PACRA Upgrades the Entity Rating of Service Long March Tyres Limited.

Service Long March Tyres Limited (SLM) operates as part of the well-established Service Group and holds the distinction of being Pakistan's sole manufacturer of all-steel Truck and Bus Radial (TBR) tyres. The Company's manufacturing platform stems from a strategic joint venture with Chaoyang Long March Tyre Company Limited, a renowned TBR manufacturer. The facility, located within the Special Economic Zone at Nooriabad, supports both domestic distribution and export logistics. Operating in a market largely served by imported brands, the Company has built a sizeable share of domestic demand while progressively expanding its presence in export markets, underpinned by consistent product quality and an established distribution network. The rating upgrade reflects a combination of factors that have collectively strengthened the Company's business and financial profile. The Company has demonstrated consistent revenue growth, underpinned by sustained improvement in profitability, strengthening market share within the domestic TBR segment, and continued expansion of its export footprint. The positive trajectory has been further supported by ongoing capacity expansions and improved capacity utilization, enabling the Company to effectively capitalize on growing market demand. A significant milestone during the period was the Company's recent successful listing on the Pakistan Stock Exchange, which has enhanced its governance framework. Industry demand for TBR tyres continues to be driven primarily by the replacement market, with new commercial vehicle sales providing supplementary support. As per PAMA data for 11MFY26, truck and bus sales rose to 6,534 units and 867 units, respectively (11MFY25: 3,776 and 719 units), reflecting a broader recovery in commercial vehicle activity underpinned by macroeconomic stabilization, declining interest rates, and demand stemming from government-led infrastructure initiatives. In line with these favorable dynamics, the Company's revenue reached PKR 33.5 billion in 1HFY26, against full-year FY25 revenue of PKR 49.8 billion, with growth primarily attributable to volumetric expansion. Margins improved across all levels, reflecting better capacity utilization and operating leverage. The governance structure is supported by a professional and experienced Board, complemented by an experienced management team responsible for day-to-day operations. Internal control systems are established across key functional areas, supporting consistency in financial reporting and operational decision-making as the Company transitions into its post-listing reporting environment. The financial risk profile remains comfortable, characterized by adequate coverage indicators and healthy internal cash flow generation. The working capital cycle, while stretched, remains broadly consistent with prevailing industry norms. The capital structure is leveraged, with borrowings predominantly comprising short-term facilities deployed to support working capital requirements.
Going forward, IPO proceeds are earmarked for a Passenger Car Radial (PCR) tyre project, representing a strategic diversification beyond commercial vehicle tyres. This initiative is expected to broaden the revenue mix and reinforce the Company's position within Pakistan's tyre manufacturing landscape over time, supporting the sustainability of the assigned ratings.
The ratings are dependent upon the Company’s ability to sustain its growth momentum, preserve a healthy profitability matrix, and maintain prudent financial discipline. The successful execution of its expansion and diversification initiatives, while keeping leverage indicators within acceptable levels, will remain a key consideration for the ratings.

About the Entity
Service Long March Tyres Limited is now a publicly listed company engaged in the manufacturing and sale of all-steel radial tyres for trucks and buses. Following its listing on PSX (15 June 2026), the Company's shareholding is held by Chaoyang Long March Tyre Co. Ltd. (~40.44%), Service Industries Limited (~20.30%), Service Global Footwear Limited (~17.38%), Service Tyres Private Limited (~9.19%), Mr. Shabir Ahmad (~4.84%), Directors/Management (~2.84%), and the General Public (~5.00%).