STPL was incorporated as a private limited Company on 21 December, 2023 in Pakistan under the Companies Act, 2017. The Company is a wholly owned subsidiary of SIL. The Company’s registered head office is located at Servis House, 2 Main Gulberg, Lahore.

The parent company, SIL, traces its origins back to the late 1930s in Lahore when its founders Ch. Muhammad Saeed, Ch. Nazar Muhammad and Ch. Muhammad Hussain began manufacturing and supplying mosquito nets, minor steel products, leather chappals, and eventually travel bags, hand bags, and holdalls, made of canvas and leather. SIL was formally incorporated as a private limited company in 1957 and later converted into a public limited company on September 23, 1959. In 1954, SIL installed a shoe manufacturing plant in the industrial area of Gulberg, Lahore, commencing large-scale footwear production the same year. The Company’s expansion continued with the acquisition of land in Gujrat, where one of Punjab’s largest industrial complexes was set up, encompassing the production of leather and canvas footwear, canvas fabric, textile spinning and eventually bicycle tyres and tubes. Over the decades, SIL has evolved into a diversified player with strong presence in both the tyre and footwear industries. In 2024, SIL transferred its Tyre Undertaking to its wholly owned subsidiary namely, Service Tyres (Private) Limited, through an approved Scheme of Arrangement.

The principal line of business of STPL is to carry on the business of manufacturing, trading, sale, marketing, retail, wholesale, import, and export of all types of tyres, tubes, spare parts, and allied products for bicycles, motorcycles, scooters, rickshaws, automobiles, buses, trucks, cars, tractors, trolleys, and other vehicles. The Company has an annual installed capacity of ~22.95mln tyres and ~57.45mln tubes in the tyre division. In the Servis genuine parts division, the Company has an installed capacity of ~6.55mln chains and ~4.91mln sprockets. As of CY25, capacity utilization stood at ~74.4% in tyres (production of ~17.08mln), ~82.7% in tubes, ~39.5% in chains, and ~41.1% in sprockets, reflecting healthy utilization in the tyre and tube lines against comparatively lower utilization in the Servis genuine parts division, which carries spare capacity. Based on management’s production data, utilization in the tyre division improved to ~86.0% in tyres and ~90.4% in tubes during 6MCY26.

STPL operates as a wholly owned subsidiary of Service Industries Limited, which holds 100% ownership in the Company. This close integration provides STPL with strong strategic and financial backing from its parent entity, enabling synergies in brand recognition, supply chain management, and market outreach.

STPL’s ownership structure is considered stable, as the controlling stake is held by Service Industries Limited, a well-established entity with over six decades of presence across multiple industries.

The business acumen of the sponsors is regarded as strong, anchored by the longstanding involvement of the sponsoring families who remain actively engaged in guiding the Company. With decades of experience in tyres and footwear business, the sponsors have consistently demonstrated strategic foresight and execution capabilities that have driven SIL’s sustained growth. Their ability to identify and capitalize on investment opportunities is reflected in the successful diversification into subsidiaries such as Service Retail, Service Global Footwear and Service Long March Tyres. Backed by strong financial depth and resources, the sponsors have established SIL’s flagship brand “Servis” as a household name in Pakistan while also extending the Company’s presence globally. This proven track record of building scale, brand equity, and international reach underscores the sponsors’ robust business acumen.

Being a part of the Servis Group, STPL benefits from a strong financial standing and wide access to both domestic and international markets. This affiliation also ensures that sponsor support, if needed, remains readily available. As of 6MCY26, the Servis Group reported a consolidated asset base of ~PKR 151.4bln and consolidated revenues of about ~PKR 84.8bln (CY25: ~PKR 148bln), reflecting its robust financial position and market reach. STPL is a material part of this base, contributing ~34% of CY25 consolidated revenue. Support also flows in the other direction: during 6MCY26 STPL paid dividends of ~PKR 1.1bln to SIL and extended a long-term loan of ~PKR 2.0bln.

The Board of Directors of STPL comprises five members, including the Chief Executive Officer (CEO). The composition reflects diversity in expertise across regulatory affairs, industry operations, and business leadership, supporting effective decision-making and strategic oversight.

