L&T to sell its stakes from Hyderabad Metro, aims to be zero debt company by FY23

The decision has been taken with an aim to bring down its ₹40,000-crore debt.

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L&T metro Hyderabad /Image Source: Twitter
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Hyderabad (Metro Rail News): Larsen and Toubro (L&T) have decided to sell its stakes in 3 projects that are Hyderabad Metro, Nabha Power and L&T Infrastructure Development. The decision has been taken with an aim to bring down its ₹40,000-crore debt.

“L&T’s overall debt is Rs 1,24,000 crore, out of that Rs 84,000 crore is from L&T Financial Services, which is not really a debt but their borrowing so that they can lend. So the real debt was Rs 40,000 crore. If Hyderabad Metro’s Rs 13,000 crore debt and Nabha power’s Rs 6,000 crore debt move away, all we have is a debt of Rs 20,000 crore, which is what is the working capital requirement of L&T. We can become a zero-debt company by the later part of the year,” SN Subrahmanyan, MD & CEO, L&T, said.

The Rs 18,000 crore L&T Metro Rail (Hyderabad) project had a concession period of 35 years, which can be extended but initially but the project was delayed due to several reasons which led to cost overruns. Therefore the revenue from the project did not match the cost that was projected and later it was further hit by the Covid-19 pandemic.

“Two factors that were not going well for the project. One, a lot of people were not traveling to the office due to Covid. Traffic had gone down very drastically, now it’s sort of coming back. As we speak, it’s about 300,000 people per day. The second issue was the huge debt of nearly Rs 13,000 crores, so there was interest cost,” Subrahmanyan said. 

“The Government of Telangana recently gave an order to give a soft loan of ₹3,000 crore (to L&T Metro Rail Hyderabad). We are working on an agreement to tie it up. Once that is done, the debt of the project will come down to ₹10,000 crore,” Subrahmanyan added.

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