HYDERABAD (Metro Rail News): Larsen & Toubro (L&T), operator of the Hyderabad metro rail project, said it is in discussions with State Bank of India (SBI) and the Telangana government to make the project financially viable.
“There is huge finance involved; there are other aspects involved. We are in constant dialogue with the government of Telangana and (lead banker) SBI to see what is best from a financial point of view to refinance the project and make it viable,” said SN Subrahmanyan, CEO & MD of L&T, during the company’s post-earnings media call on Wednesday.
L&T fully commissioned the Hyderabad metro rail project in February 2020. In March it saw a daily ridership of 500,000 people. Operations came to a grinding halt towards the end of March due to the nationwide lockdown imposed to contain Covid-19. After being fully shut for over five months, the metro rail began partial operations on September 7.
Operations are being resumed in a graded manner. Ridership has only reached 100,000 on a daily basis, as many commuters are keeping away from the metro, fearing a Covid-19 infection, and this is making the recovery all the more challenging. While the lockdown had put the brakes on operations and cash flows, L&T continued to incur fixed operational costs, depreciation and interest expenses. All this raised serious questions on the financial viability of the project, which is also burdening L&T’s balance sheet at the consolidated level.