Press Release

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

Karachi, March 16, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Artistic Energy (Pvt.) Limited (AEPL) at ‘A/A-1’ (Single A /A-One). Long term rating of ‘A’ indicates good credit quality; adequate protection factors. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-1’ reflects high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 9, 2019.

AEPL’s assigned ratings favorably take into account satisfactory operating track record of AEPL, adequate financial profile and low exposure to business risk. AEPL is a wholly owned subsidiary of Artistic Milliners (Pvt.) Limited (AMPL). The assigned ratings incorporate sound financial profile of sponsor. AEPL operates a 49.3MW wind power farm in Jhimpir, District Thatta, Sindh which was set up at a total cost of Rs 11.7b. The project was financed 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 financial risk profile incorporates sound debt coverage metrics and healthy cash flows in relation to outstanding debt repayments. Receivables witnessed a surge at end-December’19 with the same expected to further increase on account of modified tariff post incorporation of quarterly indexation and adjustments resulting from utilization of SBP’s refinancing facility. Going forward, receipts from second issue of Energy Sukuk by the Government will facilitate in managing outstanding receivables. High leverage indicators are due to sizeable dividend payout and elevated debt levels to manage liquidity pressures. Going forward, ratings would remain sensitive to level of leverage indicators and quantum of dividend payout and borrowings mobilized, if any, to fund working capital requirements.

For further information on this rating announcement, please contact Mr. Talha Iqbal (Ext: 213) or the undersigned (Ext. 201) at 021-35311861-70 or email at

Javed Callea

Applicable Rating Criteria: Industrial Corporates (April 2019)

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 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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