Mr. Arif Saeed (CEO) has served as Chairman of Service Global Footwear Limited, Engineering Development Board, and founding Chairman of major public-sector power companies, in addition to leading APTMA and Lahore Stock Exchange. He is also the chairman of Daanish University Trust and Pakistan Revenue Automation (Private) Limited. Mr. Omar Saeed, previously CEO of SIL (2011–2018), currently serves as CEO of Service Long March Tyres and Servis Foundation, and sits on the boards of Nestlé Pakistan, Systems Limited and Service Global Footwear, also he is the Chairman of Export Development Fund (EDF). Mr. Hassan Javed is a director at STPL and is the chairman of SIL, has served as CEO of Service Global Footwear Limited, and has also chaired the Pakistan Footwear Manufacturers Association and Gujranwala Electric Supply Company. Mr. Saif Javed serves as Head of a business unit at Service Global Footwear. Mr. Ejaz serves as the Chief Operating Officer (COO) of STPL. He began his career in the FMCG sector with key roles at Qarshi Industries and Mayfair Pakistan before joining Service Industries Limited as Country Manager for the tyres business.

The Board of SIL, the parent company of STPL, convenes quarterly meetings with a predefined agenda to review STPL’s management performance and ensure alignment with the Company’s strategic objectives. Proceedings are formally documented, and action items are communicated to relevant stakeholders for timely execution. To further strengthen governance, the formation of specialized committees could provide more focused oversight and facilitate efficient decision-making.

The external auditors are M/s. Riaz Ahmad & Co., Chartered Accountants, having satisfactory QCR Rating and also classified in category “A” on the SBP’s panel of auditors. The auditor expressed an unqualified opinion on the financial statements of the Company for the year ending December 31st, 2025.

On group level, the Company is structured into multiple operational entities, each overseen by specialized management teams tailored to their respective functions. Clear reporting lines, defined roles, and accountability mechanisms ensure operational efficiency and effective oversight. The Company also benefits from the stability of having all key positions filled, with senior management experienced in leading both domestic operations and international ventures. This professionalized governance structure underpins STPL’s ability to effectively discharge its operational responsibilities and support sustainable growth of Servis Group.

The management team comprises seasoned professionals with extensive industry knowledge and functional expertise. Mr. Arif Saeed, the CEO, brings over 27 years of experience and is supported by executives including Mr. Babar Ali (Group CFO), a Chartered Accountant with over 21 years of experience. Other senior team members include specialists in finance, technical operations, human resources, sales, and marketing, many of whom have long tenures with Servis Group, ensuring both continuity and depth of expertise. The mix of family leadership and professional managers provides a well-rounded foundation for strategic execution.

With the support of an experienced team of professionals, STPL has gradually strengthened its business profile, expanding operations across various cities in Pakistan and tapping export markets over the years. The management functions are clearly defined, enabling effective pursuit of strategic objectives. The company’s ability to execute its expansion strategy demonstrates management’s capacity to deliver on stated plans.

The Company has implemented an Enterprise Resource Planning (ERP) solution through Oracle E-Business Suite (EBS) R12, which integrates multiple operational and financial modules. The system generates periodic (daily and monthly) reports that provide management with timely, structured, and reliable information to support decision-making across operational, financial, and strategic dimensions. The deployment of such technology infrastructure enhances efficiency, ensures transparency, and enables management to monitor performance effectively. This setup is in line with industry best practices for information-based decision-making.

STPL has established a structured control environment supported by a team of qualified professionals responsible for implementing and monitoring policies and procedures across all functions. Segregation of duties and clarity of roles minimize operational risk, while occupancy of key positions supports continuity of processes. A centralized internal audit function further strengthens the framework by ensuring compliance with established controls and driving continuous improvements. The integration of operations with ERP-based systems provides additional built-in checks, thereby reducing the scope for conflict of interest and reinforcing a process-driven culture.

