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The Pakistan Credit Rating Agency Limited
Press Release

Date
10-Jan-25

Analyst
Anam Waqas Ghayour
anam.waqas@pacra.com
+92-42-35869504
www.pacra.com

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PACRA Maintains Entity Ratings of ACT2 Din Wind (Pvt) Limited

Rating Type Entity
Current
(10-Jan-25 )
Previous
(16-Jan-24 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Act2 Din Wind (Pvt.) Limited (“Act2 Din Wind or the Company”) is 50MW wind power plant located at Jhimpir, Sindh. Act2 Din Wind has entered into a 25-year Energy Purchase Agreement (EPA) with CPPA-G (the power purchaser), effective from the Commercial Operations Date (COD). The Company achieved COD on February 27, 2022, and has been supplying electricity to the national grid since that time. 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. However, the Company’s revenues and cash flows are subject to wind risk, as seasonal variations in wind speed impact electricity generation, leading to potential seasonality in cash flows. The Company maintains comprehensive insurance coverage to mitigate the risks of business interruptions and other related damages. During FY24, Act2 Din Wind generated ~115GWh of electricity (FY23: ~138.7GWh) with an efficiency factor of 26.3% (FY23: 31.6%). Despite the lower generation compared to the previous year, the Company recorded a topline of PKR ~2,372mln (FY23: PKR ~1,959mln, benefiting from USD and CPI indexation incorporated in the tariff structure. As a result, the Company achieved a net profit of PKR ~694mln (FY23: PKR ~438.6mln). Act2 Din Wind fulfills its working capital requirements through internally generated cash flows, without relying on short-term borrowing facilities. However, as a prudent measure, the Company has secured sufficient working capital lines that can be utilized if necessary. The Company's free cash flows are strong, ensuring timely debt repayments. Additionally, The Company is maintaining the Debt Service Reserve Account (DSRA), which is backed by 6 months SBLCs, in total providing coverage of six months on its financial obligations till maturity. While Act2 Din Wind's leveraging remains significant, it is gradually declining in line with the project's lifecycle, as the repayment of project-related loans is underway. As of FY24, approximately 13% of loans have been repaid as scheduled. The Company has applied for the true-up of its tariff, which is currently under review by the authority. Currently, the indexation provided is on an interim basis and will be subject to adjustments, if necessary, based on the final decision of the authority.
Comfort is derived from the company’s association with a strong sponsor, distinguished by sound financial backing and relevant industry expertise. Maintaining and improving operational performance in line with agreed performance levels is essential. Furthermore, sustaining financial discipline remains a key factor for the ratings. Any changes in the regulatory environment could potentially impact the ratings, going forward.

About the Entity
Act2 Din Wind Pvt. Limited, established in November 2015, is a Renewable Energy Independent Power Producer (RE IPP) operating under the Renewable Energy Policy 2006, as authorized by AEDB. The Company is led by Mr. Khurshid Akhtar, the CEO, who holds an MBA from LUMS. The total estimated cost of the project is USD 62.952 million, with 80% of the project cost (USD 50.36mln), financed through debt. This debt is sourced from foreign financial institutions and locally from SBP under the refinancing scheme at a fixed rate of 5%. The foreign loan has a tenor of 13 years, including a 2-year grace period and quarterly repayments, while the local loan has a tenor of 10 years with a 2-year grace period. The current sponsors include Din Group (49%), Ismail Group (20%), Akhter Group (15.50%) and Tapal Group (15.5%).

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.