The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Maintains Entity Ratings of Secure Logistics Group Limited

Rating Type Entity
(15-Oct-22 )
(15-Oct-21 )
Action Maintain Upgrade
Long Term A A
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Secure Logistics Group Limited (“SLG or the Company”) is a growth oriented company engaged in logistics and vehicle fleet management businesses. The logistic business is primarily focused upon transportation of cargos over long and medium distances through its long-haul (bulk and containerized cargos) and the distribution (beverage and non-beverage containerized cargos) segments. The vehicle fleet management business involves the vehicles’ tracking services and other advanced fleet management solutions. The ratings reflect Company’s strong ownership as reflected by equity injection from prominent international investors, robust goverance structure, a well-established clientele base and professionally qualified management that has steered the Company’s operation in a difficult macro business environment. As the domestic economy gradually recovers from the combined effects of COVID-19 and lately flood driven massive damage to logistics and supply chain infrastructure, the overall load volumes are expected to grow. In addition, the expected filling of remaining gaps in CPEC related infrastructure projects such as Sukkur-Hyderabad highway will provide further impetus to the logistic industry. Notwithstanding the macro level hurdles, the Company’s top line grew by ~11% with largely sustained margins in a recent period review. The Company’s Board of Directors has decided to transform SLG from a traditional to tech-based logistics operations. Consequently, the Company, through its fully owned subsidiary, LogiServe (Pvt) Ltd (“LogiServe”) has acquired a license from Special Technology Zone Authority (“STZA”). The ensuing amalgamation of LogiServe into SLG and the planned tech pivot from traditional to tech-enabled logistics through a contracted B2B Marketplace and related package of software modules is expected to expedite the scaling up of logistic business and accrue substantial tax savings. As part of its expansion strategy, SLG has solicited all requisite approvals for an IPO in Q1 2022. Due to the extremely adverse market conditions, the initiative was put on hold. SLG is now aiming for another round of capital raising from private equity partners mainly to meet the tech based CAPEX requirement, adding the new warehousing business vertical, procurement of a small number of Distribution vehicles to be able to deliver the 3 PL logistic services across the country and partial deleveraging. The management has a conservative appetite for any incremental borrowings. Financial risk profile of the Company is considered adequate with comfortable coverages, cashflows, and working capital cycle. Capital structure is moderately leveraged and mainly comprise of long-term vehicle fleet lease financings.
The ratings are dependent upon the improvement in business profile and successful implementation of business strategy. A prudent financial performance, an effective liquidity profile, and maintaining financial discipline shall remain imperative.

About the Entity
SLG is a public unlisted 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 more than three decades of experience in public and private sectors with focus upon investment banking and energy industries. He holds MBA and MIA degrees from Columbia University, USA. Mr. Gulraiz Khan (CEO) is a former Army officer with more than ten years’ experience in managing SLG’s businesses. He holds Master in Defence Management Studies, NDU, Pakistan.

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.