HYDERABAD (Metro Rail News): The L&T Hyderabad Metro Rail project, the world’s largest Public-Private Partnership (PPP) in the metro sector, has faced a major setback as Larsen & Toubro Limited (L&T) has formally expressed its intent to exit the venture by offloading over 90% of its stake in the metro operations. The company has proposed that its stake be taken over by either the Telangana state government or the central government through the creation of a new Special Purpose Vehicle (SPV).
This decision stems from the operational difficulties and mounting financial losses that the project has faced since its commissioning. In its communication to the Ministry of Housing and Urban Affairs (MoHUA), L&T Metro Rail conveyed that the Telangana government has not extended financial support despite multiple representations. The prolonged delay in disbursement is intensifying the concessionaire’s fiscal stress, adversely impacting liquidity management and complicating the sustainability of ongoing operations under the PPP framework.
The company said it is prepared to transfer its equity stake in the existing metro network to the Government of Telangana (GoTG) or the Government of India (GoI) through the formation of a new Special Purpose Vehicle (SPV). This proposal includes the takeover of Phase I along with its operations and maintenance (O&M), as well as Phase II-A and Phase II-B, to ensure project continuity and achieve the intended objectives.
The company said that the project has been impacted by a combination of structural, financial, and regulatory hurdles, which have contributed to major cost escalations and schedule delays.
Financial Performance of L&T Metro Rail
| Financial Year | Revenue from Operations & Other Income (₹ crore) | Loss Before & After Tax (₹ crore) |
| 2023-24 | 1399.31 | 555.04 |
| 2024-25 | 1108.54 | 625.88 |
In September 2010, the company executed a Concession Agreement with the Government of Andhra Pradesh, and following this, it achieved financial closure in March 2011. The project’s debt requirements were met through a consortium of 10 lending institutions, led by the State Bank of India.
As a result of project delays and cost escalations, the concessionaire lodged claims of ₹3,756 crore with the state government in March 2017. The claim escalated to nearly ₹5,000 crore in 2020 when Hyderabad Metro became fully operational.
The financial strain on the concessionaire was further intensified by the impact of COVID-19. Metro operations were suspended for 169 days, and even after services resumed, ridership has not fully recovered, largely due to the widespread shift towards remote working practices and evolving travel patterns.
In this context, L&T Metro Rail informed that it would not be in a position to act as a PPP partner for the Telangana government’s planned Phase-II A and Phase-II B corridor extensions, proposed under the leadership of Chief Minister Revanth Reddy.
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