PACRA Maintains Debt Instrument Ratings of TPL Trakker Limited – Sukuk-I – May-16 – Rating Watch

Lahore, June 29, 2020 (PPI-OT): The ratings incorporate TPL Trakker’s prominent position in Pakistan’s tracking industry, emanating from its multifaceted product portfolio and sanguine technology infrastructure. As diversity becomes inevitable to sustain in its operating segment, the Company is gradually shifting towards new avenues; incremental cash flows from the new segments are critical for growth. Recent developments precisely include acquisition of majority stake of Trakker Middle East LLC, and merger of TPL Maps and TPL Rupiya into TPL Trakker.

The Company’s process of going listed is at an advanced stage wherein approval from the regulatory authorities has been received. Underpinning the IPO is the Privately Placed Commercial Paper (PPCP) in issue whose repayment becomes due in July’20. Under the current fluid environment, the management sees that IPO will take sometime to roll out. Steps are being taken in this regard especially obtaining underwriting and capturing investors interest, and also to avail deferment of PPCP repayment under the SECP’s Relief Package; availing deferment within the due timeline is critical to the ratings. Overall, the Company’s financial risk profile displays a stretched outlook on account of elevated borrowings and persistent bottom-line losses in 9MFY20.

The situation has further compounded on account of the outbreak of COVID-19 pandemic in the country which has led to severe economic disruption and demand deceleration. As a consequence, TPL Trakker is in the process of availing benefits of the Relief Package for deferment of its loan book – including Sukuk (PKR 600mln) in order to relieve its risk profile from the mounting debt obligations in the short horizon. Currently, interest and debt coverages display a deteriorated outlook alongside leveraged capital structure. Also, there is an imminent necessity to optimize the Company’s cash conversion cycles, in order to keep its liquidity profile adequate.

The ratings are dependent upon the company’s aptness to arrest the adversities impacting its risk profile in a timely manner. Improved performance indicators, including reversal of losses and sanguine financial discipline are imperative to the ratings. Meanwhile, the ratings are placed under “Watch” to oversee the roll out of IPO and other steps needed to manage the financial challenges arising from the current mix of debt wherein contractual maturities are around.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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