Anil Ambani-owned Reliance Infrastructure is planning to leverage its equity for execution of EPC projects worth Rs 20,000 crore. The company in March tied up loans worth Rs 2,500 crore for its Delhi Metro project, which is being implemented on build, operate and transfer (BOT) basis.

Speaking to Financial Chronicle, Lalit Jalan, chief executive officer, Reliance Infrastructure, said the company would not go in for direct borrowing but resort to non-recourse project financing like in the case of Delhi and Mumbai Metro projects. “We have ample equity and a strong operating cash flow,” said Jalan.

Non-recourse financing involves taking debt for a specific task.

The lender keeps project viability in mind while extending the loan. Infrastructure projects that are executed on EPC basis involve construction on traditional contract basis and companies depend on money infusion from the parent company. Non-recourse financing is usually adopted for projects that are executed on BOT basis.

A Morgan Stanley report said the company’s cash position has improved at the end of March 2009, at Rs 10,000 crore compared with Rs 9,596 crore on March 31, 2008. The report said that “stronger than expected” growth in the EPC order book would drive the growth of the company though any significant political interference and slowdown in capital expenditure could be the risk factors.

According to Jalan, the overseas funding options for most companies have dried up and the company was taking fresh loans only from domestic lenders.