Larsen & Toubro (L&T), the Indian multinational conglomerate, has made significant strides in sustainable financing by securing a $700 million Sustainability-Linked Trade Facility (SLTF) with Standard Chartered Bank. This move follows L&T's recent issuance of India's first listed sustainability-linked bond worth $60 million under the Securities and Exchange Board of India's (SEBI) ESG Bond Framework in June.

Key Features of the Sustainability-Linked Trade Facility

The newly secured SLTF is tied to specific key performance indicators (KPIs) that are crucial to L&T's business operations:

• Intensity of greenhouse gas emissions
• Fresh-water withdrawal targets

These KPIs align with the Loan Market Association's Sustainability-Linked Loan Principles, ensuring adherence to market standards for sustainability-linked financing. DNV, a global independent expert in risk management and quality assurance, has provided a second-party opinion on the KPIs and targets associated with the SLTF.

Transparency and Accountability

To reinforce transparency and stakeholder confidence, L&T has committed to:

• Annual disclosure of performance against the KPIs
• Independent third-party assurance of the disclosed performance

L&T's Sustainability Commitments

This financing arrangement underscores L&T's commitment to sustainable business practices and augments its sustainable business portfolio. The company has set ambitious long-term targets:

• Carbon neutrality by 2040
• Water neutrality by 2035

An L&T spokesperson emphasized that sustainability is integral to the company's corporate ethos, guiding investments in:

• Low-carbon technologies
• Resource optimization
• Biodiversity conservation

Standard Chartered's Perspective

Shobana Chawla, Head of Sustainable Finance Origination at Standard Chartered, India, stated that the bank will support L&T on its decarbonization journey through this financing instrument. She highlighted that sustainability is a strategic focus for Standard Chartered, and the bank continues to play a role in supporting the development of a more sustainable economy in India.

Implications for L&T

The successful securing of this sustainability-linked facility demonstrates:

1. L&T's leadership in driving sustainable business practices
2. Enhanced investor confidence in L&T's ESG performance
3. Improved access to sustainable finance
4. Reinforcement of L&T's position as a leader in responsible growth and long-term value creation

This move by L&T not only showcases its commitment to environmental sustainability but also positions the company at the forefront of the growing trend of sustainable financing in India's corporate sector.

In a significant development for urban transportation in Hyderabad, the Telangana government has announced plans to acquire Larsen & Toubro (L&T) Group's stake in the first phase of the Hyderabad Metro Rail project. The deal, valued at ₹2,000.00 crore, marks a major shift in the ownership and management of one of India's largest metro rail projects.

Key Details of the Acquisition

• Acquisition Cost: The Telangana government will pay ₹2,000.00 crore to acquire L&T's stake.
• Debt Assumption: In addition to the acquisition cost, the state will take over the project's debt of ₹13,000.00 crore.
• L&T's Current Stake: L&T holds approximately 90% equity in the project through L&T Metro Rail Hyderabad Ltd.

Background and Motivations

L&T had previously expressed its intention to divest its stake in the Hyderabad Metro Rail project, citing operational and accumulated losses. The 70 km Metro Rail project was initially planned to be sold to either the state or central government through a special purpose vehicle.

Government's Strategic Move

The acquisition by the Telangana government appears to be a strategic decision aimed at:

1. Ensuring the continued operation and development of the metro rail system.
2. Expediting the approval process for phase 2 of the project from the Government of India.

Meeting of Minds

Telangana Chief Minister A Revanth Reddy met with L&T group CMD SN Subrahmanyan to finalize the agreement. This high-level meeting underscores the importance of the deal for both parties.

Financial Implications

• The ₹2,000.00 crore payment is structured as a one-time settlement for L&T's equity investment in the project.
• By assuming the ₹13,000.00 crore debt, the Telangana government is taking on significant financial responsibility for the project's future.

Looking Ahead

This acquisition is expected to have far-reaching implications for urban mobility in Hyderabad. With the state government taking control, there may be potential for more integrated urban planning and transportation strategies. The move also signals the government's commitment to public infrastructure projects, even in the face of financial challenges.

As the transition unfolds, stakeholders will be watching closely to see how this change in ownership affects the operation, expansion, and financial viability of the Hyderabad Metro Rail project.