The refinancing arrangement follows an agreement between L&T and the Telangana government under which the state bought out the company’s stake in India’s longest-running public-private partnership Metro project for ₹1,461 crore.
According to Telangana Chief Secretary K Ramakrishna Rao, Hyderabad Metro Phase-I incurred a loss of ₹340 crore last year against revenue of ₹1,100 crore. He said the Metro line could turn profitable next year as financing costs have come down under the refinancing arrangement. According to IRFC Chairman and Managing Director Manoj Kumar Dubey, the borrower’s financing cost is around 40 per cent lower under the new deal.
While Dubey did not confirm the spread between the earlier interest rates and IRFC’s lending rate, officials at the briefing said the non-banking financial company’s rates are around 300 basis points lower. The transfer and debt takeover also pave the way for the Phase-II expansion of the southern state capital and major information technology hub. The proposed 77-kilometre expansion is expected to cost ₹25,000 crore, and the state government has submitted a proposal to the Union Ministry of Housing and Urban Affairs.
Structured over a 20-year tenure with quarterly repayments, the refinancing replaces higher-cost debt with competitively priced long-term rupee financing. The facility carries no processing fees, commitment charges, or prepayment penalties, making it an efficient and borrower-friendly refinancing mechanism, IRFC said. Dubey added that the company is looking for more such opportunities and can undertake large-scale borrowing for Metro and urban rail networks, backed by its ₹5 trillion loan book.
Business Standard had earlier reported that the lender is exploring a first-of-its-kind co-financing arrangement for Metro and urban rail networks with multilateral institutions such as World Bank.
L&T, whose Hyderabad Metro ambitions were hit by the pandemic, struggled to generate sufficient revenue despite ridership rising to around 450,000 after the pandemic. The firm eventually decided to exit the project.
Telangana bullet train proposals on fast track
Rao said work on bullet train corridors in the state is progressing. Union Finance Minister Nirmala Sitharaman announced seven bullet train corridors in February, three of which originate from Hyderabad.
Rao said the National High Speed Rail Corporation has begun the land acquisition process for the Pune–Hyderabad corridor, while LiDAR (light detection and ranging) surveys and other due diligence exercises are underway for the Hyderabad–Bengaluru and Hyderabad–Chennai corridors. The Hyderabad–Chennai corridor will pass through Amaravati, the new capital of Andhra Pradesh.
 "Hyderabad Metro")