Master Wind Energy Limited (“MWEL”) was incorporated in Pakistan on May 03, 2005, and converted into a public limited company on July 01, 2011. The Company operates a wind power plant at Jhimpir, District Thatta, Sindh, on land leased from the Alternative Energy Development Board (AEDB), Government of Pakistan. This project marks the Master Group’s first venture into the energy sector. The plant was initially commissioned with an installed capacity of 49.5 MW, which was later enhanced to 52.8 MW through software upgradation.

The project is being developed under the Upfront Tariff Regime announced by the Government in 2013. Under this framework, the feed-in tariff, along with permitted indexations and escalations, will remain applicable throughout the 20-year concession period from the date of commercial operations. The concession is backed by sovereign guarantees provided by the Government of Pakistan through the Energy Purchase Agreement and the Implementation Agreement. As per NEPRA’s 2013 tariff determination for wind IPPs, MWEL was awarded a levelized tariff of US¢15.1088 (PKR 14.7462) per kWh for years 1–20. The current applicable tariff, as per NEPRA for July to September FY25, stands at PKR 40.9632 per kWh.

The IRR of the project, as agreed with NEPRA, is 17%

The Company is a wholly owned subsidiary of the Master Group. The Group is jointly owned by three brothers, with shareholding distributed among their families either directly or through special purpose vehicles (SPVs). In MWEL, individual shareholders hold 36.33%, while associated companies collectively hold 63.67%. The associated companies include N.M. Holding Ltd. (16.33%), Najeeb Holdings Ltd. (17.33%), Procon Engineering Ltd. (15%), and Master Textile Mills Ltd. (15%).

Stability in IPPs is anchored in the long-term agreements signed with the power purchaser. The Company further benefits from a stable ownership profile, being wholly owned by the Master Group, with shareholding distributed among the sponsoring families through direct and associated company holdings. This structure is expected to remain unchanged, reflecting the sponsors’ sustained commitment to the Company. Reinforcing their presence in the energy sector, the sponsors have also established another venture under the name Master Green Energy.

The sponsor group demonstrates strong business acumen with significant experience across diverse sectors, including foam products, chemicals, textiles, engineering, wind power, home fashion, automobiles, and real estate. In the automobile sector, the Group owns Master Motors Limited, engaged in the assembly, manufacturing, and distribution of commercial and passenger vehicles in Pakistan through collaborations with renowned international brands. In real estate, the Group has launched IMM REIT Management Company Limited, which is primarily focused on residential developments. This diversified portfolio underscores the sponsors’ ability to manage complex and large-scale businesses and reflects their long-term commitment to the Company.

The sponsors of Master Wind Energy Limited possess strong financial standing, supported by the diversified and well-established profile of the Master Group. The Group has a longstanding market presence, stable earnings, and a proven track record of growth, which underpin its capacity to extend financial and operational support to the Company when required.

MWEL’s BoD comprises eight members, including the Chairman and Managing Director. Of these, three are executive directors, three are non-executive directors, and two are independent directors. Five board members represent the Master Group, and the Board also includes one female director in line with governance requirements. While the Company is not listed on the Pakistan Stock Exchange (PSX), its Board is fully compliant with the Code of Corporate Governance.

The Board is chaired by Mr. Naveed Malik, who brings nearly four decades of experience with the Master Group, having held senior leadership positions across its businesses. The Board also includes Mr. Najeeb Malik, Managing Director of Master Textile Mills Limited, with around three decades of experience and deep involvement in the Group’s companies, and Mr. Nadeem Malik, Managing Director of Procon Engineering and Master Motor Corporation, who contributes over 30 years of expertise in the engineering and automobile sectors. Mr. Shahzad Malik, Managing Director of MWEL and also leading Dura Industries and Master Green Energy, has approximately 15 years of experience in both the foam and power sectors, reflecting the Group’s diversification into energy. Day-to-day operations are further supported by Mr. Rumman Arshad Dar, Director and Chief Operating Officer of MWEL, has long association with the Compnay and brings extensive expertise in the power sector. Independent oversight is provided by Mr. Aamir Fayyaz Shaikh, a businessman with experience in textiles, and Mr. Shahab A. Khawaja, a former government official, both serving as independent directors for the past 6 years. Female representation is ensured through Ms. Natalia Malik, a businesswoman and sponsor family representative.

The diverse experience of the Board members will play a pivotal role in guiding management toward the development of effective operational and financial policies. Their collective expertise, combining long-standing sponsor leadership with independent oversight, provides strategic direction and strengthens governance to the Company

A.F. Ferguson & Co., Chartered Accountants, is the external auditor of the Company. The auditor issued an unqualified opinion on the Company’s financial statements for the year ended June 2024, indicating a true and fair view of the financial position. The statutory audit for FY25 is currently in process.

