By CL Jose
KSRTC loss at Rs1976 cr; CARE downgrades its loans 4 notches to D
KOCHI/March 07-2022: How long can Kochi Metro stay on track with its poor finances?
Forget about the project’s ability to foot the expenditure or pay back loans; Despite having completed half decade of commercial operations, the metro project has failed to generate sufficient cash to even pay the interest against its borrowings.
The company that closed the financial year 2020-21 (FY21) with a net loss of Rs334.41 crore has already piled up losses to the tune of a whopping Rs1136 crore during the past few years.
The real black spot in Kochi Metro’s FY21 financials was that the whole cash collections during the year or the gross revenue from the project at Rs167.46 crore was far less than even the interest bill at Rs187.87 crore.
Cochin Airport & KSRTC
The advent of the financial year 2020-21 didn’t bode well for the transportation sector units run by the Kerala government.
Cochin International Airport Ltd (CIAL), a jewel in the crown of the state-run companies, with the Government holding the largest stake with 32 per cent, closed the year with a net loss of Rs85.10 crore against Rs204 crore profit in the earlier period.
CIAL, which is unheard of posting a loss or skipping cash dividends, was in the ‘red’ in 2020-21, thanks to the still-pervading COVID derivatives at works.
Unlike CIAL, which is not familiar with the loss-making game, KSRTC, a wholly-owned Kerala Government utility, quite predictably, reported yet another year of loss when 2020-2021 closed with a ‘negative’ Rs1976 crore ‘improving’ upon its own previous year’s loss of Rs1205 crore.
More seriously, CARE Ratings has downgraded KSRTC’s loans at Rs3033 crore, by four notches in a single stroke, from BBB to D, which unequivocally means ‘the loans are in default or are expected to be in default soon.”
Status Symbol
Kochi Metro, conceptualised by the previous UDF Government headed by Oommen Chandy, has literally elevated Kochi into the league of Big Cities in the country; but at what cost?.
The project, which was inaugurated by the Prime Minister Narendra Modi in 2017, has so far failed to traction the critical mass in passenger volume, leaving the project much to be desired on the financial front.
Kochi Metro project with a total capital base of Rs2541.87 crore – paid up capital at Rs1507.46 crore – sits on a total debt of Rs4079.10 crore as of March 31, 2021.
The worrying aspect of the project is that the company’s loss has been steadily increasing by the year, as is evident from the previous years’ profit & loss statements.
It shows that the loss for FY18, FY19 and FY20 has been Rs167.33 crore, Rs285.18 crore and Rs310.02 crore respectively, and that of 2020-21 (FY21) having dwarfed all the past losses with Rs Rs334.41 crore remains a tell-tale testimony.
Phase 2
With respect to the phase 2 of Kochi Metro, from JLN stadium to Infopark via Kakkanad, Public Investment Board (PIB) has recommended the proposal for approval of the Cabinet for Rs1957. 05 crore, and the project has been included in the Central budget announced on February 1, 2021.
