India Ratings and Research (Ind-Ra) has affirmed Essar Oil (EOL) long-term issuer rating at 'BBB+'. The outlook is stable.

The agency expects EOL's net leverage to remain elevated in FY16 due to the pending payments to Iran crude oil supplier, acquisition of Vandinar Power Company and capital expenditure programmes.

EOL's Ind-Ra-adjusted net debt normalised EBITDA reduced to 5.4x in FY15 (FY14: 6.0x). However, the net leverage increases to 6.7x after adjusting for inventory losses incurred during FY15. Total debt increased to Rs 278 billion in FY15 from Rs 258 billion in FY14.

EOL has substantial amount of investments in and receivables from fellow subsidiaries & associates in the form of inter-corporate deposits, preference & equity investments and loans and advances.

The management expects sustained operating cash flows and receivable, loan and advances collections from group entities to help lower the leverage levels. However, it has not been factored into the ratings.

Shares of the company declined Rs 1.75, or 0.94%, to trade at Rs 184.75. The total volume of shares traded was 104,764 at the BSE (3.25 p.m., Tuesday).