PACRA Assigns Initial Rating to TPL Trakker Limited | Privately Placed Commercial Paper (PPCP) of PKR 1,230mln

The ratings incorporate TPL Trakker's ("the Company") prominent position in Pakistan’s tracking industry, emanating from its multifaceted product portfolio and superior technology infrastructure. This adds value to its topline; though incremental cash flows from new segments are critical for growth. The Company is adding more diversity to its product portfolio in order to sustain in a market that has maturity level and is facing a demand shift. As part of the Group's strategic vision to strengthen the Company's position, TPL Trakker is now embarking on new avenues through merger & acquisition of its associate entities. This is expected to augment its business and bring synergies to the Group. The developments precisely include acquisition of majority stake of Trakker Middle East LLC, and merger of TPL Maps and TPL Rupiya into TPL Trakker. Sponsor support is also reflected from the recent injection of PKR~600mln into the Company to fulfil needs. On the operational front, the management's pivotal focus lies on optimizing the Company's business cycle, mainly receivable turnaround time, through diversifying into products with better credit terms, i.e., Internet of Things (IoT) and Video Monitoring Solutions. The Company’s financial risk profile displayed a pressured outlook during the period under review, owing to rising debt financing on the backdrop of hiked interest rates. As a result, the Company's bottomline also closed in red in 1QFY20. The Company is in the process of going listed on the PSX, now at an advanced stage. For this, it has issued a Privately Placed Commercial Paper (PPCP) of PKR 1,230mln in Jan'20, to bridge the Initial Public Offering (IPO). Thereby, timeliness and completeness of the proceeds from IPO are crucial for the repayment of the PPCP. Meanwhile, the Company's intent to sell its land in Lahore is expected to bring in fresh money in a short horizon. Additionally, cash inflow of PKR 500mln to TPL Corp. through sale of TPL Insurance shares, is expected to benefit the liquidity profile of the Sponsoring group.
The ratings are dependent on the successful materialization of the upcoming initiatives, specifically receipt of listing proceeds, as envisaged. Timely and successful repayment of the PPCP is pre-eminent for the ratings.

About the Entity
TPL Trakker Limited (TPL) – a wholly owned subsidiary of TPL Corp Limited – is a vehicle tracking and fleet management solutions provider. TPL Corp is a ~62.41% subsidiary of TPL Holdings. The Board consists of eight directors; including the CEO. Mr. Sarwar Ali Khan is the CEO of the Company, having more than a decade of experience and has been associated with the Company for the last three years.

About the Instrument
TPL Trakker Limited has issued an Unsecured, Privately Placed Commercial Paper (PPCP) of PKR 1,230mln in Jan'20 to bridge the Initial Public Offering (IPO) of the Company. The instrument carries mark-up at the rate of 6 Months KIBOR + 2.50% per annum and will be redeemed at face value on the maturity date, i.e., 6 months (180 days) from the date of Issue. The repayment of the instrument is tagged with the proceeds of the IPO.