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Standard Credit Application

SCA No. (CBG-000)

Review Date: 1st June, 2018 Next Review Date: 1 st Jun 2019
Name of Group & Borrower
Industry Identity Number Propose
Current Proposed Current

Group: TCS Group Courier and

4 4
Borrower: TCS (Pvt.) Ltd. logistics

Relationship Manager Global Relationship Global Relationship

Originating Unit Business Segment
(Current) Manager Unit
CBG (Karachi) CBG CBG
Relationship Initiated by: -
Relationship Manager Syed Ali Hussain

PGs of directors/ sponsors of TCS (Pvt.) Limited

Waivers/Current Ratio/ RAC Ageing of receivables not mentioned in receivables report

Document Expiry
Nil Nil
Conditions Precedent: Nil
Events of Default: Nil

Overdue History [Last 24 N/A

months] with UBL. If any

Exposure in PKR Million

Existing Proposed +/-
Aggregate Funded -
Aggregate Non-Funded -
Pre-Settlement Risk
SECURITY / SUPPORT Primary Secondary
Total Value PKR 333.33Mn PKR 333.33Mn

Rs. in Million
Trade 2016 2017
Future Commitment
Volumes Total UBL Total UBL
Exports - - - - -
Imports - - - - -
Guarantee 150 51.88 150 82.4 100

1. Submission Purpose/ Transaction Synopsis

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a. What is the purpose of financing and rationale for the line structure?

To seek approval for renewal of working capital and project finance facilities for TCS (Pvt.) Ltd as detailed below:

NICF/MM Facility (Renewal):

b. Explain reasons for amounts, tenors, covenants and products.

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c. Rationale for waivers/ deferrals/ Current ratio/ RACs.

 TCS (Pvt.) limited does not provide PGs of their directors/ sponsors to banks. Same is their security structure with other
 Ageing of receivables is not mentioned in the receivable report. However due to strong clientele of TCS (Pvt.) Limited, ageing
of receivables is within 120 days as confirmed by the management of TCS (Pvt.) Limited
 Current ratio is 0.9x as per the financials of FY17. The ratio is in line with the industry since it is a service provider and does
not hold any tangible stocks/ inventory. Strategy to further improve the ratio is detailed in the financial analysis section
 Waiver of site visit is recommended as TCS (Pvt.) Limited is a courier and logistics company and has no manufacturing

d. Explain the nature of our reliance/focus for this particular credit/relationship (in terms of whether our focus to extend this
credit is the strength of cash flows, strength of collateral, strength of GOP or sovereign coverage, or any other relevant factor
pertinent to this proposed exposure).

Our primary reliance for this relationship is on the financial strength of the company. TCS has healthy operating cash flows (PKR
202Mn FY17) whereas our secondary reliance will be on the Joint Pari Passu charge over Current assets with its margin being
covered through joint Pari Passu charge over Fixed assets.

e. Relationship obtained through (Swap/New Solicitation)

New solicitation

f. Reason for Swap (If Applicable)


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2. Company / Industry Strategy
a. Brief on the company background, its business, sponsors and history.