MWEL follows a lean organizational structure, with management primarily focused on financial and administrative functions. The operations and maintenance of the plant are outsourced to General Electric International Inc. Ltd. under a long-term O&M contract, ensuring operational efficiency and reliability.

Mr. Shahzad Malik, Managing Director of MWEL, leads the Company with direct reporting to the Board, bringing strong Group-level experience and strategic oversight. He is supported by Mr. Rumman Arshad Dar, Chief Operating Officer, who has nearly two decades of professional experience, including a decade with MWEL and six years as COO, contributing sector-specific expertise in power and finance. Plant operations are overseen by Mr. Syed Shahzad Ali, General Manager, who has over two decades of industry experience and nine years with MWEL, and is responsible for coordinating with General Electric International Inc. Ltd. under the O&M contract. Collectively, the management team demonstrates stability, technical competence, and the capability to ensure effective operations within a lean organizational framework.

The Company’s management demonstrates efficiency through a structured and systematic decision-making process that has contributed to consistent operational outcomes. The team not only provides strategic oversight but also ensures knowledge transfer and capacity building at the plant level by maintaining a dedicated engineering staff. Regular bi-weekly and monthly coordination meetings with GE’s O&M personnel further strengthen technical expertise and operational reliability. This approach reflects management’s commitment to continuous improvement, efficient resource utilization, and long-term sustainability of plant operations.

The Company maintains a sound control environment, supported by an efficient Management Information System (MIS). The MIS provides real-time plant production data, allowing management to closely monitor operations and make timely, informed decisions. This strengthens transparency, facilitates accountability, and ensures effective oversight of day-to-day performance. Beyond MIS, the Company’s lean organizational structure, clear reporting lines, and regular coordination with the O&M contractor further reinforce operational discipline and risk management. Collectively, these practices contribute to a robust control framework, enhancing both efficiency and governance.

MWEL operates under the framework of the Renewable Energy Policy 2006. In line with this policy, the Company achieved its COD in October 2016 and executed a 20-year Energy Purchase Agreement (EPA) with the Central Power Purchasing Agency (Guarantee) Limited [CPPA-G]. Under this agreement, all electricity generated is supplied to the national grid. The EPA remains effective until October 2036, providing long-term revenue visibility and stability by securing the Company’s off-take arrangements for the entire concession period. Under the EPA, the Company is required to generate electricity in line with the benchmark generation while maintaining the required efficiency. Any decline in generation due to efficiency shortfalls is not compensated by the power purchaser. However, in the event of curtailment of offtake by CPPA-G, the Company is compensated for the missed volumes, referred to as Non-Project Missed Volumes (NPMV).

For the initial two years of operations, the O&M services were provided by Zhejiang Huadong Engineering Science & Technology Development Company Ltd., under sub-operation by General Electric (GE). Subsequently, the O&M contract was transitioned to General Electric International Inc., which continues to manage the plant’s operations and maintenance. Under the terms of the contract, GE is responsible for ensuring the efficient performance of the plant. Any decline in generation arising from plant inefficiencies is subject to liquidated damages (LD), which are charged to GE.

The Company’s revenues are subject to seasonality due to variations in wind speeds, with higher generation typically observed during the March–September period. Resource variability risk, unique to renewable energy IPPs, arises from their reliance on wind as a key resource, making them inherently exposed to wind risk. Under the Upfront Tariff Regime and the Renewable Energy Policy 2006, the Company fully absorbs the risk associated with wind variability. Consequently, the Company’s revenues and cash flows are directly affected by wind speed variations, which impact electricity generation and may result in fluctuations in cash flows. However, as per the Energy Purchase Agreement, if the plant remains available at its contracted capacity and is ready to deliver electricity, CPPA-G is obligated to pay the full tariff irrespective of actual offtake. This arrangement mitigates demand-side risk while providing revenue protection.

The Company has sound insurance coverage for property damage and business interruption. The insured values for damages include a property damage cover (up to PKR 0.7bln) & business interruption cover (up to PKR 3bln).

