Advertisement
When should a housing society in Mumbai start considering re...
From GST on JDAs to SEBI’s REIT reclassification and the S...
Stay ahead in the world of real estate with our daily podcas...
Stay ahead in the world of real estate with our daily podcas...
The Telangana government has initiated a major infrastructure and financial restructuring exercise as it prepares to take over the 69-kilometre Phase-I of the Hyderabad Metro Rail from Larsen & Toubro (L&T) in a transaction valued at around INR 15,000 crore. The state Cabinet approved the acquisition in its 24 February meeting, with the takeover expected to be concluded by March 31. The deal includes absorbing approximately INR 13,000 crore of existing debt and paying around INR 2,000 crore for L&T equity stake in the concessionaire. Officials have appointed financial and technical advisers for due diligence and are planning a debt revamp that would leverage lower-interest financing, supported by anticipated farebox and commercial revenues. The move also opens the door for land monetisation of unevaluated metro-allotted land estimated at about 120 acres to bolster revenue and support future expansion of the city's rapid transit system.
In a decisive shift in urban transport governance, the Telangana government has embarked on a complex acquisition of the Hyderabad Metro Rail Phase-I network from L&T Metro Rail Hyderabad Ltd, with the state set to assume full ownership and operational control by 31 March 2026. The Cabinet, led by Chief Minister A Revanth Reddy, approved the takeover in late February, formalising plans to restructure debt, transfer assets and ensure uninterrupted metro services during the transition. Advertisement
The Phase-I corridor, spanning 69 km across three lines that form the backbone of Hyderabad's rapid transit network, has been under private concession since its launch in 2017. Under the acquisition plan, Telangana will absorb about INR 13,000 crore in outstanding debt and pay approximately INR 2,000 crore as a settlement for L&T's 90 per cent equity stake, bringing the total transaction consideration to around INR 15,000 crore. Officials said the terms reflect a discount relative to current valuations, which industry sources place substantially higher, and is designed to facilitate smooth ownership transfer and future development.
To manage the financial transition, the government has constituted a senior secretaries panel and a Cabinet sub-committee on resource mobilisation to oversee debt restructuring and funding arrangements. Part of the strategy includes exploring lower-interest financing from state and public financial institutions, with proposals under review that would extend repayment over up to two decades and reduce cost burdens as compared with existing commercial loans. Projected farebox and non-fare commercial revenues from the metro network are expected to service part of the debt, subject to long-term demand forecasts and operational performance.
A significant element of the acquisition deal is the treatment of metro-allotted land that was granted to L&T under the original concession. Of an estimated 269 acres allocated for the Phase-I project and related development, around 120 acres have not been monetised, while the remainder has been developed into transit-oriented commercial assets. Officials said these land parcels and associated real estate assets will revert to the state once the transfer of liabilities and equity is complete, creating opportunities for strategic land monetisation to support infrastructure financing and urban development initiatives.
The government has appointed IDBI Capital Markets & Securities Ltd as transaction adviser to conduct financial and legal due diligence, and Delhi Metro International Ltd to undertake technical evaluations of system health and operational readiness. Ensuring service continuity is a priority, with the current operator France-based Keolis expected to be retained under an extended contract through November 2026 given its experience managing the automated system.
The metro takeover is also seen as a strategic move to clear obstacles inhibiting the approval and funding of Phase-II expansion corridors, which have been pending central approvals. Government officials have said that consolidating ownership of the existing network is a prerequisite for progressing future expansion plans under joint state-Centre frameworks.
As the state prepares to assume ownership and finance restructure, the transaction is being closely watched by urban transport planners and investors, given its scale, implications for public-private partnership models and the potential reorientation of mass transit governance in one of India's fastest-growing metropolitan regions.
5th Jun, 2025
25th May, 2023
11th May, 2023
27th Apr, 2023
Advertisement
Facebook
Whatsapp
