L&T Metro Rail Hyderabad Plans to Raise ₹13,600 crore through bonds
(EPT) : Hyderabad Metro is in financial trouble with Corona Effect. People are using their vehicles and opting other transportation media instead of boarding the Metro train in the wake of the Covid outbreak. With this, the Metro company incurred huge losses.
There is a loss of revenue for the Hyderabad Metro Rail. The number of passengers has been declining for over a year, and the state govt is not receiving expected revenue from the commercial space.
L&T Metro Rail that runs metro trains in Hyderabad has plan to raise up to INR 13,600 crore through bonds and commercial papers, in one of the largest local debt fundraisings in the infrastructure space this year.
The loss-making company aims to reduce its funding cost by at least 200 basis points by replacing high-cost bank loans with the new debt, they said.
It aims to sell non-convertible debentures (NCDs) up to INR 8,600 crore with maturities up to five years, and commercial papers up to ₹5,000 crore in tranches spread across maturities up to one year, sources said.
SBI Capital Market is primarily helping L&T Metro Rail (Hyderabad) sell the bonds and commercial papers, they said. The company did not make any comment on the matter.
L&T Metro Rail, a subsidiary of L&T, was set up to enter into a concession agreement with the Telangana government to execute the project on a DBFOT (design-build-finance-operate-transfer) basis for a term of 35 years. The total length of the stretch is 69.2 km spread over three corridors.
“The project ran into time and cost overruns owing to delay in getting right of way,” Crisil said in a report. The rating on NCDs reflects the unconditional, irrevocable, and continuing guarantee from L&T and strong payment mechanism, it said.
L&T Metro Rail achieved a partial commercial operation date (COD) in November 2017 on completion of two corridors and full COD was achieved in February 2020 on completion of the third corridor.
The company had taken a loan from different banks including State Bank of India, Canara Bank, Standard Chartered Bank, and Indian Bank. The loan on average was charging over 8.50% a year, a market insider said.
SBI Capital and individual banks could not be contacted immediately.
Dealers said the company seems to be expecting cash inflows within a year, which could be a key reason for issuing CPs.
The Telangana government may announce a bailout plan for L&T Metro Rail (Hyderabad), which has been seeking financial aid citing huge losses it suffered due to the Covid-19 pandemic.
In its annual financial statement, L&TMRH reported INR 1,766.74 crore loss during the financial year 2020-21 when the metro services were shut down for about six months due to the Covid-19 outbreak.
In the previous financial year, L&T Metro had reported a loss of Rs. 382.20 crore.