Larsen and Toubro Ltd aims to finalize a deal to divest its entire stake in L&T Infrastructure Development Projects (L&T IDP), its subsidiary that houses the company's road assets, in the current quarter.
"We aim to finalize a deal to sell our entire stake in L&T IDP this quarter and from January we will start seeking regulatory approvals to go forward with our divestment," the company's Chief Financial Officer R Shankar Raman said.
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He added that L&T's plan to derisk its holdings in Hyderabad Metro is likely to be a 2-3 year process as the metro project is still recovering from the aftermath of the COVID-19 pandemic and will take a while before becoming an attractive asset that will fetch higher valuation.
The company is working to onboard a co-investor for Hyderabad Metro. It currently holds a 90 percent stake in the metro project with the remaining held by the Telangana Government. L&T plans to bring down its stake to 51 percent in the first stage of its divestment.
"Hyderabad metro reported a loss of Rs 350 crore in Q2FY23," Raman said, adding, that the daily average customers of Hyderabad metro have risen to 4.4 lakh passengers and is likely to rise further going forward.
The company has refinanced the debt undertaken for the development of Hyderabad Metro leading to a favorable interest rate outgo and is planning for monetization of the real estate space of the metro network and seeking government grants to be able to lower the debt burden, which currently stands at about Rs 13,000 crore.
Raman also said that its plans to sell its 1400 megawatt (MW) Nabha thermal power project in Punjab are likely to take another 2-3 years.
"At the moment most parties are looking at thermal power projects which are in the NCLT as they are hunting for bargains," Raman said.
Raman added that L&T is not in a rush to sell off its Nabha thermal power project as it is still a profit-making business and will wait to fetch fair value for the plant.
As part of its five-year strategic plan ‘Lakshya 26’ the company is looking to divest its investment in few non-core areas, which includes road concessions and power business as well as capital restructuring and minimizing its stake in Hyderabad Metro.
Under the strategic plan, the company plans to focus on green energy, cell and battery manufacturing, the development of data centers, tech education, and business-to-business e-commerce in the coming years.
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