Press Release

VIS Reaffirms Entity Ratings of Indus Wind Energy Limited (IWEL)

Karachi, August 07, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Indus Wind Energy Limited (IWEL) at A/A-2 (Single A/A-Two). The medium to long-term rating of ‘A’ signifies good credit quality; protection factors are strong. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on May 16, 2022.

IWEL is a 50 MW wind power project located at Deh Kohistan, District Thatta and is a wholly owned subsidiary of Indus Dyeing & Manufacturing Company Limited. The assigned ratings take into account low business risk profile underpinned by signing a 25-year long energy purchase agreement (EPA) entailing ‘take or pay’ provision with the Central Power Purchasing Agency (Guarantee) Limited (CPPA-G). Presence of long-term EPA with guaranteed capacity payments mitigates off-take risk. The wind power projects (WPPs) have been facing curtailments primarily on account of capacity constraints at national grid level amidst availability of cheaper alternative power sources and the requirement to maintain a base load. However, the Company was able to surpass the targeted capacity factor in first twelve months of operations despite these curtailments. In the backdrop of sharp local currency devaluation amidst lag in quarterly indexation adjustments, as allowed under interim relief from National Electric Power Regulatory Authority (NEPRA), gross margins have declined in 9MFY23. This, along with augmentation in finance cost led to net losses reported by the company. IWEL has applied for true-up tariff determination which is expected to conclude in the ongoing year. The liquidity profile is supported by timely recovery of receivables from CPPA-G. Trade debts are secured by a guarantee from the GoP under the Implementation Agreement (IA). The quarterly repayments of financing facilities have been commenced from Sep’22. Cash flows have remained under pressure as a result of weakening in profitability profile. However, comfort is drawn as the company has maintained a standby letter of credit (SBLC) equal to two quarterly installments for the entire loan term as per financing agreements. The project was financed through debt to equity ratio of 80:20. Hence, gearing and debt leverage have remained elevated. Capitalization indicators are expected to improve steadily over time in line with scheduled repayments of long-term financing along with equity build up on the back of profit retention.

The ratings are dependent upon timely resolution of the true-up tariff and availability of timely relief from NEPRA to support the financial risk profile of the Company.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8001) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)
Rating Scale and Definitions:

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