The tyre industry in Pakistan plays a vital role in the broader mobility sector, with demand closely linked to replacement cycles and sales of automobiles and motorcycles. Given the industry’s heavy reliance on imported raw materials (natural rubber, synthetic rubber, carbon black, etc.), it remains structurally vulnerable to exchange rate volatility and global commodity price swings. Demand is predominantly replacement-driven (~80% to 90%), while OEMs account for a smaller share. The 2/3-wheeler segment continues to anchor industry volumes, with ~2.0 million units sold in FY26, up ~30% year-on-year, supported by affordability, easing financing conditions, and resilient rural demand. In the commercial segment, demand for Truck and Bus Radial (TBR) tyres is expanding, aided by regulatory push for localization, ongoing import substitution, and rising logistics requirements. In FY26, truck and bus sales rose by ~61% to ~8,424 units (FY25: ~5,200 units), while the Jeep/SUV and pickup segment posted a ~41% volumetric growth, reinforcing the strategic significance of the commercial tyre space. Conversely, the agricultural tyre segment, after the prior year’s steep decline, broadly stabilized, with tractor sales of ~28,791 units in FY26 against ~29,000 units in FY25, a marginal ~1% decline that follows the ~37% contraction recorded in FY25 over FY24. The subdued base underscores continued pressure on rural incomes and mechanization uptake. Nonetheless, the segment remains strategically important, with prospects of recovery tied to improvement in rural purchasing power. Overall, the industry exhibits steady underlying demand potential, supported by replacement needs, gradual localization initiatives, and growing export avenues. However, rising input costs, currency depreciation, energy shortages, and competition from grey channels and under-invoiced tyres continue to weigh on sector margins. Future growth remains contingent on macroeconomic stability, sustained policy support for localization, and the industry’s ability to diversify its export base. For STPL, the recovery in 2/3-wheeler volumes supports its core segment and the stabilization of tractor sales limits further pressure in agricultural tyres, while the shift toward radial tyres in commercial vehicles, led within the Group, is a longer-term consideration for bias-ply producers.

STPL holds a significant position in Pakistan’s tyre industry, supported by its installed capacities of ~22.95mln tyres and ~57.45mln tubes and an established presence in both domestic and export markets. Last year, the Company held ~52% of the 2/3-wheeler and agricultural segment (excluding radial and passenger car players), which remains its core franchise. In 6MCY26, STPL’s sales grew by ~11.8% as per management’s representation. Similarly, Panther Tyres, the nearest bias-ply competitor, grew by ~14%, while other players experienced a decline in market share. STPL’s competitive positioning is supported by its established brand, nationwide distribution network, and cost efficiencies in raw material procurement and energy consumption, underpinning sustained gross margins. However, these advantages remain concentrated in bias-ply products, while incremental market growth is increasingly driven by radial tyres.

In CY25, the Company reported revenues of ~PKR 50.6bln (CY24: ~PKR 46.3bln), a growth of ~9.4%, with exports contributing ~PKR 7.4bln (~15% of net sales). During 6MCY26, revenues increased to ~PKR 29.0bln, reflecting a half year over half year growth of ~11.8% compared to PKR 25.9bln in 6MCY25 (annualized growth over CY25: ~14.6%). The revenue mix in 6MCY26 remained predominantly concentrated in tyres, which accounted for ~93.0% of the topline, while servis genuine parts contributed the remaining ~7.0%. Within tyre sales, motorcycle tyres accounted for ~55% and, together with three-wheeler tyres, ~65%, followed by agricultural radial tyres at ~16% and four-wheeler tyres at ~10%, which indicates concentration in a single segment. Exports grew by ~30.5% in CY25, driven primarily by demand from Asia (~56% of export sales) and South America (~38%). However, exports declined by ~12.1% in 6MCY26 compared to 6MCY25 amid regional conflicts, with their contribution to revenue decreasing to ~11.3% (CY25: ~14.7%; CY24: ~12.3%). Non-operating income was ~17.7% of profit before interest and taxes in 6MCY26 (CY25: ~14.8%) and consisted mainly of the Company’s share of profit in SLM (~PKR 1.2bln).

The Company’s gross profit margin stood at 19.4% in CY25 (CY24: 20.1%), as raw material cost rose to ~61.6% of sales from ~59.3%, partly offset by lower energy cost (~4.6% of sales against ~5.3%). For 6MCY26 gross margin improved to 22.5%, compared to 19.2% in 6MCY25, as raw material cost eased to ~62.1% of sales from ~66.2%, while energy cost rose to ~5.0% from ~4.4%. Operating margin recorded at 12.7% in CY25 and improved to 15.9% in 6MCY26 from 12.7% in 6MCY25, and EBITDA margin improved to ~18.2% in 6MCY26 from ~15.0% in CY25 (CY24: ~15.9%). Net margin was ~8.7% in CY25 and improved to 12.5% in 6MCY26 (6MCY25: 8.5%). Of the ~PKR 2.1bln increase in profit before tax over 6MCY25, ~55% came from operating profit, ~18% from lower finance cost (~2.0% of sales against ~3.6%) and ~27% from a higher share of profit in SLM. Margins therefore reflect both an operating improvement and a lower cost of funding, the latter supported by concessional export refinance and SBP refinance schemes. Raw materials, including natural and synthetic rubber, are largely imported, which keeps margins sensitive to commodity prices and the rupee. Currency exposure at the last year end was limited, with net USD receivables of ~USD 2.9mln and a 5% move in the rupee changing profit before tax by ~PKR 37mln, although exposure during the year can differ.

