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Lenders to Mumbai Metro One, which operates the Versova-Ghatkopar line, are nearing an agreement to sell their outstanding debt to the National Asset Reconstruction Company (NARCL), a government-backed bad loan aggregator. NARCL has proposed an offer of INR 1,063 crore to acquire Mumbai Metro One's INR 1,226 crore debt. This offer, which includes 15% in cash and the rest as security receipts, triggered a Swiss challenge auction but has yet to be finalised. The deal excludes foreign currency loans raised by Mumbai Metro One. Meanwhile, the government-backed bad bank is also considering restructuring the debt.
Lenders to Mumbai Metro One, which operates the metro line between Versova and Ghatkopar, are close to finalising a deal to sell their outstanding debt to the National Asset Reconstruction Company (NARCL), a government-supported bad loan aggregator, according to people familiar with the matter. Advertisement
NARCL has put forward an offer of INR 1,063 crore to acquire the INR 1,226 crore debt of Mumbai Metro One. This proposal includes 15% of the amount in cash, with the rest in the form of security receipts. The security receipts will be redeemed once the loans are recovered, and the government has guaranteed any shortfall in the recovery. However, this offer does not cover the foreign currency loans held by Mumbai Metro One, which includes a USD 63.4 million external commercial loan from the India Infrastructure Finance Company (UK).
The NARCL offer triggered a Swiss challenge auction among five domestic lenders, but no counter bids were made. Despite this, the loan has not yet been assigned to the winning Asset Reconstruction Company (ARC), sources said. NARCL has not commented on the matter. A third source revealed that the government-backed bad bank is also considering restructuring the debt of Mumbai Metro One as an alternative option.
Mumbai Metro One is a joint venture (JV) between Anil Ambani's Reliance Infrastructure and the Mumbai Metropolitan Region Development Authority (MMRDA), with Reliance Infrastructure holding 74% and MMRDA owning 26%. This was the country's first metro project awarded under a public-private partnership (PPP) model, which involved the design, financing, construction, operation, and maintenance of the 12-km elevated metro line connecting Versova and Ghatkopar.
In the past year, State Bank of India and IDBI Bank had filed separate petitions with the National Company Law Tribunal (NCLT) in Mumbai, seeking to initiate corporate insolvency proceedings to recover INR 416 crore and INR 133 crore, respectively. However, the NCLT has not yet admitted Mumbai Metro One for corporate resolution. Currently, Mumbai Metro One operates over 400 trips daily, serving hundreds of thousands of passengers.
The debt sale discussions for Mumbai Metro One highlight an important move in addressing the financial challenges faced by the metro project. NARCL's offer to acquire the debt, along with the possibility of restructuring, shows the government's proactive approach in managing bad loans. While the outcome is still pending, these efforts are crucial for maintaining the metro's operational stability, which continues to serve a large number of commuters daily and plays a vital role in Mumbai's transport infrastructure.
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