L&T Metro Rail (Hyderabad) Limited (LTMRHL) on Tuesday said it may think of roping in equity partners for Hyderabad metro rail project.
Vivek B Gadgil, chief executive and managing director of L&T Metro Rail, said while they were not talking to anybody at the moment, they would sometime definitely look at having equity partners.
"Immediately we have no idea or plan to go for equity infusion from somebody else. But in a project like this, we may think of it. When this will happen, only the market will tell. The market should be conducive and we should be able to create value out of the project," he told reporters while unveiling the project's emblem and also announcing an initiative to select brand ambassadors from general public.
Gadgil said in infrastructure projects of this size, the equity comes from institutional investors who look for longer horizon.
For the Rs16,375 crore project, the equity will be Rs3,439 crore, a consortium of banks will provide loans of Rs11,478 crore and the government grant in the form of viability gap funding will be Rs1,458 crore.
Gadgil said the company would start drawing debt in a month's time and this would be anywhere between Rs300 crore to Rs500 crore.
Under the agreement for the project, said to be the world's largest Metro project under public private partnership, L&T will exhaust all the equity first and then start drawing the gap funding.
"Present we are meeting all our expenses through our equity. We have so far spent Rs400 to Rs600 crore," he said.
He also revealed that the company has raised a short term loans of Rs.500 crore from Yes Bank, which is not part of the consortium of banks, at an 11 percent interest rate. He said the loan was taken with consent from the consortium and this helped the company not to infuse further equity.
It would re-pay the short-term loan as soon as it draws the debt. He also clarified that this loan is not over and above the loans already tied up.
Gadgil said since the financial closure in April 2011, the project cost has escalated by 12 percent but noted that there was some improvement in the situation over last few months.
Referring to the cost escalation, he said some of the things are factored into while signing the contract.
"Some contingencies provided based on your past experience and some predictions but problems start when some abnormal things happen. The last two years have been very abnormal as far as economic conditions not just in India but globally are concerned. That is where the worry starts," he added.
Asked about the possibility of renegotiating some of the clauses of the agreement with the government, he said that stage has not come yet. He pointed out that even the conditions with the bankers were not renegotiated when the supplementary agreement was signed last month.
Gadgil said they would complete all the procurement process by the middle of next month. Only two procurement contracts are yet to be awarded. The automatic fare collection contract, which is likely to be between Rs180-Rs.200 crore will be awarded in one week. The decision with regard to contract for elevators and escalators will taken in 15 to 20 days.
He said the cost of rolling stock contract was Rs1.700 crore and that of signaling and communications Rs700 crore.
The project on 72-km three high density corridors with 66 elevated Metro stations is expected to be fully operational by July 2017.
He said the trials will start by the end of 2014 but taking approvals from various statutory authorities will take a long time. Gadgil said the project was entering an interesting phase and the pace of the work would gather momentum.
The company will select six to eight brand ambassadors from among school and college students, executives, house wives and other sections of people.
Terming it as a unique feature of metro anywhere in the world, Gadgil said it was aimed at giving the project's ownership to people.
LTMRHL also entered into an agreement with Atlanta Foundation, an NGO, to announce Hyderabad Metro Connects 2013, a cycling event to be held on February 17 on one of the three corridors.
It also plans to have a bike station near Cyber Towers in Hitec City with bicycles donated by Atlanta Foundation for people to commute to metro stations.