The Pakistan Credit Rating Agency Limited
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Raniya Tanawar

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PACRA Maintains Entity Ratings of TPL Trakker Limited

Rating Type Entity
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings incorporate TPL's leadership position in Pakistan’s tracking industry, emanating from its multifaceted product portfolio and superior technology infrastructure. STE is exposed to border closure risk, nonetheless company has expanded its cargo monitoring business in Pakistan. The company has secured Export Processing Zone mandate which is the 2nd phase of Safe Transport Environment project (STE). This is significantly adding value to the top line; incremental cash flows from new segments are critical for sustainable growth. The company escalated its rental model based business as against sale model. CPEC project is another emerging lucrative opportunity. TPL Trakker is projecting that it will muster a sizable revenue even if continues to garner a fraction of the expected container movement. Multiple yet upcoming diversified revenue streams ensures sustainable inflows for the business. The company is raising debt by way of Sukuk bond, bulk of which is utilized in retiring the existing borrowings

The ratings are dependent on upcoming potential projects with strengthened business revenue and financial health. Adherence to good financial discipline while harnessing working capital management and strengthening debt servicing capacity is vital.

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 57.09% subsidiary of TPL Holdings.
The Board consists of four directors; all four of them including the CEO, are representatives of TPL Corp
Mr. Sarwar Ali Khan is the CEO of the company. Mr. Khan, having more than two decades of experience, has been associated with the company for the last two years. He is directly reportable to the Group CEO, Mr. Ali Jameel.

About the Instrument
The company issued an unlisted Sukuk of PKR 600mln, on APR 08, 2016, for a tenor of 5 years to meet working capital and business expansion requirements. The issue had quarterly coupon payments payable @ one year KIBOR plus 3% based on Shirkat-ul-Milk arrangements. The company intends to raise Sukuk with an amount of PKR1bln inclusive of PKR150mln greenshoe option (@3month KIBOR + 1.75% 6 years maturity) a)Securities: i) Equitable mortgage over property of Plot # 51-M Kot Lakhpat, Quaid – e- Azam industrial Estate Lahore and Equitable mortgage charge over Property of Plot# 20/B & 20/C Block VI, PECHS Karachi. ii) First Pari Passu Hypothecation charge on present & Future current Assets (including but not limited to receivables) of the company with 25% margin iii) 10 Million shares of TPL Properties Limited to be pledged prior to disbursement with a margin of 35% iv) Corporate Guarantee of TPL Holding (Pvt.) Limited and TPL Corp Limited. b) Repayment terms: Six (06) years, with no grace period. In twenty-four (24) equal quarterly installments, to be paid in arrears. The first Profit payment shall fall due at the end of the third (03rd) month from the date of Disbursement and every three (03) months thereafter on the total outstanding principal amount of Disbursement under the Issue

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.