India Ratings & Research (Ind-Ra) has upgraded Gallantt Ispat (GIL) long-term issuer rating to 'BB+' from 'BB-'. The outlook is stable.

The upgrade reflects a significant improvement in GIL's liquidity with full term debt repayment of Rs 704.3 million in FY15 (year end March). The payments were made 15 months before the due date. Debt servicing by GIL was funded by interest-free unsecured loans from its group company Gallantt Udyog (GUL) and interest-free VAT loans of Rs 391.1 million in FY14 and Rs 98.1 million in 1HFY15.  In its analysis, Ind-Ra has not included freight subsidy receivable from the government of Uttar Pradesh, as part of revenue as GIL has been unable to avail the same since 2011.

The ratings benefit from the management's strategy of achieving a conservative capital structure. GIL's gearing ratio was below 1x over FY12-FY14. GIL's liquidity has been alleviated since November 2011 following a high court directive permitting it to retain the value added tax (VAT) it collects from clients, as interest-free loans of 15-year tenor.

Shares of the company declined Rs 12.65, or 3.24%, to settle at Rs 378. The total volume of shares traded was 22,267 at the BSE (Friday).