KOCHI: Kochi Metro Rail Ltd (KMRL) recorded a widened net loss of Rs433.49 crore in the financial year 2023-24 (FY24), compared with Rs335.71 crore in FY23 – an increase of nearly Rs100 crore. The losses persist despite a rise in total income, highlighting the challenges of sustaining operations amid growing financial obligations and rising costs.
According to KMRL’s annual report, the metro’s total income grew to Rs246.61 crore in FY24 from Rs200.99 crore in FY23. Operating income increased from Rs134.04 crore to Rs151.30 crore, primarily due to a significant rise in fare box revenue driven by higher ridership.
Fare box revenue climbed to Rs90.88 crore in FY24 from Rs75.48 crore the previous year. However, non-fare revenue showed no major improvement during this period.
On the expense side, operating expenses surged from Rs128.89 crore in FY23 to Rs205 crore in FY24, wiping out the operating profit of over Rs5 crore claimed to have been achieved by Kochi Metro in FY23.
The metro’s total expenses reached Rs205.6 crore, while finance costs alone amounted to Rs294.22 crore, up from Rs222.08 crore the previous year, contributing significantly to the growing losses.
Mounting debt piles
The financial strain is compounded by KMRL’s debt obligations. The metro’s first phase was financed through loans from the French agency AFD (Rs1,019.79 crore) and Canara Bank (Rs1,386.97 crore), with an additional consortium loan of Rs672.18 crore led by Union Bank.
Loans were also taken from Kerala State Co-operative Bank (Rs141 crore) and HUDCO (Rs577.61 crore). A working capital loan of Rs26.32 crore from Canara Bank further adds to the burden.
Loan repayment challenges have already led to a default, prompting India Ratings & Research Private Limited to downgrade Kochi Metro’s credit rating a few months back.
Water Metro
In addition to the metro rail, KMRL is overseeing the Water Metro project, with a total project cost of Rs1,064.83 crore. While Rs156.07 crore will be provided by the Kerala government, the remainder is financed by a loan from the German agency KfW.
A public utility or a luxury?
Although public utility services like metro rail systems often operate at a loss due to their focus on accessibility and affordability, the question arises: Can Kerala, a state already grappling with severe financial constraints, sustain such capital-intensive projects?
While the increase in ridership and fare box revenue is a promising sign, the sharp rise in operating expenses and debt-servicing costs presents a daunting challenge.
The metro’s financial struggles underline the need for a sustainable strategy to balance its developmental goals with fiscal prudence, particularly in a state where financial resources are stretched thin. Without addressing these challenges, Kerala risks turning the Kochi Metro from a public utility into an unaffordable luxury.
