the average price of Mexican corn has increased dramatically due to a number of factors, including the increased use of corn in the manufacture of ethanol, a substitute for gasoline, as well as other bio-fuels. Consequently, the price of corn flour and corn tortillas, the main food staple in Mexico, increased due to such increases in the international and domestic prices of corn. In order to stabilize the price of tortillas and provide Mexican families with a consistent supply of corn, corn flour and tortillas at a reasonable price, the Mexican government promoted two agreements among the various parties involved in the corn-flour-tortilla production chain. The second and last agreement was effective until December 31, 2007. However, the parties to that agreement voluntarily continued to operate under its terms until October 2008.

Upon the expiration of the above-mentioned agreements, the Mexican government created a program to support the corn flour industry (Programa de Apoyo a la Industria de la Harina de Maíz or PROHARINA) in October of 2008. This program aimed to mitigate the impact of the rise in international corn prices through price supports designed to aid the consumer and provided through the corn flour industry. Corn flour manufacturers were entitled to receive a subsidy conditioned on selling the corn flour below a maximum price set by the Mexican government. Beginning in June 2009, the maximum price per kilogram of corn flour established to receive the government subsidy was Ps.5.875. The total amount of subsidized funds allotted to the Company by the Mexican government under this program in 2009 totaled Ps.1,465 million. However, the Mexican government cancelled the PROHARINA program in December 2009.

As a result of the cancellation of this program by the Mexican government in December of 2009, we were required to increase the prices of our products to reflect such additional costs. In addition, there can be no assurance that we will maintain our eligibility for other programs similar to PROHARINA that may be implemented, or that the Mexican government will not institute price controls or other actions on the products we sell, which could adversely affect our financial condition and results of operations.

Environmental Regulations

Our Mexican operations are subject to Mexican federal, state and municipal laws and regulations relating to the protection of the environment. The principal federal environmental laws are the Ley General de Equilibrio

Table of Contents

Ecológico y Protección al Ambiente, or General Law of Ecological Equilibrium and Protection of the Environment, or the Mexican Environmental Law, which is enforced by the Secretaría de Medio Ambiente y Recursos Naturales, or Ministry of the Environment and Natural Resources, or SEMARNAT and the Ley Federal de Derechos or the Mexican Federal Law of Governmental Fees. Under the Mexican Environmental Law, each of our facilities engaged in the production of corn flour, wheat flour, and packaged tortillas is required to obtain an operating license from state environmental regulations upon initiating operations, and then periodically submit a certificate of operation to maintain the operating license. Furthermore, the Mexican Federal Law of Governmental Fees requires that Mexican manufacturing plants pay a fee for water consumption and the discharge of residual waste water to drainage, whenever the quality of such water exceeds mandated thresholds. Rules have been issued concerning hazardous substances and water, air and noise pollution. In particular, Mexican environmental laws and regulations require that Mexican companies file periodic reports with respect to air and water emissions and hazardous wastes. Additionally, they also establish standards for waste water discharge. We must also comply with zoning regulations as well and rules regarding health, working conditions and commercial matters. SEMARNAT and the Federal Bureau of Environmental Protection can bring administrative and criminal proceedings against companies that violate environmental laws, as well as close non-complying facilities.

We believe we are currently in compliance in all material respects with all applicable Mexican environmental regulations. The level of environmental regulation and enforcement in Mexico has increased in recent years. We expect this trend to continue and to be accelerated by international agreements between Mexico and the United States. To the extent that new environmental regulations are issued in Mexico, we may be required to incur additional remedial capital expenditures to comply. Management is not aware of any pending regulatory changes that would require additional remedial capital expenditures in a significant amount.

Competition Regulations

The Ley Federal de Competencia Económica or Mexican Competition Law, and the Reglamento de la Ley Federal de Competencia Económica or Regulations of the Mexican Competition Law, regulate monopolies and monopolistic practices, and require Mexican government approval for certain mergers and acquisitions. The Mexican Competition Law grants the government the authority to establish price controls for products and services of national interest through Presidential decree, and established the Comisión Federal de Competencia, or Federal Competition Commission, to enforce the law. Mergers and acquisitions and other transactions that may restrain trade or that may result in monopolistic or anti-competitive practices or combinations must be approved by the Federal Competition Commission. The Mexican Competition Law may potentially limit our business combinations, mergers and acquisitions and may subject us to greater scrutiny in the future in light of our market presence, and we do not believe that this legislation will have a material adverse effect on our business operations.

U.S. Federal and State Regulations

Gruma Corporation is subject to regulation by various federal, state and local agencies, including the Food and Drug Administration, Department of Labor, the Occupational Safety and Health Administration, the Federal Trade Commission, the Department of Transportation, the Environmental Protection Agency and the Department of Agriculture. We believe that we are in compliance in all material respects with all environmental and other legal requirements. Our food manufacturing and distribution facilities are subject to periodic inspection by various federal, state and local agencies, and the equipment utilized in these facilities must generally be governmentally approved prior to operation.

European Regulation

We are subject to regulation in each country in which we operate in Europe. We believe that we are currently in compliance with all applicable legal requirements in all material respects.

Central American and Venezuelan Regulation

Gruma Centroamérica and Gruma Venezuela are subject to regulation in each country in which they operate. We believe that Gruma Centroamérica and Gruma Venezuela are currently in compliance with all applicable legal requirements in all material respects. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks” and “Item 3. Key Information—Risk Factors— Our Subsidiaries in Venezuela are Currently Involved in Expropriation Proceedings.”

Table of Contents

Asia and Oceania Regulation

We are subject to regulation in each country in which we operate in Asia and Oceania. We believe that we are currently in compliance with all applicable legal requirements in all material respects.

ITEM 4A. Unresolved Staff Comments.

Not applicable.

ITEM 5 Operating and Financial Review and Prospects.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion in conjunction with our audited consolidated financial statements and the notes thereto contained elsewhere herein. Our audited consolidated financial statements have been prepared in accordance with IFRS as issued by IASB. Such consolidated annual financial statements are our first financial statements prepared in accordance with IFRS. Until and including our financial statements for the year ended December 31, 2010, we prepared our consolidated financial statements in accordance with Mexican FRS. See Note 28 to our audited consolidated financial statements for an analysis of the valuation, presentation and disclosure effects of adopting IFRS and a reconciliation between Mexican FRS and IFRS as of January 1 and December 31, 2010 and for the year ended December 31, 2010. Following the Company’s adoption of IFRS, the Company is no longer required to reconcile its financial statements prepared in accordance with IFRS to U.S. GAAP.

Pursuant to the transitional relief granted by the SEC in respect of the first-time application of IFRS no audited consolidated financial statements and financial information prepared under IFRS for the year ended December 31, 2009 have been included in this annual report. Consequently no discussion is included for the year 2009. For more information about our financial statements in general, see “Presentation of Financial Information” and “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

Overview of Accounting Presentation

We began reporting under IFRS for the year ending December 31, 2011, with an IFRS adoption date of January 1, 2011 and a transition date to IFRS of January 1, 2010. IFRS has certain mandatory exceptions, as well as limited optional exceptions, in connection with the initial adoption of IFRS, which do not require the retrospective application of IFRS.

We relied on the following applicable mandatory exceptions in IFRS 1:

a) Hedge accounting: Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in IAS 39, “Financial instruments: Recognition and measurement”, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. All of the Company’s hedge contracts satisfy the hedge accounting criteria as of January 1, 2010 and, consequently, these transactions were reflected as hedges in the Company’s balance sheets.

b) Estimates: IFRS estimates as at January 1, 2010 are consistent with the estimates as at the same date made in conformity with Mexican FRS.

Additionally, we applied prospectively the following mandatory exceptions starting January 1, 2010: de-recognition of financial assets and liabilities and non-controlling interest, with no significant effect, since the requirements under Mexican FRS are the same.

