Karachi November 3 2021: Commercial production from manufacturing facility of Service Long March Tyres Private Limited (SLM) is expected to commence from January 2022, as per information shared by the company at Pakistan Stock Exchange (PSX).
So far 85 percent of civil works of SLM project has been completed and full completion is expected in December 2021. While 90 percent of Mechanical, Electrical and Plumbing (MEP) works of SLM project is completed and full completion is expected in November 2021.
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The Chinese contractors engaged for the installation of machinery, also faced delays in sending their workforce from China, due to COVID-19 restrictions and prevailing Chinese security regime. This has impacted and delayed the installation and commissioning of the machinery and hence delayed the trial and commercial production of the SLM Project.
The Trial Production of the SLM Project is now expected in December 2021 / January 2022 and the Commercial Production is expected to commence in January / February 2022.
Service Global Footwear IPO
Service Global Footwear Limited issued Prospectus offering 40,887,500 ordinary shares (20% of the total post-IPO paid-up capital of the Company) of the face value of Rupees 10 each and raised Rupees 2,175,215,000 at a strike price of Rupees 53.2 per ordinary share (including premium of Rupees 43.2 per ordinary share). The Company got listed on Pakistan Stock Exchange Limited on 28 April, 2021.
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Any excessive fund, in case the Strike Price is determined above the Floor Price, would be utilized either to fund the internal working capital requirement of the Company or to make equity investment in SLM, as may be decided by the Board of Directors.
The Board of Directors of the Company in its meeting held on 08 June 2021 resolved to utilize the excess IPO funds amounting to Rupees 621,490,000 raised over and above the Floor Price for making additional equity investment in Service Long March Tyres (Private) Limited as may be offered to the Company in future.
Service Long March Tyres Limited
Service Industries Limited (SIL) has ventured into the manufacturing of “All Steel Radial” tyres of trucks and buses (TBR Tyres). For this purpose, SIL has entered into a Joint Venture Agreement with Chaoyang Long March Tyre Co., Ltd (LM) and Myco Corporation on November 18th 2019 and have set up a Joint Venture Company in Pakistan namely “Service Long March Tyres (Private) Limited” (SLM) on January 07, 2020.
LM is a Chinese tyre manufacturer based in Chaoyang, Liaoning province and was established in 2003. LM possesses a core expertise in manufacturing of “All Steel Radial” (TBR Tyres). LM’s current production capacity is of around 3.4 million tyres per annum. LM manufactures a total of 236 varieties across 59 specifications and 50 patterns for light, medium & heavy truck and bus tyres. Almost 55% of total production is being exported to a total of 130 countries mainly to Chile, UAE, African region, Australia, and Pakistan.
Myco Corporation is a sole proprietorship owned by Mr. Shabir Ahmad, son of Haji Gul Muhammad. Myco Corporation is the exclusive distributor of Chaoyang Long March Tyre Co. Ltd, China, in Pakistan and is engaged in the import and sale of “All Steel Radial” tyres of trucks and buses (TBR Tyres). The Project cost is estimated to be PKR 16,430 Mn which would be funded in a debt to equity ratio of 50:50 with an installed production capacity of 600,000 tyres per annum. Total debt requirement of PKR 8,215 Mn has been arranged through long term financing facilities from different financial institutions. Of the total equity commitment of PKR 8,215 Mn, PKR 4,500 Mn has already been injected by SIL, LM, and Mr. Shabir Ahmad of Myco Corporation in the ratio of 51%, 44%, and 5%, respectively.
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A plot of industrial land measuring 50 acres in Sindh Industrial Trading Estate – Nooriabad, Sindh, has been procured for the Project for a total cost of PKR 830 Mn; the total cost of land has been funded by equity financing. The construction work of the Project has started in October 2020 and is expected to be completed by June 2021.
SLM would manufacture “All Steel Radial” tyres of trucks, buses (TBR), light truck and off the road vehicles for local and export markets; however, initially during the Phase 1, SLM would restrict manufacturing to trucks and buses (TBR tyres) only. As per the estimation of SLM’s management, 85% of the total sales would comprise of exports. Currently there is no local player operating in this segment of tyre market and SLM would be the first player in the local industry to bring TBR manufacturing technology in Pakistan. The entire manufacturing technology would be transferred from the Chinese Partner, LM. Other tyre manufacturers in the country such as General Tyre & Rubber Company of Pakistan Limited and Panther Tyres Limited do manufacture bias tyres for trucks and tyres but SLM would be the sole manufacturer of All Steel Radial tyres of trucks and buses in the country.
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