L&T to complete Hyderabad Metro rail project in 5 years
L&T to complete Hyderabad Metro rail project in 5 years
Hyderabad: Construction of the much-delayed Hyderabad Metro rail project can finally get underway with the state government having handed over about 90% of the land required, said India’s biggest engineering company Larsen and Toubro Ltd (L&T).
“We will be able to complete the project in a phased manner in the next five years," said V.B. Gadgil, chief executive and managing director of L&T Hyderabad Metro Rail Pvt. Ltd, an L&T subsidiary that’s executing the Metro project.
Of the total cost of ₹ 16,375 crore, L&T Metro will spend ₹ 5,000-6,000 crore on civil construction, ₹ 2,000 crore on developing 6 million sq. ft of real estate, around ₹ 1,600 crore on rolling stock and around ₹ 1,000 crore on signalling, Gadgil said.
The remaining amount will be spent on rails, communication, automated fare collection, elevators, escalators, and air conditioning.
“We have spent around ₹ 400-500 crore from our equity and haven’t used bank debt in the last 12 months," he said. “With signs of interest rates softening, we will take advantage of it."
Canada’s Bombardier Transportation, BEML Ltd, China South Locomotive and Rolling Stock Corp. Ltd, and Spain’s Construcciones y Auxiliar de Ferrocarriles are competing to supply rolling stock for the project, Gadgil added.
“With around ₹ 10,000 crore EPC (engineering, construction and procurement) contract and given the quantum of equity investment, Hyderabad Metro Rail is a very crucial project for L&T," said Shailesh Kanani, a research analyst at Mumbai-based brokerage Violet Arch Securities Pvt. Ltd. “But we will have to wait and see how L&T will make up for (the) 12-month delay due to land acquisition problems, leading to a cost overrun of 10%."
L&T plans to generate around 30% of the total revenue from the Hyderabad Metro through non-core operations that include developing 6 million sq. ft of commercial real estate on 243 acres of land allotted for the project.
“The transit-oriented development will be spread out based on the appetite of the city," Gadgil said.
L&T arranged finances for the project in March 2011.
As per the financial closure norms, L&T has to infuse 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 provided a ₹ 1,458 crore grant as viability gap funding—the money offered by the government to make up for the finance not met by the company executing a project.
Hyderabad Metro Rail is the biggest urban infrastructure project undertaken as a public-private partnership in India. The elevated Metro rail will cover 71.16km with three corridors comprising 66 stations.
The Metro network is to be constructed in five years, with L&T holding the concession for 35 years, extendable by another 25 years. The company can earn lease rentals from property development and advertising rights before the real estate is returned to the state government.
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.
viswanath.p@livemint.com
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