Following in the footsteps of the State Bank of India (SBI), IDBI Bank has taken legal action by filing a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Mumbai Metro One Private Limited (MMOPL).
This legal action aims to recover outstanding dues totalling Rs 133.37 crore, including accrued interest.
The Mumbai Metro Line 1’s operator is MMOPL, a special purpose company formed by Reliance Infrastructure and the Mumbai Metropolitan Region Development Authority (MMRDA).
In a recent regulatory filing made on 30 October, RInfra disclosed that IDBI Bank had submitted the petition before the National Company Law Tribunal (NCLT) in Mumbai.
MMOPL, which operates the metro line connecting Versova to Ghatkopar in suburban Mumbai, is currently seeking legal counsel to navigate this situation and is prepared to take all necessary actions to safeguard its interests.
The financial consequences for the company are uncertain and will hinge on the eventual outcome of these proceedings and any subsequent legal challenges.
In August of the same year, RInfra had announced that SBI had filed a similar petition under Section 7 of the IBC against MMOPL, which is a joint venture involving the company and MMRDA, with the aim of recovering approximately Rs 416.08 crore, reports Indian Express.
Debts Owed To Lenders
As of November 2022, MMOPL had availed itself of bank loan facilities amounting to Rs 1,650 crore, as well as an external commercial borrowing (ECB) facility of $63.44 million, according to a credit rating statement from Brickwork Rating.
The primary lenders included Syndicate Bank (Rs 650 crore), Indian Bank (Rs 500 crore), SBI (Rs 200 crore), Bank of Maharashtra (Rs 200 crore), and IDBI Bank (Rs 100 crore).
Furthermore, as per the FY2023 annual report of RInfra, MMOPL’s liabilities were reported at Rs 4,111.17 crore.
Financial Standing Of MMOPL
The 2023 annual report of RInfra highlighted that the net worth of MMOPL, primarily owned by RInfra at 74 per cent, had deteriorated, with current liabilities exceeding current assets and overdue obligations to its lenders.
In an attempt to address its debt situation, MMOPL has proposed a one time settlement (OTS) to its lenders, currently under discussion and pending approval from all shareholders. The metro company recorded losses of Rs 345.26 crore in FY2023 and Rs 388.70 crore in FY2022.
Ongoing Dispute With MMRDA
The RInfra annual report also revealed that MMOPL had filed several claims against MMRDA due to delays in providing unencumbered right of way and land, as well as additional costs incurred to accommodate project encumbrances through various design changes.
The total value of these claims against MMRDA amounted to Rs 1,766.25 crore. However, MMRDA did not accept these claims, leading MMOPL to initiate arbitration proceedings as stipulated in the concession agreement. The arguments in front of the arbitration tribunal have been completed, and the award is currently pending.
Mumbai’s First Metro Line
Mumbai Metro One, city’s first metro that runs between Versova-Andheri-Ghatkopar, completed its nine years of operation on 8 June this year.
The project was inaugurated by former prime minister Manmohan Singh in June 2006 and construction work began in February 2008 and commercial operation commenced from 8 June 2014.
The project runs on a dedicated elevated corridor providing east-west connectivity with a travel time of 25 minutes between Versova and Ghatkopar.
The 11.40-km long service of Metro One, having a fleet size of 16 trains serve an average four lakh ridership daily.
The headway between each train on weekdays (Monday to Friday) is three and half minutes during peak hours and gradually increases to eight minutes during non-peak hours.
Mumbai Metro One is India’s first public private partnership (PPP) metro project in which all the three phases (construction, operation and maintenance) have been undertaken by a private player.
Further, Mumbai Metro One is the first MRTS (mass rapid transit system) in the world to offer e-ticket on WhatsApp, it claimed in a release.