Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

CREDIT RATING REPORT | Oct-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
02-Oct-25 AA A1+ Stable Maintain -
12-Aug-25 AA A1+ Stable Preliminary -
About the Instrument

LEPCL has issued a rated, unsecured, unlisted, privately placed, short-term Sukuk Lucky Electric Power Company Limited | PPSTS-22 | PKR 6bln | Aug25 (“PPSTS-22”) of PKR 6,000mln (inclusive of green option of PKR 2,000mln) on 18th August 2025. PPSTS-22 has been issued in the rollover of previous Sukuk, PPSTS-21, amounting to PKR 6,000mln, which matured on 18th August 2025. The tenor of the instrument will be 6 months. The purpose of the instrument is to be utilized by the Company to meet its working capital requirements. PPSTS-22 carries a profit rate of 3MK - 0.15%. Profit and principal will be realized at the time of maturity.

Rating Rationale

Lucky Electric Power Company Limited ("LEPCL" or "the Company") has set up a 1x660MW (gross) coal-fired power plant. The project achieved COD in March-22 and is successfully connected to and providing electricity to the grid. The primary fuel is Coal; a coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC), SECMC will provide the coal from its developing Block-II (Phase III), which will start in June 26. The previous tentative month was Dec-25. The Company has also signed an import coal supply agreement with reputable coal suppliers. Currently, the plant is generating electricity through imported coal. The Company has generated a topline of ~PKR 53.4bln during 9MFY25. Lucky Electric Power Company Limited generated a bottom line of ~PKR 15.7bln during the same period. Comfort is drawn from the experience of O&M contractor, M/s Harbin Electric International Co., Ltd. -P.R. China (HEI), which has taken over the plant from the previous operator from Mar-23. Going forward, the Company’s main focus would be to keep the plant operational. In 9MFY25, the Company has total borrowings of PKR 131.9bln, including short-term borrowing of PKR 25.4bln. The Company has only 6bln of short-term debt instruments in March 2025, as compared to 25bln in June 24. PPSTS-22 is issued in replacement of PPSTS-21, which matured on 18-Aug-25.

Key Rating Drivers

The financial strength and experience in the energy chain of the sponsoring company, Lucky Cement, are considered positive for the ratings. However, considering the unusual increase in working capital requirements due to the significant devaluation of PKR, supply chain issues, and tariff adjustments, LEPCL is striving to manage its needs. The offtake agreement is with CPPA-G, which will, upon the plant’s availability as per the contract, provide capacity payments even if no purchase order is placed. The Government of Pakistan has given a payment guarantee against dues from CPPA-G.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

rating analysis

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Issuer Profile
Profile

Lucky Electric Power Company Limited (Lucky Electric) has set up a 1x660MW (gross) local coal-fired supercritical power plant at Port Qasim, Karachi, Sindh. Plant is developed on a Build-Own-Operate (“BOO”) basis with an initial estimated cost of USD 895 Million in a debt-to-equity ratio of 75:25. The tariff is divided into two components: Capacity Payments and Energy Payments. Energy payments further have two components: variable costs and fixed fuel costs. If the Plant is operational at contract availability, capacity payments and the fixed fuel costs will be provided even if no purchase order is placed by CPPA-G. The tariff control period is 30 years. The PKR/kWh Return on Equity (ROE) of Lucky Electric, as agreed with NEPRA, is 29.5%.


Ownership

Lucky Cement Limited owns 100% shareholding of Lucky Electric, incorporated in Pakistan on June 13, 2014 as public unlisted company. The registered office of the company is situated at 6-A, Muhammad Ali Housing Society,Karachi, Sindh. Lucky Electric is a subsidiary of Yunus Brothers Group (YBG), which is one of the biggest conglomerates in Pakistan with diversified interests in textiles, real estate, power generation, chemicals, food, and automotive. Lucky Cement Limited stands as the flagship company of YBG. Lucky Cement is one of the largest producers and leading exporters of quality cement in Pakistan. The Company’s sponsors have the ability to support the entity both on a continuing basis, and in times of crisis. Additionally, the financial strength of sponsors is considered strong as the sponsors have well diversified profitable businesses.


Governance

The board is dominated by the sponsor’s representatives. The company’s board of directors comprises of seven directors including the CEO. All the board members represent Lucky Cement Limited. Mr. Muhammad Ali Tabba, the Chairman, has been associated with the Group in different capacities for nearly three decades and is currently chairing the Board with his visionary leadership and vast experience. All board members are highly qualified and competent enough for effective leadership. Board members meet quarterly or conduct regular board discussions on a need basis. The Chairman of the Board exercises close oversight over the affairs of the company. However, there are no sub-committees. The board has been actively involved in providing strategic guidance to the company. There is no independent director on the board. A.F. Ferguson & CO., Chartered Accountants, is the external auditor of the company. They have expressed an unqualified opinion on the company’s financial statements at end-Jun-24.


