Press Release

VIS Credit Rating Company Reaffirms Entity Ratings of Artistic Energy (Pvt.) Limited

Karachi, April 9, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Artistic Energy (Pvt.) Limited (AEL) at ‘A/A-1’ (Single A /A-One). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on June 26, 2018.

AEL’s assigned ratings favorably take into account satisfactory operating track record of AEL during 1st year of commercial operations, adequate financial profile and low exposure to business risk. AEL is a wholly owned subsidiary of Artistic Milliners (Pvt.) Limited (AML). The assigned ratings incorporate sound financial profile of sponsor. AEL operates a 49.3MW (29 Wind Turbine Generators (WTGs) of 1.7 MW generation capacity each) wind power farm in Jhimpir, District Thatta, Sindh which was set up at a total cost of Rs 11.7b. The project was funded in a debt equity ratio of 75:25.

Business risk profile draws support from long-term Operations & Maintenance (O&M) contract in place with experienced O&M operator and track record of compliance with normative parameters stipulated in Energy Purchase Agreement (EPA) since commencement of operations. Presence of long term EPA with guaranteed capacity payments mitigates off-take risk while adequate insurance coverage is also in place. While power produced and in turn cash flows are susceptible to seasonality and possible variance in wind speed, comfort is drawn from surveys conducted by international consultants confirming adequate wind availability historically. Assessment of adequate financial profile incorporates sound debt coverage metrics (present and projected) and healthy cash flows indicating satisfactory debt servicing ability; however, erratic payment cycle exhibited by Central Power Purchasing Agency may translate into some liquidity pressures. Leverage indicators are on the higher side given the sizeable dividend payout and debt levels.

For further information on this rating announcement, please contact the undersigned (Ext. 201) at 021-35311861-70.

Javed Callea

Applicable Rating Criteria: Industrial Corporates (May 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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