Table of Contents

Below we describe the optional exceptions on which we relied, together with a discussion of the impact that the treatment specified by IFRS would have had absent our election to rely on the relevant exception. See Note 28 to our audited consolidated financial statements.

a) Business combinations. IFRS 1 provides the option to apply IFRS 3, “Business Combinations”, prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. We elected to apply IFRS 3 prospectively to business combinations occurring after the transition date. Had we not exercised this exception, we would have applied IFRS 3 to all acquisitions prior to the transition date. IFRS differs from Mexican FRS particularly with respect to recognition and valuation of employee benefits obligations, property, plant and equipment and other liabilities. As a result, the assignment of net values would have been different under IFRS.

b) Cumulative translation differences. IFRS 1 allows cumulative translation gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation differences in accordance with IAS 21, “The effects of changes in foreign exchange rates”, from the date a subsidiary or equity method investee was formed or acquired. We elected to reset all cumulative translation gains and losses to zero in retained earnings at the transition date. Had we not applied this exception, we would have been able to reclassify the translation effect only for subsidiaries in countries experiencing hyperinflation as defined under IFRS.

c) Deemed cost. We elected to use as the deemed costs at transition date the restated cost of property, plant and equipment under Mexican FRS at December 31, 2009. Had we adopted the historical cost methodology under IFRS, the cost of property, plant and equipment would have been recognized based on their historical cost and we would have reversed inflation adjustments. Had we adopted the fair value methodology under IFRS, the cost of our property, plant and equipment would have been determined based on an appraisal at transition date and following periods.

Note 27 to our audited consolidated financial statements discusses new accounting pronouncements under IFRS that will become effective in 2012 or thereafter. We do not currently expect that any of these will have a significant impact on the presentation of our financial statements.

Effects of Inflation

To determine the existence of hyperinflation, we evaluate the qualitative characteristics of the economic environment of each country, as well as the quantitative characteristics established by IFRS, including an accumulated inflation rate equal or higher than 100% in the past three years. Pursuant to this analysis, Mexico is not considered to be hyperinflationary, with annual inflation rates of 3.6% in 2009, 4.4% in 2010 and 3.8% in 2011. Meanwhile, Venezuela is considered a hyperinflationary economy, with annual inflation rates of 25.1% in 2009, 27.2% in 2010 and 27.6% in 2011.

Effects of Devaluation

Because a significant portion of our net sales are generated in U.S. dollars, changes in the peso/dollar exchange rate can have a significant effect upon our results of operations as reported in pesos. When the peso depreciates against the U.S. dollar, Gruma Corporation’s net sales in U.S. dollars represent a larger portion of our net sales in peso terms than when the peso appreciates against the U.S. dollar. When the peso appreciates against the dollar, Gruma Corporation’s net sales in U.S. dollars represent a smaller portion of our net sales in peso terms than when the peso depreciates against the dollar. For a description of the peso/dollar exchange rate see “Item 3. Key Information—Exchange Rate Information.”

On January 8, 2010, the Venezuelan government announced the devaluation of its currency and established a two tier exchange structure. Pursuant to Exchange Agreement No.14, the official exchange rate of the Venezuelan bolivar (“Bs.”) was devalued from Bs.2.15 to each U.S. dollar to Bs.4.30 for non-essential goods and services and to Bs.2.60 for essential goods. On December 30, 2010, the Venezuelan government modified Exchange agreement No. 14 and established a single exchange rate of 4.30 bolivars per U.S. dollar effective January 1, 2011.

Table of Contents

In addition to the above, our net income may be affected by changes in our foreign exchange gain or loss, which may be impacted by significant variations in the peso/dollar exchange rate. During 2010 and 2011, we recorded a net foreign exchange gain of Ps.144 million and Ps.41 million, respectively.

Monaca Consolidation

Under IFRS we consolidate all subsidiaries in which the Company, directly or indirectly, owns the majority of the common shares, has control, or is the primary beneficiary of the subsidiary’s risks and rewards.

As of this date, no formal transfer of title of the assets of MONACA has occurred. As a result, as of the date hereof, our subsidiary Valores Mundiales, S.L. has full control of MONACA’s rights, interest, shares and assets and full control of the operational and managerial decisions concerning MONACA. Accordingly, we have consolidated the balance sheet and income statement of MONACA as of December 31, 2011.

Pending the resolution of this matter, based on preliminary valuation reports, no impairment charge on GRUMA’s net investment in MONACA and DEMASECA has been identified; however, we are unable to estimate the value of any future impairment charge, if any, or to determine whether MONACA and DEMASECA will need to be accounted for as a discontinued operation. As a result, the net impact of this matter on the Company’s consolidated financial results cannot be reasonably estimated. See Notes 5-A and 25 to our audited consolidated financial statements.

Currency Issues in Venezuela

Historically, we have been able to convert bolivars into U.S. dollars at the Official Rate in order to settle certain U.S. dollar-denominated debt incurred pursuant to imports and royalty agreements and to pay dividends from our business in Venezuela. We expect to continue to be able to convert bolivars into U.S. dollars for these purposes. Accordingly, as of December 31, 2011, the Company’s Venezuelan subsidiaries accounted for U.S. dollar-denominated transactions, monetary assets and liabilities into bolivars using the Official Rate, which may not reflect economic reality. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks.” In addition, the Company’s Venezuelan subsidiaries’ bolivar-denominated financial statements were translated into Mexican pesos using the buying rate published by Banco de México on the applicable balance sheet dates.

Critical Accounting Policies

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.

We have identified below the most critical accounting principles that involve a higher degree of judgment and complexity and that management believes are important to a more complete understanding of our financial position and results of operations. These policies are outlined below.

Additional accounting policies that are also used in the preparation of our financial statements are outlined in the notes to our consolidated financial statements included in this Annual Report.

Property, Plant and Equipment

We depreciate our property, plant and equipment over their respective estimated useful lives. Useful lives are based on management’s estimates of the period that the assets will remain in service and generate revenues. Estimates are based on independent appraisals and the experience of our technical personnel. We review the assets’ residual values and useful lives each year to determine whether they should be changed, and adjusted if appropriate. To the extent that our estimates are incorrect, our periodic depreciation expense or carrying value of our assets may be impacted.

Table of Contents

Under IFRS, we are required to test long-lived assets for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable for property, plant and equipment. When the carrying amount exceeds the recoverable amount, the difference is accounted for as an impairment loss. The recoverable amount is the higher of (1) the long-lived asset’s (asset group) fair value less costs to sell, representing the amount obtainable from the sale of the long-lived asset (asset group) in an arm’s length transaction between knowledgeable, willing parties less the costs of disposal and (2) the long-lived asset’s (asset group) value in use, representing its future cash flows discounted to present value by using a rate that reflects the current assessment of the time value of money and the risks specific to the long-lived asset (asset group) for which the cash flow estimates have not been adjusted.

The estimates of cash flows take into consideration expectations of future macroeconomic conditions as well as our internal strategic plans. Therefore, inherent to the estimated future cash flows is a certain level of uncertainty which we have considered in our valuation; nevertheless, actual future results may differ.

Primarily as a result of plant rationalization, certain facilities and equipment are not currently in use in operations. We have recorded impairment losses related to certain of those assets and additional losses may potentially occur in the future if our estimates are not accurate and/or future macroeconomic conditions differ significantly from those considered in our analysis.

Goodwill and Other Intangible Assets

Intangible assets with definite lives are amortized on a straight-line basis over estimated useful lives. Management exercises judgment in assessing the useful lives of other intangible assets including patents and trademarks, customers lists and software for internal use. Under IFRS, goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment tests either annually or earlier in the case of a triggering event.

A key component of the impairment test is the identification of cash-generating units and the allocation of goodwill to such cash-generating units. Estimates of fair value are primarily determined using discounted cash flows. Cash flows are discounted at present value and an impairment loss is recognized if such discounted cash flows are lower than the net book value of the cash-generating units.

These estimates and assumptions could have a significant impact on whether or not an impairment charge is recognized and also the magnitude of any such charge. We perform internal valuation analyses and consider relevant internal data as well as other market information that is publicly available.

