Service Global Footwear Limited has entered into a joint venture with Chaoyang Long March Tyre Co Ltd and Myco Corporation are going to establish a tyre plant for buses and trucks. The maximum of the products will be meant for export.
The tyre plant is being established in the country at the time when the United States and European Union have imposed anti-dumping and countervailing duties on the tyre which are made in China. The project is in line with the government of Pakistan’s target of attracting new investment in the export sector to enhance the country’s international payment capacity and build foreign exchange reserves.
The government of Pakistan has given incentives to industries, busy in manufacturing the export items, therefore, the cost of manufacturing the tyres in this plant will be relatively low and this joint venture company will be in a position to export its product to the Western market.
The cost of the project comes to Rs.16.43 billion approximately and it is likely that it will start giving production in June 2021. Service Global Footwear Limited has planned to raise a minimum of Rs.1.55 billion by offering its 40.88 million shares to the institutional and rich individual investors on April 7-8 and to retain investors on April 12-13 at the Pakistan Stock Exchange.
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The auction of the shares will be at the minimum price of Rs.38 per share, which may increase by a maximum of 44% to Rs.53.2 per share during a two-day auction for institutional and rich individual investors. The company has planned to sell 75% of the 40.99 million shares to institutional and rich individual investors and 25% to retail investors at the strike price.
Service Global Footwear Limited will be the second company to offer its shares to the public at the Pakistan Stock Exchange in 2021. The project is being financed through 50% debt and 50% equity, the production capacity of which will be 600,000 tyres annually. As per the company’s plan, 85% of the sales will be meant for export purpose.