L&T may conclude divestment of its road assets by the end of FY23

Exit from Hyderabad Metro, Nabha Power may take 2-3 years, says CFO R Shankar Raman

Engineering major Larsen & Toubro (L&T) may conclude divestment of its road assets by the end of the current financial year (FY23), R Shankar Raman, the company’s whole-time director and chief financial officer, said in a conversation with Business Standard.

However, L&T’s exit out of Hyderabad Metro and Nabha Power may take around two-three years, he said, as the company is looking for fair valuation of these businesses.

To put things in perspective, L&T had identified sub-scale businesses that it was looking to exit as part of its ‘Lakshya 2026’ strategic plan that was put in place earlier this year.

The divestment included the sale of the Nabha Power project in Punjab, an exit from L&T Infrastructure Development Projects, which includes road concessions and where the company has a 51 per cent stake, and paring its stake in the Hyderabad Metro venture.

Media reports had suggested that L&T was in advanced talks with an infrastructure fund managed by Edelweiss for the sale of its road assets, but that deal has not materialised.

Raman said the company was aiming to finalise a deal for its road assets by the end of the December quarter and then seek regulatory approvals for the transaction by the March quarter. He did not specify who the potential buyer could be for the roads business.

“We are fairly advanced in our exit discussions for the road concessions. All going well, we should be able to ink the divestment deal by the end of this (December) quarter. It will be subject to a lot of regulatory approvals, which could take two-three months,” Raman said.

The divestment of Hyderabad Metro and Nabha Power, on the other hand, is expected to proceed in a phased manner, Raman said.

The first stage of the divestment exercise as far as the Hyderabad Metro is concerned will include bringing down L&T’s stake from 90 per cent to 51 per cent, Raman said. For this, the Mumbai-based company is talking to potential investors, he says.

The company is counting on improved passenger traffic on the Hyderabad Metro as people return to offices. From 150,000 passengers a year ago, the daily average passengers on the metro has increased to around 450,000 now, which the company hopes will touch 600,000 passengers per day in the coming months, Raman said.

The Telangana government, which has a 10 per cent stake in the metro project, has also sanctioned a Rs 3,000-crore loan, which will be disbursed in tranches to the company, Raman said. Some land parcels that are part of the metro project could also be monetised to bring down debt levels from Rs 13,000 crore to Rs 8,000 crore in the near term, Raman added.

On Nabha Power, Raman said the company was in no rush to sell just yet, since valuations were not in line with its expectations.