The ₹15,000 Crore Track: Telangana’s Historic Metro Takeover

The Telangana government has initiated the process of acquiring the 69-km Phase I network of Hyderabad Metro Rail from Larsen & Toubro in a ₹15,000 crore transaction, one of the largest takeovers by a state government in India.

The state is expected to formally assume control from April, subject to completion of financial restructuring, transfer of assets and liabilities, and ensuring uninterrupted operations and maintenance. The state cabinet has approved the purchase of a 100% equity stake in the project from L&T. The valuation includes around ₹13,000 crore in debt and approximately ₹2,000 crore towards L&T’s equity.

To facilitate the acquisition, IDBI Capital Markets & Securities has been appointed as transaction adviser for financial and legal due diligence, while Delhi Metro International Limited, a subsidiary of Delhi Metro Rail Corporation, will conduct technical due diligence and assess operational performance.

Hyderabad Metro Rail Managing Director Sarfaraz Ahmad said discussions are underway with the Indian Railway Finance Corporation (IRFC) to refinance the existing debt. IRFC, a Navaratna PSU under Indian Railways, has indicated readiness to extend ₹13,000 crore in a mix of Japanese yen and rupee loans. The proposed refinancing is expected to lower interest costs from the current rate of about 8%, with a repayment tenure of around 20 years. The debt is planned to be serviced through fare and non-fare revenue streams. A comprehensive share purchase agreement between L&T and the state government is expected to be signed soon.

A committee of senior secretaries, along with a cabinet sub-committee on resource mobilisation, has been constituted to oversee the transaction and has already submitted its report.

A key post-acquisition issue concerns government land allotted to L&T under the concession agreement. Of the 269 acres transferred, about 149 acres were used for metro corridors and depots. Of the remaining 120 acres, roughly 71 acres remain unmonetised, while around 49 acres have been developed into transit-oriented commercial projects, including malls. After the transfer, all land parcels—developed and undeveloped—will revert to the state government. Fresh valuations will be undertaken before decisions are made on their future utilisation.

Ensuring uninterrupted commuter services is another priority. Phase I operations are currently managed by Keolis, which has operated the system since commercial services began in 2017. Keolis’s original five-year contract ended in November 2022 and was extended until November this year. Officials indicated that the state is likely to retain Keolis for at least another year, citing its expertise in automation and communication-based train control systems. Under its management, the metro has achieved 90% passenger satisfaction and 99.5% punctuality.

Officials emphasised that maintaining service continuity while restructuring finances and assets will be critical to successfully concluding the takeover of one of India’s largest metro rail public-private partnership projects.

News by Rahul Yelligetti.