Analyst
Muhammad Mubashir Nazir
mubashir.nazir@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Kohinoor Energy Limited
Rating Type | Entity | |
Current (22-Mar-24 ) |
Previous (24-Mar-23 ) |
|
Action | Maintain | Maintain |
Long Term | AA | AA |
Short Term | A1+ | A1+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
The ratings reflect the strong business profile of Kohinoor Energy Limited (Kohinoor Energy), emanating from the demand risk coverage under the Power Purchase Agreement signed between Power Purchaser and the Company. Meanwhile, the Implementation Agreement provides a sovereign guarantee for cashflows, given adherence to agreed performance benchmarks. Kohinoor Energy continues to meet its availability and efficiency benchmarks - an outcome of technically sound O&M team, robust systems and controls. During 6MFY24 under review three major maintenances occurred while during the corresponding HY of the previous FY no engine was overhauled. During 6MFY24 Kohinoor Energy operated at 19.11% (6MFY23: 30.69%) capacity factor and delivered 104,642 MWh (6MFY23: 168,042 MWh) of electricity. This decrease in generation is mainly attributed to the shift of electricity demand towards a less expensive source of generation i.e., Hydro, local coal, Solar, Wind, and Biogas from the power purchaser in the wake of a cost-effective energy basket. The same trend is expected to be followed in upcoming periods. During 6MFY24 the top line of the company reported PKR 5,150mln (FY23: PKR: 12,583mln. 6MFY23: PKR: 7,039mln). Despite the fall in revenue, margins benefitted from lower load factors, and appreciation of USD against PKR. Gross and Net margins for 6MFY23 clocked to 20% & 14.7% respectively. Currently leveraging stood at 40% representing short-term borrowing only (FY23:15.6%). There is adequate cushion available to the company to meet its working capital requirement in its approved STB limits. The ratings stemmed from the fact that the long-term debt of the company was fully paid successfully in June 2008.
The ratings continue to take comfort from Kohinoor Energy's association with Saigol Group.
Although well-managed, in-house O&M activities expose the company to operational risk; thus, upholding strong operational performance in line with agreed performance levels would remain a key driver of the ratings. Meanwhile, sustained profitability and performance levels will also remain critical.
About
the Entity
Kohinoor Energy Limited, an independent power producer (IPP) – commissioned its plant under Power Policy 1994. With a total cost of US$ 138.8mln and capacity of ~131MW (Dependable capacity of 124MW), the company started its Commercial Operations in June 1997. Kohinoor Energy is listed on Pakistan Stock Exchange. The principal shareholder of the company is Saigol family (62%). The remaining shareholding (~38%) is widely dispersed. BoD comprises of seven members including the Chief Executive Officer. The board members are professionals with experience in managing the business affairs of companies in different sectors. The chairman, Mr. Naseem Saigol is a renowned businessman. The board has been actively involved in providing strategic guidance to the company and implementing strong internal control framework. Mr. Muhammad Zeid Yousaf Saigol is the Chief Executive Officer who is leading the Company's Power Division Operations.