The flagship entity TCS (Pvt.) Ltd. was established in the year 1983 with presence in 12 cities and has since grown into a full fledge
domestic and international courier service and mail solutions provider. Presently TCS provides domestic and international express
services to consumers, corporate, SMEs and households with pickups and deliveries crossing over 174 million shipments annually. It
has a nationwide network of 960 plus Express centers, with around 8,000 professionals and daily walk-in of 35,000 customers,
supported by dedicated chartered Boeing 737 aircraft and 600 satellite tracked delivery vehicles, making TCS the biggest courier
network in Pakistan. The company handles approximately 177Mn Kg of weight annually for delivery of packages. TCS also operates in
international territories through its business partners in Dubai and London connecting over 220 plus countries and territories.
Company also operates visa services division under the name of Visatronix, a division of Intiana Private Limited, extends booking
facilities for visa applicants in the non-immigrant (work, visit, study) categories for applicants all over Pakistan for countries such as
India, Spain, Malaysia, Egypt, Tunisia, Italy, Malta, South Africa, and Umrah visa for Saudi Arabia.
TCS group operates in Pakistan via following associated concerns which also provide internal support
to its parent company i.e. TCS (Pvt.) Ltd. through on-line support, visa services, distribution, cash
deliveries etc.
# Name Nature of business
1 TCS Logistics (Pvt.) Ltd. Logistic support provider i.e. home moving/ warehousing. It also provides
logistics solution to its parent company as it owns groups movable fleet.
2 Octara (Pvt.) Ltd. Specializing in corporate trainings & workshops, seminars, conferences and
3 Intiana (Pvt.) Ltd. Travel and tourism agency
4 TCS Financial Services (Pvt.) Ltd. Offers financial services through strategic alliances with banks, fund transfer
companies and insurance companies
5 TCS Distribution (Pvt.) Ltd. Provided distribution services to FMCGs/ corporate clients
6 TCS Holding (Pvt.) Ltd. Holding company to overlook group company operations and future business
7 TCS ECOM (Pvt.) Ltd. Operates on-line web-sales channels for clients
In Aug 2014 TCS Holdings was formed, in order to bring forth new opportunities to synergize TCS’s strengths. To ensure that the new
structure is more customer-oriented, the businesses have been divided into four key segments of consumer, corporate, international
and E-com. All these segments perfectly fit into the overall structure by providing complete solutions to the customers in Pakistan.

TCS top line is made from the following services:

 International Express Services
 Domestic Express Services
 Logistics Services (small parcels delivery)

TCS has specialized/ customized services under each of the above categories to cater to the variable
needs of the customers as per market demand.
International Express Services Domestic Express Services Logistics Services
International Rate Card Cash On Delivery Home Movers
International Freight Express TCS Hazir Warehousing & Distribution
Red Box Mail Management Solution Overland Express
Student Express Sentiments Express -
- Flyer Express -
- Supplementary Services -
- Same Day Express -
- Overnight Express -

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 TCS (Pvt.) Ltd. provides courier and mail management solutions to almost all large financial Institutions, PTCL, Jazz, Ufone, KE
 TCS Distribution (Pvt) Ltd provides retail distribution services to major FMCGs such as Phillip Morris, Shan Foods, Unilever,
Azhar Corporation etc.
 TCS Logistics (Pvt) Ltd provides ware-housing and bulk distribution to Indus Pharma, SAMI Pharma, Atlas Honda Ltd., Tapal
Tea, Khaddi etc.

MR. Khalid Nawaz Awan

Mr. Awan is co-founder and Chairman of TCS. His businesses developed over the past 30 years are collectively called the ‘Tranzum’
A mechanical engineer by education, Mr. Awan and TCS, are subject of a Harvard Business School Case Study on ‘International
Entrepreneurship’ - included in the MBA curriculum for the past six years. He is a lifetime member of the ‘World Presidents
Organization’ an alumni and past Chapter Chairman of the Young Presidents Organization –YPO, and member of their Peace Action
Network Forum that works for global peace. He is Toronto Committee member of ‘Human Rights Watch’, is Director of the Toronto
based 'Canada-Pakistan Business Council, and member of the Dubai based 'Canada-Arab Business Council', and he represented the
Paris based ‘International Chambers of Commerce’ ( at the United Nations General Assembly session on ‘Millennium
Development Goals’ in 2003. He is a Fellow of the Royal Aeronautical Society, of UK.

