L&T beats R-ADAG to Hyderabad metro

Larsen & Toubro (L&T), the engineering and infrastructure major, has bagged the Hyderabad Metro Rail (HMR) project. The contract involves developing a 71 km metro rail network along the main roads of Hyderabad, with an outlay of Rs 12,132 crore.

Though the state government is yet to make a formal announcement on award of the project, L&T officials confirmed that they had given the order for the project.

The HMR contract was originally given to Maytas Infra, a company promoted by the family members of the disgraced founder of Satyam B Ramalinga Raju.

However, with Raju confessing to an accounting scam in the IT company, Maytas too suffered collateral damage, forcing it to default on various milestones. The state government then cancelled the bid and called for fresh bids.

There were eight players vying for the project initially. By the last date for submission of financial bids, only three completed the formalities. Of these, L&T’s bid was the lowest.

The primary parameter for selecting the winning bid was the viability gap funding (VGF) sought from the government.

For the project, the Centre had allowed Rs 4,853 crore VGF. According to sources, L&T sought Rs 1,450 crore VGF to emerge the winner. A consortium of Transtroy-OJSC Russia was second with VGF of Rs 2,200 crore, and Reliance wanted Rs 2,900 crore.

“The bids were evaluated by a three-member committee and L&T’s bid was found to be the lowest. We have to wait for a formal approval of the bid by the chief minister’s office. But, technically, L&T is the L1 and it would get the project,” an official source said.
The consortia which were prequalified were L&T, Lanco-OHL Spain, Anil Dhirubhai Ambani Group, Essar-Leighton Australia, Gayatri Constructions, VNR Consortium, GVK-Samsung, GMR, Transstroy, CR 18 of China and BEML Consortium and Soma-Strabag.

GVK and GMR pulled out of the bidding process even before submitting the bids amid reports that the bidders were apprehensive of the financial viability of the project.

The ground work on the project for three routes of 71.16 km is expected to start by January and the entire project is expected to be completed in four years.

L&T was also in the race for taking over Satyam from the Rajus. However, the bidding process favoured Tech Mahindra.

For getting hold of the HMR project, Maytas had promised Rs 30,000-crore reverse grant to the state government. This proposal was criticised by various experts including the Delhi Metro chief Sridharan.

However, sources said, it would not be easy for L&T to go ahead with the project since it involves significant levels of dismantling of existing structures along the route and land acquisitions issues would litigate the process.

“Raju had real estate interests along the route and was more keen on taking up the project even by offering a reverse grant. Even for L&T, land acquisitions for building stations and encouraging the traffic to shift to metro rail would be a major task,” a source explained.

Meanwhile, L&T has also won a contract worth Rs 376 crore to refurbish an offshore rig for state-run explorer Oil and Natural Gas Corp.