Nishat Power Limited is the third independent power producer (IPP), which was incorporated as a public limited company in 2007 under the Power Policy 2002, after Attock and Atlas. This IPP is a subsidiary of Nishat Mills Limited of Nishat Group. Nishat Group is a conglomerate that has a presence in many sectors like cement, textile, insurance, banking and aviation. Through Nishat Mills Limited, the group currently holds 56.84 percent of the thermal based IPP, Nishat Power Limited.
The principal activity of the IPP is to build, own, operate and maintain a fuel fired power plant based on Reciprocating Engine Technology having gross capacity of 200MW in Jamber Kalan, Tehsil Pattoki, District Kasur, Punjab, Pakistan. Its main customer is National Transmission and Dispatch Company Limited (NTDC), and it has signed a fuel supply agreement (FSA) with Shell Pakistan for the supply of fuel to the oil company.
Operational performance FY15 Nishat Power Limited (KSE: NPL) completed its five years of operations in FY15. Though after achieving 1,473 gega watt hours (GWh) of generation in the first year of the project's operations, generation dipped by 28 percent in FY12 due to non-availability of fuel on account of non-payment by the power purchaser. However, the generation improved in FY13 for the IPPs in terms generation as well as efficiency: NPL dispatched 1,276 GW of electricity in FY13 to its customer NTDCL, up by 20 percent year-on-year compared to 1,063 GW in FY12. It operated at an average capacity factor of around 75 percent in FY13 compared to the only 62 percent in FY12. A comparatively lower average capacity load factor was due to lower percentage load during the five months from October till February 2012.
In FY14 NPL dispatched 1,464 GWh of electricity to NTDCL, which was15 percent higher compared to previous year the average load factor during this year was 85.58 percent. However, in FY15, the firm saw a slight dip in generation which dropped by around four percent year-on-year to 1,410 GWh in FY15 with average load factor of 82.4 percent.
Financial Performance FY15
Nishat Power Limited's financial performance in FY15 was marked with Tepid growth in earnings which was largely attributable to a gradual decline in penal mark-up income, muted growth in O&M savings and lower oil prices that kept fuel savings in check.
The firm's revenues dipped by 19 percent year-on-year. Despite lower furnace oil prices owing to overhaul which reduced fuel consumption, NPL's earnings growth of seven percent came directly from the efficiency. The firm's bottomline was also supported by a decline in finance cost by around 11 percent year-on-year. On the whole, the main growth drivers of the NPL in FY15 were flattish load factors and production, and a reduction in finance cost. Alongside the results, NPL also announced a cash dividend of Rs 1.75 per share making the full year dividend of Rs 6 per share.
As far as the payments from its key client are concerned, NTDCL continues to default on its payment obligations. Total receivables from NTDCL on June 30, 2015 stand at Rs 8 billion, out of which overdue receivables are Rs 5.6 billion.
Financial performance 1QFY16 The Nishat IPP's performance during the first three months of FY16 has been encouraging, where the reduction in finance cost played a key role. The firm's revenues for 1QFY16 were intimidated due to lower furnace oil prices and the exchange rate. Thanks to lower fuel prices fuel saving were dented during the period.
Also the firm is expected to have lower generation and hence lower capacity utilisation in 1QFY16 compared to similar period of FY15. The furnace oil prices decline by over 30 percent year-on-year in the same period.
While the gross profit declined slightly, the gross margins saw an upward movement of nine percentage points. NPL's bottomline for 1QFY16 saw an increase of over 17 percent year-on-year despite the contraction in gross margins. this was primarily due better financial position of the independent power producer and hence lower borrowing cost; financial charges for1QFY16 dropped by 42 percent year-on-year during the first three months of FY16. Net margins saw a colossal increase too in 1QFY16, improving from 11.6 percent in 1QFY15 to 20.5 percent in 1QFY16. The firm also announced an interim dividend of Re1 per share with 1QFY16 earnings after tax of Rs 930 million.
Outlook NPL participated in the pre-qualification process of sponsors for the development of Coal Power Projects along with other members, comprising of Nishat Mills Limited, Lalpir Power Limited and Pakgen Power Limited. The Consortium successfully pre-qualified and got the letter of interest (LOI) for a 660 MW Coal Power Project. For this purpose a Special Purpose Vehicle (SPV), has been incorporated namely Nishat Energy Limited to set up a coal power project under the Power Policy 2002 and Punjab Power Generation Policy 2006 as an Independent Power Producer (IPP). As per firm's financial statements, Nishat Energy submitted partial feasibility report to PPDB within the time stipulated in LOI on July 13, 2015; remaining portion of Feasibility Report shall be submitted soon, as Project Site has now been finalised by PPDB and Geo Tech and Interconnection studies are underway.
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Nishat Power Limited
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FY11 FY12 FY13 FY14 FY15
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Profitability
Gross margin 23.2% 23.4% 20.1% 16.9% 21.0%
Operating margin 22.9% 23.3% 19.7% 16.5% 20.4%
Net margin 9.0% 9.7% 10.9% 10.6% 14.0%
Liquidity
Current ratio 1.63 1.47 2.10 2.05 3.52
Debt to equity 2.29 1.64 1.17 0.94 0.72
Efficiency & Market
Fixed asset turnover 1.32 1.41 1.79 2.07 1.81
EPS (Rs/share) 5.31 5.75 7.73 7.73 7.73
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Source: Company accounts
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