Mr. M. A. Mannan
President & CEO
He looks after all TCS business units and companies. He brings to the organization over 22 years of business experience both locally
and internationally during which he has led, structured and turned around banks in the Conventional and Islamic banking spheres.
Prior to joining TCS, Mr. Mannan served as the Executive Director at Silk bank where he was responsible for Islamic Banking and also
spearheaded the Mergers & Acquisitions activities to deliver the best value for the Bank. He built on his leadership experience in the
financial sector, first as Deputy CEO of UBL (2003-2005) where he was directly responsible for consumer and commercial banking as
well as international operations in USA, UK, UAE, Qatar, Bahrain and Switzerland. He then went on to serve as CEO of Dubai Islamic
bank from 2005-2010 where he was responsible for launching the franchise in Pakistan from scratch and successfully led it to its
current status of being one of the largest Islamic banks in Pakistan. Having completed his MBA from IBA, Mr. Mannan began his
professional career at Citibank (1991-2003) where his focus was on Consumer Banking. Mr. Mannan also served as member of
the Management Committee of Citibank Pakistan.

Mr. Raziuddin Ahmed

CFO & Director Administration
Raziuddin Ahmed is a Chartered Accountant from the Institute of Chartered Accountants of Pakistan with over 25 years of experience
with leading multinational and local companies. He started his career with Fazal Group of Industries in 1991. He has been the Chief
Financial Officer and Company Secretary for Coca-Cola Beverages Pakistan Limited. He has also worked as Regional Chief Financial
Officer looking after Gulf Coordination Countries for Coca-Cola Bottling Operations. He was also associated with UAE-based Abraaj
Group for their project in Egypt as Group Chief Financial Officer. He has also worked with Oil Refinery and Explosive Manufacturing
Concern in Pakistan in various senior capacities.
Prior to joining TCS (Pvt) Ltd, Razi’s last assignment was with IFFCO Pakistan, a UAE-based group as Chief Financial Officer and
Company Secretary, with additional responsibilities for Production, Quality Control & Solution selling. Mr. Raziuddin brings with him
diverse and multifaceted experience in the areas of Operations, Finance, Accounts, Procurement, Logistics and Audit. He is a fellow
member of Institute of Chartered Accountants of Pakistan, Institute of Chartered Secretaries and Institute of Taxation Management.

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b. Comment on decision making at the broad level. In case of family owned companies, state if there is institutional ownership as
well and if this could lead to better disclosures.

The company is managed through an effective corporate structure with responsibilities vested on departmental heads over looked by
the chairman ‘Mr. Khalid Awan’ and the CEO ‘Mr. M. A. Mannan’. Major strategic decisions are taken by the board of directors. The
management consists of highly trained individuals with vast experience in their respective professions. Overall, the management is
satisfactory, backed by committed sponsors. Secondly Mr. Khalid Awan’s son Mr. Qasim Awan and his wife Mrs. Sadia Awan are also
actively involved in the business activities.

c. Comment on importance of each company in the group (if applicable). Highlight dependence of affiliates on each other for
financial support, raw material, marketing/technical support etc.

The group companies have strong support for each other by virtue of being in the service industry; details are mentioned in the
company background section.

d. How is the industry structure, regulation, and supply, demand, costing and pricing of the industry? Comment on competitors’
analysis? Identify potential risks and key success factors pertaining to raw material prices, price pass-on power to consumers, level
of product diversification and technology? What is the industry’s future outlook?

Courier, storage and transportation sectors play a very important role in boosting the economic activity in the country. Demand for
these services has always been there and ever increasing and it is directly linked with the growth in population. Success factors are
directly linked with reliability and speed which is essential for any courier service provider. TCS group is one of the largest courier, e-
commerce, logistics and distribution service provider in Pakistan. TCS presently handles around 60,000 shipments per day and has
around 15,000 corporate customers across Pakistan. Secondly TCS is constantly diversifying and adding new services based on
changing customer preferences to increase its market share. Details provided in BIR.

At present TCS is associated with some of the biggest corporate names in Pakistan, including Jazz, Telenor, Ufone, Zong, PTCL, Atlas
Honda, Unilever, P&G, Engro, GSK, and Novartis to name a few. In the banking industry TCS has managed to capture 70% of the
market share, in the telecom industry around 90%, 70% of the textile industry’s market share and 75% of the automobile industry
now use TCS logistic services.

