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Informist, Thursday, Sept. 17, 2026

 

--Source: Telangana to seek more time from L&T for Hyderabad metro takeover 

--Source:Telangana to ask L&T to extend share purchase pact deadline by 3 mos 

--CONTEXT: Current deadline to close Hyderabad metro takeover is Sept 30 

--Source: Telangana facing delay in refinancing debt for Hyderabad metro 

 

By Narayana Krishna

 

HYDERABAD - The Telangana government's proposed takeover of L&T Metro Rail Hyderabad Ltd. is facing a further delay as the state has been unable to finalise the debt funding for the transaction, a Telangana government source familiar with the matter said. It was expected to complete by September-end but the Telangana government will seek an extention of another three months.

 

L&T Metro Rail Hyderabad is a step-down subsidiary of Larsen & Toubro Ltd. and the operating company of the 72-kilometer phase-1 metro rail network. In April, the Telangana government through Hyderabad Metro Rail Ltd., a state government agency, signed a share purchase agreement to take over the Hyderabad Metro Rail project.

 

As per the agreement, the state government agency has to pay INR 14.6 billion to L&T Metro Rail to acquire equity portion of the project. The state government agency also agreed to take over the existing debt of around INR 136 billion by refinancing it through a fresh loan agreement with financial institutions.

 

The state government is planning to begin the works on phase-2 of the metro network. L&T was reluctant to participate in the expansion and opted to exit the project. Since both the phases need to align with each other, the state government decided to take over the project and begin the phase-2.

 

SBI Capital Markets, which is advising the Telangana government on raising funds for the takeover, is yet to close the financing arrangement, while Indian Railway Finance Corp. Ltd., which initially agreed to fund the takeover, has raised objections to certain aspects of the proposed funding structure, causing the delay, the source said. Resolution of the issue is critical for the state to complete the takeover of L&T's 100% stake in the Hyderabad Metro Phase-I concessionaire. As per the original share purchase agreement, the state government should have completed the takeover process by June. However, due to a delay in the debt agreement with financial institutions, the agreement was extended to Sept. 30.

 

 

As the deadline is near, the state government is expected to request L&T to extend it one more time, so that it can complete the debt agreement with another financing agency. The state government asked SBI Capital to explore the options other than IRFC to close the debt agreement as soon as possible. Since the government is aiming to cut the interest burden and scout for a low-cost loan, the whole process has seen further delay, the source said.

 

The average interest currently paid by L&T Metro Rail Hyderabad was around 7%, whereas the Telangana government is looking for a debt facility with lower than the current rate of interest, the source said. The state government is expecting to complete fundraising by October, the source said. Another source said the agreement with L&T is likely to complete by December-end.

 

At 1148 IST, shares of Larsen & Toubro traded at INR 3,849.20 on the National Stock Exchange, up over 1% from Wednesday. For the quarter ended June, Larsen & Toubro reported a consolidated net profit of INR 41.23 billion on revenues of INR 679.42 billion.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Akul Nishant Akhoury

 

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