Press Release

VIS Credit Rating Company Assigns Initial Entity Ratings to Yunus Energy Limited

Karachi, April 11, 2019: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A+/A-1’ (Single A /A-One) to Yunus Energy Limited (YEL). Long Term Rating of ‘A+’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors and risk factors are minor. Outlook on the assigned ratings is ‘Stable’.

YEL operates a 50 Megawatt (MW) wind power farm, located at Jhimpir-Hyderabad Corridor. The plant comprises 20 wind turbine generators, each with a nameplate capacity of 2.5 MW. The plant was constructed on EPC basis at a total cost of $110.2m with debt to equity ratio of 80:20. YEL commenced commercial operations in September’2016.

YEL’s assigned ratings favorably factor in the satisfactory operating track record since commercial operations, low business risk and adequate financial risk profile. The company is part of Yunus Brother Group (YBG), a reputable conglomerate with strong financial profile and presence in diversified sectors including power generation, building materials, real estate, textile, chemicals, pharmaceuticals, food and automotive sectors. Further, contractual commitment of the sponsor to fund any shortfall in the debt payment account provides comfort to the assigned ratings.

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 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 power purchaser may translate into some liquidity pressures. Leverage indicators are on the higher side given the sizeable dividend payout and debt levels. Ratings remain dependent on maintaining satisfactory operating track record and achieving projected decline in leverage indicators over the rating horizon.

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

Jamal Abbas Zaidi

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 .

VIS Credit Rating Company Limited