The Pakistan Credit Rating Agency Limited
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Anam Waqas Ghayour

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PACRA Maintains the Entity Ratings of Master Green Energy Limited

Rating Type Entity
(22-Jun-22 )
(23-Jun-21 )
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Developing Developing
Rating Watch Yes Yes

Master Group, pioneers of foam products, installed its second 50MW wind power plant project in district Jamshoro, Sindh – Master Green Energy Limited (“the Company” or “Master Green”), after Master Wind Energy Limited located in Jhimpir, Sindh. The Company signed Energy Purchase Agreement ("EPA") with CPPA-G. As per the EPA, in case of non-project missed volumes the power purchaser shall be liable to pay the missed volumes at applicable tariff rates. Master Green was awarded a cost-plus tariff by NEPRA, with the energy payments to be received from CPPA-G backed by the sovereign guarantee of Government of Pakistan. Hydro China International Engineering Company Limited & Hangzhou Huachen Electric Power Control Company are the EPC contractors. The construction on the project started in September 2019 and commercial operation date (COD) was achieved in August 2021. HydroChina International Engineering Company Limited is O&M operator for next two years, the long-term O&M operator is yet to be finalized. Comfort is drawn from its vast international and local experience. The Company generated 74.1GWh electricity including pre-COD with top line recorded to PKR 404mln. Ratings incorporate adherence to performance benchmarks through power generation, underpinned by decent cash flows generation. Short-term borrowing lines were availed in order to support its working capital needs, going forward a need to oversee the working capital management remains important. Till date the Company has repaid three installments (i.e., ~7%) of its project related long term debt. However the leverage is yet sizeable and will gradually decline along with the life of the project. Management has put forth the requisition for true up tariff to NEPRA, final decision in this respect is awaited.
Upgrading operational performance in line with agreed performance levels is important. Improvement in inflows and availability of unutilized credit limit remained congenial for the ratings.

About the Entity
Master Green Energy Limited, incorporated in May 2015, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. The 50MW wind IPP is installed in Jamshoro, Sindh. Mr. Shahzad Malik was appointed as CEO w.e.f April 07, 2022. He is zealous entrepreneur; since taking over Master Group's foam business has revamped the entire product line, expanded beyond Pakistan and updated the look of the "Master" brand. He is responsible for Master Group's investments in the energy sector. Mr. Rumman Arshad Dar is the COO of the company. Mr. Dar has fourteen years of experience in the energy sector. Mr. Dar holds an MBA in Finance and has cleared the first two levels of the CFA program. The total cost of the project is USD 65.03mln. Debt financing constitutes 80% of the project cost i.e., USD 52mln, which is financed from local and foreign financial institutions. The local facility has a tenor of ten years and the foreign facility has thirteen years with two years grace period, with quarterly repayments. Master Group has a long history spanning over 50 years. The flagship company Master Enterprises (Pvt.) Ltd established in the year 1963, deals in foam products. The Group gradually diversified in various industries with operations across textile, engineering, automobile, and retail sector.

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