L&T Hyderabad Metro Rail Limited is hopeful of the Rs 1,000 crore External Commercial Borrowings (ECBs) from Indian Infrastructure Finance Company Limited (IIFCL) by the end of this month. All the required formalities to this extent have been completed, according to a highly placed source at L&T.
The idea behind L&T looking at ECBs is to save on interest besides securing long-term debt. In the backdrop of the weak Rupee, escalation of raw material and manpower cost and fluctuating Dollar-Rupee parity, ECBs are expected to protect the company from a possible financial impact.
“The discussions have progressed very well. All the formalities from both the sides have been completed. The IIFCL Board is expected to give its nod before this month-end and it’s just a formality. ECBs are likely to save us over 4 per cent on interest,” said the official. Another advantage with the ECBs is that they are long-term loans which may extend from 20 to 25 years. Such an agreement would work out well with the nature of the Hyderabad Metrorail project according to him.
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L&T has already secured over Rs. 11,000 crore loan from a consortium of banks led by SBI and spent more than Rs. 750 crore out of the loan. The Central government has allocated Rs. 1,458 crore viability gap funding (VGF) as part of the concessional agreement with the company.
Most of the foundations and piers related work of the project has been completed in a stretch of about 46 km in two corridors according to officials. The project is at a critical stage of development and the company will now be importing a lot of equipment related to telecommunications and signalling. “The actual impact of currency fluctuation and need for cash is felt from now on. ECBs are handy,” said a market analyst.
The Rs. 16,500-crore L&T Hyderabad Metro Rail is touted to be the biggest public-private-partnership (PPP) project in India. As per the plan, the elevated expressway has three corridors spanning 71.16 km and 66 stations. Of which, the first stretch of 8 km elevated project will be inaugurated by March, 2015 as per the stated schedules.
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The work is going on as per schedule and the company has roped in globally reputed players for supply of equipment. The procurement includes rails from Tata Steel (Corus) of France and rail coaches from Hyundai-Rotem, Korea. The first coach has already arrived in Hyderabad and is in display for the public.