PACRA Assigns Initial Ratings to Service Retail (Pvt.) Limited

Service Retail (Private) Limited, a wholly owned subsidiary of Service Industries Limited (SIL), operates a vast network of Servis Shoe outlets across Pakistan, offering a wide range of footwear products, categorized in men, women, kids, accessories, and apparel. SRPL continues to uphold the Servis Group’s legacy of providing exceptional value to local customers through an extensive retail presence. SRPL benefits from strong brand equity and an extensive nationwide distribution network. The assigned ratings take comfort from the Company’s longstanding and prominent presence in the footwear industry. Pakistan’s footwear sector remains predominantly fragmented, with the unorganized segment largely comprised of craft manufacturers and cobblers, accounting for ~80% of market share. The remaining ~20% is represented by organized players, including established brands such as Servis, Stylo, Bata, Ndure, and Borjan. As per the Trade Development Authority of Pakistan’s (TDAP) report, annual demand is estimated at ~600 million pairs, with organized players commanding a notable share of the branded retail segment, while the cottage industry continues to serve domestic consumption needs. The industry is inherently cyclical, with demand patterns closely linked to consumer discretionary spending, while frequent shifts in fashion trends necessitate continuous product innovation and adaptation. During 1HCY25, SRPL recorded topline growth of ~12.1% YoY, with revenues reported at PKR 7.18bln (1HCY24: PKR 6.37bln), supported by sustained consumer demand and a measured expansion in the retail footprint. The Company operated 280 outlets as of end-1HCY25 (CY24: 275 outlets), with a concentrated presence in Punjab province, enabling access to a broad and diverse customer base. Profitability margins remained broadly stable across operating levels. Financial risk profile is demonstrated by adequate working capital management, cash cycle, and comfortable coverage. Capital structure remains leveraged, primarily comprising short-term borrowings, which are primarily utilized to fund working capital requirements. Assigned ratings incorporate the strong business acumen of sponsors complemented by sound governance practices, oversight from experienced professionals in key positions, and a comprehensive internal control framework.
The ratings remain contingent on the Company’s ability to strengthen its position within its segment and sustain growth amid a competitive business environment. Continued focus on prudent working capital management and maintaining a conservative leverage profile will remain critical.

About the Entity
Service Retail (Private) Limited (‘SRPL’ or ‘the Company’) was incorporated in Pakistan on December 21st, 2023 as a private limited company. It is primarily engaged in the sale, trading, retail, wholesale and marketing, import and export of footwear, bags, apparel and accessories in Pakistan. The Company is a wholly-owned subsidiary of SIL. The board of SRPL comprises five members, including Mr. Kashif Aziz Khwaja (CEO), Mr. Arif Saeed (Director), Mr. Omar Saeed (Director), Mr. Saif Javed (Director), and Mr. Hassan Javed (Director).