Traditionally, there were limited options available for project financing. However, with economic liberalization and stock market reforms in India, the options have significantly increased. Earlier, banks were not involved inlong-term financing but now they are looking at project financing as one of the most profitable avenues. The article provides a primer on various options available for project financing.

In today's dynamic business environment, organizations are trying hard to succeed and remain competitive. As a direct result of organizations' endeavor to gain competitive advantage over competitors, the last one decade has witnessed a number of new products, technologies and joint ventures. While a majority of them didn't succeed in sustaining the initial euphoria, those who succeeded adopted a well-planned strategy. The strategic initiatives are taken in the form of well-defined projectssmall and big depending on the objectives of the initiatives.

Along with the definition of the project objectives, organizations critically examine how to get finance for the projects. In fact, project financing is intertwined with every aspect of project managementselection, planning, analysis and implementation. Organizations pursue different projects at different points of time and for executing them, they need funds at the right time in the right quantity. From where to fund the project? How the project funding will impact the capital structure of the company? What kind of financing instruments should be considered? These are some of the questions that the chief finance officer or budget officer of an enterprise is confronted with.

During the last one decade, the project finance market has increased tremendously. According to the World Bank, it has disbursed $27 bn in the year 2002 towards various developmental projects. While the World Bank funding is more towards the societal development projects and upliftment of poor nations, global commercial banks have funded around $90 bn in 2002 towards private projects. The growth of the project financing activity during the last one decade took place due to certain economic factors such as low inflation, high growth of service sector, etc. As a result, almost all organizations, irrespective of their size, have embarked on numerous projects.

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