Future outlook of the industry looks good with satisfactory economic growth and development which is a primary driver for courier
and logistics services.

Other players in the industry are as follows:

1. Leopard Courier
2. Muller and Phipps
3. UPS
4. Pakistan Post

It is pertinent to mention that TCS (Pvt.) is a nationwide trusted delivery agent and now collects approximately PKR 1Bn of cash
through cash on delivery service across Pakistan. With the new online shopping trend in Pakistan, this collection is expected to grow
in the future. Recently, TCS has also partnered with UPS as a global courier partner.

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a. Comparison with similar players (use key indicators, e.g. sales, relative market share, capacity, capacity utilization, profitability,
liquidity and leverage ratios etc.). Comparison is required with a maximum of 4-5 players and industry averages (for the relevant
tier), provided the said information is available. Also comment on future expectations (for the tenor of the loan).

Leopard courier
Leopard courier is a local company and an active player in the industry, operating since 1983. It is presently operating with 3,000
couriers and 1,000 express centers employees.

Muller and Phipps

M&P acquired OCS which was an international company operating in Pakistan since last 20 years

Pakistan Post
A local quasi government entity has been operating since 1947. It is operating through a network of 13,000 post offices.

Note: Specific market share data is not available however we can safely assume that TCS is the market leaders with better out-reach
and wide array of services catering to all segments of society.

5. Financial Analysis (Historical & Projected)

a. How has the customer performed relative to management’s internal forecast and industry? Comment on significant changes
since prior year and versus forecast. Identify key cash flow drivers (4-5, e.g. sales (driven by price/volume), inventory (take into
account obsolescence, build-up, seasonality), receivables (evaluate realizability/quality, aging, concentration, inter-company
financing), payables (consider level of supplier financing, tenor, type) CAPEX requirements, CMLTD. Use the operating results, cash
generation, liquidity, solvency, and capital structure as a guideline. Also, comment on the “Contingent Liabilities,” if any, appearing
in the company’s balance sheet.

The Company’s accounts have been audited by EY Ford Rhodes Sidat Hyder that has an “A”-rating on the SBP approved list of
auditors. The auditors of the company have given an unqualified opinion

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b. Comment on financial flexibility, objectives and strategy. Discuss adequacy of capital and bank lines, given industry norms and
operating cycle. How sensitive are the total facilities to external factors? Highlight any instances/prospects of inter-company
financing and its implications. Comment on the customer’s access to alternate financing sources.

TCS has relations with 10 banks which provide it with considerable financial flexibility. Despite the availability of numerous financing
options, the company’s primary reliance is on its own cash flows and utilization is dependent on the pricing.

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c. Is the customer sensitive to risks emanating from financing strategy (interest rate, liquidity) and operating flows? Is the
financing and hedging strategy appropriate for the business and level of sophistication? Why? Comment on FX and interest rate


6. Security/Support
a. Estimate and comment on level of reliance, forced sale value, marketability and realizability of the collateral security.

Level of Reliance:
Our primary source of repayment will remain the cash flows from operations, and secondary source of repayment will be Joint Pari
Passu charge on current assets with 25% margin to be covered by joint Pari Passu charge over fixed assets. The level of reliance is
considered to be low in case of collateral, owing to the legal implications involved in realization of hypothecated assets.

Forced Sale Value:

Current Assets include receivables and stock which includes office supplies and card board cartons. Whereas fixed assets would
primarily include pre-fabricated steel structures which do not have an established secondary market, the forced sale value is
conservatively considered to be approx. 75% of prevailing price.

The raw material inventory includes specialized products such as pre-fabricated structures, allied machinery and office supplies, which
has a moderate secondary market. In addition, the major portion of current assets is in the form of stock which also has a moderate
level of marketability. Moreover, the margin obtained in security would ensure loss coverage (if any) at the time of realization to the
extent of 25%.

