In a letter to Union Housing and Urban Affairs Minister Manohar Lal Khattarthe company said it was open to selling its more than 90% equity stake to either the state or central government through a new Special Purpose Vehicle (SPV). The proposal includes the transfer of operations and maintenance of Phase I, along with the planned Phase II-A and Phase II-B corridors.
The letter, reviewed by PTI, stated: “The Telangana government, despite repeated follow-ups, has not provided the expected financial assistance, and the delay is further aggravating the financial duress of the concessionaire and making the situation necessarily difficult to manage.”The company pointed to several structural, financial and regulatory challenges that led to substantial cost and time overruns, including land acquisition delays, right of way issues, alignment changes, and utility shifting.
According to L&T Metro Rail’s latest annual report, revenue from operations and other income fell 21% year-on-year to ₹1,108.54 crore in FY25 from ₹1,399.31 crore in FY24. Losses widened to ₹625.88 crore in FY25, compared to ₹555.04 crore in the previous year, marking a 13% increase, PTI report highlighted.
Speaking to CNBC-TV18 last month, SN Subrahmanyan, chairman and managing director of Larsen & Toubro (L&T), described the Hyderabad Metro as “probably the most complicated investment we have ever done,” noting that the company has put in over ₹20,000 crore to run one of the few private metro projects in the world.
“Probably, we should not have done it — but we have, and now it’s an asset with us. It is also, in my view, one of the best-run metros in the world. We do compare ourselves with Hong Kong, Singapore and such,” Subrahmanyan said.He highlighted that while the metro carries about 4.5 lakh passengers daily and earns revenues of around ₹750–800 crore, it still makes losses of ₹600–700 crore mainly due to borrowings of about ₹13,000 crore at 7.5% interest.
“If traffic goes up to about 6,00,000 and with slight fare increases and land monetisation, it could be made profitable. It’ll never give us a return on investment, but let’s see how to take it forward,” he added.
L&T originally signed the concession agreement with the then undivided Andhra Pradesh government in 2010, achieving financial closure in 2011 with debt financing led by the State Bank of India. However, claims submitted by the concessionaire for delays escalated from ₹3,756 crore in 2017 to around ₹5,000 crore by 2020, when the metro was fully commissioned, the PTI report added.
The company said financial stress continued even after commissioning, worsened by the Covid-19 pandemic, which forced a 169-day shutdown and left ridership weak due to the persistence of work-from-home arrangements.
Amid these challenges, L&T Metro Rail has expressed its inability to participate as a private partner in the Telangana government’s ambitious expansion plans for Phases II-A and II-B of the elevated rail corridor.
(With PTI inputs)
