Hyderabad Metro to turn profitable next year with IRFC’s low-cost loan: Telangana Chief Secretary

The Hyderabad metro is expected “to turn profitable next year” with Indian Railways Finance Corporation’s debt refinancing, senior officials said Monday. Addressing journalists in New Delhi, Chief Secretary, Telangana, K Ramakrishna Rao said the Hyderabad Metro is already profitable at an Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) level.

“Only high debt cost was hampering which will be addressed with IRFC loan,” Rao said.

Indian Railway Finance Corporation Ltd. (IRFC) signed a Rs 13,527 crore term loan agreement with L&T Metro Rail (Hyderabad) Limited (L&TMRHL) to refinance the debt obligations of the Hyderabad Metro Rail project on Monday.


“We expect a 30-40% relief in financing cost for Hyderabad Metro with the refinancing,” IRFC Managing Director Manoj Kumar Dubey said.

According to Rao, the Hyderabad Metro Phase 1 incurred a loss of Rs 340 crore last year against a revenue of Rs 1,100 crore. Besides the debt takeover, Telangana state is also paying Larsen & Toubro Limited (L&T) around Rs 1,400 crore to take over the 69.2 kilometres metro project.

L&T’s exit from this public private partnership (PPP) project follows years of disputes with the state government over fare revisions and operational issues.

“They (L&T) had to monetise the assets and give it back to the state government after 60 years. We (state government) can monetise the assets very quickly,” Rao said, adding this will pave the way for integrating the current metro with upcoming major transport infrastructure projects in the state.

“We are developing a mega transport hub in the state which will integrate airport, metro, and bullet train...Talks are also on-going for land acquisition of the bullet train project,” Rao said, adding three of the seven proposed high-speed corridors originate or terminate in the Telangana.

"Structured over a 20-year tenure with quarterly repayments, the refinancing replaces higher-cost debt with competitively priced long-term rupee financing. The facility carries no processing fees, commitment charges or prepayment penalties," an official statement said.

The transaction is supported by an unconditional and irrevocable undertaking by the Government of Telangana for servicing all dues payable to IRFC, a state government guarantee, and an RBI-backed direct debit mandate, the statement added.