The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Mubashir Nazir

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 Upgrades Entity Ratings of ACT2 Din Wind (Pvt.) Limited

Rating Type Entity
(18-Jan-23 )
(19-Jul-22 )
Action Upgrade Maintain
Long Term A- BBB+
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Act group and Din group have successfully set up wind power plant - Act2 Din Wind (Pvt.) Limited (“Act2 Din Wind or the Project”), formerly known as Act2 wind energy Pvt. Ltd. Hydro China International Engineering Company Limited & Hangzhou Huachen Electric Power Control Company are the EPC contractors. The Upgrade in ratings incorporates commissioning of the complex by declaring commercial operations on February 2022, after taking into account all the pre-requisites mentioned in the EPA, as a result, the project does not feature any construction risk. Further, as of 1QFY23 Act2 Din Wind has paid off first three installments of project-related loan in timely maner. The construction contractors are the O&M operator for two years after COD; and provide the warranty bond (10% of EPC cost) in the form of irrevocable bank guarantee for 24 months after COD. Act2 Din Wind is awarded a cost-plus tariff, with the payments to be received from CPPA-G backed by the sovereign guarantee. Energy Purchase Agreement ("EPA") is signed 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 calculated using tariff rates. During the period, FY22, Act2 Din wind recorded sales revenue of PKR ~599mln along with a Net Profit of PKR ~299mln respectively, being the first 5 months of its operations. Working capital requirements of Act Wind are fulfilled through in-house adequate cash flow generation, without any utilization of short term borrowing lines. Free cash flows of the Company are in a comfortable position to make timely debt repayments. The Project will maintain the Debt Service Reserve Account (DSRA), which will be backed by 6 months SBLCs, in total providing coverage of six months on its financial obligations till maturity. The leveraging of Act2 Din Wind is yet sizeable and will gradually decline along with the life of the project as the repayment of project-related loan has started. The project revenues and cash flows are exposed to wind risk, there is seasonal variation in the wind speed which affect the electricity generation, and ultimately cash flows may face seasonality. However, historical wind speeds provide comfort that ACT2 Din Wind would be able to generate enough cash flows to keep its financial risk manageable.
Comfort is drawn from the group association, having strong financial backing and relevant experience. 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. Sound cash flow generation
remained congenial for the ratings.

About the Entity
Act2 Din Wind Pvt. Limited, incorporated in Nov 2015, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006 by AEDB. Mr. Khurshid Akhtar is the CEO of the company. Mr. Khurshid has done his MBA from LUMS. The total estimated cost of the project is USD 62.952mln. Debt financing constitutes 80% of the project cost i.e. USD 50.36mln, which is financed from foreign financial institutions and locally from SBP under re-financing scheme at fixed rate 5%. The foreign facility has tenor of thirteen years with two years grace period and quarterly repayments while local loan has tenor of ten years with 2 years of grace period. The current sponsor of the project includes Akhter Group, Ismail Group, Tapal Group and, Din group, that owns 15.50%, 20%, 15.5% and 49% respectively. Previously the Project was equally owned by Akhter Group, Tapal Group, and Ismail group.

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.