This approach uses significant estimates and assumptions including projected future cash flows (including timing), a discount rate reflecting the risk inherent in future cash flows and a perpetual growth rate. Inherent in these estimates and assumptions is a certain level of risk which we believe we have considered in our valuation. Nevertheless, if future actual results differ from estimates, a possible impairment charge may be recognized in future periods related to the write-down of the carrying value of goodwill and other intangible assets.

Deferred Income Tax

We record deferred income tax assets and liabilities using enacted tax rates for the effect of temporary differences between the book and tax basis of assets and liabilities. If enacted tax rates change, we adjust the deferred tax assets and liabilities through the provision for income tax in the period of change, to reflect the enacted tax rate expected to be in effect when the deferred tax items reverse. Under IFRS, a deferred tax asset must be recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies, in the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

Table of Contents

Derivative Financial Instruments

We use derivative financial instruments in the normal course of business, primarily to hedge certain operational and financial risks to which we are exposed, including without limitation: (i) future and options contracts for certain key production requirements like natural gas, heating oil and some raw materials such as corn and wheat, in order to minimize the cash flow variability due to price fluctuations; (ii) interest rate swaps, with the purpose of managing the interest rate risk related to our debt; and (iii) exchange rate contracts (mainly Mexican peso — U.S. dollar and in other currencies).

We account for derivative financial instruments used for hedging purposes either as cash-flow hedges or fair value hedges with changes in fair value reported in other comprehensive income and earnings, respectively. Derivative financial instruments not designated as an accounting hedge are recognized at fair value, with changes in fair value recognized currently in income.

When available, we measure the fair value of the derivative financial instruments based on quoted market prices. If quoted market prices are not available, we estimate the fair value of derivative financial instruments using industry standard valuation models. When applicable, these models project future cash flows and discount the future amounts to a present value using market observable inputs, including interest rates and currency rates, among others. Also included in the determination of the fair value of the Company’s liability positions is the Company’s own credit risk, which has been classified as an unobservable input.

Many of the factors used in measuring fair value are outside the control of management, and these assumptions and estimates may change in future periods. Changes in assumptions or estimates may materially affect the fair value measurement of derivative financial instruments.

Employee Benefits

We recognize liabilities in our balance sheet and expenses in our income statement to reflect our obligations related to our post-employment benefits (retirement plan and seniority premium). The amounts we recognize are determined on an actuarial basis that involve many estimates and accounts for these benefits in accordance with IFRS.

We use estimates in four specific areas that have a significant effect on these amounts: (a) the rate of return we assume our plans will achieve on its investments, (b) the rate of increase in salaries that we assume we will observe in future years, (c) the discount rate that we use to calculate the present value of our future obligations and (d) the expected rate of inflation. The assumptions we have applied are identified in Note 18 to our audited consolidated financial statements. These estimates are determined based on actuarial studies performed by independent experts using the projected unit credit method. The latest actuarial computation was prepared as of December 31, 2011. We review the estimates each year, and if we change them, our reported expense for post-employment benefits may increase or decrease according to market conditions.

Factors Affecting Financial Condition and Results of Operations

In recent years, our financial condition and results of operations have been significantly influenced by some or all of the following factors:

Table of Contents

· the level of demand for tortillas, corn flour and wheat flour;

· the effects of government policies on imported and domestic corn prices in Mexico;

· the cost and availability of corn and wheat;

· the cost of energy and other related products;

· our acquisitions, plant expansions and divestitures;

· the effect of government initiatives and policies, in particular on price controls and cost of grains in Venezuela; and

· the effect from variations on interest rates and exchange rates.

RESULTS OF OPERATIONS

The following table sets forth our consolidated income statement data on an IFRS basis for the years ended December 31, 2010 and 2011, expressed as a percentage of net sales. All financial information has been prepared in accordance with IFRS. For a description of the method, see “Presentation of Financial Information” and “Item 5. Operating and Financial Review and Prospects—Overview of Accounting Presentation.”

	Year Ended December 31,
	2010		2011
Income Statement Data
Net sales	100	%	100	%
Cost of sales	68.3		69.6
Gross profit	31.7		30.4
Selling and administrative expenses	26.2		24.3
Other expenses, net	(1.1	)	(0.4	)
Operating income	4.4		5.8
Net comprehensive financing cost	(2.5	)	(0.7	)
Current and deferred income taxes	1.8		3.1
Other items	1.3		8.2
Non-controlling interest	0.4		0.9
Majority net income	0.9		9.1

The following table sets forth our net sales and operating income as represented by our principal subsidiaries for 2010 and 2011. Net sales and operating income of our subsidiary PRODISA are part of “others and eliminations.” Financial information with respect to GIMSA includes sales of Ps.419 million and Ps.587 million in 2010 and 2011, respectively, in corn flour to Gruma Corporation, Molinera de México, PRODISA and Gruma Centroamérica. Financial information with respect to Molinera de México includes sales of Ps.231 million and Ps.277 million in 2010 and 2011, respectively, to GIMSA, Gruma Corporation and PRODISA; financial information with respect to PRODISA includes sales of Ps.97 million and Ps.114 million in 2010 and 2011, respectively, in tortilla related products to Gruma Corporation.

Financial information with respect to INTASA includes sales of, Ps.609 million and Ps.727 million in 2010 and 2011, respectively, in technological support to certain subsidiaries of Gruma, S.A.B. de C.V. In the process of consolidation, all the aforementioned intercompany transactions are eliminated from the financial statements.

	Year Ended December 31,
	2010					2011
	Net Sales		Operating Income			Net Sales		Operating Income
	(in millions of pesos)
Gruma Corporation	Ps.	21,451	Ps.	1,303		Ps.	23,923	Ps.	947
GIMSA	11,853		1,147			15,386		1,771
Gruma Venezuela	5,382		(26		)	9,157		674
Molinera de México	3,757		72			4,633		104
Gruma Centroamérica	2,765		(73		)	3,180		(46		)
Others and eliminations	1,024		(373		)	1,366		(112		)
Total	Ps.	46,232	Ps.	2,050		Ps.	57,645	Ps.	3,338

Table of Contents

Year Ended December 31, 2011 Compared with Year Ended December 31, 2010

Consolidated Results

GRUMA’s sales volume increased by 5% to 4,740 thousand metric tons compared with 4,526 thousand metric tons in 2010. This increase was driven mainly by Gruma Corporation and GIMSA. Net sales increased by 25% to Ps.57,645 million compared with Ps.46,232 million in 2010. The increase was due primarily to higher net sales at Gruma Venezuela, GIMSA, and Gruma Corporation, associated with price increases, sales volume growth, and the inflation effect in Venezuela. Sales from non-Mexican operations constituted 66% of consolidated net sales in 2011 and 2010.

Net Sales by Subsidiary: By major subsidiary, the percentages of consolidated net sales in 2011 and 2010 were as follows:

	Percentage of Consolidated Net Sales
Subsidiary	2011		2010
Gruma Corporation	42	%	46	%
GIMSA	27		26
Gruma Venezuela	16		12
Molinera de México	8		8
Gruma Centroamérica	6		6
Others and eliminations	1		2

Cost of sales increased by 27% to Ps. 40,118 million compared with Ps.31,563 million in 2010, due primarily to higher cost of sales at Gruma Venezuela, GIMSA, and Gruma Corporation associated with higher raw-material costs, sales volume growth, and the inflation effect in Gruma Venezuela. Cost of sales as a percentage of net sales increased to 69.6% from 68.3% in 2010 due primarily to Gruma Corporation, as raw-material cost increases were not fully reflected in our prices.

Selling, general, and administrative expenses (SG&A) increased by 16% to Ps. 13,984 million compared with Ps.12,100 million in 2010, due primarily to higher SG&A at Other and Eliminations and Gruma Corporation and, to a lesser extent, Gruma Venezuela and GIMSA. SG&A as a percentage of net sales decreased to 24.3% from 26.2% in 2010, driven mainly by better expense absorption at Gruma Venezuela and, to a lesser extent, GIMSA and Gruma Corporation.

Other expenses, net, were Ps. 204 million compared with Ps.519 million in 2010. The decrease is a result of a one-time charge during 2010 related to the expropriation procedure of our operations in Venezuela, which the company did not have during 2011.

