Zafco considering new tire plant in Pakistan

WASHINGTON D.C. — Zafco Group Holdings Ltd., the Dubai, United Arab Emirates-based tire distributor, is considering building a tire plant in Pakistan to support growing local demand.

The proposed project, for a factory rated at 1.4 million passenger and light truck tires a year, is valued at $92 million, according to the World Bank-affiliated International Finance Corp. (IFC), which is evaluating contributing up to $25 million in funding.

The proposed plant would be located on a 50-acres site on the outskirts of Karachi, Pakistan, IFC documents show, and would operate under the name Armstrong ZE (Pvt.) Ltd.

Zafco acquired rights to the then-mothballed Armstrong brand name in 2012 and launched a range of Armstrong-branded truck tires in North America in 2016, followed a year later by lines of passenger and light truck tires. Zafco secured the Armstrong brand rights from Pirelli & C. S.p.A., which had acquired the brand in its 1988 takeover of Armstrong Rubber Co. The brand was phased out in the latter half of the 1990s. Armstrong Rubber was founded in 1912 by George F. Armstrong in New Jersey.

Zafco already is a shareholder in two tire plants in Asia: Otani Radial Co. Ltd. in Bangkok, Thailand; and P.T. Elangperdana Tbk in Bogor, Indonesia.

The shareholding of the new project will be held by the Hussain and Yusufzai families of Pakistan, who also own Zafar Enterprises in Pakistan and Zafco Holdings, according to the IFC documents.

Both Zafar and Zafco operate in the tire distribution business, according to IFC.

The IFC said it is supporting Armstrong to enhance resource efficiency and minimize environmental impacts through its "responsible investing support in emerging economies" (RISE) program.

As part of the program, IFC is providing "advisory services to evaluate and benchmark the plant design against global best practices."

The consultations are aimed at reducing energy and water consumption and improving waste management systems, the IFC said.

The IFC finances projects and companies through loans from its own account, typically for seven to 12 years.

Other actions by the IFC to tire companies include a $30 million loan to JK Tyre & Industries Ltd. to help finance the expansion of manufacturing capacities and integrate "resource-efficient" technologies that will lead to enhanced safety and longevity.