Kohinoor Energy Limited (KOHE) Earnings Call Transcript & Summary

[Foreign Language] My name is Javed Manzoor, Company Secretary of Kohinoor Energy Limited. I welcome all of you for [Foreign Language] My name is Javed Manzoor, Company Secretary of Kohinoor Energy. I welcome all of you for joining us for corporate briefing session. Let me introduce first, our speaker panel. First is Mr. Muhammad Zeid Yousuf Saigol, Chief Executive Officer of the company; Mr. Muhammad Omer Farooq, Director of the company; and Mr. Muhammad Ashraf, Chief Financial Officer and Chief Operating Officer of the company. All of you well aware about the profile of the company. For saving time, now I request to Mr. Muhammad Ashraf, CFO and COO to present the financial highlights to the participants. Sir, please present.

Thank you very much, Javed. I hope my screen is visible to everyone. [Foreign Language] on these developed [countries], company profile, sponsor, shareholding and working capital and so on. So the company, as you know, established in 1994 under the Power Policy of 1994. The sponsors were Saigol Group of Pakistan, leading business group in Pakistan and Toyota Group of Japan. It operates -- the company owns, operates and maintain a 124-megawatt furnace oil-based power plant, which was equipped with the eight Wartsila [indiscernible] 18V46 and one steam turbine and three ABB transformers. KEL operates under an exclusive 30 years’ power purchase agreement that has been recently extended by 161 days under the renegotiation agreement with the government. As Toyota Tsusho, the second sponsor sold out their all shares to the local sponsor, Saigol Group of companies in December 2020. Now currently, Saigol’s are holding 62% majority shareholding upheld. Saigol Group is a prominent industry group in Pakistan. The overall shareholding pattern of the company is 62% holding with Saigol Group, 2% with Wartsila, the Indian manufacturer and rest of is with general public. We have -- a company is strong enough with respect to the financial and technical aspect. Recently, we have demonstrated 129.9 megawatt capacity during our Annual Dependable Capacity Test, our obligation to provide -- to generate and supply 124 megawatt. But because we are maintaining company’s equipment in very good condition and hence, company was able to demonstrate 129.9 megawatt, which is more than the obligated capacity, can maintain the stable working capital position as always. This is the dispatch demand from power purchaser under the merit order arrangement that has been going -- that has been reducing for the last 3 years. And the financial year 2025, there was only demand of 7% on annual average basis. Our profitability remained very good during the last 5 years, except this 2025 that has been substantially reduced of PKR 1.6 billion to PKR 0.7 billion. This is only because of the renegotiation with the government. And this is the last 5 years, EPS and dividend declared according to the available cash with the company that has been very nice. And overall company has distributed so far 1,235% dividend to the shareholders. Yes [or] no, we are facing challenges. As you know, we are approaching towards the end of our PPA that is November 2027. And also there is a very low demand for the furnace oil power plant because of the increasing solarization in the country. However, we are also looking for any potential opportunity in future that may be one of -- one is the CTBCM, any business opportunity under the CTBCM recently announced and launched by the government. And we are also hopeful that there might be some requirement from the relevant ESCOs to maintain their network stable. They might be looking for a capacity contract for such a power plant [indiscernible] furnace oil-based because the only furnace oil power plant are able to supply electricity against the demand and ramp up with the full capacity within no time, within say 1 hour compared with other technologies. And because we are running with the lower size of machines that is 15 megawatt, so the breakdown of the furnace oil power plant remains very low as compared to others technology. So we are hopeful and we are working and we are keenly observing all developments in the power sector and trying to get any potential opportunity for the future business after the PPA. Despite of having all challenges, the company is fulfilling its CSR responsibility. We are providing free medical treatment to the local vicinity peoples and also supporting in education facilities of the children, who are living in the surrounding of the power plant. So this is brief about our Kohinoor Energy Limited. I would be pleased to have some questions if anybody have.

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[Foreign Language] First is regarding trade debts. We've seen a massive reduction from about PKR 3 billion to about PKR 1.2 billion. First quarter [Foreign Language] overdue, I think is about [PKR 600 billion]. [Foreign Language] post the balance sheet dates, you've received any payment or [Foreign Language] regular payments [Foreign Language].

We are receiving regular payments from the power purchaser, and there's no substantial delays in the payments. We are very much satisfied with the payment situation.

[Foreign Language] PPA to extend where 161 days in view of the disputed resettlement. [Foreign Language] from a profitability point of view. I'm sure the operation being an island mode versus producing power, there must be a difference in the cost impact. [Foreign Language] and does that incentivize the government to then get power from us without paying us for anything?

[Foreign Language] Merit order is based on the only energy invoice, the energy component. So during these 161 days, [Foreign Language] that will remain the same for [indiscernible] prevailing energy component. [Foreign Language] at our own cost for any demand from the power purchaser.

So between the two [Foreign Language]