GRUMA’s operating income increased by 63% to Ps.3,338 million compared with Ps.2,050 in 2010, and operating margin improved to 5.8% from 4.4% in 2010, due primarily to Gruma Venezuela, Other and Eliminations and, to a lesser extent, GIMSA.

Net comprehensive financing cost was Ps. 427 million compared with Ps.1,163 million in 2010. The decrease resulted mainly from lower financial expenses in connection with GRUMA’s debt reduction and better interest rates achieved during 2011, and gains on foreign-exchange-rate hedging related to corn procurement. See

Table of Contents

“Item 5. Operating and Financial Review and Prospects —Liquidity and Capital Resources—Indebtedness,” and “Item 5. Operating and Financial Review and Prospects —Liquidity and Capital Resources—Market Risk.”

GRUMA’s equity in earnings of associated companies, net, primarily from GFNorte, represented income of Ps. 4,711 million in 2011 compared with income of Ps.592 million in 2010 primarily derived from the gain on the sale of GRUMA’s stake in GFNorte during February 2011.

Taxes increased 115% to Ps.1,807 million compared with Ps.840 million in 2010 primarily as a result of higher pre-tax income.

GRUMA’s net income was Ps.5,816 million compared with Ps.639 million in 2010. Majority net income was Ps. 5,271 million compared with Ps.432 million in 2010. Both improvements were caused mainly by the gain on the sale of GRUMA’s stake in GFNorte.

Subsidiary Results

Gruma Corporation

Sales volume increased 6% to 1,478 thousand metric tons compared with 1,395 thousand metric tons in 2010. This increase was due mainly to several acquisitions made throughout the year, the one-time effect of one more week of operations during 2011, which occurs every five-to-six years according to Gruma Corporation’s fiscal year-end accounting closings; and organic growth at the European operations.

Net sales increased by 12% to Ps. 23,923 million, compared with Ps.21,451 million in 2010. The increase was driven mostly by the aforementioned sales volume growth coupled with price increases implemented during 2011 in connection with higher raw-material costs.

Cost of sales increased by 16% to Ps. 15,452 million compared with Ps.13,302 million in 2010 due to higher raw-material cost (corn, wheat, and oil) and sales volume growth. As a percentage of net sales, cost of sales increased to 64.6% from 62.0% because the aforementioned higher raw-material costs were not fully reflected in our prices.

SG&A increased by 9% to Ps. 7,435 million compared with Ps.6,829 million in 2010 due to sales volume growth, higher sales commissions related to price increases, and higher promotion and advertising expenses . SG&A as a percentage of net sales improved to 31.1% from 31.8% in 2010 in connection with better expense absorption.

Operating income decreased by 27% to Ps. 947 million from Ps.1,303 million in 2010, and operating margin declined to 4% from 6.1%.

GIMSA

Sales volume increased by 4% to 1,959 thousand metric tons compared with 1,890 thousand metric tons in 2010. The increase was a result of the growth in the supermarket segment associated with their organic growth, market-share gains in the snack producers segment, and customers’ build-up of corn flour inventories at the end of 2011 in anticipation of price increases.

Net sales increased by 30% to Ps. 15,386 million compared with Ps.11,853 million in 2010. The increase was due mainly to price increases and, to a lesser extent, the aforementioned sales volume growth and a non-recurring sale of corn for Ps.574 million.

Cost of sales increased by 30% to Ps. 11,284 million compared with Ps.8,648 million in 2010 due to higher corn costs and, to a lesser extent, the cost of the aforementioned non-recurring sale of corn during 2011 and the sales volume growth. As a percentage of net sales, cost of sales increased slightly to 73.3% from 73.0% due to the non- recurring sale of corn which had no margin contribution For a discussion of the discontinuation of Mexican government price supports, please see “Mexican Regulation——Corn Flour Consumer Aid Program.”

SG&A increased by 15% to Ps. 2,286 million compared with Ps.1,981 million in 2010. The increase resulted mainly from the continued strengthening of several programs aimed at attracting traditional tortilla makers,

Table of Contents

higher promotion and advertising expenses and, to a lesser extent, higher freight expenses coming from capacity constraints at some plants and from increased sales to supermarkets and snack producers (as for transactions with these customers we usually pay freight expenses). SG&A as a percentage of net sales decreased to 14.9% from 16.7% in 2010 due to better expense absorption.

Operating income increased by 54% to Ps. 1,771 million from Ps.1,147 million in 2010, and operating margin increased to 11.5% from 9.7%.

Gruma Venezuela

Sales volume increased 1% to 528 thousand metric tons compared with 523 thousand metric tons in 2010 due to production efficiencies at some plants, which allowed us to expand distribution in certain channels.

Net sales increased by 70% to Ps. 9,157 million compared with Ps.5,382 million in 2010. The increase was due mainly to the inflation effect and price increases and, to a lesser extent, the devaluation of the Mexican Peso and the aforementioned sales volume growth.

Cost of sales increased by 67% to Ps. 6,747 million from Ps.4,047 million in 2010. This increase was primarily due to the inflation effect and higher cost of raw materials (corn and wheat), salary increases and larger benefits for manufacturing employees and, to a lesser extent, the devaluation of the Mexican Peso and the aforementioned sales volume growth. As a percentage of net sales, cost of sales decreased to 73.7% from 75.2% due mainly to a better cost absorption as a result of the aforementioned.

SG&A increased by 30% to Ps. 1,736 million compared with Ps.1,335 million in 2010. The increase was due primarily to the inflation effect and, to a lesser extent, the devaluation of the Mexican Peso. SG&A as a percentage of net sales decreased to 19% from 24.8% due to a better expenses absorption.

Operating income increased to Ps. 674 million compared with an operating loss of Ps.26 million in 2010, and operating margin improved to 7.4% from negative 0.5%.

Molinera de México

Sales volume increased by 7% to 564 thousand metric tons compared with 530 thousand metric tons in 2010. This increase was driven by regional pricing strategies, increased market coverage and strengthening of commercial programs, higher demand for pre-mixed flours by the supermarkets, and introduction of new products to the foodservice segment.

Net sales increased by 23% to Ps. 4,633 million compared with Ps.3,757 million in 2010. The increase resulted from higher prices to reflect higher cost of wheat and, to a lesser extent, from the sales volume growth.

Cost of sales increased by 26% to Ps. 3,894 million compared with Ps.3,095 million in 2010 in connection with these higher wheat costs and volume growth . As a percentage of net sales, cost of sales increased to 84% from 82.4% due to higher wheat costs, which were not fully reflected in our prices.

SG&A increased by 9% to Ps. 631 million compared with Ps.578 million in 2010. The increase was due to the ongoing programs oriented towards the aforementioned market coverage expansion and better customer service, higher freight expenses in connection with sales volume growth, and higher intercompany shipments due to capacity constraints at some plants. SG&A as a percentage of net sales decreased to 13.6% from 15.4% in 2010 due to a better expense absorption.

Operating income increased by 45% to Ps. 104 million from Ps.72 million in 2010, and operating margin increased to 2.2% from 1.9%.

Gruma Centroamérica

Sales volume increased by 14% to 229 thousand metric tons compared with 201 thousand metric tons in 2010. The increase was due mainly to shortage of corn within the region due to bad weather conditions, which

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

We fund our liquidity and capital resource requirements, in the ordinary course of business, through a variety of sources, including:

· cash generated from operations;

· uncommitted short-term and long-term lines of credit;

· occasional offerings of medium- and long-term debt; and

· sales of our equity securities and those of our subsidiaries and affiliates from time to time.

Extreme exchange rate volatility in the financial markets during the last two quarters of 2008 and the first quarter of 2009 resulted in significant fluctuations in the mark-to-market value of GRUMA’s foreign exchange derivative instruments, which in turn resulted in downgrades in our debt ratings. As of October 28, 2008, GRUMA’s foreign exchange derivative instruments represented an aggregate negative mark-to-market non-cash unrealized loss of U.S.$788 million. On November 12, 2008 we entered into a loan agreement with Bancomext in the amount of Ps.3,367 million and applied the proceeds to terminate our commitments arising under all the currency derivative instruments that we had entered into with one of our derivative counterparties and to pay other commitments arising under the currency derivative instruments maturing from the date of such loan agreement with Bancomext (the “2008 Bancomext Peso Facility”).

