Lumen Energia Limited (‘Lumen Energia’ or ‘the Company’) is an unlisted Private Limited Company, incorporated in 2010, under the erstwhile Companies Ordinance, 1984 (now the Companies Act, 2017). The Company’s registered office is located in Islamabad.

Lumen Energia (Pvt.) Ltd. was initially incorporated with the objective of generating electricity through sustainable, renewable, and environmentally clean sources, primarily utilizing biomass as fuel. In September 2010, the Company received a Letter of Interest from the Alternative Energy Development Board for a 12 MW power plant near Jhang, Punjab. Following approval of the feasibility study and tariff determination by NEPRA, the project was subsequently put on hold due to unforeseen challenges. The Company remained non-operational until Sept24, when it formally commenced commercial activities with a revised business focus on steam production utilizing biomass (agricultural waste) as fuel. The assigned rating is further supported by Lumen’s affiliation with its sister concerns, Axis Environment Services and Scandic Green Energy (Pvt.) Ltd. Axis, in partnership with its German collaborator UPM, has been operating in Pakistan since 2006, focusing on the development of CDM and renewable energy projects. Scandic specializes in biomass supply and established Pakistan’s first biomass briquetting plant in Badin with an annual capacity of 10,000 metric tons. It has also expanded into steam generation, serving clients such as Engro Friesland in Sahiwal.

Lumen Energia is strategically focused on expanding its presence in the provision of environmentally sustainable energy solutions to Pakistan’s manufacturing sector through the phased development of biomass-based plants. This approach reinforces the Company’s commitment to environmental stewardship and positions it as a significant contributor to corporate social responsibility (CSR) initiatives. The Company has established its inaugural steam generation facility in Kabirwala, Punjab, with an annual production capacity of 100,000 metric tons. Under a long-term agreement spanning 10 years, Nestlé Pakistan is contracted to procure 90,000 metric tons of steam per annum from this plant. The Company is currently engaged in the development of a similar steam generation facility for Engro Friesland in Sahiwal.

The Company’s major ownership resides with partners Mr. Arif Alam (49%), Mr. Naveed Ismail (51%).

The Company is wholly owned by the sponsoring members, which has maintained consistent ownership and oversight over time. This concentrated ownership structure is viewed as stable, reflecting long-term commitment, strategic alignment, and continuity in governance and decision-making.

The sponsors bring over two decades of experience in the power sector, having successfully navigated various business and economic cycles. Their extensive engagement reflects a robust understanding of industry dynamics, strategic adaptability to shifting domestic and international trade environments, and resilience amid market volatility. Notably, Mr. Naveed Ismail, one of the key sponsors, currently serves as Chairman of the Board at National Transmission and Despatch Company (NTDC) and Gener S.A. He has previously held prominent positions, including Board Member at K-Electric Limited and CEO of Genco Holding Company Limited (GHCL). His international leadership roles include President of AES Ekibastuz, Eletropaulo Metropolitana, and Central Puerto S.A. Mr. Ismail holds a B.Sc. (Hons.) in Mechanical Engineering from the N.W.F.P. University of Engineering, a Master of Science in Mechanical Engineering from the Massachusetts Institute of Technology (MIT), and an MBA from Boston College.

The Company derives significant financial strength and strategic support from its affiliation with a well-established associated companies. This association provides access to shared resources, operational synergies, and financial backing, enhancing the Company’s credit profile, liquidity position, and overall ability to withstand market fluctuations.

The Company is governed by a two-member Board comprising both executive directors: Mr. Arif Alam, who serves as the Chief Executive Officer, and Mr. Naveed Ismail, who also holds the position of Executive Director.

Mr. Arif Alam is a Danish-Pakistani energy entrepreneur with over 30 years of experience in renewable energy, climate initiatives, and international trade. He is the Chief Executive Officer and Founding Partner of several ventures, including Scandic Green Energy and Agrifuel, which specialize in biomass and decentralized energy solutions in Pakistan. He holds a Bachelor of Science in Economics from Copenhagen Business School and is an active member of the FPCCI Alternate Energy Committee. Mr. Naveed Ismail is a seasoned energy sector executive with over three decades of international experience in power generation, transmission, and sector restructuring across Pakistan, Central Asia, South America, and Europe. He currently serves as Chairman of the National Transmission and Despatch Company (NTDC) and Chief Executive Officer of Lumen Energia, where he advises on critical energy reforms and infrastructure development. His previous leadership roles include senior executive positions at K-Electric, Genco Holding Company, AES Corporation, and other prominent global utilities. Mr. Ismail has successfully led the turnaround of large-scale coal and thermal power plants and played a pivotal role in power sector reforms and privatization initiatives in Pakistan. He holds advanced degrees in engineering and finance from the Massachusetts Institute of Technology (MIT) and Boston College.

The Company has not yet established formal board committees, presenting an opportunity to enhance its governance structure. Additionally, while the Board convenes annually, formal meeting minutes are documented. However, Lumen is on a fast-track transformation to adopt the best practices of Code of Corporate Governance.

The external auditors of the Company, Abdul Khaliq and Co. Chartered Accountants, have expressed an unqualified opinion on the financial statements of the Company for the year ended Jun-24. The firm is QCR rated.

The company operates under a horizontal organizational structure, wherein department heads report directly to the CEO. The organization maintains a defined departmental framework, encompassing key functions such as: i) Production ii) Accounts & Finance, iii) Human Resource iv) Admin. Each department functions independently under the leadership of its respective head, ensuring streamlined reporting and operational efficiency.