The power sector in Pakistan, with an installed capacity of 46,605 MW and total generation of 127,523 GWh in FY25, remains dominated by thermal (46%), hydro (31%), and nuclear (18%) sources. Renewables—including wind, solar, and biomass—currently account for about 5% of grid-based capacity (limited to IPPs, excluding captive and self-owned solar/wind generation). The government, however, aims to raise this share to 30% by 2030 under supportive frameworks such as the Alternative Energy Policy 2019 and the Indicative Generation Capacity Expansion Plan (IGCEP 2047), which emphasize competitive bidding, grid modernization, and diversification of the energy mix to reduce reliance on imported fuels. Despite these policy efforts, new investment in the power sector has slowed, with most recent capacity additions concentrated in hydropower projects. At the same time, rooftop solar has gained strong momentum. Between 2022 and 2024, net-metered capacity increased from just over 300 MW to nearly 2,813 MW, with more than 280,000 households registered. This rapid expansion has been driven by rising grid tariffs, declining solar equipment costs, and greater adoption of net metering. While the trend has improved energy access and contributed to the renewable transition, most of this generation is self-consumed rather than fed into the grid. Consequently, demand for grid-based electricity has weakened, leaving fixed network costs to be spread over a smaller consumer base. Combined with underutilized installed capacity and persistent circular debt, this has contributed to rising per-unit electricity costs. A more balanced, system-wide approach is required to align distributed generation growth with the financial sustainability of the sector. Policy responses are evolving. The government is considering revisions to the net-metering buyback rate and has already imposed a 10% import tax on solar panels to manage sectoral imbalances and fiscal pressures. At the structural level, reforms are underway to curb circular debt and enhance efficiency through the Competitive Trading Bilateral Contract Market (CTBCM), which will enable large consumers to procure electricity directly from generators—promoting competition, improving price discovery, and supporting renewable integration into the national grid.

In FY25, the Company’s generation declined to 95.376 GWh (FY24: 127.366 GWh), impacted by weaker wind speeds, curtailments, and subdued demand. Revenue contracted by 31% to PKR 4,189mln (FY24: PKR 6,115mln), including NPMV of PKR 538mln (FY24: PKR 1,873mln). The decline was primarily driven by curtailments (13 GWh vs. 42 GWh in FY24), a lower late payment surcharge (PKR 167mln vs. PKR 429mln), easing inflation that reduced indexation adjustments, along with the modest reduction in generation.

Under the EPA, MWEL is required to maintain a plant availability of 95%. During FY25, average availability remained high at 98.71%, in line with agreed parameters. However, electricity generation stood at 95.376 GWh against the benchmark generation of 142 GWh, resulting in an capacity factor of 22% (benchmark: 32%).

Debt financing constitutes 75% of the project cost, totaling USD 99.2mln, sourced equally from local and foreign financial institutions. A long-term facility of USD 49.6mln was obtained from the International Development Finance Corporation ('IDFC'), United States of America (USA) formally known as (Overseas Private Investment Corporation -OPIC), while local debt of PKR 5,456mln was provided by a consortium of banks comprising Meezan Bank Limited, Bank Al Habib Limited, Bank of Punjab, and Habib Metropolitan Bank. over 80% of both local and foreign debt has been repaid to date.

MWEL receives payments under the EPA for electricity it is capable of generating, protecting the Company from demand-side risk even if CPPA-G requires no additional electricity. However, payments are not made if the plant is unavailable or unable to generate, making cash flows partially exposed to operational risk and seasonal variations in wind speed. As of FY25, the Company has no investment book nor short-term working capital liabilities, reducing liquidity risk. Interest coverage remains strong 5.2x in FY25 (FY24: 4.9x) ensuring financial stability. The Company has a strong equity base, and consistent dividend payments highlight its healthy liquidity position.

MWEL operates with minimal reliance on working capital lines, meeting its operational requirements primarily through internal cash generation, and has not utilized any short-term borrowings to date. Payments from CPPA-G are due within 30 days, and trade receivables are secured by a government guarantee under the Implementation Agreement, with markup on delayed payments at 3M KIBOR plus 4.5% per annum. In FY25, net cash cycle days increased to 255 (FY24: 204), largely due to delayed collections arising from the circular debt issue in the power sector. Receivable days rose to 279 (FY24: 218), reflecting payment delays from CPPA-G. The company holds no inventory, so gross working capital days are entirely driven by receivables, resulting in minimal working capital requirements and eliminating the need for short-term borrowings. On the liability side, MWEL has limited trade creditors, with payments confined to O&M and general office expenses, resulting in short payable days of 24 in FY25 (FY24: 13), underscoring a conservative, cash-driven working capital management approach.

During FY25, MWEL generated a Free Cash Flow from Operations (FCFO) of PKR 3,238mln, down from PKR 5,242mln in FY24, primarily due to lower gross profit (FY25: PKR 2,236mln vs. FY24: PKR 4,179mln) resulting from reduced NPMV and lower wind speeds, which led to efficiency below benchmark levels. Cash at bank stood at PKR 3,147mln (FY24: PKR 3,057mln), while the Current Maturity of Long-Term Debt (CMLTD) was PKR 2,663mln (FY24: PKR 2,423mln), reflecting a coverage ratio of 0.9x (FY24: 1.5x). With the majority of project debt repaid and no significant long-term CAPEX required, the Company has minimal financial obligations and maintained consistent dividend payments of PKR 1,200mln (FY24: PKR 1,213mln), underscoring sound cashflow position.

During FY25, the company’s leverage decreased to 21.9% from 32.4% in FY24, driven by repayments of project-related loans. The company has not utilized any additional long-term loans, and the debt on the balance sheet reflects only the remaining project-related financing.