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Informist, Thursday, Sept. 25, 2025

--Telangana govt agrees to take over Hyderabad Metro Phase 1 project

--Telangana govt to take over Hyderabad Metro Phase 1 debt of INR 130 bln

--Telangana govt to pay L&T INR 20 bln to acquire Hyderabad Metro Phase 1

By Narayana Krishna and Anjana Therese Antony

HYDERABAD/MUMBAI – The Telangana government has agreed to take over the first phase of the Hyderabad metro rail project to expedite the second phase after the central government's approval for the same. According to a top state government official, the decision to take over the first phase of the project was taken after negotiations between a high-powered team of the state government led by Chief Minister A. Revanth Reddy and a team from Larsen & Toubro Ltd. headed by Chairman and Managing Director S.N. Subrahmanyan on Thursday.

The first phase of the Hyderabad metro rail project is being operated by L&T's subsidiary L&T Metro Rail (Hyderabad) Ltd. As part of the move, the state government will take over the entire debt of the first phase, which currently stands at INR 130 billion. It will also pay nearly INR 20 billion to L&T towards its equity investment in the subsidiary as a one-time settlement.

L&T had formally requested to exit the metro rail project due to lack of support from the state government and mounting financial losses from the project. According to L&T Metro Rail's annual report for 2024-25 (Apr-Mar), its net loss increased to INR 6.26 billion from a net loss of INR 5.55 billion in the previous fiscal. The L&T subsidiary's revenue from operations and other income had declined 21% in FY25 to INR 11.09 billion.

On Thursday, Telangana Chief Minister Reddy and senior state government officers held a meeting with L&T CMD Subrahmanyan and other company officials to discuss the way forward for the project. Even though Reddy asked L&T to continue with the second phase, Subrahmanyan reiterated his stance that the company will not be able to participate in the second phase as an equity partner.

Subrahmanyan also declined to sign a definitive agreement with the state government which would incorporate the revenue and cost sharing mechanisms. This is because the company has major concerns "regarding seamless train operations between the two phases and regarding revenue and cost sharing mechanisms."

For the quarter ended June, L&T had reported a consolidated net profit of INR 36.17 billion on a revenue of INR 636.79 billion. On the National Stock Exchange, its shares closed 0.8% lower at INR 3,644.40.  End

Edited by Rajeev Pai and Ashish Shirke

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