INTERVIEW: Hyd Metro operations to begin in 2015: L&T IDPL CEO & MD K.Venkatesh

L&T IDPL is likely to begin partial operations of the Hyderabad Metro Rail project by 2015 as against 2017, estimated earlier, says K Venkatesh

Partial operations for L&T IDPL-led Hyderabad Metro Rail project may begin from 2015 and thereon progressively till July 2017, says K Venkatesh, CEO and MD of the company. According to him, the project is likely to be completed in six stages and the first stage will be commissioned somewhere between the first and the second quarter of 2015.

In an interview, Venkatesh says the growth of the company has been impacted due to slowdown in parameters like industrial growth, automobile production and port traffic. “Across our portfolio, our weighted average reduction is around 15 percent in terms of growth,” he adds. With regards to the Dhamra port, where the company is looking to sell its stake, Venkatesh says there are a couple of offers on the table, though he declined to give details. Below is the verbatim transcript of K Venkatesh’s interview.

Q: The Sangareddy project which is worth Rs 1,200 crore and Amravati-Jalgaon project which is worth Rs.2500 crore, are they under consideration for that rescheduling of premium because we have seen quite a bit of development on that particular issue and if that comes through, will that be beneficial to you?

A: What we have been informed by the National Highway Builders Federation is that the proposals for rescheduling are still pending with various government departments. Also, it will be applicable to all projects falling into the dispensation of a premium rescheduling. So, we cannot comment unless we have clarity on what exactly is the proposed reschedulement. Clarity is expected over the next two-three weeks and as soon as it comes, it will be applicable to us. Meanwhile, no objection letters have been given by most developers and we have also given a no objection letter in terms of such dispensation being carried out across the board.

Q: Can you give us more details about the Dhamra port stake sell? Are there any contours or details in terms of possible negotiations that you could share with us?

A: Right now, I can only tell you that the Dhamra port in Orissa is fast ramping up. There are a few interesting offers on the table. There is no definitive negotiation detail that I can give you at the moment.

Q: What about toll revenues, you have seen healthy compounded annual growth rate (CAGR) over the last three years, for this particular year, how is that shaping up?

A: From the last one and a half years, we are no exception, there has been a slowdown. If you see all the parameters starting from industrial growth to automobile production to port traffic, everywhere there has been slowdown and that has impacted roads. Across our portfolio, our weighted average reduction is around 15 percent in terms of growth. This is vis-à-vis our bid estimates, our traffic is down 15 percent. But on a portfolio basis, we are still okay in terms of debt servicing and our returns.

Q: Coming back to the equity commitment of around Rs 8,100 crore, can you give us an update on what exactly that would comprise of besides stake sell?

A: That was just an indication because there were a lot of questions that were coming up from various analysts as to how will L&T IDPL fund its existing commitments as well as future growth if any. Therefore, we had put together the broad direction in which L&T IDPL wishes to proceed in a manner of an indicative strategy.

The broad objectives being that L&T will marginally dilute its stake in L&T IDPL so that you get a risk sharing as well as growth capital being built in. Also, within L&T IDPL there are a few assets which if we get at the right value and at the right time, will monetize it and that will contribute towards meeting existing commitments as well as growth capital. Consequently, we are working in both these directions to de-risk L&T by getting a minority partner in IDPL and de-risking IDPL by monetizing some of the assets and also at the same time selectively looking at opportunities that are likely to come up over the next one and a half to two years.

Q: Could you give us an update with regards to the Hyderabad Metro project as well?

A: The Hyderabad Metro not withstanding all the difficulties that we have been through in the past in getting the right of way (RoW). I am happy to inform you that its progress is satisfactory. We are scheduled to commission the entire project in six stages. The first stage being commissioned somewhere between the first and the second quarter of 2015 and thereon progressively till July 2017.

We are aiming for a slightly earlier commissioning if things work out and the remaining RoW issues are ironed out, we will be well poised to complete it before the commissioning date of July 2017. But they will all happen in stages from the first, second quarter of 2015. (Courtesy: Money Control)