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Government loan of Rs 30 bn for Metro to recover from loss in Hyderabad

2023-02-28

Loss-making the Telangana government has decided to provide a Rs 30 bn soft loan to L&T Hyderabad Metro Rail (L&THMRL) and also allow it to sell or lease some of the land parcels that were handed over to the company as part of the concessionaire agreement.

The government will provide 10 bn immediately, with the remainder distributed in stages. L&THMRL owes Rs 130 bn in debt.

This is in addition to the Rs 20 bn loss the company has suffered in recent years. The company intends to reduce its debt burden to Rs 80 bn after receiving an interest-free loan from the government, as well as to monetise the 260 acre it owns.

Once the government provides soft loans, the metro rail operator will postpone its divestment plans and instead agree to complete the remaining 5 km stretch between Mahatma Gandhi Bus Station and Falaknuma, which is part of the Jubilee Bus Station-Falaknuma corridor.

Interestingly, L&T group chief financial officer R Shankar Raman stated in an interview in November 2022 that the Telangana government agreed to provide a Rs 30 bn soft loan and also approved the proposal to monetise the land parcels. He stated that the L&THMRL was losing money due to low ridership, which was about 4.5 lakh commuters per day, and that he hoped to reach 7 to 8 lakh commuters in the next few years. He also stated that they were attempting to reduce the company's costs.

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