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India Inc ? the 2nd largest borrower

Indian corporates, by borrowing over $3.7 bn this year alone, have become Asia Pacific's second largest borrower.

india Updated: Dec 13, 2006 13:02 IST

It's not only the big mergers and acquisitions like Tata Steel's over-$11 billion bid for London-based Corus for which India Inc is borrowing money. Corporates are also going for a kill with huge loans to fund their various projects.

India has become the second biggest borrower in Asia Pacific by borrowing over $3.7 billion for project financing since the beginning of 2006, taking a big jump from its 10th position last year.

Australia continues to lead the table in the region by raising $8.6 billion so far this year, as part of its project financing exercise, data compiled by global financial information provider Dealogic shows.

The overall Asia Pacific project finance volume has risen to a record high of $25.7 billion in 2006, up 24 per cent from $20.8 billion in the same period last year.

Indian companies have executed over 10 project finance deals in 2006, while its loan volumes used to be non-extinct till a couple of years ago. The project financing by Indian companies have more than doubled in the past one year.

Project financing is used to fund very large capital intensive projects, with long gestation period, where the lenders rely on the assets created for the project as security and the cash flow generated by the project as source of funds for repaying their dues.

Raising loans have become a preferred instrument for the corporates to fund their various activities - be it big projects or costly M&A deals.

First Published: Dec 13, 2006 13:02 IST