PACRA Maintains Entity Ratings of Service Long March Tyres (Private) Limited.

The ratings reflect the robust business and operational profile of Service Long March Tyres (Private) Limited (“SLM Tyres” or “the Company”). Operating under the umbrella of the well-established Service Group, SLM Tyres is a strategic joint venture between Service Industries Limited (SIL)—one of Pakistan’s leading manufacturers of footwear and tyres—and Chaoyang Long March Tyre Company Limited (LM), a globally recognized Chinese manufacturer of all-steel radial tyres. This collaboration enabled a full-scale technology transfer and led to the establishment of Pakistan’s first dedicated manufacturing facility for all-steel truck and bus radial (TBR) tyres. The facility is strategically located in the Special Economic Zone (SEZ) of the Sindh (S.I.T.E), Nooriabad, allowing for efficient nationwide distribution and streamlined export logistics. Since commencing commercial production in March 2022, the Company has demonstrated rapid operational growth. It has developed a robust nationwide distribution network and established a growing footprint in international markets by offering high-quality products that meet global standards. This strategic synergy has positioned SLM Tyres as a prominent player in the regional tyre industry. Operating in a competitive market landscape, primarily dominated by imported tyre brands, SLM Tyres has captured a notable ~55% share of the domestic market. On the export front, the Company has also gained momentum. Notably, recent tariff adjustments by the U.S. are expected to benefit SLM Tyres, as competing exporters from Vietnam and Thailand are now subject to higher import duties in the U.S. market. In CY24, the Company reported a year-on-year revenue growth of ~68%, with total sales reaching PKR 44,882 million. This growth was primarily driven by increased volumetric sales. SLM Tyres' strong financial and operational performance is reinforced by a sound governance framework and a competent management team. The leadership brings a wealth of industry expertise and diverse experience, ensuring strategic direction and operational efficiency across all business functions. Looking ahead, SLM Tyres is well-positioned for sustained growth. Phase II of the Company’s capacity expansion is underway and aims to increase annual production capacity to ~1.6 million tyres. Plans for Phase III remain intact, targeting a total installed capacity of ~2.4 million tyres per annum. These expansions are aligned with rising domestic demand and the management’s strategy to broaden its global footprint. The Company’s financial risk profile is considered strong, characterized by comfortable debt coverage metrics, healthy cash flows, and an efficient working capital cycle. The capital structure remains leveraged, with a mix of long-term and short-term borrowings utilized for capacity expansion and working capital needs. A significant portion of these borrowings has been secured through concessionary financing schemes.
The ratings are dependent upon the Company’s ability to sustain its growth trajectory in revenue and maintain a healthy profitability matrix while upholding strong financial discipline. The materialization of the envisaged strategy shall also remain imperative to the ratings.

About the Entity
Service Long March Tyres (Private) Limited was incorporated in Pakistan on January 7th, 2020 as a private limited entity. It is primarily engaged in the manufacturing and sale of all-steel radial tyres for buses and trucks in Pakistan. The Company’s ownership is a split between Chaoyang Long March Tyre Company Limited (~44%), Service Industries Limited (~22.09%), Service Global Footwear Limited (~18.91%), Service Tyres (Private) Limited (~10.00%) and Mr. Shabir Ahmad (~5.0%). The board of SLM Tyres comprises 9 members, including Mr. Jin Yongsheng (Chairman) and Mr. Omar Saeed (CEO).