Summary
Larsen & Toubro (L&T) is considering selling its 90% stake in the Hyderabad Metro project after 2026 due to declining ridership. R Shankar Raman, L&T’s director, attributes this decline to the state government’s free bus scheme, which has shifted commuters’ preferences. He highlights a gender disparity in transportation, where buses primarily serve women beneficiaries, while men increasingly opt for railway travel. To alleviate financial strain, L&T secured a Rs 3,000 crore soft loan from the Telangana government and plans to monetize real estate assets associated with the metro system. Despite operational hurdles, L&T reported a 10.2% increase in consolidated net profit in the March quarter. The company seeks to balance financial sustainability with meeting commuter needs as it navigates the complexities of urban transit management.
L&T Considers Selling Hyderabad Metro Project Post 2026 Amidst Declining Ridership
Infrastructure giant Larsen & Toubro (L&T) is contemplating the sale of its 90% stake in the Hyderabad Metro project after 2026, citing concerns over dwindling ridership and financial viability. The firm’s director R Shankar Raman revealed this plan, attributing the decline in metro usage to the state government’s free bus scheme, which he believes has shifted commuters’ preferences.
Challenges in Ridership and Gender Distribution
Raman highlighted the gender disparity in transportation, noting a shift where buses primarily serve women beneficiaries of the Mahalakshmi bus scheme, while men increasingly opt for railway travel. He emphasized the need to address this gender distribution trend and its implications on metro ridership, which has seen a significant drop due to the allure of free bus rides.
Financial Strategies and Monetization Efforts
To alleviate the financial strain caused by reduced ridership, L&T secured a Rs 3,000 crore soft loan from the Telangana government, aimed at sustaining operations and repayment without interest. Additionally, the company plans to monetize the real estate assets associated with the metro system, viewing it as a potential revenue stream in the coming years.
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Impact of Government Policies on Transit
While acknowledging the government’s efforts to promote public transportation through initiatives like free bus rides, Raman expressed concerns about their long-term impact on the city’s transit ecosystem. He cautioned against over-reliance on pollution-prone vehicles and stressed the need for sustainable transit solutions to meet Hyderabad’s evolving needs.
Financial Performance Amidst Industry Challenges
Despite the operational hurdles faced by the Hyderabad Metro project, L&T reported a promising 10.2% increase in consolidated net profit in the March quarter. This growth, fueled by higher income streams, underscores the company’s resilience amidst industry challenges and its commitment to delivering value to stakeholders.
Looking Ahead: Balancing Financial Viability with Commuter Needs
As L&T navigates the complexities of urban transit management, striking a balance between financial sustainability and meeting commuter demands remains paramount. The impending decision to divest its stake in the Hyderabad Metro project reflects a strategic shift aimed at safeguarding long-term interests while ensuring continued service excellence for the city’s residents.
Amidst evolving transit dynamics and shifting consumer preferences, stakeholders await further developments in L&T’s strategic vision for the Hyderabad Metro and its broader impact on urban mobility in India.
