Hyderabad, India (Urban Transport News): The current operator L&T Metro Rail (Hyderabad) Limited, a subsidary compnay of major infrastfructure Larsen & Tourbo Ltd (L&T) is now planning to exit from Rs 18,000 crore Hyderabad Metro Rail, the world's largest metro rail project executed in public-private-partnership model. With this, L&T Group is also planning to move away from non-core businesses.
The tight financial position that the mega project is in and the mounting losses are also said to be forcing the infrastructure behemoth to explore the exit option.
Talikng about the exit plan, Subrahmanyan, Chief Executive Officer, and Managing Director, L&T, said:
We have invested in the Hyderabad Metro and the project has been completed in a very efficient way, very beautifully done and a lot of international acclaims have come for that, but we are not operators of the metro. So, we would like to divest it in the future.
Henceforth, the L&T Group intends to concentrate on its core business areas of EPC projects, defence manufacturing and IT services.
It has been learnt that as a part of its strategy to exit from non-core businesses, L&T sold its electrical and automation business to Schneider Electric for Rs 14,000 crore. Next in the line for the divestment are L&T Infrastructure Development Projects Limited and L&T Metro Rail (Hyderabad) Limited. The L&T group is planning to use proceeds from these divestments for future investments.
As per Annual Report of L&T Metro Rail (Hyderabad) Limited, the metro operator suffered a net loss of Rs 382 crore in the FY 2019-20. Its total revenues stood at Rs 1,370 crore. The company reported a net loss of Rs 149 crore on a revenue of Rs 1,634 crore in the previous financial year. It has liabilities of over Rs 16,000 crore.
It has also been learnt that the ongoing Covid-19 pandemic compounded the mega project's financial woes. The Hyderabad Metro has lost over Rs 300 crore due to Covid-induced lockdown which lasted for 170 days. Though it resumed operations last month, the passenger traffic is yet to reach pre-Covid levels.
"To overcome the huge financial burden on us, and for some respite, we are exploring different options with all related stakeholders. Due to Covid-19, HMR operations were suspended for about 170 days. Presently, our prime focus is to continue operations adhering to safety norms," said spokesperson of L&T Metro Rail (Hyderabad) Limited, the Hand India reported.