The Pakistan Credit Rating Agency Limited
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Rohail Amjad

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PACRA Maintains Rating of TPL Trakker Limited | Sukuk-I | May-16

Rating Type Debt Instrument
Action Maintain Maintain
Long Term A+ A+
Short Term - -
Outlook Stable Stable
Rating Watch - -

The ratings incorporate TPL's leadership position in the tracking industry, emanating from its diverse product portfolio and superior technology infrastructure. STE is exposed to border closure risk, never the less the company is expanding its cargo monitoring business in Pakistan. This would add significant revenue to the top line; incremental cash flows from new segments are crucial to the growth.The company is also endeavoring to switch to rental model as against sale model.
CPEC is also an emerging opportunity. TPL Trakker is projecting that it will muster a sizable revenue even if it is able to garner a fraction of the expected container movement.
Revenue augmentation is also expected to foster from Auto hardware sales: Navigation systems, 360 degree Cameras and Parking Sensors. The deal is at an advanced stage. The company is raising debt by way of Sukuk bond, bulk of which will be utilized in retiring the existing borrowing

The ratings are dependent upon the improved risk profile with strengthened business revenue and financial health. Herein revenues from new projects need to transpire, as projected. 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 53% 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. Redemption of Sukuk was in four equal semi-annual instalments starting from 42nd month (Oct'19) and ends on 60th month (Apr'21).

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.