Mr. Arif Alam is a Danish-Pakistani energy entrepreneur with over 30 years of experience in renewable energy and climate-related projects. Leveraging his extensive expertise, he has been instrumental in the development of numerous Clean Development Mechanism (CDM) initiatives, primarily focused on renewable energy. Recognizing a critical market gap arising from Pakistan's ongoing energy crisis—particularly in Punjab due to natural gas shortages—Mr. Alam has focused his efforts on delivering turnkey energy solutions to multinational corporations such as Unilever and Engro. He is the Founder and Chief Executive Officer of i) Scandic Green Energy (Private) Limited ii) Agrifuel and iii) Axis Environment Services. These companies specialize in the deployment of biomass-based energy infrastructure under Build-Own-Operate (BOO) models, primarily for industrial steam generation. Projects are strategically located in rural areas of Punjab, which are rich in agricultural biomass. Given the seasonal nature of these feedstocks, storage solutions were developed, leading to the establishment of Pakistan’s first biomass pellet plant. Scandic Green Energy has further pioneered biomass briquetting in the country, commissioning Pakistan’s first biomass briquette facility in Badin with an annual production capacity of 10,000 metric tons. The company has also expanded its operations into steam supply, serving industrial clients such as Engro Friesland in Sahiwal. Axis Environment Services, in collaboration with its German partner UPM, has been active in Pakistan since 2006, with a focus on CDM development and renewable energy deployment. Mr. Alam is supported by a skilled and experienced management team that plays a critical role in the execution and operation of these projects.

There are currently no formal management committees in place. However, the management team convenes its meeting on monthly basis to ensure the efficiency and effectiveness of the Company's operations.

The Company has a customized ERP system. MIS reports are regularly generated and reviewed by the Management for operational efficiency and decision-making.

The Company has developed an effective mechanism for identification, assessment, and reporting of all types of risk arising out of the business operations because the Company has outsourced internal audit function to ensure operational efficiency which operates under the direct supervision of directors.

Pakistan’s power sector faces persistent structural challenges, including low utilization of installed capacity (around 34%) and high transmission and distribution losses (16–20%). These inefficiencies contribute to rising capacity payments and a growing circular debt, which reached PKR 2.3 trillion in FY24. Tariffs remain high, straining consumers and pushing industries toward captive generation. Meanwhile, the energy mix is gradually shifting towards renewables, with net-metered solar capacity nearing 4.9 GW. Despite this progress, outdated infrastructure and poor recovery rates continue to hamper sectoral stability. Reforms in distribution and integrated grid planning are critical for long-term sustainability.

The Company plays an active role in Pakistan’s energy sector, with a growing presence in the country’s renewable power generation landscape.

The Company remained non-operational until September 2024, when it formally commenced commercial operations with a revised strategic focus on steam generation using biomass (agricultural waste) as fuel. Under a 10-year long-term agreement, the Company is contracted to supply 90,000 metric tons of steam annually to Nestlé Pakistan. In parallel, the Company is in the process of developing a similar biomass-based steam generation facility for Engro Friesland in Sahiwal. Upon commencement, this project is also expected to supply 90,000 metric tons of steam annually, bringing the total projected topline from both projects to approximately PKR 900 million. During the nine-month period ended FY25 (9MFY25), the Company generated revenue of PKR 200.8 million through steam sales to Nestlé Pakistan.

During 9MFY25, the Company achieved a gross profit margin of approximately 20%, reflecting operational efficiency in its biomass-based steam generation activities. However, elevated financial charges, primarily driven by debt-servicing costs associated with project financing, significantly impacted the bottom line. As a result, the Company recorded a marginal net profit margin of 0.7% for the period. This underscores the pressure of high leverage on overall profitability despite healthy gross margins.

The sponsors are actively pursuing strategic expansion opportunities through engagements with various industrial counterparts to enhance the Company’s footprint within the energy sector. These initiatives are aimed at broadening the Company's customer base, diversifying revenue streams, and increasing market share, thereby reinforcing its long-term growth trajectory and competitive positioning in the renewable and industrial energy solutions space.

The Company’s working capital cycle necessitates maintaining an inventory equivalent to 40–45 days of biomass supply, in line with contractual requirements set by Nestlé Pakistan Limited. This translates to a working capital investment of approximately PKR 40mln. As per management representation, this requirement is currently being met through internally generated operating cash flows. Consequently, the Company has not required any short-term financing to date. This reflects a healthy liquidity position and prudent cash flow management, enabling the Company to meet its operational needs without reliance on external short-term borrowings.

Due to elevated finance costs arising from debt-funded project development, the Company reported a modest interest coverage ratio of approximately 1.2x during 9MFY25. This indicates limited headroom in earnings to cover interest obligations. Additionally, the interest plus principal coverage ratio stood at 0.5x over the same period, reflecting a constrained capacity to meet both interest and scheduled principal repayments through operating cash flows. These indicators highlight the impact of high leverage on the Company’s debt-servicing ability and underscore the importance of sustaining strong operational performance to support financial obligations.

The Company maintains a highly leveraged capital structure, with the leverage ratio reaching ~74.3% during 9MFY25. This reflects a deliberate and strategic approach to leveraging debt for project development. A total capital expenditure of PKR 500mln was incurred on the Nestlé steam generation project, financed through a capital mix of 75% debt and 25% equity. To support the debt component, the Company secured a 10-year long-term financing facility amounting to PKR 1bln from Bank Alfalah. The unutilized portion of this facility is being allocated toward the construction of a similar biomass-based steam generation plant for Engro Friesland in Sahiwal, which also entails a projected capital outlay of PKR 500mln. As a result of these borrowings, the Company’s outstanding long-term debt stood at approximately PKR 669mln as of Mar25. This capital structure demonstrates the Company’s focus on optimizing financial leverage to fund infrastructure development, while also highlighting the associated debt-servicing obligations.