PACRA Upgrades Entity Ratings of Secure Logistics Group Limited

Secure Logistics Group Limited (“SLG or the Company”) is an integrated logistic group with synergetic business lines of Logistics, Asset Tracking and Security Services. Recently, the Company successfully concluded its Initial Public Offering (“IPO”) and achieved a listed status on Pakistan Stock Exchange (“PSX”). The primary purpose of IPO was (i)substantial deleveraging of the Balance Sheet through repayment of the debt (ii) expansion in distribution segment by addition of new Vehicles (iii) Investment in IT infrastructure along with the development of B2B third-party marketplace (iv) expansion of logistic services to the Regional markets through the TIR license, that would strategically position the company to capitalize on emerging opportunities within the region (v) establishment of sophisticated multiple warehousing facilities across the major logistical hubs / Special Economic Zones (SEZs) of the country. During IQCY24, the Company also acquired ~75% stake in Sky Guard (Pvt) Ltd, (a security service provider company to enhance operations of security-related services in Gilgit Baltistan and Azad Jammu & Kashmir. Sponsors of SLG have a clear vision about its future growth plans and intends to place SLG as a tech enabled 3 PL player with regional coverage. SLG’s value proposition is also enhanced by its holding company structure and the formidable ownership arrangement which includes prominent local and international investors, its value proposition, and sustainable business fundamentals, all underpinned by well-established repute and relative market position. The Board of SLG is compliant with the code of corporate governance and comprised of highly skilled individuals with extensive yet diverse experience and independent oversight roles, whereas the operations of the company are managed by skilled professionals and complemented by robust internal control systems seamlessly integrated throughout the group. During CY23 the Company’s top line grew by ~25% mainly due to price inflation and an increase in capacity utilization, however, GP margins showed dilution and stood at ~23% (CY22 ~29%). The logistic industry of the country is highly fragmented with a dominating large unorganized/informal segment, it also faces challenges due to soaring inflation, rupee devaluation, and high policy rates. On the flip side, there exists a notably sluggish pace of technology adoption, hindering the infusion of innovation and efficiency. However, the planned enhancements to existing road infrastructure and the establishment of new SEZs under CPEC projects are poised to serve as opportunities for the logistics industry. Financial risk profile of the Company is considered good with comfortable coverages, cashflows, and working capital cycle. Capital structure is moderately leveraged as of CY23, but the post-IPO substantial portion of borrowings have been paid off, and all future expansion would be funded by internally generated cashflows.
The ratings are dependent upon the improvement in business profile and successful implementation of business strategy. A prudent financial performance in line with the financial projections, an effective liquidity profile, and maintaining financial discipline shall remain imperative.

About the Entity
SLG is a public listed company, providing logistics and fleet management services to leading corporates, banks, insurance and leasing firms. The Company’s sponsors are seasoned professionals with exposure to private and public sectors. Mr. Pervaiz Khan (Executive Director) has around four decades of experience in public and private sectors with focus upon investment banking and energy industries. Mr. Gulraiz Khan (CEO) has been managing the SLG business for over 13 years.