In addition, we entered into agreements on October 16, 2009 with our remaining derivative counterparties to convert a total of U.S.$738.3 million dollars owing under our terminated foreign exchange derivative instruments into medium- and long-term loans. On February 18, 2011, GRUMA made an early payment of outstanding balances of such bank facilities. The total amounts of the payments made were U.S.$752.6 million and Ps.773.3 million, payments for which GRUMA used the entirety of the net proceeds from the GFNorte Sale, which totaled Ps.9,005.5 million after fees and expenses, as well as its own resources and others obtained through short-term facilities. As a result of these early payments the aforementioned agreements with our derivative counterparties were terminated.

The reduction in our credit rating and the liquidity scarcity experienced in the global financial markets resulted in a reduction in our ability to issue new debt and reduced the availability of our uncommitted short-term lines of credit during most of 2009. However, since the significant debt repayment on February 18, 2011 and the rating upgrades by Fitch and Standard & Poor’s, our ability to access credit lines has improved. See “Item 5—Operating and Financial Review and Prospects—Outstanding Indebtedness.”

On June 16, 2011, we concluded a series of transactions to refinance and terminate our obligations under the 2008 Bancomext Peso Facility. As a result, we entered into the Syndicated Loan Facility, the Peso Syndicated Loan Facility, the Rabobank Loan Facility and the 2011 Bancomext Peso Facility (as defined below). The proceeds of these transactions as well as proceeds from uncommitted short term lines of credit were applied to make an early payment on the outstanding balance of the 2008 Bancomext Peso Facility in the amount of Ps.3,367 million. Additionally, on June 20, 2011 we refinanced and extended the Gruma Corporation Loan Facility. See “Item 5. Operating and Financial Review and Prospects —Indebtedness” below for a description of our current principal debt instruments.

Our long-term corporate credit rating and our senior unsecured perpetual bond are rated BB by Standard & Poor’s. Our Foreign Currency Long-Term Issuer Default Rating and our Local Currency Long-Term Issuer Default Rating are rated BB by Fitch. Our U.S.$300 million perpetual bond is rated BB by Fitch Ratings. These ratings reflect the debt repayment made on February 18, 2011, after applying the net proceeds from the sale of GRUMA’s 8.8% stake in GFNorte. The ratings in effect during 2009 and 2010, prior to the debt repayment on February 18, 2011, reflected additional leverage on GRUMA’s capital structure from the termination of GRUMA’s foreign exchange derivative positions and the subsequent conversion of the realized losses into debt.

Table of Contents

credit ratings may continue to increase the cost of and/or limit the availability of unsecured financing, which may make it more difficult for us to raise capital when necessary. If we cannot obtain adequate capital on favorable terms, or at all, our business, operating results and financial condition would be adversely affected. However, management believes that its working capital and available external sources of financing are sufficient for our present requirements.

The following is a summary of the principal sources and uses of cash for the two years ended December 31, 2010 and 2011.

	2010			2011
	(thousands of Mexican pesos)
Resources provided by (used in):
Operating activities	Ps.	3,291,138		Ps.	1,751,314
Financing activities	(4,234,431		)	(7,429,059		)
Investing activities	(802,208		)	6,779,129

During 2011, net cash generated from operations was Ps.1,751 million after changes in working capital of Ps.3,611 million, of which Ps.1,422 million was due to an increase in accounts receivable, Ps.3,063 million reflected an increase in inventory and Ps. 1,624 million reflected an increase in accounts payable. Net cash used by financing activities during 2011 was Ps.7,429 million, including Ps.21,374 million in borrowing payments related to derivative instruments, Ps.992 million in cash interest payments, Ps.523 million of dividends paid to minority shareholders of GIMSA and Ps.156 million in cash receipts in respect of derivative instruments. Cash used for investment activities during 2011 reflected cash expenditures for Ps.6,779 of which Ps. 1,632 were applied to general manufacturing upgrades and efficiency improvements in our subsidiaries in the U.S. and, to a lesser extent, in our subsidiaries in Mexico and Europe, Ps.709 million for the acquisitions in the U.S. and Europe, and Ps. 9,004 for the sale of our stake in GFNorte. As of December 31, 2010 and 2011, there were no significant restricted net assets of the consolidated subsidiaries of the Company, as defined by Rule 4-08(e)(3) of Regulation S-X.

Factors that could decrease our sources of liquidity include a significant decrease in the demand for, or price of, our products, each of which could limit the amount of cash generated from operations, and a lowering of our corporate credit rating or any other credit downgrade, which could impair our liquidity and increase our costs with respect to new debt and cause our stock price to suffer. Our liquidity is also affected by factors such as the depreciation or appreciation of the peso and changes in interest rates. See “Item 5.Operating and Financial Review and Prospects —Indebtedness.”

As further described below, Gruma, S.A.B. de C.V. is subject to financial covenants contained in its debt agreements which require it to maintain certain financial ratios and balances on a consolidated basis, among other limitations. Gruma Corporation is also subject to financial covenants contained in one of its debt agreements which require it to maintain certain financial ratios and balances on a consolidated basis. A default under any of our existing debt obligations for borrowed money could result in acceleration of the due dates for payment of the amounts owing thereunder and, in certain cases, in a cross-default under some of our existing credit agreements and the indenture governing our perpetual bonds. See “Item 10. Additional Information—Material Contracts.”

Gruma, S.A.B. de C.V. and its consolidated subsidiaries are required to maintain a leverage ratio no greater than 3.5:1, and an interest coverage ratio no lower than 2.5:1. As of March 31, 2012, Gruma, S.A.B. de C.V.’s leverage ratio was 2.5:1, and the interest coverage ratio was 5.9:1. The amount of interest that Gruma Corporation pays on its debt may increase if its overall leverage ratio increases above 1.0:1. See “Item 5. Operating and Financial Review and Prospects —Indebtedness.” As of March 31, 2012, Gruma Corporation’s leverage ratio was 1.2:1, therefore the applicable interest rate range under the Gruma Corporation Loan Facility is LIBOR + 150 bp.

Mr. González Barrera has pledged part of his shares in our company to secure some of his borrowings. If there is a default and the lenders enforce their rights against any or all of these shares, Mr. González Barrera and his family could lose control over us and a change of control could result. This could trigger a default in some of our credit agreements and the indenture governing our perpetual bonds which have an aggregate principal amount outstanding as of March 31, 2012 of U.S.$715 million and have a material adverse effect upon our business, financial condition, results of operations and prospects. For more information about this pledge, see “Item 7. Major Shareholders and Related Party Transactions.”

Table of Contents

Indebtedness

Our indebtedness bears interest at fixed and floating rates. As of March 31, 2012, approximately 29% of our outstanding indebtedness bore interest at fixed rates and approximately 71% bore interest at floating rates, with almost all U.S. dollar and Mexican peso floating-rate indebtedness bearing interest based on LIBOR and TIIE, respectively. From time to time, we partially hedge both our interest rate exposure and our foreign exchange rate exposure as discussed below. For more information about our interest rate and foreign exchange rate exposures, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

Outstanding Indebtedness

As of March 31, 2012, we had total outstanding long-term debt aggregating approximately Ps.11,541 million (approximately U.S.$901 million). Approximately 84% of our long-term debt at such date was dollar-denominated, and 16% denominated in Mexican Pesos.

