Analyst
Hamza Ghalib
hamza.ghalib@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Liberty Power Tech Limited
Rating Type | Entity | |
Current (27-Dec-18 ) |
Previous (30-Jun-18 ) |
|
Action | Maintain | Maintain |
Long Term | A+ | A+ |
Short Term | A1 | A1 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Liberty Power Limited (Liberty Power Tech) runs a 200MW power plant based on Residual Fuel Oil. The Company operates in the regulated power sector. It enjoys sovereign guarantee against receivables from power purchaser CPPA-G given adherence to agreed performance benchmarks. The Company's operations and maintenance operator, Wartsila Pakistan (WPK), is a key source of comfort in managing the plant's operations. The Company's financial risk profile is largely dependent on the repayment behavior of the power purchaser. The Company has been paying consistent dividends. Fuel supply risk is adequately covered as they procure from different suppliers with good credit terms; being managed since 2011. Liberty Power Tech continues to meet its availability (90%) and efficiency (45%) benchmarks. Nevertheless, strong internal cash generation and available working capital lines have helped it in managing its working capital requirements efficiently. Because of the mounting receivables and consequent funding thereof from banking lines, remaining cushion in the available working capital facilities is limited, warranting management’s immediate attention. The ratings draw comfort from the sponsors’ demonstrated support to the Company.
Upholding operational performance in line with agreed performance levels would remain a key rating driver. Improving, indeed aligning, the Company's repayment behavior with its financial profile would be ratings positive. Meanwhile, any significant increase in overdue receivables may impact the ratings.
About
the Entity
Liberty Power Tech was incorporated in Sep07 as an Independent Power Producer under the power policy 2002. Liberty Power Tech operates a 200MW power plant based on Residual Fuel Oil near Faisalabad. The electricity generated is being sold to National Transmission and Dispatch Company under the Power Purchase Agreement. The company is majorly owned by Liberty Group (Liberty Mills Limited: 29%; Mukaty Family 61%; and Soorty Enterprises: 10%). Mukaty Family, the key sponsors of Liberty Power Tech, while planning to strengthen its foothold in power generation segment, are contemplating ventures in unrelated industries. This is likely to strengthen the group’s overall business profile.
Liberty Power Tech has an eight-member board of directors with all members belonging to the Liberty Group, which is principally engaged in the textile sector. Mr. Saleem Mukaty, the Chairman, has been associated with the Group in different capacities and is currently chairing the Board with his visionary leadership and vast experience.
The management team comprises qualified professionals possessing sufficient experience in various sectors. Mr. Azam Sakrani, Liberty Power Tech’s CEO since 2014, has over 20 years of experience in project management and banking, finance, and power sectors.