Narcl Buys Metro 1 Debt Ends Insolvency Threat

Mumbai Metro One Pvt Ltd (MMOPL), which operates the Versova-Ghatkopar Metro corridor, has got a major financial breather with the National Asset Reconstruction Company Ltd (NARCL) taking over and restructuring its debt. The move brings to an end the insolvency proceedings that had been hanging over the company for the past few years.

Under the agreement, MMOPL’s outstanding debt of Rs 2,771.32 crore has been bought out and restructured, bringing down the liability by around Rs 1,100 crore. The company will now owe NARCL about Rs 1,600 crore instead of the earlier amount.

Metro One, Mumbai’s first Metro line, is operated by MMOPL, a joint venture in which Reliance Infrastructure holds a 74 per cent stake and MMRDA the remaining 26 per cent. The corridor, which carries around five lakh commuters every weekday, has been under financial stress for years.

The trouble dates back to the construction phase. The project’s cost went up from the estimated Rs 2,356 crore to more than Rs 4,000 crore by the time the line opened in 2014. While ridership remained strong, the revenue was not enough to service the debt. MMOPL started defaulting on loan repayments in 2018, following which the loans were classified as non-performing assets.

In 2023, State Bank of India and IDBI Bank moved the National Company Law Tribunal (NCLT) seeking insolvency proceedings against the company. The proceedings were put on hold after the Maharashtra government proposed settling the lenders’ dues and explored buying Reliance Infrastructure’s stake in the project. That proposal, however, never went through.

With NARCL now stepping in, the lenders—including SBI, IDBI Bank, Indian Bank and Canara Bank—will be paid, while MMOPL will repay the restructured amount to NARCL.

“The deal eases Metro One’s debt burden and pulls the company out of insolvency proceedings, allowing it to continue operating without the immediate shadow of financial proceedings,” the company said in a statement.

As part of the arrangement, NARCL will nominate a director to MMOPL’s board. A joint monitoring committee has also been set up to oversee the restructuring.

The restructuring could also revive plans to increase train length from four coaches to six, something commuters have been demanding for years because of overcrowding on the corridor. Whether that happens, however, will depend on the company’s finances. With Metro Line 6 expected to open next year and debt repayment likely to remain the priority, the expansion may still have to wait.

The reduction in debt could also reopen the possibility of MMRDA buying Reliance Infrastructure’s stake in the venture, as the lower liabilities are expected to bring down the company’s valuation.

Sabah Virani is a journalist with The Indian Express’ Mumbai bureau, covering infrastructure, housing and urban issues. In the realms of technical fields, she brings out human stories and the pace of change ongoing in the city. Expertise Specialised Role: Tracking infrastructure in Mumbai and the wider Mumbai Metropolitan Region (MMR), Sabah’s reporting tracks progress on various projects. From bridges to metros, she mixes technical details with resourceful information. Core coverage areas: Sabah keeps a close eye on the activities of the Mumbai Metropolitan Region Development Authority (MMRDA) and its projects across the MMR, including the metros, road projects, bridges, the bullet train, pod taxi, its role as a planning authority, and more. She also watches for developments from the Maharashtra State Road Development Corporation (MSRDC), City and Industrial Development Corporation of Maharashtra (CIDCO) and the GoM’s Urban Development department. Housing: Sabah also tracks developments in housing, particularly the workings of the Slum Rehabilitation Authority (SRA). She also keeps a keen watch on the big redevelopment projects ongoing in Mumbai, including the Dharavi Redevelopment Project, Motilal Nagar, Kamathipura, BDD Chawl redevelopment, among others. Occasionally, she reports on the environment, biodiversity, waste, arts and culture. Experience: Prior to working for the Indian Express, Sabah covered the municipality, civic issues and miscellaneous for Hindustan Times. Before that, she covered all things Mumbai for the online publication Citizen Matters. She has also worked as an editorial assistant at FiftyTwo.in. ... Read More