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The Pakistan Credit Rating Agency Limited
Press Release

Date
08-Oct-19

Analyst
Taimoor Ahmad
taimoor.ahmad@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Liberty Power Tech Limited

Rating Type Entity
Current
(08-Oct-19 )
Previous
(12-Apr-19 )
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. 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. Although there are delays in payments from power purchaser, the company manages the impact by aligning the payments to fuel suppliers with its receipts. This keeps working capital needs under check. Short term borrowing lines are available and mainly used to fund any short-fall in working capital requirements. As at end Sept-19 available working capital lines stood at PKR 14,245mln out of which PKR 11,288mln are utilized (~79%). Given the liquidity situation, utilization is imputed to go up. As at end Jun-19 the company has outstanding principal for Sukuk and Islamic finance facility of PKR 3,624mln and PKR 443mln respectively. 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. However, the management ably supported by sponsors’ remains committed to sustain improvement in the management of commercial obligations and timely debt repayments.

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 majority 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 the 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. Management team comprises qualified professionals with sufficient experience in various sectors. The company has a well defined organizational structure with the CEO reporting to the board.

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.