The Pakistan Credit Rating Agency Limited
Press Release


Anam Waqas Ghayour

Applicable Criteria

Related Research

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 the Entity Ratings of Master Wind Energy Limited

Rating Type Entity
(26-Sep-23 )
(30-Sep-22 )
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Master Group, pioneers of foam products, has set up a 52.8MW wind power plant – Master Wind Energy Limited. The project is established under the Policy for Development of Renewable Energy for Power Generation, 2006 which offers a guaranteed internal rate of return, cost indexation, and passthrough tariff structure. The project revenues and cash flows are exposed to two main risks. First; wind risk. Under the upfront tariff regime, any variability in wind speeds is to be borne by the Company, due to which its cash flows may face seasonality. However, historical wind speeds provide comfort that Master Wind would be able to generate enough cash flows to keep its financial risk manageable. Second; operational risk. Comfort is drawn from General Electric International Inc. – the O&M operator – having both international and local market experience. If the Company maintains its availability as per contract and is ready to deliver electricity to CPPAG, CPPA-G is liable to pay the whole tariff even in case of missed volumes. The Government of Pakistan has provided a sovereign guarantee against dues from CPPA-G. Working capital requirements are fulfilled through in-house adequate cash flow generation. The Company's free cash flows are in a comfortable position to make debt repayments. During FY23, the company generated 91.678GWh as compared to 137.6GWh in the corresponding period last year depicting a decline of 34% (YoY). The reason for the declines among other factors includes variation in wind speed due to seasonality and forced outages due to maintenance work at the transmission network. The company manages its working capital requirement through in-house cash generation and has not availed any working capital lines. Master Wind has successfully repaid approx. 60% of the project loan without availing the benefit of the forbearance period, facet of strong financial profile and working capital management.
Upholding operational performance in line with agreed performance levels is important. Improving, indeed aligning, build-up of DSRA from internal sources, receipt pattern from power purchaser, debt repayment behavior, and liquidity cushion would impact the directions of ratings. External factors such as any adverse changes in the regulatory framework and weakening of financial profile may impact negatively.

About the Entity
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 the textile, engineering, automobile, and retail sectors. Master Wind Energy Limited, incorporated in May 2005, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. The 52.8MW wind farm is set up in Jhimpir, Sindh. The total cost of the project was USD 132.3mln. Debt financing constitutes 75% of the project cost, i.e., USD 99.2mln, which is financed equally by local and foreign financial institutions. The Company has paid 60% of its project-related debt. The project was commissioned on 14th October 2016. Master Wind’s Board of Directors (BoD) comprises eight members, including the Chairman and Managing Director. Out of these, four are non-executive, two are independent and two are executive directors. Whereas five board members represent the Master group. Mr. Shahzad Malik has been the MD of Master Wind since 2011, assisted by an experienced management team.

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.