Larsen and Toubro Ltd (L&T), which is building the 16,375-crore Hyderabad Metro Rail project, on Wednesday said it has begun leasing real estate space across stations along the metro rail corridors by tying up with retail outlets, food chains, pharmacy stores and banks.

L&T said it has tied up with State Bank of India, Bank of Baroda and Corporation Bank for setting up ATMs across stations, Medplus for pharmacy stores, fast food chains such as Domino’s Pizza, Polito’s Pizza and dairy parlours such as Amul.

The company said K. Raheja Corp.’s supermarket chain HyperCity and PVR Cinemas have also pre-booked to set up malls and multiplexes.

The metro rail project allows L&T to develop 18.5 million sq. ft of real estate across the 269 acres allotted for three depots and 64 stations over the next eight years.

Of this, L&T plans to develop 12.5 million sq. ft at terminal locations and the remaining on adjoining metro rail stations.

The company is building 6 million sq. ft of real estate space at an investment of 2,300 crore by July 2017, the commercial launch date of the project. “We have tied up finances for the first phase of transit-oriented development, and construction work is under way," said V.B. Gadgil, chief executive and managing director of L&T Hyderabad Metro Rail Pvt. Ltd, the unit that’s executing the metro rail project.

L&T plans to generate nearly half of the total revenue from the Hyderabad Metro through non-core operations that include lease rentals from property development and advertising rights before the real estate is returned to the state government.

Gadgil said L&T has so far spent 7000 crore on the project, of which its equity contribution was 2,500 crore. It is investing around 4,330 crore as equity, the single biggest investment so far on any project the firm has executed. The debt component is 10,478 crore. The Union government has provided 1,458 crore as viability-gap funding.

L&T is facing a cost overrun of as much as 2,750 crore on account of high interest cost and delays in execution, Gadgil said.

Problems of land acquisition have pushed the project timeline by at least 15 months behind schedule. The decision of the Telangana government that is seeking realignment in at least three stretches at Sultan Bazaar, Old City and State Assembly has hit the execution.

“The project is still at a critical stage of execution, any further obstacles and delays could derail it altogether," Gadgil said.

Hyderabad Metro Rail is the biggest urban infrastructure project undertaken as a public-private partnership in India. The elevated Metro rail will cover 71.2km with three corridors comprising 64 stations.

L&T won the bid to build the Metro rail network in July 2010 after the government in July 2009 cancelled the mandate given to Maytas Infra Ltd, which failed to tie up finances for the project.

Maytas Infra was promoted by B. Ramalinga Raju, the founder of Satyam Computer Services Ltd, who in January 2009 confessed to having misstated accounts to the tune of 7,136 crore, triggering India’s biggest corporate fraud investigation.

L&T is executing the Hyderabad Metro Rail project on build, operate and transfer basis with the concession for 35 years, extendable by an additional 25 years.

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