Management

Lucky Electric’s management team comprises qualified professionals in areas like technical, commercial, and legal specialists with the capability to construct, develop, operate, finance, and maintain the project. The company has a well-defined organizational structure with the CEO reporting to the board. Mr. Ruhail Muhammad, the CEO, is MBA and CFA Charter holder. Mr. Ruhail carries vast experience in leading various corporate organizations and is also on the board of various renowned corporate entities. He is supported by an experienced team of professionals. Over the years since incorporation, management has played a significant role in empowering the organization through its progressive results and has achieved project milestones in a timely and accurate manner. The company takes advantage of advanced I.T. solutions to deliver comparatively better on many fronts. Moreover, Lucky Electric's quality of the I.T. infrastructure and the breadth and depth of activities performed has remained well satisfactory.


Business Risk

The electricity generated will be sold to Central Power Purchasing Agency (CPPA-G) under 30 30-year Power Purchase Agreement (PPA). COD as per the PPA was March 01, 2021. However, the company achieved COD on March 21, 2022 owing to the global pandemic of Novel Corona Virus. The Company has entered into a 7-year Operation & Maintenance (O&M) contract with M/s Harbin ElectricInternational Co., Ltd. - P.R. China (HEI), effective from March 2023. The project revenues and cash flows are primarily dependent upon maintaining plant’s availability and capacity factors at adequate levels. The Coal Supply Agreement (CSA) of Lucky Electric is with SECMC. SECMC is expanding up to 13.1 MTPA coal mine in Thar Block – II in three phases. The Company has also negotiated imported coal supply agreement from Indonesia. Plant would run on imported coal in case of non-availability of Thar coal. Lucky Electric has obtained four types of different insurance to cover its various types of risks. As at June 30, 2024 the installed capacity within CPPA Gsystem stood at 45,888MW. Total electricity generated in the country during FY24 amounted to 137,196.07 GWh which slightly declined from 138,539.00 GWh in FY23. With other Thar coal based IPPs becoming operational during FY23, generation from local coal has increased due to its low cost. LEPCL reported revenues of PKR53.4bln during 9MFY25 (9MFY24: PKR 70.7bln). However, due to the increase in policy rate company incurred the finance cost of PKR 17,035mln. Thus, reporting a profit of PKR 15,722mln (9MFY24: PKR 14,208mln). The contract availability for the plant over 30 years is agreed to be at 85%. If these aren’t met, Lucky Electric would be charged LDs by the Power Purchaser.


Financial Risk

Lucky Electric’s capital structure comprises 25% equity, and debt financing constitutes 75% of the initial estimated project cost, ~USD 895mln, financed from local and foreign financial institutions. Local Facility obtained from multiple consortium of banks aggregating to PKR 65.9 billion has a 10 year tenure starting June 2022 and to be paid in 40 quarterly installments. The foreign facility is USD 210mln. Out of which USD 20mln will be paid quarterly and USD 190mln will be paid semiannually. The Company manages its working capital needs through internal cash flows as well as through Short-term borrowings due to delayed payments from the power purchaser. Receivables of the company stand at 27,458mln in 9MFY25 as compared to PKR 34,685mln in 9MFY24. Similarly, short-term borrowings reached to PKR 25,406mln at Mar 25 from 21,955mln at end Dec-24. The stability and sustainability of future cash flows of Lucky Electric depends completely on continuous performance of its power plant. During 9MFY25, the Company generated FCFOs of PKR 36,555mln (9MFY24: PKR 41,823mln). Interest coverage stands at 2.1x and Debt Coverage stands at 1.5x. The project has incurred a project cost of USD 895mln with 75:25 debt-to-equity ratio. Currently debt to equity ratio stood at 69.2% as of end March 2025 with a total debt of the company at PKR 131,975mln and equity of PKR 61,568mln.


Instrument Rating Considerations
About the Instrument

LEPCL has issued a rated, unsecured, unlisted, privately placed, short-term Sukuk Lucky Electric Power Company Limited | PPSTS-22 | PKR 6bln | Aug25 (“PPSTS-22”) of PKR 6,000mln (inclusive of green option of PKR 2,000mln) on 18th August, 2025. PPSTS-22 has been issued in rollover of previous Sukuk, PPSTS-21 amounting to PKR 6,000mln, which matured on 18th August, 2025. The tenor of the instrument is 6 months. The purpose of the instrument is to be utilized by the Company to meet its working capital requirements. PPSTS-22 carries a profit rate of 3MK + Spread (-0.15%). Profit and principal will be realized at the time of maturity.


