Press Release

VIS Reaffirms Entity Ratings of Zephyr Power Limited

Lahore, April 18, 2024: VIS Credit Rating Company reaffirms the entity ratings of Zephyr Power Limited (‘ZPL’ or ‘the Company’) at ‘A+/A-1’ (Single A Plus/A-One). The medium to long-term rating of ‘A+’ reflects good credit quality; protection factors are adequate. Risk is moderate but may vary slightly from time to time because of economic conditions. The short-term rating of ‘A-1’ indicates high certainty of timely payments; Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on February 02, 2023.

ZPL principally operates a wind based Independent Power Project (IPP) with a total capacity of 50 MW employing 25 Wind Turbine Generators (WTGs) located at Gharo, Thatta, Sindh. The assigned ratings factor in the robust profile of the primary sponsor, represented by foreign investment by a Development Finance Institution (DFI) wholly owned by the UK Government. The remaining sponsors comprise a consortium of local partners contributing through equity and management. The ratings also draw comfort from the presence of Debt Service Reserve Account (DSRA) and CPPA-G’s commitment of timely payment of receivables for debt servicing. In addition, presence of long-term Energy Purchase Agreement (EPA) with CPPA-G mitigates off-take risk while adequate insurance coverage is also in place. Moreover, operational risk remains minimal given O&M contractor’s track record of international experience, and fulfillment of obligations towards the company till date.

The ratings take into consideration temporary closure of two wind turbines during FY23 which impacted operational performance; however, recovery amounting to expected loss of output is anticipated from the O&M contractor. Nonetheless, the topline continued to depict growth over the rating review period owing to tariff rate adjustments with gross and net margin levels rebounding during the ongoing year. The liquidity profile remains sound given adequate debt-servicing capacity and cash flow coverages. Moreover, capitalization indicators exhibited timeline improvement given expansion of equity base; the same are expected to further enhance given projected internal capital generation coupled with repayment of financial obligations and limited capital expenditure plans, going forward.

For further information on this ratings announcement, please contact at 042-35723411-13 or email at info@vis.com.pk.




Applicable Rating Criteria: Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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 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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .