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The Pakistan Credit Rating Agency Limited

Date
16-Sep-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Rohail Amjad
rohail.amjad@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • Debt Instruments Rating Methodology (Jun 17) [View]
  • Corporate Rating Methodology (Jul 17) [View]
  • Correlation between long-term and short-term rating scale (Jun 17) [View]

Related Research

  • Sector Study | Tracking Services (Feb 17) [View]
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PACRA Maintains Entity Rating of TPL Trakker Limited
 Rating Type Entity Debt Instrument
Current
(16-Sep-2017)
Previous
(18-Feb-2017)
Current
(16-Sep-2017)
Previous
(18-Feb-2017)
 Action Maintain Maintain Maintain Maintain
 Long Term A- A- A+ A+
 Short Term A2 A2
 - -
 Outlook Stable Stable Stable Stable
 Rating Watch RatingWatch - RatingWatch -

The ratings incorporate TPL’s leadership position in the tracking industry, emanating from its diverse product portfolio and superior technology infrastructure. The company is also poised to expand geographically. STE is exposed to border closure risk, never the less company is expanding its cargo monitoring business in Pakistan. This would add significant revenue to the topline Sustainability, from incremental cash flows from core operations, going forward, remains important for coverages which are currently subdued to some extent. The rating watch captures the ongoing corporate restructuring of the company; TPL Trakker being in structured in to a holding company, and renamed to “TPL Corp”. The two major segments of would be demerged into wholly owned subsidiaries i) TPL Vehicle Tracking (TPLV), and ii) TPL MAPS (TPL M), along with these two investments TPL Corp would entail investment in TPL properties, TPL Direct Insurance, TPL Securities Services and Trakker Middle East.

The ratings are dependent upon the sustainability of the risk profile post corporate restructuring; new status of the company and its financial strength. Adherence to good financial discipline while harnessing working capital management and strengthening debt servicing capacity through improving cash position is vital.

About the Entity
TPL Trakker Limited (TPL), listed on PSE, is Pakistan's largest vehicle tracking and fleet management company operating with a network of 9 branches, catering to 150,000 customers’ tracking needs. TPL is majority (53%) owned by TPL Holdings (Pvt) Limited (THL), which, in turn, is equally owned by Ali Jameel and Ali Bhai families. Digicore divested its whole stake during the years (Jun’15: 5%). The rest is dispersed ownership. THL has other direct investments in general and life insurance, real estate, security services, energy and financial services sectors.
The Board consists of eight directors, including CEO; six are representatives of THL and two are independent. Mr. Ali Jameel, a Chartered Accountant from England & Wales, is the CEO of TPL Trakker. He has diversified experience in managing various business ventures. He is supported by an able team. COO, Mr. Sarwar Ali Khan, oversees commercial operations while the financial and technological matters are reported to the CEO, directly.


About the Instrument
The company has issued an unlisted Sukuk of PKR 600mln, on May 11, 2016, for a tenor of 5 years to meet working capital and business expansion requirements. The issue has quarterly coupon payments payable @ one year KIBOR plus 3% based on Shirkat-ul-Milk arrangements. Redemption of Sukuk shall be in four equal semi-annual instalments starting from 42nd month (Nov'19) and ending on 60th month (May'21).
TPL Trakker Limited is also issuing an unlisted privately placed term finance certificate of PKR 1,200mln including a greenshoe option of PKR 200mln with 2 years life having a grace period of one year. The issue date of the instrument will be that on which the amount of the instrument will be disbursed. Instrument will be issued at 3Months KIBOR + 1.25%. Interest will be payable quarterly in arrears.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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