Construction major Larsen & Toubro is planning to sell its stake in Hyderabad Metro after its ridership declined due to Telangana government’s free bus ride scheme for women, said whole-time director & chief financial officer R Shankar Raman.
The company owns 90 percent of the metro project, while 10 percent is with the state government.
The daily passenger count of the metro has declined from its peak of 550,000 in November 2023 to 480,000 now. The financials of the metro have been a concern for the company and it will look at monetizing the asset after FY26 as part of its non-core business plans, Raman told BT TV during an interview.
The Congress government had launched the free bus scheme in December 2023 after coming to power in the state. Other promises made by the Revanth Reddy-led government include health insurance of Rs 10 lakh, financial assistance of Rs 2,500 for women, and gas cylinders at Rs 500.
On the free bus ride scheme, Raman said the ridership of the metro has become "less interesting" and there is a clear gender divide in the usage of the public transport. He added that women have moved away from the metro and are occupying busses more despite no increase in the number of the latter. This has led to men moving away from busses to metro, he added.
Also read: L&T hopes Hyderbad Metro ridership to improve once IT sector employees return to offices
The company also said it plans to monetize some of the real estate attached with the metro. L&T, which has a 65-year concession to run the system, received a Rs 3,000-crore soft loan from the state government.
L&T Hyderabad Metro Rail has a debt burden of 13,000 crore, this is apart from the Rs 2,000 crore loss the company has suffered in the past few years, and it plans to cut its debt down to Rs 8,000 crore.
Earlier, during a post-earnings call, Raman had said the company was hoping IT firms’ stricter return-to-office mandate will drive the ridership of the metro. "The IT industry employees need to come to the office; they are not yet coming to office, but will hopefully return soon," Raman said in the post-earning conference.
Larsen & Toubro will slow down its divestment plans in 2024-25 and will primarily focus on restructuring the debt and improving ridership in Hyderabad Metro, Raman had said.
In the fourth quarter, the company on May 8 reported a consolidated net profit for the quarter ended March 2024 at Rs 4,396 crore, up 10 percent compared to Rs 3,987 crore in the same quarter last year and Rs 3,621 crore in the same quarter in 2022-23.
The company had bagged the project in 2010 and completed in 2020 at a cost of Rs 20,000 crore.
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