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L&T is planning to sell over 90 per cent of its Hyderabad Metro stake to the Telangana or Central Government through a new SPV due to ongoing operational and financial difficulties. Delays in government support, property acquisition, alignment changes, and COVID-19 impacts have increased losses and cost overruns. Revenues declined by 21 per cent in 2024-25, while losses rose 13 per cent. Previous claims against the state reached INR 5,000 crore. L&T has also stated that it cannot participate in the upcoming Phase II-A and II-B expansions due to these financial and operational challenges.
Larsen & Toubro Limited (L&T) has expressed its intention to sell over 90 per cent of its stake in the Hyderabad Metro Rail project to either the Telangana state or central government through a new Special Purpose Vehicle (SPV), citing accumulated losses and operational challenges. Advertisement
In a letter to the Ministry of Housing and Urban Affairs, L&T Metro Rail stated that despite repeated follow-ups, the Telangana government has not provided the expected financial assistance. The delay has intensified the financial pressures on the concessionaire, making it difficult to manage the project effectively.
L&T noted that it is willing to transfer its equity stake in the existing metro network for purchase by the government and take over the operation and maintenance of Phase I along with the proposed Phase II-A and II-B corridors. This, the company said, would help achieve the intended objectives of the metro expansion.
The company explained that structural, financial, and regulatory challenges have caused substantial cost and time overruns. Factors beyond its control-such as property acquisition, right-of-way issues, changes in alignment, and utility relocations?contributed to these delays and additional expenses.
According to the latest annual report, L&T Metro Rail's revenue from operations and other income fell to INR 1,108.54 crore in 2024-25 from INR 1,399.31 crore the previous year, a decrease of 21 per cent. Losses before and after tax increased by 13 per cent, reaching INR 625.88 crore compared with INR 555.04 crore the previous year.
The project was initially formalized through a Concession Agreement with the then undivided Government of Andhra Pradesh in September 2010, and financial closure was achieved in March 2011. A consortium of ten banks, led by the State Bank of India, sanctioned the entire debt for the project.
Due to cost overruns and delays, L&T submitted claims worth INR 3,756 crore to the state government in March 2017, which rose to INR 5,000 crore by the time the metro was fully commissioned in February 2020. Even after commissioning, the company faced continued financial pressure as the COVID-19 pandemic forced a 169-day shutdown of the metro and caused lasting reductions in ridership due to changes in work and travel patterns.
Given these challenges, L&T Metro Rail confirmed its inability to participate as a Public-Private Partnership partner in the Telangana government's planned Phase II-A and II-B elevated rail corridor expansions.
Source PTI
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