Relative Seniority/Subordination of Instrument

The claims of the Sukuk holders will rank superior to the claims of ordinary shareholders.


Credit Enhancement

The instrument is unsecured.
 
 

Oct-25

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Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

financial summary

(PKR mln)

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Mar-25
9M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 136,066 139,409 146,974 134,264
2. Investments 0 0 0 0
3. Related Party Exposure 0 0 0 0
4. Current Assets 65,934 79,554 76,150 51,780
a. Inventories 5,781 11,612 9,227 14,439
b. Trade Receivables 27,458 33,604 30,859 16,372
5. Total Assets 202,000 218,963 223,123 186,043
6. Current Liabilities 8,283 13,337 23,069 14,360
a. Trade Payables 5,464 6,078 8,221 0
7. Borrowings 131,975 153,675 161,659 142,717
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 173 124 116 89
10. Net Assets 61,568 51,827 38,279 28,877
11. Shareholders' Equity 61,568 51,827 38,279 28,877
B. INCOME STATEMENT
1. Sales 53,382 90,954 98,280 25,953
a. Cost of Good Sold (20,200) (39,511) (62,126) (19,647)
2. Gross Profit 33,183 51,443 36,154 6,306
a. Operating Expenses (487) (737) (545) (156)
3. Operating Profit 32,695 50,706 35,609 6,150
a. Non Operating Income or (Expense) 87 169 74 (139)
4. Profit or (Loss) before Interest and Tax 32,782 50,875 35,683 6,011
a. Total Finance Cost (17,035) (31,302) (26,231) (5,236)
b. Taxation (25) (40) (62) 0
6. Net Income Or (Loss) 15,722 19,533 9,390 775
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 36,555 55,812 40,446 7,337
b. Net Cash from Operating Activities before Working Capital Changes 17,215 24,429 16,387 (3,130)
c. Changes in Working Capital 10,690 (17,976) (11,708) (36,033)
1. Net Cash provided by Operating Activities 27,905 6,453 4,679 (39,163)
2. Net Cash (Used in) or Available From Investing Activities (104) (783) (1,082) (14,206)
3. Net Cash (Used in) or Available From Financing Activities (28,115) (12,480) 1,774 53,659
4. Net Cash generated or (Used) during the period (314) (6,810) 5,371 289
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -21.7% -7.5% 278.7% N/A
b. Gross Profit Margin 62.2% 56.6% 36.8% 24.3%
c. Net Profit Margin 29.5% 21.5% 9.6% 3.0%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 88.5% 41.6% 29.2% -110.6%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 32.7% 37.3% 26.8% 3.3%
2. Working Capital Management
a. Gross Working Capital (Average Days) 201 171 132 433
b. Net Working Capital (Average Days) 172 142 101 N/A
c. Current Ratio (Current Assets / Current Liabilities) 8.0 6.0 3.3 3.6
3. Coverages
a. EBITDA / Finance Cost 2.1 1.8 1.6 1.5
b. FCFO / Finance Cost+CMLTB+Excess STB 1.5 1.4 1.2 1.0
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 4.3 5.5 10.0 42.8
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 68.2% 74.8% 80.9% 83.2%
b. Interest or Markup Payable (Days) 13.6 38.8 51.9 0.0
c. Entity Average Borrowing Rate 15.9% 19.4% 16.5% 4.6%

Oct-25

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Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

rating scale

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Oct-25

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Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
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    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
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    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  6. Probability of Default
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Oct-25

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Lucky Electric Power Company Limited - PPSTS-22 - PKR 6.0bln - Aug-25

Regulatory and Supplementary Disclosure

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Nature of Instrument Size of Issue (PKR) Tenor Security Quantum of Security Nature of Assets Trustee Book Value of Assets (PKR mln)
Privately Placed Short Term Sukuk (PPSTS-22) 6,000 mln inclusive of green shoe portion of 2,000 mln 6 months Unsecured N/A N/A Habib Bank Limited N/A
Name of Issuer Lucky Electric Power Company Limited
Issue Date 18-Aug-25
Maturity 18-Feb-26
Option N/A
Due Date Principal* Opening Principal Principal Repayment* Due Date Markup/ Profit* 3M Kibor + Spread Markup/Profit Payment Installment Payable Principal Outstanding

PKR in mlnPKR in mln

Issuance 6,000
18-Aug-25 6,000
18-Feb-26 0

Oct-25

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