L&T Metro Rail Hyderabad, the concessionaire for the Hyderabad Metro Rail project, having sunk in about Rs. 600 crore already out of the total estimated expenditure of Rs. 14,143 crore, will be tapping into the Central government’s grant of Rs. 1,458 crore only after exhausting its own funds.

This was indicated by L&TMRH Chief Executive Officer and Managing Director V.B. Gadgil, during an interaction with the media a few days ago.

“We will exhaust our equity before tapping the viability gap funding (VGF) provided by the Centre,” he said.

While he refused to speculate about any escalation in the final cost of the project, stating that it was a “dynamic process”, he was hopeful that the current high interest rates will begin to ease during the year. “It is dangerous to make any predictions (on the final cost) as it depends on various factors but we have factored quite a few ups and downs in the interest rates when the cost estimates were made,” he averred.

He also clarified that L&TMRH has not entered into any renegotiations with its consortium of banks on the loan. Financial closure was achieved for Rs. 16,375 crore -- Rs.14,132 crore for the metro rail project and Rs. 2,243 crore for the real estate component.

Debt requirement

The consortium of 10 public sector banks led by State Bank of India (SBI) has sanctioned the entire debt requirement of Rs. 11,480 crore for the project, the largest fund tie-up in the country for a public, private partnership (PPP) work. The equity component for the project, expected to be around Rs. 3,440 crore, will be infused primarily by the parent L&T group.

Although it was yet to tap the loan offered by the consortium of PSBs, L&TMRH has taken a Rs. 500 crore short-term loan from Yes Bank at a very “competitive interest rate” with the permission of the consortium a few months ago. This short term loan has helped the firm not to dig deep into its own funds earmarked for the purpose, he added.

Metro rail is being built across 72.16 km on three dense traffic corridors.

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