PACRA Maintains Entity Ratings of Service Industries Limited

Service Industries Limited (“SIL” or “the Company”) operates with a dual profile, functioning both as a holding company and an operating company. As a holding entity, SIL maintains strategic investments in Service Long March Tyres (Pvt.) Ltd (SLM) and Service Global Footwear Ltd (SGFL), while also owning two wholly-owned subsidiaries: Service Tyres (Pvt.) Ltd and Service Retail (Pvt.) Ltd. These now manage the tyre and tube operations and footwear retail business, respectively, following a structured demerger. This reorganization has reinforced SIL’s role as a holding company, enabling greater efficiency and oversight through specialized management teams. On the operating front, SIL continues to manage its footwear manufacturing facility located in Gujrat. The assigned ratings reflect the group’s formidable market position across all operating segments, a diversified investment portfolio that broadens revenue streams, and expanding exports that have supported sustained growth in consolidated revenue and profitability. A sound governance framework and prudent risk management practices further underpin the ratings. In the domestic market, SIL is focused on strengthening its presence in footwear retail through network expansion and product diversification. In the tyre and tube segment, the Company retains a dominant position in the two- and three-wheeler and light commercial vehicle bias tyre categories. In the truck and bus radial (TBR) segment, SLM has established a sizeable market share by offering competitive local alternatives under an import substitution strategy. On the export side, both SLM and SGFL continue to advance the group’s vision of expanding its global reach. The broader macroeconomic environment in FY25 reflected signs of recovery, with GDP growth recorded at 2.68%, supported by an improved industrial and services sector, declining inflation, lower policy rates, and relative stability in the foreign exchange, which contributed to stronger consumer confidence. Against this backdrop, SIL’s consolidated revenue grew by ~30% in CY24, reaching PKR 125bln compared to PKR 96.5bln in CY23, driven by higher volumes and price adjustments. Profitability margins also improved across all levels, supported by operating efficiencies and economies of scale. The ratings incorporate SIL’s strengthened financial risk profile, characterized by adequate cash flows, coverage, and a slightly stretched working capital cycle. The capital structure is leveraged, reflecting the use of concessionary financing for expansion projects. Going forward, the sponsors remain committed to enhancing revenue streams through import substitution and by broadening export opportunities under sustainable business models, while continuing to invest in innovation and market diversification to sustain long-term growth.
The ratings are dependent on the sustenance of the Group's leading position in its respective business niches and consistent growth under a challenging business environment. Profitability in line with business expansion; prudent working capital management and maintenance of coverages shall remain imperative along with sustained dividend flow from the investments.

About the Entity
SIL is a public listed entity, incorporated in 1957. The Company operates under the brand name of 'Servis' across the country. The group is one of the largest manufacturers of tyres & tubes (Agri and 2, 3 & 4-wheelers), TBR, and footwear, besides being a prominent export player in the country. The majority stake vests with the sponsoring family, which collectively holds ~40.3% of shareholding. The Board comprises nine members, with 3 independent directors, 2 executive directors & 4 non-executive directors. Mr. Arif Saeed is the CEO of the Company.