Perpetual Bonds

On December 3, 2004, Gruma, S.A.B. de C.V. issued U.S.$300 million 7.75% senior unsecured perpetual bonds, which at the time were rated BBB- by Standard & Poor’s Ratings and by Fitch Ratings. The bonds which have no fixed final maturity date, have a call option exercisable by GRUMA at any time beginning five years after the issue date. In connection with our refinancing under the Term Loan, the Three-Year Term Loans, the BNP Term Loan and the Refinanced 2005 Facility, Gruma, S.A.B. de C.V. entered into a supplemental indenture on October 21, 2009 that provided holders of our perpetual bonds with an equal and ratable security interest in certain of our subsidiaries (the “Pledged Shares”). Due to the early payment of the outstanding balances of several of our current bank facilities using proceeds from the GFNorte Sale, cash and short-term lines of credit, the security interests in the Pledged Shares have been released. As of December 31, 2011 we have not hedged any interest payments on our U.S.$300 million 7.75% senior unsecured perpetual bonds.

Gruma Corporation

In October 2006, Gruma Corporation entered into a U.S.$100 million 5-year revolving credit facility with a syndicate of financial institutions, which was refinanced and extended on June 20, 2011 to U.S.$200 million for an additional 5-year term (the “Gruma Corporation Loan Facility”). The facility, as refinanced in 2011, has an interest rate based on LIBOR plus a spread of 1.375% to 2% that fluctuates in relation to Gruma Corporations’ leverage and contains less restrictive provisions than those in the facility replaced. This facility contains covenants that limit Gruma Corporation’s ability to merge or consolidate, and require it to maintain a ratio of total funded debt to consolidated EBITDA of not more than 3.0:1. In addition, this facility limits Gruma Corporation’s, and certain of its subsidiaries’ ability, among other things, to create liens; make certain investments; make certain restricted payments; enter into any agreements that prohibit the payment of dividends; and engage in transactions with affiliates. This facility also limits Gruma Corporation’s subsidiaries’ ability to incur additional debt.

Gruma Corporation is also subject to covenants which limit the amounts that may be advanced to, loaned to, or invested in us under certain circumstances. Upon the occurrence of any default or event of default under its credit agreements, Gruma Corporation generally would be prohibited from making any cash dividend payments to us. The covenants described above and other covenants could limit our and Gruma Corporation’s ability to help support our liquidity and capital resource requirements

Syndicated Loan Facility

On March 22, 2011 we obtained a U.S.$225 million, five-year senior credit facility through a syndicate of banks (the “Syndicated Loan Facility”). The Syndicated Loan Facility consists of a term loan (“Term Loan Facility”) and a revolving loan facility (the “Revolving Loan Facility”). The interest rate for the Term Loan Facility and for the Revolving Loan Facility is either (i) LIBOR or (ii) an interest rate determined by the administrative agent based on its “prime rate” or the federal funds rate, respectively, plus, in either case, (a) 2.25% if the Company’s ratio of total funded debt to EBITDA (the “Maximum Leverage Ratio”) is greater than or equal to 3.0x, (b) 2.0% if the Company’s Maximum Leverage Ratio is greater than or equal to 2.5x and less than 3.0x, (c) 1.75% if the

Table of Contents

Company’s Maximum Leverage Ratio is greater than or equal to 2.0x and less than 2.5x and (d) 1.50% if the Company’s Maximum Leverage Ratio is less than 2.0x. The Syndicated Loan Facility contains covenants that require the Company to maintain a ratio of consolidated EBITDA to interest charges of not less than 2.5:1, and a Maximum Leverage Ratio of not more than 3.5:1. The Syndicated Loan Facility also limits our ability, and our subsidiaries’ ability in certain cases, among other things, to: create liens; make certain investments or other restricted payments; merge or consolidate with other companies or sell substantially all of our assets; and enter into certain hedging transactions. Additionally, the Syndicated Loan Facility limits our subsidiaries’ ability to guarantee additional indebtedness issued by the Company and to incur additional indebtedness under certain circumstances.

Peso Syndicated Loan Facility

On June 15, 2011 we obtained a Ps.1,200 million, seven-year senior credit facility through a syndicate of banks (the “Peso Syndicated Loan Facility”). The Peso Syndicated Loan Facility consists of a term loan maturing in June 2018 with yearly principal amortizations beginning on December 2015, at an interest rate of 91-day TIIE plus a spread between 137.5 and 225 basis points based on the Company’s ratio of total funded debt to EBITDA. The Peso Syndicated Loan Facility contains covenants that require the Company to maintain a ratio of consolidated EBITDA to interest charges of not less than 2.5:1, and to maintain a Maximum ratio of total funded debt to EBITDA of not more than 3.5:1. The Peso Syndicated Loan Facility also limits our ability, and our subsidiaries’ ability in certain cases, among other things, to: create liens; make certain investments or other restricted payments; merge or consolidate with other companies or sell substantially all of our assets; and enter into certain hedging transactions. Additionally, the Peso Syndicated Loan Facility limits our subsidiaries’ ability to guarantee additional indebtedness issued by the Company and to incur additional indebtedness under certain circumstances.

Rabobank Loan Facility

On June 15, 2011 we obtained a U.S.$50 million, five-year senior credit facility from Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (the “Rabobank Loan Facility”). The Rabobank Loan Facility consists of a revolving loan facility, at in interest rate of LIBOR plus (a) 2.25% if the Maximum Leverage Ratio is greater than or equal to 3.0x, (b) 2.0% if the Company’s Maximum Leverage Ratio is greater than or equal to 2.5x and less than 3.0x, (c) 1.75% if the Company’s Maximum Leverage Ratio is greater than or equal to 2.0x and less than 2.5x and (d) 1.50% if the Company’s Maximum Leverage Ratio is less than 2.0x. The Rabobank Loan Facility contains covenants that requires the Company to maintain a ratio of consolidated EBITDA to interest charges of not less than 2.5:1, and a Maximum Leverage Ratio of not more than 3.5:1. The Rabobank Loan Facility also limits our ability, and our subsidiaries’ ability in certain cases, among other things, to: create liens; make certain investments or other restricted payments; merge or consolidate with other companies or sell substantially all of our assets; and enter into certain hedging transactions. Additionally, the Rabobank Loan Facility limits our subsidiaries’ ability to guarantee additional indebtedness issued by the Company and to incur additional indebtedness under certain circumstances.

2011 Bancomext Peso Facility

On June 16, 2011 we obtained a Ps.600 million, seven-year senior credit facility from Bancomext (Banco Nacional de Comercio Exterior) (the “2011 Bancomext Peso Facility”). The 2011Bancomext Peso Facility consists of a term loan maturing in June 2018 at an interest rate of 91-day TIIE plus a spread between 137.5 and 225 basis points based on the Company’s ratio of total funded debt to EBITDA. The 2011Bancomext Peso Facility contains a covenant that requires us to maintain a ratio of consolidated EBITDA to interest charges of not less than 2.5:1 as well as a covenant that requires us to maintain a maximum ratio of total funded debt to EBITDA of not more than 3.5:1. The 2011Bancomext Peso Facility also limits our ability, and our subsidiaries’ ability in certain cases to create liens.

Other Information

As of December 31, 2011 we were in compliance with all of the covenants and obligations under our existing debt agreements.

As of March 31, 2012, the Company had committed lines of credit for the amount of U.S.$325 million from banks in Mexico and the United States of which we have drawn U.S.$306 million dollars.

Table of Contents

As of March 31, 2012, we had total cash and cash equivalents of Ps.1,292 million.

The following table presents our amortization requirements with respect to our total indebtedness as of March 31, 2012.

Year		In Millions of U.S. Dollars
2012		117
2013		14
2014		26
2015		32
2016		420
2017 and thereafter		419
Total		1,028

The following table sets forth our ratios of consolidated debt to total capitalization (i.e., consolidated debt plus total stockholders’ equity) and consolidated liabilities to total stockholders’ equity as of the dates indicated. For purposes of these ratios, consolidated debt includes short-term debt.

Date	Ratio of Consolidated Debt to Total Capitalization	Ratio of Consolidated Liabilities to Total Stockholders’ Equity
December 31, 2010	0.63	2.63
December 31, 2011	0.43	1.51
March 31, 2012	0.43	1.50

Capital Expenditures

During 2010, capital expenditures of U.S.$89 million mostly applied to general manufacturing and technology upgrades in Gruma Corporation and GIMSA, and the acquisition of the leading producer of corn grits in Ukraine. During 2011, capital expenditures were U.S.$191 million, most of which were primarily applied to production capacity expansions, manufacturing and technology upgrades especially in the U.S. and, to a lesser extent, in Mexico and Europe. We also made several acquisitions throughout the year, including the leading producer of corn grits in Turkey, two tortilla plants in the U.S. and the leading tortilla manufacturer in Russia .