Legal complications involved in a hypothecation charge make it difficult to liquidate the charge and therefore, the realizability of
charge is considered to be low but we still feel that occurrence of such an event is considered to be negligible due to TCS group’s
strong market reputation.

7. What must happen to cause the customer to default? Highlight in order of priority significant risks associated
with the exposure. Identify mitigants, if any. Identify and elaborate on at least five risk factors. Provide rationale for
accepting risks that do not have any mitigants.

Risk: Competition by other players in the industry

This risk is mitigated on account of TCS strong presence in the local market, backed by vast network nationwide as detailed in BIR.
Secondly TCS infrastructure and group support and diversity of product line is one of a kind which is missing in other competitors.

Risk: default of Intergroup receivables

Intergroup receivables of the company stood at PKR 758Mn in FY17.Major portion of receivables to related parties (FY17:PKR 655Mn;
FY16:385Mn) belong to TCS E-Com (Private) limited. TCS E-Com had launched, an online shopping website. In order to
support its operations, TCS (Pvt.) Limited maintains a current account balance with them. The trend for online shopping is increasing
in Pakistan and as noticed currently, is increasing its business by selling products of major brands as well as tickets for
cricket matches, concerts etc. Due to the increased business in TCS ECOM, these receivables have increased from the past year. The
same are expected to be settled when TCS ECOM generates a bottom-line profit that is expected within the next 2 years or through an

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equity sale transaction that is currently under discussion with three potential investors.

8. Sources of Repayment
a. Primary Source(s)
Comment on the quality and likelihood of being paid from primary sources of repayment for the proposed exposure. Evaluation, in
this regard, to be based on/ supported by the financial projections (base case/downside) covering the life of the exposure. Use
coverage ratios, leverage and strength of free cash flows etc. as a guide.

The strength of the company's cash flows provides sufficient comfort in terms of repayment capacity with Gearing Ratio at 2.6x and
Net Cash generated from operations at PKR 133Mn. Consistency in these cash flows is expected to continue during the tenor of our

b. Secondary Source(s)
a. Comment on market perception of the customer in relation to refinancing from other financial institutions. Are
banks offering facilities to the customer? Do financial indicators support market perception?

The company has a long list of banks in their portfolio; hence the option of arranging finances is high.

b. Comment on other sources e.g. for government owned entities, the support of the government to ensure that an entity
does not go bankrupt due to its strategic importance or reputation implications etc. or in the cases where
personal/corporate guarantees are available, proceeds from their enforcement.


c. For facilities where structured take outs are available e.g. bills discounting, comment on source(s) of repayment i.e.
realization of receivables.

9. Relationship
a. What is our share of facilities and our role for the customer?

As detailed on the front page.

b. How important is the relationship to us? Provide reasons to support your response.

TCS group is one of the sought after names in the industry with a niche position in the courier and logistic sector. It is a good source of
ancillary income generated through cash management services, remittance business and working capital lines. We have recently
signed our CMT collection mandates with TCS (Pvt.) Limited at a healthy pricing of 10bps. The collection is currently recorded at PKR
100Mn each month which we further plan to increase to PKR 200Mn each month.

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c. Comments on the cross sell possibilities? Address both lending and non-lending products.

 Cash management services- Employee banking

d. Highlight UBL’s business with the customer and profitability earned from the relationship.

Profitability in ‘000 2017

Imports -
Exports -
Interest income earned
Fee income earned
Other income
The profitability of the customer is expected to increase as we have secured a CMT collection mandate in TCS (Pvt.) Limited which is
priced at 10Bps. The collection has started in 2018. Currently we are capturing a monthly volume of PKR 100Mn which is expected to
rise grow to PKR 200Mn per month in the near future.

10. Approvers’ Comments

a. Address the approval comments/observations, if any, over the previous 12 months.
b. Address any observations/concerns as raised by Audit (BRR/ Internal / SBP), over the last 12 months.


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