L&T willing to exit from debt-ridden, loss-making Hyderabad Metro Rail project

Core Viewpoint - Larsen and Toubro Limited (L&T) intends to divest over 90% of its stake in the L&T Hyderabad Metro Rail project due to operational and accumulated losses, proposing a transfer to the state or central government through a new Special Purpose Vehicle (SPV) [1][3]. Financial Performance - For the financial year 2024-25, L&T Metro Rail reported revenue from operations and other income of ₹1,108.54 crore, a decrease of 21% from ₹1,399.31 crore in the previous year [5]. - The loss before and after tax for the same period was ₹625.88 crore, reflecting an increase of 13% compared to a loss of ₹555.04 crore in the previous financial year [5]. Operational Challenges - The company has faced significant structural, financial, and regulatory challenges, leading to substantial cost and time overruns due to delays in property acquisition, right of way, changes in alignment, and utility shifting [4]. - Claims submitted by the concessionaire to the state government due to delays and cost overruns increased from ₹3,756 crore in March 2017 to ₹5,000 crore by February 2020 when the metro was fully commissioned [7]. Impact of External Factors - The COVID-19 pandemic caused a complete shutdown of the metro for 169 days, with ongoing impacts on ridership due to changes in work and travel culture, further exacerbating the financial stress on the concessionaire [8]. - L&T Metro Rail has expressed its inability to participate in the Telangana government's expansion plans for the elevated rail corridor projects Phase-II A and Phase-II B as a Public-Private Partnership (PPP) partner [8].