STPL’s sustainability is underpinned by its established position in motorcycle, three-wheeler and agricultural tyres, with product diversification and export expansion forming key elements of its growth strategy. The planned wholly owned subsidiary, Service Tyres International (Pvt.) Limited (STIPL), is expected to support product diversification, and broaden the Company’s market reach.

The Company’s gross and net working capital cycle stood at 69 days and 57 days, respectively, in CY25 (CY24: 66 days and 52 days). For 6MCY26, the cycle lengthened to 78 days and 64 days, driven by higher trade receivable days of ~44 (CY25: 33; 6MCY25: 36), as trade debts rose to ~PKR 8.7bln from ~PKR 5.3bln at Dec-25 and ~PKR 6.4bln at Jun-25, an increase of ~35% year on year against revenue growth of ~11.8%. Inventory days eased to 34 (CY25: 35) and payable days were 14 (CY25: 12). A receivable build also occurred in 6MCY25, so seasonality explains part of the movement, but the 6MCY26 build of ~PKR 3.4bln was ~32% larger, and together with ~PKR 2.7bln higher loans and advances it took working capital changes to ~PKR 5.4bln. Net cash from operating activities was therefore negative ~PKR 1.4bln in 6MCY26 (6MCY25: positive ~PKR 1.4bln). Working capital is funded mainly by short-term borrowings of ~PKR 16.6bln, which are covered ~1.4 times by current assets of ~PKR 23.4bln (current ratio: 3.3x; Dec-25: 2.8x).

Free cash flow from operations (FCFO) was ~PKR 4.4bln in 6MCY26 (CY25: ~PKR 6.1bln; CY24: ~PKR 6.5bln). EBITDA to finance cost improved to 4.7x in CY25 (CY24: 3.2x) and to 9.0x in 6MCY26 (6MCY25: 4.2x), while FCFO to finance cost was 3.8x in CY25 and 7.5x in 6MCY26. Core coverage improved to 2.7x in CY25 from 1.5x in CY24, and to 4.8x in 6MCY26. The debt payback ratio improved to 0.9x in CY25 from 1.4x in CY24, and further to 0.5x in 6MCY26 (6MCY25: 0.9x). The improvement stems from higher operating profit and a lower finance cost, which fell ~29% in CY25 to ~PKR 1.7bln and ~38% in 6MCY26 to ~PKR 0.6bln. Coverage strength is clearest before working capital changes. After them, net cash from operations was negative ~PKR 1.4bln in 6MCY26, and the CY25 figure of ~PKR 5.9bln included ~PKR 1.5bln of recoveries of short-term loans from group companies.

The Company’s leverage ratio improved to 57.6% in 6MCY26 from 70.1% in CY25 (CY24: 74.9%), supported by an ~PKR 8.7bln reduction in short-term borrowings to ~PKR 16.6bln and an increase in equity to ~PKR 15.0bln from ~PKR 12.5bln, primarily through profit retention, net of ~PKR 1.1bln in dividends. However, net leverage increased to ~47.4% at Jun-26 from ~39.8% at Dec-25, following the redemption of ~PKR 19.9bln in short-term investments held at Dec-25. Consequently, net debt increased to ~PKR 13.5bln from ~PKR 8.3bln, reflecting cash absorption by operating outflows, a ~PKR 2.0bln long-term loan to SIL and dividend payments. Short-term borrowings accounted for ~81.3% of total borrowings, while a portion of long-term funding comprises concessional export refinance and SBP financing schemes. Related-party exposure, comprising the ~PKR 4.2bln investment in SLM and ~PKR 2.0bln loan to SIL, stood at ~PKR 6.2bln, equivalent to ~41% of equity. Going forward, the capitalization profile will remain sensitive to the funding requirements of the expansion plan to be executed through newly incorporated subsidiary.