We have budgeted approximately U.S.$200 million for capital expenditures in 2012, which we intend to use mainly for production capacity expansions, general manufacturing and technology upgrades, especially in Gruma Corporation, GIMSA and Molinera de Mexico. We anticipate financing these expenditures throughout the year through internally generated funds and debt. This capital expenditures budget does not include any potential acquisition.

Concentration of Credit Risk

Our regular operations expose us to potential defaults when our suppliers and counterparties are unable to comply with their financial or other commitments. We seek to mitigate this risk by entering into transactions with a diverse pool of counterparties. However, we continue to remain subject to unexpected third party financial failures that could disrupt our operations.

We are also exposed to risk in connection with our cash management activities and temporary investments, and any disruption that affects our financial intermediaries could also adversely affect our operations.

Our exposure to risk due to trade receivables is limited given the large number of our customers located in different parts of Mexico, the United States, Central America, Venezuela, Europe, Asia and Oceania. However, we still maintain reserves for potential credit losses. Our operations in Venezuela represented 16% of our sales and 14% of total assets as of December 31, 2011. The severe political and economic situation in Venezuela presents a risk to our business that we cannot control and that cannot be accurately measured or estimated. For example, the Venezuelan government devalued its currency and established a two tier exchange structure on January 11, 2010. Pursuant to Exchange Agreement No.14, the official exchange rate of the Venezuelan bolivar (“Bs.”) was devalued

Table of Contents

from Bs.2.15 to each U.S. dollar to Bs.4.30 for non-essential goods and services and to Bs.2.60 for essential goods. However, effective January 4, 2011, the fixed exchange rate became 4.30 bolivars for all goods and services.

At this time, we cannot predict the effect that the Venezuelan government’s decision to devalue its currency, or similar decisions the government may take in the future, will have on our suppliers and counterparties. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risks.”

Our financial condition and results of operations could be adversely affected since, among other reasons: (i) 100% of the sales of our operations in Venezuela are denominated in bolivars; (ii) Gruma Venezuela produces products that are subject to price controls; (iii) part of Gruma Venezuela’s sales depend on centralized government procurement policies for its social welfare programs; (iv) we may have difficulties repatriating dividends from Gruma Venezuela, as well as importing some of its requirements for raw materials as a result of the exchange controls; and (v) Gruma Venezuela may face increasing costs in some of our raw materials due to the implementation of import tariffs. In the case of some of our raw materials, we may also face increasing costs due to the implementation of import tariffs. See “Item 3. Key Information—Risk Factors—Risks Related to Venezuela—Venezuela Presents Significant Economic Uncertainty and Political Risk.”

From time to time, we enter into currency and other derivative transactions that cover varying periods of time and have varying pricing provisions. Our credit exposure on derivatives contracts is primarily to professional counterparties in the financial sector, arising from transactions with banks, investment banks and other financial institutions. As of March 31, 2012, the Company had foreign exchange derivative transactions in effect for a nominal amount of U.S.$378 million. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”

Market Risk

Market risk is the risk of loss generated by fluctuations in market prices such as commodities, interest rates and foreign exchange rates. These are the main market risks to which we are exposed.

During 2011, GIMSA entered into forward transactions in order to hedge the Mexican peso to U.S. dollar foreign exchange rate risk related to the price of the corn purchases for the summer and winter corn harvests in Mexico.

As of March 31, 2012, the Company had foreign exchange derivative transactions in effect for a nominal amount of U.S.$378 million with different maturities from April through July 2012. The purpose of these contracts was to hedge the risks related to exchange rate fluctuations on the price of corn and wheat, which is denominated in U.S. dollars. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”

RESEARCH AND DEVELOPMENT

We continuously engage in research and development activities that focus on, among other things: increasing the efficiency of our proprietary corn flour and corn/wheat tortilla production technology; maintaining high product quality; developing new and improved products and manufacturing equipment; improving the shelf life of certain corn and wheat products; improving and expanding our information technology system; engineering, plant design and construction; and compliance with environmental regulations. We have obtained 57 patents in the United States since 1968. Twenty of these patents are in force and effect in the United States as of the date hereof and the remaining 37 have expired. We currently have five new patents in process, four in the United States and one in other countries. Additionally, two of our registered patents are currently in the process of being published in other countries.

Our research and development is conducted through our subsidiaries INTASA, Tecnomaíz and CIASA. Through Tecnomaíz, we engage in the design, manufacture and sale of machines for the production of corn/wheat tortillas and tortilla chips. We carry out proprietary technological research and development for corn milling and tortilla production as well as all engineering, plant design and construction through INTASA and CIASA. These companies administer and supervise the design and construction of our new plants and also provide advisory services and training to employees of our corn flour and tortilla manufacturing facilities. We spent Ps.77 million and Ps. 91 million on research and development in 2010 and 2011, respectively.

Table of Contents

TREND INFORMATION

Our financial results will likely continue to be influenced by factors such as changes in the level of consumer demand for tortillas and corn flour, government policies regarding the Mexican tortilla and corn flour industry, and the cost of corn, wheat and wheat flour. In addition, we expect our financial results in 2012 to be influenced by:

· volatility in corn and wheat prices;

· increased competition from tortilla manufacturers, especially in the U.S.;

· increase or decrease in the Hispanic population in the United States;

· increases in Mexican food consumption by the non-Hispanic population in the United States; as well as projected increases in Mexican food consumption and use of tortillas in non-Mexican cuisine as tortillas continue to be assimilated into mainstream cuisine in the U.S., Europe, Asia and Oceania, each of which could increase sales;

· volatility in energy costs;

· increased competition in the corn flour business;

· exchange rate fluctuations, particularly increases and decreases in the value of the Mexican peso relative to the Venezuelan bolivar and U.S. dollar;

· civil and political unrest, currency devaluation and other governmental economic policies in Venezuela which may negatively affect the profitability of Gruma Venezuela;

· unfavorable general economic conditions in the United States and globally, such as the recession or economic slowdown, which could negatively affect the affordability of and consumer demand for some of our products; and

OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2011 we do not have any outstanding off-balance sheet arrangements.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

We have commitments under certain firm contractual arrangements to make future payments for goods and services. These firm commitments secure the future rights to various assets to be used in the normal course of operations. For example, we are contractually committed to making certain minimum lease payments for the use of property under operating lease agreements. The following table summarizes separately our material firm commitments at December 31, 2011 and the timing and effect that such obligations are expected to have on our liquidity and cash flow in future periods. In February of 2011, we prepaid approximately U.S.$753 million and Ps.773 million of indebtedness. In addition, the table reflects the timing of principal and interest payments on outstanding debt, which is discussed in “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.” We expect to fund the firm commitments with operating cash flow generated in the normal course of business.

Table of Contents

Contractual Obligations and Commercial Commitments	Total	Less than 1 Year	From 1 to 3 Years	From 3 to 5 Years	Over 5 Years
	(in millions of U.S. dollars)
Long-term debt obligations	822.3	—	28.8	402.7	390.8
Operating lease obligations(1)	194.7	44.7	58.1	34.4	57.5
Finance lease obligations	2.4	0.9	1.5	—	—
Purchase obligations(2)	606.9	606.9	—	—	—
Interest payments on our indebtedness (3)	261.5	46.8	81.9	76.1	56.7
Other liabilities(4)	117.1	117.1	—	—	—
Total	2,004.9	816.4	170.3	513.2	505.0
Total in millions of peso equivalent amounts	27,968.4	11,388.8	2,375.7	7,159.1	7,044.8

(1) Operating lease obligations primarily relate to minimum lease rental obligations for our real estate and operating equipment in various locations.

(2) Purchase obligations relate to our minimum commitments to purchase commodities, raw materials, machinery and equipment.

