Country’s leading rating firm India Ratings and Research (Ind-Ra) has affirmed long-term issuer ‘IND AAA’ rating to GAIL (India) Limited’s with stable outlook.

The company’s capacity expansion at its petrochemical plant in Pata was completed in FY15 and Brahmaputra Crackers and Polymer Limited project will be completed by FYE16. The company’s LHCs/LPG production segment performed well as the profitability jumped to INR19.2bn in FY15 from Rs 10.2bn in FY14, driven by lower subsidy burden.

Ind-Ra expects FY16 volumes to increase nearly 10-15mmscmd, driven by the imported LNG scheme for the power sector. However, the scheme proposes a 75 per cent and 50 per cent haircut on marketing and transmission margins which could lower margins on this incremental volume.

The ratings do not factor in any support from the government of India (GoI; Fitch Ratings Ltd. ‘BBB-’/Stable; ownership: 56.11% at end-FY15). However, if GAIL’s standalone rating was to move lower than sovereign, the support due to GoI’s ownership and GAIL’s strategic importance to the government can be incorporated into the ratings.