K-Electric witnessed a tough business situation as its profit shed by 47% or over Rs. 2.5 billion in the first half of the financial year 2019-20.
According to the financial results, the utility company recorded a profit of Rs. 2.79 billion during July to December 2019 as compared to Rs. 5.34 billion profit in the corresponding period of the previous financial year.
The negative growth in profitability was recorded due to the colossal Rs. 2 billion tax payments, which included the amount under pending taxes.
The company earned an overall revenue of Rs. 156 billion in the first half of FY20 versus Rs. 145 billion recorded in the similar period of FY19. The company’s cost of sales also surged to Rs. 134 billion this year in the said period as compared to Rs. 121 billion in the last financial year.
During the last financial year, KE made a staggering profit growth of 40%, reaching Rs. 17.2 billion.
KE’s financial performance is witnessing a downward trend during the current financial year as similar to its operational performance that caused a massive uproar among the customers throughout the year due to overbilling and frequent load-shedding.
K-Electric Successfully Closes Rs. 25 Billion Sukuk
In other news, K-Electric has successfully closed Rs. 25 billion Sukuk which is the largest Sukuk issue in the private sector of Pakistan. With oversubscription of Initial Public Offering (IPO) portion of Sukuk by almost 2.5 times, the power utility was able to close the Sukuk subscription on 3rd August 2020, more than two weeks ahead of schedule.
This is a testament to the continued investor confidence in K-Electric’s robust investment plan under which $2 billion will be spent across Karachi’s energy value chain over the next 3 years, including the establishment of a 900 MW state-of-the-art RLNG-fired power plant and downstream transmission and distribution upgrades. Supported by timely regulatory and governmental approvals, these investments will shift Karachi into a power surplus position through the addition of close to 2100 MW additional power supply by 2023.
Out of the targeted Rs. 25 billion, KE had earlier raised Rs. 23.7 billion pre-IPO. The remaining amount (Rs. 1.3 billion) was offered through IPO to the general public, with a minimum subscription of Rs. 5,000 per certificate. With a seven-year tenor, inclusive of a two-year grace period and an AA+ accreditation from the VIS Credit Rating Company Limited, the issue offers a lucrative return to its investors.
This Sukuk issue will also contribute towards the increased use of Shariah-compliant financial instruments in Pakistan’s capital markets. KE has previously launched four Sukuk issues. The last Sukuk issue of Rs. 22 billion, issued in 2015, was also the largest issue in the private sector of Pakistan at the time.