HMR to earn 50% revenues from real estate

While the total transit-oriented development proposed was 18.5 million sft, the company would execute six million sft first and then consider taking up the remaining 12.5 million sft, either utilising accrued rentals or on a project-by-project basis

L&T Metro Rail (Hyderabad) expects 50-55% of its revenues to come from real estate and the remaining from passenger fares in the initial years, according to chief executive officer and managing director VB Gadgil.

“These models are not static but are dynamic in nature. This ratio will change when the ridership picks up over a period of time and they will definitely change depending on the city’s development also,” he said.

The over Rs 15,000-crore Hyderabad project comprises 72km of elevated metro rail line and six million square-feet (sft) of transit-oriented development (TOD). Gadgil said, “While the total TOD proposed was 18.5 million sft, the company would execute six million sft first and then consider taking up the remaining 12.5 million sft, either utilising accrued rentals or on a project-by-project basis.” Stating that 90-95% of civil works on Stage-I (between Nagole and Mettuguda) were almost complete, which was expected to be commissioned by March 21, 2015, he said that the first full train with three coaches would arrive from Hyundai Rotem in South Korea sometime by the end of April or early May for stringent trial runs at the depot.

L&T Metro Rail (Hyderabad) had already tied up funds with banks. While it has been granted a viability gap funding of Rs 1,400 crore, the company has thus far spent around Rs 3,000 crore on the project through equity and debt in equal proportions. Also, the company has taken a comprehensive insurance policy and has so far paid a premium of Rs 27 crore to cover the project for the initial three-and-a-half to four years.