(3) In the determination of our future estimated interest payments on our floating rate denominated debt, we used the interest rates in effect as of December 31, 2011.

(4) Other relates to liabilities for short-term bank loans and the current portion of long-term debt.

ITEM 6 Directors, Senior Management and Employees.

MANAGEMENT STRUCTURE

Our management is vested in our board of directors. Our day to day operations are handled by our executive officers.

Our bylaws require that our board of directors be composed of a minimum of five and a maximum of twenty-one directors, as decided at our Ordinary General Shareholders’ Meeting. Pursuant to the Mexican Securities Law, at least 25% of the members of the board of directors must be independent. Under our bylaws and the Archer-Daniels-Midland association, as long as Archer-Daniels-Midland owns at least 20% of our capital stock, it will have the right to designate two of our directors and their corresponding alternates. Archer-Daniels-Midland has designated Federico Gorbea, President and Chief Operating Officer of Archer-Daniels-Midland’s operations in Mexico, and Mark Kolkhorst, Corporate Vice President of Archer-Daniels-Midland and President of Archer-Daniels-Midland’s Cocoa and Milling divisions, as members of our board of directors. Archer-Daniels-Midland has elected Ray G. Young, its Senior Vice President and Chief Financial Officer, and Vikram Luthar, its Group Vice President of Finance, to serve as alternates for Mr. Gorbea and Mr. Kolkhorst, respectively. In addition, under Mexican law, any holder or group of holders representing 10% or more of our capital stock may elect one director and its corresponding alternate.

The board of directors, which was elected at the Ordinary General Shareholders’ Meeting held on April 26, 2012, currently consists of 17 directors, with each director having a corresponding alternate director. The following table sets forth the current members of our board of directors, their ages, years of service, principal occupations, outside directorships, other business activities and experience, their directorship classifications as defined in the Code of Best Corporate Practices issued by a committee formed by the Consejo Coordinador Empresarial, or Mexican Entrepreneur Coordinating Board, and their alternates. The terms of their directorships are for one year, or for up to thirty additional days if no designation of their substitute has been made or if the substitute has not taken office.

Roberto González Barrera	Age:	81
	Years as Director:	30
	Principal Occupation:	Chairman of the Board of GRUMA and GIMSA.
	Outside Directorships:	Chairman Emeritus of the Board of Grupo Financiero Banorte, Chairman of the Boards of Fundación GRUMA, Fundación Banorte and Patronato de Cerralvo, Director of Patronato del Hospital Infantil de México.
	Directorship Type:	Shareholder, Related
	Alternate:	Joel Suárez Aldana

Table of Contents

Alejandro Barrientos Serrano	Age:	46
	Years as Director:	Since April 2012
	Principal Occupation:	Chief Financial Officer of GRUMA.
	Outside Directorships:	Director of GIMSA.
	Business Experience:	President of the Mexico Office of BLADEX and CALYON, Senior Account Executive at Banco Nacional de México, and Senior Auditor at Ruiz, Urquiza & CIA.
	Directorship Type:	Related
	Alternate:	Homero Huerta Moreno

José de la Peña y Angelini	Age:	63
	Years as Director:	3
	Principal Occupation:	Chief Executive Officer of Corporativo Obama.
	Outside Directorships:	Director of GIMSA.
	Business Experience:	President of the Mexico Office of FCB Worldwide, Chief Operating Officer of Chrysler de México, Executive Vice President Sales and Marketing of GRUMA, Chief Operating Officer of Gruma Latin America.
	Directorship Type:	Independent
	Alternate:	Mario Ernesto Medina Ramírez

Juan Diez-Canedo Ruiz	Age:	61
	Years as Director:	7
	Principal Occupation:	Chief Executive Officer of Financiera Local.
	Outside Directorships:	Director of GIMSA.
	Business Experience:	Chief Executive Officer of Fomento y Desarrollo Comercial, Alternate Director of Grupo Financiero Banorte and Banco Mercantil del Norte, Chief Executive Officer of Cintra, Executive Vice President of GRUMA and Grupo Financiero Banorte, Banking Director of Grupo Financiero Probursa, Alternate Chief Executive Officer of Banco Internacional.
	Directorship Type:	Shareholder, Independent
	Alternate:	Felipe Diez-Canedo Ruiz

Bertha Alicia González Moreno	Age:	58
	Years as Director:	4
	Principal Occupation:	Honorary Life President of Patronato para el Fomento Educativo y Asistencial de Cerralvo.
	Outside Directorships:	Director of Grupo Financiero Banorte, Director of GIMSA, Centro Educativo Universitario Panamericano, Adanec, and Grafo Industrial.
	Business Experience:	Owner and Chief Executive Officer of Uniformes Profesionales de Monterrey and Comercializadora B.A.G.M., Majority Shareholder of Grupo Beryllium.
	Directorship Type:	Shareholder, Related
	Alternate:	Javier Morales González

Juan Antonio González Moreno	Age:	54
	Years as Director:	18
	Principal Occupation:	Chief Executive Officer of Gruma Asia and Oceania.
	Outside Directorships:	Alternate Director of Grupo Financiero Banorte, Chairman of the Board and Chief Executive Officer of Car Amigo USA.
	Business Experience:	Several positions in GRUMA, including Senior Vice President of Special Projects of Gruma Corporation, President of Azteca Milling, Vice President of Central and Eastern Regions of Mission Foods, President and Vice President of Sales of Azteca Milling, Chief Operating Officer of GIMSA.
	Directorship Type:	Related

Table of Contents

	Alternate:	Alejandro Vazquez Salido

Federico Gorbea Quintero	Age:	48
	Years as Director:	5
	Principal Occupation:	President and General Manager of Archer Daniels Midland Mexico.
	Outside Directorships:	Chairman of the Board of Terminales de Carga Especializadas, Director of Asociación de Proveedores de Productos Agropecuarios de México.
	Business Experience:	President and General Manager of Compañía Continental de México.
	Directorship Type:	Independent
	Alternate:	Ray G. Young

Carlos Hank Rhon	Age:	64
	Years as Director:	18
	Principal Occupation:	Chairman of the Board of Grupo Financiero Interacciones, Grupo Hermes and Grupo Coin/La Nacional.
	Outside Directorships:	None.
	Business Experience:	Chairman of the Board of Laredo National Bancshares, Director of Banamex-Accival and Mexican Stock Exchange.
	Directorship Type:	Related
	Alternate:	Carlos Hank González

Mark Kolkhorst	Age:	48
	Years as Director:	1
	Principal Occupation:	Corporate Vice President of ADM and President of Cocoa and Milling divisions.
	Outside Directorships:	None.
	Business Experience:	President of Milling Division, President of Specialty Feed Ingredients, Vice President of Sales of Specialty Feed Ingredients, Vice President of ADM/GROWMARK and Tabor Grain.
	Directorship Type:	Independent
	Alternate:	Vikram Luthar

Mario Martín Laborín Gómez

FORWARD LOOKING STATEMENTS			2

PART I			3

	ITEM 1	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	3

	ITEM 2	OFFER STATISTICS AND EXPECTED TIMETABLE	3

	ITEM 3	KEY INFORMATION	3

	ITEM 4	INFORMATION ON THE COMPANY	19

	ITEM 5	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	39

	ITEM 6	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	56

	ITEM 7	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	64

	ITEM 8	FINANCIAL INFORMATION	66

	ITEM 9	THE OFFER AND LISTING	70

	ITEM 10	ADDITIONAL INFORMATION	71

	ITEM 11	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	89

	ITEM 12	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	94

PART II			95

	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	95

	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	95

	ITEM 15.	CONTROLS AND PROCEDURES	95

	ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	96

	ITEM 16B.	CODE OF ETHICS	96

	ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	96

	ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	97

	ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	97

	ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	97

	ITEM 16G.	CORPORATE GOVERNANCE	97

	ITEM 16H.	MINE SAFETY DISCLOSURE	99

PART III			99

	ITEM 17.	FINANCIAL STATEMENTS	99

	ITEM 18.	FINANCIAL STATEMENTS	99

	ITEM 19.	EXHIBITS	99